Social and Behavioral Sciences Commons^™

South Dakota's International Trade, Evert Van Der Sluis, Benno Wymar

Economics Commentator

No abstract provided.

Working Paper No. 30, On The Origins Of Laissez-Faire, Thomas Breaden

Working Papers in Economics

This paper traces laissez-faire back to its French roots, and in particular, to its origins as a political philosophy evoking an economic approach. Related to his visit to France in the 1760s and his personal contacts, we suggest that Adam Smith serves as the link between selected French thinkers and what after Smith’s Inquiry would be widely accepted as a quintessentially Anglo-Saxon tradition in economics. Exploring doctrine, we offer linkages between F. Quesnay, A. Turgot, J.J. Rousseau, and Smith’s ideas. Similarities in Smith’s understanding and the French exponents regarding economic activity vis-a- vis a public sector are presented, along with …

Insuring Major Spring Crops In South Dakota, Matthew A. Diersen

Economics Commentator

No abstract provided.

Tax Management, Burton Plflueger

Economics Commentator

No abstract provided.

Did Reform Of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, Max M. Schanzenbach, Robert H. Sitkoff

Law and Economics Papers

This paper investigates the effect of changes in state prudent trust investment laws on asset allocation in noncommercial trusts. The old prudent man rule favored “safe” investments

such as government bonds and disfavored “speculation” in stock. The new prudent investor rule, now widely adopted, relies on modern portfolio theory, freeing the trustee to invest based on risk and return objectives reasonably suited to the trust and in light of the composition of the trust portfolio as a whole. Using state- and institution-level panel data from 1986-1997, we find that after a state’s adoption of the new prudent investor rule, trust …

Capital Flight From The Philippines, 1970-2002, Edsel L. Beja Jr

Economics Department Faculty Publications

Capital flight is defined as the movement of capital from resource-scarce developing countries to avoid social controls. It is measured as net unrecorded capital outflow, or the residual between officially recorded uses and sources of funds. Total capital flight from the Philippines was estimated at USD 138 billion (in 1995 constant prices) for the period 1970-2002. Including imputed interest earnings, the stock of capital flight as of 2002 was USD 218 billion. Indeed, by any yardstick, these figures are significant amounts of lost resources that could have been utilized to generate additional output and jobs in the country. Were it …

Central Bank Independence In A (Very) Non-Neoclassical World, Eduardo Zambrano

Economics

What if it could be possible to convince a completely non-neoclassical economist of the importance of Central Bank independence? The profession currently favors arguments in favor of Central Bank independence that are based on the seminal work by Barro and Gordon (1983 a,b), a model with naturally strong neoclassical assumptions. As a consequence of this, the argument in favor of Central Bank independence routinely given by economists is often not bought by those who question the validity of the neoclassical assumptions. In this paper I argue that Central Bank independence can be beneficial for society even when the economy is …

On Some Subtle Implications Of The Choice Of Numeraire For Monetary Policy In Developing Countries, Eduardo Zambrano

Economics

Numeraire choice is often deemed a problem of purely analytical convenience. In this paper I show that there is more to numeraire selection than meets the eye for the formulation of monetary policy in countries with weak fiscal institutions. I show how (a) improper numeraire choice can dramatically overstate or understate Central Bank profits and (b) how this can threaten the ability of a Central Bank to keep inflation under control. I show point (a) in the context of Monte Carlo experiments calibrated for the Venezuelan economy and point (b) in an infinitely lived representative agent model that illustrates the …

(Review) Pierre Force, Self-Interest Before Adam Smith: A Genealogy Of Economic Science, Spencer J. Pack

Economics Faculty Publications

Pierre Force, Self-Interest Before Adam Smith: A Genealogy of Economic Science (Cambridge: Cambridge University Press, 2003), pp. ix, 279, $65.00. ISBN 0-52183060-5.

(Review) Self-Interest Before Adam Smith: A Genealogy Of Economic Science, Spencer J. Pack

Economics Faculty Publications

Pierre Force, Self-Interest Before Adam Smith: A Genealogy of Economic Science (Cambridge: Cambridge University Press, 2003), pp. ix, 279, $65.00. ISBN 0-521 83060-5.

Rhode Island Current Conditions Index -- December 2005, Leonard Lardaro

The Rhode Island Current Conditions Index

No abstract provided.

