bluuebunny/crossref_metadata_2025 huggingface dataset:
THE VANISHING LIQUIDITY EFFECT OF MONEY ON INTEREST: ANALYSIS AND IMPLICATIONS FOR POLICY
Authors: MELVIN MICHAEL
Published: January 2010

This paper seeks to re‐examine the effects of money on interest rates. The earlier literature on this topic determined, fairly well, the pattern of response of interest rates to changes in money growth. The notable studies of Cagan (1972), Cagan and Gandolfi (1969), and Gibson (1970) served to establish the professions “stylized pattern” as presented in section I. Section II presents new evidence on the subject and finds that the old empirical generalizations no longer hold. Specifically, the results suggest that the initial liquidity effect of faster money growth is likely to be offset within the month following the monetary policy change. Sections III and IV investigate the reasons for the changing pattern of monetary effects on interest rates and discuss the policy implications of the new pattern.
PATIENTS‘ TRUST AND THE QUALITY OF PHYSICIANS
Authors: McGUIRE THOMAS G.
Published: January 2010

Patients are uncertain of physicians' quality but learn about the quality of particular physicians through experience in treatment. Patients come to trust physicians who have served them well. This paper explores the economic consequences of patients' learning and trust within a model of the market for physicians' services. In a market equilibrium, there are too many incompetent physicians in practice. Surprisingly, even the more competent physicians have an interest in preventing patients from judging quality except through experience. As we show, all physicians, including the most competent, may oppose steps to inform patients of physicians' quality.
THE ACCUMULATION OF HUMAN CAPITAL DURING MARRIAGE BY MALES
Authors: KENNY LAWRENCE W.
Published: January 2010

Married males have significantly higher wage rates than never‐married, widowed, or divorced males, even when differences in educational attainment, experience, race, and so on are controlled for. Evidence presented in this paper suggests that most of the unexplained wage differential associated with marital status in earnings regressions results from males accumulating human capital more rapidly when they are married than when those same males are not married. The hypothesis that married males earn more than unmarried males because marriage facilitates the financing of human capital accumulation is supported by this and other evidence.
A QUALITY‐ADJUSTMENT MODEL OF THE ACADEMIC LABOR MARKET: THE CASE OF ECONOMISTS
Authors: MOORE WILLIAM J. , NEWMAN ROBERT J. , RAISIAN JOHN , THOMAS R. WILLIAM
Published: January 2010

This paper uses some new data on the initial academic placements of new Ph.D. economists to test a quality‐adjustment model, which is consistent with the hypothesis that most academic appointments follow a “downstream” pattern. By the use of weighted least squares the authors confirm the importance of the perceived quality of the faculty of the degree granting program, the publishing performance of former graduates of these programs, and the student/faculty ratio of these programs in economics over the period 1960 to 1978. Finally, it is shown that contrary to popular opinion, the extent of the “downstream” pattern has not been magnified in the so‐called buyers markets of the 1970's.
INTERNATIONAL PRICE BEHAVIOR AND THE DEMAND FOR MONEY
Authors: GANDOLFI ARTHUR E. , LOTHIAN JAMES R.
Published: January 2010

Oil prices, commodity prices and American monetary policy, the last operating through a variety of channels, have all figured prominently in explanations of the international inflation process in the late 1960s and early 70s. OUT major purpose in this paper is to test these various hypotheses. We do so in the context of a reduced‐form rational‐expectations price equation which we estimate for the United States and seven other industrial countries using quarterly data for the period 1955 through 1976.

The principal conclusion that emerges from this exercise is that movements in domestic money in these countries served as the key link in the inflation process. The factors that produced these monetary changes, however, differed among countries. Price shocks of various sorts were clearly of secondary importance.

The other important set of conclusions concerns the demand for money. In place of a traditional stock adjustment model, we used GLS with a second‐order correction for autocorrelation. We believe this produced more plausible estimates of the parameters of the long‐run demand function and of the adjustment process itself.
PRODUCTIVITY PERFORMANCE OF U.S. TRUNK AND LOCAL SERVCE AIRLINES IN THE ERA OF DEREGULATION
Authors: CAVES DOUGLAS W. , CHRISTENSEN LAURITS R. , TRETHEWAY MICHAEL W.
Published: January 2010

The transition to deregulation of the U.S. air transport industry began in 1976. In this paper we measure total factor productivity growth of the airlines for the first five years of the transition (1976–1980) and compare the performance with that of the preceding years. We find that productivity growth accelerated from 2.8% per year to 5.1% per year. An analysis of covariance model with individual airlines as observations leads to the conclusion that for the trunk airlines nearly all of the acceleration can be explained by increases in output and load factor and decreases in the growth of capacity. For the local service airlines, however, less than half of the acceleration may be so‐explained.
TIE‐IN SALES AND PRICE DISCRIMINATION
Authors: LIEBOWITZ S. J.
Published: January 2010

