bluuebunny/crossref_metadata_2025 huggingface dataset:
SEIGNIORAGE, DOMESTIC DEBT, AND FINANCIAL REFORM IN CHINA
Authors: KIME KEVIN M.
Published: January 2010

This paper describes the institutional features of China's hybrid economy that have allowed the government to earn high levels of seigniorage. It quantifies both the financial benefits and implicit costs to the government of extracting seigniorage from the economy. The analysis, which is based on the inside/outside money model of Gurley and Shaw (1960), indicates that seigniorage earnings in the period 1987—1994 were large, but were earned at the cost of a rising implicit government debt and potential future inflation. The paper also outlines how the Chinese government's ability to earn seigniorage in the future may decline as the economy becomes fully monetized and as reform alters the economy's unique institutional structure.
THE EFFECTS OF 1996 FARM LEGISLATION ON FEED AND FOOD GRAINS
Authors: SMITH VINCENT H. , GLAUBER JOSEPH W.
Published: January 2010

The 1996 Federal Agricultural Improvement and Reform (FAIR) Act of 1996 has been portrayed as a radical departure from the farm policies of the past 60 years. FAIR brought sweeping institutional changes to the basic price and income support programs, many of which had been in place since the 1930s. Close analysis reveals that many of the reforms of the FAIR Act are less revolutionary innovations and more continuations of reforms that began with the 1985 farm legislation and were extended by the 1990 farm bill. Nor should one believe that the changes will result, as some suggest, in large changes in crop acreages or have large effects on the year‐to‐year variability offarm revenues for these crops. In both cases, the changes in policies may be substantive, but their effective consequences are modest.
SUBSIDY TO NUCLEAR POWER THROUGH PRICE‐ANDERSON LIABILITY LIMIT: COMMENT
Authors: HEYES ANTHONY G. , LISTON‐HEYES CATHERINE
Published: January 2010

Dubin and Rothwell (1990) use details of insurance premiums to develop a methodology for inferring the value to nuclear operators of the Price‐Anderson liability limit from but misinterpret the terms of the insurance contracts for which the premiums are paid. This leads them to overstate the subsidy due to the limit by a factor of between four and ten.
DENG XIAOPING'S GREAT TRANSFORMATION
Authors: CHEUNG STEVEN N.S.
Published: January 2010

Editor's Note: The First Annual Arnold C. Harberger Distinguished Lecture, University of California, Los Angeles, November 17, I997
THE EAST ASIAN CURRENCY CRISIS: CAUSES AND LESSONS
Authors: KAWAI MASAHIRO
Published: January 2010

Financial deregulation and capital‐account liberalization preceded speculative currency attacks in Thailand. A combination of de facto fixed exchange rates and high rates of interest generated excessive capital inflows, which led to too much liquidity chasing bad investments. The under‐supervised and over‐guaranteed financial sector extended loans excessively, particularly for non‐productive, speculative purposes. Non‐transparent practices, in the form of weak disclosure of institutions' true balance sheets and insider relations, masked these poor investments. The buildup of short‐term, unhedged debt left East Asian economies vulnerable to a sudden collapse of confidence. Currency attacks ran down official foreign exchange reserves. Rapid capital outflows and the consequent depreciation of currencies exacerbated the strains on private sector balance sheets. The policy lessons are to (i) use macroeconomic policy to avoid excessive capital inflows and currency overvaluation, (ii) strengthen the financial system, with proper disclosure and accounting requirements, stringent loan classification and provisioning rules, and capital adequacy requirements, prior to capital‐account liberalization, (iii) stabilize exchange rates based on currency baskets that reflect trade and investment linkages, and (iv) develop regional. financial cooperation with regional surveillance and peer pressure to maintain policy discipline.
EASTERN EUROPEAN EXPORT PERFORMANCE DURING THE TRANSITION
Authors: SHEETS NATHAN , BOATA SIMONA
Published: January 2010

During the past decade, the structure of Eastern European exports has undergone a deep transformation, as communist bloc trading relationships have collapsed and trade with the West has increased. The extent of this geographical re‐orientation has generally exceeded the predictions of equilibrium models developed by Hamilton and Winters (1992) and Collins and Rodrik (1991). Significant changes in the product composition of Eastern European exports have accompanied the geographical re‐orientation. Exports of manufacturing goods to former communist countries have declined sharply, but exports to the European Community across an array of goods—including heavy machinery—have grown robustly. The observed changes in export composition appear to reflect the redirection of physical goods through price competition and the emergence of market‐determined comparative advantage.
DEMOCRACY AND ECONOMIC REFORM: THEORY AND SOME EVIDENCE FROM THE RUSSIAN CASE
Authors: BRAGUINSKY SERGUEY
Published: January 2010

The paper examines theoretical issues concerning the relationship between political democracy and economic reform and builds on the empirical material from the recent experience of Russia. The process of transition to democracy is shown to have started spontaneously due to the situation of power stalemate among pressure groups that came to control the communist system in the years preceding its ultimate collapse. The unrestrained control by those groups is shown to be the reason behind the continued economic collapse, while gradual build‐up of the democratic system can in the long run act in the direction of improving the chances for a successful economic reform.
SPECIAL GOVERNMENT ASSISTANCE TO DEFENSE‐DEPENDENT INDUSTRY WORKERS: THE CASE OF THE AEROSPACE INDUSTRY
Authors: SCHOENI ROBERT F. , DARDIA MICHAEL
Published: January 2010

