WHO PAYS THE SEVERANCE TAX?

Over the past four years, taxes levied by states on energy production have become a source of contention between the “energy have” and “energy have–not” regions of the nation. The popular notion that the taxes are shifted forward to consumers has gone virtually unchallenged in the policy debate. This paper examines the incidence and burden of severance taxes and also assesses the impact of severance taxation on production, investment, and land use. The author concludes that severance taxes are not shifted forward to consumers but are borne by producers and resources owners in the form of reduced profits and rents.     

Book reviews

SHOWCASE STATE: THE ILLUSION OF INDONESIA'S ‘ACCELERATED MODERNISATION’. Rex Mortimer (ed.). Angus and Robertson, 1973. 164 pp; 0–207–12826. $3.95 softbound, $5.95 hardbound.

FOREIGN POLICY AND NATIONAL INTEGRATION: THE CASE OF INDONESIA. Jon M. Reinhardt. Yale University Southeast Asia Studies, Monograph Series No. 17, 1971. Distributed by The Cellar Book Shop, 18090 Wyoming, Detroit, Michigan 48221. $US6.50.

ISLAMIC COURTS IN INDONESIA: A STUDY IN THE POLITICAL BASES OF LEGAL INSTITUTIONS. Daniel S. Lev. University of California Press, Berkeley, London, 1972. 281 pp.

AUSTRALIAN FOREIGN POLICY: TOWARDS A REASSESSMENT. Claire Clark (ed.). Cassell Australia, Melbourne, 1973. 274 pp. $3.75.

FREEDOM IN AUSTRALIA. Enid Campbell and Harry Whitmore. Second edition, Sydney University Press, Sydney, 1973. 488 pp. $15 cloth, $10 paper.

CONTEMPORARY NEW ZEALAND. K. W. Thomson and A. D. Trlin (eds.). Hicks Smith, Wellington, 1973. 456 01430 6. 218 pp.

CANADA'S SEARCH FOR NEW ROLES: FOREIGN POLICY IN THE TRUDEAU ERA. Peter C. Dobell. Oxford University Press, London, 1972. 0–19–285057–1. 161 pp. $5.10.

SOUTH AFRICA'S FOREIGN POLICY 1945–19701 James Barber. Oxford University Press, 1973. 0–19–21561–9. 325 pp. $13.15.

POWER AND EQUILIBRIUM IN THE 1970s. Alastair Buchan. Chatto & Windus, London, 1973. 0–7011–1998–5. 120 pp. $6.80.

THE SOVIET UNION IN WORLD AFFAIRS: A DOCUMENTED ANALYSIS, 1964–72. W. W. Kulski. Syracuse University Press, Box 8, University Sta, Syracuse, N.Y. 13210, USA, 1973. 526 pp. $US5.95 paper, $US17.50 hard cover.

THE RISE AND FALL OF THE NEW ROMAN EMPIRE: ITALY'S BID FOR WORLD POWER, 1890–1943. G. St. J. Barclay. Sidgwick and Jackson, London, 1973. 210 pp. 0283 97862. £3.95stg.

THE FRENCH COMMUNIST PARTY VERSUS THE STUDENTS. Richard Johnson. Yale University Press, New Haven & London, 1972. 215 pp. 0–300–01525–9. $8.00 cloth, $1.95 paper.

STUDIES IN DEMOGRAPHY. Ashish Bose, P. B. Desai, and S. P. Jain (eds.). The University of North Carolina Press, 1972. 579 pp. $12.95.

A DIPLOMATIC HISTORY OF MODERN INDIA. Charles H. Heimsath and Surjit Mansingh. Allied Publishers, Calcutta, 1971. .559 pp. Rs. 30.

CHINA: THE REVOLUTION CONTINUED. Jan Myrdal and Gun Kessle. Penguin Books, U.S.A., 1973. 155 pp. $2.20.

MAO TSE‐TUNG AND GANDHI: PERSPECTIVES ON SOCIAL TRANSFORMATION. J. Bandyopadhyaya. Allied Publishers, Calcutta, 1973. 156 pp.

STUDIES IN POLITICS: NATIONAL AND INTERNATIONAL. M. S. Rajan (ed.). Vikas Publications, Delhi, 1971. 512 pp. Rs. 60.     

PANEL DATA MODELS WITH SPATIALLY DEPENDENT NESTED RANDOM EFFECTS

This paper focuses on panel data models combining spatial dependence with a nested (hierarchical) structure. We use a generalized moments estimator to estimate the spatial autoregressive parameter and the variance components of the disturbance process. A spatial counterpart of the Cochrane‐Orcutt transformation leads to a feasible generalized least squares procedure to estimate the regression parameters. Monte Carlo simulations show that our estimators perform well in terms of root mean square error compared to the maximum likelihood estimator. The approach is applied to English house price data for districts nested within counties.     

Analyzing Cross-classified Data with Inherent Spatial Dependence

Despite considerable recent progress in the methods available for the log-linear analysis of categorical data arising from complex sampling schemes, only a few papers have been published that deal with the parallel phenomenon of dependence induced by spatial sampling. This paper aims to add to the general awareness of this topic and suggests some new ideas for tackling the problems raised. In the paper it is shown that the method that has been proposed for the valid selection of log-linear models given spatially dependent data and some derivative methods are somewhat conservative when compared to an approach based on a model of spatial dependence outlined in section 4. The method also serves as a data exploratory technique to enhance the use of the more robust conservative approach.