Social Preferences In Small‐Scale Societies, Alexander J. Field

Economics

This volume reports on a cross‐cultural investigation of social preferences in 15 small‐scale, non‐Western societies. Participants from all 15 groups played the ultimatum game with members of their own culture; subjects from a subset also played dictator and voluntary contribution to public goods games. The bulk of the book (Chapters 4 through 14) consists of reports by the field workers (mostly anthropologists). Each chapter includes ethnographic information, a description of how members of the group make their living, details on the experimental protocols and results, and some discussion. Although none of the results are consistent with the predictions of the …

Sequential Equilibria In Bayesian Games With Communication, Dino Gerardi, Roger B. Myerson

Cowles Foundation Discussion Papers

We study the effects of communication in Bayesian games when the players are sequentially rational but some combinations of types have zero probability. Not all communication equilibria can be implemented as sequential equilibria. We define the set of strong sequential equilibria (SSCE) and characterize it. SSCE differs from the concept of sequential communication equilibrium (SCE) defined by Myerson (1986) in that SCE allows the possibility of trembles by the mediator. We show that these two concepts coincide when there are three or more players, but the set of SSCE may be strictly smaller than the set of SCE for two-player …

Testing Linearity In Cointegrating Relations With An Application To Purchasing Power Parity, Seung Hyun Hong, Peter C.B. Phillips

Cowles Foundation Discussion Papers

This paper develops a linearity test that can be applied to cointegrating relations. We consider the widely used RESET specification test and show that when this test is applied to nonstationary time series its asymptotic distribution involves a mixture of noncentral chi-squared distributions, which leads to severe size distortions in conventional testing based on the central chi-squared. Nonstationarity is shown to introduce two bias terms in the limit distribution, which are the source of the size distortion in testing. Appropriate corrections for this asymptotic bias leads to a modified version of the RESET test which has a central chi-squared limit …

The Response Of Prices, Sales, And Output To Temporary Changes In Demand, Adam Copeland, George J. Hall

Cowles Foundation Discussion Papers

We determine empirically how the Big Three automakers accommodate shocks to demand. They have the capability to change prices, alter labor inputs through temporary layoffs and overtime, or adjust inventories. These adjustments are interrelated, non-convex, and dynamic in nature. Combining weekly plant-level data on production schedules and output with monthly data on sales and transaction prices, we estimate a dynamic profit-maximization model of the firm. Using impulse response functions, we demonstrate that when an automaker is hit with a demand shock sales respond immediately, prices respond gradually, and production responds only after a delay. The size of the immediate sales …

Grading In Games Of Status: Marking Exams And Setting Wages, Pradeep Dubey, John Geanakoplos

Cowles Foundation Discussion Papers

We introduce grading into games of status. Each player chooses effort, producing a stochastic output or score. Utilities depend on the ranking of all the scores. By clustering scores into grades, the ranking is coarsened, and the incentives to work are changed. We first apply games of status to grading exams. Our main conclusion is that if students care primarily about their status (relative rank) in class, they are often best motivated to work not by revealing their exact numerical exam scores (100,99,…,1), but instead by clumping them into coarse categories ( A,B,C ). When student abilities are disparate, the …

Grading In Games Of Status: Marking Exams And Setting Wages, Pradeep Dubey, John Geanakoplos

Cowles Foundation Discussion Papers

We introduce grading into games of status. Each player chooses effort, producing a stochastic output or score. Utilities depend on the ranking of all the scores. By clustering scores into grades, the ranking is coarsened, and the incentives to work are changed. We first apply games of status to grading exams. Our main conclusion is that if students care primarily about their status (relative rank) in class, they are often best motivated to work not by revealing their exact numerical exam scores (100,99,…,1), but instead by clumping them into coarse categories ( A,B,C ). When student abilities are disparate, the …

A Remark On Bimodality And Weak Instrumentation In Structural Equation Estimation, Peter C.B. Phillips

Cowles Foundation Discussion Papers

In a simple model composed of a structural equation and identity, the finite sample distribution of the IV/LIML estimator is always bimodal and this is most apparent when the concentration parameter is small. Weak instrumentation is the energy that feeds the secondary mode and the coefficient in the structural identity provides a point of compression in the density that gives rise to it. The IV limit distribution can be normal, bimodal, or inverse normal depending on the behavior of the concentration parameter and the weakness of the instruments. The limit distribution of the OLS estimator is normal in all cases …

The Nasa Glenn Research Center: An Economic Impact Study Fiscal Year 2004, Robert Sadowski

All Maxine Goodman Levin School of Urban Affairs Publications

The John H. Glenn Research Center at Lewis Field (Glenn) is one of 10 National Aeronautics and Space Administration (NASA) Centers. Glenn is situated on 350 acres adjacent to Cleveland Hopkins International Airport. Its physical plant includes over 150 buildings that contain a unique collection of world-class test facilities. Glenn also includes the 6,400-acre Plum Brook Station near Sandusky, Ohio, 50 miles west of Cleveland. It specializes in large-scale tests that would be hazardous within the confines of the main campus.

