bluuebunny/crossref_metadata_2025 huggingface dataset:
A STABLE MONEY DEMAND FUNCTION
Authors: HAMBURGER MICHAEL J.
Published: January 2010

Especially for monetarists–but for nonmonetarists as well– the demand function for money is of crucial importance for understanding macroeconomic activity and for making policy prescriptions. However, recent relationships between the money supply and aggregrate spending have generated increasing skepticism regarding the stability of money demand and the merits of using monetary aggregates as the bases for monetary policy. The author has formulated a demand for money function similar to so‐called “conventional” models in most respects. But its specification differs from these other models in two important ways– the choice of interest rates and the determination of real income elasticity. Using his specification, the author finds that money demand continues to be highly stable and argues that the case for basing policy and setting targets in terms of Ml is as strong as ever. He concludes that the close correspondence between actual and predicted velocity implies that the recent high growth rate of Ml is not inflationary but merely has accommodated a comparable increase in money demand.
TOTAL TRANSACTION MEASURES AND M1 GROWTH
Authors: KRETZMER PETER E. , PORTER RICHARD D.
Published: January 2010

This paper examines the role of measures of total transactions in explaining growth in the demand for Ml money balances. Fueled by strong growth in financial activities, total transactions have grown rapidly relative to nominal GNP, especially since 1979. In an aggregate Ml equation, we find financial transaction measures to be of some additional help in explaining Ml growth, beyond the ability of GNP to do so alone. A disaggregated approach shows more promise, with transaction measures improving the explanation of demand deposit growth.
INTERNATIONAL DEBT PROBLEMS
Authors: MELTZER ALLAN H.
Published: January 2010

A long‐term solution to the international debt problem is achieved when debtor countries can return to the marketplace without assistance or negotiation with foreign governments and international agencies. The prospects of major debtors' returning are very different and are most likely for Brazil. Various proposals are discussed, including proposals to exchange bank loans at market value for equity. Secretary Baker s proposal, which is opposed by the Shadow Financial Regulatory Committee, is also discussed.
COMPARATIVE WELL‐BEING OF CHILDREN AND ELDERLY
Authors: SMEEDING TIMOTHY , TORREY BARBARA BOYLE , REIN MARTIN
Published: January 2010

This paper compares the economic well‐being of children and the elderly to each other in the United States and across six industrialized countries. Using the Luxembourg Income Study database, we find that U.S. children–whose economic status is measured by their family income–are generally worse off than U.S. elderly in terms of both poverty and adjusted mean income. Moreover, U.S. children are worse off in terms of higher poverty rates than are the children in any of the other countries studied. The paper presents a variety of explanations for these differences.
STRUCTURAL CHANGE WITHIN THE OLDER POPULATION: ECONOMIC IMPLICATIONS
Authors: SEROW WILLIAM J. , SLY DAVID F. , MICKLIN MICHAEL
Published: January 2010

While much concern has been expressed recently about the aging of the United States population and the socioeconomic implications of this aging, comparatively little attention has been paid to the changes within the older population that likely will evolve during the next few decades. This paper examines changes in the demographic, social, and economic characteristics of the U.S. elderly until the year 2020. Additionally, the paper argues that analysis of the implications of aging based solely on trends in the total size of this population and on characteristics of the present generation of older Americans will not likely yield results fruitful for policymaking and planning.
INTERPRETING CHANGES IN THE ECONOMIC STATUS OF THE ELDERLY, 1949‐1979
Authors: ROSS CHRISTINE M. , DANZIGER SHELDON , SMOLENSKY EUGENE
Published: January 2010

This paper analyzes changes in the economic well‐being of the elderly using data from the Decennial Censuses of 1950 through 1980. We find that the economic status of each elderly cohort is higher on average than that of the preceding cohort. Certain events associated with age–retirement for both men and women and widowhood for women–are associated with declining incomes. Controlling for sex, labor force participation, and marital status, however, the economic well‐being of elderly cohorts generally increases with age.
MANAGING THE INTERNATIONAL DEBT CRISIS: THE FUTURE OF THE BAKER PLAN
Authors: BRAINARD LAWRENCE J.
Published: January 2010

The Baker Plan, announced in October 1985, represents a new approach by the U.S. administration to managing the international debt crisis. This paper assesses the present administration's new approach, first by examining whether it addresses the factors that led to the failure of past administrations' policies, and then by evaluating the Baker Plan with reference to the obstacles that hinder a lasting resolution of the debt crisis.
THE CONTEMPORARY DECLINE OF UNION STRENGTH
Authors: FIORITO JACK , MARANTO CHERYL L.
Published: January 2010

This paper reviews six explanations for the contemporary decline in United States union strength. The authors, after reviewing the conceptual basis and available evidence for each of these explanations, conclude that–for the present–each explanation has some merit. In other words, the contemporary decline in union strength results from the combined impact of various forces. However, employer suppression activities (e.g., illegal discharges for union activities) apparently represent the single most powerful explanation for union decline. Attempts by unions or policymakers to reverse this decline are more likely to be effective if the multiple causes of union decline are better understood.
UNION ORGANIZING AND THE REAGAN NLRB
Authors: SOCKELL DONNA , DELANY JOHN THOMAS
Published: January 2010