The end of the Cold War brought profound changes to defense‐dependent sectors of the civilian economy. The aerospace industry has been at the vortex of these contractions. Based on the assumption that aerospace workers suffered unique hardships, the federal government established special programs to assist them. This study tests that broad assumption using unique administrative data from California. Although some aerospace workers suffered substantially, their experiences were not appreciably different from those of non‐aerospace durable goods workers, which calls into question the rationale for special assistance to workers in defense‐dependent industries.
ECONOMIC RESOURCES OF THE HOMELESS: EVIDENCE FROM LOS ANGELES
Authors: SCHOENI ROBERT F. , KOEGEL PAUL
Published: January 2010

This paper examines the economic resources of homeless adults using a unique data set from Los Angeles. The homeless rely on a variety of sources for income; the two most common sources are the government and the family. Over 58% received government transfers in the 30 days prior to the interview, while one‐third had received cash assistance from a family member or friend. Familial transfers in the form of shared housing and meals also are important. While familial transfers buffer declines in income among the homeless, private support networks are not pervasive enough to overcome the severe difficulties the homeless face. Moreover, it is unclear why such a high share of the homeless do not participate in government assistance programs, although the evidence suggests that transaction costs are likely to be an important factor.
CRIMINAL PERCEPTIONS AND VIOLENT CRIMINAL VICTIMIZATION
Authors: MYERS SAMUEL L. , CHUNG CHANJIN
Published: January 2010

This paper explores the relationship between various measures of prior victimization and indicators of both the perceived victimization risk and fear of crime. Equations are specified and estimated both for the fear of crime/perception of risk and for prior victimization. Since prior victimizations are exogenous to the determination of the current assessment of risk or fear of crime, it is possible to isolate the independent effects of victimization and extraneous factors, like racial neighborhood composition, in a recursive model structure. The analysis also examines the contribution that individual victimization and extraneous factors make to the overall gap between average victimization rates and average indicators of fear.

Prior victimization explains some of the rather enormous perception of future victimization, but a sizable gap between perceived risk and actual risk remains. Much of that gap appears to be related to proximity to nonwhites, a possible proxy for racial prejudices and beliefs that nonwhite neighborhoods contribute to heightened crime.
DO GOVERNMENT SUBSIDIES STABILIZE OR DESTABILIZE AGRICULTURAL MARKETS?
Authors: MATSUMOTO AKIO
Published: January 2010

This study examines the effect of government intervention on output fluctuations in agricultural markets. It uses a simple model of supply and demand (i.e., a cobweb model), in which the government supports producers for agricultural goods in the form of subsidies. Within this framework, this study demonstrates that government intervention is a two‐edged sword: it not only prevents the output dynamics from explosive oscillations but also causes highly irregular and persistent fluctuations somewhat like the one observed in the actual data.
POWER MARKETS: RESTRUCTURING ELECTRICITY
Authors: BILAS RICHARD A. , LAY KENNETH L. , SMITH GORDON R. , MOORE MICHAL C. , MICHAELS ROBERT J.
Published: January 2010

Editor's Note: This is an edited transcription from the general session of the 73rd Annual Conference of the Western Economic Association International, held in Lake Tahoe, Nevada.
MARGINAL COST PRICING FOR UTILITIES: A DIGEST OF THE CALIFORNIA EXPERIENCE
Authors: CONKLING ROGER L.
Published: January 2010

The California Public Utilities Commission (CPUC) has adopted the policy of using marginal costs as the basis for the pricing of regulated electric services (the “Marginal Cost Pricing Doctrine”). The record of actions taken by the CPUC to translate the doctrine into pragmatic pricing techniques spans 21 years from 1976, when the policy was adopted, to March 1997. Its pricing edicts for regulated electric rates of the three large California utilities—Pacific Gas and Electric Company (PG &E), Southern California Edison Company (SCE or Edison), and San Diego Gas & Electric Company (SDG &E)—are significant incursions into microeconomic price theory. (JEL D6, B4, N7)
A COOPERATIVE PERSPECTIVE ON SOVEREIGN DEBT: PAST AND PRESENT
Authors: YANG DER‐YUAN
Published: January 2010

In the modern era, sovereign states often borrow to finance their budgets; in the medieval period, kings had similar financing needs. Both types of sovereign borrowers share one characteristic: if they failed to fulfill their obligation, legal action is not one of the lenders' options. However, as history has shown, some institutions evolved to secure lenders' rights. We provide a cooperative perspective of the negotiation between debtors and creditors in a two‐period model, using the Nash bargaining solution. Our results show that the initial debt and new loans are positively related, while the remaining debt and the interest rate are negatively related. These conclusions match the financial evolution of England after the Glorious Revolution. This paper may have some implications for the solution of the current Asian financial crisis. (JEL C71, G14, H63, H87, N10)
MUCH ADO ABOUT NOTHING? DEMOGRAPHIC BULGES, THE PRODUCTIVITY PUZZLE, AND CPP REFORM
Authors: EMERY J. C. HERBERT , RONGVE IAN
Published: January 2010

