The size and structure of China's government debt

This paper analyzes the size and structure of China's government debt. In addition to explicit government debt, we consider three types of government contingent liabilities: local government debt, university debt, and state banks’ nonperforming loans. The size of each types of debt is estimated and the reasons for the emergence of each type of debt are analyzed. International comparisons are made and it is found that China's government debt is larger than many other developing countries. To insure fiscal sustainability and to leave rooms for future expansionary fiscal policies, the government should reduce contingent liabilities.     

Pair‐copula constructions for non‐Gaussian DAG models

We propose a new type of multivariate statistical model that permits non‐Gaussian distributions as well as the inclusion of conditional independence assumptions specified by a directed acyclic graph. These models feature a specific factorisation of the likelihood that is based on pair‐copula constructions and hence involves only univariate distributions and bivariate copulas, of which some may be conditional. We demonstrate maximum‐likelihood estimation of the parameters of such models and compare them to various competing models from the literature. A simulation study investigates the effects of model misspecification and highlights the need for non‐Gaussian conditional independence models. The proposed methods are finally applied to modeling financial return data. The Canadian Journal of Statistics 40: 86–109; 2012 © 2012 Statistical Society of Canada     

Approximate jackknife empirical likelihood method for estimating equations

It is known that the profile empirical likelihood method based on estimating equations is computationally intensive when the number of nuisance parameters is large. Recently, Li, Peng, & Qi (2011) proposed a jackknife empirical likelihood method for constructing confidence regions for the parameters of interest by estimating the nuisance parameters separately. However, when the estimators for the nuisance parameters have no explicit formula, the computation of the jackknife empirical likelihood method is still intensive. In this paper, an approximate jackknife empirical likelihood method is proposed to reduce the computation in the jackknife empirical likelihood method when the nuisance parameters cannot be estimated explicitly. A simulation study confirms the advantage of the new method. The Canadian Journal of Statistics 40: 110–123; 2012 © 2012 Statistical Society of Canada     

Food subsidy,income transfer and the poor: A comparative analysis of the public distribution system in India's states

The Targeted Public Distribution System (TPDS) – the largest food subsidy program in India – has been a dismal failure in targeting the poor. The present paper examines its performance in three Indian states – Andhra Pradesh, Maharashtra and Rajasthan, based on primary data collected for this study. As real income transfers through food price subsidies are a tiny fraction of expenditure per person under this scheme, a contribution of the present study is to model determinants of real income transfers through subsidised wheat, rice and sugar. The analysis throws new light on how income transfers vary with economic status of a household, inequality in the distribution of land in a village, amount of food price subsidy, transaction costs of buying from ‘fair price shops’ (FPS), and supply shortages. The policy implications of these results are profound. Desperate measures such as a universal food subsidy enshrined in a proposed National Food Security Act are rejected on the grounds that the enormous leakages and wastage under the present TPDS would only get worse. Assertions that a universal food subsidy is the only option consistent with the right to food are rejected as mistaken. Instead, it is worthwhile to overhaul the PDS within the existing outlay.     

Social security reforms and early retirement

Many reform proposals of the social security systems in various OECD economies suggest to scale down the non-actuarial parts of the pension systems. These reforms have a flavor of increased efficiency at the costs of welfare losses for low-income individuals. Assessing the economic effects, we investigate five different reform proposals by means of a numerical overlapping generations model for the Norwegian economy. The model features an endogenous retirement age and heterogeneous individuals within generations. It turns out that the various reforms, which scale down the public non-actuarial pension system, lead to increases in the retirement age and steady-state welfare gains for all income classes. Received: 7 December 2000/Accepted: 29 January 2002 All correspondence to ?ystein Th?gersen. Financial support from the Research Council of Norway (The Economic Research Program on Taxation) is gratefully acknowledged. We are indebted to Lans Bovenberg, John Ermisch, Erling Steigum and two referees for valuable comments and useful discussion. Responsible editor: John F. Ermisch.     

Intergenerational reliance on social assistance: Evidence from Canada

This paper provides the first analysis of the intergenerational transmission of participation in a Canadian social assistance program. Two sources of intergenerational transmission are taken into account: one that is due to a possible causal link between parents' and children's participation, and one that is due to a correlation between individual and environment specific characteristics across generations. The basic data come from the Québec government's administrative records and cover 17,203 young people who were 18 years old in 1990 and whose parents were recipients of social assistance during at least one month between 1979 and 1990. The results reveal that, on average, a one-percentage unit increase in parental participation during the youth's pre-adult years (age 7–17) raises the youth's participation rate by 0.29 percentage unit during early adulthood (age 18–21). This impact is stronger during the early stages of childhood (age 7–9) and during late adolescence (age 16–17).     

Optimal age of retirement and population growth

The purpose of this paper is to study intergenerational optimal resources sharing when the social planer can choose the retirement age in addition to consumptions and investment. We use the extension of the Diamond analysis by Hu [1979] that incorporates endogenous retirement age. We found that the optimal retirement age is an increasing function of the population growth rate if the elasticity of substitution of old agents' labor for young agents' labor is lower than one. In the millian case, when the size of a population does not matter, and when the elasticity of substitution of old agents' labor for young agents' labor is strictly higher than one, the optimal retirement age is a decreasing function of the population growth rate. In the benthamite case, the change in the optimal retirement age is indeterminate. Received: 19 February 1999/Accepted: 27 February 2001 All correspondence to Bertrand Crettez. We would like to thank Jean-Pierre Vidal for very helpful comments on an earlier draft. An anonymous referee provided insightful comments on a previous version of this paper. Responsible editor: Alessandro Cigno.     

DO TRANSFER TAXES REDUCE INTERGENERATIONAL TRANSFERS?

We estimate the effect of taxes on intergenerational transfers by exploiting a sequence of Italian reforms culminating with the abolishment of transfer taxes. We use the Surveys of Household Income and Wealth from 1993 to 2006, which have data on real estate transfers, and information on potential donors and recipients. Difference‐in‐differences estimates indicate that the abolition of transfer taxes increases the probability of high‐wealth donors making a transfer by two percentage points and increases the area transferred by 9.3 square meters relative to poorer donors.     

Price perception and confirmation bias in the context of a VAT increase

This paper examines a potential confirmation bias in price perception in consequence to a real-world event and different explanations for such a confirmation bias. In a panel design conducted 2 months before and after a raise in value-added tax (VAT), 303 participants had to estimate the current prices for four products affected and four products not affected by this raise in VAT and the anticipated or recalled prices of these products. Before the VAT increase, an undifferentiated belief in strong future price increases was prevalent. After the VAT increase, a confirmation bias was found: in retrospect, participants reported price increases that were significantly higher than the official price development and in line with an undifferentiated belief in marked price increases. Two theoretical explanations for confirmation bias, i.e., the biased use of price information and the selective distortion of memory, fit the data.