LCERPA members offer expertise in a wide range of fields. On this page we provide information on our members' 2015 research and publications, including papers published as part of the LCERPA Working Paper Series.

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Ariizumi, H., Y. Hu, and T. Schirle. 2015. "Stand together or alone? Family structure and the business cycle in Canada. Review of Economics of the Household, Vol. 13, Issue 1 (March), 135-161.

Beck, M., N. Rivers, R. Wigle, and H. Yonezawa. 2015. Carbon tax and revenue recycling: Impacts on households in British Columbia. Resource and Energy Economics, Vol. 41, August 2015, 40-69.

Boeringer, C., N. Rivers, T. Rutherford, and R. Wigle. Forthcoming. "Sharing the burden for climate change mitigation in the Canadian federation." Canadian Journal of Economics.

Bohl, M. J. Diesteldorf and P. Siklos. 2015. "Volatility Spillovers in Spot and Futures Markets. The case of China's First Stock Index Futures" China Economic Review, 34, July: 207-244.

Bohl, M. P. Kaufmann, and P. Siklos. 2015. What Drove the Mid-2000s Explosiveness in Alternative Energy Stock Prices? Evidence from U.S., European and Global Indices International Review of Financial Analysis, 40 (Jul 2015): 194-206.

Claus, E. and I. Claus. 2015. "Savings and wealth accumulation: Measurement, influences and institutions" Journal of Economic Surveys, 29(4): 587-593.

Claus, E. and M. Dungey. 2015. Can monetary policy surprises affect the term structure? Journal of Macroeconomics.

Feldman, N.E. and B.J. Ruffle. 2015. The Impact of Including, Adding and Subtracting a Tax on Demand. American Economic Journal: Economic Policy, 7(1): 95-118.

Filardo, A. and P. Siklos. 2015. "Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia" Emerging Markets Trade and Finance, May, DOI: 10.1080/1540496X.2014.998562.

Jones, R.A. and Y.W. Wu. 2015. Credit Exposure and Valuation of Revolving Credit Lines, Journal of Derivatives, Vol. 22, No.4, 37-53.

Koebel, K. and T. Schirle. (Forthcoming) "The differential impact of universal child benefits on the labour supply of married and single mothers" Canadian Public Policy, March 2016.

Lavender, B. and P. Siklos. 2015. "The Credit Cycle and the Business Cycle in Canada and the US: Two Solitudes?" Canadian Public Policy, Volume 41, Issue 2, June 2015.

Legree, S., T. Schirle and M. Skuterud. (Forthcoming) "The Effect of Labor Relations Laws on Unionization Rates within the Labor Force: Evidence from the Canadian Provinces" Industrial Relations.

McCaig, B. and N. Pavcnik. 2015. "Informal employment in a growing and globalizing low-income country," American Economic Review, 105(5): 545-50.

McLeod, L. 2015. "The association between physician supply and the mix of generalist and specialist services used." Contemporary Economic Policy, Vol. 33, Issue 3: 434-449.

Morrison, W.G. Forthcoming 2016. Product Bundling and Shared Information Goods: A Pricing Exercise Journal of Economic Education, Winter 2016.

Gillen, D. and W.G. Morrison. 2015. Aviation security: Costing, pricing, finance and performance Journal of Air Transport Management, 48 (September, special issue): 1-12.

Neill, C. 2015 Rising student employment: the role of tuition fees. Education Economics, 23(1&2): 101-121.

Neuenkirch, M. and P. Siklos. 2015. "How Monetary Policy Is Made: Two Canadian Tales" International Journal of Central Banking, January 2015: 225-250.

Payne, A. and J. Smith. 2015. "Does income inequality increase charitable giving?" Canadian Journal of Economics. Volume 48, Issue 2, 739-818.

Ruffle, B. J. and Z. Shtudiner. 2015 "Are Good-Looking People more Employable?" Management Science, 61(8): 1760-1776.

Ruffle, B. J. and Y. Tobol. 2016. "Clever enough to tell the truth," Experimental Economics, (online March 2016) DOI:10.1007/s10683-016-9479-y.

