Economic Theory Commons^™

The Relationship Between Import Prices And Inflation In The United States, Thomas D. Corrigan

WCBT Faculty Publications

Inflation has been a non-issue in the United States in recent years despite strong economic growth, on balance, and falling unemployment. Some analysts believe that "new economy" dynamics are responsible for this favorable outcome and further claim that the traditional Phillips curve tradeoff between growth and inflation is no longer a valid assumption underlying economic policy decisions. Others believe that the Phillips curve is indeed alive and well but that favorable "supply shocks" have masked the still relevant tradeoff between growth and price stability. One potential "supply shock" candidate is a declining trend in the cost of imports into the …

Full Cost Pricing: An Approach To Internalize The Full-Cost Of A Gallon Of Unleaded Gasoline In The U.S And The Feasibility Of Markets Sustaining This Result, Joseph Mack

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

Three Essays On Real Estate Investment Trusts, Yan Lin

Theses and Dissertations in Business Administration

This dissertation includes three essays that study on Real Estate Investment Trusts (REITs). The first essay examines the shape of market demand curve by employing REIT equity fund flows as a proxy for REIT aggregate demand. An empirical framework is introduced to disentangle the price-pressure effect and the information effect. We do not find evidence for the price-pressure effect, which states that REIT equity fund flows directly affect REIT market prices. Instead, we find that the performance of REIT market prices does influence REIT equity fund flows. The results indicate that investors adjust their demand for REITs by investigating and …

Incentive Compatibility In Multi-Unit Auctions, Sushil Bikhchandani, Shurojit Chatterji, Arunava Sen

Research Collection School Of Economics

We characterize incentive compatibility in multi-unit auctions with multi-dimensional types. An allocation mechanism is incentive compatible if and only if it is nondecreasing in marginal utilities (NDMU). The notion of incentive compatibility we adopt is dominant strategy in private value models and ex post incentive compatibility in models with interdependent values. NDMU is the following requirement: if changing one buyer’s type, while keeping everyone else’s types the same, changes this buyer’s allocation then the new allocation must be relatively more attractive (or relatively less unattractive) to this buyer. We also establish a price characterization of incentive compatible mechanisms.

A Rationale For Meeting Quotas Asymmetrically, J. Patrick Meister, Robert S. Main

Scholarship and Professional Work - Business

Under certain conditions, otherwise identical, competing firms may find it jointly preferable to face differing degrees of trade barriers on individual products rather than symmetric trade barriers. The key is the ability to reduce marginal production cost via research and development. The economic significance of this insight is that there could be a role for a market for quota allotments. This insight also has applications to Voluntary Export Restraints in which a priori symmetric, restricted firms may prefer to have individual production levels allocated asymmetrically. This indicates the need for detailed studies of how quotas are met by individual firms. …

Financial Small-Scale Business Under The New Cbn Directive And Its Likely Impact On Industrial Growth Of The Nigerian Economy., O. J. Nnanna

Bullion

This examines the prospects of the current drive to ensure efficient and sustainable credit delivery system to the SSls. The rest of the paper is divided into three broad sections. The first section reviews and appraises past financing programmes / schemes, highlighting the major constraints on their performance. The current initiative of the Bankers' Committee is discussed in section two, focusing on its likely impact and underscoring the needed complementary policy measures. Section three summa-rises and concludes the paper.

Democracy And Violence: A Review Of "The Democratic Experience And Political Violence", Ibpp Editor

International Bulletin of Political Psychology

This article is a book review of The Democratic Experience and Political Violence. The book was co-edited by David Rapoport, Professor Emeritus of Political Science at the University of California, Los Angeles and Leonard Weinberg, Foundation Professor of Political Science at the University of Nevada, Reno.

Fuzzy Areas And Firm Boundaries, Pradeep Banerjee

IIMB Management Review

The manner in which firms function has been studied by academic economists for some time now. Adam Smith, the doyen of economists, incorporated his evaluation of producing units in his Inquiry into the Nature and Causes of Wealth of Nations (1776). The other famous economist, Alfred Marshal also studied the operation of the market and firms that functioned in it. Marshal is credited with having laid down an important part of the methodology of microeconomics, a branch of economics that takes up the study of firms as part of its routine.

An Investigation Of The Association Between Auditor Switching And Negative Information, Michael Morris Grayson

Doctoral Dissertations

This study investigates the premise that certain types of negative information are associated with auditor switches. A data set of 305 auditor switches from 1976 to 1994, extracted from the Compustat data base (limited subscription), was analyzed using tests of proportions and nonparametric sign tests. The data set consists of negative information extracted from the switching companies' income statements (i.e., net losses or extraordinary items) or calculated from the items extracted (i.e., net income adjusted to reverse the effect of extraordinary items).

