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Articles 1 - 30 of 83
Full-Text Articles in Business
What Type Of Central Banker Dampens The Political Business Cycle? The Case Of Africa, Christine Strong
What Type Of Central Banker Dampens The Political Business Cycle? The Case Of Africa, Christine Strong
Economics Faculty Publications
This article investigates the extent to which central bank independence can help to reduce political business cycles in Africa. Like previous studies, we find evidence of political cycles in our sample of 34 African countries for the period 1980–2018, but our findings show that politicians' ability to manipulate both fiscal and monetary policy depends on the degree of alliance between the fiscal authority and the monetary authority. Indeed, our analysis reveals that the political business cycle worsens when the central banker is an ally whereas a non‐ally central banker is associated with a decrease in the ability of the incumbent …
The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou
The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou
Economics Faculty Publications
The impact of capital accumulation on job creation is an important and interesting issue in economic development. This model provides a general-equilibrium framework for studying technology choice with unemployment in a developing economy based on micro-foundations. Unemployment in the urban sector results from the existence of efficiency wages. Manufacturing firms engage in oligopolistic competition and choose technologies to maximise profits. A more advanced technology uses more capital and less labour. In the steady state, an increase in the amount of capital induces firms to choose more advanced technologies and the wage rate increases. While a higher capital stock always induces …
Search, Technology Choice, And Unemployment, Constantine Angyridis, Haiwen Zhou
Search, Technology Choice, And Unemployment, Constantine Angyridis, Haiwen Zhou
Economics Faculty Publications
Technology variations among countries account for a significant part of their income differences. In this paper, a firm's technology choice is embedded in a search theoretic framework for unemployment. More advanced technology is assumed to have a higher setup cost, but it is more productive. The model is tractable and the following results are derived analytically. An increase in the unemployment benefit leads to an increase in the equilibrium wage rate, giving an incentive to firms to choose a more advanced technology. Thus, this result regarding unemployment insurance in models with wage posting carries through with Nash bargaining as well. …
Fixed Costs And The Division Of Labor, Haiwen Zhou
Fixed Costs And The Division Of Labor, Haiwen Zhou
Economics Faculty Publications
How market size and the level of coordination costs determine the degree of specialization is studied in an infinite horizon model with the amount of capital determined endogenously. Firms producing the same intermediate good engage in oligopolistic competition and choose the degree of specialization of their technologies to maximize profits. A more specialized technology is a technology with a lower marginal cost, but a higher fixed cost. Interestingly, the relationship between the level of coordination costs and a firm’s degree of specialization is ambiguous. A firm in a country with a larger market size, more patient citizens, or a higher …
Fast Poisson Estimation With High-Dimensional Fixed Effects, Sergio Correia, Paulo Guimarães, Thomas Zylkin
Fast Poisson Estimation With High-Dimensional Fixed Effects, Sergio Correia, Paulo Guimarães, Thomas Zylkin
Economics Faculty Publications
In this paper we present ppmlhdfe, a new Stata command for estimation of (pseudo) Poisson regression models with multiple high-dimensional fixed effects (HDFE). Estimation is implemented using a modified version of the iteratively reweighted least-squares (IRLS) algorithm that allows for fast estimation in the presence of HDFE. Because the code is built around the reghdfe package, it has similar syntax, supports many of the same functionalities, and benefits from reghdfe’s fast convergence properties for computing high-dimensional least squares problems. Performance is further enhanced by some new techniques we introduce for accelerating HDFE-IRLS estimation specifically ppmlhdfe also implements a novel and …
What Should We Teach In Intermediate Macroeconomics?, Dean D. Croushore
What Should We Teach In Intermediate Macroeconomics?, Dean D. Croushore
Economics Faculty Publications
The major focus of a course in Intermediate Macroeconomics is building and understanding macroeconomic models and how they work. The course is the most analytical course in the curriculum and should lead students to embark on deep thinking about models and equilibrium. Students learn the essentials of a model and develop the concept of how to simplify a model to understand key concepts. Once the core of a model is developed, additional model features can be added to increase realism. Perhaps the most important macroeconomic concept in the course is that of general equilibrium—students learn to go beyond examining initial …