Ruffle, B. J. and O. Volij. Forthcoming First-mover advantage in best-of series: an experimental comparison of role-assignment rules. International Journal of Game Theory, DOI: 10.1007/s00182-015-0493-7.

Ruffle, B. J., A. Weiss, and A. Etziony. 2015. The Role of Critical Mass in Establishing a Successful Network Market: An Experimental Investigation. Journal of Behavioral and Experimental Economics, Volume 58, October: 101-110

Schirle, T. 2015. The effect of universal child benefits on labour supply. Canadian Journal of Economics, 48(2), May 2015.

Schirle, T. 2015. The gender wage gap in the Canadian Provinces, 1997-2014. Canadian Public Policy, 41(4), December 2015: 309-319.

Shiamptanis, C. 2015. Risk assessment under a nonlinear fiscal policy rule. Economic Inquiry, DOI: 10.1111/ecin.12199.

Siklos, P. 2015. Macroeconomic Implications of Financial Frictions in the Euro Zone Comparative Economic Studies, 57.2 (Jun 2015): 222-242.

Beck, M. and R. Wigle. 2015. Carbon Pricing and Mind the Hissing Sustainable Prosperity, Academic Research Paper, February 2015.

Claus, E. and I. Claus. (eds.) Forthcoming 2016. A collection of surveys on savings and wealth accumulation. United Kingdom: John Wiley & Sons Limited.

DeCicca, P. and L. McLeod (2015). Chapter 3: Smoking in Canada. In Life-course smoking behavior: Patterns and national context in ten countries, D.R. Lillard and R. Christopoulou (eds.). Oxford University Press.

DeCicca, P. and L. McLeod (2015). Chapter 11: Smoking by men in cross-country perspective. In Life-course smoking behavior: Patterns and national context in ten countries, D.R. Lillard and R. Christopoulou (eds.). Oxford University Press.

Legree, S., T. Schirle, and M. Skuterud. Forthcoming Can Labour Relations Reform Reduce Wage Inequality? in Income Inequality: The Canadian Story, edited by David A. Green, W. Craig Riddell and France St-Hilaire.

Milligan, K. and T. Schirle. 2016. Option Value of Disability Insurance in Canada Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement. NBER Book Series. University of Chicago Press.

Saguil, K. and C. Neill. Universally Subsidized Day Care and its Effects on Youth Crime Rates: Evidence from Quebec LCERPA Working Paper no. 2015-14, September 2015.

Abstract. Research from intensive, targeted early childhood intervention programs suggests they can have large, long-run private and public benefits, much of which come from reductions in the propensity to engage in criminal activity. That research is being used to advocate for increased government expenditures universal early childhood programs. However, it is not clear that interventions would have the same effects on the general population as they do on disadvantaged children. The introduction of Quebec’s universally subsidized day care program in 1997 provides an opportunity to take a first glimpse at the long run effects of a non-targeted early childhood program. Studies of the short-run effects of the program show no evidence of improvements in child development in the short run, but the long run effects have not been studied. We use a difference-in-differences strategy to examine the policy’s effects on youth crime rates, using the rest of Canada as the counterfactual. Overall, we find no evidence of large reductions in youth crime rates among the cohort of Quebec youth following the introduction of subsidized day care relative to youth in the rest of Canada – indeed, if anything, they appear to have increased. We conclude that caution is necessary in using findings of large social benefits of early childhood education from small, intensive, targeted interventions to draw conclusions that larger-scale universal programs implemented in a different context.

Kaplan, T.R. and B.J. Ruffle. Waiting to Cooperate? Cooperation in one-stage and two-stage games LCERPA Working Paper No. 2015-13, September 2015.

Abstract. Cooperation between two players often requires exactly one to take the available action, while the other acquiesces. If the decisions whether to pursue the action are made simultaneously, then neither or both may acquiesce leading to an inefficient outcome. However, inefficiency may be avoided if players move sequentially. We test experimentally whether two-stage versions of this entry-exit game enhance cooperation. In one version, players may wait in the first stage to see what their paired player did and then coordinate in the second stage. In another version, sequential decision-making is imposed by assigning one player to move in stage one and the other player in stage two. Although there are fewer cooperative decisions in the two-stage treatments, we show that subjects coordinate better on efficient cooperation and on avoiding both acquiescing. Consequently they achieve higher profits. Yet, the least cooperative pairs do worse in the two-stage games than their single-stage counterparts. They use the second stage not to facilitate coordination but to disguise their uncooperative play or to punish their opponents.