President Reagan's appointees to the National Labor Relations Board (NLRB) have issued many controversial decisions. This has caused a debate between liberals viewing the Reagan NLRB as anti‐union and conservatives viewing the recent NLRB decisions as a return to proven and appropriate policies. This paper investigates Reagan NLRB decisions over the years 1982‐1986 so as to shed some light on the facts underlying the debate. The analysis reveals that the Reagan NLRB decisions have been either favorable to employers or unfavorable to unions. The NLRB's decisions undoubtedly contribute to the organizing difficulties faced by unions.
BUSINESS CYCLES AND RACIAL DISPARITIES IN PUNISHMENT
Authors: MYERS SAMUEL L. , SABOL WILLIAM J.
Published: January 2010

Deeply rooted historical patterns allow us to make a correlation between imprisonment and unemployment and the marginalization of blacks. This paper examines the interrelationships among criminal activity, punishment, and cycles of the economic system based on the influence of political and economic forces on forming penal policies. The penal system is viewed as a device by which labor market fluctuations can be regulated. We examine differences between blacks and whites and between the North and the South to arrive at this paper's thesis: that race provides the link among economic cycles, employment, and crime.
EMPLOYMENT, CRIME, AND RACE
Authors: GOOD DAVID H. , PIROG‐GOOD MAUREEN A.
Published: January 2010

This study examines the relationship between the employability and the criminality of white and black male teenagers. We find that among black teenagers, the employed engage in fewer criminal activities than do the unemployed. Thus, blacks apparently view employment and crime as alternative income‐generating activities. On the other hand, employment status seems not to affect the criminal behavior of white male teenagers. Our evidence indicates that in the group studied, whites tend to use employment as a cover for crime or to moonlight in crime. Different legitimate opportunity structures for whites and blacks can explain, in part, the behavioral differences of whites and blacks. One more important policy implication is that job opportunities targeted to high‐risk black teenage populations have the additional beneficial effect of reducing crime rates.
OPTIMAL BANKING STRUCTURE: IMPLICATIONS FOR INTERSTATE BANKING
Authors: NELSON RICHARD W.
Published: January 2010

This paper assesses the implications for the banking industry of relaxing interstate branching prohibitions. Theoretical models suggest that the number, size distribution, and specialization of firms in an industry are determined so as to minimize costs of production. Analysis presented here shows that interstate branching prohibitions, or their removal, are likely to affect costs only if the “convenience” of office location is important and if significant economies of scale are associated with office expansion. These conditions apparently do not hold in either retail banking or wholesale banking. The paper concludes that productive efficiency alone will not force a major consolidation of the banking system when branching restrictions are eliminated. To the extent that a consolidation does occur, it likely will reflect factors not considered in our model. These factors include (1) possibilities for increased diversification with greater size, (2) scarce managerial resources, (3) managerial incentives to maximize the organization's size, and (4) demand for multi‐office banking.
INTERSTATE BANKING AND ANTITRUST LAWS: HISTORY OF PUBLIC POLICIES TO PROMOTE BANKING COMPETITION
Authors: SHULL BERNARD
Published: January 2010

Over the past several years, antitrust laws' significance as a public policy to promote competition in banking has diminished. Deregulation has intensified competition so much that it has made antitrust laws nonbinding constraints, even during a merger movement of extraordinary proportions. Deregulation and attenuating antitrust raise a question as to whether a distinctive competitive policy for commercial banks should exist as it has in the past.

Two earlier policies are identified and reviewed in this paper: (1) free banking, which in several forms existed from the 1830s to the early 1930s, and (2) antitrust, which became relevant during the early 1960s. Experience under both policies illuminates the interaction between competition and regulation in banking. Such experience indicates that the effects of current competitive policy must be evaluated within the developing regulatory environment. Partially evaluating current policy within this context suggests that new charter requirements should be reformulated and that large bank mergers should be limited. So long as a distinctive regulatory system exists, a distinctive competitive policy for banks is needed.
THE INTERSTATE BANKING LANDSCAPE: LEGISLATIVE POLICIES AND RATIONALE
Authors: FRIEDER LARRY A.
Published: January 2010

Expansion across state boundaries has been the dominant change in the structural landscape of banking. Forty‐one states and the District of Columbia now permit full‐service interstate banking. This paper reviews and analyzes these laws and their related provisions. Geographical liberalization is found to be mostly pro‐competitive.

Regional reciprocity statutes dominated the interstate banking landscape until mid‐1985. Of the first 18 laws, 12 were regional. However, the regional approach peaked quickly, and most remaining states enacted nationwide laws—either immediate nationwide bills or regional bills that “trigger” to the nationwide level at a certain date. Presently, 27 of the 42 laws are nationwide. At least 9 states that initially selected regional laws are soon expected to switch to a nationwide approach.

