bluuebunny/crossref_metadata_2025 huggingface dataset:
ELECTORAL POLITICS AND THE EXECUTIVE VETO: A PREDICTIVE THEORY
Authors: GRIER KEVIN B. , MCDONALD MICHAEL , TOLLISON ROBERT D.
Published: January 2010

We argue that winner‐take‐all voting in states and the unequal distribution of electoral votes across states in presidential elections makes incumbent presidents rationally place more weight on the preferences of voters in closely contested, larger states when making policy decisions. This hypothesis is tested by examining whether presidential veto decisions are influenced by the floor votes of senators from these electorally crucial states. In a pooled sample of 325 individual bills from 1970 through 1988, we find significant evidence of this behavior by incumbent presidents.
ESTIMATION OF THE DEPRECIATION RATE OF PHYSICAL AND R&D CAPITAL IN THE U.S. TOTAL MANUFACTURING SECTOR
Authors: Nadiri M. Ishaq , Prucha Ingmar R.
Published: January 2010

Numerous studies on production and cost, the sources of productivity, and endogenous growth have recognized the pivotal role played by physical and R&D capital stocks. Analysis of the contributions of these capitals often requires measures of the stocks of physical and R&D capital, which in turn requires measuring their depreciation rates. In this paper we specify a model of factor demand that allows us to estimate the depreciation rates of both physical and R&D capital jointly with other model parameters. The model is estimated for the U.S. total manufacturing sector.
NEW EVIDENCE ON THE RETIREMENT AND DEPRECIATION OF MACHINE TOOLS
Authors: Oliner Stephen D.
Published: January 2010

This paper uses data from machinery dealers to estimate the retirement and depreciation patterns for a broad set of conventional machine tools. According to the dealers, the average service life of these machines at the survey date was about thirty years. Service lives were even longer in the mid‐1970s, with the reduction over time likely caused by the diffusion of superior, computer controlled machines. Consistent with the relatively long average life, the conventional machines have depreciated slowly. I use the results to assess the average service life assumed by the Bureau of Economic Analysis to construct capital stocks for metalworking machinery.
THE INFLUENCE OF CLASSROOM CHARACTERISTICS ON HIGH SCHOOL TEACHER TURNOVER
Authors: Mont Daniel , Rees Daniel I.
Published: January 2010

This paper examines the effect of class load and other factors on teacher turnover. Unlike previous studies, class load characteristics–class size, number of classes taught, and percentage of class time spent in areas outside a teacher's certification area–are included along with salary, personal characteristics, and district characteristics in a discrete time hazard model to simulate the effects of changing classroom characteristics on high school teacher turnover. The results indicate that class load characteristics are important correlates of job turnover. Policy implications for school districts, given a growing school‐age population, are discussed.
THE DYNAMICS OF A STABLE CARTEL: THE RAILROAD EXPRESS 1851–1913
Authors: Grossman Peter Z.
Published: January 2010

The railroad express was probably the most successful cartel in U.S. business history. The key to its stability lay in the fact that collusion was largely an effort to create a cost‐reducing distribution network. Because cost was dependent on collusion, the five cartel members could both underprice entrants and punish defectors. It is shown that in a Bertrand‐type price war, colluding firms could effectively drive a defector into bankruptcy. As a result, the express controlled its market and remained a stable organization for more than half a century.
A MODEL OF “FAMILY FAIRNESS” AND ITS IMPLICATIONS FOR DEBT NEUTRALITY
Authors: Pemberton James
Published: January 2010

Evidence suggests that a signcant proportion, though by no means all, of bequests is equally divided among the beneficiaries. This is inconsistent with standard models of bequests, which predict that equal division should occur only by chance. This paper proposes a modified model incorporating “family fairness” as well as utilitarianism as an influence on behavior. Various implications for debt neutrality are analyzed.
NEW ESTIMATES OF THE OPTIMAL TAX ON ALCOHOL
Authors: Kenkel Donald S.
Published: January 2010

In this paper I use a new data set to estimate the optimal alcohol tax rate. As a benchmark, the empirical results imply that the optimal tax rate is over 100 percent of the net‐of‐tax price. However, alcohol taxation is a second‐best solution to the problems associated with alcohol abuse. I conclude that the optimal alcohol tax rate would be much lower if punishment for drunk driving were more certain and severe. Government provision of information about the health consequences of heavy drinking would also remove part of the efficiency rationale for alcohol taxes.
ARMEN A. ALCHIAN'S INFLUENCE ON ECONOMICS
Authors: Lott John R.
Published: January 2010

Editor's Note: I wish to thank Special Symposium Editor John Lott for his dedicated, vigorous and hard work in setting up the symposium and then in shepherding the manuscripts through the referee and editing process. I also wish to thank Coeditor Rodney Smith, Claremont McKenna College, for serving as our liaison with the special editor. Along with Editorial Coordinator Carolyn Williams, Professors Lott and Smith put together one of the very best one‐day subconferences ever held at a WEA convention. This celebration of the career and influence of Armen Alchian of UCLA, an important and special senior member of our profession, was a wonderful academic experience for all participants, and I trust the insights included in this volume will advance and enrich our thinking about economics as Professor Alchian has throughout his distinguished career.

