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A Second Chance at Success : A Political Economy Perspective
Get PDF* Revised: [08-04, 2008]This paper characterizes a stationary Markov-perfect political equilibrium whereagents vote over income taxation that distorts educational investment. Agents becomerich or poor through educational investment, and the poor have a secondchance at success. The results show the following concerning the cost of a secondchance. First, when the cost is low, the economy is characterized by high levels ofupward mobility and inequality, and a low tax burden supported by the poor withprospects for upward mobility. Second, when the cost is high, there are multipleequilibria with various patterns of upward mobility, inequality and redistribution.Numerical examples show that the shift from a high-cost economy to a low-costeconomy may reduce social welfare
Lifespan for radially symmetric solutions to systems of semilinear wave equations with multiple speeds
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A Test for Dependence and Covariance Estimator of Market Microstructure Noise
Get PDF* Revised: Test of Unbiasedness of the Integrated Covariance Estimation in the Presence of Noise [07-03-Rev., 2007 ]There are many approaches for estimating an integrated variance and covariance in thepresence of market microstructure noise. It is important to know a dependence of noise toconstruct the integrated variance and covariance estimators. We study a time dependence ofbivariate noise processes in this paper. We propose a test statistic for the dependence of thenoises and an autocovariance estimator of the noises and derive its asymptotic distribution.The asymptotic distribution of the autocovariance estimator provides us to another test statisticwhich is for significance of the autocovariances and for detection whether the noise exists ornot. We obtain good performances of the test statistics and autocovariance estimator of thenoises in a finite sample through Monte Carlo simulation. In empirical illustration, we confirmthat the proposed statistics and estimators capture various dependence patterns of the marketmicrostructure noises