This paper analyzes a class of contracts between buyers and sellers which specifies that the purchase of one good cannot be effectuated unless a second good is also purchased. The economic forces resulting from a tie‐in are shown to be influenced by factors such as depreciation of the tying good, the sales policy of the firm and the discount rate. Price discrimination, the traditional hypothesis for this tie‐in, is seen to make sense only when these factors align themselves in particular ways although an alternative hypothesis, risk reduction, is unaffected by these factors. The price‐discrimination hypothesis, therefore, loses much of its appeal, relative to the alternative.
THE RATE OF RETURN TO MEXICAN AMERICANS AND ANGLOS ON AN INVESTMENT IN A COLLEGE EDUCATION
Authors: RAYMOND RICHARD , SESNOWITZ MICHAEL
Published: January 2010

Rates of return to an investment in a college education are estimated for Mexican American and Anglo male college graduates with majors in business, accounting, education and liberal arts. The returns, estimated for 1967, 1970 and 1973 graduates of Pan American University, are quite substantial for all but the Anglo education majors. The returns to the business and accounting majors substantially exceed those to the other graduates. There was no strong tendency for the rates of return to fall over time nor were there any systematic differences between the returns to the two ethnic groups. This latter result does not imply an absence of labor market discrimination against Mexican American college graduates.
WILL RETARDING THE INFORMATION FLOW ON AUTOMOBILE RECALLS AFFECT CONSUMER DEMAND?
Authors: REILLY ROBERT J. , HOFFER GEORGE E.
Published: January 2010

Recently the National Highway Traffic Administration changed its policy concerning the public announcement of safety‐related automotive recalls. This paper examines whether consumers continue to use recalls as an input in their decision to purchase an automobile. It was found that over the 1977‐81 period, severe recalls adversely affected the demand for the model recalled, while benefiting substitutes of other manufacturers.
OPTIMAL STRATEGIES FOR WORKERS ON TEMPORARY LAYOFF
Authors: WHITE BARBARA ANN
Published: January 2010

In this paper we analyze the worker's behavior when faced with job offers which include possible temporary layoff spells of varying (known) durations. We show that of the three strategies which can be optimal, two involve search in all or part of the layoffs. We also show that the duration of any particular spell plays no role in determining which strategy is optimal to pursue. And finally, we develop an index for evaluating jobs with different wage and layoff probabilities and show that the worker's reservation wage monotonically increases, decreases or remains constant during the course of a layoff.
ON THE OPTIMAL FOREST HARVESTING DECISION
Authors: STRANG WILLIAM J.
Published: January 2010

This paper deals with the problems of when and whether to harvest a stand of timber which provides valuable services intact as well as when harvested. The analysis extends a previous treatment with the result that it is optimal not to harvest more often and for a greater number of reasons than had been realized.
TAXATION, GOVERNMENT SPENDING, AND LABOR SUPPLY A DIAGRAMMATIC EXPOSITION
Authors: HANSSON INGEMAR , STUART CHARLES
Published: January 2010

The effects of a change in the level of taxation on labor supply are examined under the assumption that the government budget balances. The government spends tax revenues either on redistributions (which are assumed to have an income effect on labor supply) or on other government goods (which are assumed not to influence labor supply). In order for a rise in the tax rate to increase the quantity of labor supplied, it must be that (i) the labor‐supply function bends backward, and (ii) sufficiently little of the increased tax revenues are redistributed. The quantity of labor supplied must fall if all marginal tax revenues are redistributed.
MEDICAL INSURANCE, TECHNOLOGICAL CHANGE, AND WELFARE
Authors: GODDEERIS JOHN H.
Published: January 2010

Concerns have been expressed about the welfare effects of expensive innovations in medical care financed largely through medical insurance. This paper develops a model which considers such issues. It is shown that even if insurance is purchased optimally (subject to a plausible constraint on the form of the contract), innovations may be adopted that have the effect of reducing expected welfare. The question of how the benefits of medical innovations ought to be measured in the presence of insurance is also explored.
SOCIAL SECURITY AND AGGREGATE CAPITAL ACCUMULATION REVISITED: DYNAMIC SIMULTANEOUS ESTIMATES IN A WEALTH‐GENERATION MODEL
Authors: BEACH CHARLES M. , BOADWAY ROBIN W. , GIBBONS JACK O.
Published: January 2010

This paper re‐examines Feldstein's(1974, 1982)results of the effect of social security on private capital accumulation in the context of a simultaneous‐equation model of capital accumulation. The model incorporates dynamic feedback effects in capital accumulation and is estimated by FIML to incorporate theoretical restrictions that are tested against the data. It is then simulated as a full dynamic model to analyze the long‐run effect of SSW on private capital accumulation. The simulated effects are in the same direction as found by Feldstein, but are considerably weaker.
THE SCREENING HYPOTHESIS: AN APPLICATION OF THE WILES TEST
Authors: MILLER PAULW. , VOLKER PAUL A.
Published: January 2010

According to Wiles (1974) the screening and human capital theories of the return to education may be discriminated between by determining whether qualified individuals earn more by working in areas where their skills are relevant, than they earn in other areas. Failure to do so is presumed to constitute evidence against human capital theory. This paper applies the Wiles' test to a census of recent Economics and Science graduates from Australian Universities. Only for male science graduates is any evidence found in favour of human capital theory.
THE EFFECTS OF NON‐CLEARING LABOR MARKETS ON THE DEMAND FOR PUBLIC SPENDING
Authors: DUDLEY LEONARD , MONTMARQUETTE CLAUDE
Published: January 2010

