This empirical study adopts an open-economy loanable funds model to investigate the impact of post-Bretton Woods U.S. federal government budget deficits and personal income tax rates on the ex post real interest rate yield on thirty-year... more
This empirical study adopts an open-economy loanable funds model to investigate the impact of post-Bretton Woods U.S. federal government budget deficits and personal income tax rates on the ex post real interest rate yield on thirty-year Treasury bonds. In this study, the budget deficit is measured in two different ways, the total (“unified”) budget deficit and the primary deficit (the total/unified deficit minus net interest payments). Two different estimation techniques, autoregressive two stage least squares estimation and the ARCH (Autoregressive Conditional Heteroscedasticity) Method, for the 1973-2016 study period provide evidence that the ex post real interest rate yield on thirty-year Treasury bonds has been an increasing function of both federal budget deficit measures (expressed as a percent of GDP) and the maximum marginal federal personal income tax rate. The estimations all imply that elevating either the total/unified or primary federal budget deficit appears to raise ...
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This study empirically investigates the “relative tax gap hypothesis,” which posits that the greater the size of the relative tax gap, the greater the degree to which the U.S. Treasury must borrow from domestic and/or other credit markets... more
This study empirically investigates the “relative tax gap hypothesis,” which posits that the greater the size of the relative tax gap, the greater the degree to which the U.S. Treasury must borrow from domestic and/or other credit markets and hence the higher the ex ante real interest rate yield on the Bellwether 30 year U.S. Treasury bond. The study uses the most current data available for computing what is referred to here as the “relative tax gap,” which is the ratio of the aggregate tax gap (the loss in federal income tax revenue resulting from personal income tax evasion) to the GDP level. For each year of the study period, the nominal value of the tax gap is scaled by the nominal GDP level and expressed as a percentage. The study period runs from 1982 through 2016, reflecting data availability for all of the variables. The estimation results provide strong support for the hypothesis. In addition, in separate estimations, evidence is provided that the relative tax gap also acts...
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While the research linking interest rates to government deficits is extensive, the impact of other tax-related variables is uncommon. This study seeks to add to the literature on credit markets by exploring the impact of not only the... more
While the research linking interest rates to government deficits is extensive, the impact of other tax-related variables is uncommon. This study seeks to add to the literature on credit markets by exploring the impact of not only the budget deficit but also average effective personal income tax rates and personal income tax evasion as explanatory variables. To the best of our knowledge this study is the first study to recognize the joint importance of all of these fiscal variables. We utilize data covering the post-Bretton Woods period from 1971 through 2016 to analyze the impact of the three variables in order to shed light on the spread between the real interest rate yields on Moody’s Aaa-rated corporate bonds and high quality municipal bonds. Estimations reveal that the higher the average effective federal personal income tax rate, the greater the differential between the yields on corporate bonds and tax-free Municipals. Furthermore, it is found that the higher the adjusted gross income gap, the greater the real yield spread between Moody’s Aaa-rated corporate bonds and high quality municipal bonds. Finally, the greater the primary budget deficit, the greater the spread as well.
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PurposeThe purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.Design/methodology/approachThe analysis adopts a... more
PurposeThe purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.Design/methodology/approachThe analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments.FindingsThe results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control.Practical implicationsThese findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level.Originality/valueThis study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.
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In the present study, we empirically investigate the uncertainty of the effectiveness of recent monetary policies in lowering the real mortgage rate in the U.S. In particular, we have an eye towards determining whether the Fed’s policies... more
In the present study, we empirically investigate the uncertainty of the effectiveness of recent monetary policies in lowering the real mortgage rate in the U.S. In particular, we have an eye towards determining whether the Fed’s policies have been consistently effective or whether, instead, there is uncertainty regarding whether, when, and to what extent these policies achieve their ostensible goal of lowing the mortgage rate. Based upon empirical estimates of a loanable funds model, it is shown that the consistency of recent monetary policies, as reflected in the ratios of the M2 money supply to GDP and quantitative easing to GDP, has varied considerably between the study periods 1974–2009, 1974–2010, 1974–2011, 1974–2012, 1974–2013, 1974–2014, and 1974–2015, implying that there exists uncertainty regarding how consistent monetary policy effectiveness really is. This monetary policy uncertainty is even more apparent when the periods 1974–2008 and 1974–2016 are considered. Moreover, it is observed that elevated interest rate risk is a collateral effect of recent monetary policies. Interest rate risk seriously endangers the health of the macro-economy and throws future monetary policy effectiveness even further into question and yields further economic uncertainty.
