bluuebunny/crossref_metadata_2025 huggingface dataset:
BANK RESERVE REQUIREMENTS AS AN IMPEDIMENT TO SIGNALING
Authors: GREENBAUM STUART I. , THAKOR ANJAN V.
Published: January 2010

Effective legal reserve requirements may hamper the private capital market's ability to price bank deposits. In the model developed here, the market has less information about bank assets than the banks have, and a bank can therefore signal its superior information through its choice of excess reserves. Mandatory reserves can inhibit such signaling and therefore result in inefficient deposit pricing.
INVOLUNTARY, EMPLOYMENT IN CONTRACTS WITH RISKY JOB SEARCH
Authors: BAOWN ELEANOR P.
Published: January 2010

The implication of partially insurable job search risk for incentive compatibility in a standard contracting framework are explored. When unemployment spells provoke job search, workers face risk in spell duration and reemployment wages. When search effort is not variable, contracts including unemployment insurance will yield involuntary employment. When search effort is diminished by UI benefits, firms shift some compensation back to wages, increasing the relative attractiveness of employment. The analysis begins with a theorem on incomplete insurance by Imai, Geanakoplos and Ito [1981] for which a simple proof and economic intuition are provided.
A POSITIVE THEORY OF INFLATION AND INFLATION VARIANCE
Authors: DEVEREUX MICHAEL
Published: January 2010

Empirically, inflation and the variance of inflation are positively associated. This paper develops a model that provides a potential explanation for this relationship in tern of the incentives facing the policymaker in a “discretionary equilibrium.” The model can also account for an empirical association between inflation and measures of real output instability. There is, however, no direct causal link whatever from the average rate of inflation to either the variance of inflation or that of real output.
CO‐MOVEMENTS IN RELATIVE COMMODITY PRICES AND INTERNATIONAL CAPITAL FLOWS: A SIMPLE MODEL
Authors: JONES RONALD W.
Published: January 2010

Suppose a number of countries produce a commodity which employs local labor and a type of capital that is internationally mobile. Within the framework of a specific‐factors model the paper argues that there is a presumption about the international movement of capital when the relative price of the industry using that capital rises on world markets. Capital flows towards countries less heavily involved in producing the commodity; internal labor flows contribute toward worldwide industry dispersion; and the volume of international trade in that commodity tends to fall.
DO DEVALUATIONS IMPROVE THE TRADE BALANCE? THE EVIDENCE REVISITED
Authors: HIMARIOS DANIEL
Published: January 2010

This paper reexamines the effectiveness of devaluation in trade balance adjustment. The question is addressed in a framework which improves the previous empirical literature in several respects. The evidence indicates that devaluations have been a successful tool in inducing trade balance adjustment. In particular, nominal devaluations are found to result in significant real devaluations that last for at least three years, and the real devaluation induces significant trade flows that are distributed over a two‐to three‐year period. The evidence comes from two different samples, 1953‐73 and 1975‐84, involving twenty‐seven countries and sixty devaluation episodes.
TAX RATES AND LABOR SUPPLY IN FISCAL EQUILIBRIUM
Authors: SNOW ARTHUR , WARREN RONALD S.
Published: January 2010

A central tenet of supply‐side economics is that a balanced‐budget reduction in the marginal tax rate on wage income increases aggregate labor supply. In contrast, the orthodox Keynesian analysis concludes that the relationship between tax rates and the economy‐wide supply of labor is theoretically ambiguous. Our analysis of a general model reveals that these two propositions are associated, respectively, with the special assumptions of “compensated independence” and “ordinary independence” between leisure and public spending.
COMPUTER APPLICATIONS ECONOMICS: ON‐LINE AND INTERACTIVE
Authors: WYKOFF FRANK C.
Published: January 2010

Utilizing modern computer languages, economic researchers and students can obtain maximum flexibility, portability, intellectual satisfaction, and sound research techniques by employing the computer on‐line and interactively without relying on canned programs like SPSS, TSP and other “black boxes”. The author exploits this method in research as well as in classes from principles to econometrics.

The power of new languages is illustrated with APL for two economic applications: (1) construction of GNP indexes from price and quantity data, and (2) a multiple regression model. The latter, including coefficient estimates, predicted and actual dependent variables, individual errors, and the sum of squared residuals, takes one short line of code.
DOES EXCHANGE RATE APPRECIATION ‘DEINDUSTRIALIZE’ THE OPEN ECONOMY? A CRITIQUE OF U.S. EVIDENCE
Authors: Glick REUVEN , Hutchison MICHAEL
Published: January 2010

This paper takes a critical look at the conventional view that the dollar exchange rate appreciation during the early 1980s caused a major resource shift in the U.S. economy away from tradables production, such as manufactures, toward nontradables production. We argue that the association of a dollar appreciation with relative strength or weakness in the tradable goods sector depends on the particular shock causing the appreciation, and consequently that the relation between exchange rates and the sectoral composition of output is unlikely to be stable over time. Our empirical analysis finds evidence of instability in the exchange rate–sectoral output link and of a positive association between tradables output and fiscal stimulus.
WORKER ATTITUDES AND THE COST OF PRODUCTION: HYPOTHESIS TESTS IN AN EQUILIBRIUM MODEL
Authors: Norsworthy J. R. , Zabala CRAIG A.
Published: January 2010