The median‐voter model suggests the causal sequence: distribution → spending → bureaucracy, whereas the bureaucratic model proposes the chain: bureaucracy → spending → distribution. In the presence of labor‐market distortions and underemployment labor contracts, we argue that an initial link must be added to each causal chain; namely, the excess supply of labor in the private sector. Empirical estimates of both the median‐voter and bureaucratic models indicate that inter‐country differences in per‐capita public spinding are an increasing function of differences in wage rates.
A SIMPLE TEST FOR REGRESSION PARAMETER INSTABILITY
Authors: ASHLEY RICHARD
Published: January 2010

The relative advantages of simple, exact tests over sophisticated but conservative tests are stressed and a simple diagnostic test to detect regression parameter instability is proposed. The test is exact (in the statistical sense), easy to perform using any regression package, and simple enough to present in a first year course. Thus, this test has the potential for widespread use. Monte Carolo simulation results are presented which indicate that the power of the test is comparable to that of more sophisticated alternatives—e.g., the VPR test of Garbade (1977). As an illustration, the test is applied to a bivariate forecasting model for Texas personal income constructed using time series analysis techniques.
THE DURABILITY OF HUMAN CAPITAL: SOME NEW EVIDENCE
Authors: KIKER B.F. , ROBERTS R. BLAINE
Published: January 2010

This paper analyzes the effect of chronological aging, experience, job search, change of job and/or employer, and formal training on the wage growth of a sample of young men. Following the human capital literature, wage growth directly corresponds to human capital and the analysis allows for the assessment of the durability or rate of depreciation of human capital if further investments are not made. The findings suggest that human capital is not very durable, contrary to some previous estimates given in the literature.
BEYOND KEYNESIANISM AND MONETARISM
Authors: OLSON MANCUR
Published: January 2010

Though there is consensus among economists about microeconomic theory, neither the Keynesian nor the Monetarist theory of macroeconomics has attracted a consensus, presumably because neither is compelling enough to persuade the skeptical. A new approach to the subject that combines insights from each of the familiar schools with considerations that both schools have overlooked is accordingly offered here. This argument accepts the evidence that involuntary unemployment and depressions sometimes occur and thus rejects the finding of the new classical or equilibrium macroeconomics, that markets always clear and that all individuals and firms are in equilibrium. It also rejects the Keynesian assumption of wages or prices arbitrarily fixed at disequilibrium levels, and insists that any adequate theory must show what interests are served by the existence of involuntary unemployment. The theory offered here shows that an institutional or organizational arrangement common in all societies which have experienced widespread unemployment and deep recessions entails that many firms and individuals will be in disequilibrium. This disequilibrium becomes more severe when there is unexpected deflation or disinflation. The disequilibrium is of precisely the type commonplace in recessions and entails involuntary unemployment. The theory also shows how groups of individuals and firms can gain from practices that entail involuntary unemployment and underutilization of resources for others.
HAS THE MEDIAN VOTER FOUND A BALLOT BOX THAT HE CAN CONTROL?
Authors: MUNLEY VINCENT G.
Published: January 2010

This paper examines the appropriateness of the median voter hypothesis within an agenda control framework where the alternative to a proposed expenditure level is the existing level. Evidence from New York State school districts suggests that within this institutional setting the actual level of public service provision does not differ significantly from the median voter's preferred level. The evidence also suggests that demand function parameter estimates for educational expenditures are not sensitive to the assumption that the public service output level corresponds to the median voter's private equilibrium.
REAL VERSUS NOMINAL SPECIFICATION OF THE DEMAND FOR MONEY FUNCTION
Authors: LIANG MING‐YIH
Published: January 2010

This paper re‐examines the issue of real versus nominal specification of the money demand function and presents evidence in favor of the nominal specification. A series of experiments with U.S. quarterly data show that the money demand function specified in nominal terms is more stable and generates more accurate forecasts than that specified in real terms. “The case of the missing money” also is discussed.
AN ANALYSIS OF THE LAFFER CURVE
Authors: BENDER BRUCE
Published: January 2010

The Laffer curve shows the relationship between tax revenue and the personal income tax rate, with tax revenue being a presumably concave function of the tax rate and equal to zero at tax rates of zero percent and 100 percent. If the personal income tax rate is reduced, then tax revenue will decrease (increase) if the economy is on the positively (negatively) sloped section of the Laffer curve. This paper derives a sufficient condition for the economy to be on the positively sloped section of the Laffer curve. In light of the current knowledge of the elasticities of supply of labor and supply of saving, it is difficult to escape the conclusion that a decrease in U.S. personal income tax rates will decrease tax revenue.
ELECTORAL CYCLES AND THE EARNINGS OF FEDERAL BUREAUCRATS
Authors: BORJAS GEORGE J.
Published: January 2010