Frank C. Wykoff, Editor
ARMEN ALCHIAN'S CONTRIBUTION TO MACROECONOMICS
Authors: Jordan Jerry L. , Gavin William T.
Published: January 2010

Armen Alchian's contributions to macroeconomics forged important paths that are still crucial to the understanding of monetary theory and monetary policy. We outline Alchian's examination of the fundamental role of money in society and his work (with Benjamin Klein) on the measurement of inflation. We also detail how, in research with Reuben Kessel, Alchian brought insight into the problems that followed the erratic inflation policies of the 1960s and 1970s, explained the effects of anticipated and unanticipated inflation on the real economy, and described the difficulty of identifying the effects of monetary shocks in macroeconomic data.
CONSUMPTION, WEALTH, AND FINITE HORIZONS: TESTS OF RICARDIAN EQUIVALENCE
Authors: Graham Fred C. , Himarios Daniel
Published: January 2010

We find strongly non‐Ricardian results when we re‐estimate Evans's [1988] model using a better approximation of the market value of wealth. We also examine the long‐run properties of the data and find results consistent with our regression evidence when we allow for declining labor income as modeled by Gali (1990]. Our findings in support of non‐Ricardian behavior by consumers stand in sharp contrast to those of both Evans and Gali.
INTERNATIONAL CURRENCY SUBSTITUTION AND SEIGNIORAGE IN A SIMPLE MODEL OF MONEY
Authors: Imrohoroglu Selahattin
Published: January 2010

This paper investigates the economic signcance of currency substitution using a small, open economy model of money. The main result is that in a low‐inflation economy the seigniorage‐maximizing inflation rate can be quite large despite a very high elasticity of currency substitution when the share of foreign real balances in producing domestic liquidity services is small (as some recent econometric estimates indicate in the case of Canada). This suggests that currency substitution is likely to be of second‐order importance to policymakers in a low‐inflation economy where foreign real balances provide economically small domestic liquidity services.
ALTRUISM, MATCHING, AND NONMARKET INSURANCE
Authors: Chami Ralph , Fischer Jeffrey H.
Published: January 2010

Incomplete market insurance gives rise to nonmarket arrangements for coinsurance. We find that the effort altruistically linked individuals take to avoid an accident increases with the degree of altruism. If the degree of altruism is sufficiently high, an economy with nonmarket insurance yields higher social welfare than an economy without nonmarket insurance. As altruism increases, the equilibrium level of effort approaches the second‐best solution without the need for costly monitoring. Coinsurance is above (below) the socially optimal level if individuals place greater weight (less weight) on their own utility than on that of their partners.
MONOPOLY, MONOPSONY AND CONTESTABILITY IN HEALTH INSURANCE: A STUDY OF BLUE CROSS PLANS
Authors: Foreman Stephen Earl , Wilson John Anderson , Scheffler Richard M.
Published: January 2010

As dominant sellers of health insurance and buyers of health services, Blue Cross and Blue Shield have potential monopoly and monopsony power. The credible threat of entry resulting from the increased competitiveness of these markets in the 1980s may have produced competitive outcomes—reduced prices, improved quality and efficient cost structures—even in a concentrated market. We find the plans used economies of scale and monopsony power to reduce administrative costs, provide payments and consumer premiums. Our findings suggest that steps to enhance the contestability of health markets may be a better response than regulation.
MORE EVIDENCE ON THE MONEY‐OUTPUT RELATIONSHIP
Authors: HAFER R. W. , KUTAN A. M.
Published: January 2010

Recent studies have found that money loses its explanatory power over output if the 2980s are included in the sample. Interest rates, not money, appear to predict output. Using annual data for 1915–1993 and quarterly data for 1960–1993, we demonstrate that the supposed breakdown in the money‐output relationship stems from the type of stationary assumption imposed on the data. Assuming difference‐stationary produces results found in the literature. Assuming trend‐stationary produces results indicating that money and output remain statistically related. Moreover, the change in the stationarity assumption greatly affects the quantitative importance cf interest rates in explaining output.
CROSS‐COUNTRY EVIDENCE ON LONG‐RUN GROWTH AND INFLATION
Authors: CLARK TODD E.
Published: January 2010

While inflation is generally inversely related to growth, I show that estimates of the relationship seer two robustness problems which plague a variety of model specifications. First, growth‐inflation results are highly sensitive to modifications to the country sample, limited from the start to low‐ and moderate‐inflation countries. Second, results are also sensitive to modifications in the time period of analysis. In conjunction with the regression specification sensitivity documented by Levine and Renelt [1992], these results should further discourage the practice cf quantifying inflation's effects with cross‐county growth regressions.
THE EFFECT OF WELFARE PROGRAMS ON CRIMINAL BEHAVIOR: A THEORETICAL AND EMPIRICAL ANALYSIS
Authors: ZHANG JUNSEN
Published: January 2010

A simple economic model of criminal behavior shows that welfare payments will reduce the time allocated to illegal activities under risk aversion and other reasonable assumptions. This theoretical prediction is confirmed by the empirical findings: using a set of cross‐sectional U.S. state data for 1987, it is found that cash or in‐kind welfare programs have a negative and often significant effect on property crime. More general programs such as public housing seem to have a larger effect than those aimed primarily at women (AFDC). Medicaid and school lunch programs apparently have little effect on property crime.
EMPLOYER SEARCH, TRAINING, AND VACANCY DURATION
Authors: BARRON JOHN M. , BERGER MARK C. , BLACK DAN A.
Published: January 2010