This paper extends the application of neoclassical production theory to include the effects of worker attitudes on productivity and cost of production, using data for the U.S. automobile industry. Behavioral indicators of worker attitudes are imbedded in a standard four‐input translog cost function. The coefficients of the imbedded function are determined in estimation of the cost function simultaneously with its share equations. Hypotheses concerning the effects of worker attitudes on the cost function are tested, and the properties of the index of worker attitude that emerge from the estimation are examined.
THE GROWTH OF SOCIAL SECURITY: ELECTORAL PUSH OR POLITICAL PULL?
Authors: Congleton ROGER D. , ShughartII WILLIAM F.
Published: January 2010

The social security program has grown more than a thousand fold since its inception. Even fnter the increased number of retired persons and inflation are accounted for, average real social security benefit levels more than tripled from the late 1940s to the early 1980s. What accounts for this growth? This paper finds that increased retirement benefit levels are generated by changes in the constraints faced by the median voter rather than by changes in the political power of special interest groups. The results suggest that the median voter has a finite planning horizon.
WHY ECONOMIC REFORMS FAIL IN THE SOVIET SYSTEM–A PROPERTY RIGHTS‐BASED APPROACH
Authors: Winiecki JAN
Published: January 2010

Why do economic reforms fail in Soviet‐type system despite the obvious interest of ruling groups in improving the performance of their ailing economies? The author applies a property rights based analysis stressing modes of rent‐maximization by ruling groups as a crucial explanatory variable. Party apparatchiks and economic bureaucrats‐particularly benefit from persistent interference in the economic sphere and consequently are most interested in maintaining the status quo. The author surveys the impact of these motivations on the content of economic reforms, outlines the strategies of counterreformers and predicts the future of reforms in Soviet‐type economies.
EMPLOYMENT AND WELFARE PARTICIPATION AMONG WOMEN
Authors: Bassi LAURIE J.
Published: January 2010

The model makes a distinction between “voluntary” and “involuntary” welfare receipt. the findings suggest that among female heads of households, the increase in welfare receipt that occured between 1967 and 1979 was almost completely attributable to an increase in involuntary unemployment and an increase in the proportion of the population that was eligible for welfare (due to changes in program parameters). The passage of time, used as a proxy for changes in the stigma associated with receiving welfare, appears to be a secondary importance. The labor supply response to welfare programs is small, and possibly diminishing over time.
CAPITAL CONTROLS AND DEVIATIONS FROM PROPOSED INTEREST RATE PARITY; MEXICO 1982
Authors: Spiegel MARK M.
Published: January 2010

An intervention analysis of the Mexican capital control policy of August 1982 shows the policy to have a negative, but temporary, impact on the Mexican deviation from interest rate parity. Previous studies concerning the impact of capital control inteventions have predicted positive effects of capital control policies. These stem from the effective tax capital controls place on foreign capital inflows. When capital controls are also designed to restrict domestic capital outflows, however, their net effect becomes an empirical, rather than theoretical, question.
GOVERNMENT DEBT AND THE DEMAND FOR MONEY: AN EXTREME BOUND ANALYSIS
Authors: Deravi M. KEIVAN , Hegji CHARLES E. , Moberly H. DEAN
Published: January 2010

The article provides evidence that there is a relationship between government debt and interest rates via the demand for money. This relationship is examined through the wealth effect of government debt on money demand, and the robustness of the results is tested by the use of extreme bound analysis in addition to standard econometric techniques. We find that OLS regression shows government debt fnfecting the demand for money positively, implying that Federal government debt is net wealth. In addition, the extreme bound analysis shows that the estimates of the government debt coefficient are robust under alternative specifications of the Goldfeld model.
FEAR OF NUCLEAR WAR AND INTERCOUNTRY DIFFERENCES IN THE RATE OF SAVING
Authors: SLEMROD JOEL
Published: January 2010

This paper demonstrates that, across nineteen OECD countries for 1981‐84, a survey‐based measure of the perceived likelihood of nuclear war is negatively correlated with the rate of net private saving, holding other determinants of saving constant. The estimates indicate that a 10 percent increase in the fraction of the population that believes a world war is likely is associated with a decline of 4.1 percentage points in the net private saving rate. This finding is consistent with other evidence based on U.S. aggregate time series and cross‐individual data suggesting that fear of nuclear war decreases savings.
INTERTEMPORAL SUBSTITUTION AND CONSTRAINTS ON LABOR SUPPLY: EVIDENCE FROM PANEL DATA
Authors: BALL LAURENCE
Published: January 2010

This paper tests an intertemporal labor supply model for workers who say they face quantity constraints on their hours and for workers who say they do not. The data reject the model for the first group but not for the second. I conclude from this evidence that employment fluctuations result mainly from changes in the severity of constraints—that is, changes in involuntary unemployment—rather than intertemporal substitution. It also appears that liquidity constraints influence labor supply. Finally, the paper proposes a new approach to identifying intertemporal labor supply equations.
THE DEMISE OF HOSPITAL PHILANTHROPY
Authors: SLOAN FRANK A. , HOERGER THOMAS J. , MORRISEY MICHAEL A. , HASSAN MAHUD
Published: January 2010