This paper analyzes the relationship between the timing of federal elections and the pay raises received by civilian employees of the federal government. The theoretical framework discusses how electoral wage cycles are generated as a result of optimizing behavior on the part of voters, bureaucrats, and the government. The empirical analysis uses a time series of wage rates for the twenty‐eight largest federal agencies over the period 1961–1978. The study indicates that pay hikes during the Presidential election year are significantly greater (about 2 to 3 percent higher) than bureaucratic pay raises in other years.
COMPENSATING WAGE DIFFERENTIALS FOR MANDATORY OVERTIME?
Authors: EHRENBERG RONALD G. , SCHUMANN PAUL L.
Published: January 2010

This paper examines the extent to which individuals who are employed by firms that require mandatory overtime receive a compensating wage differential for this “distasteful” working condition. While the empirical results indicate that the average worker does not receive a positive differential for this working condition, the results do indicate that unionized workers and (perhaps) newly hired workers receive a positive differential. The paper then develops a framework to determine if any observed compensating differential is, in fact, fully compensating. The application of this framework to the mandatory overtime issue reveals that the fully compensating differential would be relatively small. The methodology developed in this paper should prove useful in a variety of other contexts.
THE EFFECTS OF MARKET PRACTICES IN OLIGOPOLISTIC MARKETS: AN EXPERIMENTAL EXAMINATION OF THE ETHYL CASE
Authors: GRETHER DAVID M. , PLOT CHARLES R.
Published: January 2010

This study reports on the performance of experimental markets characterized by industrial structure and practices similar to those at issue in the Ethyl case. The central question is whether price competition is affected by the practices of advanced notification of price changes and “most‐favored nation” contracts or is determined by industrial organization and concentration alone.
DISTRIBUTIVE CONSEQUENCES OF A PROPERTY TAX REVOLT
Authors: EATMON NILE , KIEFER DAVID
Published: January 2010

Voters who support tax limitations measures such as California's Proposition 13 seem to feel that their expected gains more than compensate for whatever costs may follow from a successful tax revolt. Costs can arise from a decline in government services or from an increase in some replacement tax if service levels are maintained. This paper estimates the perceived and actual incidence of a property tax revolt under alternative assumptions about voter perceptions and eventual outcomes. Our results suggest that the most visible benefits of a tax cut favor low‐income homeowners. In the event of government budget cutbacks, it is possible that the distribution of services is sufficiently skewed toward low‐income groups to reverse the incidence of a property tax revolt.
DIFFUSION OF KNOWLEDGE‐BASED PRODUCTS: APPLICATIONS TO DEVELOPING ECONOMIES
Authors: BURSTEIN M. L.
Published: January 2010

Demand for a knowledge‐based product often must be created by the product's innovator. But the process which diffuses knowledge, and so enhances demand, accelerates decay of the company's ability to appropriate benefits generated both by the product and by the company's complementary explanation of its qualities and uses.

Decay of the ability to appropriate profit arises from a pervasive free‐rider problem. Rivals, as well as users, become educated by the innovator. As the market deepens and expands, entry will become feasible for firms capable of production but incapable of supplying effective educational packages.

At least two principal themes emerge: i) logically, innovative products will be sold bundled with education and other complementary services, at least in their early stages; ii) intensity of diffusion will be sensitive to the nature of governing property‐rights regimes.

The analysis suggests that, because of free‐rider and other problems, an innovator often finds initial product development plans unproductive and must resort to alternatives. Feasible diffusion often requires that the product space allocated to an innovator by grants of property rights be larger (contain more dimensions) than one confined to primary invention(s).
A CONTRACTUAL REMEDY TO PREMATURE INNOVATION: THE VERTICAL INTEGRATION OF BRAND‐NAME SPECIFIC RESEARCH
Authors: YU BEN T.
Published: January 2010

Is there any private contractual mechanism which can reduce premature innovation? Vertical integration of inventors and manufacturers is shown to be an answer. So is exclusive dealing between inventors and manufacturers: the prospect of getting ahead of other manufacturers and the fear of being left behind would induce a manufacturer to contract for an inventor's output. Inventors, assured of markets for their results, can focus more on the quality than on the completion dates of their work.

The paper examines contractual remedies for premature innovation consistent with the idea of competition. The analysis develops from the conventional “rushing” model. First it is shown that self‐interest of consumers, manufacturers and inventors contradicts the intrinsic consequences of the rushing model. Correction requires exclusive commitments by manufacturers to the innovating results of winning inventors. Second it is hypothesized that vertical integration of inventors with production facilities of manufacturers is a form of prior commitment discouraging premature innovation. Viewed this way, an entry‐barrier raised by brand‐name advertising may not be entirely undesirable.
THE BEHAVIOR OF REGULATORY ACTIVITY OVER THE BUSINESS CYCLE: AN EMPIRICAL TEST
Authors: AMACHER RYAN , HIGGINS RICHARD , II WILLIAM SHUGHART , TOLLISON ROBERT
Published: January 2010

This paper tests a prediction of the interest‐group theory of regulation which suggests that regulators generally will not force any one group to bear the full adjustment costs associated with variations in the business cycle. That is, the interest‐group model predicts that regulatory agencies will redistribute cyclical gains and losses by supplying more “producer protection” regulation during contractions and more “consumer protection” regulation during expansions; i.e., regulatory activity which reduces consumer welfare will tend to be countercyclical, intensifying when aggregate demand falls and abating as demand increases.

