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This dissertation raises a number of policy concerns from a macroeconomic policy point of view and provides additional insights and implications in terms of the effects of fiscal policy and its macroeconomic effects that have kept the open economy macroeconomics literature busy since the early 2000s. The first essay develops a dynamic stochastic general equilibrium (DSGE) model for analyzing the impact of various capital income tax policies in a small open economy that is populated by households possessing endogenous time preferences. I contribute to the literature by studying the impacts of: i) anticipated tax shocks under stochastically growing output, ii) stochastic tax shocks under deterministic output, on a dynamic general equilibrium framework. With the model's specifications, this is the first attempt to integrate uncertainty in the study of taxation and welfare. The results suggest that under certain conditions welfare paradoxes may exist, in the sense that increases in tax instruments may improve welfare. The second essay characterizes the dynamic effects of net tax and government spending shocks on prices, interest rate, GDP and its private components in four OECD countries using structural vector autoregressive regressions (SVAR) approach. For the first time in this literature, I propose a structural decomposition of total net taxes into four components: corporate income taxes, income taxes, indirect taxes and social insurance taxes. The paper provides estimates of the responses of macroeconomic aggregates to innovations in these net tax components. Decompositions of total net tax innovations show that net tax components have different impacts on economic variables. Moreover, the size and persistence of these effects vary across countries depending upon the strength of wealth, substitution, and income effects reflecting the structure of the economies. The last essay estimates the wealth effects of housing and stock market wealth using time-series data for eight developed countries. In estimation I employ the SVAR, which articulate the dynamic interactions of shocks to housing prices, stock values, and disposable incomes. The results show that for these countries the initial consumption response to housing price shocks is greater than to stock market capitalization shocks, but the long-run consumption response to the latter is more persistent than to the former. My findings suggest balanced monetary policies for the developments of housing markets and equity markets.

The primary objective of this dissertation is to investigate whether Canadian whole farm programs with both income-supporting and income-stabilizing attributes, which are considered as decoupled based on the WTO criterion, are actually decoupled from production. The dissertation began with the review of the existing theoretical and empirical literature on the impact of programs designed to be decoupled payments on acreage response including studies related to the wealth and insurance effects. The review revealed that previous studies lack a detailed theoretical model of how acreage decisions will be affected by stabilizing the farm profit (insurance effect) as well as the higher expected profit (wealth effect). Given the nature of Canadian whole farm programs which attempt to smooth income, to examine the whole farm programs, a model is needed to capture the insurance effect arising from these programs as well as the wealth effect.<p> To address this gap, the theoretical framework developed by Chavas and Holt (1990) was extended, in this dissertation, to incorporate the insurance effect into the farmers' acreage decisions under uncertainty. In particular, by developing theoretical restrictions, which consider the relationship between income stabilization compensated and uncompensated acreage decision functions, the insurance effect emphasized in the literature was explicitly derived within the theoretical model. The acreage allocated to each crop was derived as a function of expected crop profits, elements of the variance-covariance matrix of crop profits, expected total wealth (initial wealth plus market profit), and variance of total wealth. The government payments were incorporated into the model through truncation of the probability distribution of profits. Specifically, the whole-farm programs truncated the total (farm) profit distribution which affected the expected total wealth and variance of total wealth.<p> The theoretical model was then used to develop an empirical model. The econometric model was applied to acreage data in the Canadian Prairies from 1970 to 2006 in order to statistically test if the whole farm programs were really decoupled. The results revealed that coefficients of expected total wealth (wealth effect) and variance of total wealth (insurance effect) were statistically significant in the whole system, which implied the whole-farm programs were production and therefore trade distorting and were not actually decoupled, even if they satisfied the WTO criteria. The statistically significant coefficients for expected total wealth and variance of total wealth variables were then used to simulate the impact of recent whole-farm programsthe Western Grain Stabilization Act (WGSA), the Net Income Stabilization Account (NISA) and the Canadian Agricultural Income Stabilization (CAIS)on crop choices.<p> The results suggested that the WGSA, NISA and CAIS programs have increased the acreage allocated to spring wheat and peas (through both wealth and insurance effects, although the insurance effect appears to dominate) while they have decreased the acreage for barley (through the wealth effect), canola and hay (through the insurance effect) in the prairie provinces. In general, the size of the wealth effect was quite small, while the insurance effect was always significant. Specifically, the acreage allocated to wheat increased by 7.79 percent on average across Prairies while canola acreage decreased by 8.86 percent under the CAIS. Thus, the empirical results revealed that for Canadian whole-farm programs the impact of the effects related to risk is important. Particularly, the results showed the inherent difficulty in divorcing the stabilization effect received by Canadian whole-farm programs from farmers' production decisions.

