MDY Volume 14 Issue 4 Cover and Front Matter

13651005_14-4.qxd 9/2/10 10:53 PM Page 1 Macroeconomic Dynamics Vol. 14, No. 4, September 2010 Pages 427–616 VOLUME 14, NUMBER 4, SEPTEMBER 2010 MACROECONOMIC DYNAMICS Volume 14, Number 4, September 2010 Contents

ARTICLES A Picture of Stock-Flow Unemployment in the United Kingdom Melvyn G. Coles, Paul Jones, and Eric Smith 427 A Role for Cultural Transmission in Fertility Transitions Thomas Baudin 454 The Behavior of the Saving Rate in the Neoclassical Optimal Growth Model MACROECONOMIC Anastasia Litina and Theodore Palivos 482 Are Initial Wage Losses of Intersectoral Movers Compensated for by Their Subsequent Wage Gains? DYNAMICS Donggyun Shin, Kwanho Shin, and Seonyoung Park 501 Land Reforms and Economic Development Hans Gersbach and Lars-H. R. Siemers 527 MD INTERVIEW An Interview with James J. Heckman Interviewed by Donna K. Ginther 548 VINTAGE ARTICLE The Timing of Tax Collections and the Structure of “Irrelevance” Theorems in a Cash-in-Advance Model Thomas J. Sargent and Bruce D. Smith 585 NOTES A Note on the Crowding-Out of Investment by Public Spending Olivier Cardi 604

EDITOR: WILLIAM A. BARNETT

Cambridge Journals Online For further information about this journal please go to the journal website at: journals.cambridge.org/mdy