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This empirical study seeks to identify key determinants of the recent post-Great settlement pattern of undocumented immigrants inside the U.S. Among the potential determining factors considered are the degree of labor market freedom, the... more
This empirical study seeks to identify key determinants of the recent post-Great settlement pattern of undocumented immigrants inside the U.S. Among the potential determining factors considered are the degree of labor market freedom, the quality of life, and Sanctuary cities. The focus is the year 2012, which has not by itself as yet been studied for this purpose. The estimation results provided in this study imply that the state-level settlement pattern of undocumented immigrants in the U.S. was an increasing function of labor market freedom, the number of Sanctuary cities, and the overall quality-of-life index, as well as per capita personal income, while being a decreasing function of the cost of living and colder climate. Furthermore, the impacts of labor market freedom and the other variables in the model are affirmed using a modest robustness test involving a semi-log estimate for the 2014 settlement pattern of undocumented immigrants. Gli effetti della liberta nel mercato del...
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PurposeThe purpose of this paper is to examine the impact of labor market freedom on state-level cost of living differentials in the USA using cross-sectional data for 2016 after allowing for the impacts of economic and quality of life... more
PurposeThe purpose of this paper is to examine the impact of labor market freedom on state-level cost of living differentials in the USA using cross-sectional data for 2016 after allowing for the impacts of economic and quality of life factors.Design/methodology/approachThe study uses two-stage least squares estimation controlling for factors contributing to cost of living differences across states.FindingsThe results reveal that an increase in labor market freedom reduces the overall cost of living.Research limitations/implicationsThe study can be extended using panel data and alternative measures of labor market freedom.Practical implicationsIn general, the finding that less intrusive government and greater labor freedom are associated with a reduced cost of living should not be surprising. This is because less government intrusion and greater labor freedom both inherently allow markets to be more efficient in the rationalization of and interplay with forces of supply and demand.S...
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ABSTRACT This empirical note finds that the state-level employment growth rate is an increasing function of the percent of the population (age 25 and over) with a high school diploma and warmer January temperatures. In addition, the... more
ABSTRACT This empirical note finds that the state-level employment growth rate is an increasing function of the percent of the population (age 25 and over) with a high school diploma and warmer January temperatures. In addition, the employment growth rate is a decreasing function of the overall cost of living, higher state income taxation, and a higher percentage of the labor force that is unionized. Finally, and perhaps most interestingly, the employment growth rate is an increasing function of the percentage growth rate in the number of small firms (those with under 20 employees) in each state. Thus, it appears that the latter may in fact be a job-creating engine and that entrepreneurship is an employment-creating machine.
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1. IntroductionIn this study, we focus on the Jacksonville metro-politan statistical area (MSA) to determine the sectors that are likely to drive economic growth and increase employment. The MSA includes five counties: Du-val, Clay, St.... more
1. IntroductionIn this study, we focus on the Jacksonville metro-politan statistical area (MSA) to determine the sectors that are likely to drive economic growth and increase employment. The MSA includes five counties: Du-val, Clay, St. Johns, Nassau, and Baker. The region has four distinct seasons with a winter average high of 66.5 degrees and a summer average high of 90.8 degrees1. With the largest urban park system in the U.S., the region has attracted and continues to attract migration from many areas of the country. The Jack-sonville MSA is the 40th largest in the country and the fourth largest in the state of Florida, behind the Miami, Tampa, and Orlando metropolitan areas.Growth in Northeast Florida slowed in the recent post-recession years. While in the 2000s the region was growing faster than the U.S., growth rates were equalized after the recession. Northeast Florida's em-ployment shrank more than 5% in 2009, and the net migration of population into the region declined...
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This study has two objectives, both of which seek to provide insights into factors that influenced the voter participation rate in general elections in the US in recent years. The principal objective of this study is to proffer and then... more
This study has two objectives, both of which seek to provide insights into factors that influenced the voter participation rate in general elections in the US in recent years. The principal objective of this study is to proffer and then empirically investigate the following hypothesis: the voter participation rate of registered voters is reduced by greater state size (in squares miles) because, other things held the same, greater state size increases the transactions costs of voting for many of those persons who prefer to cast a ballot in person rather than by mail. A focus on this variable is unique in the literature. The secondary general objective of this study is to identify other factors that influenced the voter participation rate in recent years. The study adopts a state-level panel dataset and reports both Cross-section Random-effects estimations and dynamic panel estimations (Panel GMM estimates) for the first four US Presidential elections years of the 21st century, i.e., 2000, 2004, 2008, and 2012. After allowing for a variety of variables in the model, it is found that a 10,000 square mile greater size for a state in turn implies 0.148%-0.156% lower voter turnout, whereas a 100,000 square mile greater state size implies a 1.48%-1.56% lower voter turnout. Furthermore, the study finds that the voter participation rate of registered voters was an increasing function of six other factors: the unemployment rate, the percent of the population that earned a high school diploma or more, election competitiveness, median family income, and the percentage of the population that was either Afro-American/black or Hispanic/Latin.
