bluuebunny/crossref_metadata_2025 huggingface dataset:
Bicameral Legislatures and Fiscal Policy
Authors: Bradbury John Charles , Crain W. Mark
Published: July 2021

Early and modern scholars both presume that bicameral chambers limit the exploitation of minorities by the ruling majority similar to supermajority voting rules. We explain theoretically why bicameralism is a unique and desirable institution for protecting minority interests. The empirical analysis examines the structure of bicameralism in the American States. Using detailed data to proxy voter preferences, we find the degree of constituent homogeneity across chambers to be an important determinant of government expenditures for several budget components. Decreased constituent homogeneity tends to reduce redistributive spending and increase spending on public goods.
Was Hayek an Ace?
Authors: Vriend Nicolaas J.
Published: July 2021

To address the question whether Hayek might have been an agent‐based computational economist (ACE)avant‐la‐lettre, I consider an ACE model concerning the phenomenon of information contagion. Alongside increasing returns, network externalities, and information cascades, information contagion has been presented in the literature as an explanation for particular patterns of macrobehavior that may seem at odds with the underlying micromotives. Whereas these other explanations have been shown to have a proper microfoundation, information contagion has remained a phenomenon that seemed to occur only when certainad hocrules of thumb for individual behavior are assumed. I show how information‐contagious behavior can emerge in a coevolutionary process of interacting adaptive agents, how this is related to various Hayekian themes, and how ACE research in general can be seen as an application of Hayek's methodological insights.
Policy Ineffectiveness or Offsetting Behavior? An Analysis of Vehicle Safety Inspections
Authors: Poitras Marc , Sutter Daniel
Published: July 2021

Over 60 million registered motor vehicles in 20 states are subject to mandatory periodic safety inspection. The effect of safety inspection on roadway casualties has been estimated by several studies, with mixed results. We present a unique test of inspection effectiveness by analyzing the policy's impact on old cars in use and on repair industry revenue. Our results indicate that inspection has no significant impact on old cars or repair industry revenue, which implies that inspection does not improve the mechanical condition of vehicles. Unlike studies that examine casualties, our tests allow us to distinguish between policy ineffectiveness and Peltzman‐type offsetting behavior as sources of inspection failure.
Are Multiple‐Choice Exams Easier for Economics Students? A Comparison of Multiple‐Choice and “Equivalent” Constructed‐Response Exam Questions
Authors: Chan Nixon , Kennedy Peter E.
Published: July 2021

Many economics students believe that multiple‐choice (MC) exams are easier than constructed‐response (CR) exams. If true understanding of economics is reflected by performance on CR exams, then easier MC exams would give rise to misleading measures of student understanding of economics, creating a false sense of complacency among both instructors and students. This article investigates this issue by comparing student scores on MC and “equivalent” CR questions. Our results show that, for certain types of MC questions, students do indeed score better, even after correcting for guessing, and on other types of questions, they produce similar scores. These results are unaffected by comparing males versus females or “good” versus “poor” students.
Ideal Money
Authors: Nash John F.
Published: July 2021

Money can be recognized as a technological development comparable to the wheel and of similar antiquity. Among the more recent developments in the technology that facilitates transfers of utility (in the sense of game theory) are systems like those of EZ Pass, by means of which vehicles traversing toll bridges or toll highways can pay their toll fees without stopping for the attention of human personnel manning the toll booths. In this lecture, I present remarks about the history of monetary systems and about issues of comparative quality or merit, along with a specific proposal about how a system or systems of “ideal money” might be established and employed. In addition, I criticize the Keynesian psychology in relation to the history of the influence of Keynesians on the practical characteristics of national currencies.
The Market Value of Reducing Cancer Risk: Hedonic Housing Prices with Changing Information
Authors: Gayer Ted , Hamilton James T. , Viscusi W. Kip
Published: July 2021

In this paper, we use housing price changes occurring after the release of a regulatory agency's environmental risk information to estimate the value people place on cancer risk reduction. Using a large original data set on the repeal sales of houses, matched with detailed data on hazardous waste cancer risk and newspaper publicity, we find that housing prices respond in a rational manner to changes in information about risk. Since the new information indicated that the sites in our sample pose relatively low cancer risk, the informational release led residents to lower their risk beliefs, resulting in an average housing price increase of $56 to $87. This price change implies a statistical value per case of cancer of $4.3 million to $8.3 million, which is similar to the estimates obtained in labor market studies of the value of a statistical life. Newspaper publicity about the local sites increased housing prices, suggesting that residents perceived the news as good.
Out‐of‐Sample Forecasts and Nonlinear Model Selection with an Example of the Term Structure of Interest Rates
Authors: Liu Yamei , Enders Walter
Published: July 2021

