Working Papers

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https://unbscholar.lib.unb.ca/handle/1882/12775

Working or discussion papers circulated publicly or among a group of peers. Certain disciplines, for example, economics, issue working papers in series. (URI: http://purl.org/coar/resource_type/c_8042)

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A Measure of Interregional Redistribution
Ruggeri, G. C.; Yu, Weiqiu
This paper develops a disaggregated index of interregional distribution generated by federal fiscal activity based on a comparison between relative federal revenues and expenditures assigned to various regions and the pattern of income disparities among regions. To explore the properties of this index, we present three special cases under known degrees of distribution and calculate the indices using the Canadian data for 1996. The local indices are then aggregated to derive a global index qf interregional redistribution. Our results show that the federal fiscal system in 1996 delivered a degree of interregional redistribution 1.8 times what would have been generated under equal per capital expenditures by region and nearly half of the redistribution that equalizes the per capita income via federal expenditures.
A National Formulary for Canada
Hollis, Aidan; Law, Stephen, M.
This article analyzes the benefits and costs of replacing Canada's ten different provincial formularies with one single national formulary. The 2002 Romanow Commission on the Future of Health Care in Canada recommended that Canada should have a National Drug Agency which would maintain a national formulary, replacing the existing provincial formularies which balkanize drug markets across Canada. This recommendation has been in part incorporated into the "Common Drug Review" in which the provinces (excluding Québec) have agreed to undertake a single evaluation of all new drugs; provinces, however, retain their own formularies and decide which products to list. This balkanized approach to listing and insurance coverage of drugs substantially weakens the bargaining position of the provinces and leads to higher costs.
A Note on the Probability of Recessions: Can Statistics Cananada's Leading Index Predict as Well as MARS
Sephton, Peter, S.
In this note we estimate the probability of recession using the revised leading index published by Statistics Canada. The results are compared to probabilities derived from a new non-parametric regression routine. While the indexes provide similar information on the probability that the economy is currently in recession, the non-parametric approach appears to offer more reliable information. Two out-of-sample forecasting exercises demonstrate the potential benefits to the use of the multivariate adaptive regression spline model.
A Proposal for Reducing Federal Taxes
Ruggeri, G. C.
Asymmetric Firm Entry and Social Inefficiency
Dickson, Vaughan
Canadian Newsprint in the United States: A Multivariate Conintegration Analysis
Jee, Keewan; Yu, Weiqiu
In this paper, Johansen multivariate cointegration tests are adopted to investigate the U.S. demand for Canadian newsprint using monthly data from May 1988 to December 1996 Preliminary data analysis shows that all data are non-stationary which implies that previous results based on simple ordinary least squares are spurious. Johansen multivariate cointegration techniques allow for identifying a long-run relationship as well as a short-run relationship via an error correction model. Among the determinants are the export price of Canadian newsprint to the US., the exchange rate between the two countries, US. personal disposable income, and US. newsprint price.
Capital Income Taxation, Labour Supply and Work Effort
Ruggeri, G. C.; Yu, Weiqiu
Although it is well-known that, in life cycle models of consumption and labour supply, capital income taxation affects the labour supply through the normal income effect, this interaction between capital income taxation and labour market behaviour is usually confined to the voluntary savings of consumers who wish to smooth the pattern of consumption through their lifetime. We show in this paper that the interaction maybe widespread. Three channels through which capital income taxation may affect labour market behaviour are identified: first, capital income taxes may alter the lifetime labour supply when workers are constrained on hours of work; second, they may affect labour supply in the case where consumers target a certain level of lifetime consumption; finally, they may influence work effort in an efficiency wage model.
Climate Change Plans for Canada: a Full Cost-Benefit Framework for Evaluating Options at the Provincial Level
Lantz, Van; Murrell, David
This paper examines the provincial economic impacts from implementing the Kyoto Protocol in Canada under two policy options currently being considered by the federal government: the Broad-as-Practical and Reference-Package options. Using information from federal documents and academic literature, we find that the federal forecasts of undiscounted GDP losses to provincial economies represent misleading indicators of true economic impacts. We suggest that a more accurate provincial impact analysis of GHG policy options would be based on a net present value framework that incorporates discounted costs and ancillary benefits over the time-frame of the program. Once these elements are accounted for, we find that most provinces would benefit under both policy options, and would prefer the Reference-Package. Specifically, the Reference-Package option reduces provincial burdens of achieving Canada's Kyoto commitment, and may do so at virtually no net efficiency cost relative to the Broad-as-Practical option. These findings emphasize the importance of incorporating both market and non-market values into the policy-making arena.
Convergence in a Small Open Economy
Ruggeri, Giuseppe; Yang, Fan
This paper used data for the ten Canadian provinces to determine whether there was convergence of regional disparities during the 1961-99 period. The results show mixed evidence on convergence. There was convergence of nominal output, but no convergence of real output, per capita or per worker. During the 1984-99 period, there was no convergence of output, per capita or per worker, in nominal and in real terms. However, there was convergence of personal income per capita over the entire period and for the two sub-periods. Government transfers to persons increased the speed of convergence of personal income per capita.
Did the 1994/96 Employment Insurance Reforms Improve Labour Market Outcomes for Young People
Audas, Rick; Murrell, David
