Independent but Not Indifferent: Partisan Bias in Monetary Policy at the Fed

Independent central banks are thought to be effective inflation hawks because they are run by technocrats with conservative monetary policy preferences. However, central bankers can only protect their independence by compromising with the elected officials who grant them their independence. Policy, therefore, is likely to be a weighted average of the preferences of the central bank and the government. Consequently, central bankers may be eager to help right‐wing governments stay in power and oppose the election of left‐wing governments. We show evidence from the United States that interest rates (a) decline as elections approach when Republicans control the White House, but rise when Democrats do; and (b) are sensitive to the inflation rate (output gap) when Democrats (Republicans) are in the White House. Thus, the Federal Reserve is a conditional inflation hawk. Since the Fed became operationally independent in 1951, the Republicans have exhibited a decided electoral advantage in presidential politics.     

Print Advertising Strategies of International Firms

Advertising sponsored by non-US corporations has increased dramatically in the United States since the 1960s. This paper employs a content analysis approach to examine the amount, format and type of advertising being incorporated by non-US companies. All non-US advertisements were examined in Newsweek magazine for the years 1965 to 1982. Several advertising issues are examined, emphasizing differences by country and year.     

Job changing decisions of faculty members: a case study of a model with multiple selection

A model of faculty job search behaviour must explain the two decisions of whether to search for another position and of whether to accept the new position if an offer is received. Developing a theoretical model of this process is not diffcult, but estimation difficulties caused by the self-selection inherent in the data subsamples of non-searchers, searchers who stay, and searchers who leave must be considered. To estimate the structural determinants of these decisions we make assumptions regarding the covariance matrix of the error terms of the structural equations that allow us to use a straightforward extension of earlier approaches to this problem. The particular variables that correspond to the theoretical measures in the model are not common to most data bases on faculty. Thus, we were forced to use a rather old data base to estimate the model, which reduces the usefulness of the estimates for current policy purposes. Nonetheless, the estimates do shed light on the efficacy of the model and illustrate the issues involved in the estimation problems.     

The Gold at Fort Knox

When explaining that U.S. currency is not backed by gold or other precious metals, economic educators frequently are asked about the gold at Fort Knox, Kentucky. This note explains the content and role of the depository at Fort Knox.     

Game Theory and Economic Modelling. by David M. Kreps

Data from the National Science Foundation (2014) indicate that at least one PhD in economics was awarded to a Swarthmore College graduate in every year since 1966. The authors’ purpose in this article is to consider factors that may have contributed to the high number of PhDs in economics awarded to Swarthmore College graduates. While there is little doubt that self-selection plays a significant role, they describe curricular and environmental aspects of the economics department at Swarthmore that may have contributed to this outcome.     

In Memory of Michael Watts (November 3, 1950–December 5, 2014)

In an experimental economics simulation, Ukrainian teachers of economics chose free riding responses at a rate similar to those found by Leuthold in an undergraduate class on public economics at the University of Illinois. The authors speculate that those who become academic economists may do so because they have certain insights in deductive logic.     

Relevance weighted likelihood for dependent data

The relevance-weighted likelihood function weights individual contributions to the likelihood according to their relevance for the inferential problem of interest. Consistency and asymptotic normality of the weighted maximum likelihood estimator were previously proved for independent sequences of random variables. We extend these results to apply to dependent sequences, and, in so doing, provide a unified approach to a number of diverse problems in dependent data. In particular, we provide a heretofore unknown approach for dealing with heterogeneity in adaptive designs, and unify the smoothing approach that appears in many foundational papers for independent data. Applications are given in clinical trials, psychophysics experiments, time series models, transition models, and nonparametric regression. Received: April 2000