The empirical results show a countercyclical and statistically significant ceteris paribus relationship between Federal Trade Commission enforcement efforts under the Robinson‐Patman Act and several alternative measures of general business conditions. Since the Robinson‐Patman Act is viewed widely as anti‐consumer, the findings suggest that in cyclical downturns the Commission moves to protect producers against losses by bringing more cases which limit the tendency for prices to fall. This result may be rationalized under the view that during recessions, the Federal Trade Commission is in the business of transferring wealth from consumers either to protect small business or to bolster cartels. On the other hand, during business expansions the Commission reduces its Robinson‐Patman case load, and such a change in enforcement may serve to mitigate producer gains, transferring wealth to consumers at the margin. In any case the paper offers empirical support for the interest‐group model by providing evidence that the business cycle plays an important part in explaining the level and pattern of regulatory activity.
HOSPITAL OWNERSHIP AND PERFORMANCE
Authors: BECKER EDMUND R. , SLOAN FRANK A.
Published: January 2010

This study compares the performance of three ownership forms of hospitals: for profit, private nonprofit, and public, further classified according to whether or not the hospital is run by a hospital chain. Data come from a 1979 national survey of U.S. hospitals. The authors find that hospital cost is quite similar among alternative ownership forms as is profitability. The results do not provide much empirical support for standard property rights theory. Several reasons are suggested why this may be so.
A THEORY OF EX POST VERSUS EX ANTE PRICE DETERMINATION
Authors: SMITH J. K. , SMITH R. L.
Published: January 2010

The traditional theory of exchange implicitly assumes instantaneous exchange at the contractually determined price. However, actual exchange may entail payment before or after supply as well as determination of effective price ex ante or ex post of supply. The paper demonstrates that the market determination of price timing arises in conjunction with the resolution of mutual uncertainty among buyers and sellers concerning product quality and product cost. The conditions are identified under which ex post pricing will result rather than the more traditional ex ante pricing. The theory accounts for the simultaneous use of ex post and ex ante pricing in a single market. Legal service pricing is used to illustrate the theoretical principles derived in the paper.
MANDATORY RETIREMENT AS A CLAUSE IN AN EMPLOYMENT INSURANCE CONTRACT
Authors: LAPP JOHN S.
Published: January 2010

This paper postulates the existence of an “employment insurance contract” in which firms insure the employment of workers, at a predetermined wage, against potential, age related declines in productivity. To limit its liability the firm establishes an age limit to its promise ––– the mandatory retirement age. It is demonstrated that Pareto‐efficient contracts exist which involve mandatory retirement at a specific age. The existence of these contracts, including mandatory retirement, increases workers' life‐time utility and encourages the accumulation of human capital. Empirical results are consistent with the predictions of the model.
COLLEGE FOOTBALL TELECASTS: WHERE ARE THEY GOING?
Authors: PACEY PATRICIA L. , WICKHAM ELIZABETH D.
Published: January 2010

Observed Nielsen ratings for college football games show a decreasing trend in the number of viewers in recent years. As the market for these telecasts becomes more competitive, both buyers and sellers should adjust rights fees for quality differences. A model of full income allocation is proposed to isolate pure quality changes from true changes. Using a sample of weekly national collegiate telecasts the optimum optimorum is determined from the set of generalized Box‐Cox forms. Regional data provide an application of the model. Quality and hedonic indexes show not only a deterioration in quality over time but also a downward trend in demand for quality‐adjusted units. Implications for alternative television policies are discussed.
GEOGRAPHIC DIFFERENCES IN U.S. UNEMPLOYMENT RATES: A VARIANCE DECOMPOSITION APPROACH
Authors: MURPHY KEVIN J.
Published: January 2010

This paper analyzes the determinants of the geographic dispersion of unemployment rates. The model presented here recognizes that structural labor market relationships differ across areas and that area unemployment rates and some of the explanatory variables are determined simultaneously. Most importantly, the methodology introduced here provides an estimate of the impact of each of the explanatory variables on the overall dispersion of unemployment rates, allowing comparison of several competing hypotheses that purport to explain why areas differ so widely in terms of their unemployment rates. The empirical results indicate that inter‐area differences in product market demand and in sensitivity to changes in conditions in the product market are the most important factors accounting for geographic differences in unemployment rates. More generally, the results indicate that unemployment rates differ widely across areas not so much because areas differ in terms of the underlying characteristics that determine unemployment rates but because areas are so heterogeneous with respect to labor market structure.
TWO‐PART PRICING FOR A MULTI‐PRODUCT MONOPOLIST
Authors: SCOTT FRANK A. , MORRELL STEPHEN O.
Published: January 2010