It is well known that goodness‐of‐fit measures lead to overfitting. We compare the small‐sample properties of linear and several nonlinear models using a Monte Carlo study. A large number of linear series are generated and conventional methods of fitting nonlinear models are applied to each. The best linear and nonlinear models are compared using in‐sample and out‐of‐sample criteria. Out‐of‐sample forecasts are shown to be superior for selecting the proper specification. The experiment is repeated using a nonlinear model and the in‐sample lit and forecasts of the various models are compared. An example is provided using the term structure of interest rates.
The Later You Pay, the Higher the k
Authors: Seidman Laurence S. , Lewis Kenneth A.
Published: July 2021

This paper shows the importance of the age path (life‐cycle timing) of any tax for the accumulation of capital in the economy. Income, consumption, and wage taxes differ in their age paths as well as their incentive effects. This paper studies how the differing age path of each tax affects the capital accumulation of the economy in an empirically calibrated life‐cycle model. We investigate lump‐sum “age” taxes and find in every case that the later the person pays tax, the higher the k of the economy. To analyze the life‐cycle timing effect of conventional transactions‐based taxes (income, consumption, and wage), we replace each tax with a lump‐sum age tax that has the identical age path of tax payments over the life cycle. We find that the timing effect is quantitatively important and often causes the impact of a tax on capital accumulation to be very different from what would be predicted from the incentive effect.
The Efficiency of Sharecropping: Evidence from the Postbellum South
Authors: Garrett Martin A. , Xu Zhenhui
Published: July 2021

In this article, we investigate why sharecropping rose sharply in the postbellum South. Our hypothesis is that sharecropping was desirable because sharecropped farms could be more productive than owner‐operated farms and perhaps more productive than rented farms. Using the data from the postbellum South, we find strong empirical support for this hypothesis. Our results show that the output elasticity of sharecropped farms is higher than that of owner‐operated farms on all occasions and that of rented farms on some occasions. The differences in productivity are statistically significant, and the results are very robust. These empirical results refute the long‐held notion that sharecropping is inefficient. Contrary to the view that, like a tax, sharecropping produces disincentives to work, the results in this article suggest that sharecropping might have created an incentive among farmers for its rapid and widespread use in the postbellum South.
Stochastic Estimation of Firm Inefficiency Using Distance Functions
Authors: Atkinson Scott E. , Färe Rolf , Primont Daniel
Published: July 2021

Econometric estimation of allocative and technical efficiency has frequently been carried out using a shadow cost function and its associated share or demand equations. Since the problem is formulated in terms of shadow prices, the effect of allocative inefficiency on input usage must be computed indirectly from input share or demand equations. As an alternative approach, we derive and estimate an input shadow distance system comprising the dual shadow input distance function and the price equations derived from the shadow cost minimization problem. Estimated shadow quantities provide direct estimates of the effect of allocative inefficiency on input usage. One can also easily calculate firm‐ and time‐varying technical inefficiency by decomposing the residuals. We also compute returns to scale and the cost savings obtained by eliminating both types of inefficiency, Our approach is illustrated using a panel of U.S. railroads.
The Influence of Demographics and Household‐Specific Price Indices on Consumption‐Based Inequality and Welfare: A Comparison of Spain and the United States
Authors: Garner Thesia I. , Ruiz‐Castillo Javier , Sastre Mercedes
Published: July 2021

Previous research has suggested that inequality is lower in Spain than in the United States when it is based on income. For the present article, both inequality and social welfare are examined, with household consumption expenditures used as a proxy for household welfare. For tractability, equivalence scales depended only on the number of people in the household. Household‐specific price indices were used to express the 1990‐1991 expenditure distributions in 1981 and 1991 winter prices. Our results reveal that inequality and welfare comparisons are drastically different for smaller and larger households. When all households are considered, the two‐country comparison suggests that the income inequality ranking can only be maintained for expenditure distributions when economies of scale are small or nonexistent. However, welfare is always higher in the United States than in Spain. Because inflation during the 1980s in both countries was essentially distributionally neutral, all results appear to be robust to the choice of time period.
Cost Economies: A Driving Force for Consolidation and Concentration?
Authors: Paul Catherine J. Morrison
Published: July 2021

Expanding concentration in many industries has generated concern about the determinants of these market structure patterns. Understanding such trends requires information on technological characteristics underlying cost efficiency. However, market structure and power analyses are typically based on restrictive models that limit the representation of cost drivers. In this paper, I model and estimate a comprehensive cost specification allowing for utilization, scale, scope, and multiplant economies using U.S. beef packing plant data. My evidence of substantive cost economies implies economic motivations for observed concentration, consolidation, and diversification and facilitates the interpretation and use of market structure measures for policy guidance.
New Estimates of Economies of Scale and Scope in Higher Education
Authors: Laband David N. , Lentz Bernard F.
Published: July 2021