We develop a one‐period model of hospital and donor behavior to analyze how insurance for hospital care, various public subsidies, and other factors affect donations to hospitals. Theoretically, increased insurance coverage has an ambiguous effect on private giving. Empirical tests using time series and cross‐sectional data show that the growth of private insurance and especially the introduction of Medicare and Medicaid substantially reduces private giving to hospitals. Effects of public subsidies for construction depend on whether the subsidy more closely resembles a matching or lumpsum grant.
ANTICIPATED MONEY, UNANTICIPATED MONEY, AND OUTPUT: 1873–1930
Authors: FACKLER JAMES S. , PARKER RANDALL E.
Published: January 2010

Unanticipated money does, and anticipated money does not, influence output for the period between the Civil War and the Depression. These conclusions, reached using a two‐step econometric procedure, appear robust for a wide variety of measures of output and for two alternate definitions of money.
SEASONALITY AND THE MONETIZATION OF FEDERAL BUDGET DEFICITS
Authors: Joines Douglas H.
Published: January 2010

Prior findings that federal government budget deficits promptly lead to increases in the monetary base are unreliable. These findings are due largely to inadequate treatment of seasonality in post‐war quarterly data. Once seasonality is properly modeled, no further short‐run relation is apparent. Theory suggests that there may be a long‐run relation between deficits and money growth. If such a relation exists, the sample of postwar U.S. data is too small to identify it.
POLITICAL MODELS OF THE BUSINESS CYCLE SHOULD BE REVIVED
Authors: Haynes Stephen E. , Stone Joe A.
Published: January 2010

Political models of the business cycle have typically been ignored because they appear inconsistent with rational behavior and because empirical evidence is inconclusive. This paper addresses the second issue, demonstrating for U.S. real GNP, unemployment, and inflation that electoral cycles (persistent patterns across electoral terms) are significant, but apparently only for Republican incumbents, and that partisan cycles (persistent differences between parties) are also significant. These findings are consistent with the conjecture that a minority party is more constrained by electoral concerns, whereas a majority party is freer to pursue partisan objectives.
COSTLY PORTFOLIO ADJUSTMENT AND THE SHORT RUN DEMAND FOR MONEY
Authors: Lane Timothy D.
Published: January 2010

In many empirical studies the short‐run demand for money includes a lagged dependent variable; this is usually attributed to some cost of adjusting money balances toward their desired level. This short‐run money‐demand equation is sometimes used as a structural equation in models in which market clearing is also assumed (in the sense that money supply equals short–run money demand). In this paper, a theoretical counterexample demonstrates that this use of a short‐run money demand equation is not generally valid. This finding challenges the usual interpretation of the lagged dependent variable.
INFORMATION COSTS AND THE ORGANIZATION OF CREDIT MARKETS: A THEORY OF INDIRECT LENDING
Authors: Staten Michael E. , Gilley Otis W. , Umbeck John
Published: January 2010

This paper explains indirect lending as a strategy for reducing a bank's cost of screening borrowers. Commercial banks appear to “ration” credit by rejecting some direct loan applicants, although they accept higher‐risk borrowers who apply for loans indirectly through retailers. However, the more thorough credit check on direct loans causes applicants to sort themselves according to risk. Indirect applicants signal their higher risk through their choice of financing. Since banks gather more accurate information on direct applicants, the two types of contracts should differ in predictable ways. These implications are tested with Federal Reserve data on 5,000 automobile loans.
CONSUMER DEMAND FOR VEHICLE SAFETY: AN EMPIRICAL STUDY
Authors: Mccarthy Patrick S.
Published: January 2010

Although numerous studies on the effects of vehicle safety regulation exist, few are devoted to consumer demands for vehicle safety. This study uses an extensive data set combining vehicle specific information with responses from a national household survey of new car buyers to estimate individual demand for safety. It finds, ceteris paribus, purchase probability rises with an increase in safety features. In particular, an index of vehicle crashworthiness is a strong determinant of purchase decisions. The results favor a policy of posting crash test results and suggest that passive restraint systems enhance the likelihood of purchasing a given model.
PART‐TIME STATUS AND HOURLY EARNINGS OF BLACK AND WHITE MEN
Authors: Leeds Michael A.
Published: January 2010

Labor economists now believe that wages and hours are jointly determined, creating a premium in the hourly pay of full‐time workers. The size and nature of this premium, however, varies considerably by race. It is shown here that full‐time work carries a far lower premium for black workers than for white workers and has very different implications for blacks' occupational status.
A THEORY OF THE POLITICALLY OPTIMAL COMMODITY TAX
Authors: Seiglie Carlos
Published: January 2010

A theory of the politically optimal tax is developed where tax rates are endogenous and determined by forces in the political market. The theory is used to explain the levels of alcoholic beverage taxes between states in the United States. It is shown that these rates are influenced by the ownership structure existing in the liquor industry, the consumption externalities associated with drinking, the minimum drinking age laws, the earmarking of tax revenues, the enforcement of regulations and real income.
A NOTE ON ADJUSTMENT TO PRODUCTION UNCERTAINTY AND THE THEORY OF THE FIRM
Authors: Booth Laurence
Published: January 2010

