Taxation, Bequests, and Short and Long Run Timber Supplies: An Overlapping Generations Problem

This paper uses an overlapping generations model with one-sided altruism to study the effects of several forest taxes that target bequests and affect timber supply. Unlike previous work, we investigate bequests and timber supply in both the short and long run when bequests are costly (e.g., taxed). The landowner's problem is examined in the short run, while the government's problem is examined in the long run assuming the existence of a steady state. We also consider taxes targeting harvests, growth, savings and bequests. Several new results are established concerning the interactions of taxes that might be used by a government to alter short and long run forest capital stocks: (i) the presence of a forest bequest tax affects the neutrality of harvest tax in both the short and long run, (ii) in the long run the bequest tax decreases bequests and timber supplies. When the bequest tax is not present, the capital income tax is neutral with respect to bequest and timber supply, while the harvest tax is neutral only if forest productivity is also not taxed. Finally, (iii) in the short run, the substitution and total effects of taxes in landowner decisions generally depend on the presence of the bequest tax. The results have implications for Pigouvian tax design and second best tax choice.     

Noncausal Bayesian Vector Autoregression

We consider Bayesian analysis of the noncausal vector autoregressive model that is capable of capturing nonlinearities and effects of missing variables. Specifically, we devise a fast and reliable posterior simulator that yields the predictive distribution as a by‐product. We apply the methods to postwar US inflation and GDP growth. The noncausal model is found superior in terms of both in‐sample fit and out‐of‐sample forecasting performance over its conventional causal counterpart. Economic shocks based on the noncausal model turn out to be highly anticipated in advance. We also find the GDP growth to have predictive power for future inflation, but not vice versa. Copyright © 2016 John Wiley & Sons, Ltd.     

How Much Does Expertise Reduce Behavioral Biases? The Case of Anchoring Effects in Stock Return Estimates

We use data from surveys involving 300 Scandinavian financial market professionals and 213 university students to conduct three controlled experiments in which we manipulate the background information given to subjects. We find a very large anchoring effect in the students' long-term stock return expectations, that is, their estimates are influenced by an initial starting value. Professionals show a much smaller anchoring effect, but it nevertheless remains statistically and economically significant, even when we restrict the sample to more experienced professionals. We also find that the professionals are not conscious of the impact of historical returns on their expectations.     

Solving Intra-Company Conflicts Using the RAMONA-Interactive Negotiation Support System

A key issue within manufacturing organizations is how to induce the different departments and/or interest groups to work most effectively for the common good of the company. In almost every company daily conflicts exist between different interests and/or interest groups. For example in a typical manufacturing company, production management and marketing management perspectives can contain different goals with respect to the terms of sales with resultant inefficiencies. This paper describes 1) in detail the RAMONA-program a user-friendly interactive Negotiation Support System, and 2) how RAMONA can support the different interest groups involved in intra-company negotiations for the overall benefit of the firm.     

Injuries in different socio-economic groups in Finland

Introduction. Suicides are a hidden and unrecognized epidemic in the Indian region, affecting predominantly younger age groups. Information on causative risk factors and mechanisms is not available in the country, which is crucial for designing intervention programmes.

Objectives. To identify and quantify risk factors for completed suicides in the city of Bangalore.

Methods. A case–control study was conducted with the families of 269 completed suicides and 269 living controls within the broader population of the city using psychological autopsy methods.

Results. The study has shown that several factors in the areas of family, marriage, education, occupation, general health, mental health and absence of protective factors contribute significantly for suicides. The cumulative and repetitive interaction of several factors in a complex manner results in suicides. The significant factors were presence of previous suicidal attempt in self (odds ratio (OR) = 42.62), interpersonal conflicts and marital disharmony with spouse (OR = 27.98), alcoholism in self (OR = 23.38), presence of a mental illness (OR = 11.07), sudden economic bankruptcy (OR = 7.1), domestic violence (OR = 6.82) and unemployment (OR = 6.15). Individuals completing suicides did not have a positive outlook towards life, problem-solving approaches and coping skills.

Conclusion. The observed findings are at variance with suicidal causation in the West in some areas operating in a different sociocultural and economic environment. The intervention strategies should include prioritized macro and micro level efforts aimed at individual, family and society.     

Near unit root and the relationship between inflation and interest rates: A reexamination of the Fisher effect

Tests of the Fisher effect are plagued by high persistence in interest rates. Instead of standard regression analysis and asymptotic results, methods relying on local-to-unity asymptotics are employed in testing for the Fisher effect with monthly U.S. data covering the period 1953:1–1990:12. These procedures are extensions of a recently presented method (Cavanagh, Elliott and Stock (1995)) based on simultaneous confidence intervals, and they have the advantage of being asymptotically valid whether interest rates are integrated of order one or zero, or near unit root processes. Taking appropriately account of the near unit root problem the findings in most of the previous literature are reconfirmed. There is support for the Fisher effect in the interest rate targeting period (1953:1–1979:10) of the Federal Reserve but not in the 1979:11–1990:12 period. First version received: July 1999/Final version received: April 2000     

Has US inflation really become harder to forecast?

Since the mid-1980s, Phillips curve forecasts of US inflation have been inferior to those of a conventional causal autoregression. However, little change in forecast accuracy is detected against the benchmark of a noncausal autoregression, more accurately characterizing US inflation dynamics.     

Nonlinear dynamics of interest rate and inflation

According to several empirical studies US inflation and nominal interest rates as well as the real interest rate can be described as unit root processes. These results imply that nominal interest rates and expected inflation do not move one‐for‐one in the long run, which is incongruent with theoretical models. In this paper we introduce a new nonlinear bivariate mixture autoregressive model that seems to fit quarterly US data (1953 : II–2004 : IV) reasonably well. It is found that the three‐month Treasury bill rate and inflation share a common nonlinear component that explains a large part of their persistence. The real interest rate is devoid of this component, indicating one‐for‐one movement of the nominal interest rate and inflation in the long run and, hence, stationarity of the real interest rate. Copyright © 2006 John Wiley & Sons, Ltd.     

How Investors Trade Around Interim Earnings Announcements

Abstract:   This study focuses on non‐institutional trading behaviour around interim earnings announcements in the emerging market. We separate the stock trading activity of Finnish households into five trading classes and compare the results to institutional trading. Data covering the years 1996–2000 shows that earnings news triggers trading in every trading class. We also find some evidence that actively trading individuals especially (compared to passively trading ones) show increased buying and selling activity before the event compared to the non‐event period. After the event we find that Finnish households in the most active investor class tend to follow a contrarian strategy, especially selling after good news. This adds to previous evidence by Grinblatt and Keloharju (2000b) . Furthermore, the performance of the active investor classes is superior to that of passive ones. Finally, the institutional trading class is clearly less affected by the announcement than the active investor classes, suggesting that institutions utilize a broader information set than individual investors.     

Are expansions cost effective for stock exchanges? A global perspective

This paper investigates the existence and extent of economies of scale and scope among the stock exchanges. Evidence from 38 exchanges in 32 countries and 4 continents around the world for the years 1989–1998 portrays the existence of significant economies of scale and scope. The degree of such scale and scope however differs across size and regions. The largest exchanges show an increasing trend of cost effectiveness. The exchanges in North America and Europe report substantially higher economies of scale relative to the exchanges in the Asia-Pacific regions.