Analysts predict that future demographically driven financial imbalances will undermine the sustainability of pay‐as‐you‐go social insurance arrangements like the Canada Pension Plan (CPP). Proposed reforms for the CPP focus on raising the contribution rate to pre fund future benefits. In an overlapping generations model, the authors examine how demographic factors alone could explain the observed changes in productivity/wage growth over the last 30 years. The authors also examine how these factors impact on a pay‐as‐you‐go financed CPP. If Canada is a small open economy, then real wages and real interest rates are not affected by domestic demographic conditions. In this setting, increasing payroll taxes transfers the burden of finance away from the lower income baby bust generation to the higher income baby boom generation. In contrast, if Canada can be characterized as a closed economy, then real wages and real interest rates are sensitive to domestic demographic conditions. In this setting, increasing payroll taxes now to keep taxes lower in future is intergenerationally regressive because the CPP burden is reduced for the well off baby bust generation and passed onto the lower income baby boomers. (JEL H55, J18, J10)
TIME LIMITS ON WELFARE RECEIPT
Authors: GITTLEMAN MAURY
Published: January 2010

Among the changes in U.S. poverty policy coming about from the end of “welfare as we knew it” has been an imposition of time limits on the receipt of federal welfare funds. Yet little is known about the impact this restriction will have. This paper examines welfare dynamics under Aid to Families with Dependent Children to provide a sense of magnitude of the number of families that would have been at risk of exhausting their eligibility for federal funds in the past. In addition, simulation models are employed to assess whether these results are sensitive to changes in key variables, some of which are within the grasp of policy makers, others of which are not. (JEL 13, J1)
ESTIMATING THE NON‐ENVIRONMENTAL CONSEQUENCES OF GREENHOUSE GAS REDUCTIONS IS HARDER THAN YOU THINK
Authors: DECANIO STEPHEN J.
Published: January 2010

Top‐down and bottom‐up models of the non‐environmental consequences of policies to reduce greenhouse gas emissions embody different implicit theories of economic organizations. Yet neither approach is explicit in showing the detailed computations that must be traced if the activities of firms are to be described realistically. Specification of firms' computational processes leads inevitably to a consideration of potential computational limits on the behavior of organizations. It is known that solutions of some standard economic problems are not effectively computable, and that the solutions to others are computationally intractable. These fundamental computational limits have strong implications for the theory of the firm, and recognizing their existence and importance suggests new policy approaches for reducing greenhouse gas emissions. (JELC6, D2, L2, Q4)
ASSESSING THE EFFICIENCY OF PUBLIC SCHOOLS USING DATA ENVELOPMENT ANALYSIS AND FRONTIER REGRESSION
Authors: RUGGIERO JOHN , VITALIANO DONALD F.
Published: January 2010

The cost efficiency of 520 New York school districts is measured using data envelopment analysis and stochastic frontier regression. Mean inefficiency is 14% using either method, and the rank order correlation coefficient of inefficiency between the two methods is 86. The three largest school districts (Buffalo, Rochester, and Syracuse) are among the most efficient. Student test scores are output variables, and socioeconomic control variables are included to adjust for the harshness of the educational environment in which districts operate. (JELC29, C61, 121)
DOES FINANCIAL MARKET DEVELOPMENT STIMULATE SAVINGS? EVIDENCE FROM EMERGING STOCK MARKETS
Authors: BONSER‐NEAL CATHERINE , DEWENTER KATHRYN L
Published: January 2010

This paper examines the empirical relation between financial market development, as measured by the stock market, and gross private savings rates in 16 emerging markets over 1982‐1993. With data from all 16 countries, there is evidence of a significant positive relation between savings and stock market size and liquidity. When countries with outlying values for the stock market measures are excluded, however, all significance disappears. The results suggest that a growing or deepening stock market will not necessarily be associated with higher savings rates. (JEL E21, 016)
IS THE EXCLUSIONARY RULE WORTHWHILE?
Authors: OSBORNE EVAN
Published: January 2010

In the U.S. criminal courts must throw out improperly obtained evidence. A key justification for this practice is that it is that it deters law‐enforcement misconduct. This paper uses principal‐agent theory to suggest that, contrary to economic and other conventional wisdom, if the exclusionary rule is flawed it is because it deters inadequately rather than excessively. Principles of an optimal compensation scheme for law‐enforcement personnel are offered along with evidence suggesting that actual compensation does not reflect them. The rule may thus fail to sufficiently prevent misconduct even as it increases the costs from lost convictions. (JEL K14, K42, D82)
THE WAIVER PORK BARREL: COMMITTEE MEMBERSHIP AND THE APPROVAL TIME OF MEDICAID WAIVERS
Authors: HELLAND ERIC
Published: January 2010