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The objective of this study is to explore the relationship between research and development outlays (R&D) and firm ownership structure for the public corporations listed on the Italian stock exchange. There is literature on the impact of... more
The objective of this study is to explore the relationship between research and development outlays (R&D) and firm ownership structure for the public corporations listed on the Italian stock exchange. There is literature on the impact of corporate governance on firms' innovation, and specifically on the relation between ownership structures and innovation. However, related empirical research is still in its infancy, with most contributions focused on the USA. Using a sample of 369 firm-year observations over the period 2005-2013, we investigate the relationship between R&D outlays and ownership structure estimating both a the fixed-effects panel model and a dynamic panel data system-GMM model. We consider various indicators of corporate governance, such as ownership concentration, board ownership, and institutional investors. Our findings reveal a negative relationship between R&D outlays and ownership concentration. Furthermore, we find a positive relationship between R&D inves...
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Using four decades of data, this exploratory empirical study adopts a loanable funds model to investigate the impact of the federal budget deficit in the U.S. on the ex ante real interest rate yield on ten-year Treasury notes. For the 40-... more
Using four decades of data, this exploratory empirical study adopts a loanable funds model to investigate the impact of the federal budget deficit in the U.S. on the ex ante real interest rate yield on ten-year Treasury notes. For the 40- year period 1973-2012, empirical estimation using quarterly data reveals that the ex ante real interest rate yield on ten-year U.S. Treasury notes was an increasing function of the ex ante real interest rate yield on Moody's Aaa-rated corporate bonds, the ex ante real interest rate yield on three-month Treasury bills, and the increase in per capita real GDP, while being a decreasing function of net capital inflows (as a percent of GDP) and the monetary base (as a percent of GDP). In addition, it is found that the federal budget deficit (as a percent of GDP) exercised a positive and statistically significant impact on the ex ante real interest rate yield on ten-year Treasury notes, a finding consistent in principle with a number of prior studies...
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Effectively no scholarly research has been published in peer-reviewed journals on the potential migration impacts of environments that are more conducive to entrepreneurship. Similarly, the potential migration impact of personal freedom... more
Effectively no scholarly research has been published in peer-reviewed journals on the potential migration impacts of environments that are more conducive to entrepreneurship. Similarly, the potential migration impact of personal freedom also is essentially ignored in the literature. This study seeks to add to the literature by investigating the impacts of both entrepreneurial activity and personal freedom on state in-migration patterns. Using a panel dataset for the post-Great Recession period 2010-2017, the empirical analysis reveals that all three of the Kauffman indices of entrepreneurial activity are found to exercise a positive and statistically significant impact on both net in-migration and gross in-migration. In addition, the index of overall personal freedom is found to exercise a positive and statistically significant impact on both of these in-migration measures. Thus, it appears that there may be good reason for future migration studies to take such variables into accoun...
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This study investigates the impact of various factors on the ex-ante real interest rate yield on high grade municipal bonds. The AR/2SLS estimation implies that this ex ante real interest rate is an increasing function of the ex-ante real... more
This study investigates the impact of various factors on the ex-ante real interest rate yield on high grade municipal bonds. The AR/2SLS estimation implies that this ex ante real interest rate is an increasing function of the ex-ante real interest rate yield on thirty-year Treasury bonds while being a decreasing function of net capital flows. The yield in question also is found to have been negatively impacted by the Depository Institutions Deregulation and Monetary Control Act. Furthermore, the estimation finds that this interest rate measure is a decreasing function of the maximum marginal federal personal income tax rate. In addition, it is found that, in the presence of an interaction term, the ex-ante real interest rate yield on high-grade municipals is an increasing function not only of the budget deficit but also the aggregate tax gap. The policy implications of these results include the need to limit the extent of budget deficits and to also limit the extent of income tax ev...