Following Colin, Rhine, and Santos (1989), we reeslimate cost functions for 1492 private and 1450 public institutions of higher education (IHEs) in the United States, using data for fiscal year 1995‐1996. Costs are modeled as a function of the level of production of three outputs: undergraduate education, graduate education, and externally funded research. We find that public and private IHEs are characterized by significantly different cost functions. At the sample means of the variables, we estimate that public and private IHEs enjoy both ray economics of scale and product‐specific economies with respect to production of all three outputs. However, we also find that, at the sample means, both public and private institutions are characterized by diseconomies of scope in the production of these three outputs. Our findings suggest that both public and private IHEs could reduce their unit costs of operation by growing relative to the current mean levels of production.
Productivity Growth and Some of Its Determinants in the Deregulated U.S. Railroad Industry
Authors: Bitzan John D. , Keeler Theodore E.
Published: July 2021

This study analyzes the effects of an important postderegulation innovation on rail freight productivity: the elimination of cabooses and related crew members. It also analyzes the overall growth of productivity in rail freight between 1983 and 1997 (using a translog rail cost function estimated over a sample of Class I railroads between 1983 and 1997). The results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5‐8% on the typical Class I railroad in 1997, equivalent to an annual cost saving of $2 billion to $3.3 billion for all Class I railroads. Moreover, if Class I railroads had no other technological advances since 1983, their 1997 costs (with 1997 factor prices) would have been 36‐43% higher than they in fact were. Finally, the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997; if anything, it accelerated slightly.
Rail Transit and Neighborhood Crime: The Case of Atlanta, Georgia
Authors: Ihlanfeldt Keith R.
Published: July 2021

The construction of commuter rail stations is the centerpiece of many metropolitan areas' overall strategies for dealing with worsening air pollution, automobile congestion, and urban sprawl. Neighborhood groups have frequently opposed new stations on the grounds that stations increase crime. If fears of station‐induced neighborhood crime are justified, building new stations may make the problems they are supposed to address even worse, because crime is a cause of employment and population decentralization. This paper first demonstrates theoretically that transit's impact on neighborhood crime can be either positive or negative. Some rare evidence is then provided on the link between transit and crime. Using a unique panel of neighborhood crime data for Atlanta, the results from estimating fixed effects and random effects models show that transit's impact on crime depends on certain characteristics of the neighborhood. The mix of these characteristics found within central city neighborhoods has resulted in transit increasing crime there, whereas in the suburbs crime has been reduced by transit.
An Empty Promise: Average Cost Savings and Scale Economies among Canadian and American Manufacturers, 1910‐1988
Authors: Keay Ian
Published: July 2021

During the debate that led up to the implementation of a bilateral free‐trade agreement between Canada and the United States on January 1, 1989, much was made of economists' claims that both nations could expect significant welfare improvements as a result of the removal of tariffs on traded goods. The welfare gains were expected to flow from average cost savings associated with the exploitation of scale economies. In this article, I show that it was overly optimistic to predict substantive, permanent average cost convergence as a result of adjustments in the scale of production among Canadian or American manufacturing firms. I conclude that the formation of reasonable expectations regarding the effects of trade‐induced output adjustments should consider global‐ and local scale economies and should employ data that are not dominated by a single cycle of macroeconomic volatility.
The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data
Authors: Fairris David , Pedace Roberto
Published: July 2021

Human capital theory suggests that workers may finance on‐the‐job training by accepting lower wages during the training period, Minimum wage laws could reduce job training, then, to the extent they prevent low‐wage workers from offering sufficient wage cuts to finance training. Empirical findings on the relationship between minimum wages and job training have failed to reach a consensus. Previous research has relied primarily on survey data from individual workers that typically lack both detailed measures of job training and important information about the characteristics of firms. This study addresses the issue of minimum wages and on‐the‐job training with a unique employer survey. We find no evidence indicating that minimum wages reduce the average hours of training of trained employees and little to suggest that minimum wages reduce the percentage of workers receiving training.
Monopoly: A Game Economists Love to Play—Badly!
Authors: McKenzie Richard B.
Published: July 2021

Giving this presidential address to the Southern Economics Association is more of a privilege than a duty of office. I suspect that I am more honored to give this talk than most past presidents of the Association, given my current academic post in California. I may be far removed from my southern heritage in space, but not in orientation. My heart remains tied to the South. I am very pleased that the SEA board and members did not consider my current California connection as a disqualification for president of the Association.
Occupational Segregation and the Gender Wage Gap in a Dynamic East Asian Economy
Authors: Zveglich Joseph E. , Rodgers Yana van der Meulen
Published: July 2021