We develop a model of optimal employer search strategy when information about match quality is endogenous. The model is tested using four data sets, two of which have not previously been used. As theory predicts, we find that when filling positions requiring more training, employers search more intensively and extensively. Employers also search more extensively when hiring workers with more education and with prior experience. These findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants. Factors that influence employer search also affect the duration of a vacancy.
GOVERNMENT CONSUMPTION AND GROWTH
Authors: EVANS PAUL
Published: January 2010

Using a simple stochastic growth model that nests both exogenous and endogenous growth, this paper shows that the growth rate should be mean stationary if growth is exogenous and difference stationary if growth is endogenous and any variable affecting investment is difference stationary. Permanent changes in the share of output devoted to government consumption should permanently affect the growth rate if and only if, growth is endogenous. I test these implications and find no evidence that growth is endogenous. Furthermore, even if growth is endogenous, the evidence indicates that its degree of endogeneity is likely to be small.
THE DEVELOPMENT AND DECLINE OF MEDIEVAL VOTING INSTITUTIONS: A COMPARISON OF ENGLAND AND FRANCE
Authors: BARZEL YORAM , KISER EDGAR
Published: January 2010

This paper argues that in the middle ages voting institutions emerged as mechanisms that allowed rulers to cooperate with subjects on mutually profitable projects. In spite of their utility, many of these voting institutions eventually declined. We test the model on the English parliament and the French estates general. The historical evidence strongly supports our view that these institutions declined in France, but not in England, due to increases in the heterogeneity of voters' interests and the insecurity of French rulers, since these factors made cooperation between French rulers and their subjects more difficult.
JOB MOBILITY AND GENDER‐BASED WAGE GROWTH DIFFERENTIALS
Authors: KEITH KRISTEN , MCWILLIAMS ABAGAIL
Published: January 2010

Studies of gender differences in the returns to job mobility have yielded conflicting results. We examine whether there are gender differences in mobility patterns or in the returns to different types of mobility. Our results, based on the National Longitudinal Survey of Youth, imply that there are gender differences in mobility patterns, but there are not gender differences in the wage growth associated with different types of mobility. Therefore, it appears that empirical estimates of the gender differences in the returns to job mobility may be misleading if they do not consider the cause of separation.
MINIMUM WAGES AND TIPPED SERVERS
Authors: WESSELS WALTER JOHN
Published: January 2010

Tips allow restaurants to pay servers lower wages. As more servers are hired, each serves fewer meals and earns less in tips. As a result, restaurants must pay a higher wage. This gives them monopsony power over wages. Over some range, a higher minimum wage should increase employment. Empirically, we found the full “reverse C” monopsony pattern of employment for restaurants, with employment first going up and then down as the minimum wage is increased.
DEREGULATING RELIGION: THE ECONOMICS OF CHURCH AND STATE
Authors: IANNACCONE LAURENCE R. , FINKE ROGER , STARK RODNEY
Published: January 2010

Traditional religious research fails to recognize religion as a market phenomenon. It especially overlooks supply‐side factors that shape the incentives and opportunities of religious firms, emphasizing instead demand‐side shifts in the perceptions, tastes, and needs of consumers. This paper reviews the effects of government actions that alter religious supply. Our examples demonstrate that simple deregulation lies at the root of major religious trends and that the vitality of a religious market depends critically upon its competitiveness.
CENTRAL BANKING AS A POLITICAL PRINCIPAL‐AGENT PROBLEM
Authors: FRATIANNI MICHELE , HAGEN JÜRGEN VON , WALLER CHRISTOPHER
Published: January 2010

Due to their ties with elected leaders, central bankers may pursue policies that are not in society's best interests. Consequently, the relationship between the public and the central bank can be characterized as a principal‐agent problem. An inflation and stabilization bias arise as a result of this agency problem and the magnitudes of these biases depend on the political environment. Various institutional proposals for eliminating these biases are examined, and we find that central bank independence and performance contracts work best. However, we argue that central bank independence is preferable for resolving the agency problem.
REEXAMINING THE ADDED WORKER EFFECT
Authors: SPLETZER JAMES R.
Published: January 2010

Panel data with a short recall period are used to examine the effect of a husband's loss of employment on his wife's entry into the labor force. A significant contemporaneous added worker effect is found, although as much as 75% of the added worker effect suggested by descriptive statistics is seen to reflect sample heterogeneity.
APRIL 15 SYNDROME
Authors: SLEMROD JOEL , CHRISTIAN CHARLES , LONDON REBECCA , PARKER JONATHAN A.
Published: January 2010

In tax year 1988, delaying filing income tax returns cost the 73.2 million taxpayers claiming refunds nearly one billion dollars of interest. “Impatient” tax filers, who mail in their tax payments before the filing deadline, passed up $46 million in interest.

We develop a model of tax filing based on stochastic opportunity cost, and then investigate whether filing times are consistent with that model. We find some evidence for this because, ceteris paribus, higher refunds are associated with earlier filing and complex returns are associated with later filing, as are higher incomes (as a proxy for higher costs of time).
INSTITUTIONAL CHANGE AND THE VELOCITY OF MONEY: A CENTURY OF EVIDENCE
Authors: BORDO MICHAEL D. , JONUNG LARS , SIKLOS PIERRE L.
Published: January 2010

We study common features in the income velocity of money, income, and interest rates for Canada, the U.S., the U.K., Sweden and Norway using annual data from 1870. The recently developed and refined techniques of testing for cointegration are employed.

