Empirical application of optimal commodity tax theory to taxation of alcoholic beverages

Article Abstract:

The optimal control of externalities through taxation is applied to alcoholic beverages, particularly in Finland. The computation of the optimal tax uses the first-best solution whereby marginal cost pricing affects production costs in relation to the harmful effects of commodities assessed at marginal external cost. Results indicate that optimal taxes are computed after weighing the costs and benefits of control and revenue generation in the absence of control. Taxes demonstrate more stability and less elasticity to price changes than individual consumption demand.

Research, Taxation, Externalities (Economics), Alcohol, Ethanol

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Information spillovers, margins, scale and scope: with an application to Canadian life insurance

Article Abstract:

A model describing the production of life insurance services is developed. The model focuses on price setting ability and cost advantages from size and diversity. Insurer decision on face value and number of policies and insurance line numbers are likewise analyzed in applying the model to Canadian life insurance firms. Results show that unit revenue-cost margins post a mean range from 13% to 40% in various insurance lines. Returns to scale indicate mean from 1.13 to 1.4 while returns to scope range from 70 to 100 percent.

Life insurance, Canada, Economic aspects, Insurance industry, Life insurance industry, Insurance

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Empirical analysis of short-term Eurocurrency rates: evidence from a transfer function error correction model

Article Abstract:

The short-term behavior of six Eurocurrency rates with short-end maturities is studied empirically. Unit root tests indicate nonstationary interest rate levels and the cointegration of short rate and the long rate. Regression of the error correction model indicates all error correction terms to be highly significant. Findings of the study show the cointegration of the short rate and the long rate in the long-term as well as a close relationship in the short-run.

Usage, Prices and rates, International aspects, Interest rates, Eurocurrency market, Transfer functions

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