The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform

We study the impact of Quickpay, a reform that permanently accelerated payments to small business contractors of the U.S. government. We find a strong direct effect of the reform on employment growth at the firm level. However, we document substantial crowding out of nontreated firms' employment within local labor markets. While the overall net employment effect is positive, it is close to zero in tight labor markets. Our results highlight an important channel for alleviating financing constraints in small firms, but emphasize the general-equilibrium effects of large-scale interventions, which can lead to lower aggregate outcomes depending on labor market conditions.     

A practical solution to the problem of ultimate ruin probability

Abstract

It was the Swiss actuary Chr. Moser who, in lectures at Bern University at the turn of the century, gave the name “self-renewing aggregate” to what Vajda (1947) has called the “unstationary community” of lives, namely where deaths at any epoch are immediately replaced by an equivalent number of births. It was Moser too (1926) who coined the expression “steady state” for the stationary community in which the age distribution at any time follows the life table (King, 1887). With such a distinguished actuarial history, excellently summarized by Saxer (1958, Ch. IV), it behoves every actuary to know at least the definitions and modus operandi of today's so-called renewal (point), or recurrent event, processes.     

An equilibrium analysis of information aggregation and fluctuations in markets with discrete decisions

This paper shows how the interaction between decentralized information gathering and discreteness of investment decisions at the individual level can generate random fluctuations in aggregate investment that involve occasionally large allocation errors. This interaction is illustrated in a model in which private information is costly to acquire and prices reveal information. The unique rational expectations equilibrium outcome of the model is shown to always be noisy and characterized by investment levels which may be high simply because uninformed investors are buying under the impression that the high price is a signal of good investment opportunities.     

Incomes policy reconsidered

In this study a large data base of individual contract data is used to analyse the impact of wage controls on different groups in the Canadian unionized private sector. Of particular interest is the behavior of the controlled relative to the uncotrolled sector. Statistically significant reductions in wage inflation are discerned both sectors with the effect in the controlled sector being, approximately, twice large as that in the uncontrolled sector.     

TESTING FOR INVERSE HOMOTHETICITY: A NONPARAMETRIC APPROACH

The efficiency of a decision-making unit can be estimated relative to the direct output possibility set or the indirect (cost-constrained) output possibility set. For the direct and indirect output sets we show that the ratio of two Farrell (radial) efficiency measures equals the ratio of two Zieschang (non-radial) efficiency measures if and only if the production technology is inverse-homothetic. A consequence of inverse homotheticity is that the input and output expansion paths are linear.     

A Note on Retrospectivity and the Tax System*

The legitimacy or otherwise of retrospective tax legislation has become a topical issue in Australian tax reform debates. This note considers the economic costs of permitting this budgetary practice. While under certain circumstances the standard welfare cost of the tax system may be reduced by retrospective announcement of tax arrangements, the costs of forming expectations. required by the possibility of retrospective tax legislation lead to a reduction in the value of economic activity.