This paper examines profit‐maximizing multi‐part pricing arrangements by multi‐product monopolists. The results indicate that prices set by such firms will deviate from the marginal‐cost‐pricing efficiency norm when multi‐part tariffs can be set on only a subset of the firm's product line. Per unit prices will be set above marginal cost when the monopolist sells goods that are substitutes, while per unit prices for complements may be set above or below marginal cost. In either case, the pricing strategy will involve increasing the demand for goods on which an entry fee can beset.
JOINT VENTURES AND OFFSHORE OIL LEASE SALES
Authors: GILLEY OTIS W. , V. KARELS GORDON , LYON RANDOLPH M.
Published: January 2010

Alternative explanations of joint bidding for offshore oil tract leases are examined. The models suggest that firms undertake joint bids: 1) to reduce risk by spreading ownership across tracts; 2) to share technical expertise including information; and 3) to ameliorate financial constraints. These hypotheses are examined empirically using the multiple logit technique and other tests with data constructed from the Baltimore‐Canyon sale of 1976. The results suggest that firms' behaviors are consistent with the explanations of diversification and sharing of expertise; explanations based on financial constraints are shown to be consistent with the data in the risk‐averse case but not in the risk‐neutral case. Implications of these results for research and policy are discussed.
EXTENSIVE SEARCH, INTENSIVE SEARCH, AND HIRING COSTS: NEW EVIDENCE ON EMPLOYER HIRING ACTIVITY
Authors: BARRON JOHN M. , BISHOP JOHN
Published: January 2010

This paper presents recent evidence on employer search to fill a position. A 1982 employer survey sponsored by the National Institute of Education and the National Center for Research in Vocational Education provides the basis for analyzing employer search and hiring costs. The paper examines the effects of such factors as employer size, dismissal costs, unionization, on‐the‐job training, adjustment costs, capital, and labor market conditions on intensive employer search, extensive employer search, and hiring costs. Intensive employer search is measured by the average number of hours the employer spends recruiting, screening, and interviewing per applicant. Extensive search is measured by the number of applicants seen per applicant interviewed and the number interviewed per employment.
QUIT BEHAVIOR UNDER IMPERFECT INFORMATION: SEARCHING, MOVING, LEARNING
Authors: HOLMLUND BERTIL , LANG HARALD
Published: January 2010

The paper provides a search ––– theoretic interpretation of a well‐known empirical regularity ––– the inverse relationship between quit rates and job tenure. We consider a setting where the employed job searcher has incomplete information about non‐wage job attributes at the time acceptance decisions are made; hence jobs will be accepted (or refused) without full knowledge of the value of the offers. The model implies that workers with long tenure will be less likely to quit, holding wage rates constant. We also show that a risk‐neutral worker is willing to accept a wage offer that falls below his current “full” wage (in the absence of moving costs).
FAVORITE SONS: INTERGENERATIONAL WEALTH TRANSFERS AMONG POLITICIANS
Authors: LABAND DAVID N. , LENTZ BERNARD F.
Published: January 2010

In this paper we investigate the degree of occupational following in politics, and its impact upon the career success, and behavior (while in office) of both sons and fathers. We find that sons follow into their politician/fathers' footsteps to a degree surpassed in the general population only among farmers and self‐employed proprietors. There is substantial, indirect evidence which suggests that following is motivated to a large extent by the transfer of valuable name recognition and voter loyalty.
DOMESTIC CONTENT LEGISLATION: HOUSE VOTING AND THE ECONOMIC THEORY OF REGULATION
Authors: COUGHLIN CLETUS C.
Published: January 2010

House voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach. The results indicate that a representative's vote in favor of the content legislation and the intensity of the legislator's preferences are positively related to the importance of the auto and steel industries in the representative's district, an increasing unemployment rate, campaign contributions from labor groups, affiliation with Democratic Party, and a liberal ideology. Despite ideology's statistical significance, the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion. The estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns.
TAXES AND EXPENDITURES IN THE U.S.: PUBLIC OPINION SURVEYS AND INCIDENCE ANALYSIS COMPARED
Authors: FISHER RONALD C.
Published: January 2010

The usefulness of surveys for eliciting fiscal opinions of voters is investigated. Using data from the U.S. Advisory Commission in Intergovernmental Relations annual surveys of attitude toward government and taxes, the survey responses are related to economic and political factors and the survey results compared to those predicted by incidence analysis. The results from this analysis and a review of previous studies of this type suggest that there is often no consistent economic foundation for answers to fiscal survey questions. It also appears that some standard survey questions are too general to produce precise estimates of the factors influencing responses.
ENVIRONMENTAL REGULATION: WHOSE SELF‐INTERESTS ARE BEING PROTECTED?
Authors: PASHIGIAN B. PETER
Published: January 2010

Special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards. Locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions. Analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the South and the West. Pollution abatement costs per unit of output are higher in areas with higher not lower air quality.
CORPORATE CHARTERING: AN EXPLORATION IN THE ECONOMICS OF LEGAL CHANGE
Authors: II WILLIAM F. SHUGHART , TOLLISON OBERT D.
Published: January 2010