Regional banking compacts seemed inherently unstable and difficult to establish. Only the Southeast successfully established a stable regional banking zone. The location of control over the nation's banking assets is being restructured. In some states with well‐capitalized holding companies aggressively exploiting the new laws, banks have grown in size. Other states that were slow to pass legislation, or whose banks are in no financial position to make acquisitions, have lost rank.

After a relatively short time, the federal government finally may legislate on the interstate banking issue. Pressure to do so would derive from the different banking structures and regions, problematic competitive dimensions, banks' supervision and regulation necessities, and eventual interstate branching proposals.
ELECTRIC POWER DEREGULATION: BACKGROUND AND PROSPECTS
Authors: SMITH VERNON L.
Published: January 2010

The incentive failures of rate‐of‐return regulation are well known and thus raise the question of whether to deregulate electric power. The development of long‐distance transmission and of alternative power sources in networks has spawned several institutions that would or could allow markets to substitute for such regulation. These include long‐term contract sales, spot power exchange, contract power pooling, shared facility ownership, and economic dispatch. Because of the current surplus of power, the existence of such institutions has caused increasing competition in the electric power market and has catalyzed the movement to deregulate generators from state authority and to restructure utility assets. By encouraging this movement, regulators can further the discipline that markets already exert on prices and costs. By making counterproposals to the utilities, regulators can influence asset restructuring so that some of the capital gains inherent in such restructuring can be shared with consumers in the form of rate relief. Finally, for the future, the cotenancy agreement—which is antitrust supervised and competitively ruled—has promising possibilities for deregulating transmission and distribution.
ECONOMIC EFFICIENCY AND “PRUDENCE” ANALYSIS OF POWER PLANT INVESTMENT
Authors: ZYCHER BENJAMIN
Published: January 2010

The various deregulation proposals for the electric utility sector rely on market forces to provide incentives. Even within the traditional regulatory framework, using market behavior instead of regulators' views as a criterion for regulatory decisions is part of the spectrum of deregulation proposals. This paper proposes such an implicit deregulation of rate base decisions. It presents an efficiency standard with which public utility commissions (PUCs) should conduct their “prudence” analyses of power plant construction costs. Prudence reviews, as typically conducted by PUCs, are likely to change the risk structure in regulated sectors so as to make both ratepayers and shareholders worse off. Moreover, the correct perspective for such analyses is ex ante rather than ex post. This means that the expected costs and benefits of alternative actions are the correct parameters for evaluating prudence, and that the interests of ratepayers are consistent only with this economic efficiency approach to prudence analysis. Average industry behavior is the correct standard for implementing the efficient prudence criterion. This paper describes an alternative procedure that PUCs can use to conduct prudence reviews correctly.
LOWER OIL PRICES AND STATE EMPLOYMENT
Authors: BROWN S. P. A. , HILL JOHN K.
Published: January 2010

Even after two years of adjustment, it was apparent that the sharp drop in oil prices occurring during late 1985 and early 1986 would have a profound effect on the regional distribution of employment in the United States. In this paper, we develop and implement a procedure for quantifying the long‐term consequences of lower oil prices on employment in each of the 50 states. We use the estimates developed to determine how much of the variation in state employment growth during 1986 can be attributed to the oil price decline. We also use the estimates to gauge the feasibility of political action, such as an oil import tariff, to reverse the oil price decline.
OIL PRICE VOLATILITY AND U.S. MACROECONOMIC PERFORMANCE
Authors: CONSIDINE TIMOTHY J.
Published: January 2010

This study uses a model with explicit energy sector linkages to estimate the macroeconomic impacts of the 1986 collapse in energy prices. The model combines features of neoclassical macroeconomics to estimate final demand spending and of general equilibrium analysis to estimate substitution possibilities. The model allows price and wage rigidities yet permits interfuel and input substitutions. The simulation results suggest three conclusions. First, the most significant macroeconomic impact of the 1986 oil price reduction is the sharp drop in inflation. Second, output and employment gains are relatively small due to the sharp drop in energy sector output. Finally, the estimated gain in real output due to lower energy prices is close to the output loss resulting from the trade deficit increase during 1986. This may be one reason why no substantial increase in economic growth occurred following the 1986 collapse in energy prices.
THE CINDERELLA SCHOOL OF TAX REFORM: A COMMENT ON RABUSHKA
Authors: McCHESNEY FRED S.
Published: January 2010

The enthusiasm for the latest round of tax changes is hard to fathom. Tax “reform” has become an almost annual part of U.S. politics, as legislation is routinely bought and sold for the benefit of private rather than public interest. The 1986 episode was no different, and there is no reason to believe that the changes will last long.
ECONOMIC ORIGINS OF APARTHEID
Authors: HAZLETT THOMAS W.
Published: January 2010