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Focusing on the 311 Chinese firms listed in the global markets from 2008 to 2019, based on the trade-off theory and the resource slack theory, using panel vector autoregressive model and panel threshold model, this paper explores the... more
Focusing on the 311 Chinese firms listed in the global markets from 2008 to 2019, based on the trade-off theory and the resource slack theory, using panel vector autoregressive model and panel threshold model, this paper explores the impact of fulfilling ESG responsibility on firm performance. The study reveals that in the short run, fulfilling ESG responsibility presents a “Substitution Effect,” whereas, in the long run, it presents a “Promotional Effect.” On the other hand, the improvement of firm performance has a significantly positive impact on ESG fulfillment investment, even though there is a strong hysteresis effect. Significant heterogeneity exists regarding the relationship between ESG fulfillment and firm performance. ESG fulfillment has a negative impact on firm performance in the short run, with the most affected firms being those small and mid-sized firms listed in the Mainland China markets. In the near term, the impact of firm performance on ESG fulfillment is positi...
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Due to problems of model specification and identification, the results of Cebula’s test and his conclusions are questionable. Therefore, the purpose of this paper is to correct the specification and identification errors found in Cebula’s... more
Due to problems of model specification and identification, the results of Cebula’s test and his conclusions are questionable. Therefore, the purpose of this paper is to correct the specification and identification errors found in Cebula’s paper and to provide an alternative test of the simultaneity hypothesis.
Research Interests: Human Geography, Demography, Economics, Econometrics, Politics, and 15 moreCulture, Population Dynamics, Research, Regional Studies, Medicine, Social Welfare, Population, Americas, Simultaneity, United States, Specification, Ethnic Groups, North America, Developed Countries, and Population Characteristics
The objective of this note is to examine empirically the impact on geographic mobility of explicitly including geographic living costs in the migration decision calculus. This study is directed toward an analysis of migration patterns in... more
The objective of this note is to examine empirically the impact on geographic mobility of explicitly including geographic living costs in the migration decision calculus. This study is directed toward an analysis of migration patterns in the United States. Specifically, the study examines net migration over the 1960-1970 period to some 36 Standard Metropolitan Statistical Areas (SMSA’s) in the United States for which adequate living-cost data are available.
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798 married women living in Mexico City were surveyed to study the determinants of family size and female labor force participation (FLFP). Economic attitudinal and demographic variables effect on family size and FLFP are analyzed.... more
798 married women living in Mexico City were surveyed to study the determinants of family size and female labor force participation (FLFP). Economic attitudinal and demographic variables effect on family size and FLFP are analyzed. Measures of cultural variables and of the degree to which market work and child care can be performed simultaneously are developed and these factors effect on family size and FLFP are discussed. The effect of unplanned fertility on FLFP is also explored. Assumptions of the model are outlined and criticisms of its static nature are discussed. The difference between jobs in which market work and child care can be performed simultaneously (traditional sector jobs) and those in which they cannot (modern sector jobs) is emphasized. Important economic factors determining FLFP include wifes potential wage and its relative contribution to the family income and the opportunity cost of children. Additional factors which influence family size are length of wifes exposure to risk of pregnancy and attitudes about the quality of life desired for each child. The increase in modern sector jobs and the decrease in traditional sector jobs is found to be more important in decreasing fertility than the total number of jobs available to women.
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Voter participation rates vary widely across the 50 states of the U.S.A. This study seeks to provide insights into the determinants of this variation. Using the 2004 and 2008 general elections as the initial focus, it is found that the... more
Voter participation rates vary widely across the 50 states of the U.S.A. This study seeks to provide insights into the determinants of this variation. Using the 2004 and 2008 general elections as the initial focus, it is found that the voter participation rate in a state is positively related to the percentage of the state’s adult population with at least a high school education, the state’s unemployment rate, the percentage of the state’s population age 65 and older, and the female labor force participation rate in the state, while being negatively related to the state’s median family income. The voter participation rate is also found to be a decreasing function of the percentage of its population that is Hispanic. However, although the voter participation rate is lower in states with a higher percentage of Afro American population for the 2004 general election, for the 2008 general election it is found that states with a higher percentage of Afro-Americans had a higher voter parti...
Using a panel dataset for 369 firm-year observations during the period 2005-2013 in the Italian context, we investigate the impact of certain characteristics of corporate boards on the magnitude of corporate Research and Development... more
Using a panel dataset for 369 firm-year observations during the period 2005-2013 in the Italian context, we investigate the impact of certain characteristics of corporate boards on the magnitude of corporate Research and Development (R&D). Our findings reveal a negative relationship between R&D and board size on the one hand and between R&D and board ownership on the other hand. Moreover, we find strong evidence of a positive and statistically significant relationship between R&D and independent corporate board directors. In addition, we also find a relationship between R&D and board diversity effect, as measured by women and foreign members on the boardroom. Our study uses multiple econometric models to address endogeneity issues.