Labor markets in the East Asian “miracle” economies have undergone profound changes in recent decades as their comparative advantage in low‐wage labor diminished and jobs shifted toward higher‐skill manufacturing and services. This study uses an occupational decomposition technique to examine how such shifts in East Asia's occupational structures have affected trends in their gender wage gaps. The wage gap is decomposed into across‐occupation and within‐occupation factors that are each further separated into wage and employment components. Results based on a comprehensive labor force data set for Taiwan show that within‐occupation pay discrepancies account for the bulk of gender wage inequity.
Art of the Deal: The Merger Settlement Process at the Federal Trade Commission
Authors: Coate Malcolm B. , Kleit Andrew N.
Published: July 2021

This paper models the modern merger review process in which an enforcement agency, here the Federal Trade Commission (FTC), interacts with the acquiring firm to determine the outcome of antitrust regulation. Our empirical implementation of a game theoretic analysis tests whether decisions are driven by the costs and benefits of the proposed enforcement initiative as well as whether firms' responses are colored by competitive and institutional considerations. With respect to firms, the results suggest that mergers are driven by the opportunity to capture efficiencies, In contrast, the structural (anticompetitive) characteristics of mergers do not seem to impact firms' litigation decisions. Firms, however, are deterred from fighting the FTC by the potential negative impact on their reputations. In addition, “hostage effects” associated with the size of the noncontroversial portion of acquisitions held up by the FTC's competitive concerns also affect firm decisions.
Religious Freedom and the Unintended Consequences of State Religion
Authors: North Charles M. , Gwin Carl R.
Published: July 2021

We use a cross‐section of 59 countries to examine the impact of state religion and of constitutional protection of religion on the degree of religiosity within a country. Our measure of religiosity is the percentage of the population who attend religious services at least once a week. We find that both establishment of a state religion and constitutional protection of religion have significant (and opposing) effects. The existence of a state religion reduces attendance by 14.6‐16.7% of the total population, whereas each decade of constitutional protection increases attendance by approximately 1.2% of the population. We also find that other measures of religious regulation have significant negative effects on attendance. Ironically, the motive behind establishment of a particular state religion usually is to strengthen that religion, but the effects are ultimately to undermine the vitality of the established religion.
Integration and Causality in International Freight Markets: Modeling with Error Correction and Directed Acyclic Graphs
Authors: Haigh Michael S. , Nomikos Nikos K. , Bessler David A.
Published: July 2021

Using directed acyclic graphs (DAGs) and error correction models, we study the dynamics of freight prices that comprise the Baltic Panamax Index (BPI), the index on which freight futures trading was based. The DAGs are used to make statements about the contemporaneous correlations between prices and allow us to address the construction of the data‐determined orthogonalization on contemporaneous innovation covariance, which is crucial in providing inference in innovation accounting techniques. Our results provide a source of information on price discovery and suggest that the index is not appropriately composed and weighted, which may help explain the failure of the Baltic International Freight Futures Exchange (BIFFEX) contract.
The Pre‐ and Postwar Price‐Output Paradox Revisited
Authors: Taylor Jason E. , Kim Jinill
Published: July 2021

This article addresses past findings of a change in the sign of the price‐output correlation in the pre‐ and post‐World War II eras. This “paradox” can be resolved by taking into account the changing direction of price movements, deflation to inflation, during the two time periods. There is, in fact, a consistently negative correlation between the absolute value of price level changes and changes in output in both time periods and throughout the entire sample. This finding offers empirical support to economic theories espousing the benefits of price stability.
Productivity in Education: The Quintessential Upstream Industry
Authors: Hoxby Caroline M.
Published: July 2021

Using consistent test score data from the National Assessment of Educational Progress and data on per‐pupil spending, I show that the productivity of American public schools fell by approximately half from 1970 to 2000. The most reliable international data also suggest that productivity in American public schools is lower than that of numerous other industrialized countries, including the remaining English‐speaking ones, I explore explanations for the decline in productivity, including changing sociodemographics, Baumol's “cost disease,” rising wages of female college graduates, the increasing emphasis on educating disadvantaged children, rising market power, and the education sector's relative decrease in pay for performance. I review evidence that suggests that schools raise their productivity and use of pay for performance when they face competition. I also describe results that indicate that individual teachers have important, distinctive effects on achievement.
Nonlinear Purchasing Power Parity under the Gold Standard
Authors: Paya Ivan , Peel David A.
Published: July 2021