South African apartheid is a social system arising from the economic conflict of competitive interest groups. During the past four centuries, this struggle has not been linear: Changing economic and demographic conditions have tended to make white and non‐white subclasses net complementary factors at certain times and net substitute factors at others. Moreover, such cross‐elasticities in production are not clearly delineated along racial lines. For example, the synergy of white capital and black labor formed the essential social “evil” which apartheid, promoted by white labor and farm interests, was created to expunge. Hence, isolating apartheid via international sanctions is inherently problematic. The imposition of apartheid itself was accompanied by extensive South African‐imposed trade barriers.
SOUTH AFRICAN DISINVESTMENT: CAUSES AND EFFECTS
Authors: FEIGENBAUM BERNARD , LOWENBERG ANTON D.
Published: January 2010

Divestment pressure is one channel through which those interest groups opposing apartheid have attempted to induce U.S. firms to withdraw from South Africa. This paper investigates empirically the relationship between stockholder influence, disinvestment, and the behavior of South Africa‐active firms. The paper finds that if institutional investors hold a large proportion of a firm's shares, then that firm will be induced to participate in fair employment and social programs to benefit its black labor force. However, the same “socially responsible” firm is also more likely to disinvest—leaving a less progressive employer in its place.
REFORMING THE SOVIET CARTEL
Authors: OSBAND KENT
Published: January 2010

The key to Soviet economic reform is competition. Cultural inertia, ideology, and vested privilege discourage competition. The attempts at reform have achieved no significant breakthrough in the state sector. In the non‐state sector the situation is more promising. To the extent that the new Law on Cooperatives is implemented, it may mark a turning point for perestroika.
APPLICATIONS OF REAL EXCHANGE RATE ANALYSIS
Authors: HARBERGER ARNOLD C.
Published: January 2010

This paper presents an approach for analyzing changes in the real exchange rate. It cites three views of the real exchange rate and outlines the complex forces that cause the rate to change. Using data from the International Monetary Fund's International Financial Statistics, the analysis then focuses on selected countries, each chosen because its experience reflects the operation of a principal force affecting the exchange rate. A summary of the experience of several countries during the 1970–1983 period illustrates the importance of the real exchange rate in the wake of inflationary episodes, oil crises, massive capital movements, and debt crises during that period. The analysis directs particular attention toward the central role that real exchange rate movements have played in the international debt crisis.
EVALUATING MEDICAL MALPRACTICE REFORMS
Authors: HUGHES JAMES W. , SNYDER EDWARD A.
Published: January 2010

Which of the tort reforms enacted during the mid‐1970s to alleviate the medical malpractice litigation crisis have succeeded? Under some circumstances, the frequency and disposition of claims may indicate how reforms affected key policy variables such as the number of injuries and costs of litigation. But potential pitfalls exist in using claims data to evaluate tort reforms. In this paper, we identify and discuss these problems, review recent findings, and offer guidance to improve policy analysis.
STOCK MARKET REACTION TO NUCLEAR REACTOR FAILURES
Authors: ROTHWELL GEOFFREY S.
Published: January 2010

Current proposals to reform regulation of the commercial nuclear power industry ignore the potential of financial market sanctions on poor reactor management. This paper examines investor reaction to the automatic shutdowns following equipment failures at nuclear power plants from 1978 to 1985. Compared with a portfolio of nuclear utilities, the daily return to common equity of the owner of a failed reactor dropped by 0.24 percent after two trading days but increased by 0.24 percent four trading days later. Investors are averse to reactor failures but correct initial negative responses once they learn that the reactor is not damaged.
NEW INSIGHTS INTO THE DECLINE OF ANTITRUST ENFORCEMENT
Authors: SNYDER EDWARD A.
Published: January 2010

The total number of cases that the Antitrust Division has filed during the past decade has increased, but the number of significant criminal price‐fixing cases has declined. Policy changes have had significant effects on other areas of enforcement. This paper argues, however, that the decline in this dimension of antitrust enforcement can be explained by a 1974 act of Congress that increased criminal penalties for price‐fixing violations from the misdemeanor level to the felony level. According to this argument, the stiffer penalties' deterrent impact has reduced the supply of antitrust violations. In this respect, the analysis highlights the flaws in measuring the strength of enforcement from the frequency of cases filed. In addition, the paper reports empirical evidence from a multinomial logit model of defendant plea choice indicating that the felony penalties encourage defendants to plead not guilty more frequently. Furthermore, data on the outcomes of criminal antitrust cases reveal that the government has greater difficulty in obtaining convictions when felony penalties apply. From the viewpoint of enforcers, these findings imply that detecting and prosecuting significant price‐fixing violations is more difficult. This, in turn, helps explain the reduction in related private enforcement.
EFFECT OF FIRM ORGANIZATIONAL STRUCTURE ON INCENTIVES TO ENGAGE IN PRICE FIXING
Authors: JOYCE JON M.
Published: January 2010

