In the case of U. S. agricultural policy, this paper shows how governmental intervention can be formally incorporated in a conditional-vector-error-correcting model. From the resulting theoretical framework and empirical analysis, formal hypotheses are tested regarding both forward and backward...

Because policymakers may consider the state of the economy when setting taxes, endogeneity bias can arise in regression models that estimate relationships between economic variables and taxes. This paper quantifies the policy endogeneity bias and estimates the impact of R&D tax incentives on R&D...