The primary objective of this dissertation is to investigate whether Canadian whole farm programs with both income-supporting and income-stabilizing attributes, which are considered as decoupled based on the WTO criterion, are actually decoupled from production. The dissertation began with the review of the existing theoretical and empirical literature on the impact of programs designed to be decoupled payments on acreage response including studies related to the wealth and insurance effects. The review revealed that previous studies lack a detailed theoretical model of how acreage decisions will be affected by stabilizing the farm profit (insurance effect) as well as the higher expected profit (wealth effect). Given the nature of Canadian whole farm programs which attempt to smooth income, to examine the whole farm programs, a model is needed to capture the insurance effect arising from these programs as well as the wealth effect.<p> To address this gap, the theoretical framework developed by Chavas and Holt (1990) was extended, in this dissertation, to incorporate the insurance effect into the farmers' acreage decisions under uncertainty. In particular, by developing theoretical restrictions, which consider the relationship between income stabilization compensated and uncompensated acreage decision functions, the insurance effect emphasized in the literature was explicitly derived within the theoretical model. The acreage allocated to each crop was derived as a function of expected crop profits, elements of the variance-covariance matrix of crop profits, expected total wealth (initial wealth plus market profit), and variance of total wealth. The government payments were incorporated into the model through truncation of the probability distribution of profits. Specifically, the whole-farm programs truncated the total (farm) profit distribution which affected the expected total wealth and variance of total wealth.<p> The theoretical model was then used to develop an empirical model. The econometric model was applied to acreage data in the Canadian Prairies from 1970 to 2006 in order to statistically test if the whole farm programs were really decoupled. The results revealed that coefficients of expected total wealth (wealth effect) and variance of total wealth (insurance effect) were statistically significant in the whole system, which implied the whole-farm programs were production and therefore trade distorting and were not actually decoupled, even if they satisfied the WTO criteria. The statistically significant coefficients for expected total wealth and variance of total wealth variables were then used to simulate the impact of recent whole-farm programsthe Western Grain Stabilization Act (WGSA), the Net Income Stabilization Account (NISA) and the Canadian Agricultural Income Stabilization (CAIS)on crop choices.<p> The results suggested that the WGSA, NISA and CAIS programs have increased the acreage allocated to spring wheat and peas (through both wealth and insurance effects, although the insurance effect appears to dominate) while they have decreased the acreage for barley (through the wealth effect), canola and hay (through the insurance effect) in the prairie provinces. In general, the size of the wealth effect was quite small, while the insurance effect was always significant. Specifically, the acreage allocated to wheat increased by 7.79 percent on average across Prairies while canola acreage decreased by 8.86 percent under the CAIS. Thus, the empirical results revealed that for Canadian whole-farm programs the impact of the effects related to risk is important. Particularly, the results showed the inherent difficulty in divorcing the stabilization effect received by Canadian whole-farm programs from farmers' production decisions.

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The rapid soaring housing prices in Chinese residential property market have attracted increasing worldwide attention in recent years. Facing the rising concerns about both the stability and sustainability of Chinese housing market prices dynamics, this study aims at investigating the impacts of changes in housing wealth on consumption in China. Previous studies on this subject usually use country level data with relatively shorter sample period, or individual time series for a single or a few cities. Recent development in literatures suggests that panel data have the more heightened capacity for modeling the complexity of human behavior than a single cross-section or time series data can possibly allow. In this study, in order to identify both long-term and short-term elasticity of consumption with respect to housing wealth, panel framework of ECM is constructed, with quarterly data from 23 cities throughout China, covering the period of 2005Q1-2010Q4. The estimation results confirm large and highly significant positive housing wealth effect on consumption in both long-run and short-run for China. Furthermore, due to the potential endogeneity problem driven by the fact that housing prices are highly correlated with income, instrumental variable estimations are also implemented. The resulting empirical findings confirm that changes in housing values can exert large and positive impacts on household consumption, even after this potential endogeneity bias is controlled for.

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Gramm-Leach-Bliley Act (GLBA) was signed into law on November 12, 1999. This act is regarded as the most influential deregulation for the U.S. financial services industry in the past one-century. The purpose of this study is to determine and analyze the wealth effects of the GLBA on U.S. and foreign banks and insurance companies. This dissertation is composed of four separate essays. In the first two chapters I investigate the wealth effects of the GLBA on domestic banks and insurance companies. I find that Money Center Banks followed by Super Regional Banks benefit most from this deregulation. I also find that banks with Section 20 investment subsidiaries benefit more than rest of the industry. For all types of banks exposure to systematic risk reduces following the enactment of the GLBA. In cross sectional analysis I find that banks size and change in exposure to systematic risk can explain the wealth effects at firm level. In the domestic insurance industry, property/casualty and life insurance companies have the highest wealth effect. Exposure to systematic risk also reduces for all types of insurance companies following the enactment of the GLBA. From cross sectional analysis I find that diversification opportunities and safeguards against excessive risk taking create value for property/casualty and all other (except life) insurance companies. I also test merger related hypothesis. The result shows that poor performing firms and larger firms gain more form this deregulation. In the third and fourth chapter I investigate the wealth effects of the GLBA on international banks and foreign insurance companies. I find that the events leading to the passage of the GLBA have significant negative wealth effects (spill-over effects) on the portfolios of banks and insurance companies for most of the developed countries I analyze. These effects are not same for any two countries. Most importantly I find that reduction in diversification opportunities for international banks and foreign insurance companies in the U.S. market can explain the wealth effects at firm level from the GLBA.