This article examines price fixing and bid rigging by applying the theory of the economics of crime to explain the calculus of the individual decision maker in the firm. This approach departs somewhat from the traditional approach to investigations of collusion. The latter has emphasized market structure and firm interrelationships while it has ignored the characteristics of the firm itself. But analyses ignoring firm organizational and financial structure are incomplete insomuch as these factors are crucial to the incentives and costs that the decision maker confronts. This paper offers an alternative approach in which price‐fixing and bid‐rigging offenders' prominent characteristics apparently are mirrored in defendant firms and individuals that the Antitrust Division has prosecuted recentlv.
ARE THE TWIN DEFICITS REALLY RELATED?
Authors: MILLER STEPHEN M. , RUSSEK FRANK S.
Published: January 2010

The emergence of record current‐account and fiscal deficits in the United States during the 1980s draws increasing attention to what has become known as the “twin deficit” problem. Conventional wisdom is that a shift to larger government deficits entails a decline in government saving and results in larger trade deficits, Persistently large trade deficits are troublesome because they imply a transfer of wealth to foreigners and possibly a reduction in future generations' living standards.

This paper examines whether post‐World War II data for the United States reveal a long‐run secular relationship between the trade deficit and the fiscal deficit. The focus is on the secular relationship since that is the one most relevant to long‐run policy concerns. The authors employ three different statistical techniques: (i) a deterministic technique for separating the secular components from the cyclical components to derive secular measures of the twin deficits, (ii) a stochastic procedure to isolate the secular components, (Hi) cointegration analysis to test for a long‐run equilibrium relationship.

The authors conclude that, based on the first two approaches, evidence of a positive secular relationship between the twin deficits exists only under flexible exchange rates. This relationship appears quite strong–that is, a $1 change in the fiscal deficit eventually leads to roughly a $1 change in the trade deficit. On the other hand, findings based on cointegration analysis indicate no long‐run equilibrium relationship between the twin deficits. This latter finding, however, may reflect a low power of the relevant statistical tests stemming from the shortness of the sample period.
PRICING FOR WATER CONSERVATION
Authors: MORRIS JOHN R.
Published: January 2010

Water utilities tend not to use prices to encourage conservation. Many utilities still use declining block rates. Even after switching to ascending blocks, however, some have hookup charges that amount to fixed charges of more than half the cost of water. Converting the hookup charge from aflat amount to an amount based on actual water use could lead to substantial savings in usage and cost. In Denver, where a hookup charge now is equivalent to $400 per year added to one's mortgage, the savings in usage that would result from a usage‐based hookup charge are estimated at between 9 and 32 percent of total use. A usage‐based hookup charge would substitute for a proposed dam costing more than $500 million. Structuring prices to control usage would be far simpler than implementing the conservation programs now being proposed in some water utilities, would result in lower water costs for anyone desiring lower costs, and would allow individuals to choose whether to conserve but require them to pay the costs of their decision.
A DECADE OF DECLINING WELFARE PARTICIPATION: SORTING OUT THE CAUSES
Authors: ROBINS PHILIP K.
Published: January 2010

Since the late 1970s, the proportion of all single‐parent families receiving benefits from the Aid to Families with Dependent Children (AFDC) program has been declining. This is reversing an earlier two‐decade trend. This paper uses data from the Current Population Survey so as to investigate the reasons for the decline. The analysis reveals that for the years prior to 1981, the decline has resulted both from an erosion in real AFDC guarantee levels–caused by high rates of inflation–and from changes in demographic conditions. For the years subsequent to 1981, the decline has resulted from an increase in effective AFDC benefit reduction rates caused by the Omnibus Reconciliation Act of 1981. Somewhat offsetting the participation rate decline were falling real child support collections and a rising unemployment rate.
POLICY ISSUES AND CHILD SUPPORT PAYMENT BEHAVIOR: EMPIRICAL FINDINGS
Authors: BERON KURT J.
Published: January 2010

Non‐compliance with child support orders is separated into absent fathers who pay none of their obligation and those who make partial payments. This paper reports policy findings from an updated empirical study of those paying nothing. Such findings support better payment performance when the collection/ expenditure ratio is greater in a state's Child Support Enforcement Program. The paper argues that the customary approach, which combines partial payers and full payers of support, leads to misleading policy conclusions. It reports an empirical study breaking out the partial payer group and finds the impact of several policy variables to be reduced greatly for this group.
ECONOMIC ADJUSTMENT IN HEAVILY INDEBTED DEVELOPING COUNTRIES
Authors: FIELEKE NORMAN S.
Published: January 2010

The threat to the international financial system resulting from the developing‐country debt problem has diminished since the initial 1982 crisis, despite halting adjustment and impaired creditworthiness in heavily indebted developing countries. The threat to the financial system has eased as commercial banks have reduced sharply the share of their assets and capital exposed to the troubled debtor countries. The countries themselves, however, are no better off. A sizable balance‐of‐payments adjustment has occurred in the heavily indebted developing countries, but that adjustment was concentrated–at least in quantitative terms–during the years immediately following the onset of the crisis and might have been more efficient had it been executed more gradually. Despite the adjustment that has occurred, the creditworthiness of the heavily indebted countries–as evaluated by conventional indices–has not improved. And, for reasons that this article explores, economic growth per capita has not resumed either.
DEFINING A RIGHT OF ACCESS TO INTERSTATE NATURAL GAS PIPELINES
Authors: SMITH RODNEY T. , VANY ARTHUR S. DE , MICHAELS ROBERT J.
Published: January 2010

