Comparing the welfare effects of income and excise taxes in the presence of the other taxation paradox

This paper implements numerically a general equilibrium model in which all private producers are price makers and the government utilizes tax revenues to provide a public good. After deriving the partial equilibrium condition for an excise tax to increase price by more than the tax (for a monopoly firm), numerical examples are given, demonstrating this phenomenon for both partial and general equilibrium. In the general equilibrium context, optimal excise taxation and optimal flat-rate income taxation are compared. In the excise tax regime, prices increase by more than the taxes. In the income tax regime, prices actually decline relative to the no-tax regime. In all of the examples given, flat-rate income taxation is superior to excise taxation in terms of welfare. The author has benefitted from exceptionally helpful comments received from J. Ronnie Davis, John D. Wilson, Ralph W. Pfouts, and Amy Crews. He has also benefitted from conversations with Franz Gehrels, David E. Wildasin, Herbert J. Kiesling, and Harold York. The usual disclaimer applies.     

Search and Liquidity in Single-Family Housing

A two-stage least squares model of housing prices is estimated with data collected from 3358 single-family home transactions. The results provide evidence for an optimal marketing period and indicate that a liquidity premium is priced in single-family home sales. Consistent with the hypothesis derived from economic search models, the model shows higher selling prices for houses having longer expected marketing periods. The model also shows a price premium for houses that sell faster than expectations. This effect supports the concept that liquidity is a value-enhancing characteristic.     

Head-heart disparity among future managers: Implications for ethical conduct

An examination of the ethical perceptions of business students using Macobby's head/heart traits and a comparison to earlier studies of managers, accountants, and business students is made. The data were collected at three universities that are similar in size, enrollment and degree programs within the College of Business. Results indicate that present day business students are no less ethically inclined than are their business counterparts in previous eras. In general head traits dominated over heart traits, an indication that business schools continued to do a good job emphasizing and developing analytical skills but a poor job of developing the qualities of the heart that are generally associated with ethical behavior. The implications of these findings are discussed.     

Models for which the MLE and the conditional MLE coincide

The MLE, CMLE and MMLE coincide in a linear regression model with fixed individual effects. In this case, there is no incidental parameters problem and the MLE is consistent. The equivalence of these estimators is important because CMLE=MLE implies both the consistency of the MLE and the efficiency of the CMLE. In general, we cannot expect to find a CMLE or MMLE, since there may be no fixed-dimension sufficient statistic for the effects, nor an appropriate transformation of the data whose distribution does not depend on the effects. However, we show that the MLE, CMLE and MMLE do coincide in systems of seemingly unrelated regressions and in systems of simultaneous equations. We establish this result for systems in which (exogenous) variables in addition to (or other than) the intercept may have coefficients which vary over individuals, provided that the set of such variables is the same in every equation.The financial support of the National Science Foundation is gratefully acknowledged.     

Explaining the Cross‐Section of Stock Returns in Japan: Factors or Characteristics?

Japanese stock returns are even more closely related to their book-to-market ratios than are their U.S. counterparts, and thus provide a good setting for testing whether the return premia associated with these characteristics arise because the characteristics are proxies for covariance with priced factors. Our tests, which replicate the Daniel and Titman (1997) tests on a Japanese sample, reject the Fama and French (1993) three-factor model, but fail to reject the characteristic model.     

Australian Audit Committees — Do They Meet Best Practice Guidelines?

The paper reports the results of a study of Australia's largest 250 companies' audit committees in two years (1998 and 2001). The audit committees were scrutinised on the bases of audit committee independence and the frequency of meetings. Australia's audit committees did not score highly on either criterion and most companies fell short of best practice guidelines. Further, it was puzzling and of concern that Australian audit committees appear to have deteriorated in terms of independence and frequency of meetings between 1998 and 2001.     

Wage and price controls in the equilibrium sequential search model

In this paper, we study the effects of wage and price controls on employment, output, and welfare in a simplified version of the Bénabou (J. Econom. Theory 60 (1993) 140) equilibrium sequential search model with bilateral heterogeneity. We show that a price ceiling increases output but the change in welfare depends on three effects: the reduction in aggregate search costs, the increase in surplus due to increased output, and the transfer of production to the least efficient firm. The model is formally identical to a standard equilibrium search model of the labor market so analogous results hold for the minimum wage.