Hegwood and Papell (2002) conclude on the basis of analysis in a linear framework that long‐run purchasing power parity (PPP) does not hold for 16 real exchange rate series, which were analyzed in Diebold. I lusted, and Rush (1991) for the period 1792‐1913 under the Gold Standard. Rather, PPP deviations are mean‐reverting to a changing equilibrium—a quasi PPP (QPPP) theory. We analyze the real exchange rate adjustment mechanism for their data set assuming a nonlinear adjustment process allowing for both a constant and a mean shifting equilibrium. Our results confirm that real exchange rates at that time were stationary, symmetric, nonlinear processes that revert to a nonconstant equilibrium rate. Speeds of adjustment were much quicker when breaks were allowed.
Long‐Term Attachments and Long‐Run Firm Rates of Return
Authors: Orazem Peter F. , Bouillon Marvin L. , Doran Benjamin M.
Published: July 2021

Long‐term attachments between workers and firms are common. Numerous studies have examined worker returns to tenure, but little is known of firm returns to firm‐worker matches. Yet these attachments represent a human capital asset quasi‐held by the firm, which is not captured by traditional accounting measures of firm assets. Firms with large quasi‐holdings of human capital will have higher measured return on assets, other things equal. Analysis of data on 250 large manufacturing firms supports the view that firms profit from long‐term attachments with their workers. Consequently, unmeasured human capital assets contribute to the explanation of persistence in measured long‐run excess profits across firms.
Technological Diffusion and Productivity Convergence: A Study for Manufacturing in the OECD
Authors: Frantzen Dirk
Published: July 2021

In this article is investigated the issue of total factor productivity convergence through international technological diffusion on disaggregate manufacturing panel data from 1970 to 1995 with respect to a set of OECD countries. Estimates of alternate growth equations imply conditional convergence in all industries. Leaving out the conditioning variables still implies a significant catch‐up effect in a great majority of industries. These same industries are also characterized by σ‐convergence and by a tendency toward a unimodal distribution of relative productivity levels. These results suggest that, during the period of investigation, total factor productivity growth performances in OECD manufacturing were dominated by transitional dynamics. Evidence in favor of the presence of a unit root in the technology gap between frontier and non‐frontier countries is, therefore, misleading.
A Generalized Approach to Multigeneration Project Evaluation
Authors: Liu Liqun , Rettenmaier Andrew J. , Saving Thomas R.
Published: July 2021

In this article, we generalize the existing descriptive approach to multigeneration public project evaluation, taking into account distortionary taxes on capital income. In contrast to conventional wisdom, we show that such generalization does not require a project‐specific social discount rate (SDR) expressedas a weighted average of gross and net rates of return. What emerges is the concept of the marginal cost of public funds (MCF) that has the convenient property of project independence. In addition, the MCF‐based criterion identifies projects that, along with appropriate intergenerational transfers through time‐varying head taxes, are Pareto improving, and is, therefore, independent of any utilitarian social welfare function being used.
Determinants of Cross‐Border Intellectual Property Rights Enforcement: The Role of Trade Sanctions
Authors: Chiang Eric P.
Published: July 2021

With growing trade in a global economy, the desire for trade protection becomes increasingly important. One aspect of trade protection that has risen to the forefront is the protection of intellectual property rights (IPR) across national borders. This article analyzes the determinants of U.S.‐filed investigations for alleged IPR cross‐border violations using the complete set of Section 337 investigations conducted by the U.S. International Trade Commission (USITC). By analyzing political, institutional, and economic variables in an industry‐level model, we find evidence that investigations are more frequent in industries that face intense import competition among IPR‐protected goods. In addition, greater technology access to U.S. patents by respondent firms is found to increase filings, especially in countries where corruption levels are higher.
The Impact of Corruption on the Black Market Premium
Authors: Bahmani‐Óskooee Mohsen , Goswami Gour G.
Published: July 2021

Recently the impact of institutional factors on macro variables has been gaining momentum. Researchers have investigated the impact of corruption, law and order, and bureaucracy on economic growth, inflation, investment, productivity, and the real exchange rate. In this article, we investigate empirically the impact of institutional factors on the black market premium. In many developing nations, because of government restrictions on capital and trade flows, there exists a black market for foreign exchange. By using data from 60 developing countries over the 1982‐1995 period, we show that the black market premium is higher in countries that are plagued by more corruption. This finding seems to be insensitive to five different measures of corruption as well as whether cross‐section or panel data are used.
Author Order and Research Quality
Authors: Joseph Kissan , Laband David N. , Patil Vivek
Published: July 2021

