We examine the limiting behavior of cooperative and noncooperative fiscal policies as countries' market power goes to zero. We show that these policies converge if countries raise revenues through lump-sum taxation. However, if there are unremovable domestic distortions, such as distorting taxes, there can be gains to coordination even when a single country's policy cannot affect world prices. These results differ from the received wisdom in the optimal tariff literature. The key distinction is that, contrary to the tariff literature, the spending decisions of governments are explicitly modeled.

We propose a definition of time-consistent policy for infinite-horizon economies with competitive private agents. Allocations and policies are defined as functions of the history of past policies. A sustainable equilibrium is a sequence of history-contingent policies and allocations that satisfy certain sequential optimality conditions for the government and for private agents. We provide a complete characterization of the sustainable equilibrium outcomes for a variant of Fischer's model of capital taxation. We also relate our work to recent developments in the theory of repeated games.

V. V. Chari, Ravi Jagannathan, Larry Jones; Price Stability and Futures Trading in Commodities*, The Quarterly Journal of Economics, Volume 105, Issue 2, 1

The alternative versions of the t ‐test found in event studies result from different weighting schemes for abnormal returns, different abnormal return models, and different correlational structures among abnormal returns. In the presence of dependencies among abnormal returns, the generalized least squares t ‐tests are much more sensitive to the mis‐specifications in the abnormal return model than are the nongeneralized t ‐tests. Therefore, when analyzing contemporaneous returns, particularly with samples exhibiting a large industry concentration, a nongeneralized t ‐test should be preferred to a generalized least squares t ‐test because of the dependencies that may exist. Because the generalized least squares t ‐tests are highly sensitive to errors in specifying an appropriate abnormal return model, a portfolio time‐series ordinary least squares regression should be preferred to a generalized least squares regression even when the variance or covariance matrix of abnormal returns can be estimated with a high degree of reliability. In testing for the mean effects, the concern for event period variance increases seems to be unwarranted, and the variance estimators using event period data are inefficient and biased. The issue is not whether variance increases in an event period, but which variance is to be used: that of the event period or of the nonevent period? Answers to such questions are presented in this paper. Résumé. Les différentes versions possibles du test t que l'on trouve dans les études d'événements résultent de différents systèmes de pondération des rendements anormaux, de différents modèles de rendements anormaux et de différentes structures de corrélation des rendements anormaux. Lorsqu'il existe une dépendance entre les rendements anormaux, les tests t généralisés des moindres carrés sont beaucoup plus sensibles aux défauts de construction du modèle des rendements anormaux que ne le sont les tests t non généralisés. C'est pourquoi lorsqu'on analyse des rendements simultanés, en particulier si l'échantillon présente une forte concentration industrielle, le test t non généralisé est préférable au test t généralisé des moindres carrés, compte tenu des dépendances qui peuvent exister. Les tests t généralisés des moindres carrés étant très sensibles aux défauts de construction du modèle approprié de rendements anormaux, l'application de la méthode classique des moindres carrés à une série chronologique relative à un portefeuille est préférable à la régression généralisée des moindres carrés, même s'il est possible d'estimer avec un degré élevé de fiabilité la matrice de variance ou de covariance des rendements anormaux. Dans le test des effets moyens, la préoccupation relative aux augmentations de la variance de la période d'événements semble être injustifiée, et les estimateurs de la variance fondés sur les données de la période d'événements sont inefficients et biaisés. Il ne s'agit pas de déterminer si la variance augmente pendant la période d'événements, mais quelle variance doit être utilisée: celle de la période d'événements ou une autre. Les auteurs répondent à ces questions.

Only a tiny fraction of the nonpoor population currently purchases private insurance coverage against long-term-care (LTC) costs. Studies generally attribute the failure to purchase private coverage to "unawareness" by potential purchasers of the benefits of coverage and a misperception that Medicare currently covers long-term care. I explore alternative reasons for failure to purchase coverage by well-informed, expected utility-maximizing risk-averse individuals for whom LTC is associated with a large increase in mortality and for whom family members represent an alternative source of care. There may be no demand for LTC insurance even if it is made available at actuarially fair premiums because the main consequence of coverage is to enhance the expected value of one's estate.

This study evaluates the effectiveness of a radon risk communication program based on how the estimated value of additional information varies across the six types of descriptive materials randomly assigned to a panel of homeowners participating in a radon utility model estimated with probit from respondents' answers to a contingent behavior question asking if they would purchase at a one-time price the services of a licensed technician to analyze their radon problems. The findings indicate that the information materials used most frequently by states and testing companies to explain radon's risk are the least effective of the six considered.

We examine the limiting behavior of cooperative and noncooperative fiscal policies as countries' market power goes to zero. We show that these policies converge if countries raise revenues through lump-sum taxation. However, if there are unremovable domestic distortions, such as distorting taxes, there can be gains to coordination even when a single country's policy cannot affect world prices. These results differ from the received wisdom in the optimal tariff literature. The key distinction is that, contrary to the tariff literature, the spending decisions of governments are explicitly modeled.

Auditing, Auditor independence, Contingent fees, Contingent fee contracts

Reviews the book `Information Technology Management: Evolving Managerial Roles,' by Howard O. Rockness and Robert W. Zmud.

Relatively little is known about the behavior and performance of firms organized as partnerships. In this paper we attempt to fill that gap by developing and testing a model of the effect of alternative compensation arrangements on productive efficiency in medical group practices. The technique employed is maximum likelihood production frontier estimation. We provide a simple behavioral model of the determination of productive efficiency and a new interpretation of the economic measure of technical efficiency. We derive a "behavioral production function" that relates production to individual responses to incentives, and we indicate the impossibility of recovering the parameters of the production technology from observed behavior. Overall, the empirical results indicate that incentives do affect productivity. A larger number of members in a group decreases productivity while greater average experience leads to greater productivity.