Intra-Household Resource Allocation, Consumer Preferences and Commodity Tax Reforms: Australian Evidence

Empirical analysis of household expenditure behaviour has traditionally ignored the issue of resource allocation between household members, assuming that they have identical or unitary preferences. This paper relaxes that assumption, develops a household sharing rule and proposes intra-household demand systems that are able to identify differences in the preferences of members from conventional data. The resulting price and expenditure elasticities are used to demonstrate that collective demand models suggest different directions for commodity tax reforms to those implied by the traditional unitary model.     

A Cross Country Comparison of Child Nutrition and Investigation of its Demographic Determinants

This study pools data on child anthropometrics and on their determinants from Pakistan, Peru, Jamaica, Russia and South Africa. It, then, estimates regression equations of child height and weight, measured by the Z-scores, on both combined country data and, separately, for each country. Moreover, the study estimates the child height and weight equations, separately, for young (0–36 months) and older children (37–72 months) and provides evidence on the impact of household assets and of a household’s access to basic amenities on the health of its children. The child health in the five countries chosen, which are culturally, economically, politically and geographically, quite diverse, are compared. The paper finds that the hard core cases of child malnutrition are not necessarily related to poverty or inequality. Female education plays an effective role in improving child health, with its beneficial effects considerably enhanced in households with access to public information through the radio or the TV.

     

Statistical Properties of a Composite Index as Estimator of a Single Latent Variable

Journal of Quantitative Economics -     

Intra-Industry Reactions to Stock Split Announcements

We examine whether favorable information conveyed by stock split announcements transfers to nonsplitting firms within the same industry. On average, nonsplitting firms' shareholders experience positive and significant abnormal returns at the stock split announcements of their industry counterparts. In addition, industrywide and firm-specific characteristics are important determinants in explaining nonsplitting firms' stock returns. These firms' earnings increase significantly, and the earnings changes are positively related to the stock price reactions. Finally, we find no evidence that investors revise the value of nonsplitting firms because they anticipate a decline in earnings volatility.     

Innovation, Imitation and Intellectual Property Rights: A Note on Helpman's Model

This note analyses the effect of the policy of tightening Intellectual Property Rights (IPR) on the rate of innovation in the North and on the welfare in both North and South in a model which is otherwise identical to Helpman (1993) except in the concept of knowledge capital. We assume that the South based imitated products do not contribute to the knowledge capital in the North. It is shown that the tightening of IPR raises the rate of innovation in the North and may improve the welfare of both North and South. These results are significantly different from those in Helpman (1993).     

What drives the cross‐country growth and inequality correlation?

Abstract.  We present a neo‐classical model that explores the determinants of growth‐inequality correlation and attempts to reconcile the seemingly conflicting evidence on the nature of the growth‐inequality relationship. The initial distribution of human capital determines the long‐run income distribution and the growth rate by influencing the occupational choice of the agents. The steady‐state proportion of adults that innovates and updates human capital is path dependent. The output elasticity of skilled‐labour, barriers to knowledge spillovers, and the degree of redistribution determine the range of steady‐state equilibria. From a calibration experiment we report that a skill‐intensive technology, low barriers to knowledge spillovers, and high degrees of redistribution characterize the industrial countries with a positive growth‐inequality correlation. A negative correlation between growth and inequality arises for the group of non‐industrial countries with the opposite characteristics. JEL classification: E1, O4     

Redistributive Tax and Growth in a Model with Discrete Occupational Choice

An optimal redistributive tax-subsidy formula is derived for a growth model where income inequality is endogenously driven by an adult's choice of occupation between work and management. Investment in human capital is the engine of growth. The world's stock of exploitable knowledge as well as the economy's average human capital determine the potential rate of return from investment in human capital in an economy. How much available knowledge would be exploited in the economy depends on the proportion of innovators in our model. A redistributive tax reform impacts growth as well as income inequality via its influence over the occupational choice. The optimal redistributive tax rate is path-dependent in the sense that it depends on the initial wealth distribution. The normative implication of the model is that the optimal capital income tax rate could very well be positive if the initial wealth inequality exceeds a threshold. The optimal capital income tax rate depends inversely on the initial wealth inequality.     

Current account dynamics and capital mobility in the newly industrialized countries

This paper examines the current account dynamics in a group of ten newly industrialized countries (NICs) during the period 1980–2012 using a panel error-correction model. The model is also used to empirically test whether the degree of capital mobility is positively related to financial openness. The Chin-Ito (2006, 2008) financial openness index is used to classify the countries into different groups, and we place the countries in one group that are similar to each other in terms of their financial openness. Furthermore, to evaluate the extent of capital mobility over the different period from 1980 to 2012, the total period under study is divided into three sub-periods. The estimation results indicate that there exist long-run equilibrium relationships between domestic saving, investment, and current account in all groups regardless of their degree of financial openness. We find that more openness in terms of the capital account is associated with a higher degree of capital mobility in the case of NICs. The empirical result also indicates that the degree of capital mobility is higher in the first and third sub-period.     

Thinking critically about critical thinking: Assessing critical thinking of business students using multiple measures

Critical thinking is a skill that potential employers expect all graduates to possess. Hence, most business management programs consider critical thinking as an important student learning goal. Unfortunately, there is ambiguity about how to best assess critical thinking, both as a skill and a learning outcome. The authors empirically demonstrate how they measure the critical thinking ability of their students in different settings, and how their critical thinking ability improves as they progress through the business program.     

Understanding the economic dynamics behind growth-inequality relationships

In this paper, a dynamic general equilibrium (DGE) model of growth-inequality relationships, with missing credit markets, knowledge spillover and self-employed agents, is calibrated to New Zealand data. The model explains how two distinct policy shocks involving redistribution and immigration imply, subsequently, two completely opposite outcomes. Agents’ inability to borrow aggravates a negative macroeconomic effect of heterogeneity on growth. Redistribution mitigates that effect but creates microeconomic disincentives on saving and work-effort. Consequently, immigration shocks that perturb variance of efficiency induce a negative growth-inequality relationship, while redistribution shocks, in New Zealand’s case, produce larger fluctuations in incentives than in macro benefits, implying a positive growth-inequality relationship.