This article studies the properties of optimal fiscal policy in a stochastic growth model when the government cannot commit itself beyond the next period's capital income tax rate. We find that the results contrast markedly with those under full commitment. First, capital income tax rates are...

Existing empirical research and results presented in this paper indicate that large auditors are more accurate than small auditors. Two explanations for this are examined. DeAngelo (1981) has argued that large auditors have a greater incentive to maintain a reputation for accurate auditing. More...

By using a block-exogenous vector autoregressive model and the data of a small open economy under a currency board, this paper gains several advantages in examining the empirical relevance of open economy macroeconomic theories regarding international monetary policy transmission. The results...

Many of Boettke's criticisms of formalist economics are justified. However, he defines it so broadly that it becomes practically synonymous with mainstream economics. Yet he blames it for the specific sins of formalist economics more narrowly defined. And since he treats Austrian economics as...

Motivated by a $2.2 billion inventory write-off by Cisco Systems, we investigate how duplicate orders can lead a manufacturer to err in estimating the demand rate and customers' sensitivity to delay, and to make faulty decisions about capacity investment. We consider a manufacturer that sells...

This paper empirically investigates one aspect of the vertically differentiated models of intraindustry trade. These models predict that the pattern of trade within an industry is based on comparative advantage rather than being completely random. An empirical model is specified in which the...

The temporal aggregation effect on seasonal unit roots and its implications for seasonal unit root testing are discussed. The aggregation effect allows to test with any HEGY-type method for integration at the harmonic frequencies through the Nyquist frequency of properly temporally aggregated series

A switch from a Bismarckian (BIS) earnings-related to a Beveridgean (BRV) flat rate pay-as-you-go (PAYG) pension scheme will raise the variance of personal replacement ratios and, hence, the variance of individual interest-saving elasticities. A monopolistic financial sector can then make...

This paper evaluates the impact of misinformation for inventory systems with product returns. Ifone could exactly know how much is going to be returned and when, one would certainly benefitfrom incorporating this perfect information a priori in the management of production, inventory,and...

The paper investigates the incentives to commit price or retain price flexibility in a model in which exporting firms face different degrees of exchange rate uncertainty. The result shows that introducing exchange rate uncertainty can lead to the endogenous emergence of a unique leader-follower...