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We investigate the impact of federal government budget deficits and federal personal income tax rates on the ex post real interest rate yield on ten-year US Treasury notes. Using autoregressive two-stage least squares estimations for the... more
We investigate the impact of federal government budget deficits and federal personal income tax rates on the ex post real interest rate yield on ten-year US Treasury notes. Using autoregressive two-stage least squares estimations for the post-Bretton Woods era, we find that the yield on these Treasury issues has been an increasing function of the federal budget deficit as a percent of GDP, both in the form of the total/unified deficit and the primary deficit, and also an increasing function of the average effective federal personal income tax rate. The estimation reveals that growth in the M2 money supply (relative to GDP) acts to reduce the real interest rate yield on ten-year Treasuries. Consequently, while a growing money supply can help to keep real interest rates on Treasury notes (and hence federal debt service costs) down, policymakers should be sensitive to the fact that both budget deficit increases and tax rate increases can elevate the real interest rate. JEL codes : E43,...
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This empirical study seeks to identify key aggregate-level economic and non-economic determinants of the expected benefits from voting and hence aggregate voter turnout. A unique dimension of this study is the hypothesis that PAC... more
This empirical study seeks to identify key aggregate-level economic and non-economic determinants of the expected benefits from voting and hence aggregate voter turnout. A unique dimension of this study is the hypothesis that PAC (political action committee) election campaign contributions, e.g., to U.S. Senate races, may reduce the expected benefits of voting and hence voter turnout because the greater the growth of real PAC contributions, the greater the extent to which eligible voters may become concerned that these contributions lead to PAC political influence over elected officials. Indeed, this study finds for the period 1960-2000 that the voter participation rate has been negatively impacted by the growth in real PAC contributions to Senate election campaigns. Another interesting finding is that voter turnout is directly/positively related to strong public approval or strong public disapproval of the incumbent President. This study also finds that the voter participation rate...
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This study empirically investigates three hypotheses. The first is that higher levels of economic freedom in an economy promote a higher growth rate of economic activity and hence yield a higher growth rate of per capita real GDP in that... more
This study empirically investigates three hypotheses. The first is that higher levels of economic freedom in an economy promote a higher growth rate of economic activity and hence yield a higher growth rate of per capita real GDP in that economy. The second hypothesis is that higher quality government regulation leads to a more efficient economic system, in large part by interfering less with market functioning and in part by not adding unnecessarily to the cost of conducting business in the marketplace, and thereby leads to a higher per capita real GDP growth rate. The third hypothesis is that the higher the taxation level/burden relative to GDP in an economy, the lower the growth rate of private sector spending and hence the lower the growth rate of per capita real GDP in that economy. Using a panel dataset for OECD nations over the 2003 through 2006 period, fixed effects PLS estimations find compelling evidence in support of all three of these hypotheses.
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Unaccounted for currency in die U.S. has been argued to reflect die presence of widespread income tax evasion. In turn, income tax evasion is especially problematic in this era of large government budget deficits and growing national... more
Unaccounted for currency in die U.S. has been argued to reflect die presence of widespread income tax evasion. In turn, income tax evasion is especially problematic in this era of large government budget deficits and growing national debts which have led to debt crises. This empirical study seeks to identify determinants of recent federal personal income tax evasion in the U.S. using the most recent tax evasion data available, data that run through 2008 and are derived from the General Currency Ratio Model and measured in the form of the ratio of unreported AGI (adjusted gross income) to reported AGI. The empirical estimates find that personal income tax evasion is an increasing function of the maximum marginal federal personal income tax rate, the interest rate yield on three year Treasury notes, per capita real income, and a dummy variable for the years in which the second war in Iraq was conducted, while being a decreasing function of the Tax Reform Act of 1986, the ratio of the ...
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The adverse health effects from cigarette smoking account for an estimated 400,000 deaths annually in the U.S. Given this circumstance, the present study has two objectives. First, using a panel data set for a very recent time frame, it... more
The adverse health effects from cigarette smoking account for an estimated 400,000 deaths annually in the U.S. Given this circumstance, the present study has two objectives. First, using a panel data set for a very recent time frame, it seeks to investigate the impact of federal plus state cigarette excise taxes (along with the influence of other factors) on the aggregate consumption of cigarettes. The study adopts a five-year state-level panel data series spanning the period 2002 through 2006. Consistent with certain previous studies, the estimates in this study find that the higher the cigarette excise tax, the lower the aggregate volume of cigarettes consumed. However, this outcome does not address the practical problem of the substitution of high nicotine cigarettes for low nicotine cigarettes in light of a significant cigarette tax hike. This circumstance leads to the second objective of this study, namely, to formally propose a general form/template for a cigarette excise tax ...