The initial results, based on tests which assumed random movement of net income, did not support the notion …

Economics And Strategic Management: Bridging The Divide, Rakesh Singh

IIMB Management Review

There has always been a great divide between economic theory and management theory. On the one hand, most business schools put basic economics on their curriculum and insist on compulsory courses in the subject.  On the other hand, management theorists have found economics too abstract to be useful. Economists have always tried to run clown the case study approach as lacking in rigour and have criticized management's approach of generality.

Strategic Flexibility In Information Technology Alliances: The Influence Of Transaction Cost Economics And Social Exchange Theory, Candace Ybarra, Margarethe Wiersema

Business Faculty Articles and Research

Utilizing a model drawn from both transaction cost economics and social exchange theory, we analyze determinants of strategic flexibility in a sample of strategic alliances involved in joint development agreements or joint research pacts. Findings indicate that, in general, determinants suggested by transaction cost economics provided flexibility in modification and inflexibility in exit. From social exchange theory, trust was found to be positively related to both types of flexibility while another component of social exchange theory, dependence, was found to be negatively related to the strategic flexibility of the alliance. Results also found that factors suggested by both transaction cost …

The Fundamental And Non-Fundamental Components Of Stock Prices: The Role Of Time-Varying Expected Inflation, Maosen Zhong

Doctoral Dissertations

I derive testable implications of fundamental and non-fundamental components of stock prices. In order to control for the role of time-varying expected inflation and to be able to perform reasonable empirical tests, I use a nominal (rather than a real) interpretation of the present-value model (PVM), whereby nominal interest rates approximate expected inflation. I conjecture that the fundamental and non-fundamental components represent the permanent and temporary components of stock prices, respectively. A series of cointegration analysis over the annual period 1871–1997 confirms my conjecture for the model with time-varying expected inflation. Various fundamental and non-fundamental exclusion tests indicate that both …

A Political Model Of Monetary Policy With Application To The Real Fed Funds Rate, Tony Caporale, Kevin B. Grier

Economics and Finance Faculty Publications

We construct an empirical model of U.S. monetary policy assuming that the Federal Reserve is an ordinary federal bureaucracy. We use the real Federal Funds rate as our policy measure and show the existence of significant executive, legislative, and bureaucratic influence on the real rate of interest from 1961 to 1996. We find that presidential party is an adequate statistical measure of executive influence and that the voting scores of the Senate Banking Committee leadership best represent legislative influence. We argue that political changes cause systematic and predictable changes in monetary policy.

Relative Gains Problem And Case Studies Of Economic Cooperation In East Asia, Ping Deng

Graduate Program in International Studies Theses & Dissertations

Relative gains problem basically means unequal cooperative payoffs disproportionately favoring partners. With the relative gains problem widely accepted as a serious impediment to international cooperation, some scholars have theoretically argued or modeled several conditions that are most likely to foster a state's sensitivity to relative gains and thus substantially affect the prospects for cooperation. But little empirical work has been done to date. The central objective of this dissertation is to test whether those theoretical propositions can be supported by empirical evidence. For this purpose, we have deducted three hypotheses: (1) If a state faces military threat and zero-sum political …

The Fischer Black Hypothesis: Some Time-Series Evidence, Tony Caporale, Barbara Mckiernan

Economics and Finance Faculty Publications

We estimate an ARCH-M model to analyze the relationship between the conditional standard deviation of real gross national product (GNP) and its growth rate for the period 1871-1993. We find that variability significantly increases output growth rates. In addition, impulse response functions show that the effect of variability on growth rates is dynamic. These results provide evidence in favor of Black's (1987) business cycle hypothesis.

Tobin, James, Tony Caporale

Economics and Finance Faculty Publications

James Tobin was born in Champaign, Illinois, in 1918. He received his bachelor's degree in 1939 and his master's degree in 1940, both from Harvard. Following naval service during the years 1942-6, he returned to his graduate studies and received his PhD from Harvard in 1947. In 1950, he joined the economics department at Yale University, and he has largely remained at Yale and has been identified with this institution throughout his career. He twice directed the Cowles Foundation for Research in Economics, first from 1955 to 1961, and then from 1964 to 1965. He also served for two years, …

Capital Structure And Product-Market Rivalry: How Do We Reconcile Theory And Evidence?, Dan Kovenock, Gordon Phillips

Economics Faculty Articles and Research

This paper presents empirical evidence on the interaction of capital structure decisions and product market behavior. We examine when firms recapitalize and increase the proportion of debt in their capital structure. The evidence in this paper shows that firms with low productivity plants in highly concentrated industries are more likely to recapitalize and increase debt financing. This finding suggests that debt plays a role in highly concentrated industries where agency costs are not significantly reduced by product market competition. Following the empirical evidence we introduce the "strategic investment" effects of debt and argue that this effect, in conjunction with agency …

Toward A Sustainable Maine : The Politics, Economics, And Ethics Of Sustainability, Richard Barringer (Ed.)

