Tax Discounting in a High‐debt Economy*

This paper estimates a consumption function for Belgium that allows for government debt discounting and for the overall discounting of the future (reflecting the consumers’ planning horizon or precautionary savings). It also allows for substitutability or complementarity effects from government expenditures. Results suggest that consumers do take into account (future) government activity. Ricardian Equivalence is rejected however, since we cannot reject a relatively short planning horizon or a precautionary savings motive for the consumers. We use bootstrapped distributions for inference since the instrumental variables estimators used may have non‐standard distributions. This procedure also helps to tackle potential endogeneity and sample size problems.     

Explaining the US–EU productivity growth gap: Structural change vs. intra-sectoral effect

This paper proposes a decomposition of labour productivity growth in the EU15 and the the US since the mid 1990s. The results suggest that the EU's relative slowdown is due to modest “pure” gains of productivity within sectors.     

Sources of crime in the state of Veracruz: The role of female labor force participation and wage inequality

Abstract

In recent years, crime has become a serious concern in Mexico as its increase has detrimentally affected government institutions and economic growth. There is considerable speculation among policy analysts about the causes of the increase in crime. Whereas some analysts attribute the increase to a rise in income inequality, others believe internal migration and a loss of morals are the roots of criminal behavior. This research shows that at least for the Mexican state of Veracruz, wage inequality and labor force participation have an important impact on crime. When gender is considered, however, the impact is more complicated than it seems. An increase in women's labor force participation decreases the overall number of alleged violent offenders. However, the number of alleged rapists and grievous bodily harm offenders increases as women's wage distribution improves. The results shed light on the gender dimensions of the economics of crime.     

A within-trial cost-effectiveness analysis of panitumumab compared with bevacizumab in the first-line treatment of patients with wild-type RAS metastatic colorectal cancer in the US

Abstract

Aims: This analysis investigated the cost-effectiveness of panitumumab plus mFOLFOX6 (oxaliplatin, 5-fluorouracil, and leucovorin) compared with bevacizumab plus mFOLFOX6 in the first-line treatment of patients with wild-type RAS metastatic colorectal cancer (mCRC).

Materials and methods: The cost-effectiveness analysis was developed from a third-party payer perspective in the US and was implemented using a partitioned survival model with health states for first-line treatment (progression-free), disease progression with and without subsequent active treatment, and death. Survival analyses of patients with wild-type RAS mCRC from the PEAK head-to-head clinical trial of panitumumab vs bevacizumab were performed to estimate time in the model health states. Additional data from PEAK informed the amount of each drug consumed, duration of therapy, subsequent therapy use, and toxicities related to mCRC treatment. Literature and US public data sources were used to estimate unit costs associated with treatment and duration of subsequent active therapies. Utility weights were calculated from patient-level data from panitumumab trials in the first-, second-, and third-line settings. A life-time perspective was taken with future costs and outcomes discounted at 3% per annum. Scenario, one-way, and probabilistic sensitivity analyses were performed.

Results: Compared with bevacizumab, the use of panitumumab resulted in an incremental cost of US $60,286, and an incremental quality-adjusted life-year (QALY) of 0.445, translating into a cost per QALY gained of US $135,391 in favor of panitumumab. Results were sensitive to wastage and dose rounding assumptions modeled.

Limitations: Progression-free and overall survival were extrapolated beyond the follow-up of the primary analysis using fitted parametric curves. Costs and quality of life were estimated from multiple and different data sources.

Conclusions: The efficacy of panitumumab in extending progression-free and overall survival and improving quality of life makes it a cost-effective option for first-line treatment of patients with wild-type RAS mCRC compared with bevacizumab.     

How do auditors respond to low annual report readability?

We show that increased audit effort is associated with lower annual report readability to compensate for a perceived increase in the risk of financial misstatement for United States (US) firms. In particular, we find that lower annual report readability is associated with longer audit delays and higher audit fees for Form 10-K for US auditors, suggesting that auditors spend more effort auditing clients when annual reports have lower readability. We also find that low readability increases the likelihood of auditors using more explanatory language in unqualified audit reports.     

On bootstrapping panel factor series

This paper studies the asymptotic validity of sieve bootstrap for nonstationary panel factor series. Two main results are shown. Firstly, a bootstrap Invariance Principle is derived pointwise in i$i$, obtaining an upper bound for the order of truncation of the AR polynomial that depends on n$n$ and T$T$. Consistent estimation of the long run variances is also studied for (n,T)→∞$(n,T)\to \infty$. Secondly, joint bootstrap asymptotics is also studied, investigating the conditions under which the bootstrap is valid. In particular, the extent of cross sectional dependence which can be allowed for is investigated. Whilst we show that, for general forms of cross dependence, consistent estimation of the long run variance (and therefore validity of the bootstrap) is fraught with difficulties, however we show that “one-cross-sectional-unit-at-a-time” resampling schemes yield valid bootstrap based inference under weak forms of cross-sectional dependence.     

Hours worked in selected OECD countries: an empirical assessment

In this paper, we empirically assess the evolution of the aggregate hours worked, with a particular emphasis on their age structure, in a sample of OECD countries, along the period 1970–2007. We show that the age composition of the workforce has a large and statistically significant effect on hours worked volatility. To exploit the multilevel structure of our data, we use a Mixed Linear Model to investigate the consequences of (i) demographic change, (ii) sector-specific, and (iii) country-specific factors on hours worked by ‘young’ (aged 15–29) and ‘prime-aged’ (29+) individuals. We show that changes in workforce demographics, captured by the ratio between population older than 29 and population younger than 29, are strongly and significantly correlated with the amount of hours worked by ‘young’ individuals. We also document the impact of sectoral capital intensity and profitability on the dynamics of (aggregate) hours worked. Finally, we show that productive public expenditure, here proxied by the public investment in ICT, is beneficial for the hours worked both by young and prime-aged individuals.