This paper analyzes the impact of production uncertainty on the firm's optimal output decision. If uncertainty is introduced by an additive risk variable, then short‐run optimal output is unchanged, but the owner‐manager's expected utility can change causing long‐run output effects. If uncertainty is introduced by a multiplicative random variable, then short‐run output can change as well.
ADJUSTMENT TO PRODUCTION UNCERTAINTY AND THE THEORY OF THE FIRM: A COMMENT
Authors: Schmidt Torsten , Tressler John
Published: January 2010

This paper reconsiders the model presented by Flacco and Kroetch [1986]. It shows that with additive technological uncertainty the firm will produce and contract to sell the same output as under certainty. When the Flacco/Kroetch model is generalized to allow the firm to select contract commitments and planned output ex ante, no simple comparisons with certainty are possible. These results are broadly consistent with those obtained by Mills [1959; 1962] for demand uncertainty.
ADJUSTMENT TO PRODUCTION UNCERTAINTY AND THE THEORY OF THE FIRM: REPLY
Authors: Flacco Paul R. , Kroetch Brent G.
Published: January 2010

This reply responds to two comments on our 1986 article in this journal under the same title. The comments discuss a special case of the model which gives a certainty result, and also propose several alternative formulations of the model. The reply argues that the special certainty result is not an interesting or reasonable case, and discusses the relationship between the proposed alternative formulations and the original model. The influence of risk preferences on optimal output is analyzed through comparative statics for changes in risk in the context of the original model.
“ECONOMICS: ON‐LINE AND INTERACTIVE”– SOME COMMENTS
Authors: Shibli M. Abduuah
Published: January 2010

The first part of this note discusses some of the advantages of using canned programs such as SAS and Minitab. Software packages (a) save time and effort; (b) allow for more efficient use of computer resources; and (c) are useful tools for both the beginner as well as the seasoned user. The second part compares two programming languages: BASIC in the program mode and APL in the interactive mode. Using programs written to calculate GNP and multiple regression coefficients as reference points, it argues that BASIC programs are easier to follow and edit.
THE INFLUENCE OF IDEOLOGY ON CONGRESSIONAL VOTING
Authors: BENDER BRUCE
Published: January 2010

This paper investigates the influence of ideology on congressional voting. The conceptual framework is based on the assumption that the congressman's objective is the maximization of the expected value of his office. A comparative analysis of voting on two proposed floor amendments to the U. S. House Administration Committee's 1974 Federal Election Campaign Act bill indicates that congressmen will ignore ideological considerations when the opportunity cost of not ignoring them is sufficiently high. Voting on one of these amendments is found to be consistent with shirking as broadly defined.
EXCHANGE RATE SYSTEMS AND INVESTOR PREFERENCES
Authors: MELVIN MICHAEL , ORMISTON MICHAEL B.
Published: January 2010

This paper investigates whether or not floating exchange rates add an undesirable level of risk to international investment positions. For investors holding currencies, we find that fixed exchange rates are preferred to floating exchange rates, which supports the often‐argued case that floating exchange rates do excessively increase the riskiness of investment. However, in the more realistic case of investors holding foreign securities, we find that floating exchange rates are preferred to fixed exchange rates; that is, we find that floating exchange rates have not added an undesirable level of risk to international investment positions.
ON THE RELATIVE EFFICIENCY OF CASH TRANSFERS AND SUBSIDIES
Authors: ROSS THOMAS W.
Published: January 2010

This paper considers the relative efficiency of cash grants and subsidies when society's goal is to raise the welfare of a household. When the head of the household makes all consumption decisions, a principal‐agent problem is created: the head acts as the agent of the government in allocating the transferred resources. Subsidies to commodities with particular characteristics may be a more efficient way to guarantee that benefits are shared within the household. Though related to the old notion of paternalism, this theory leads to more specific predictions regarding the kinds of commodities that can be efficiently subsidized.
AN OBJECTIVE MEASURE OF SEARCH VERSUS EXPERIENCE GOODS
Authors: LABAND DAVID N.
Published: January 2010

This paper proposes the use of product price as an empirically pliable measure of the expected benefits to consumers of acquiring information about product and vendor performance prior to purchase. As the purchase price of an item increases, so does the cost of making a disappointing purchase and, accordingly, the expected benefit from acquiring prepurchase information, ceteris paribus. A continuous price variable (a proxy for the cost of making a disappointing purchase) generates results similar to those obtained by Nelson [1970; 1974] for search versus experience goods, but can be applied to a broader range of goods and services.
PRODUCTION COSTS, TRANSACTION COSTS, AND LOCAL GOVERNMENT CONTRACTOR CHOICE
Authors: FERRIS JAMES M. , GRADDY ELIZABETH
Published: January 2010

Local governments that choose to externally produce a service can contract with other governments, for‐profit firms, or nonprofit organizations. This contractor choice is modeled as one in which the local government decision maker minimizes service delivery costs, both production and transaction costs, subject to political and fiscal constraints. The model is estimated using data on three frequently contracted health services obtained from a national survey of local government service delivery arrangements. The empirical analysis reveals the importance of both production and transaction costs, as well as the choice set of available suppliers, to contractor choice.
CUSTOMER DISCRIMINATION AND AFFIRMATIVE ACTION
Authors: KAHN LAWRENCE M.
Published: January 2010