We observe a great deal of heterogeneity in the manner in which author orderings are assigned both across and within academic markets. To better understand this phenomenon, we develop and analyze a stochastic model of author orderings. In our model, authors work equally hard to obtain priority in listings but final contributions are stochastic. Further, research outlets differ in their quality hurdles. In this setting, our simulation results are consistent with two empirical regularities. First, we find that the rate of alphabetization increases with the stringency with which papers are accepted for publication. Second, conditional on clearing the publication hurdle, quality increases with alphabetization. These findings arise because increases in the publication hurdle make it more likely that authors will exceed this threshold only when both contribute a high amount. This, in turn, leads to roughly equal contributions (alphabetization) and also generates a positive correlation between alphabetization and quality.
Impact of State Exemption Laws on Small Business Bankruptcy Decision
Authors: Agarwal Sumit , Chomsisengphet Souphala , Liu Chunlin , Mielnicki Lawrence
Published: July 2021

To provide further insights into the current debate on consumer bankruptcy, this article empirically assesses the impact of state bankruptcy exemption levels on the likelihood of small business owners filing for bankruptcy. We estimate a proportional hazard model of small business bankruptcy using a unique panel data set of over 43,000 small business credit card holders over a two‐year period from May 2000 to May 2002. Overall, our results indicate that for every $10,000 increase in a state's homestead exemptions, the risk of small business bankruptcy increases by 8%. Moreover, we also find that the likelihood of small business owners filing for bankruptcy will rise by 4% with a $1000 increase in personal property exemption levels.
Temporary Acceleration of Inflation: What Can a Central Bank Learn from It?
Authors: Patron Hilde
Published: July 2021

In this article I present a model in which the monetary authority conducts policy by setting money supply in the presence of uncertainty and Bayesian learning about the economic environment. I find that there exists a set of assumptions under which a temporary acceleration of money growth and thus of inflation increases the government's overall expected utility. There also exists a set of assumptions under which a temporary deceleration of money growth and thus of inflation increases the government's overall expected utility.
Policy Makers' Preferences, Party Ideology, and the Political Business Cycle
Authors: Krause Stefan , Méndez Fabio
Published: July 2021

We generate data on the relative preferences of policy makers for inflation and output stability and reexamine how policy makers and political parties behave for 24 countries by using this new approach. This behavior is essential in both the partisan cycle models and the opportunistic political cycle analysis. Our evidence suggests that right‐wing parties exhibit a higher relative preference toward stabilizing inflation than left‐wing parties. We obtain mixed results on the opportunistic behavior of incumbent parties. Finally, when we analyze the behavior of left and right ideologies separately, we find overwhelming support for party resemblance in the electoral year and strong evidence of opportunistic conduct by right‐wing parties.
Price Dispersion and Accessibility: A Case Study of Fast Food
Authors: Stewart Hayden , Davis David E.
Published: July 2021

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast‐food meal and the location of fast‐food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.
Classroom Games: Candidate Convergence
Authors: Wilson Rick K.
Published: July 2021

This article details an experiment that is easily run in the classroom. It demonstrates how two‐candidate elections quickly converge to an equilibrium. It points out that the equilibrium is centered on the median voter. Finally, it illustrates what happens when preferences or institutions change. Material associated with conducting the experiment is provided, as is supplemental material for classroom instruction.
Does the Length of Maternity Leave Affect Maternal Health?
Authors: Chatterji Pinka , Markowitz Sara
Published: July 2021

The objective of this paper is to investigate the impact of the length of maternity leave on maternal health in a sample of working mothers. Two measures of depression and a measure of outpatient health visits are used to represent maternal health. Ordinary least squares models provide baseline estimates, and instrumental variables models account for the potential endogeneity of the return‐to‐work decision. The findings suggest that returning to work later is associated with a reduction in the number or frequency of depressive symptoms. There is suggestive but inconclusive evidence that longer maternity leave is associated with a lower probability of being a likely case of clinical depression and a lower likelihood of having frequent outpatient visits during the first six months after childbirth. These findings contribute to the literature on maternal leave policy, which focuses primarily on the benefits of leave for child health and development, by evaluating the influence of longer maternal leave on the health of mothers.
Auction Markets for Evaluations
Authors: Deck Cary A. , Wilson Bart J.
Published: July 2021

When the value of a product or service is uncertain, outcomes can be inefficient. A market for evaluations can theoretically increase efficiency by voluntarily eliciting an evaluation that would otherwise not be provided. This paper uses a controlled laboratory experiment to test the performance of four market mechanisms to provide product evaluations. The mechanisms considered are derived from the oft studied uniform price sealed bid, discriminatory price sealed bid, English clock auction, and Dutch clock auction. Our results indicate for this nonrivalrous product that (i) each of these institutions improves social welfare and (ii) the performances of the four mechanisms are equivalent. This second point is particularly noteworthy given that differing behavior is routinely observed in traditional private value auctions.
Marital Status and Productivity: Evidence from Personnel Data
Authors: Mehay Stephen L. , Bowman William R.
Published: July 2021