The evidence suggests there is a unique long‐run relationship in velocity but not in income and interest rates. Moreover, we find that only a model which includes institutional change proxies is properly specified. We argue that the evidence is best interpreted in the context of common historical developments in the respective countries' financial systems.
THE MARKET FOR MOTION PICTURES: RANK, REVENUE, AND SURVIVAL
Authors: VANY ARTHUR S. DE , WALLS W. DAVID
Published: January 2010

Every motion picture is an innovation that competes for theater screens and audiences during its brief life against a changing array of imperfect substitutes. We analyze a large sample of motion pictures as an evolving rank tournament of survival and death. The results indicate that the failure rate of motion pictures is time‐dependent and survival time is strongly related to the number of initial bookings. Weekly box office revenue is highly convex in rank, which is consistent with Rosen's superstar phenomenon. Our results have implications for motion picture licensing arrangements, which have been severely restricted by U.S. court decisions.
THE IMPACT OF PSYCHOLOGICAL AND HUMAN CAPITAL ON WAGES
Authors: GOLDSMITH ARTHUR H. , VEUM JONATHAN R. , DARITY WILLIAM
Published: January 2010

Historically, economists have taken the position that psychological capital is either unobservable or immeasurable; thus, heretofore, little evidence has been available on the contribution of psychological capital to wages. Using data drawn from two different waves of the National Longitudinal Survey of Youth, we offer evidence that psychological capital has both a direct effect—via self‐esteem—and an indirect effect—through locus of control—on an individual's real wage. We find a person s wage is more sensitive to changes in self‐esteem than to comparable alterations in human capital. Both relative wages and human capital contribute to self‐esteem.
THE EQUILIBRIUM FED FUNDS RATE AND THE INDICATOR PROPERTIES OF TERM‐STRUCTURE SPREADS
Authors: BOMFIM ANTULIO N.
Published: January 2010

This paper introduces a model‐based measure of the equilibrium federal funds rate and examines the indicator properties of the spread between observed and equilibrium rates. The results are compared to those of existing studies, which implicitly use long‐term interest rates to proxy the equilibrium funds rate. Granger‐causality tests suggest that different measures of the term‐structure spread are dominated by the funds‐rate spread as a forecaster of a wide range of macroeconomic variables. These results are supported by variance‐decomposition analysis. The paper also estimates simple VARs to discuss how the policy stance responds to macroeconomic shocks
EQUILIBRIUM STRUCTURE IN AN ECONOMIC MODEL OF CONFLICT
Authors: NEARY HUGH M.
Published: January 2010

Four different types of equilibrium are possible within a two‐player model of society where only armed self‐enforcement of property rights is possible. The main underlying parameters are the total resource endowment and the initial distribution of this endowment between the players. The parameter space is partitioned into regions in which the respective types of equilibrium occur The equilibrium types involve positive arms expenditure by, respectively, neither player the richer player, and both players; the latter case involves a sub‐type in which the poorer player's entire endowment is expended on arms. (JEL D30, D72, D74)
NONLINEAR BUSINESS CYCLE DYNAMICS: CROSS‐COUNTRY EVIDENCE ON THE PERSISTENCE OF AGGREGATE SHOCKS
Authors: BRADLEY MICHAEL D. , JANSEN DENNIS W.
Published: January 2010

We look for asymmetries in the dynamics of real GDP growth for the G7 countries, using a model by Beaudry and Koop that allows the depth of a recession to influence the rate of growth of output. We find evidence supporting these nonlinearities in four countries, including the United States, but we do not find evidence that the asymmetries are common even among the four countries exhibiting asymmetric behavior. A modification of the model to distinguish between the recession and recovery phases of a business cycle does not change this general finding. The asymmetries discovered by Beaudry and Koop do not appear to be common among the G7 nations. (JEL E32)
PENSIONS AND WAGE PREMIA
Authors: MONTGOMERY EDWARD , SHAW KATHRYN
Published: January 2010

We hypothesize that the magnitude of the pension‐wage compensating differential should vary by sector, because sectoral differences in firms ‘technologies result in cost differences in providing non‐wage benefits’. Using data from the Survey of Consumer Finances, we find that the pension‐wage compensating differential is smaller in the union sector and large firms than in small, nonunion firms. Controls for sectoral selectivity do not alter the results. Thus, workers at unionized and large firms pay a lower implicit price for their pensions either because pensions have productivity‐enhancing effects, or because these firms pay workers economic rents via pensions. (JEL 532, J31, 541)
ENTREPRENEURIAL ORIGINS: A LONGITUDINAL INQUIRY
Authors: SCHILLER BRADLEY R. , CREWSON PHILIP E.
Published: January 2010

Ever since Schumpeter identified the “animal spirits” of entrepreneurs as the driving force of markets, researchers have been trying to determine who is an entrepreneur and what factors breed entrepreneurial success. Using data from the National Longitudinal Surveys of Youth, we first determine who pursues self‐employment in their youth, and then who succeeds. There is a surprisingly high incidence of self‐employment, but very low success rates. Significant correlates of both entry into self‐employment and eventual success differ markedly by gender. (JEL 523)
WHY DON'T POOR COUNTRIES CATCH UP? A CROSS‐NATIONAL TEST OF AN INSTITUTIONAL EXPLANATION
Authors: KEEFER PHILIP , KNACK STEPHEN
Published: January 2010

