Comparing budget repair measures for a small open economy with growing debt

We quantify the macroeconomic and welfare effects of alternative fiscal consolidation plans in the context of a small open economy. Using an overlapping generations model tailored to the Australian economy, we examine immediate and gradual eliminations of the existing fiscal deficit with (i) temporary income tax hikes, (ii) temporary consumption tax hikes and (iii) temporary transfer payment cuts. The simulation results indicate that all three fiscal measures result in favourable long-run macroeconomic and welfare outcomes, but have adverse consequences in the short run that are particularly severe under the immediate fiscal consolidation plan. Moreover, our results show that cutting transfer payments leads to the worst welfare outcome for all generations currently alive. Increasing the consumption tax rate results in smaller welfare losses, but compared to raising income taxes, the current poor households pay much larger welfare costs. The adverse effects on wellbeing of current generations highlight political constraints when implementing a fiscal consolidation plan. However, after compensating current generations for all welfare losses, there is still an overall efficiency gain. This implies possibilities to devise a fiscal consolidation plan supported by a compensation scheme to improve wellbeing of future generations.This research was supported by the Australian Research Council Centre of Excellence in Population Ageing Research (CEPAR) under grant CE110001029

Enhancement of the Spin Accumulation at the Interface Between a Spin-Polarized Tunnel Junction and a Semiconductor

We report on spin injection experiments at a Co/Al$_2$O$_3$/GaAs interface with electrical detection. The application of a transverse magnetic field induces a large voltage drop $\Delta V$ at the interface as high as 1.2mV for a current density of 0.34 nA.$\mu m^{-2}$. This represents a dramatic increase of the spin accumulation signal, well above the theoretical predictions for spin injection through a ferromagnet/semiconductor interface. Such an enhancement is consistent with a sequential tunneling process via localized states located in the vicinity of the Al$_2$O$_3$/GaAs interface. For spin-polarized carriers these states act as an accumulation layer where the spin lifetime is large. A model taking into account the spin lifetime and the escape tunneling time for carriers travelling back into the ferromagnetic contact reproduces accurately the experimental results

Sustainable and equitable pensions with means testing in aging economies

A means-tested pension system has a distinct feature that tailors the level of pension benefits according to individual economic status. In the context of population aging with widening gaps in life expectancies, we show that this feature generates an automatic mechanism that (i) mitigates the pressing fiscal cost of an old-age public pension program (fiscal stabilization device) and (ii) redistributes pension benefits to those in need with shorter life expectancies (redistributive device). To evaluate this automatic mechanism, we employ an overlapping generations model with population aging. Our results indicate that this novel mechanism plays an important role in containing the adverse effects of population aging on the fiscal costs and enhancing the progressivity of a pension system. More pronounced aging scenarios further strengthen the role of this mechanism. A well-designed means test rule can create a sufficiently strong automatic mechanism to keep public pensions sustainable and progressive under population aging