MACROECONOMIC DYNAMICS MACROECONOMIC DYNAMICS Editor: William A. Barnett, University of Kansas, Department of Economics, 356 Snow Hall, 1460 Jayhawk Notes for Contributors Boulevard, Lawrence, KS 66045–7523, USA. Book Review Editors: Michele Boldrin, Department of Economics, Washington University, One Brookings Contributions. Contributions are welcome approved such citation; written authoriza- (charts, diagrams or other art work) at the Drive, St. Louis, MO63130, and Universidad Carlos III, Madrid; Gregory D. Hess, Department of Economics, from all countries. They should be written tion may be required at the Editor’s discre- end of the paper, indicating in the body of 500 East 9th Street, Claremont McKenna College, Claremont, CA 91711. in English. tion. Authors are responsible for obtaining the paper where each graphic should ap- Aims and Scope/Editorial Policy. written permission to publish material for pear. If it is not possible for you to include Special Issues Editors: Stephen Turnovsky, Department of Economics, Box 353330, University of Washington, Macroeconomic Dynamics publishes resea- which they do not own the copyright. A the graphics files in the word processor Seattle, WA 98195; Lee Ohanian, Department of Economics, UCLA, 2261 Bunche Hall, 405 Hilgard Avenue, rch of the highest theoretical, empirical or Copyright Transfer Agreement, with cer- source code, you should upload the indi- quantitative sophistication. Papers of high tain specified rights reserved by the author, vidual graphics files separately after you Los Angeles, CA 90024. quality are welcomed from all areas of must be signed and returned to the Editor upload the PDF and source files for your Editorial Information System Manager: Stephen E. Spear, Graduate School of Industrial Administration, macroeconomics and from all parts of the by a senior author of accepted manuscripts, paper. world, as long as the research is founded prior to publication. This is necessary to References. References should be cited in Carnegie Mellon University, Pittsburgh, PA 15213. in a rigorous scientific approach. Major ad- enable the publisher to ensure the wide dis- the text by the author’s last name and the vances in macroeconomics without imme- tribution of the author’s(s’) work and the date of publication. Complete bibliographic Local Area Network Manager: Nathan Haley, Lawrence, Kansas. diate policy applications are also accepted, protection of both the author and the pub- information for each citation should be in- if they show potential for application in the lisher under copyright law. Articles and cluded in the list of references. References Editorial Associate: Melinda Barnett, University of Kansas. future. Occasional book reviews, announ- other material published in Macroeconomic should be typed in alphabetical order in the Advisory Editors: cements, conference proceedings and in- Dynamics represent the opinions of the style of the following examples: terviews are also published. Special issues authors and should not be construed to Monograph: Jean-Pascal Bénassy (CEPREMAP, Paris), Willem Buiter (London School of Economics and Political Science, appear in the journal’s Supplements Series, reflect the opinions of the Editor, Advisory Stokey, Nancy L. and Robert E. London), Francis X. Diebold (University of Pennsylvania), Steven Durlauf (University of Wisconsin), Douglas Gale having its own Special Issues Editors. An Board, Editorial Board, or the Publisher. Lucas, Jr. with Edward Prescott (1989) Re- (New York University), Giancarlo Gandolfo (University of Rome), Roger Guesnerie (DELTA, Paris), Takatoshi Ito electronic version of the journal will be Preparation of a Manuscript. The en- cursive Methods in Economic Dynamics. published simultaneously with the paper tire manuscript (including notes and refer- (University of Tokyo), Timothy Kehoe (University of Minnesota), Finn Kydland (Carnegie Mellon University), Cambridge, MA: Harvard University Press. version enabling immediate access to the ences) should be produced as double spaced Chapter in an Edited Volume: 1 Lung-Fei Lee (Ohio State University), Adrian Pagan (Australian National University), Robert Townsend best current research in Macroeconomics. typescript on 8 2 11-inch or A4 white Danthine, Jean-Pierre and John B. (Massachusetts Institute of Technology), Mark Watson (Princeton University), Kenneth West (University of Home Page. The journal has a home page paper, with wide margins to accommodate Donaldson (1995) Computing equilibria of on the web which is a source of further copyediting. The manuscript should be con- nonoptimal economies. In Thomas F. Wisconsin), Michael Woodford (Columbia University), Randall Wright (University of Pennsylvania) information about the journal. The location verted to a pdf for submission by upload- Cooley (ed.), Frontiers of Business Cycle of the home page is: http://econ.tepper.cmu. ing to the journal’s server. The publisher Associate Editors: Research, pp. 65–97. Princeton, NJ: edu/barnett/MD.html. Information. about asks that you provide a PDF file of the fi- Princeton University Press. Klaus Adam (Mannheim University, Germany), Gaetano Antinolfi (Washington University), Jasmina Arifovic Macroeconomic Dynamics may also be nal version of your paper, together with a (Simon Fraser University), Philippe Bacchetta (HEC Lausanne, Switzerland), Pierpaolo Benigno (LUISS Guido viewed at www.journals.cambridge.org. copy of the word processing source file in Journal Article: Epstein, Larry G. and Stanley Zin Carli, Rome), Joydeep Bhattacharya (Iowa State University), Volker Böhm (University of Bielefeld, Germany), Manuscript Submissions. The submission which the paper was written. Pages should procedure for this journal has been convert- be numbered consecutively. Page 1 should (1989) Substitution, risk aversion and the Raouf Boucekkine (Universite Catholique de Louvain, Belgium), Shankha Chakraborty (University of Oregon), ed to electronic uploading of pdfs to the provide the article, author’s(s’) names (in temporal behavior of consumption and Marcelle