Recent growth in Medicaid spending has forced states to look for ways to slow the program's rate of growth. Under the Medicaid program's rules, state governments must submit a waiver to the federal government in order to implement a cost‐saving program. The time required to process a waiver varies from 14 days to over three years. This study examines the determinants of the time it takes to process a waiver and the number of revisions required before final approval. The results indicate that an increase in the tenure of the state's delegation to the House oversight committee reduces the time to approval for Freedom of Choice waivers. However, more liberal committee members appear to delay waivers. The results complement the existing literature on the pork barrel by showing that seniority on a committee is an important determinant‐not only of monetary benefits but also of nonmonetary benefits. (JEL H51, 118)
R&D SPILLOVERS TO AGRICULTURE: MEASUREMENT AND APPLICATION
Authors: JOHNSON DANIEL K. N. , EVENSON ROBERT E.
Published: January 2010

This paper documents research and development (R7amp;D) spillovers between nations and between industries, discussing some theoretical and measurement issues. A new technique makes patent data more practical for economic uses, allowing analysis of the industries of manufacture and sectors of use for inventions. New technology introduced for use in the agricultural and food processing sectors in 14 less developed and newly industrialized nations is traced, comparing the regional and industrial sources of these inventions across time. An application shows that both international and interindustrial spillovers add to agricultural total factor productivity, and distinguishes between the direct and indirect effects of spillovers from public and private, domestic and foreign sources. (JEL C67, 031, 047, Q16)
THE INTERNATIONALIZATION OF AGRICULTURAL TECHNOLOGY: PATENTS, R&D SPILLOVERS, AND THEIR EFFECTS ON PRODUCTIVITY IN THE EUROPEAN UNION AND UNITED STATES
Authors: SCHIMMELPFENNIG DAVID , THIRTLE COLIN
Published: January 2010

Multilateral indices of total factor productivity (TFP) allow efficiency comparisons between ten European Union countries and the United States from 1973 to 1993. Differences in TFP levels are then explained by land quality differences, public research and development (R&D) expenditures, education levels, private‐sector patents, international spillovers of public R&D, and private‐sector technology transfer. There is evidence that public R&D results in limited knowledge spillovers between the European countries and the United States. However, the use of international patent data from the Yale Technology Concordance shows not only that patents matter, but also that private sector technology transfer may be the dominant force in explaining TFP trends. The United States and the European Union countries with more advanced research systems (Netherlands, Denmark, France, and Belgium) converge in a high‐growth club, while Germany, Luxembourg, Greece, Italy, Ireland, and the United Kingdom form the slow‐growth group. Ignoring knowledge spillovers and technology transfer leads to biased estimates of R&D elasticities, which is hardly surprising since the private sector is now spending more than the public in some of these countries. Thus, the estimated rate of return to public agricultural R&D falls from over 60% in the closed economy model to 10% in the model that takes account of international spillovers. (JEL Q16)
HAVE PRICE POLICIES DAMAGED LDC AGRICULTURAL PRODUCTIVITY?
Authors: FULGINITI LILYAN E. , PERRIN RICHARD K.
Published: January 2010

This paper examines price policies and agricultural productivity in 18 developing countries over the period 1961–1985. We measure productivity with both a nonparametric Malmquist index and a production function, confirming previous findings of declining agricultural productivity, but with sufficient inconsistencies as to raise concern about the adequacy of the methods. We nonetheless find considerable support for the hypothesis that unfavorable price policies have damaged agricultural productivity performance in these countries. (JEL 04, Ql)
SNAKE RIVER SALMON RECOVERY: QUANTIFYING THE COSTS
Authors: HUPPERT DANIEL D.
Published: January 2010

Economic costs are relevant to endangered species protection in both theory and practice. Recovering endangered Snake River salmon will require modifying public land use, restricting fishing and hatchery production, reducing water for agriculture, and altering the operation of hydroelectric dams. The economic costs are estimated to range from $246 million to $359 million per year. While the estimated cost is not matched by the estimated increased value of fishing, the nonuse value of salmon recovery may be very large. Better economic and biological information is needed to assure that decisions for salmon species protection are reasonably cost effective. (JEL Q28, H43)
A K% MONEY GROWTH LEADERSHIP RULE IN AN INTERNATIONAL MONETARY POLICY GAME
Authors: JANSEN DENNIS W. , WENG MING‐JANG
Published: January 2010

This paper examines a version of the Friedman k%money growth rule in an open economy monetary policy game. Using the two‐country model proposed by Canzoneri and Henderson (1991), we show that, in response to asymmetric aggregate demand shocks, the Pareto‐efficient outcome can be achieved by a policy that we call a k%money growth leadership rule. Following that rule, one country, the leader, sets her money supply growth rate, and the follower sets her money supply growth rate so as to keep the sum of nominal money supply growth at k%. We show that this policy yields the same outcome as does cooperative equilibrium. We also show that alternative policy rules, such as keeping exchange‐rate adjusted money supply growth at k%, or forming a currency union, will not lead to the Pareto‐efficient outcome in response to these demand shocks. (JEL E5, F3)
The effects of the Uruguay round: empirical evidence from U.S. industry
Authors: Mutti J. , Sampson R. , Yeung B.
Published: January 2010

