Money Growth,Output Growth,and Inflation: A Reexamination of the Modern Quantity Theory's Linchpin Prediction

A testable implication of the modern quantity theory of money, when viewed as a theory of inflation, is the joint hypothesis that (i) there is a one-to-one positive relationship between inflation and the money stock growth rate, (ii) there is a one-to-one negative relationship between inflation and the aggregate output growth rate, and (iii) there are no other determinants of inflation besides the money stock and aggregate output expansion rates. This implication is the theory's linchpin prediction. A recent prior study published in this journal examines cross-country data and reports that this hypothesis cannot be rejected. The present study reexamines the prior study's data and finds that the joint hypothesis is decisively rejected, an unpleasant finding from a monetarist perspective. The article then goes on to propose an alternative to the prior study's model of the inflation process and reports findings that are, from the perspective of a monetarist, at least mildly pleasant.     

Inter-vivos Transfers and Exchange

Most parents divide their bequests equally among their children, whereas inter-vivos transfers are usually unequal. We propose that exchange is better for inducing inter-vivos transfers than bequests. Inter-vivos transfers can be adjusted quickly to the amount of care, are less costly than writing a will, and can be kept secret from other family members and the public. The results from national longitudinal data show that, as expected, if a parent gives any inter-vivos transfers, she is more likely to give to children who provide informal care. Informal care has no effect on the equality of intended bequests.     

Military Spending, Government Disarray, and Economic Growth: A Cross-Country Empirical Analysis

Recent years have seen a spate of empirical studies that have used cross-country regressions to examine a variety of possible determinants of long-term economic growth. The present study considers an additional, largely overlooked, explanatory variable: military spending. Consistent with Thompson’s (1974) hypothesis that enhanced national defense fosters economic growth by increasing the security of property rights, the military expenditures share of GDP is found to have a statistically significant positive impact on the growth rate of per capita GDP. This result is obtained for two alternative model specifications, a Barro-regression and a LISREL variant of that regression. The LISREL variant is motivated by Sala-i-Martin’s (1994) claim that the impact of government economic policies jointly, rather than extant government policies individually and separately, is "the phenomenon that really matters" for long-term economic growth.     

Pure vs. mixed commodity bundling

In the commodity bundling literature, pure bundling is ruled out as a uniquely optimal strategy because mixed bundling is always (weakly) better. This paper provides a theoretical distinction between the two pricing schemes. The distinction relies on the degree of consumer heterogeneity in reservation prices. While there is a lack of empirical evidence on commodity bundling pricing schemes due to the difficulties in measuring consumer heterogeneity, we circumvent this problem by examining firm heterogeneity. Specifically, we use data from the newspaper industry in which some two edition newspaper firms are mixed bundlers and others are pure bundlers.     

Consumer life styles and market segmentation

Consumer behaviorists faced with the task of segmenting markets increasingly turn to the study of consumer life styles. The life style concept and its role in predicting consumer decisions are analyzed here. One methodology known as AIO or life style research has proven especially useful in identifying heavy users of specific product categories. Three representative AIO portraits—for beer, eye make-up, and bank credit cards—are outlined. An evaluation of life styles as a systems concept suggests bright prospects for presenting research findings to clients, formulating creative strategies, positioning products and services and selecting media. C. W. Post Center, L.I.U. Doubleday Advertising Co.