During the nineteenth and early twentieth centuries, the market for corporate charters was deregulated as states replaced special chartering with incorporation under general laws. This paper explores the pattern of deregulation across states within the context of the interest‐group theory of government. The empirical results show that legal change tended to occur first in states where the stake in deregulation was greatest, and where the costs of lobbying for “liberal” corporation codes were low. Innovations in law can thus be explained by the same benefit‐cost calculus that describes economic innovation.
TRADING UNCERTAINTY, ENFORCEMENT AND LABOR UNIONS
Authors: EDEN BENJAMIN
Published: January 2010

It is shown that when contracts can be perfectly enforced, trading uncertainty leads to discrimination among workers with the same skills and experience. In this case anti‐discrimination laws lead to inefficiencies. In the absence of perfect enforcement, anti‐discrimination practices may be used as enforcement devices and need not lead to inefficiencies. In particular, firms may wish to precommit to an anti‐discrimination policy, say by inviting in a labor union, in order to offer credible insurance to its workers. This leads to an equilibrium in which union workers get a higher wage than non‐union workers, but unions do not have monopoly power.
MARKET FORCES AND AIRCRAFT SAFETY: THECASEOFTHEDC‐10
Authors: CHALK ANDREW
Published: January 2010

The May 25th, 1979 Chicago DC‐10 crash provides the opportunity to test an important proposition in the theory of consumer product safety: Can market forces provide safety when products are too complex to permit buyer prepurchase inspection? This paper combines economic theory with modern finance theory to measure the cost of the crash to shareholders of the plane's manufacturer, McDonnell Douglas. The results indicate that the DC‐10 crash resulted in a $200 million loss to McDonnell Douglas stockholders and that this amount exceeds any reasonable estimate of regulatory or liability costs.
PRICE LEVEL UNCERTAINTY, SAVING, AND LABOR SUPPLY
Authors: SNOW ARTHUR , WARREN RONALD S.
Published: January 2010

This paper derives the implications, for individual saving and labor supply, of increased uncertainty about the future price level. The framework for the analysis is a two‐period model in which saving and labor supply are alternative sources of both present disutility and future income. The individual is assumed to make simultaneously his saving and labor supply decisions prior to the resolution of the uncertainty about the future price level. We find that, under theoretically plausible and empirically relevant assumptions about attitudes toward risk, an increase in future price level uncertainty increases individual saving and labor supply. These results imply that, for the economy as a whole, increased uncertainty about the future price level increases output and employment, while decreasing the real rate of interest, the present price level, and economic welfare.
SEALED‐BID VERSUS OPEN AUCTIONS: THE EVIDENCE
Authors: HANSEN ROBERT G.
Published: January 2010

Data from U.S. Forest Service timber auctions are used to test Vickrey's original proposition that sealed‐bid and open auctions yield equal revenue. Models for the high‐bid in an auction are specified and estimated using three different procedures: ordinary least squares, two stage least squares, and maximum likelihood. The second two procedures include a second equation which accounts for the Forest Service's auction choice and therefore control for selection bias. These two procedures, which unlike ordinary least squares yield consistent estimators, imply a statistically and economically insignificant difference in high‐bids between sealed‐bid and open auctions.
THE STATE OF THE FEDERAL BUDGET AND THE STATE OF THE ECONOMY: FURTHER EVIDENCE
Authors: BRADLEY MICHAEL D. , POTTER SUSAN M.
Published: January 2010

Simultaneous monetary and fiscal policy reaction functions are derived and estimated for the 1969:2–1984.3 period. The results suggest that the Reagan administration has abandoned fiscal policy as a stabilization tool. Furthermore, although the average money growth rate declined in the Reagan administration, variation in the rate of money growth indicates that monetary policy has been used to combat unemployment. Finally, monetary and fiscal policies were not coordinated during this period. Rather, monetary and fiscal policy appear to be set by a Nash equilibrium in a non‐cooperative game. In a Nash equilibrium, the policy chosen by each authority maximizes its payoff, given the policy choice of the other authority.
ARTICLE POPULARITY
Authors: LABAND DAVID N.
Published: January 2010

This paper briefly examines the causes and consequences of article popularity. Tracing subsequent citations to nearly 6,000 articles published during 1974‐76 reveals that most articles are cited rarely, if ever. Over 90% are cited fewer than 20 times over the ensuing 6 years, whereas only 3/10ths of 1% are cited over 100 times. Regression analysis demonstrates that author reputation, article length, and quality of publishing journal are strong determinants of article popularity.