This paper shows that under constant returns to scale and free entry, customer discrimination unlike employer or employee discrimination, can cause long‐run wage differentials. The general equilibrium impact of affirmative action policies on wages, productivity and unemployment is contrasted under these types of discrimination. The empirical literature on affirmative action is surveyed in light of these models and some support is found for models of employer prejudice. Finally, by changing the composition of output, affirmative action policies raise the probability of a nondiscriminatory general equilibrium outcome under customer prejudice.
TRANSACTION COST, TWO‐PART TARIFFS, AND COLLUSION
Authors: YOUNG ALLAN RICHARD
Published: January 2010

When two goods exhibit demand complementarity, the sellers would generally charge lower prices under collusion than under rivalry–a cartel internalizes cross effects that independent firms ignore. For the particular case of “two‐part” tariffs consisting of entrance fees and per‐unit prices, this paper shows that entrance fees are indeed lower under collusion than under rivalry, but that per‐unit prices are unaffected. The demand complementarity arises from transaction costs borne by consumers who enter the market. The policy implication is that collusion can be socially preferable to competition in the presence of such transaction costs.
TEACHING TOOLS: INTERTEMPORAL RESOURCE ALLOCATION: DISTRIBUTIVE ISSUES SURROUNDING GASOLINE PRICE HIKES
Authors: BUTZ DAVID A.
Published: January 2010

This paper shows that many people misinterpreted the gasoline price increases that followed Iraq's invasion of Kuwait in August 1990. Consumers expressed outrage when prices increased immediately even though a production shortfall did not materialize for several weeks. But by withholding output in the invasion's aftermath arbitragers (including oil companies) reallocated output intertemporally to make more available when it was needed most. The welfare consequences in general depend upon demand elasticities and their rate of change, but in this instance consumer surplus would probably have been maximized with a full and immediate price adjustment and oil companies profited from their restraint.
ANALYZING RENT CONTROL: THE CASE OF LOS ANGELES
Authors: MURRAY MICHAEL P. , RYDELL C. PETER , BARNETT C. LANCE , HILLESTAD CAROL E. , NEELS KEVIN
Published: January 2010

An accurate assessment of the economic effects of a rent control law requires that both the specific provisions of the ordinance and the characteristics of the local housing market be considered. Examining the case of Los Angeles we conclude: First, most of the transfers from landlords to tenants were realized early in the law's life, while most of the economic cost of rent control was incurred later. Second, ordinance provisions aimed at increasing landlords' incentives to maintain rent‐controlled dwellings also markedly reduce the size of the transfers to tenants. These results, we think, will apply to other jurisdictions.
CUSTOMER RACIAL DISCRIMINATION IN MAJOR LEAGUE BASEBALL
Authors: ANDERSEN TORBEN , CROIX SUMNER J. LA
Published: January 2010

Most studies of racial discrimination concentrate on identifying the existence rather than the source of discrimination. In contrast, this paper tests directly for racial discrimination by major league baseball customers by examining the market for baseball cards. In Tobit regressions, the market prices of cards consistently reflect player performance records and other demand variables. When interactive race‐productivity variables are included in the models, a significant and complex pattern of fan discrimination against black pitchers and black hitters is found. Discrimination against latin players is not found.
VOTING IN FIRMS: THE ROLE OF AGENDA CONTROL, SIZE AND VOTER HOMOGENEITY
Authors: BENHAM LEE , KEEFER PHILIP
Published: January 2010

Voting is a common feature of most firms. Unrestricted voting, however, can lead to unstable decision making. We find that firms make tradeoffs among collective decision making, production scale, firm structure, and voter characteristics that are consistent with efforts to economize on the costs of voting. Firm responses include agenda control, restrictions to obtain a homogeneous voting population, and limits on firm size. We consider three long‐surviving producer cooperatives, representing extreme cases of collective decision making, and find that their organization is sensitive to the costs of voting and to the employment of mechanisms to constrain those costs.
THE TIMING OF MARKETS AND MONETARY TRANSFERS IN CASH‐IN‐ADVANCE ECONOMIES
Authors: SALYER KEVIN D.
Published: January 2010

In cash‐in‐advance models, do the timing of markets and the timing of the monetary transfer affect equilibrium money demand? The timing of markets generates different individual money demands; however, under the common assumption that agents are identical, these differences do not affect the behavior of equilibrium real balances. In contrast, the timing of the monetary transfer has important implications for agent's information sets; these implications can influence the equilibrium characteristics of real balances.
BASHING AND COERCION IN MONETARY POLICY
Authors: Waller Christopher J.
Published: January 2010

Political pressure, or “bashing,” by the administration is typically believed to be one way that the administration can coerce an otherwise independent central bank into following the administration's preferred monetary policy path. This paper develops a model for analyzing this type of policy “cooperation” and demonstrates that bashing the central bank creates uncertainty on the part of private agents with regard to future policy actions, which translates into real wage and output variability. Hence, although beneficial to the administration, political pressure creates uncertainty and thus economic instability.
DECENTRALIZED INCOME REDISTRIBUTION RECONSIDERED
Authors: Johnson William R.
Published: January 2010