The dissertation studies the value of both investment banks' services on the whole and fairness opinions specifically, which the banks provide to the acquiring firms. In the first chapter, I examine how investment banks and acquiring firms' governance quality interact to affect shareholders' wealth in corporate mergers and acquisitions. Although the wealth impact of investment banks in mergers and acquisitions is widely studied in the literature, existing studies do not consider the interaction between governance quality and investment banks. I examine how investment banks and governance quality of acquiring firms interact to affect the wealth of acquiring firms' shareholders. I find that acquiring firms with poor governance are more likely to use investment banks in the deal. This association holds even after controlling for deal feature and other characteristics. I find that the use of investment banks per se does not result in a wealth reduction for the acquiring firms' shareholders. However, when the acquiring firm has poor governance, the use of investment bank is associated with extra value loss for the shareholders. The finding suggests that investment banks may help managerial empire building at the expense of shareholders under some circumstances. The study indicates that when studying investment bank's impact it is important to consider the quality of the hiring firms' governance. In the second chapter, I investigate the wealth implications of fairness opinions that the board of an acquiring firm purchases in corporate mergers from investment banks. Using the propensity score matching method to address the self-selection issue, I find that firms undertaking opinioned mergers under-perform firms with non-opinioned matching mergers in short windows around the announcement date. In the long run, the firms with opinioned merger do not perform better than firms with non-opinioned mergers. The acquiring firms perform poorly relative to their performance before the mergers, irrespective of whether their mergers are opinioned. Over a 12-month window after the mergers, the acquiring firms involved in both opinioned and non-opinioned mergers under-perform matching firms that do not make mergers. These findings are consistent with the hypothesis that the board buys a fairness opinion for its self-protection instead of maximization of shareholder wealth. The implication of this finding is that when investors evaluate mergers, they should focus primarily on deal characteristics, not fairness opinion.

En tant que grand pays agricole, il est très important d'étudier la consommation des ménages en Chine rurale. De nombreux facteurs peuvent affecter la consommation, tels que les facteurs liés à l'évolution du marché du travail, à savoir le nombre croissant de migrations rurales et urbaines, mais aussi des changements sans précédent dans l'accumulation de la richesse des ménages. Or, la façon dont la consommation est affectée par la migration et la richesse des ménages n’a jusqu’à présent été que très peu étudiée. En ce qui concerne la consommation des ménages ruraux, la question connexe de la pauvreté nécessite également d’être analysée, notamment pour la Chine à travers le ciblage d’une politique particulière de réduction de la pauvreté, le programme Dibao.Le premier chapitre de cette thèse se concentre sur l'impact de la migration et des envois de fonds sur l'investissement dans l'éducation en Chine rurale. A l’aide de données microéconomiques extraites du China household Income Project (CHIP) 2013, nous mettons en évidence leur rôle négatif, en soulignant néanmoins que le montant des envois de fonds peut servir de mécanisme d'assurance. Le deuxième chapitre se concentre sur l'effet de la richesse sur la consommation des ménages et ses changements entre 2002 et 2013. Il montre que la propension marginale à consommer hors de la richesse nette est très significative et elle augmente avec le temps pour les ménages urbains et ruraux. En outre, les effets de richesse en matière de logement sont importants, en particulier pour les ménages ruraux, tandis que l'élasticité estimée de la consommation par rapport aux actifs financiers est beaucoup plus faible sur cette même période. Le troisième chapitre évalue les performances de ciblage du programme Dibao rural et met en exergue des erreurs de ciblage assez importantes en utilisant des critères traditionnels d'identification des revenus. Cependant, avec un critère d'identification multidimensionnel, l'efficacité du ciblage augmente, même si le taux de couverture reste faible. / As a large agricultural country, it is of great importance to study on household consumption in rural China. Many factors may affect consumption, such factors including not only those related to the tremendous changes in the labor market, i.e., the increasing number of rural to urban migration, but also unprecedented changes in the accumulation of household wealth. Until now, systematic evidence is missing on how consumption is affected by migration and household wealth. Moreover, regarding rural household consumption, another related issue, consumption poverty, should also be studied, but so far less has been said on the targeting performance of the poverty alleviation policy, the rural Dibao Program.The first chapter concentrates on the impact of migration and remittances on educational investment in rural China. Using household data from the China Household Income Project 2013, we find that they both play a negative role, but the amount of remittances can act as an insurance mechanism. The second chapter focuses on the wealth effect on consumption and its changes between 2002 and 2013. It shows that the marginal propensity to consume out of net wealth is highly significant and it increases over time for both urban and rural households. Moreover, housing wealth effects are strong, especially for the rural households, while the estimated elasticity of consumption with respect to financial assets is much smaller and elusive over the two years. The third chapter evaluates the targeting performance of the rural Dibao program. The result reveals quite large targeting errors using traditional income identification criteria. However, after taken the multi-dimensional identification criterion the targeting effectiveness increases, but the coverage rate remains low.