Transforming Our Regional Economy, Ziona Austrian, Ed Morrison, Laszio Kozmon

All Maxine Goodman Levin School of Urban Affairs Publications

This strategic action plan focuses on the future of Cuyahoga County and sets forth a roadmap to build a more prosperous economy. It is not the only road map available to us, and we can certainly improve upon it. But, it is a roadmap that is practical, one that we can begin using today. We have set out initiatives that can and should be implemented.

Utilization Of Income Tax Credits By Low-Income Individuals, Stacy Dickert-Conlin, Katie Fitzpatrick, Andrew Hanson

Economics Faculty Research and Publications

The Internal Revenue Service-a sub-agency that exists to collect revenue-has the task of administering and enforcing a wide array of social policy: from subsidies for college and child care expenses, to creating jobs in depressed areas, and assisting welfare recipients with employment. While these new or expanded credits represent a new paradigm in the delivery of social policy, little is known about who uses these programs and, equally important, who does not use these programs. Understanding utilization is a key to understanding how effective this means of transferring income is and whether we are reaching the targeted populations. This paper …

Blind Spots: The Effects Of Information And Stakes On Fairness Bias And Dispersion, James Konow

Economics Faculty Works

Mounting empirical research provides evidence of fairness bias and its economic and social effects, where fairness bias refers here to a deviation of claims from unbiased justice due to a personal stake. A far less appreciated issue is dispersion of fairness views and claims, which is also important for its effects on disagreements, empirical analysis, and philosophical theories. This study undertakes a systematic analysis of the effects on fairness bias and dispersion of two variables: stakes and information. Most philosophical and social science analyses related to justice and bias associate heightened bias with increased information and, conversely, impartiality with the …

Empirical Studies Of Foreign Direct Investment, Joseph P. Daniels

Economics Faculty Research and Publications

No abstract provided.

International Technology Diffusion: Effects Of Trade And Fdi, Alejandro Ciruelos, Miao Wang

Economics Faculty Research and Publications

There has been little analysis of the effect of inward FDI on international R&D diffusion, especially in LDCs, although FDI has become the core of international production and LDCs have been receiving an increasing share of world FDI over the past few decades. Using data from 57 countries from 1988 to 2001, we find that both FDI and trade serve as important channels of international technology diffusion. However, there exist heterogeneous effects of FDI in DCs and LDCs. For inward FDI to promote technology diffusion in LDCs, a certain threshold of human capital has to be reached.

Designing State Aid To Education In The Presence Of Property Tax Exemptions Part 2, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

Experiences With "Quality" Labeling Of Food Products, Thomas L. Dobbs

Economics Commentator

No abstract provided.

Results On The Bias And Inconsistency Of Ordinary Least Squares For The Linear Probability Model, William C. Horrace, Ronald L. Oaxaca

Economics - All Scholarship

This note formalizes bias and inconsistency results for ordinary least squares (OLS) on the linear probability model and provides sufficient conditions for unbiasedness and consistency to hold. The conditions suggest that a "trimming estimator" may reduce OLS bias.

Equity Analysis And Natural Hazards Policy, Matthew D. Adler

All Faculty Scholarship

What is an “equitable” policy for mitigating the impacts of hurricanes, earthquakes, floods, and other natural hazards? Economists tend to see “equity” or “distribution” as irreducibly political and subjective. But, in truth, equity analysis and cost-benefit analysis are on a par. Both require a normative justification. Moreover, normative argument can help us structure equity analysis, just as it can cost-benefit analysis. This chapter, written for a forthcoming book on natural hazards policy after Katrina, argues that equity is a normative consideration distinct from efficiency or overall well-being. It then argues that equity is individualistic, not group-based; ex post, not ex …

Social Security Reform: What Are The Options?, Greg Shaw, Susan Swanlund, Tari Renner

Roundtables

Recorded in 2005, this Roundtable set the social security issue in the context of public opinion, strategies of the political parties, and changes in the Medicare program. The goal of the discussion was to help citizens understand the political and economic challenges confronting the efforts to reform social security.

A transcript of this discussion is available at the download link above and to the right of this page.

Testable Implications Of Subjective Expected Utility Theory, Eduardo Zambrano

Economics

I show that the predictive content of the hypothesis of subjective expected utility maximization critically depends on what the analyst knows about the details of the problem a particular decision maker faces. When the analyst does not know anything about the agent's payoffs or beliefs and can only observe the sequence of actions taken by the decision maker any arbitrary sequence of actions can be implemented as the choice of an agent that solves some intertemporal utility maximization problem under uncertainty.