In theory, a state could redistribute income at a lower cost to its taxpayers than if the national government handled it. Part of the cost is exported out of state when federal tax revenues generated by the state fall as money incomes are reduced by additional redistribution. Simulations combining labor supply and migration responses show that for some reasonable parameter values enough of the cost is exported so that states do face lower costs of redistribution. Hence, the federal tax system provides at least a partial offset to the well‐known externalities generated by local redistribution.
CAMPAIGN SPENDING IN CONGRESSIONAL ELECTIONS
Authors: Banaian King , Luksetich William A.
Published: January 2010

Past research of the effects of campaign spending in Congressional elections has found, contrary to expectations, that incumbent spending lowers votes he or she receives. Our model simultaneously determines votes and spending and eliminates this anomaly. A measure comparing the incumbent's voting record to constituent preferences aids model identification. Using two‐stage least squares, we find that both incumbent and challenger spending are signficant determinants of the popular vote received. Tenure and spending appear to have diminishing returns, and voters appear to punish incumbents who vote against their wishes.
SHORT‐RUN PRICING STRATEGIES TO INCREASE CORPORATE AVERAGE FUEL ECONOMY
Authors: Greene David L.
Published: January 2010

Since 1974 the average fuel economy of new cars has doubled from fourteen to twenty‐eight miles per gallon. Shifts in sales to more fuel efficient models within a product line accounted for little of the improvement. This paper explores the use of pricing strategies to shift sales to achieve a legislated fuel economy target. A multinomial logit model is used to compute surcharges and rebates that leave consumer satisfaction unchanged yet increase the sales‐weighted average fuel economy. The results suggest pricing strategies are efficient for small improvements in fuel economy, but are expensive for large improvements.
ADVERTISING, CONCENTRATION AND PROFITABILITY IN MANUFACTURING
Authors: Gisser Micha
Published: January 2010

This paper predicts an inverted‐LI relationship between concentration and advertising only for oligopolistic industries facing relatively less elastic demand curves. It rejects the inverted‐LI theory based on the hypothesis that the large firms collude and lends empirical support to the idea that causation runs from Concentration to advertising intensity. By confirming that the effect of advertising on profitability is significant and greater for industries producing homogeneous goods than for those producing heterogeneous goods, this study fails to support the barriers‐to‐entry hypothesis.
IN SEARCH OF GIFFEN BEHAVIOR
Authors: Gilley Otis W. , Karels Gordon V.
Published: January 2010

This paper develops a theory of Giffen behavior that results from a second rationing constraint. In contrast to standard analysis, this approach is virtually independent of the specific form of consumer preferences. The effect is first developed in a two‐good world along with an example, then extended to a more general case to determine if the effect vanishes as the choice set is expanded. The results demonstrate that Giffen behavior is plausible when a second rationing constraint applies and, furthermore, adding additional goods to the choice set does not necessarily cause the effect to vanish.
BANK PANICS, SUSPENSIONS, AND GEOGRAPHY: SOME NOTES ON THE “CONTAGION OF FEAR” IN BANKING
Authors: Smith Bruce D.
Published: January 2010

Recent attempts to understand bank panics tend to emphasize informational asymmetries or the possibilities of multiple equilibria. Such approaches stand in contrast to historical research that emphasizes legal factors influencing the organization of the banking system. This paper constructs a model of a banking system operating under regulations similar to those in effect under the National Banking System and in which information is complete. In all other respects the model resembles that of Diamond and Dybvig [1983]. The results indicate that, given the regulatory environment, it would have been surprising if suspensions of convertibility had not recurred periodically.
THE HAYEK HYPOTHESIS IN EXPERIMENTAL AUCTIONS: INSTITUTIONAL EFFECTS AND MARKET POWER
Authors: Davis Douglas D. , Williams Arlington W.
Published: January 2010

We report twelve market experiments utilizing a “seller market power” supply and demand structure where two of five sellers can unilaterally increase their profit by withholding supply. The data indicate that both the double auction and posted offer institutions result in traders extracting the bulk of the potential gains from exchange in the market; however, prices generally occur above the competitive equilibrium prediction. Market power in the form of strategic supply withholding does not appear to be responsible for the supra‐competitive prices.
THE DEMAND TO REGULATE FRANCHISE MONOPOLY: EVIDENCE FROM CATV RATE DEREGULATION IN CALIFORNIA
Authors: Hazlett Thomas W.
Published: January 2010

The motivation to price control a franchise monopoly is examined in the context of three distinct economic views of regulatory behavior. These views are tested against data from the California cable television market, over the years 1980–85, during which a subset of monopoly firms converted from regulated to unregulated pricing for basic cable service. As the price constraints of regulation appear to be insignificant in a welfare analysis, the demand for such controls by municipalities is derived from their utility in enforcing vote‐maximizing transfer schemes–a Peltzmanian political outcome with a Stiglerian economic welfare result.
EFFICIENT USER CHARGES IN A RENT‐SEEKING MODEL
Authors: Lee Dwight R. , Wilson Paul W.
Published: January 2010

This paper examines efficient user charges on governmentally provided facilities in the presence of rent seeking. We find that the efficient user charge depends upon the relative slopes of the demand curve for the use of the facility and the corresponding marginal cost curve, as well as the level of rent seeking over the revenue raised. Except for a special case, the efficient user charge is found to differ from the charge indicated by the intersection of demand and marginal cost curves. Examples show that actual user charges on government facilities are often set at inefficient levels.
DO WE PUNISH HIGH INCOME CRIMINALS TOO HEAVILY?
Authors: Lott John R.
Published: January 2010