This article uses an event study to evaluate the anticipated results of the Uruguay Round on U.S. industry. Economists commonly use computable general equilibrium (CGE) models to predict the net economic efficiency effects of trade agreements. The event study method represents a complementary approach that relies on stock price movements to assess how investors predict that an event, in this case the conclusion of the Uruguay Round, will affect industry profitability. The empirical estimates indicate that U.S. industries with comparative advantage (disadvantage) experience positive (negative) stock price reactions, reflecting an increase (a decrease) in the industry trade and investment opportunities as well as an increased (decreased) return to existing tangible and intangible assets. For the market as a whole, the variation in stock prices does not differ significantly from zero, and the economic magnitude of industry gains and losses is small. These results are consistent with most CGE assessments and with the skeptical attitude that the real impact of the Uruguay Round Agreement remains uncertain.
Why is U.S. direct investment in China so small?
Authors: Zhang KH.
Published: January 2010

While the United States is the largest source of foreign direct investment (FDI) in the world, and China is the largest FDI recipient among developing countries, U.S. direct investment (USDI) in China has been surprisingly small. This article investigates the determinants of USDI through a relative‐demand model with time‐series data. Evidence presented in this article indicates that the small USDI cannot be fully appreciated without understanding differences between USDI and Hong Kong direct investment (HKDI), the latter being the dominant source of FDI in China. Empirical results suggest that the USDI in China was primarily motivated by market access and that the HKDI was export oriented. The small USDI thus is a result of U.S. investors' preference for market access and China's export‐promotion FDI regime, along with the troubled Sino‐U.S. relations and political instabilities in China.
Government Purchases, Government Transfers, and the Post‐1970 Slowdown In U.S. Economic Growth
Authors: WEBER C.E.
Published: January 2010

This article shows that the post‐1970 slowdown in U.S. economic growth can be explained by a shift in fiscal policy away from government purchases and toward transfer payments. Two endogenous growth models that include government purchases and transfers imply a relationship between these variables and long‐run growth. Empirically, the simultaneous decline in the fraction of output purchased by federal, state, and local governments and rise in transfer payments around 1970 dramatically overpredict the growth slowdown of the early 1970s. The growth rate is predicted to have risen in the absence of this change in fiscal policy.
Does NAFTA (North American Free Trade Agreement) Chapter 19 make a difference? Dispute settlement and the incentive structure of U.S./Canada unfair trade petitions
Authors: Jones K.
Published: January 2010

NAFTA Chapter 19 sets up bilateral review panels to replace the domestic judicial appeals process of resolving disputes among NAFTA members over the enforcement of unfair trade laws. In principle, such panels can change the incentive structure of filing unfair trade law petitions by reducing the likelihood of an affirmative finding of injurious unfair trade. Using data from U.S. and Canadian unfair trade petition filings, empirical tests show support for this hypothesis. However, a more comprehensive settlement of conflicts will require progressive legal integration, including an extension of national treatment measures to alleged “unfair trade” that is not currently envisaged under the NAFTA.
East Asia's growth: technology or accumulation?
Authors: Rodrigo GC.
Published: January 2010

Krugman, building on the work of Alwyn Young, has argued that hypergrowth in East Asia derives mostly from factor accumulation, owing little to technological change. Yet this explanation is at odds with what analysts of technological change have to say about technology acquisition in these countries. This article examines the Young‐Krugman thesis and argues that the problem lies in the misconception of technological change as distinct from accumulation. The critique is taken further by means of a review of the multifaceted way that technology raises the productivity of labor. It is argued that technology is carried not as disembodied knowledge, but as techniques hard‐coded in physical devices and structures, by patterns soft‐coded in human and organizational capabilities and business‐friendly institutions, formal and informal. These operate as symbiotic complements, not separable substitutes as assumed in conventional theory. These arguments are supplemented by perspectives introduced from the technology literature. Since the respective roles and relationship between accumulation and technology are scrutinized, the analysis provides important policy conclusions on the value of East Asian growth strategies.
Economies of scale in public education: an econometric analysis
Authors: Chakraborty K. , Biswas B. , Lewis WC.
Published: January 2010

This article investigates the sources of scale economies in the production of public education. The relationship between the average cost of producing educational output and school characteristics including school and district size is estimated using a neoclassical cost function. The empirical analysis used panel data from Utah school districts and estimates the function using the covariance and error component models after making necessary corrections for heteroskedasticity and autocorrelation. The uncorrected fixed effects model generates a significant negative coefficient on district size in both the cost and expenditure functions; the coefficient on number of students has the hypothesized sign but is not significant in either equation. After making various corrections for autocorrelation and heteroskedasticity, the coefficients have the correct signs and are significant in all equations. Thus, it is concluded that scale economies arise from both sources but that the evidence is stronger for district size.
The term structure of interest rates and the Mexican economy
Authors: Gonzalez JG. , Spencer RW. , Walz DT.
Published: January 2010

Can the yield spread, which has been found to predict with surprising accuracy the movement of key macroeconomic variables of developed countries, also predict such variables for a developing country experiencing economic turmoil? This article presents empirical results that suggest significant forecasting ability for the yield spread for segments of the Mexican economy during the 1995–1997 period of economic volatility. The actual and predicted variable changes sometimes conflict with those experienced by developed countries in part because of the unusually close relationship between the Mexican Treasury and the Banco de México. Consequently, analysts and policy officials may exploit the forecast potential of the yield spread, but only in the context of evolving institutional considerations.
A note on the effect of minimum drinking age laws on youth alcohol consumption
Authors: Kaestner R.
Published: January 2010