Early neoclassical analyses predicted that poor countries would grow faster than wealthy countries, because of technological advances and diminishing returns to capital in the latter. The reverse has occurred: poor countries are falling back rather than catching up. We suggest here that deficient institutions underlie this divergence. Employing various indicators of institutional quality, including the rule of law, the pervasiveness of corruption, and the risk of expropriation and contract repudiation, we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place. (JEL O00, O10)
A FEDERAL FUNDS RATE EQUATION
Authors: MEHRA YASH P.
Published: January 2010

This paper presents evidence that indicates that U.S. interest rate policy during most of the 1980s can be described by a reaction function in which the federal funds rate rises if real GDP rises above potential GDE if actual inflation accelerates, or if the long‐term bond rate rises. Money growth when included in the reaction function is significant, indicating that money also influenced policy. The results presented here however indicate that in recent years the Fed has discounted the leading indicator properties of money. (JEL E5)
ASYMMETRIC ADJUSTMENTS OF PRICE AND OUTPUT
Authors: TINSLEY P. A. , KRIEGER REVA
Published: January 2010

Classical theories predict rapid price adjustments, which are observed in inflationary episodes; Keynesian theories of sticky prices predict sluggish price responses, which are observed in contractions. We attempt to reconcile these observations in a model with asymmetries in producer price and output adjustments. Analysis of SIC two‐digit industry data indicates production frequently exhibits negative asymmetry‐shortfalls from trend are larger than positive deviations‐whereas price often displays positive avmmetry. Evidence supporting two rational motives for asymmetric pricing is presented, but causal interactions between output and price asymmetries are not resolved. (JEL E3)
TEACHING TOOLS: SIMULATING MONEY SUPPLY CREATION IN CLASS
Authors: CAMERON NORMAN E.
Published: January 2010

Students in introductory economics or intermediate macroeconomics can learn and experience the process of creating money through an interactive simulation in which students play the roles of bankers, loan customers, and business firms. The simple version of this simulation is easy to set up, though many instructors will find the more structured version worth the additional setup cost. During the structured simulation, students encounter other macroeconomic concepts such as the marginal efficiency of investment curve, and broad versus narrow money. This simulation offers some experiential learning and adds variety to a macroeconomics course. (JEL A22)
MORTGAGE LENDING TO MINORITIES: WHERE'S THE BIAS?
Authors: DAY THEODORE E. , LIEBOWITZ S. J.
Published: January 2010

This paper examines mortgage lending and concludes that studies based on data created by the Boston Fed should be reevaluated. A detailed examination of these data indicates that irregularities in these data, when combined with the most commonly used research methodology, appear to have biased previous research toward a finding of discrimination against minority applicants. When the most severe data irregularities are eliminated, evidence to support a hypothesis of discrimination disappears. The currently fashionable “flexible” underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the “beneficiaries” of these policies. (JEL J7, G28)
THE DURATION OF THE SMOKING HABIT
Authors: DOUGLAS STRATFORD
Published: January 2010

I investigate the determinants of the hazard rates of both starting and quitting the cigarette smoking habit. The model is an ordered probit split‐sample duration model with lagged duration dependence and time‐varying covariates (cigarette price and regulation). Duration of the smoking habit is approximately unitary elastic with respect to cigarette price. The hazard rate of starting smoking peaks sharply and quickly declines before age 20. Both nonparametric and parametric results indicate that the quitting hazard rate rises with the habit's duration, a result at odds with survey data but consistent with the economic model of rational addiction. (JEL C41, 112)
GEOGRAPHICALLY LOCALIZED KNOWLEDGE: SPILLOVERS OR MARKETS?
Authors: ZUCKER LYNNE G. , DARBY MICHAEL R. , ARMSTRONG JEFF
Published: January 2010

Using detailed data on California biotechnology, we find that the positive impact of research universities on nearby firms relates to identifiable market exchange between particular university star scientists and firms and not to generalized knowledge spillovers. Poisson and two‐stage Heckman regressions indicate the number of star‐firm collaborations powerfully predicts success: for an average firm, five articles coauthored by academic stars and the firm's scientists imply about five more products in development, 3.5 more products on the market, and 860 more employees. Stars collaborating with or employed by firms, or who patent, have significantly higher citation rates than pure academic stars. (JEL O31, D62, L65, L66)
INFERENCE USING QUALITATIVE AND QUANTITATIVE INFORMATION WITH AN APPLICATION TO MONETARY POLICY
Authors: JEFFERSON PHILIP N.
Published: January 2010

I propose a framework for drawing inferences about an unobserved variable using qualitative and quantitative information. Using this framework, I study the timing and persistence of monetary policy regimes and compute probabilistic measures of the qualitative indicator's reliability. These estimates suggest that (1) it is over one and one‐half times more likely that monetary policy is not restrictive at any point in time, (2) Boschen and Mills's [1995] policy index is a reliable indicator of the stance of monetary policy, and (3) certain qualitative indicators of monetary policy improve interest rate forecasts that are based on linear forecasting models. (JEL C22, E52)
MONETARY INTEGRATION, INFLATION CONVERGENCE AND OUTPUT SHOCKS IN THE EUROPEAN MONETARY SYSTEM
Authors: WESTBROOK JILLEEN R.
Published: January 2010