The relative importance of various economics journals, though not their rankings, is sensitive to inclusion of “hit” articles; the differential impact of a journal may be more closely approximated by its ability to attract a significant proportion of the “hit parade” of articles.
THE EFFICACY OF STATE MANDATED MINIMUM QUALITY CERTIFICATION: THE CASE OF USED VEHICLES
Authors: PRATT MICHAEL D. , HOFFER GEORGE E.
Published: January 2010

This paper investigates whether the quality certification required by certain state used vehicle disclosure laws has been effective. Metzger concluded from a theoretical investigation of non‐market responses to the lemons problem, that such laws may or may not be effective. We have been unable to find evidence that the currently mandated disclosure requirements in Wisconsin (known defects provision) and Iowa (safety certification) are effective in increasing the number of good quality vehicles traded in those used markets. These disclosure requirements do not seem to decrease a prospective buyer's risk of purchasing a lemon.
DEMAND AND SUPPLY OF HOUSING IN THE U.S.: 1929–1978
Authors: GAHVARI FIROUZ
Published: January 2010

Annual data for the period 1929–1978 are used to estimate a complete model of demand and supply of housing services and consumption goods in the U.S. by maximum likelihood methods. The demand functions are derived by maximizing a utility function characterized by weak inter‐temporal separability. Utility in each period is assumed to be of a generalized CES type with housing services and consumption goods as arguments. The estimating demand relation is transformed into a relatively simple form by focusing on the relative demand of housing to consumption goods. It is found that the intra‐temporal elasticity of substitution between housing and consumption goods is unitary. The maximum likelihood estimates of the other parameters of the elementary utility function are also presented. Finally, it is noted that by estimating the structure of individual preferences a basis is established for the calculation of long‐run efficiency gains of a change in the tax treatment of housing.
DOES THE TAX SYSTEM FAVOR INVESTMENT IN HIGH‐TECH OR SMOKE‐STACK INDUSTRIES?
Authors: FULLERTON DON , LYON ANDREW B.
Published: January 2010

In this paper, we examine whether differential use of depreciable assets gives rise to differential tax treatment of high‐technology industries relative to other industries. We calculate the total effective tax rate on a marginal investment in each of 34 assets, and weighting by the use of these assets, we calculate total effective tax rates for 73 industries. We find considerable variation within the high‐tech sector and within the more traditional sector, but for the case of a taxable firm with a given debt/equity ratio, we do not find any systematic differences between overall rates in the two sectors.
AN ECONOMIC ANALYSIS OF BANKRUPTCY STATUTES
Authors: DYE RONALD A.
Published: January 2010

Personal bankruptcy statutes are analyzed as social insurance agreements. The risk‐sharing and incentive effects resulting from changes in bankruptcy laws are studied. It is shown that increasing the leniency of bankruptcy statutes may have unambiguous short‐term benefits to potential bankrupts, but may be detrimental in the long‐run.
FUTURES MARKET BACKWARDATION UNDER RISK NEUTRALITY
Authors: BRESNAHAN TIMOTHY F. , SPILLER PABLO T.
Published: January 2010

J.M. Keynes first introduced the theory of normal backwardation in futures markets. In the language of (British) commodities markets, a backwardation is an excess of the spot price over futures prices. As is well‐known, Keynes suggested that this might be explained as a risk premium. Less well known is that Keynes actually proposed two distinct theories of backwardation.

Of these two theories of backwardation, the latter has recently received much attention. The purpose of this paper is to formalize Keynes' first theory, his liquid stocks theory, with an eye to its eventual empirical test.

We follow the recent formalizations of the risk premium theory by assuming the existence of perfectly competitive asset markets. To emphasize the differences between the two theories, however, we assume that there are well‐funded risk neutral investors. Thus, risk premia cannot explain backwardation under our assumptions. Instead, backwardations arise because of interactions between equilibrium in the commodities exchange, both in spot and futures trading, and the production, consumption and storage decisions taken on the real side of the economy.
OPTION VALUE: A GENERAL APPROACH
Authors: PLUMMER MARK L. , HARTMAN RICHARD C.
Published: January 2010

This article examines a potential bias if expected consumer surplus is used to measure the benefits of a price change under uncertainty. This bias, which is called option value, may be positive or negative. A general framework is developed for analyzing the determinants of the sign of option value, and this framework is applied to three types of uncertainty: income uncertainty, quality uncertainty, and uncertainty over consumer tastes. In the first two cases, option value has a determinate sign; however, in the last case, option value may be positive, negative, or zero in an unpredictable fashion.
ADJUSTMENT TO PRODUCTION UNCERTAINTY AND THE THEORY OF THE FIRM
Authors: FLACCO PAUL R. , KROETCH BRENT G.
Published: January 2010

This paper considers the behavior of the firm which faces uncertainty in its production process but can adjust its output once the uncertainty is resolved. Ex post adjustment, unlike previous treatments, involves a marginal cost penalty if more output is required and a lowering of price if too much is produced. With ex post adjustment allowed in this fashion, it is found that nonlinear risk preferences do not affect the sign of the firm's marginal risk premium at optimum ex ante output. The firm will produce less output than under certainty whether it is risk averse, risk neutral, or prefers risk.
THE POLITICALLY OPTIMAL TARIFF: LEVELS OF TRADE RESTRICTIONS ACROSS DEVELOPED COUNTRIES
Authors: GODEK PAUL E.
Published: January 2010

The degree to which countries restrain international trade varies significantly. This paper explains the pattern of tariff and non‐tariff trade barriers for developed countries, in the context of politically optimal redistribution. The degree of trade restriction across countries is shown to be determined by differences in such factors as per capita income, the size of the government, and the size of the country.