This study uses data from the National Longitudinal Survey of Youth to investigate the effect of minimum drinking age laws (MDALs) on youth alcohol consumption. Two considerations motivated the analysis. First, results from previous studies provide conflicting evidence of the effect of MDALs on alcohol consumption. Second, all previous studies of the effects of MDALs on alcohol consumption have failed to control for unmeasured time‐varying state effects. This study addresses this latter issue by using a difference‐in‐differences‐in‐differences (DDD) methodology. The results of this study were mixed. On the one hand, a preponderance of estimates of the effect of MDALs on alcohol consumption are negative, although many are not significantly different from zero. On the other hand, estimates of the effect of MDALs differ by gender and exhibit some variation across samples and methods. In the end, I believe the estimates presented in this article are not sufficient to draw a definitive conclusion and suggest the need for additional research.
The economic impact of reducing on‐base naval housing
Authors: Bernstein P. , Tolley G.
Published: January 2010

This article develops a methodology for estimating the impact on rents and home prices from a hypothetical reduction of on‐base naval housing from 56 naval bases in the United States. Based on data from the Center for Naval Analyses and the U.S. Census of Housing, and response coefficients from housing economics literature, illustrative estimates are presented of the short‐run and long‐run and long‐run impact of reducing naval housing.

Key factors determining the increase in rents and home prices include (1) the increase in demand for housing in the private sector resulting from the reduction of on‐base naval housing, (2) the short‐run and long‐run elasticities of supply of private sector housing with respect to housing prices, and (3) the elasticity of demand to live in a defined housing area with respect to housing prices.

We find that the effects on rents and home prices are in most cases small in the short run and negligible in the long run. The median first‐year rent increase in the 53 counties is estimated to be 0.90%, with only 9 of the counties still expected to experience rent increases of as much as 4%. In the long run, the median rent increase is estimated to be only 0.10%. Because the purchase of a home is a long‐term investment, we find that the impact on home prices is negligible, similar to the long‐run impact on rents.
ORGANIZATIONAL PORTFOLIO THEORY: PERFORMANCE‐DRIVEN ORGANIZATIONAL CHANGE
Authors: DONALDSON L
Published: January 2010

The article outlines some of the main ideas of a new organizational theory: organizational portfolio theory. The literature has empirically established that organizations tend not to make needed adaptive changes until they suffer a crisis of low organizational performance. Organizational portfolio theory takes this idea and constructs a theory of the conditions under which organizational performance becomes low enough for adaptive organizational change to occur. The focus is on the interaction between organizational misfit and the other causes of organizational performance. To model these interactions use is made of the concepts of risk and portfolio.
Income inequality and inflation: the cross‐country evidence
Authors: Al‐Marhubi FA
Published: January 2010

Different strands of the political economy approach to macroeconomic policy imply a link between income inequality and inflation. This article tests this proposition using a newly assembled data set on income distribution. The results show that income inequality is associated with higher inflation. This association, although not economically large, holds for democracies as well as nondemocracies. Sensitivity analysis suggests that the results are not due to measurement error, reverse causation, or omitted variables.
THE DECLINE OF CHINA'S BUDGETARY REVENUE: REASONS AND CONSEQUENCES
Authors: Lin S
Published: January 2010

The decline of the government revenue share in GDP has become a major concern for Chinese policy makers and many economists. This article analyzes the reasons and the consequences of low government budgetary revenue in China. It is argued that lowered corporate tax rates, small tax bases, and tax evasions are the main reasons for the decline of government revenue share in GDP. Low budgetary revenues have resulted in low budgetary expenditures and growing budget deficits, stimulated the expansion of extra‐budgetary and off budgetary revenues, and made the privatization of state enterprises more difficult. This article also discusses policy options for China.
THE WEALTH OF NATIONS: GROWTH, IDEAS, AND TECHNOLOGY
Authors: Darby MR
Published: January 2010

In the following articles Freedman and Jordan examine institutional arrangements that promote high and rising incomes. The quality of institutions may be as important as human capital, investment, and population growth in determining which nations are most prosperous.
INTERGOVERNMENTAL GRANTS AND THE POSITIONING OF PRESIDENTIAL PRIMARIES AND CAUCUSES: EMPIRICAL EVIDENCE FROM THE 1992, 1996, AND 2000 ELECTION CYCLES
Authors: Jr FG Mixon , Hobson DL
Published: January 2010

The present study tests the theory that states can impact the size of the grants they receive (per capita) from the federal government by becoming pivotal players in the federal electoral (primary/caucus) process. That is, by rearranging their presidential primary and caucus dates, states can play an important role in determining the field of candidates for the two major political parties in the United States. States are then likely to be rewarded within the budgetary process at the federal level, which begins with the executive branch. Results from a simultaneous equation system suggest that the impact of the average movement of primaries/caucuses in the sample period (10.36 days closer to 1 January) results in an increase of federal grants of $362 million to $1.2 billion (over a two‐year period) for the average state. These results are consistent with the current pattern in the American political process of more front‐ended presidential primaries and caucuses.
VALUING MANGROVE CONSERVATION IN SOUTHERN THAILAND
Authors: Sathirathai S , Barbier EB
Published: January 2010