Studies on monetary convergence in Europe have reached mixed conclusions, raising questions about whether the European Monetary System failed to expedite convergence, or whether convergence requires redefining. A definition of convergence is explored that conditions monetary policy on factors affecting real exchange rates. Inflation rates have converged, while unconditional monetary policies have not. Once conditioning factors are considered, much of the gap between inflation and monetary convergence is explained. Differences in output trends do not explain the gap, while velocity variability does. (JEL F33)
COMPUTERS, PRODUCTIVITY, AND INPUT SUBSTITUTION
Authors: STIROH KEVIN J.
Published: January 2010

This paper examines the relationship between computers and economic growth using U.S. sectoral data from 1947 to 1991. The computer‐producing sector shows strong multi‐factor productivity growth that reflects the fundamental technological progress behind the computer revolution. Although aggregate multi‐factor productivity remains low, the computer‐producing sector made a substantial contribution to its modest revival in the 1980s. In sharp contrast, computer‐using sectors show little multi‐factor productivity growth since 1973. For these sectors, the computer revolution is largely a story of traditional input substitution, investment and rapid capital accumulation with little evidence that computer investment affects multifactor productivity. (JEL O30, O47)
HEDONICS AND DEMAND ANALYSIS: THE IMPLICIT DEMAND FOR PLAYER ATTRIBUTES
Authors: STEWART KENNETH G. , JONES J.C.H.
Published: January 2010

Although a significant econometric literature is concerned with the implicit demand for the attributes of differentiated goods in hedonic pricing models, the literature has developed independently of modern econometric demand analysis. This study estimates factor demand systems using data on player characteristics employed by Major League Baseball teams, and associated estimated hedonic prices. It is found that the implicit demand for player attributes by teams is largely consistent with the predictions of the neoclassical theory of the firm, in contrast to the results often obtained by empirical demand studies using conventional data sets. (JEL D21)
LIQUIDITY CONSTRAINTS AND THE SUBSTITUTABILITY BETWEEN PRIVATE AND GOVERNMENT CONSUMPTION: THE ROLE OF MILITARY AND NON‐MILITARY SPENDING
Authors: EVANS PAUL , KARRAS GEORGIOS
Published: January 2010

Using data from 66 economies, we examine (i) the substitutability between private consumption and military and non‐military government spending, and (ii) the severity of liquidity constraints. Although the estimated substitutability parameters are fragile, private consumption and non‐military government spending are shown to be generally substitutes, whereas private consumption and military spending are better described as complements. The fraction of income that accrues to liquidity constrained households is typically positive, and the severity of liquidity constraints (which is robust and precisely estimated) is shown to be negatively related to saving rates, and positively related to the variability of transitory income. (JEL E62, E21)
ESTIMATING THE LIQUIDITY OF M2 COMPONENTS IN THE POST‐DIDMCA ERA
Authors: DUTKOWSKY DONALD H. , DUNSKY ROBERT M.
Published: January 2010

This paper estimates the liquidity of M2 components within an intertemporal model of a representative household. A modification of Pfann and Verspagen's asymmetric adjustment cost function measures liquidity cost. Generalized Method of Moments estimation of structural parameters using monthly data for December 1983–March 1993 reveals significant evidence of asymmetry toward decreasing asset holdings for all components except demand deposits. Estimated withdrawal costs for savings deposits, money market mutual funds, and small time deposits are small. Split sample estimations suggest greater liquidity in the more recent period. The results point to the effects of financial innovation in lowering withdrawal costs. (JEL E51, D91)
THE EFFECT OF CONCEALED WEAPONS LAWS: AN EXTREME BOUND ANALYSIS
Authors: BARTLEY WILLIAM ALAN , COHEN MARK A.
Published: January 2010

Lott and Mustard [1997] provide evidence that enactment of concealed handgun (“right‐to‐carry”) laws deters violent crime and induces substitution into property crime. A critique by Black and Nagin [1998] questions the particular model specification used in the empirical analysis. In this paper, we estimate the “model uncertainty” surrounding the model specified by Lott and Mustard using an extreme bound analysis (Leamer [1983]). We find that the deterrence results are robust enough to make them difficult to dismiss as unfounded, particularly those findings about the change in violent crime trends. The substitution effects are not robust with respect to different model specifications. (JEL K42)
OPTIMAL PUNISHMENT SCHEMES WITH STATE‐DEPENDENT PREFERENCES
Authors: NEILSON WILLIAM S.
Published: January 2010

The optimal tradeoff between the certainty and severity of punishment is studied in a setting in which individuals are more sensitive to changes in certainty than severity and have state‐dependent preferences—being convicted of a crime reduces utility at every wealth level. In this setting it is not optimal to set the probability of punishment at one even if it is costless to convict criminals, because reducing the certainty of punishment also reduces the probability that offenders' utility functions shift downward. The optimal level of certainty is therefore lower than that implied by prior studies based on state‐independent preferences. (JEL K42, D81)
ENVIRONMENTAL PROTECTION IN THE FEDERALIST SYSTEM: THE POLITICAL ECONOMY OF NPDES INSPECTIONS
Authors: HELLAND ERIC
Published: January 2010