Although a robust wage premium for married men has been documented extensively in the labor economics literature, prior studies have been hampered in testing competing explanations of the premium by a lack of data on worker productivity. This study exploits a unique data set that contains job‐performance measures for employees of a large, hierarchical organization. The quasi‐longitudinal data track the marital status and job productivity, including performance reviews and promotions, of male Naval officers in technical and managerial jobs. Compared with single men, married men receive significantly higher performance ratings and are more likely to be promoted. In estimates that control for selection arising from quit decisions, the size of the marriage productivity effect falls but in most cases remains robust. Also, based on supplementary tests, selectivity arising from the decision to marry appears to explain only a small portion of the unadjusted marriage premium for Navy officers.
Health‐Specific Moral Hazard Effects
Authors: Koç Çağatay
Published: July 2021

In this paper I examine the effect of insurance on the demand for health care among consumers of similar health, which I call the health‐specific moral hazard effect. Using the 2000 Medical Expenditure Panel Survey, I analyze the variation in the moral hazard effect across health subpopulations in the demand for inpatient and outpatient services. The endogeneity of insurance, the change of insurance regime, and the discreteness and the nonnegativity of the use of health care motivate the use of an endogenous switching model for count data. The econometric results indicate that the moral hazard effect for physician visits is higher at relatively higher levels of health, whereas the effect for both hospital nights and hospital admissions is lower at relatively higher levels of health. The evidence suggests that both efficient and inefficient moral hazard may exist, and this may depend on the type of health care service used.
Free Riding in Noncooperative Entry Deterrence with Differentiated Products
Authors: Kovenock Dan , Roy Suddhasatwa
Published: July 2021

We examine free riding and underinvestment in noncooperative entry deterrence in the Gilbert and Vives (1986) model with differentiated products. Our analysis proves that for products that are differentiated enough, when both entry allowing and entry deterring equilibria coexist, the symmetric entry deterring equilibrium may Pareto dominate the entry equilibrium. Hence, “coordination failure” underinvestment in entry prevention can occur. However, as claimed, the overinvestment result of Gilbert and Vives remains robust to moderate amounts of product differentiation. We also show that coordination failure underinvestment arises in a wide variety of entry deterrence models and does not rely on assumptions regarding strategic substitutability or complementarity of precommitments.
Price and Output Stability under Price‐Level Targeting
Authors: Cover James Peery , Pecorino Paul
Published: July 2021

It is commonly believed that a monetary policy that targets the price level reduces the long‐term variability of the price level, but only at the cost of increased variability of both inflation and output. We develop a model in which the one‐step‐ahead variance of output and the price level are lower under price‐level targeting than under inflation targeting. This increased stability under price‐level targeting works through an interest‐rate channel that, to our knowledge, has not previously been emphasized in the literature. Surprisingly, if the sensitivity of demand to the real rate of interest is high enough, then the variance of inflation can also be lower under price‐level targeting than under inflation targeting.
Partial Agglomeration or Dispersion in Spatial Cournot Competition
Authors: Matsumura Toshihiro , Ohkawa Takao , Shimizu Daisuke
Published: July 2021

We revisit works by Pal and Matsushima, which, respectively, present different equilibrium locations. We consider nonlinear transport costs and show that Pal's result (dispersion) is more robust than Matsushima's (partial agglomeration). Pal's result holds true for any transport cost function, while Matsushima's does not hold under strong concavity or convexity of the transport cost function. If we consider sequential move of location. Pal's result holds for any transport costs. On the other hand, Matsushima's does not hold except for linear transport cost. We also discuss welfare and show that nonlinearity of the transport cost function yields rich welfare implications.
Seller Reputation, Information Signals, and Prices for Heterogeneous Coins on eBay
Authors: Melnik Mikhail I. , Alm James
Published: July 2021

In online commerce, a buyer cannot directly examine the product and has to trust the seller for the product description and delivery. The reputation of the seller (and other information signals on the quality of the product) can therefore affect the buyer's willingness to pay. However, while the impact of reputation on willingness to pay for homogeneous goods has been examined, its impact on heterogeneous goods (where there is more uncertainty about product quality) is largely unknown. This paper examines the effects of reputation in online auctions, using U.S. silver Morgan dollar coins in “Almost Uncirculated” condition that are sold on eBay. Empirical results indicate that a seller's overall reputation has a positive impact on a buyer's willingness to pay, that negative comments about a seller often have a negative impact, and that these reputational effects increase in importance when there is more uncertainty about the quality of the coin.
Rebates, Matches, and Consumer Behavior
Authors: Davis Douglas D. , Millner Edward L.
Published: July 2021