50 Years Of Economic Instruction In The Journal Of Economic Education, Gail M. Hoyt, Kimmarie Mcgoldrick
50 Years Of Economic Instruction In The Journal Of Economic Education, Gail M. Hoyt, Kimmarie Mcgoldrick
Economics Faculty Publications
With 2019 marking the fiftieth year of publication of the Journal of Economic Education (JEE), it seems fitting to examine the evolution of economic instruction as portrayed in the Journal. Born of the American Economic Association (AEA), and first edited by members of the AEA’s Committee on Economic Education (Saunders 2012), it is not surprising that the Journal’s focus as chronicler, proponent, and outlet for economic education activity reflects the educational component of the American Economic Association’s mission. The creation of the Journal signaled a self-awareness in the discipline that we needed to be more deliberate in …
Teaching Courses In Macroeconomics And Monetary Policy With Bloomberg Analytics, Dean D. Croushore, Hossein S. Kazemi
Teaching Courses In Macroeconomics And Monetary Policy With Bloomberg Analytics, Dean D. Croushore, Hossein S. Kazemi
Economics Faculty Publications
In this article, the authors illustrate the use of Bloomberg for analyzing topics in macroeconomics and monetary policy in economics and finance courses. The hands-on experience that students gain from such a course has many benefits, including deeper learning and clearer understanding of data. The authors describe goals and learning objectives, then compare Bloomberg with Federal Reserve Economic Data (FRED). In addition, they provide examples of how to use Bloomberg in the classroom, describe how to have students perform sector analysis, show how Bloomberg tools are useful for analyzing monetary policy, discuss how to use Bloomberg to analyze the financial …
Currency Unions And Trade: A Ppml Re-Assessment With High-Dimensional Fixed Effects, Mario Larch, Joschka Wanner, Yoto V. Yotov, Thomas Zylkin
Currency Unions And Trade: A Ppml Re-Assessment With High-Dimensional Fixed Effects, Mario Larch, Joschka Wanner, Yoto V. Yotov, Thomas Zylkin
Economics Faculty Publications
Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues associated with the three-way (exporter-time, importer-time, and country-pair) fixed effects currently recommended in the gravity literature have heretofore limited the choice of estimator, leaving an important methodological gap. To address this gap, we introduce an iterative Poisson Pseudo-Maximum Likelihood (PPML) estimation procedure that facilitates the inclusion of these fixed effects for large data sets and also allows for correlated errors across countries and time. When applied to a …
Fiscal Surprises At The Fomc, Dean D. Croushore, Simon Van Norden
Fiscal Surprises At The Fomc, Dean D. Croushore, Simon Van Norden
Economics Faculty Publications
We examine a new set of U.S. fiscal forecasts from FOMC briefing books. The forecasts were precisely those presented to monetary policymakers and include frequently updated estimates covering six complete business cycles and several fiscal-policy regimes. We detail the performance of forecast federal expenditures, revenues, surpluses, and structural surpluses in terms of accuracy, bias, and efficiency. We find that forecast errors can be economically large, even at relatively short forecast horizons. While economic activity became less volatile after 1990, fiscal policy became harder to forecast. Finally, cyclically adjusted deficit forecasts appear to be overoptimistic around both business cycle peaks and …
On The Widely Differing Effects Of Free Trade Agreements: Lessons From Twenty Years Of Trade Integration, Scott L. Baier, Yoto V. Yotov, Thomas Zylkin
On The Widely Differing Effects Of Free Trade Agreements: Lessons From Twenty Years Of Trade Integration, Scott L. Baier, Yoto V. Yotov, Thomas Zylkin
Economics Faculty Publications
We develop a novel two stage methodology that allows us to study the empirical determinants of the ex post effects of past free trade agreements (FTAs) as well as obtain ex ante predictions for the effects of future FTAs. We first identify 908 unique estimates of the effects of FTAs on different trading pairs for the years 1986-2006. We then employ these estimates as our dependent variable in a “second stage” analysis characterizing the heterogeneity in these effects. Interestingly, most of this heterogeneity (∼ 2/3) occurs within FTAs (rather than across different FTAs), with asymmetric effects within pairs (on exports …
Coordination Costs, Market Size, And The Choice Of Technology, Haiwen Zhou
Coordination Costs, Market Size, And The Choice Of Technology, Haiwen Zhou
Economics Faculty Publications
Impact of coordination costs and market size on a firm’s choice of technology is studied in a general equilibrium model in which firms engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology.
