Refunds are modelled as a market response to asymmetric information. A firm's choice of product reliability is private information, and not verifiable. Firms compete by offering price-refund contracts; consumers draw inferences about quality from the observed contracts. In equilibrium, quality...

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A business tax is neutral if it does not effect the firms' decisions at the margin. We analyze the effect of a business tax on the firms' investment decision. The "implicit rent deduction" and "immediate write-off" methods are found to be special cases of our general tax design. The implication...

The paper reviews the substance and proposals of the Canadian Royal Commission on Corporate Concentration. Since there are indications that the federal government is about to make a fifth set of proposals since the revision process of the Combines Investigation Act began in 1968, an extensive...

Various popular exchange rate models (a standard monetary model, a portfolio balance model, and sticky-price models) are estimated and evaluated using U.S.-Canadian data for the 1970s. Nonnested hypothesis tests demonstrate that none are correctly specified. The data suggest: 1) the exchange...

One of the alleged costs of inflation is said to be the loss of competitiveness in international markets if the rate of change of proces is higher in the domestic country than in the rest of the world. While inflation is measured by changes in the consumer price index, wholesale price index, or...

This paper looks at the incentives to free-ride on the information signaling of others and shows how this can lead to delay in productive activity and to a cascade of activity once information is signaled. In the presence of increasing returns to scale to a profitable project, an initial pioneer...

We study the optimal redistributive tax structure when the population can be disaggregated into tagged groups. We begin with the case in which the tag has no normative significance, but simply separates the population into identifiable groups with different distributions of ability-types. Under...

This paper analyzes the relationship between the current account deficit in Canada and the public sector deficit. The hypothesis that the public sector deficit is a major determinant of the current account deficit in the U.K. has become known as the New Cambridge approach to the balance of...