One of the goals of the Employment Insurance (El) changes during 1994/96 was to reduce the number of habitual, seasonal El users, and to re-channel such users into higher skilled, lower-unemployment occupations. The changes were expected to re-direct a large proportion of young people into more productive human capital acquisition and occupational-choice activity. This paper investigates, using a simple one-equation model, the factors associated with a polychotomous (multinomial) variable describing labour-market states for young people. The model uses year / province interaction variables to explain pre- and post-reform El policy changes, along with labour-market and socioeconomic control variables. This paper finds that labour market/human capital participation for young people improved steadily, from the 1980s through the late 1990s, for young people living as dependants within a family. But for young people living away from their parents, there was little long-run economic improvement. For this group, there is some evidence that the 1994/96 El reforms did play a small role in improving labour market / education outcomes.
Economic Indicators, Units of Measurement and Convergence
Ruggeri, Joe; Huang, Haifang
Education Policies and Economic Growth
Benos, Nikos
This paper studies the general equilibrium implications of various types of education policy. In particular, we examine individual-specific vouchers (ISV), individual-specific transfers (1ST) and public investment on economy-wide human capital (GH). Individual-specific vouchers augment inherited private education spending, while individual-specific transfers are standard cash transfers, which increase private income. Public investment on economy-wide human capital provides economy-wide externalities to individual human capital accumulation. The context is an overlapping generations growth model with second-best policy. In particular, the government chooses its tax policy and the allocation of tax revenues among the three types of education policy, subject to the competitive decentralized equilibrium. Numerical simulations show that it is socially optimal to provide a large voucher on inherited individual education expenditures and spend heavily on economy-wide human capital accumulation. In addition, it is optimal to finance government spending by a low proportional tax on initial human capital and a high lump-sum tax.
Equity Aspects of Tax Preferences
Fougère, Maxime; Ruggeri, Giuseppe; Vincent, Carole
Extended Critical Values for a Simple Test for Cointegration
Sephton, Peter, S.
Leybourne and McCabe (1993) have extended the Kwiatkowski et al (1992) stationarity test to examine the null hypothesis of cointegration. The purpose of this note is to provide an extended set of critical values for use in applied research.
Federal Fiscal Balances and Redistribution in Canada, 1992-96
Ruggeri, G. C.; Yu, Weiqiu
This article identifies the major methodological issues involved in the calculation of federal fiscal balances by province. Using data from the Provincial Economic Accounts (PEA) and National Income Accounts, we calculate four sets of balances for the period 1992-1996, namely basic balances, primary balances, balanced budget balances with tax increases and balanced budget balances with spending cuts, under different assumptions. For comparison purposes, we also include federal fiscal balances contained in the PEA based on the cash-flow approach. The results show that federal fiscal balances by province vary significantly from one method to another. In particular, the basic balances calculated using our approach yield substantially lower gains to the net beneficiary provinces and lower costs to the net contributor provinces than balances based on the cash-flow approach. Eliminating the interest on the public debt or the federal deficit increases the contributions by the "better off" provinces and reduces the gains to the net beneficiary provinces. We also calculate some indices of redistribution among provinces generated by the federal fisc and find that the degree of redistribution was modest under all methods of calculations.
Federal Fiscal Policy & Interregional Redistribution
Ruggeri, Joe; Watson, Barry
Federal Income Tax Cuts and Regional Disparities
Fougère, Maxime; Ruggeri, G. C.
This paper examines the potential impact of federal personal income tax reform on regional disparities. We present simulations of the provincial distribution of federal PIT revenue changes under six different tax reduction schemes applied to the projected income distribution for the year 2000. We show that the provincial distribution of federal income tax reductions can vary considerably depending on the chosen option. Options that flatten the rate structure would tend to aggravate regional disparities because they provide relatively greater benefits to richer provinces. In particular, moving to a single rate tax or to a three-rate PIT with wider tax brackets would produce a relatively larger tax reduction in the richer provinces. It would also provide relatively higher supply-side effects through the tax break on capital gains and the larger reduction in the top marginal rate. The analysis also indicates that we can prevent potential increases in regional disparities by introducing tax cuts that do not affect horizontal redistribution such as equi-proportional reduction in all PIT rates.
Fiscal Illusion and the Perceived Price of Provincial Government Output in Canada
Dickson, Vaughan; Yu, Weiqiu
This paper examines if how governments finance themselves can influence the perceived price of and hence demand for government output. Using a standard model for government output and a panel data set often Canadian provinces for the period 1961 to 1992, we find that tax revenues are perceived more acutely than other major revenues (borrowing, federal transfers, investment income) and some taxes are recognized more than others. We also find learning by taxpayers (declining fiscal illusion) during the period and that lower increases in perceived tax prices lead to more seats for incumbent politicians.
Gender Dimensions of Human Capital Growth in Canada
Ruggeri, Joe; He, Zhen
This paper estimates the growth rates of the stock of human capital and its two components - the labour input and the level of educational attainment -for Canada over the period from 1976 to 2000, separately for males and females, to determine the impact of gender differences. Three measures are used: the first is based on the population in the age range 15-64, the second on the labor force, and the third on employment. The results show that gender made little difference in the growth rate of the population based stock of human capital because the gender differences in the growth rates of the labour input and educational attainment were small. Gender differences accounted for over one-quarter of the growth rate of the human capital stock when measured with respect to the labour force or employment. This effect was largely due to the rapid increase in the participation rate of females. The gender effect was not due to higher rates of human capital accumulation by females, but by their increasing willingness to make the human capital they acquired available for market activities.
Government Spending on Health Care as Public Investment
Ruggeri, Joe; Doucet, Melanie

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