Article history: Received 23 February 2012 Received in revised form 18 October 2012 Accepted 18 October 2012 Available online 24 November 2012 This study estimates a dynamic latent factor model of the yield curve for Canada using a newly constructed data series on the term structure of constant-maturity, zero-coupon interest rates. The state-space representation of the model is used to assess t...

The purpose of this paper is to investigate the intertemporal linkages between FDI and disaggregated measures of international trade. We outline a model exemplifying some of these linkages, describe several methods for investigating two-way feedbacks between various categories of trade, and apply them to the recent experience of developing countries. After controlling for other macroeconomic an...

Many authors have documented that it is challenging to explain exchange rate fluctuations with macroeconomic fundamentals: a random walk forecasts future exchange rates better than existing macroeconomic models. This paper applies newly developed tests for nested model that are robust to the presence of parameter instability. The empirical evidence shows that for some countries we can reject th...

Firm births and deaths are interrelated. Johnson and Parker (1994) have summarized the various causality relationships according to three different effects: (1) the Multiplier, (2) the Competition and (3) the Marshall effect. This article proposes an enlarged analytical framework by introducing the sectoral and cross-sectoral dimensions of firm demography. The expected interrelationships betwee...

Adolescent Drug Use and the Deterrent Effect of School-Imposed Penalties Simple OLS estimates of the effect of school-imposed penalties for drug use on a student’s consumption of marijuana are biased if both are determined by unobservable school or individual attributes. The potential reverse causality is also a challenge to retrieving estimates of the causal relationship, as the severity of sc...

This paper examines the causal relationship between growth and poverty reduction in developing countries between 1970 and 1998. For this purpose, we apply a modified form of traditional Granger causality tests to suit the short times series that are available, and use panel data model evaluation techniques to test the out-of-sample forecasting performance of competing models. We conclude that t...

In this paper, we argue that study of the effect of financial development and shocks on aggregate growth volatility will not be informative because they affect growth volatility through its different components. Financial development affects only the business cycle component of volatility and therefore, the effect on total volatility is dependent on its share in total volatility. On the contrar...

Policy Evaluation and Economic Policy Advice Arguably, one of the most important developments in the field of applied economics during the last decades has been the emergence of systematic policy evaluation, with its distinct focus on the establishment of causality. By contrast to the natural sciences, the objects of our scientific interest typically exert some influence on their treatment stat...

We examine exogenous changes in state corporate income taxes over the 1988-2006 period and find that tax decreases significantly boost both the quantity, measured by the number of patents, and the quality, measured by citations per patent, of innovative output, while tax increases have little impact on innovation. Most of the impact of tax changes on innovation occurs two or more years after th...

In this paper we investigate the long run relationship between financial depth and economic growth, trying to utilize the data in the most efficient manner via panel unit root tests and panel cointegration analysis. In addition, we use threshold cointegration tests, and dynamic panel data estimation for a panel-based vector error correction model. The long run relationship is estimated using fu...