Many critics believe that since high income criminals can afford to purchase better legal services they are less severely punished than poor criminals who commit equivalent crimes. Others are concerned that the penalties imposed on criminals are “too small.” This paper shows that ignoring the effect conviction has on later earnings dramatically underestimates the total monetary penalty paid by those convicted and that the penalty structure is extremely progressive. Where evidence on the probability of conviction is available, it shows that the highest income criminals face the highest expected penalties.
STATE ABORTION LEGISLATION AS A PUBLIC GOOD—BEFORE AND AFTER ROE V. WADE
Authors: Conway Karen Smith , Butler Michael R.
Published: January 2010

This paper develops a theoretical model of the public demand for abortion legislation, taking account of two possible types of demand, external and private. All voters possess an external demand for abortion legislation whereas only those voters who could potentially have an abortion possess a private demand. We estimate the public demand for abortion legislation using state‐level data prior to Roe v. Wade, and then predict the likely outcome for each state should Roe be overturned. Our predictions suggest that the country as a whole is unlikely to return to as restrictive an environment as existed pre‐Roe.
THE DETERMINANTS OF CAMPAIGN SPENDING: THE ROLE OF THE GOVERNMENT JACKPOT
Authors: Palda Filip
Published: January 2010

To raise money for their campaigns, political candidates auction a part of government wealth (the jackpot) to contributors. The larger the jackpot, the more candidates spend. Data on the gubernatorial races of 1978 and 1986 indicate that (1) for every dollar increase in the per capita jackpot, campaign spending rises by 0.0004 cents per voter, (2) balanced budget laws hinder the candidate's ability to raise money, (3) in states that give the governor more power over the budget (measured by a “Schlesinger” index) candidates raise more. The paper emphasizes that candidates willingly limit their spending to avoid indebtedness to contributors.
ENFORCING TIME‐INCONSISTENT REGULATION
Authors: Kleit Andrew N.
Published: January 2010

Passage of legislation enacting a regulatory program does not ensure that the program will be successfully implemented. Certain regulations require significant long‐term investment by firms prior to their enforcement date. If firms do not engage in the desired investment, enforcing the regulations may generate significant welfare losses for society. Firms know this and may behave strategically by not undertaking the investment, generating the well‐known time‐inconsistency problem. A game‐theoretic model presented here shows how the time‐inconsistency problem can be alleviated using administrative procedures as a device to commit an agency to carrying out its bureaucratic mission.
IMPACT OF SEAT BELT USE ON DRIVING BEHAVIOR
Authors: Singh Harinder , Thayer Mark
Published: January 2010

Previous research has indicated that individual compensating behavior, specifically, more risky driving may reduce the effectiveness of seat belt laws. We test the compensating‐behavior hypothesis using individual‐specific survey data. The analysis also incorporates individual risk tastes. Our results indicate that the compensating‐behavior hypothesis applies only to those that are not strongly risk averse. Other risk‐differentiated groups do not exhibit compensating behavior. Finally, it seems that individuals learn to reduce compensating behavior over time.
THE LIFE‐CYCLE LABOR SUPPLY OF MARRIED WOMEN AND ITS IMPLICATIONS FOR HOUSEHOLD INCOME INEQUALITY
Authors: Shaw Kathryn L
Published: January 2010

In a life‐cycle model of married womens' labor supply the husband's expected lifetime income should have a greater effect on his wife's labor supply than should his current income. Using the Panel Study of Income Dynamics data, the husband's average lifetime income (over the panel years) does have a greater negative income effect than current income. However, this income effect has declined over time: the labor supply of wives is becoming less sensitive to their husbands' incomes. This declining elasticity would cause household income inequality to worsen over time, but has been offset by other factors.
FRIEDMAN TAX CUTS VS. BUCHANAN DEFICIT REDUCTION AS THE BEST WAY OF CONSTRAINING GOVERNMENT
Authors: Lee Dwight R. , Vedder Richard K.
Published: January 2010

Does a tax cut reduce government spending by reducing government revenue or does it increase government spending by lowering the perceived price of government services? Some economists, including Milton Friedman, take the former position, while others, including James Buchanan, think the latter is true. The question seems to resist an empirical answer, with some studies supporting Friedman's view and others supporting Buchanan's. In this paper, each position is shown to be a special case in a simple model of taxation and deficit determination.
VOTING, SPATIAL MONOPOLY, and SPATIAL PRICE REGULATION
Authors: Ye Meng‐Hua , Yezer Anthony M.J.
Published: January 2010

Regulations often require that local public utilities engage in high rates of freight absorption. These regulations, often mandating uniform pricing, are shown to arise logically as a consequence of self‐interested voting behavior. We specifically consider the case of a single‐plant spatial monopoly which is regulated by consumers distributed around the plant. Consumers may change their delivered price by voting to require a rate of freight absorption which differs from the profit‐maximizing rate. Voting outcomes under a median voter model predict the high rate of freight absorption often observed in practice.
INDUSTRY INCOME and CONGRESSIONAL REGULATORY LEGISLATION: INTEREST GROUPS VS. MEDIAN VOTER
Authors: Cahan Steven F. , Kaempfer William H.
Published: January 2010