Can Maternity Benefits Have Long-Term Effects On Childbearing? Evidence From Soviet Russia, Olga Malkova
Can Maternity Benefits Have Long-Term Effects On Childbearing? Evidence From Soviet Russia, Olga Malkova
Economics Faculty Publications
This paper quantifies the effects of Russia’s 1981 expansion in maternity benefits on completed childbearing. The program provided one year of partially paid parental leave and a small cash transfer upon a child’s birth. I exploit the program’s two-stage implementation and find evidence that women had more children as a result of the program. Fertility rates rose immediately by 8.2% over twelve months. The increase in fertility rates not only persisted for the ten-year duration of the program, but it reflected large increases in higher-order births to older women who already had children before the program started.
How Do The Trans-Pacific Economies Affect The Usa? An Industrial Sector Approach, Takeshi Yagihashi, David D. Selover
How Do The Trans-Pacific Economies Affect The Usa? An Industrial Sector Approach, Takeshi Yagihashi, David D. Selover
Economics Faculty Publications
This paper studies how the Trans-Pacific region affects the US economy in terms of business cycle transmission. We use a large data set consisting of disaggregated sectoral industrial production indexes from selected countries in the region and employ a factor-augmented vector autoregression (FAVAR) approach to analyze the transmission of shocks in different industries. We find that a positive output shock in the entire Trans-Pacific region has positive effects on the majority of US manufacturing sectors. We also find that sectoral shocks in five sectors of the Trans-Pacific region have a large impact on the overall US economy. Three of the …
Silence Is Golden: Railroad Noise Pollution And Property Values, Jay K. Walker
Silence Is Golden: Railroad Noise Pollution And Property Values, Jay K. Walker
Economics Faculty Publications
This paper uses a unique dataset containing property values and manually collected noise measurements in Memphis, Tennessee to estimate the impact of train noise pollution on commercial and residential property values. Results show that a residential property exposed to 65 decibels or greater of railroad noise results in a 14 to 18 percent decrease in property value. Once a 65 decibel measure is included, there is no additional impact on price of distance to the closest railroad crossing. For commercial property, neither crossing proximity nor noise level significantly affect property value. The results provide evidence of a negative externality that …
A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou
A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou
Economics Faculty Publications
In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual’s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual’s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more …
I'M Retiring ... Well, Sort Of, Kevin F. Hallock
I'M Retiring ... Well, Sort Of, Kevin F. Hallock
Economics Faculty Publications
I’m 45 years old and I’m retiring ... from writing regular columns for workspan. And that has me thinking about retirement and incentives as part of a total rewards system.