Mangroves are ecologically important coastal wetland systems that are under severe threat globally. In Thailand, the main cause of mangrove conversion is shrimp farming, which is a major source of export income for the country. However, local communities benefit from many direct and indirect uses of mangrove ecosystems and may have a strong incentive to protect these areas, which puts them into direct confrontation with shrimp farm operators and, by proxy, government authorities. The article examines whether or not the full conversion of mangroves into commercial shrimp farms is worthwhile once the key environmental impacts are taken into account. The estimated economic value of mangrove forests to a local community is in the range of $27,264‐$35,921 per hectare. This estimate includes the value to local communities of direct use of wood and other resources collected from the mangroves as well as additional external benefits in terms of off‐shore fishery linkages and coastline protection from shrimp farms. The results indicate that, although shrimp farming creates enormous private benefits, it is not so economically viable once the externalities generated by mangrove destruction and water pollution are included. There is also an incentive for local communities to protect mangroves, which in turn implies that the rights of local people to guard and protect this resource should be formally recognized and enforced by law.
THE EFFICIENCY OF SEQUESTERING CARBON IN AGRICULTURAL SOILS
Authors: Pautsch GR , Kurkalova LA , Babcock BA , Kling CL
Published: January 2010

Agricultural tillage practices are important human‐induced activities that can alter carbon emissions from agricultural soils and have the potential to contribute significantly to reductions in greenhouse gas emission (Lal et al., The Potential of U.S. Cropland, 1998). This research investigates the expected costs of sequestering carbon in agricultural soils under different subsidy and market‐based policies. Using detailed National Resources Inventory data, we estimate the probability that farmers adopt conservation tillage practices based on a variety of exogenous characteristics and profit from conventional practices. These estimates are used with physical models of carbon sequestration to estimate the subsidy costs of achieving increased carbon sequestration with alternative subsidy schemes.
THE IMPACT OF PRICES AND CONTROL POLICIES ON CIGARETTE SMOKING AMONG COLLEGE STUDENTS
Authors: Czart C , Pacula RL , Chaloupka RJ , Wechsler H
Published: January 2010

Smoking among youths and young adults rose throughout the 1990s. Numerous policies were enacted to try to reverse this trend. However, little is known about the impact these policies have on the smoking behavior of young adults. This article uses a dichotomous indicator of daily smoking participation in the past 30 days, an ordered measure representing the frequency of cigarette consumption, and a quasi‐continuous measure of the number of cigarettes smoked per day on average to examine the impact of cigarette prices, clean indoor air laws, and campus‐level smoking policies on the smoking behaviors of a 1997 cross section of college students. The results of the analysis indicate that higher cigarette prices are associated with lower smoking participation and lower levels of use among college student smokers. Local‐ and state‐level clean indoor air restrictions have a cumulative impact on the level of smoking by current smokers. Complete smoking bans on college campuses are associated with lower levels of smoking among current smokers but have no significant impact on smoking participation. Bans on cigarette advertising on campus as well as bans on the sale of cigarettes on campus have no significant effect on the smoking behavior of college students.
DOES FOREIGN DIRECT INVESTMENT PROMOTE ECONOMIC GROWTH? EVIDENCE FROM EAST ASIA AND LATIN AMERICA
Authors: Zhang KH
Published: January 2010

Although there is considerable evidence on the link between foreign direct investment (FDI) and economic growth in developing countries, causal patterns of the two variables has not been investigated yet with a reliable procedure. This article provides an empirical assessment of the issue by using data for 11 economies in East Asia and Latin America. Although FDI is expected to boost host economic growth, it is shown that the extent to which FDI is growth‐enhancing appears to depend on country‐specific characteristics. Particularly, FDI tends to be more likely to promote economic growth when host countries adopt liberalized trade regime, improve education and thereby human capital conditions, encourage export‐oriented FDI, and maintain macroeconomic stability.
DETERMINATION OF PARTICIPATION DECISION, HIRING DECISION, AND WAGES IN A DOUBLE SELECTION FRAMEWORK: MALE‐FEMALE WAGE DIFFERENTIALS IN THE U.S. LABOR MARKET REVISITED
Authors: Mohanty MS
Published: January 2010

The magnitude of the male‐female wage differential is known to be highly sensitive to the specification of the wage equations used. An important source of misspecification is the failure to correct the sample selection bias that results from estimating the wage equation obtained through two sequential decisions: the worker's decision to participate in the labor market and the employer's decision to hire. Estimation of the wage equation ignoring this double selection process leads to biased estimates, and consequently the resulting male‐female wage differentials are likely to be misleading. Following a double selection approach and using a sample from the National Longitudinal Survey of Youth, this article examines the determinants of not only the wage equation but also the worker's participation and the employer's hiring decisions in both male and female samples. The study further demonstrates that the unexplained male‐female wage differential remains underestimated when the roles of both selection decisions are ignored in the estimation of wage equations.
LABOR DEMAND AND THE WAGE GAP IN THE WEST BANK AND GAZA STRIP
Authors: Sayre EA
Published: January 2010