Chauvet (University of California at Riverside), Juan Carlos Conesa (Universitat Autònoma de journal’s server. To submit, follow the in- the form preferred for publication, com- asset returns I: A theoretical framework. Barcelona), Isabel Correia (Banco de Portugal), Rose-Anne Dana (Université Paris IX-Dauphine), Christophe structions provided at http://server1.tepper. plete affiliation, phone, fax and e-mail num- Econometrica 42, 937–969. cmu.edu/md/electronic_submission.htm. bers (if available). At the bottom of Page 1 Article in Press: Deissenberg (University d’Aix-Marseille II), Huberto Ennis (Federal Reserve Bank of Richmond), Alvaro Questions about the submission procedure place any footnotes to the title or authors, Huang, He, Selahattin Imrohoroglu, Escribano (Universidad Carlos III de Madrid, Spain), George Evans (University of Oregon), Roger Farmer can be transmitted to the Editorial Infor- indicated by superscripts *, **, etc. Page 2 and Thomas J. Sargent (in press) Two com- (UCLA), Jonas Fisher (Federal Reserve Bank of Chicago), Luisa Fuster (Madrid Institute of Advanced Studies, mation System Manager, Stephen Spear, should contain a proposed running head putational experiments to fund Social Spain), Oded Galor (Brown University and Hebrew University of Jerusalem), Marc Giannoni (Columbia at [email protected], or to the Editor, (abbreviated form of the title) of up to 40 Security. Macroeconomic Dynamics. William A. Barnett, at [email protected]. characters, and the name and mailing ad- Journal names should not be abbrevi- University), Thorvaldur Gylfason (University of Iceland), Melvin Hinich (University of Texas), Cars Hommes Special lssues Submissions. The journal dress, telephone, fax and e-mail numbers ated. (University of Amsterdam, The Netherlands), Seppo Honkapohja (Bank of Finland, Helsinki), Svend Hylleberg publishes special issues in its Supplements of the author to whom proof’s should be Footnotes. Where more that a simple (Aarhus University, Denmark), Leo Kass (University of Konstanz, Germany), Todd Keister (Federal Reserve Series. Proposals for special issues should sent. Page 3 should contain a short abstract source citation is called for, footnotes may be sent to either of the journal’s Special of the paper in less than 150 words. The Bank of New York), Sharon Kozicki (Bank of Canada), Blake LeBaron (Brandeis University), Helmut Lütkepohl be used. These should be numbered con- Issues Editors and should include a table of abstract will appear at the head of the arti- secutively throughout the text and typed (European University Institute, Florence), Iourii Manovskii (University of Pennsylvania), David Marshall contents and one of more proposed guest cle when published in the journal. A list of together at the end of the paper before the (Federal Reserve Bank of Chicago), Alfredo Medio (University of Udine, Italy), Ilian Mihov (INSEAD, France), editors. three or four keywords or terms should also references. Source citations within footnotes Originality and Copyright. Manuscripts be included. The full text of the manuscript follow the same style as citations within Omer Moav (The Hebrew University of Jerusalem), Pablo Neumeyer (Universidad Torcuato Di Tella), Lee are accepted for review on the understand- should begin on Page 4. the text. Ohanian (UCLA), Claudia Olivetti (Boston University), Roberto Perotti (Università Bocconi, Italy), Patrick ing that the same work has not been and will Equations. All equations should be type- Copyediting and Proofreading. The pub- not be published nor is presently submitted written and the numbers for displayed equa- Pintus (Université de la Méditerranée & GREQAM, France), Simon Potter (Federal Reserve Bank of New York), lisher reserves the right to copyedit and Neil Rankin (University of York, UK), Gilles Saint-Paul (Université de Toulouse, France), Klaus Martin for publication elsewhere. While under ed- tions should be placed in parenthesis in itorial review, it is the responsibility of the the right margin. References to equations proofread all articles for publication, but Schneider (New York University), Apostolos Serletis (University of Calgary, Canada), Frank Smets (European authors to keep the Editor informed about should simply use the form “(3).” Su- the corresponding author will receive page Central Bank, Frankfurt), Tony Smith (Yale University), Peter Norman Sorensen (University of Copenhagen, submissions, publication plans, and actual perscripts and subscripts should be typed proofs for final proofreading. These should be checked and returned within five days of Denmark), Stephen Spear (Carnegie Mellon University), Stephen Turnovsky (University of Washington), publication of related research or abstracts clearly above and below the line, respec- thereof in other outlets, including letters, tively. Theorem, lemma, and proposition receipt. The publisher reserves the right to Francois R. Velde (Federal Reserve Bank of Chicago), Nicolaas Vriend (Queen Mary, University of London), journals, review publications, journals in statements should appear in italic print. charge authors for excessive correction of Neng Wang (Columbia University), Yi Wen (Tsinghua University, Beijing), Noah Williams (University of other disciplines, conference proceedings, End-of-proof signposts should appear as non-typographicalerrors. Wisconsin), Joseph Zeira (The Hebrew University of Jerusalem), Tao Zha (Federal Reserve Bank of Atlanta) and published dissertations. It is further un- such: either or Q.E.D., typed in italics. Offprints. The corresponding author will derstood that all persons listed as authors Authors are encouraged to use the follow- receive 25 free offprints of their article free have given their approval for the submis- ing order for parentheses: {[(...)]}. of charge; additional numbers may be pur- sion of the paper and that any person cited Tables and Figures. If possible, the pub- chased if ordered at proof stage (an order as a source of personal communication has lisher asks that you include all graphics form will be sent with proofs).