Quotas On Boards And The Gender Gap, Kevin F. Hallock
Quotas On Boards And The Gender Gap, Kevin F. Hallock
Economics Faculty Publications
Back in the late 1990s, Marianne Bertrand and the author examined the pay gap between male and female executives listed in the proxy statements of publicly traded US firms from 1992 in 1997, which they later published in the October 2011 edition of Industrial and Labor Relations Review. They found that, taken as a whole, women in these top five positions earned about 45% less than men in these positions. At the same time, they found that as much as 75% of this gap could be explained by the fact that women managed smaller companies, and were less likely to …
Good Girl, Bad Boy: Corrupt Behavior In Professional Tennis, Michael Jetter, Jay K. Walker
Good Girl, Bad Boy: Corrupt Behavior In Professional Tennis, Michael Jetter, Jay K. Walker
Economics Faculty Publications
This paper identifies matches on the male and female professional tennis tours in which one player faces a high payoff from being "on the bubble" of direct entry into one of the lucrative Grand Slam tournaments, while their opposition does not. Analyzing over 378,000 matches provides strong evidence for corrupt behavior on the men's tour, as bubble players are substantially more likely to beat better ranked opponents when a win is desperately needed. However, we find no such evidence on the women's tour. These results prevail throughout a series of extensions and robustness checks, highlighting gender differences regarding corrupt and …
Examining Industrial Interdependence Between Japan And South Korea: A Favar Approach, David D. Selover, Takeshi Yagihashi
Examining Industrial Interdependence Between Japan And South Korea: A Favar Approach, David D. Selover, Takeshi Yagihashi
Economics Faculty Publications
This paper investigates the economic relationship between Japan and South Korea by incorporating disaggregated output measures. Using a factor-augmented vector autoregression (FAVAR) model, we conduct several experiments to test the nature of the interdependence, both in the aggregate and by sector. We find that South Korean output shocks affect the Japanese economy in a significant manner, whereas Japanese output shocks have a limited effect on South Korea. By further examining the transmission mechanism of sectoral output shocks and comparing them with the direction of sectoral trade, we find evidence of cross-border production sharing, which explains the asymmetric results seen in …
The Choice Of Technology And Equilibrium Wage Rigidity, Haiwen Zhou
The Choice Of Technology And Equilibrium Wage Rigidity, Haiwen Zhou
Economics Faculty Publications
In this general equilibrium model, firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Capital and labor are the two factors of production. The existence of efficiency wages leads to unemployment. The model is able to explain some interesting observations of the labor market. First, even though there is neither long-term labor contract nor costs of wage adjustment, wage rigidity is an equilibrium phenomenon: an increase in the exogenous job separation rate, the size of the population, the cost of exerting effort, and the probability that shirking is detected will not change the equilibrium wage rate. …
Time-Consistent Optimal Fiscal Policy Over The Business Cycle, Zhigang Feng
Time-Consistent Optimal Fiscal Policy Over The Business Cycle, Zhigang Feng
Economics Faculty Publications
This paper examines a dynamic stochastic economy with a benevolent government that cannot commit to its future policies. I consider equilibria that are timeconsistent and allow for history-dependent strategies. A new numerical algorithm is developed to solve for the set of equilibrium payoffs. For a baseline economy calibrated to the U.S. economy, the capital income tax with the highest social welfare is slightly procyclical, while the labor income tax is countercyclical. Compared with the data, this equilibrium provides a better account of the cyclical properties of U.S. tax policy than other solutions that abstract from history dependence. The welfare cost …
Sabbaticals, Kevin F. Hallock
Sabbaticals, Kevin F. Hallock
Economics Faculty Publications
With the year end upon you and many workplaces closing, reducing hours or accommodating employee vacations because of the holidays, this column focuses on rewards in the form of time away from work that is not so common -- sabbaticals. Sabbaticals are a generous benefit to those workers who have them. And they can clearly be an important part of a total rewards package. According to inc.com, while 5% of firms in the US offer sabbaticals, 25% of the companies listed in "Best Companies to Work For" offer them. Corporate sabbaticals, however, aren't typically as generous in length as those …
Retention Pay, Kevin F. Hallock
Retention Pay, Kevin F. Hallock
Economics Faculty Publications