Interest group theories of regulation suggest that industries will be able to gain political benefits at the expense of the larger, but disorganized and disinterested, general public. However, casual observation indicates that industries are often the targets of costly legislation. We examine how the political influence and vulnerability of industries are affected by industry income. Results show wealthy industries are more likely to be subject to costly legislation, whereas no relationship was found between industry income and the granting of political benefits. We interpret these results as supportive of both interest group and median voter models of the political process.
THE EFFECT OF GENDER‐SORTING ON PROPENSITY TO COAUTHOR: IMPLICATIONS FOR ACADEMIC PROMOTION
Authors: Mcdowell John M. , Smith Janet Kiholm
Published: January 2010

A cohort sample of Ph.D. economists indicates a significant propensity for researchers to select coauthors of the same sex. This gender‐sorting contributes to lower article production for women. Further, we find evidence of bias in academic promotion when single‐authored and coauthored articles carry the same weight in promotion and salary decisions. The evidence explains, in part, why women academics wait longer for promotion and are not as likely to be promoted as men. Among the effects of gender‐sorting is self‐selection of women into larger departments where they are more likely to find colleagues of the same sex.
RACIAL DIFFERENCES IN HOMEOWNERSHIP and HOUSING WEALTH, 1970–1986
Authors: Long James E. , Caudill Steven B.
Published: January 2010

Black couples are found to own a disproportionately low share of aggregate housing wealth in the United States because they are less likely than whites to be homeowners and because black‐owned houses have lower market values than white‐owned houses. Probability of ownership and house value equations (corrected for selectivity bias) are estimated with national data for 1970, 1980, and 1986. Trends in racial differences in homeownership and house value are identified and reasons for their existence are investigated.
STRUCTURAL UNEMPLOYMENT IN THE UNITED STATES: THE EFFECTS OF INTERINDUSTRY and INTERREGIONAL DISPERSION
Authors: Parker Jeffrey
Published: January 2010

The effects of sectoral shifts, measured by dispersion in the growth rates of employment or earning across industries or regions, on unemployment are tested in a specification controlling for the effects of other labor‐market variables and shifts in the demographic composition of the labor force. Interindustry and geographical shifts in labor demand have significant unemployment effects, with adult males the group most strongly affected. The estimated equations imply that most of the fluctuation in unemployment over the period 1956‐87 was been due to microeconomic causes rather than aggregate demand.
SECTORAL SHIFTS and CYCLICAL UNEMPLOYMENT: A RECONSIDERATION
Authors: Palley Thomas I.
Published: January 2010

The debate over the relative importance of sectoral and aggregate shocks in explaining fluctuations in the aggregate unemployment rate has centered on the relationship between unemployment, job vacancies, and the dispersion of sectoral employment growth rates (which proxies for sectoral shocks). This paper examines some possible theoretical relationships between these variables, and, after decomposing unemployment into components attributable to sectoral and aggregate shocks, estimates the importance of each. It finds that fluctuations in unemployment are principally caused by aggregate shocks, but sectoral shifts explain a significant, albeit steady, amount of unemployment.
LIQUIDITY CONSTRAINTS and AGGREGATE CONSUMPTION BEHAVIOR
Authors: Cushing Matthew J.
Published: January 2010

This paper presents time series evidence on the importance of liquidity constraints in aggregate consumption expenditures. In contrast to previous studies, I find the proportion of consumption attributable to liquidity constrained behavior to be large and highly statistically significant. The estimation pays careful attention to the problems of stochastic consumption and temporal aggregation, and the estimates are shown to be robust to alternative specifications involving costly adjustment of consumption, public spending, and to stochastically varying rates of return.
TAXATION, AGGREGATE ACTIVITY and ECONOMIC GROWTH: FURTHER CROSS‐COUNTRY EVIDENCE ON SOME SUPPLY‐SIDE HYPOTHESES
Authors: Garrison Charles B. , Lee Feng‐Yao
Published: January 2010

This paper investigates the effect of marginal tax rates on the level of economic activity. Data from sixty‐three countries for the period 1970‐84 provide support for Koester and Kormendi's method of estimating marginal tax rates for individual countries. However, their conclusion that increases in marginal tax rates have negative effects on the level of economic activity is not robust when we extend the time period from 1970‐79 to 1970‐84. Further, even for Koester and Kormendi's own data set, the negative relation does not hold when the sample is disaggregated into industrial countries and low‐income countries.
PRIVATE INTEREST SUPPORT FOR EFFICIENCY ENHANCING ANTITRUST POLICIES
Authors: BUCHANAN JAMES M. , LEE DWIGHT R.
Published: January 2010

Recent discussions of antitrust based on the private interest theory of government conclude that the real, as opposed to the stated, purpose of antitrust legislation is to protect politically influential industries against competition. Yet several prominent antitrust scholars who accept the private interest theory of government in general see antitrust legislation serving the public interest by increasing competition. We argue that the private interest theory of government is consistent with the view that antitrust legislation promotes competition. Indeed antitrust legislation may be supported by organized interest groups because such legislation increases the competition they face.