Ruffle, B.J. and Y. Tobol. Clever enough to tell the truth. LCERPA Working Paper No. 2015-12, September 2015 (updated March 2016).

Abstract. We conduct a field experiment on 427 Israeli soldiers who each rolled a six-sided die in private and reported the outcome. For every point reported, the soldier received an additional half-hour early release from the army base on Thursday afternoon. We find that the higher a soldier’s military entrance score, the more honest he is on average. We replicate this finding on a sample of 156 civilians paid in cash for their die reports. Furthermore, the civilian experiments reveal that two measures of cognitive ability predict honesty, whereas self-report honesty questions and a consistency check among them are of no value. We provide a rationale for the relationship between cognitive ability and honesty and discuss the generalizability of this result.

Koebel, K. and T. Schirle. The differential impact of universal child benefits on the labor supply of married and single mothers LCERPA Working Paper No. 2015-11, May 2015.

Abstract. Using a difference-in-differences estimator, we find the Canadian Universal Child Care Benefit (a demogrant paid to families with children under age 6 that was introduced in July 2006) has significant negative effects on the labor supply of legally married mothers but significant positive effects on the labor supply of single mothers. The positive effect for single mothers is concentrated among divorced mothers, with results suggesting divorced mothers’ likelihood of participating in the labor force rises by 2.8 percentage points when receiving the benefit. This contrasts with a reduction in the likelihood of legally married mothers participating in the labor force by 1.4 percentage points. Further, the effects for single moms primarily represent entry to employment and the labor force (extensive margin) and not an increase in hours among those who would have been working without the benefits. The estimated effects for common-law married mothers and single never-married mothers are not statistically significant.

Ruffle, B.J., A. Weiss and A. Etziony "The Role of Critical Mass in Establishing a Successful Network Market: An Experimental Investigation." LCERPA Working Paper No. 2015-10, May 2015.

Abstract. A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. Through a series of experiments, we study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass. Neither an improved reward-risk ratio through lower prices nor previous success at a lower critical mass facilitates the establishment of a network market when the critical mass is sufficiently high.

Snoddon, T. "Prospects for Integrated Carbon Taxes in Canada: Lessons from Federal-Provincial Tax Coordination." LCERPA Working Paper No. 2015-9, May 2015.

Abstract. The global nature of the climate change externality calls for a global response but so far none has emerged. Instead, climate policies are being implemented by subnational and national governments, resulting in a fragmented policy landscape at the national level. This is certainly the case in Canada. While this outcome is not particularly surprising, from an economics perspective, it is arguably more costly, less efficient, and less effective at achieving emissions reductions than a more harmonized approach. Is this outcome the unavoidable price of Canadian federalism? Is a more harmonized carbon tax approach feasible? This paper considers Canada’s experience with three major taxes, jointly occupied by federal and provincial governments. Despite its highly decentralized structure, Canada has a history of tax harmonization and coordination arrangements for these taxes. By examining the evolution of these arrangements, the paper offers insights on the prospects of adopting a more harmonized carbon tax approach to address climate change.

Daniel, B.C. and C. Shiamptanis. "Predicting Sovereign Fiscal Crises: High-Debt Developed Countries." LCERPA Working Paper No. 2015-8, *Updated* March 2017.