Decontrol of the wellhead price of natural gas under the Natural Gas Policy Act of 1978 ended the general shortage of natural gas, which had begun in the 1960s. It also led to dislocations in gas markets because of regulatory uncertainties that created difficulties in renegotiating contracts made during the shortage period. Together, the decontrol and dislocations led to a decline in the traditional role of interstate gas pipelines as full‐requirements suppliers to local distributors, who now use pipelines primarily as transporters of gas purchased independently of the pipelines. The growth in transport transactions has increased greatly the potential scope of efficient exchanges in gas markets. Achieving efficiency gains, however, requires an underlying right of access to pipelines that is non‐discriminatory, exchangeable, and consistent with both existing regulation and pre‐existing contractual relationships. The authors define such a right, which they call exchangeable transport entitlement (ETE). They show that ETE satisfies the criteria for efficiency gains, and they examine the practical problems of the transition that a regulatory regime incorporating ETE faces. The analysis has important implications for other industries and for the economic theory of regulation. Specifically, the analysis shows that economists must realize the importance of diverse contractual relationships in both their theoretical literature and their proposals for regulatory reform.
CROSS‐CONTRACT CREDITING UNDER FERC ORDER 500
Authors: DeCANIO STEPHEN J.
Published: January 2010

In remanding Federal Energy Regulatory Commission (FERC) Order 436, the US. Court of Appeals for the District of Columbia Circuit did not require the FERC to issue a new policy on “take‐or‐pay” contracts between interstate pipelines and natural gas producers. The court asked only that the FERC meet the standard of “reasoned decision making.” FERC Order 500, in proposing the mechanism of cross‐contract crediting to reformulate take‐or‐pay contracts, went far beyond the court's decision.

Take‐or‐pay contracts are but one component of an interrelated set of long‐run commitments by both pipelines and gas producers upstream and downstream. The FERC's abrogating take‐or‐pay contracts would reverberate beyond the immediate consequences for pipelines and producers. Implementing Order 500 would change the conditions under which gas producers explore, develop, and extract. It would influence the terms of future lease and royalty contracts with owners of mineral rights, and it would have adverse consequences for end users of gas. Evidence exists that promulgating Order 500 increased spot gas prices. Most take‐or‐pay problems have been resolved through voluntary renegotiation by the parties. Nullifying the remaining contracts through regulation will not accomplish the pro‐competitive goals that have guided the FERC's natural gas policy during the 1980s.
EQUITY AND EFFECTIVENESS OF POSSIBLE CO2 TREATY PROPOSALS
Authors: CHAPMAN DUANE , DRENNEN THOMAS
Published: January 2010

The Montreal Protocol on chlorofluorocarbon control established an important precedent for global environmental treaties that include both developing countries and industrial countries. This paper evaluates seven possible treaty proposals to control carbon dioxide (CO2) emissions. Growth‐rate control proposals fail on effectiveness of control or on equity differences between developing countries and industrial countries. Complex proposals link policies in population growth, economic development, world energy taxation, and forestation. These complex proposals, which appear to be both effective and equitable, can defer or avoid CO2 doubling.
SUBSIDY TO NUCLEAR POWER THROUGH PRICE‐ANDERSON LIABILITY LIMIT
Authors: DUBIN JEFFREY A. , ROTHWELL GEOFFREY S.
Published: January 2010

Between 1959 and 1982, the Price‐Anderson Act placed a limit of $560 million on the liability of nuclear power plant operators for accidental damages. This limit grew to $7 billion due to the 1988 amendments to the act. This paper using insurance premiums charged for the first $160 million of coverage and the Nuclear Regulatory Commission's estimate of the probability of a worst‐case loss, models the distribution of damages with a log‐logistic density function. The study finds that the value of the Price‐Anderson subsidy was $60 million per reactor year before 1982 but then dropped to $22 million per reactor year following the 1988 amendments.
NUCLEAR TERRORISM: REACTOR SABOTAGE AND WEAPONS PROLIFERATION RISKS
Authors: LEVENTHAL PAUL L , HOENIG MILTON M.
Published: January 2010

Nuclear power plants and research reactors are vulnerable to acts of terrorism that could render safety systems inoperable and result in catastrophic releases of radioactivity. In addition, expanding civil commerce in weapon‐usable forms of plutonium and uranium and deploying tactical nuclear weapons in areas where terrorists are active increase the risk of terrorists' building or stealing nuclear weapons or, even more likely, carrying out a credible hoax.

The United States and other advanced industrialized nations should be concerned about nuclear terrorism, the threat of which now is perceived as low. However, if terrorist groups become more determined, violent, and technologically advanced, as some experts anticipate, then the possibility of nuclear terrorism will likely increase with little warning. Nuclear terrorism, regardless of where it occurs, could have far‐reaching consequences for economic stability and world peace. Western Europe is a region of continuing concern due to its high level of “nuclearization”–that is, civil and military nuclear development–and the presence of sophisticated terrorist organizations operating across national boundaries.