In many seasonal jobs, such as store clerks during the holiday shopping season, retention is about employers wanting as little employee turnover as possible during the small window they have each year to earn a big part of their profits. One way seasonal businesses might persuade workers to stay is with some sort of cash bonus paid for staying until the season's end or by paying a substantially higher wage at the very end. While the summer beach of Cape Cod may feel worlds away from the corporate office, the need to consider retention strategies for key employees is universal. …
Pay, Corporate Location And Donations To Charity, Kevin F. Hallock
Pay, Corporate Location And Donations To Charity, Kevin F. Hallock
Economics Faculty Publications
State and local governments direct a great deal of effort (and resources) toward incenting companies to locate in their particular jurisdictions. The cited reasons for this effort are often the increase in jobs and boost to the local tax base. In "The Geography of Giving: The Effect of Corporate Headquarters on Local Charities", David Card, Enrico Moretti and the author investigated a number of issues related to the geographical location of corporate headquarters and charitable giving. It turns out that location does matter and the movement of highly paid employees does, too. There are at least two main channels through …
Paying To Put Out Fires, Kevin F. Hallock
Paying To Put Out Fires, Kevin F. Hallock
Economics Faculty Publications
There is surprisingly little academic work on the compensation of firefighters. This may be, in part, because their wages are often set by collective bargaining agreements and that those paid as firefighters are regularly paid by seniority. But many aspects of the labor market can still be studied through this interesting occupation, including labor unions, compensation for job risk and even volunteerism. Consider the mountains of papers on Fortune 500 CEOs relative to the number (500) of employees doing this job in the US. In contrast, consider the tiny number of papers on firefighters relative to the large numbers who …
Ceo Pay Over The Very Long Run, Kevin F. Hallock
Ceo Pay Over The Very Long Run, Kevin F. Hallock
Economics Faculty Publications
Recent work by economic historians shows people that while CEO pay has risen dramatically since the 1990s, such a trend was all but nonexistent from World War II through the mid-1970s. Imagine coming upon an article in a prestigious business publication titled "Another Decade of Deterioration in Top Executive Pay Compared to the Economy as a Whole." Its author, Arch Patton, reports data from a set of more than 400 "top managers" from 1953-1964. What is particularly startling is the size of the deterioration relative to the average. People know from piles of recent evidence that executive compensation has increased …
Incentive Compensation For Ministers?, Kevin F. Hallock
Incentive Compensation For Ministers?, Kevin F. Hallock
Economics Faculty Publications
Paying leaders of for-profit organizations is difficult. And this is even the case when there is some agreement regarding the objectives of the organizations (e.g., returns to shareholders in publicly held companies). But as they step away from the most obvious objective of maximizing shareholder return or profit, things can get more complicated. Three authors shed considerable light on this by using a rich data set of more than 2,000 Methodist ministers over 43 years. To be sure, the data are from one specific religious group in one region of the US, but the data are absolutely extraordinary. In "Is …
Tipping, Technology And Lessons In Compensation Design, Kevin F. Hallock
Tipping, Technology And Lessons In Compensation Design, Kevin F. Hallock
Economics Faculty Publications
New technologies seem to be popping up everywhere to make it easier for customers to exercise their power to pay. From personal phone apps to iPad kiosks in restaurants to video screens in taxis, a tip amount is instantly calculated for you just choose the percent or level you wish to tip. All this technological assistance on tipping is also creating exciting, new data sources. Increasingly, labor economists and other social scientists are using such data sources to better understand how people respond to incentives and the resulting workplace implications. The tipping examples described in this article offer some interesting …
What Have You Done For Me Lately?, Kevin F. Hallock
What Have You Done For Me Lately?, Kevin F. Hallock
Economics Faculty Publications
The author considers the question of whether some occupations or pay plans can create incentives to strategically time employees' best performance and what problems that might create. There certainly is plenty of evidence across a set of industries that the timing of performance can have real effects on the compensation of employees. To the extent that this gives employees (athletes, salespeople, executives, and others) incentives to shift the timing of effort in ways that may not be in the best interests of the employer, shareholders, and other constituents is certainly something worth thinking about if you want to better curb …