Maine Collection

Toward A Sustainable Maine : The Politics, Economics, and Ethics of Sustainability

Richard Barringer, editor, Professor Emeritus at the University of Southern Maine

Edmund S. Muskie Institute of Public Affairs, University of Southern Maine, Portland, Maine, 1993.

The proceedings of a conference presented at Bowdoin College on March 19 and 20, 1993, by the Edmund S. Muskie Institute of Public Affairs at the University of Southern Maine, and by the Natural Resources Council of Maine. Ellen Baum, conference organizer.

Contents; Foreword by Richard Barringer / Welcome by Everett Carson / Global, Canadian, and Maine Perspectives / Sustaining Our Natural and …

Information Asymmetry, Incentive Contracts And Organizational Behavior, T V S Ramamohan Rao

IIMB Management Review

No abstract provided.

Notes On The Effect Of Capital Gains Taxation On Non-Austrian Assets, Dan Kovenock, Michael Rothschild

Economics Faculty Books and Book Chapters

This paper is an attempt to assess the effect of capital gains taxation on non-Austrian assets, such as claims to profits of continuing enterprises. As compared to taxation on an accrual basis, the capital gains tax discourages sales of appreciated assets. This is the "lock-in" effect. Because assets subject to capital gains taxation are generally held a long time, conventional estimates suggest that the effective rate of capital gains taxation is low. We contend that conventional estimates could seriously underestimate the effective rate of capital gains taxation because they ignore uncertainty. We construct a model which allows us to calculate …

Price Determination In A Competitive Industry With Costly Information And A Production Lag, Reuven Glick, Clas Wihlborg

Business Faculty Articles and Research

We analyze the role of information for price and output adjustment when competitive firms with rational expectations cannot directly distinguish between industrywide and firm-specific cost disturbances. Firms may become informed about industrywide cost conditions by acquiring information at a cost. The sensitivity of price and output to cost disturbances decreases as more firms choose to purchase information. The equilibrium industry share of informed firms increases as the cost of information falls and total cost variability increases. The equilibrium share of informed firms is largest when there is a comparable degree of variability in both industrywide and firm-specific costs.

Capital Gains Taxation In An Economy With An ‘Austrian Sector’, Dan Kovenock, Michael Rothschild

Economics Faculty Articles and Research

This paper examines the effects of a proportional capital gains in an economy with an Austrian sector (with wine and trees) and an ordinary sector. We analyze the effect of capital gains taxation (on both an accrual and a realization basis) on the efficiency with which resources are used within the Austrian sector. Since time is the only input which can be varied in the Austrian sector, this amounts to looking at the effect of capital gains taxation on the harvesting time or selling time of assets. Accrual taxation decreases the selling time of Austrian assets. Realization taxation decreases the …

Polluters’ Profits And Political Response: Direct Control Versus Taxes: Comment, Robert S. Main, Charles W. Baird

Scholarship and Professional Work - Business

In a recent issue of this Review, James Buchanan and Gordon Tullock (B-T) presented a public choice analysis of the relative merits of direct controls and taxes in externality control. In Section IV of their paper, B-T consider the case of reciprocal external diseconomies of consumption. They ask whether "... persons in this sort of interaction, acting through the political processes of the community, will impose on themselves either a penalty tax or direct regulation" (p. 143). Their analysis is carried out within the context of a two-person model in which each person consumes the same quantity of a …

A Study Of The Utility And Validity Of Earnings Forecasts, Michael P. Howell

Honors Theses

According to William J. Casey, the past Chairman of the Securities and Exchange Commission, and recently appointed Under Secretary of State and Economic Affairs, forecasting should be the first and most important priority of all areas of management and public accounting. Only large institutional investment corporations have had access to such "useful" information when needed. Consequently, large investors are able to make more objective and intelligent investment decisions. A recent study determined that few investment corporations veritably have access to pertinent internal forecasting models. In fact, when interviewed, many executives claimed that even if they could procure such information, they …

Entrepreneurship And Economic Development: A Critique Of The Theory, Rhoda E. Howard-Hassmann

Political Science Faculty Publications

This thesis is a criticism of the "entrepreneurial school" of economic development, which contends that a major cause of underdevelopment in the Third World is the poor "entrepreneurial spirit" in these areas. The entrepreneurial spirit consists of certain values and behaviour which it is presumed existed in the West at the time of its development. To test the validity of this theory empirical evidence on entrepreneurs is examined; this evidence includes historical data on the West, especially the United States and France, and twenty-one area studies of entrepreneurs in the Third World. The evidence suggests that there is little difference …

Book Review. Massive Industrial Size, Classical Economics, And The Search For Humanistic Value, Joseph F. Brodley

Articles by Maurer Faculty

No abstract provided.

The Russian Five Year Plan Is Economically Constructive, Oscar M. Duconge

Electronic Theses and Dissertations

The Five Year Plan is a plan by which Russia is to place herself among the great nations of the world through process of industrializing her manufacturers, mechanizing her farms and modernizing her business.