Alternative theories of government behaviour yield conflicting prescriptions for public finance ranging from Samuelson's (1954) rule for the provision of public goods to Brennan and Buchanan's (1977) "Tax Constitution for Leviathan." This paper presents a general model which subsumes these rules...

This paper develops an extremely general procedure for performing a wide variety of model specification tests by running artificial linear regressions. Inference may then be based either on a Lagrange Multiplier statistic from the procedure, or on conventional asymptotic t or F tests based on...

This paper assesses the importance of exact aggregation restrictions in the context of Jorgenson, Lau and Stoker's (1982) model of aggregate consumer behaviour, and analyzes demographic variables. We find the exact aggregation restrictions are strongly rejected by the data, and stratification of...

A small open economy is characterized by a two-sector model with tradables and non-tradables. Stabilization policies typically have unequal effects on these two sectors and expansion of total output often requires contraction in one sector. Such situations make difficult obtaining effective...

This paper compares ad valorem and specific taxation in two models of oligopoly, with and without free entry. Predominantly ad valorem taxation implies a relative low consumer price, high tax revenue and (when entry is precluded) low profits. Ad valorem taxation dominates specific from the...

The reason why the assumption of a representative agent is so popular in the equilibrium business cycle literature is mainly that equilibrium allocations are derived by solving a concave programming problem, whereas once heterogeneity is introduced it is necessary to solve for weights on...

Correctly or not, Ronald Coase is often credited with the doctrine that courts ought to adjudicate for efficiency, that "the value of production" should serve as the criterion for resolving disputes over the boundaries between property rights. The doctrine that courts ought to adjudicate for...

Using the properties of integrated and cointegrated economic time series, this paper derives an error correction model (ECM) of money demand from a dynamic optimization problem. A general form of the ECM is estimated for Canadian M2 and M2+ over the period 1968:I to 1989:IV. The ECM appears to...