This paper examines the consequences of the delegation of regulatory authority to local officials. The study evaluates three hypotheses of the role delegation plays in the implementation of regulatory policy: (1) the federal case, which predicts that delegation has no effect, (2) the state/local model predicts that delegation is, in fact, abdication, and (3) the full impact model predicts that both interests determine how environmental policy is implemented. The results provide evidence that while delegation does not completely remove national policy maker's ability to alter regulatory policy, it does allow local interests to alter national standards. (JEL L51, Q28)
BEHAVIORAL FOUNDATIONS OF RECIPROCITY: EXPERIMENTAL ECONOMICS AND EVOLUTIONARY PSYCHOLOGY
Authors: HOFFMAN ELIZABETH , MCCABE KEVIN A. , SMITH VERNON L.
Published: January 2010

Laboratory experiments have generally supported the theorem that, in classical property rights environments, noncooperative behavior in markets yields efficient social outcomes. Experiments, however, regularly fail to support the game theoretic prediction of noncooperative behavior in small‐group strategic interaction and in large‐group public good environments. In these two types of experiments subjects frequently achieve more efficient social outcomes–they collect more money from the experimenter–than noncooperative game theory predicts. Many subjects in these experiments exhibit reciprocity even in single‐play games. Evolutionary psychologists hypothesize that humans have evolved mental algorithms for identifying and punishing cheaters in social exchange. (JEL A11, A12, B41, C70, C72, C92)
RATIONALITY AND THE “RELIGIOUS MIND”
Authors: IANNACCONE LAURENCE , STARK RODNEY , FINKE ROGER
Published: January 2010

The social‐scientific study of religion has long presumed that religious thought is “primitive,” non‐rational, incompatible with science, and (thus) doomed to decline. Contemporary evidence, however, suggests that religious involvement correlates with good mental health, responds to perceived costs and benefits, and persists in the face advanced education and scientific training. Although professors, scientists, and other highly educated Americans are less religious than the general population, the magnitude of this effect is similar to those associated with gender, race, and other demographic traits. Moreover, “hard” science faculty are more often religious than faculty in the humanities or social sciences.(JELZ10)
SOCIAL SECURITY, THE FAMILY, AND ECONOMIC GROWTH
Authors: EHRLICH ISAAC , LUI FRANCIS T.
Published: January 2010

We show that a defined‐benefits PAYG social security system distorts key family‐based choices that affect economic growth. We identify human capital as the engine of growth, and the motivating forces linking the family's overlapping generations as mutually productive intergenerational transfers and/or altruism. The PAYG system is shown to affect adversely at least one of three determinants of the economy's growth path: fertility, savings, and investment in human capital. The specific effects may vary over different stages of economic development. The growth rate is expected to fall in advanced economies. Our analysis indicates that the effect may be sizeable. (JEL 915, 111, 850)
AN ECONOMETRIC ANALYSIS OF CHARITABLE GIVING WITH INTERDEPENDENT PREFERENCES
Authors: ANDREONI JAMES , SCHOLZ JOHN KARL
Published: January 2010

Many economists and social scientists have conjectured that individual gifts to charity may be interdependent. This paper explores empirically how an individual's charitable contributions may be affected by the giving of others in a “reference group” of similar individuals. We find modest evidence of interdependence of preferences through these reference groups, although the aggregate effects are not large. Hence, we conclude that the inferences from standard models, which ignore interdependence of preferences, are not likely to be misleading. (JEL H31, H41, D12)
INCENTIVES, PREDESTINATION AND FREE WILL
Authors: GLAESER L. , GLENDON SPENCER
Published: January 2010

Without wholeheartedly endorsing Max Weber's views on Protestantism and economic growth, we present a model formalizing his claim that belief in predestination was a component in economic development. Our model suggests that belief in predestination is more effective when heterogeneity of beliefs is high, when the desire for homogeneity is high, or when accurate signals about ethics are important. Using the General Social Survey, we find that Protestants generally and Presbyterians in particular exhibit a stronger connection between individual and group behavior and between worldly success and church attendance. (JEL A13, Z10)
IS THE TIME‐SERIES EVIDENCE ON MINIMUM WAGE EFFECTS CONTAMINATED BY PUBLICATION BIAS?
Authors: NEUMARK DAVID , WASCHER WILLIAM
Published: January 2010

Existing meta‐analysis approaches to testing for publication bias are problematic when applied to time‐series studies in economics, because changes in parameters can generate spurious evidence of publication bias. We suggest an alternative test in such contexts, and apply it to time‐series studies of the effects of minimum wages on employment. In contrast to recent research by Card and Krueger [1995a], we find that the results of published time‐series studies of minimum wage effects are consistent with structural change, and that the null hypothesis of no publication bias is not rejected by the evidence. (JEL B41, C22, C40, J23)
FINANCIAL MARKET VARIABLES DO NOT PREDICT REAL ACTIVITY
Authors: THOMA MARK A. , GRAY JO ANNA
Published: January 2010