The returns to schooling for Palestinian men in the West Bank and Gaza Strip declined sharply from 1981 to 1987 but recovered slightly from 1987 to 1991. This article examines the degree to which these returns were associated with the demand for Palestinian labor. Contrary to previous research, the current study finds that labor demand and not just the increased schooling of Palestinians determined the returns to schooling. Specifically, increased demand for unskilled Palestinian labor in Israel and decreased demand for Palestinian workers in other Arab states combined to explain one‐fifth to one‐quarter of the decline in the wage gap from 1981 to 1987.
WAREHOUSES, TRUCKS, AND PM2.5: HUMAN HEALTH AND LOGISTICS INDUSTRY GROWTH IN THE EASTERN INLAND EMPIRE
Authors: BLUFFSTONE RANDALL A. , OUDERKIRK BRAD
Published: January 2010

The eastern Inland Empire of Southern California has experienced dramatic growth of the logistics industry since 2000. This paper analyzes the air pollution implications of that expansion. It is found that truck traffic will generate significant air pollution, especially PM2.5. The estimated excess mortality associated is 32–64 cases per year, with a combined excess mortality and morbidity value of $247–$455 million per year. This represents 44%–81% of the estimated wages generated by industry growth and $5 million–$9 million per distribution facility. These estimates suggest that policies should be developed to internalize those costs.
THE DYNAMICS OF THE “MATURE” PRODUCT CYCLE AND MARKET REYCLING, FLYING‐GEESE STYLE: AN EMPIRICAL EXAMINATION AND POLICY IMPLICATIONS
Authors: CUTLER HARVEY , OZAWA TERUTOMO
Published: January 2010

The product cycle (PC) model of trade has led to an extensive theoretical literature examining the relations between the innovating Northand the imitating South countries. Closely related is the flying‐geese (FG) theory, which emphasizes the transfer of production from a higher developing South country to a lower developing country in search of lower production costs.This article explores empirically the time series pattern of TV exports from 10 Asian economies to the United States and examines policy implications. The observed pattern is consistent with both the PC and FG models in a combined form.
ETHNIC ENCLAVES AND LABOR MARKETS: AN ANALYSIS OF IMMIGRANT OUTCOMES IN CALIFORNIA
Authors: CHOWDHURY MUSSADDEQ , PEDACE ROBERTO
Published: January 2010

The goal of this article is to examine how immigrant enclaves influence labor market outcomes. We examine the effect of ethnic concentrations on earnings in the state of California. Individual‐level wage equations that control for several observable human capital and demographic characteristics are estimated. In addition, we introduce a measure that captures an ethnic group’s proportion of the metropolitan area population. In general, we find that any potentially positive enclave effects are likely to be offset by negative labor market competition effects. In particular, most enclave effects become insignificant after controlling for metro area–specific effects. (JEL J61, J31)
STRATEGIC BEHAVIORS TOWARD ENVIRONMENTAL REGULATION: A CASE OF TRUCKING INDUSTRY
Authors: LAM TERENCE , BAUSELL CHARLES
Published: January 2010

We used trucking industry’s response to the U.S. Environmental Protection Agency’s acceleration of 2004 diesel emissions standards as a case study to examine the importance of accounting for regulatees’ strategic behaviors in drafting of environmental regulations. Our analysis of the time series data of aggregate U.S. and Canada heavy‐duty truck production data from 1992 through 2003 found that heavy‐duty trucks production increased by 20%–23% in the 6 mo prior to the date of compliance. The increases might be due to truck operators pre‐buying trucks with less expensive but noncompliant engines and behaving strategically in anticipation of other uncertainties. (JEL L51, Q25)
RACIAL DISPARITIES IN FEDERAL DISABILITY BENEFITS
Authors: GODTLAND ERIN M. , GRGICH MICHELE , PETERSEN CAROL DAWN , SLOANE DOUGLAS M. , WALKER ANN T
Published: January 2010

We estimate racial differences in the Social Security Administration’s (SSA) decision to award federal disability benefits using newly available data, multivariate econometric models, and Oaxaca decomposition methods. We focus on the appellate level of SSA’s disability decision‐making process. We find that for claimants represented by attorneys
there is no statistically significant difference in benefit award rates between whites and African‐Americans. However, for claimants without attorney representation, we find sizable and significant differences between whites and African‐Americans. (JEL J15, H53)
NAFTA AND THE MAQUILADORAS: BOON OR BANE?
Authors: TRUETT LILA J. , TRUETT DALE B.
Published: January 2010

This article examines the factors that affect the value added of the maquiladoras as a group as well as the apparel, electrical equipment, food, furniture, and motor vehicle equipment industries. It also explores the impact of the North American Free Trade Agreement (NAFTA) on the maquiladoras. The economic variables of relative wage rates, relative prices between Mexico and the United States, and U.S. real gross domestic product generally appear to have their expected effects. However, with the possible exceptions of the clothing and electrical equipment industries, this study suggests that NAFTA had either a negative impact or no effect on the maquiladoras. (JEL F14, 054)