This paper reviews potential dangers and available remedies based on the report of the International Task Force on Prevention of Nuclear Terrorism, on policy and technical studies prepared for the Task Force, and on follow‐up research conducted by the Nuclear Control Institute, the Task Force's sponsoring organization.
THE NEED TO REFORM THE FEDERAL DEPOSIT INSURANCE SYSTEM
Authors: BARTH JAMES R. , HUDSON CARL D. , PAGE DANIEL E.
Published: January 2010

The biggest financial disaster in modern history struck the savings and loan industry during the 1980s. This paper argues that the unifying cause of this debacle was the way in which the federal deposit insurance system is structured. The fundamental cause was not fraud and deregulation, as is commonly argued. The government not only permitted reportedly insolvent institutions to continue to operate, it permitted many such institutions to grow by offering relatively high rates on their deposits. Unfortunately, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 may not prevent a similar situation from ever recurring. Therefore, one must understand exactly what happened, what the FIRREA does and does not do, and the proposals for reforming the entire structure of the federal deposit insurance system.
TARGETING FARM PROGRAMS
Authors: SUMNER DANIEL A.
Published: January 2010

“Targeting” in the agricultural policy context generally means directing payments to small or financially vulnerable farms or to poor farm families. This may seem a worthy objective. If farm programs were designed to act as welfare, then focusing the benefits on the needy clearly would be appropriate. Payments now are roughly the difference between the market price per unit produced and a high government price per unit. Therefore, farms with more output get larger payments. Further, revising farm programs to act as aid to the needy would be difficult. Targeting amendments currently proposed generally are unworkable and likely would do little to change the actual distribution of benefits. Finally, because farmers currently are eligible for other aid programs and because few producers of significant output meet general welfare criteria, seemingly little real reason exists for attempting to convert farm programs rather than simply phasing down the payment levels overall.
CAUSES AND CONSEQUENCES OF FARM POLICY
Authors: ALSTON JULIAN , CARTER COLIN
Published: January 2010

Two types of public choice models have been applied to model the political economy of farm programs: the self‐willed government (SWG) model and the clearinghouse government (CHG) model. In terms of theory, the two models are very similar but most analysts prefer the CHG model. In terms of empirical work, the CHG model has done a little more—but not much more—to further our understanding of the causes of farm programs. Reviewing the theoretical and applied literature indicates that one should extend and refine the models so as to allow explicitly for a larger number of interest groups (especially agribusiness and foreign interests), to allow multiple policy instruments to be applied jointly, and to explain the choice(s) of policy instruments jointly with the rate of protection.
CAUSALITY IN POLITICAL BUSINESS CYCLES
Authors: ELLIS CHRISTOPHER J. , THOMA MARK A.
Published: January 2010

One can easily identify four general models of political business cycles: office‐motivated models (both forward and backward looking) and partisan models (again, both forward and backward looking). Each model makes different assumptions about the direction and timing of causal links between the economy and polity. This paper uses Granger causality tests to investigate the causal links between presidential popularity and different measures of aggregate economic performance and aggregate economic policy. The paper's aim is to investigate whether any existing theories receive substantive support and, if not, to suggest the properties that any new theories should display. The results indicate no overwhelming support for any existing theories, though partisan models receive more support than do office‐motivated models. The data appear to be most consistent with Ellis and Thoma's reputational partisan model.
UNDERSTANDING THE BUSINESS FAILURE RATE
Authors: LANE SARAH J. , SCHARY MARTHA
Published: January 2010

The rate of business failures is widely quoted but is little understood. This study reviews the availability and usefulness of data on business failures and discusses the major determinants of fluctuations in the business failure rate. It shows that the age distribution of the population of firms is the largest determinant of failures and that the rate of failure has only a small countercyclical fluctuation. The study documents a substantial decline in the rate of failures between 1962 and 1979 and a smaller increase after 1980. The evidence presented suggests that the long decline is caused by the fall in failure rates in certain states and that part of the increase during the 1980s is due to changes in Dun & Bradstreet's data collection procedures.
AN ECONOMIC EXPLANATION FOR THE INEFFECTIVENESS OF ADDICTION TREATMENT
Authors: BOHANON CECIL E.
Published: January 2010

The addiction literature treats as a stylized fact that formal treatment programs have little long‐run efficacy. Treated addicts have no better prospects for long‐run abstinence than do addicts who do not enter treatment programs. A logical consequence of this is that if treatment enhances the prospects of long‐run abstinence for some treated addicts, then it diminishes the prospects for others. This paper offers a simple cost‐benefit argument explaining how treatment can interfere with certain natural processes conducive to permanently abandoning an addiction. The paper argues that a stable remission from addiction depends on the historic costs of the addiction relative to the historic benefits as perceived by the user. Because treatment intrinsically mitigates the cost of addiction but does not directly influence the benefits of addiction, treatment can make returning to an addiction more likely.
FURTHER ANALYSIS OF THE TWIN DEFICITS
Authors: BISWAS BASUDEB , TRIBEDY GOPAL , SAUNDERS PETER
Published: January 2010