The past decade has seen an extensive empirical reassessment of the information content of financial market variables sensitive to monetary policy. Particularly provocative are recent papers suggesting that some interest rates and interest rate spreads contain more information about economic activity than monetary aggregates. This paper reviews important methodological pitfalls in these studies. We then show that none of the commonly employed measures of monetary policy contain incremental information useful in forecasting real economic activity. Two conclusions are possible. Either monetary policy innovations have no significant real effects, or we (collectively) have failed in our efforts to measure monetary policy. (JEL E52)
ECONOMIC MAN AS A MORAL INDIVIDUAL
Authors: DOWELL RICHARD S. , GOLDFARB ROBERT S. , GRIFFITH WILLIAM B.
Published: January 2010

We propose a concrete method for including moral concerns in preferences. In our framework, the agent maximizes utility subject to constraints, but the utility from consuming a specific commodity bundle varies in a “lumpy” or “discontinuous” way with the concurrent moral content of the individual's behavior. Our method also indicates how constraints vary with this moral content. Our approach seems more intuitively appealing than several competing frameworks, and can be used to explain a number of otherwise puzzling phenomena. (JEL D11, A13)
THE EFFECT OF THE DESIGNATED HITTER RULE ON HIT BATSMEN: PITCHER'S MORAL HAZARD OR THE TEAM'S COST‐BENEFIT CALCULATION? A COMMENT
Authors: TRANDEL GREGORY A. , WHITE LAWRENCE H. , KLEIN PETER G.
Published: January 2010

Goff, Shughart and Tollison [1997] attribute the American League's higher hit‐batsman rate since 1973 to moral hazard: pitchers who no longer bat no longer face retaliation. We argue that retaliation is more efficiently directed at sluggers than at weak‐hitting pitchers, and show that American League Designated Hitters (DHs) are plunked more frequently than are National League pitchers. We also offer a new estimating equation and update GST's sample. We show that the DH's effect on hit batsmen is no longer statistically significant. However, the point estimates are close to our prediction, which does not rely on moral hazard. (JEL D81, J28)
THE HAZARDS OF MORAL HAZARD: COMMENT ON GOFF, SHUGHART, AND TOLLISON
Authors: LEVITT STEVEN D.
Published: January 2010

Goff et al. [1997] argue that the sharp increase in the number of hit batsmen after the adoption of the designated hitter rule is due to moral hazard. I argue instead that simple changes in the composition of batters faced explains much of the observed effect. Pitchers are bad hitters and therefore are much less likely to be hit than their designated hitters. Furthermore, there is no correlation between the frequency with which individual pitchers hit opposing batsmen and their personal likelihood of being hit by a pitch while batting, contrary to the predictions of the moral hazard model. (JEL D81, J28)
MORAL HAZARD AND THE EFFECTS OF THE DESIGNATED HITTER RULE REVISITED
Authors: GOFF BRIAN L. , II WILLIAM F. SHUGHART , TOLLISON ROBERT D.
Published: January 2010

New evidence seems to cast doubt on the hypothesis that the American League's adoption of the designated hitter (DH) rule in 1973 created a moral hazard problem for pitchers. In particular, the substitution of hard‐hitting DHs for weak‐hitting pitchers in the American League supposedly explains the lion's share of inter‐league differences in hit batsmen. However, theoretical and empirical questions about the explanatory power of this alternative hypothesis lead us to the conclusion that moral hazard remains the most plausible reason why more AL than NL batters have been hit by pitches in 22 of the past 25 seasons. (JEL D81, J28)
MONEY AND MIDDLEMEN IN AN ECONOMY WITH PRIVATE INFORMATION
Authors: Li Yiting
Published: January 2010

This paper extends the Williamson‐Wright model to study interaction between money and middlemen in an economy with qualitative uncertainty concerning the consumption goods. It is shown that with private information as the only trading friction, given that expert middlemen endogenously arise, people may still be willing to adopt indirect exchange involving money. Generally recognizable money improves welfare by promoting useful exchange and economizing on the cost of agents becoming middlemen. In an economy with trading frictions caused by private information and a double coincidence of wants problem, we show that there is room for both intermediary institutions. (JEL E40, D82)
RAISING THE STAKES IN THE ULTIMATUM GAME: EXPERIMENTAL EVIDENCE FROM INDONESIA
Authors: Cameron Lisa A.
Published: January 2010

The ultimatum game has generated considerable interest because experimental evidence strongly rejects the standard game‐theoretic predictions. A limitation to this general result is the possibility that experimental results are an artifact of small stakes. Implementing the ultimatum game in Indonesia makes it possible to raise the stakes to three times the monthly expenditure of the average participant. Even with these sizable incentives, results do not uniformly approach the sub‐game perfect, selfish outcomes. More specifically, responders become more willing to accept a given percentage offer at higher stakes, but proposer behavior is largely invariant to stake changes. (JEL C91, C78)
TARIFF POLICY AND ENTRY WITH COST‐BASED INFORMATIONAL ASYMMETRIES
Authors: Herander Mark G. , Kamp Brad
Published: January 2010

This study introduces a cost‐based informational asymmetry into a two period signaling model. We examine the effects of import tariff policy within this environment of incomplete information and compare them to the standard, full information effects. When tariff rates can be credibly fixed, the standard effects of tariff policy may be significantly altered. For example, lower tariffs may discourage foreign entry because of the induced signaling effects of tariff policy. Moreover, because the impact of tariff policy depends on the cost structure of domestic firms, uninformed policymakers will not be able to predict the qualitative effects of tariff policy. (JEL F12, F13)