Canadian Journal of Economics-Revue Canadienne D Economique最新文献

Canada initiated the formation of the (modern) imperial trade bloc in 1897 when it extended preferential market access to imports from Britain. British goods initially received a preferential reduction of one eighth of the applicable duty, rising to one quarter in 1898 and one third in 1900. Because duties varied across imported commodities, the uniform relative margins of preference resulted in cross-commodity variation in the absolute margins of preference. This cross-commodity variation is exploited in our paper. Relying on a data set that includes over 32,000 Canadian import products, we find that a 1 percentage-point increase in the absolute margin of preference was associated with a 5.4% increase in the value of imports from Britain. Counterfactually, if Canada had not adopted a preferential trade policy, by 1903, the value of British imports into Canada would have been reduced by approximately one half.

This paper examines the relative importance of global, regional, country and idiosyncratic factors as well as the determinants that underpin fluctuations in international trade flows across different regions of the world. Our analysis starts by using a Bayesian dynamic latent factor model (BDFM) to simultaneously estimate the four dynamic factors, followed by the application of Bayesian model averaging to identify the variables that explain the shares of variance. Our key findings are: (i) international factors are the most important in explaining fluctuations in international trade, suggesting that the interconnections between economies and policies/shocks at the regional and global level tend to be more important than country-level factors and (ii) regional integration, particularly when the agreement goes beyond trade in goods, is positively related to the share of the regional factor and inversely related to the importance of the global factor. Furthermore, the regional factor is more important in the case of economically large trade blocks. Overall, our analysis illustrates the usefulness of applying a BDFM model to study the co-movements of international trade series.

The paper considers a two-country model with international capital mobility and production-generated cross-border pollution. It examines the effectiveness of alternative policy combinations consisting of capital taxes and nationally or internationally tradable emissions permits in reducing global pollution. The internationally mobile capital is taxed according to three different rules, namely, capital tax exemptions, capital tax credits and capital tax deductions. Our key result is that, under certain conditions, the lowest Nash equilibrium level of global pollution is achieved with a policy mix combining either capital tax exemptions or capital tax credits with internationally, rather than nationally, tradable emission permits.

We analyze vertical integration incentives in a bilaterally duopolistic industry with bargaining in the input market. Vertical integration incentives are a combination of horizontal integration incentives upstream and downstream and depend on the strength of substitutability and complementarity and the shape of the unit cost function. Under particular circumstances, vertical integration can convey more bargaining power to the merged entity than a horizontal merger to monopoly. In a bidding game for an exogenously determined target firm, a vertical merger can dominate a horizontal one, while pre-emption does not occur.

In this paper, I examine the relationship between a basic income as a policy tool and the functioning of the labour market. I focus on three key areas where a basic income has been hypothesized to relate to labour markets: (i) through altering work decisions, (ii) as a response to predicted changes in work arising from technological change and (iii) as backstop that would allow workers to demand better working conditions and higher wages. I provide answers on the role or impact of a basic income in each area in the context of the current Canadian labour market. But a key focus in the paper is on the ways we could alter our labour market models to provide a better basis for debating the impacts of policies like a basic income in the context of a goal of moving toward a more just society.

We document the rise the intergenerational transmission of income using newly updated administrative Canadian tax data for children born between the early 1960s and the mid-1980s. We show that children whose parents were in the bottom income quintile have become less likely to exit the bottom quintile once in adulthood and less likely to transition into the middle class. Declining mobility is observed both at the national and provincial level. While federal and provincial policy-makers should worry about the rise in the strength of the poverty trap, the impact of recent policy developments on children that have yet to become adults remains to be documented.

In this lecture, I review work addressing three questions. First, are predictions about macro stabilization policies robust to reasonable departures from rational expectations? Second, do people's expectations converge to a particular set of rational expectations? Third, if they do converge, how quickly? I discuss examples from the literature where the answer to the first question is no. The answer to the second question is that learning equilibria converge to the “standard” rational equilibria analyzed in new Keynesian models. Finally, I discuss circumstances under which the answer to the third question is very slowly. In the examples, learning is slowest and policy analysis based on rational expectations is least robust in the face of shocks that render the stakes of getting policy “right” the highest.

Whether judges and prosecutors should be given full discretionary power in sentencing or mandatory minimum sentences be imposed remains a fiercely debated topic. In this paper, we examine the impact of Canada's 2005 introduction of minimum sentences on sexual offences against children and child pornography on the distribution of sentence lengths using administrative data containing the universe of these offences that occurred between 2003 and 2007. We find that the average sentence length for affected crimes at times increased by substantially more than the newly imposed minimum, and effects of the policy appear even in the middle and upper portions of the sentencing distribution. These increases occur immediately following the policy change, signalling that judges and prosecutors quickly change their sentencing behaviour after the implementation of mandatory minimum sentences. These lengthier sentences have significant implications for the estimation of the fiscal costs of minimum sentencing policies.

We suggest an explanation for the existence of “mission drift,” the tendency for Microfinance Institutions (MFIs) to lend money to wealthier borrowers rather than to the very poor. We focus on the relationship between MFIs and external funding institutions. We assume that both the MFIs and the funding institutions are pro-poor. However, asymmetric information on the effort chosen by the MFI to identify higher-quality projects may increase the share of loans attributed to wealthier borrowers. This occurs because funding institutions have to build incentives for MFIs, creating a trade-off between the quality of the funded projects and the attribution of loans to poorer borrowers.

We experimentally study the interaction between a persuader and a decision-maker. The former would like to persuade the latter to approve a project by providing evidence on the project's value. He may choose a selective disclosure strategy on the basis of his private information. Our experimental design contrasts situations where the persuader observes private information or not and where the decision-maker interacts with a human or robot persuader. The experimental results confirm the theoretical prediction that the human persuader manipulates the production of evidence. Although the decision-maker does not adequately take into account such manipulation, the comparative static analysis across treatments is mostly consistent with theoretical predictions with a rational decision-maker. Our findings on the welfare effect of the persuader's manipulation on the decision-maker are consistent with theory. In particular, the decision-maker may benefit from such manipulation. However, the welfare effect on the persuader is not always consistent with theory, in that there are instances in which the persuader is not hurt by manipulation even though theory predicts that he is.