Tax Enforcement for Gamers: High Penalties or Strict Disclosure Rules?

This essay responds to Alex Raskolnikov’s proposal to replace the current federal income tax compliance regime with a two-track approach based on taxpayer choice. The “deterrence regime” (DR) would be designed to be chosen by “gamers”, and the “compliance regime” (CR) would be designed to be chosen by all other taxpayers. Penalty rates would be significantly higher in the DR than in the CR. In this response, Lawrence Zelenak notes that the tax shelter disclosure rules of current law can also be viewed as a way of imposing a special compliance regime-featuring high odds of detection rather than high penalty rates-on gamers. Zelenak compares Raskolnikov’s proposal with the current regime, and suggests that there are plausible grounds for preferring the current regime to the proposal

Crossover from one to three dimensions for a gas of hard-core bosons

We develop a variational theory of the crossover from the one-dimensional (1D) regime to the 3D regime for ultra-cold Bose gases in thin waveguides. Within the 1D regime we map out the parameter space for fermionization, which may span the full 1D regime for suitable transverse confinement.Comment: 4 pages, 2 figure

The Predictability of Excess Returns on UK Bonds: a Non-Linear Approach

This paper provides an empirical description of the behaviour of excess returns on UK government discount bonds in terms of risk factors such as the forward premium, the slope of the term structure, dividend yields and excess stock returns. We identify the existence of a time-varying term structure of expected excess returns. Further, the dynamics of the expected returns are characterised by regime-switching behaviour where the transition from one regime to the other is controlled by the slope of the term structure of interest rates. The first regime, which is characterised by flat or downward sloping term structures, occurs during periods of economic recession. The second regime, which is characterised by upward sloping term structures, occurs during periods of economic expansion. The main risk factors explaining expected returns are the slope of the term structure in the recessionary regime and the excess stock returns in the expansionary regime

Signatures in the Planck regime

String theory suggests the existence of a minimum length scale. An exciting quantum mechanical implication of this feature is a modification of the uncertainty principle. In contrast to the conventional approach, this generalised uncertainty principle does not allow to resolve space time distances below the Planck length. In models with extra dimensions, which are also motivated by string theory, the Planck scale can be lowered to values accessible by ultra high energetic cosmic rays (UHECRs) and by future colliders, i.e. M f approximately equal to 1 TeV. It is demonstrated that in this novel scenario, short distance physics below 1/M f is completely cloaked by the uncertainty principle. Therefore, Planckian effects could be the final physics discovery at future colliders and in UHECRs. As an application, we predict the modifications to the e+ e- to f+ f- cross-sections

Factor-Driven Two-Regime Regression

We propose a novel two-regime regression model where regime switching is driven by a vector of possibly unobservable factors. When the factors are latent, we estimate them by the principal component analysis of a panel data set. We show that the optimization problem can be reformulated as mixed integer optimization, and we present two alternative computational algorithms. We derive the asymptotic distribution of the resulting estimator under the scheme that the threshold effect shrinks to zero. In particular, we establish a phase transition that describes the effect of first-stage factor estimation as the cross-sectional dimension of panel data increases relative to the time-series dimension. Moreover, we develop bootstrap inference and illustrate our methods via numerical studies