Abstract. This paper examines the effects of depreciation, taxes and inflation on the optimal timing of asset replacement in accordance with the Canadian tax laws. The main findings are that an increase in the capital cost allowance rate will delay (accelerate) replacement of fixed assets at low (high) levels of capital cost allowance rates, and that an increase in the annual inflation rate will delay (accelerate) replacement of fixed assets at low (high) levels of inflation. The applications of the replacement model are illustrated with numerical examples.

Résumé. Cet article examine les conséquences de l'amortissement, de l'impôt et de l'inflation sur le choix du moment optimal du remplacement d'actifs, conformément au régime fiscal canadien. Les résultats importants dégagés sont à l'effet qu'un accroissement du taux d'allocation du coût en capital retardera (devancera) le remplacement d'immobilisations pour des niveaux faibles (élevés) de taux d'allocation du coût en capital, et qu'un accroissement du taux annuel d'inflation retardera (devancera) le remplacement d'immobilisations pour des niveaux faibles (élevés) d'inflation. Les applications du modèle de remplacement sont présentées au moyen d'exemples numériques.

A risk averse buyer and seller contract over the trade of an item. At the time of trading they each privately know their value s and cost r respectively, but these are not known when the contract is drawn up. The contract specifies a Bayesian revelation mechanism for implementing a trading rule and prices, as functions of their types s and r. An optimal (second-best) contract balances the goal of efficient trading and risk sharing against the need to provide the agents with incentives to reveal their type truthfully. An optimal contract is characterized. First, it is efficient to have some insurance from a third party: even though neither the buyer nor the seller will be fully insured, there is no need for the buyer to be exposed to the seller's risk or vice versa. Second, there will be less than first-best trade (underproduction). Third, once they have privately learnt their type—but before they have played the mechanism—both the buyer and the seller prefer that the final outcome will be trade rather than no trade. Fourth, although the trade prices increase with s and r, the rest of the contract need not be monotonic. This lack of monotonicity means that the standard methodology fails: it is not enough simply to appeal to local incentive compatibility, since global incentive constraints may bind. A nonstandard technique has to be used to find the nature of the second-best distortions.

If a firm does not know the individual ex post outside opportunities of its contracted workforce, then it can use hours, wages, and redundancy payments to screen them. Will a second-best contract have underemployment inefficiency, or overemployment? And, with a stochastic contract, are those workers randomly selected for layoff worse off than their retained colleagues (involuntary layoff), or vice versa (involuntary retention)? The answers depend on the nature of the workers' preferences. Two polar cases are looked at, corresponding to permanent and temporary layoff. The former is characterized by overemployment and involuntary retention; the latter by underemployment and involuntary layoff. Also examined are “simple contracts” where all retained workers are paid a common wage and all laid-off workers receive a common redundancy payment. Handling asymmetric information in stochastic contracts has led to two technical innovations. First, a number of results are proved even though all the truth-telling constraints are explicitly included. Second, a new regularity condition is found under which the local constraints are sufficient to ensure global incentive compatibility at an optimum.

Accounting changes, Discretionary accounting decisions, Management turnover, Earnings management

Municipal Ownership of Street Railways in Detroit Get access Charles Moore Charles Moore Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 13, Issue 4, July 1899, Pages 453–459, https://doi.org/10.2307/1883648 Published: 01 July 1899

Journal Article The End of Municipal Street Railways in Detroit Get access Charles Moore Charles Moore Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 14, Issue 1, November 1899, Page 121, https://doi.org/10.2307/1882358 Published: 01 November 1899

This paper studies the stability of competitive equilibria in a model of aggregate employment when the representative agent uses a least-squares forecasting procedure. It is shown that the Pareto inferior low employment steady state is always unstable under least-squares learning, even if it is stable under perfect foresight. The high employment steady state is stable under learning if and only if it is saddle point stable under perfect foresight. This weakens multiple equilibrium theories of coordination failure that purport to explain persistently high unemployment. The Pareto superior high employment steady state will be the focal point of individual forecasting.