Suchergebnisse

We set up a trade model where three countries compete for an exogenous number of firms. Our innovation lies in the geography of the model. Of the three countries, one is the hub through which all trade takes place. First, we establish the natural geography of the region, which is given by the equilibrium distribution of industrial activity in the absence of taxes or subsidies. We then examine the implications for corporate taxes when the countries compete with each other to attract firms. We find that, even when all countries are the same size, the centrality of the hub gives it an advantage in tax setting, such that its equilibrium tax can be larger than that of the spokes and yet it still attracts a disproportionate share of industry. Thus geographic advantage in tax competition has a second dimension, centrality in addition to size.

This paper investigates whether the higher prevalence of South multinational enterprises (MNEs) in risky developing countries may be explained by the experience that they have acquired of poor institutional quality at home. We confirm the intuition provided by our analytical model by empirically showing that the positive impact of good public governance on foreign direct investment (FDI) in a given host country is moderated significantly, and even in some cases eliminated, when MNEs have been faced with poor institutional quality at home.

AbstractWe investigate the impact of heightened political uncertainty in the run‐up to, and after, the 2014 Scottish independence referendum. The conditional volatilities of stock returns of our Scottish index and the FTSE all share index are characterised by the same GARCH parameters for a sample ending in late 2013, but this no longer holds when estimation extends closer to the referendum. The relative volatility of Scottish companies' stock returns peaked when polls indicated the referendum result was 'too close to call,' fell back on the result, but rose again in the run‐up to publication of proposals for further devolution.

AbstractIn this paper we estimate the marginal rate of substitution between aggregate per‐capita consumption and per‐capita government expenditure on goods and services using US quarterly data over the period 1953 to 1993. This estimate is an important input to any attempt to assess the overall effectiveness of fiscal policy since it directly affects the size of the fiscal policy multiplier. Other recent consumption studies which incorporate the effects of government expenditure have failed to establish a stable estimate of the marginal rate of substitution. We argue that this failure results from imposing the unrealistic assumption that this parameter is constant. In contrast, we allow the marginal rate of substitution to depend on both the level and composition of government spending.

An understanding of the determination of real wages is crucial in
analysing the determination of the natural rate of unemployment or
NAIRU. Uses cointegration techniques to examine a core theoretical model
of the long‐run determinants of real wages involving unit labour costs,
unemployment, union power and the replacement ratio. Considers the
different measures of union power and the duration of unemployment and
alternative specifications involving the "wedge" but a
robust cointegrating relationship is not found. These results can be
interpreted in several ways: concepts such as union power or the
"generosity" of benefits may be measured inadequately; the
theoretical understanding of the long‐run determinants of real earnings
may remain seriously incomplete; alternatively the short spans of data
examined may be insufficient for the application of cointegration
techniques, although the sample sizes examined here are fairly typical
of most macroeconomic time series.