In this paper we evaluate the impact of the Tax Reform Act of 1986 on U.S. economic growth. We first calculate effective tax rates on income from capital employed in corporate, noncorporate, and household sectors. We then project the future growth of the U.S. economy with and without the 1986 tax reform. We find that much of the potential gain in welfare was dissipated through failure to index the income tax base for inflation. The most promising avenue for future reform is to include income from household assets in the tax base, while reducing tax rates on business income.

This study reexamines the earlier finding of Michael J. Alderson and K. C. Chen (1986) that financial markets do not consider excess pension assets in determining share prices and that significant increases in shareholder wealth occur when an overfunded pension plan is terminated. The results document that specific event-time contamination (corporate restructuring announcements) provides the driving force for all the earlier findings.

This paper develops a theory of capital structure in an international setting with corporate and personal taxes. The authors generalize the analysis of M. M. Miller (1987) to an international equilibrium characterized by differential international taxation and inflation in otherwise perfect international capital markets. The authors' analysis highlights the key role that corporate tax arbitrage plays in generating an international capital structure equilibrium, and they set forth a number of mechanisms for tax arbitrage transactions. They close the paper by outlining some implications of their analysis for national differences in capital structure, the international Fisher effect, and international tax effects on yield differentials.

This paper develops a theory of capital structure in an international setting with corporate and personal taxes. We generalize the Miller analysis to an international equilibrium characterized by differential international taxation and inflation in otherwise perfect international capital markets. Our analysis highlights the key role that corporate tax arbitrage plays in generating an international capital structure equilibrium, and we set forth a number of mechanisms for tax arbitrage transactions. We close the paper by outlining some implications of our analysis for national differences in capital structure, the International Fisher Effect, and international tax effects on yield differentials.

ABSTRACT This paper develops a theory of capital structure in an international setting with corporate and personal taxes. We generalize the Miller analysis to an international equilibrium characterized by differential international taxation and inflation in otherwise perfect international capital markets. Our analysis highlights the key role that corporate tax arbitrage plays in generating an international capital structure equilibrium, and we set forth a number of mechanisms for tax arbitrage transactions. We close the paper by outlining some implications of our analysis for national differences in capital structure, the International Fisher Effect, and international tax effects on yield differentials.

Using data from the 1976 and 1978 National Longitudinal. Surveys of young men and young women, this study examines racial differences in the magnitude and composition of wealth and the reasons for them. On average, young black families hold 18 percent of the wealth of young white families, and hold their wealth in proportionately different forms. Even after controlling for racial differences in income and other demographic factors, as much as three-quarters of the wealth gap remains unexplained. We speculate on the causes for this, concluding that racial differences in intergenerational transfers most likely play an important role.

This paper considers estimation and hypothesis testing in linear time series when some or all of the variables have (possibly multiple) unit roots. The motivating example is a vector autoregression with some unit roots in the companion matrix, which might include polynomials in time as regressors. Parameters that can be written as coefficients on mean zero, nonintegrated regressors have jointly normal asymptotic distribution, converging at the rate of T(superscript "one-half") In general, the other coefficients (including the coefficient on polynomials in time), and associated t and F test statistics, have nonstandard asymptotic distributions. Copyright 1990 by The Econometric Society.

This paper uses a national survey of 3,119 individuals to examine the effect of lung cancer risk perceptions on smoking activity. Both smokers and nonsmokers greatly overestimated the lung cancer risk of cigarette smoking, and the extent of the overestimation is much greater than the extent of underestimation. These risk perceptions in turn significantly reduce the probability of smoking, as suggested by an economic model of risky consumption decisions. Cigarette excise taxes in effect endow individuals with additional risk perceptions comparable to their current assessed lung cancer risks. Copyright 1990 by University of Chicago Press.