Abstract. Every country has a fiscal limit on debt, where that limit represents a debt level so high that the country's economic and political systems cannot raise taxes or reduce spending sufficiently to maintain solvency. At the limit, creditors flee, and the government faces a fiscal crisis. If we knew the limit, then we could estimate the probability of a fiscal crisis as the probability of reaching the limit. Governments do not announce their fiscal limits. In this paper, we estimate fiscal feedback rules for six-high-debt developed countries to investigate the extent to which the systematic response of the primary surplus to debt reveals information on the fiscal limit. In general, estimation of a fiscal feedback rule does not reveal an explicit fiscal limit for a country that has not experienced a crisis. However, estimates of long-run debt, together with debt history, can be combined to yield an estimate of a lower bound on the fiscal limit. We use estimates of the fiscal rule for six high-debt developed countries to project debt forward from dates, following the beginning of the financial crisis, and compare the projections with our estimates of the lower bound on debt. We label countries, whose debt projections exceed the lower bound as high-risk. Both Greece and Portugal enter the high-risk category about one year prior to their financial crises. Italy is at high risk in 2012 and others are at low risk through 2012.

Pelloni, G. and M. Savioli. "Why is Italy doing so badly?" LCERPA Working Paper No. 2015-7, April 2015.

Abstract. We present the current Italian economic crisis as a phase of a major systemic decline. We argue that “Italy’s system” has forced the country to abandon a “dynamic” view of comparative advantage, crucial for sustained economic growth, in favour of a “static” view of specialization. Creative destruction has been hampered and the indispensable sectoral restructuring has not taken place, leading to stagnation. The roots of this decline lay in collective action issues and an implicit contract between elites and civil society. We suggest that solving these issues is indispensable in order to support a “dynamic” view of comparative advantage and so the re-start of the Italian economy and society.

Schirle, T. "The gender wage gap in the Canadian provinces, 1997-2014." LCERPA Working Paper No. 2015-6, April 2015. More information about this project can be found here.

Abstract. This study examines the gender gaps in average hourly wages facing private sector full time employees in the Canadian provinces, using data from the Canadian Labour Force Survey. Over the 1997-2014 period, all provinces have made progress toward narrowing the gender wage gap, though notably little progress was made in Newfoundland and Alberta. Much of the variation across provinces in the gender gap is eliminated once we account for gender differences in individual and job characteristics in each province. Decomposition results suggest a large portion of the wage gap in each province is explained by gender differences in industry and occupation. The unexplained portion of the wage gap has been reduced in many provinces as gender differences in industry and occupation play an increasingly important role.

Bohl, M.T., J. Diesteldorf, and P.L. Siklos. The effect of index futures trading on volatility: Three markets for Chinese stocks LCERPA Working Paper No. 2015-5, February 2015. (This paper has been accepted for publication in China Economic Review as "Volatility Spillovers in Spot and Futures Markets: The case of China's First Stock Index Futures.")

Abstract. This paper examines whether the introduction of Chinese stock index futures had an impact on the volatility of the underlying spot market. To this end, we estimate several Generalized Auto-Regressive Conditional Heteroscedasticity (GARCH) models and compare our findings for mainland China with Chinese index futures traded in Singapore and Hong Kong. Our results indicate that Chinese index futures decrease spot market volatility in all three spot markets considered. In contrast, we do not obtain the same results for the companion index futures markets in Hong Kong and Singapore. China’s stock market is relatively young and largely dominated by private retail investors. Nevertheless, our evidence is favorable to the stabilization hypothesis usually confirmed in mature markets.

Filardo, A.J. and P.L. Siklos. Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia LCERPA Working Paper No. 2015-4, February 2015. (This paper has been accepted for publication in Emerging Markets Trade and Finance.)

Abstract. This paper examines past evidence of prolonged periods of foreign exchange reserves accumulation in the Asia-Pacific region. Several proxies for this unobserved variable are considered, including a newly proposed one based on a factor model. We focus on identifying periods of prolonged interventions and identify its key macro-financial determinants. Two broad conclusions emerge from the stylized facts and the econometric evidence. First, the best protection against costly reserves accumulation is a more flexible exchange rate. Second, the necessity to accumulate reserves as a bulwark against goods price inflation is misplaced. Instead, there is a strong link between asset price movements and the likelihood of accumulating foreign exchange reserves that are costly. Policy implications are also drawn.

Siklos, P.L. and B Lavender. The credit cycle and the business cycle in Canada and the U.S.: Two solitudes? LCERPA Working Paper No. 2015-3, February 2015. (This paper has been accepted for publication in Canadian Public Policy.)

