Federal tax competition and the efficiency consequences for local taxation of revenue equalization

Recent work has shown that a system of equalization grants can neutralize the efficiency loss caused by tax competition among lower-level governments. These models, however, ignore the vertical tax externalities that occur when the federal and lower-level governments levy taxes on the same base. This paper incorporates equalization grants into a standard capital tax competition model in which there are horizontal tax externalities between jurisdictions and vertical tax externalities between the levels of government. It is shown that, even in the presence of vertical tax externalities, an efficient level of lower-level government taxation can be achieved with a modifying version of a standard equalization grant formula.     

Information costs and liquidity effects from changes in the FTSE 100 list

Abstract

In this paper we examine the stock price effect of changes in the composition of the FTSE 100 over the time period of 1984–2001. Like the S&P 500 listing studies, we find that the price and trading volume of newly listed firms increases. The evidence is consistent with the information cost/liquidity explanation. This is because investors hold stocks with more available information, implying that they have lower trading costs. This explains the increase in the stock price and trading volume of newly listed stocks to the FTSE 100 List. We find the reverse effect for the deletions from the FTSE 100.     

International stock markets interactions and conditional correlations

This paper investigates the transmission of price and volatility spillovers across the US and European stock markets in bivariate combinations. The framework used encompasses the most popular multivariate GARCH models, with News Impact Surfaces employed for interpretation. By using synchronous data the dynamic conditional correlation model (Engle, R., 2002. Dynamic conditional correlation: a simple class of multivariate GARCH models. Journal of Business and Economic Statistics 20, 339–350) is found to best capture the relationships for over half of the bivariate combinations of markets. Other findings include volatility spillovers from the US to European markets, and a reverse spillover. In addition, the magnitude of the correlation between markets is higher not only for negative shocks in both markets, but also when a combination of shocks of opposite signs occurs.     

Using the allocation of emission permits for strategic trade purposes

We show that the presence of transaction costs in emission permit markets challenges the common presumption that grandfathering permits corresponds to lump-sum transfers with no strategic effects on output. Fixed transaction-costs influence firms’ decision to participate in the permits market, while variable transaction-costs affect firms’ output choice by creating a wedge between buyers’ and sellers’ opportunity cost of using permits. Thus, permit grandfathering can be used as a strategic trade instrument even when firms are price takers in the permit markets. Grandfathered permits differ from subsidies in that the stimulus they provide is bounded exogenously and rather limited.     

Arbeitslosengeld II: Arbeitsanreize und Verteilungsgerechtigkeit

Die Zusammenlegung von Arbeitslosen- und Sozialhilfe hatte unter anderem das Ziel, die Arbeitsanreize für arbeitsf?hige Leistungsempf?nger zu st?rken. Wie sind die Anreizwirkungen zu bewerten? Wirkt der durch Arbeitslosengeld II erreichbare Lebensstandard negativ bei der Entscheidung für eine Arbeitsaufnahme? Werden kinderreiche Familien bei den ALG-II-Leistungen benachteiligt? Dr. Christos Koulovatianos, 35, ist derzeit Visiting-Professor am Lehrstuhl für Geld und Makro?konomie der Goethe Universit?t Frankfurt/Main; Prof. Dr. Ulrich Schmidt, 40, ist Inhaber des Lehrstuhls für Finanzwissenschaft, Sozialpolitik und Gesundheits?konomik an der Christian-Albrechts-Universit?t zu Kiel und t?tig am Institut für Weltwirtschaft; Dr. Carsten Schr?der, 35, ist dort Juniorprofessor. Wir danken Alfred Boss, Stefan Homburg, Harmen Lehment, Tim Lohse, Klaus Schrader, Dennis J. Snower, Jürgen Stehn und Michael Stremlau für hilfreiche Kommentare.     

Core service versus relational benefits: what matters most?

Services literature has extensively examined the effects of core service and relational benefits on behavioral outcomes arguing that both components, studied separately, contribute significantly to customer satisfaction and loyalty. However, an integrative examination of the relative importance of both core service and relational benefits is missing. This study examines the combined impact of an extended typology of core service and relational benefits on satisfaction and relational outcomes. One qualitative and one quantitative study are conducted within a banking context. Findings confirm a more extensive typology of relational benefits and reveal that competence (part of the trust benefit) and convenience significantly affect satisfaction; however, when core service is introduced to the model, the effect of relational benefits ceases to be significant. Several future research opportunities for an integrated service benefits approach are identified; and implications for managers on how to allocate their efforts across the various types of service benefits are discussed.     

The Value of Investor Protection: Firm Evidence from Cross-Border Mergers

International law prescribes that in a cross-border acquisitionof 100% of the target shares, the target firm becomes a nationalof the country of the acquiror, and consequently subject toits corporate governance system. Therefore, cross-border mergersprovide a natural experiment to analyze the effects of changesin corporate governance on firm value. We construct measuresof the change in investor protection in a sample of 506 acquisitionsfrom 39 countries. We find that the better the shareholder protectionand accounting standards in the acquiror's country, the higherthe merger premium in cross-border mergers relative to matchingdomestic acquisitions.     

Twitter investor sentiment and corporate earnings announcements

We examine the impact of firm-specific investor sentiment (FSIS) on stock returns for negative and positive earnings surprises. Using a measure constructed from firm-specific tweets, we find that FSIS has a greater impact on stock returns for negative relative to positive earnings surprises. We further show that the impact of FSIS is greater for firms whose valuation is uncertain and difficult to arbitrage. Moreover, we provide evidence of return reversals over post-announcement periods. Our results highlight the importance of FSIS around earnings announcements.     

Testing for the LOP under nonlinearity: an application to four major EU pork markets

This article develops an econometric procedure to test the validity of the Law of One Price (LOP) under nonlinearity and to distinguish between its strong and its weak version. The procedure is applied to four major EU pork markets using weekly prices from 1991 to 2008. The empirical results suggest that the markets are well integrated, with deviations from the steady‐state price differentials corrected nonlinearly. The LOP is valid for all market pairs and for the pair Germany–Spain it holds in its strong version.     

What Do Unions Do to Productivity? A Meta‐Analysis

The impact of unions on productivity is explored using meta-analysis and meta-regression analysis. It is shown that most of the variation in published results is due to specification differences between studies. After controlling for differences between studies, a negative association between unions and productivity is established for the United Kingdom, whereas a positive association is established for the United States in general and for U.S. manufacturing.