In a 1989 Contemporary Policy Issues article Miller and Russek published findings of a causal relation between the fiscal deficit and the trade deficit. However, they found no overwhelming support for reverse causation between the twin deficits. The authors of the analysis here gathered annual data on U.S. federal budget deficits and net exports for 1950–1988 and deflated the nominal values by the GDP deflators to examine the causal relation based on real values. They made a distinction between structural and actual budget deficits. Instead of an arbitrary choice of lag structure, they used Hsiao (1979, 1981) minimum final prediction error criterion to determine the optimum lag lengths of the explanatory variables. The analysis reveals a unidirectional causal relation running from structural budget deficits to net exports, confirming some of Miller and Russek's findings. Contrary to Miller and Russek's conclusions, however, findings here indicate a bi‐directional causal relation between actual budget deficits and net exports. These findings suggest important policy implications.
BENEFITS OF PRESERVING OLD‐GROWTH FORESTS AND THE SPOTTED OWL
Authors: HAQEN DANIEL A. , VINCENT JAMES W. , WELLE PATRICK G.
Published: January 2010

This paper presents results from a national contingent‐valuation study of the economic benefits of preserving old‐growth forests in the Pacific Northwest. The study elicits “market‐like” valuation responses from U.S. households concerning the benefits of a conservation policy for the northern spotted owl. These data provide a basis for estimating the benefits of preservation in terms of average household willingness to pay. Existing cost estimates are used to compute threshold prices that the benefits of the policy must exceed for the policy to be efficient. Benefit/cost ratios are calculated using “best” and “lower‐bound” estimates of the benefits of preservation. Under all combinations of assumptions, the estimated benefits exceed the costs of the conservation policy.
ZERO INFLATION: TRANSITION COSTS AND SHOE LEATHER BENEFITS
Authors: Carlstrom CHARLES T. , Gavin WILLIAM T.
Published: January 2010

The idea that the monetary authority cannot achieve price stability except at the cost of a recession is the most common and convincing argument against price stability. This paper presents calculations showing that the resource costs of a recession that might result from eliminating a 4 percent inflation are approximately equal to the “shoe leather” costs incurred when inflation is stable at 4 percent.
REGULATORY STRUCTURE, REGULATORY FAILURE, AND THE S& L DEBACLE
Authors: Nelson RICHARD W.
Published: January 2010

Widespread S & L failures during the 1980s required the federal government to spend over 100 billion dollars bailing out the deposit insurance fund. This paper interprets the S & L debacle as a regulatory failure. Review of the S & L debacle suggests that regulators failed to manage the deposit insurance system efficiently. But the regulatory agencies' structure appears to have played a secondary role in contributing to regulatory failure. Faced with the same incentives, objectives, and resources, regulators probably would have behaved similarly regardless of the regulatory structure.
THE MINIMUM WAGE, WAGE SUBSIDIES, AND POVERTY
Authors: Husby R. D.
Published: January 2010

In an attempt to augment the lowest wages, the United States and several other countries utilize legal minimum wages. However, the minimum wage has potentially adverse employment effects. The analysis here suggests that an alternative policy that combines a minimum wage and a wage subsidy is superior to either by itself. Such a combination can assist the low wage worker, avoid disemployment effects, and maximize market efficiency.
PROHIBITION VERSUS TAXATION: RECONSIDERING THE LEGAL DRINKING AGE
Authors: Kenkel DONALD S.
Published: January 2010

The legal drinking age targets a group at a high risk of alcohol‐related problems. This paper argues that taxation could achieve the same benefits as the legal drinking age at a substantially lower social cost. Existing empirical research suggests that simultaneously lowering the legal age to 18 and taxing alcohol purchases at between 12 to 86 percent of the current price would achieve the same results as the current legal age. Levying a special teen tax only on young adults would minimize its social costs. Teen tax revenues between $564 million to $4.03 billion measure the net social gain of replacing the current prohibition on young adults' alcohol purchases with a taxation policy.
MOTIVATING RECYCLING: A MARGINAL COST ANALYSIS
Authors: Judge REBECCA , Becker ANTHONY
Published: January 2010

Areas considering alternative house‐to‐house recycling programs as a means of diverting material from landfills can determine the most efficient choice by comparing programs' marginal costs with diversion's marginal benefits. This paper describes a controlled field experiment that observed individual household recycling habits over a six‐month period. The experiment monitored the quantity of material that households recycled under increasingly more convenient (and increasingly more costly) programs. The analysis here uses a Tobit model to determine how the quantity of material diverted varies as a function of convenience factors and demographic characteristics. The analysis compares the value of the expected marginal increase in diversion to the marginal cost of increasing recycling convenience to determine the efficient level of convenience for an area's recycling program.