An experiment conducted to examine the effects of different discount formats on consumer purchases is reported. Participants made a series of purchase decisions for chocolate bars given (1) “rebates” from the listed price, (2) “matching” quantities of chocolates for each bar purchased, and (3) simple price reductions. Contrary to standard theoretical predictions, and consistent with results in the context of charitable contributions by Eckel and Grossman (2003), we find that participants purchase significantly more chocolate bars under a “matching” sales format than under a comparable “rebate” format. Inattention to the net consequences of decisions, as well as some “rebate aversion,” explain the preference for matching discounts.
Dynamics of Firm‐Supplier Relationships in a Less Developed Economy: Evidence from African Manufacturing Firms
Authors: Fisman Raymond , Ghosh Suman
Published: July 2021

In this paper, we study supplier‐firm interactions to explain firms' outsourcing relationships. We show that in an imperfect information setup a firm learns about the quality of its suppliers through repeated interaction. As the firm determines the suppliers' quality with greater precision, it gives a greater proportion of its contracts to these “better” suppliers. We report evidence from African manufacturing firms that is consistent with our hypothesis: both frequency and volume of transactions increase with the length of a firm's relationship with its supplier. These effects are stronger in poor contracting environments.
The Review Process in Economics: Is It Too Fast?
Authors: Azar Ofer H.
Published: July 2021

Rewards for publications in good economics journals are very high, and submission fees and other monetary costs associated with submitting an existing manuscript are low. Consequently, the editorial delay (especially the first‐response time—the time until the first editorial decision), by postponing monetary rewards to publication, constitutes the major submission cost (from the author's perspective). Reducing the delay will induce many additional submissions of low‐quality papers to good journals, increasing significantly the workload of editors and referees. Moreover, the rejection rate will increase and cause papers to be rejected more times before publication, offsetting at least some of the shorter first‐response times. As a result, the efforts of many editors to reduce the editorial delay, although attracting more submissions to their journals, may have adverse effects from a social perspective, and the optimal delay might be longer than the current average of four months.
Marginal Deterrence and Multiple Murders
Authors: Ekelund Robert B. , Jackson John D. , Ressler Rand W. , Tollison Robert D.
Published: July 2021

This paper examines empirically the state‐level impact of capital punishment on multiple murder rates for the period 1995‐1999. In baseline tests—tests employing mixed panel data and using an estimation technique combining aspects of both fixed‐ and random‐effects models—we show that executions reduce the single murder rate and that the use of electrocution reduces the murder rate beyond that resulting from lethal injection. These results are not unique. The unique finding of our analysis is that multiple murders are not deterred by execution in any form, quite possibly because the marginal cost of murders after the first is approximately zero. Finally, we offer a brief historical analysis of how the principle of marginal deterrence has been used and suggest how it might be applied in the matter of multiple murders.
Pension Plan Choice among University Faculty
Authors: Clark Robert L. , Ghent Linda S. , McDermed Ann A.
Published: July 2021

A pension plan is an important component of lifetime earnings, and thus the decision between a defined benefit pension and a defined contribution pension is an important one. This study uses data from annual faculty censuses of the University of North Carolina system, where new hires are given a choice between a state defined benefit pension and a defined contribution plan. Newly hired faculty members who are older, female, and nonwhite are found to be more likely to choose the defined benefit plan. Some differences across university Carnegie classification are also seen. In addition, a declining trend in defined benefit participation is shown.
Testing Monetary Policy Intentions in Open Economies
Authors: Granato Jim , Lo Melody , Wong M. C. Sunny
Published: July 2021

Temple (2002) argues that the inflation level used in Romer (1993) lacks power in revealing the policy intentions of monetary authorities, Temple also points out that Romer's use of the openness‐inflation correlation cannot be explained by time consistency theory. In this article, we demonstrate that more open economies experience less inflation volatility and persislence. We attribute our findings to the hypothesis that monetary authorities in more open economies adopt more aggressive monetary policies. This pattern emerges strongly after 1990. Our results indicate that the near‐universal regime shift in 1990 is not just a simple process of increased monetary policy aggressiveness, but an increased response to economic openness.
The Influence of Teaching on Research in Economics
Authors: Becker William E. , Kennedy Peter E.
Published: July 2021

An extensive literature in education shows little relationship between teaching and research. Authors advance the notion that research enhances teaching, but they typically ignore the prospect of teaching enhancing research. We report the results of a survey of active researchers in economics who were asked if they could cite a specific instance in which their research was substantively influenced by their teaching. About 50% reported such an experience, with a further 35% indicating, without prompting, that their teaching had a very positive effect on their research in general. Their comments identify a variety of channels through which teaching influences research.