Abstract. Recent events highlight the importance of understanding the relationship between credit availability and real economic activity. This paper estimates macroeconomic models for Canada to investigate the relationship between changes in non-price lending standards, business loans and output. We ask whether macroeconomic and financial market conditions in the U.S. affect Canadian macroeconomic and financial conditions. The answer seems to be less so than previous evidence suggests. Real time data are also found to have a significant impact on the results. The U.S. and Canada may indeed be likened to ‘two solitudes’ insofar as the impact of credit conditions is concerned. Differences in the quality of banking standards and supervision of financial institutions, as well differences in the effectiveness of monetary policies in the two countries may partially explain the results.

Claus, E., and M. Dungey. Can monetary policy surprise the market? LCERPA Working Paper No. 2015-2, January 2015. (This paper has also been published in the CAMA's working paper series.)

Abstract. This paper extracts measures of monetary policy surprises for Australia, Canada and the United States using a latent factor framework. We distinguish monetary policy surprises which occur when central banks report new assessments of the economy (or do not reinforce changes expected by market assessments) from those when policy makers appear to change their preferences. Changing policy preferences are evident in all jurisdictions, particularly during periods of stress. No-change policy announcements have distinctly differing impacts across the three countries; in Canada these have the same impact as policy changes, in Australia they are not discernibly different to a normal trading day and the US market lies between these scenarios. The revealed differences in size and type of the policy surprise outcomes for these operationally similar central banks suggests that the role of transparency policy is more subtle than previously appreciated.

Boeringer, C., N. Rivers, T. Rutherford, and R. Wigle. "Sharing the burden for climate change mitigation in the Canadian federation." LCERPA Working Paper No. 2015-1, January 2015 (posted with SSRN by ZenTra Centre for Transnational Studies in 2014).
This paper has been accepted for publication in the Canadian Journal of Economics.

Abstract. Dividing the burden for greenhouse gas abatement amongst the provinces has proven challenging in Canada, and is a major factor contributing to Canada’s poor historic performance on greenhouse gas abatement. As the country aims to achieve substantial cuts to emissions over the next decade and by mid-century, such burden sharing considerations are likely to be elevated in importance. This paper uses a detailed Canadian computable general equilibrium model to compare a number of archetypal rules for sharing the burden of a joint commitment amongst members for the case of greenhouse gas reductions in Canada. Because of the substantial heterogeneity amongst Canadian provinces, these different burden sharing rules imply significantly different relative abatement effort amongst provinces, and also significantly different welfare implications. We compare these archetypal burden sharing rules to existing provincial emission reduction commitments, and find that none of the standard burden sharing rules comes close to existing commitments. We argue that future efforts to share the burden of greenhouse gas abatement in Canada would be more successful if they were informed by a formal analysis such as the one presented here.

Ensing, D. and T. Snoddon. 2016. "Canada's Climate Policy: Promises, Expectations and Practicalities." LCERPA Commentary No. 2016-1, February 2016.

Schirle, T. and E. Vickers. 2015 "The 2014 Gender Wage Gap in Ontario." LCERPA Commentary No. 2015-1, March 2015.

Abstract. In this report we provide 2014 estimates of the male-female gap in average hourly wages for private sector Ontario workers aged 20-59, using the 2014 Labour Force Survey. We decompose the wage gap to describe the extent to which the gap reflects gender differences in observable characteristics and the extent to which the gap is unexplained. Overall, the average wage of Ontario women in the private sector was 81.4% of the average wage of Ontario men in the private sector. A large portion of the gap (44%) reflects gender difference in industry and occupation, but 56% remains unexplained.

Schirle, T. 2015. "Wage Gap Calculator" Excel file. The author suggests using this calculator after reading Schirle and Vickers (2015) LCERPA Commentary No. 2015-1.

Abstract. This calculator allows individuals working in Ontario's private sector to obtain a conditional prediction of the hourly wage for men and women given a set of personal and job characteristics. Less formally, individuals can obtain an estimate of the average hourly wage one might expect to see given an employee's attributes.