Volume 14, Number 4, September 2010 Contents

MD INTERVIEW An Interview with James J. Heckman Interviewed by Donna K. Ginther 548

VINTAGE ARTICLE The Timing of Tax Collections and the Structure of “Irrelevance” Theorems in a Cash-in-Advance Model Thomas J. Sargent and Bruce D. Smith 585

NOTES A Note on the Crowding-Out of Investment by Public Spending Olivier Cardi 604

Downloaded from https://www.cambridge.org/core. IP address: 170.106.34.90, on 01 Oct 2021 at 20:24:20, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S1365100510000696 SUBSCRIPTION INFORMATION: Macroeconomic Dynamics (ISSN 1365-1005) is published five times a year plus supplement. Annual subscription rates for Volume 14, 2010: Institutional rate is (print and electronic) $547.00 in the USA, Canada, and Mexico, £325.00 elsewhere. Institutional rate (electronic only) $457.00 in the USA, Canada, and Mexico, £275.00 elsewhere. Institutional rate (print only) $503.00 in the USA, Canada, and Mexico, £294.00 elsewhere. Individual rate is (print and electronic) $178.00 in the USA, Canada, and Mexico, £100.00 elsewhere. Individual rate (print only) $173.00 in the USA, Canada, and Mexico, £95.00 elsewhere. Students (print only) $122.00 in the USA, Canada, and Mexico, £46.00 elsewhere. For members of the Econometric Society, the Society for the Advancement of Economic Theory, the Society for Nonlinear Dynamics and Econometrics, the Society for Computational Economics, and the Society for the Promotion of Economic Theory the rate is $100.00 in the USA, Canada, and Mexico, £62.00 elsewhere. Institutional access is via IP address range(s) or domain name(s); individual subscriber access is via a username and password. Prices include postage; airmail is extra. Write to Cambridge University Press, 32 Avenue of the Americas, New York, NY 10013-2473, or outside the USA, Canada, and Mexico to Cambridge University Press, The Edinburgh Building, Shaftesbury Road, Cambridge CB2 8RU, England. Claims for missing issues should be made immediately after receipt of the next issue. Periodicals postage pending at NewYork, NY and additional mailing offices. Postmaster: send address changes in the USA, Canada, and Mexico to: Macroeconomic Dynamics, Cambridge University Press, 100 Brook Hill Drive, West Nyack, NY 10994-2133. Send address changes elsewhere to: Macroeconomic Dynamics, Journals Dept., Cambridge University Press, The Edinburgh Building, Shaftesbury Road, Cambridge, CB2 8RU, U.K. c 2010 Cambridge University Press. Photocopying information for users in the USA: The Item-Fee Code for this publication indicates that copying for internal or personal use beyond that permitted by Section 107 or 108 of the US Copyright Law is authorized for users duly registered with the Copyright Clearance Center (CCC) Transactional Reporting Service, provided that the appropriate remittance of $18.00 per article is paid directly to: CCC, 222 Rosewood Drive, Danvers, MA 01923. Specific written permission must be obtained from the publisher for all other copying. The Item-Fee Code for this journal is 1365-1005/10 $18.00. ISI Tearsheet Service, 3501 Market Street, Philadelphia, PA 19104, USA is authorized to supply single copies of separate article for private use only. Article reprints are available from the authors. For orders of 50 or more reprints, contact Cambridge University Press. Macroeconomic Dynamics is indexed in EconLit; The Journal of Economic Literature (e-JEL and JEL on CD); ISI: Current Contents/Social & Behavioral Sciences; Social Sciences Citation Index; Research Alert; Mathematical Reviews; MathSciNet; Zentralblatt fur Mathematik.

EDITORIAL POLICY

Macroeconomic Dynamics publishes research of the highest theoretical, empirical or quantitative sophistication. Papers of high quality are welcomed from all areas of advanced macroeconomics and allied ﬁelds, so long as the research is founded in a rigorous scientiﬁc approach. Major advances in macroeconomics without immediate policy applications also are accepted, if they show potential for application in the future. Occasional book reviews, software reviews, announcements, conference proceedings and interviews are published.

An electronic version of the journal is published just prior to the paper version at journals.cambridge.org/mdy. Access to the full-text articles of the electronic version will be limited to institutional subscribers of the hard copy version of the journal, with access available to all online users at that institution’s registered domain. Tables of Contents, abstracts, searching and alerting services will remain free of charge. To view the full text of Macroeconomic Dynamics, you will need to use the Adobe Acrobat Reader software. If you do not have a copy already, you can get it free of charge. Just follow the link from our Cambridge Journals Online home page, download it, and install it as a plug-in helper application for your browser.