Taxing Multinationals

This paper analyzes the effects of tax policy on the strategic choices of a domestic multinational company competing with a foreign multinational company in a third country. We demonstrate the role of the effective average tax rate and the effective marginal tax rate on the company's choices. We consider the impact on national welfare of alternative tax policies for outbound investment. Our results differ from existing models. In contrast to Feldstein and Hartman (1979), in our model, taxing foreign source income on accrual with a deduction for foreign taxes is not generally optimal. However, unlike Mintz and Tulkens (1996), the optimal policy for domestic and outbound investment is linked through the strategic choices of the multinational.

Scaling laws for convection and jet speeds in the giant planets

Three-dimensional studies of convection in deep spherical shells have been used to test the hypothesis that the strong jet streams on Jupiter, Saturn, Uranus, and Neptune result from convection throughout the molecular envelopes. Due to computational limitations, these simulations must adopt viscosities and heat fluxes many orders of magnitude larger than the planetary values. Several numerical investigations have identified trends for how the mean jet speed varies with heat flux and viscosity, but no previous theories have been advanced to explain these trends. Here, we show using simple arguments that if convective release of potential energy pumps the jets and viscosity damps them, the mean jet speeds split into two regimes. When the convection is weakly nonlinear, the equilibrated jet speeds should scale approximately with F/nu, where F is the convective heat flux and nu is the viscosity. When the convection is strongly nonlinear, the jet speeds are faster and should scale approximately as (F/nu)^{1/2}. We demonstrate how this regime shift can naturally result from a shift in the behavior of the jet-pumping efficiency with heat flux and viscosity. Moreover, the simulations hint at a third regime where, at sufficiently small viscosities, the jet speed becomes independent of the viscosity. We show based on mixing-length estimates that if such a regime exists, mean jet speeds should scale as heat flux to the 1/4 power. Our scalings provide a good match to the mean jet speeds obtained in previous Boussinesq and anelastic, three-dimensional simulations of convection within giant planets over a broad range of parameters. When extrapolated to the real heat fluxes, these scalings suggest that the mass-weighted jet speeds in the molecular envelopes of the giant planets are much weaker--by an order of magnitude or more--than the speeds measured at cloud level.Comment: 23 pages, 10 figures, in press at Icaru

Precautionary Saving and Social Insurance

Microdata studies of household saving often find a significant group in the population with virtually no wealth, raising concerns about heterogeneity in motives for saving. In particular, this heterogeneity has been interpreted as evidence against the life-cycle model of saving. This paper argues that a life-cycle model can replicate observed patterns in household wealth accumulation after accounting explicitly for precautionary saving and asset-based means- tested social insurance. We demonstrate theoretically that social insurance programs with means tests based on assets discourage saving by households with low expected lifetime income. In addition, we evaluate the model using a dynamic programming model with four state variables. Assuming common preference parameters across lifetime- income groups, we are able to replicate the empirical pattern that low-income households are more likely than high-income households to hold virtually no wealth. Low wealth accumulation can be explained as a utility-maximizing response to asset-based means-tested welfare programs.

Computational Methods and Results for Structured Multiscale Models of Tumor Invasion

We present multiscale models of cancer tumor invasion with components at the molecular, cellular, and tissue levels. We provide biological justifications for the model components, present computational results from the model, and discuss the scientific-computing methodology used to solve the model equations. The models and methodology presented in this paper form the basis for developing and treating increasingly complex, mechanistic models of tumor invasion that will be more predictive and less phenomenological. Because many of the features of the cancer models, such as taxis, aging and growth, are seen in other biological systems, the models and methods discussed here also provide a template for handling a broader range of biological problems

Investment, protection, ownership, and the cost of capital

We investigate the cost of capital in a model with an agency conflict between inside managers and outside shareholders. Inside ownership reflects the classic tradeoff between incentives and risk diversification, and the severity of agency costs depends on a parameter representing investor protection. In equilibrium, the marginal cost of capital is a weighted average of terms reflecting both idiosyncratic and systematic risk, and weaker investor protection increases the weight on idiosyncratic risk. Using firm-level data from 38 countries, we estimate the predicted relationships among investor protection, inside ownership, and the marginal cost of capital. We discuss implications for the determinants of firm size, the relationship between Tobin's Q and ownership, and the effect of financial liberalizations.Investor protection, ownership, investment, cost of capital, agency costs

Evaluating Effects of Tax Preferences on Health Care Spending and Federal Revenues

In this paper, we calculate the consequences for health spending and federal revenues of an above-the-line deduction for out-of-pocket health spending. We show how the response of spending to this expansion in the tax preference can be specified as a function of a small number of behavioral parameters that have been estimated in the existing literature. We compare our estimates to those from other researchers. And, we use our analysis to derive some implications for tax policy toward HSAs.

L'CO/LFIR Relations with CO Rotational Ladders of Galaxies Across the Herschel SPIRE Archive

We present a catalog of all CO (J=4-3 through J=13-12)), [CI], [NII] lines available from extragalactic spectra from the Herschel SPIRE Fourier Transform Spectrometer (FTS) archive combined with observations of the low-J CO lines from the literature and from the Arizona Radio Observatory. This work examines the relationships between LFIR, L'CO, and LCO/LCO(1-0). We also present a new method for estimating probability distribution functions (PDFs) from marginal signal-to-noise ratio Herschel} FTS spectra, which takes into account the instrumental "ringing" and the resulting highly correlated nature of the spectra. The slopes of log(LFIR) vs. log(L'CO) are linear for all mid- to high-J CO lines and slightly sublinear if restricted to (U)LIRGs. The mid- to high-J CO luminosity relative to CO J=1-0 increases with increasing LFIR, indicating higher excitement of the molecular gas, though these ratios do not exceed ~ 180. For a given bin in LFIR, the luminosities relative to CO J=1-0 remain relatively flat from J=6-5 through J=13-12, across three orders of magnitude of LFIR. A single component theoretical photon-dominated region (PDR) model cannot match these flat SLED shapes, though combinations of PDR models with mechanical heating added qualitatively match the shapes, indicating the need for further comprehensive modeling of the excitation processes of warm molecular gas in nearby galaxies.Comment: 17 pages, 4 figures (including appendix), accepted by ApJ. Full tables will be in VizieR upon publication, email first author for tables in the meantim

SALMON RECOVERY IN THE COLUMBIA RIVER BASIN: ANALYSIS OF MEASURES AFFECTING AGRICULTURE

The effects of salmon recovery measures on the Northwest agricultural sector are evaluated. Relevant recovery measures, such as: modified timing for dam releases, reservoir drawdown, and flow augmentation in the Columbia River basin, on the regional agricultural sector are evaluated. Combined, these measures would increase power rates, grain transportation costs, and irrigation water costs and reduce the supply of water to irrigators. We quantify these input cost and quantity changes and combine them into seven recovery scenarios for analysis. Results suggest that drawdown and/or minor reductions in irrigation water diversions would reduce producers' profits by less than 1% of baseline levels. However, the most extreme scenario-a long drawdown period combined with a large reduction in irrigation diversions-would reduce producers' profits by $35 million (2.5$35 million decline in annual profits, more than $27 million occur in southern Idaho and eastern Oregon. The federal government would bear these costs if it acquires water via voluntary transactions.Agricultural and Food Policy, Resource /Energy Economics and Policy,