Trade,Geography, and Industry Growth in U.S. Manufacturing

Much of the recent empirical literature examining the New Economic Geography has focused on how access to markets impacts wages. In this article, we consider an alternative aspect of the theory by examining how access to markets affects industry growth. We develop a model relating the growth of two key measures of market size—market access and supplier access—to growth in industry employment and the real value of industry shipments. We estimate the model using data on U.S. manufacturing industries between 1984 and 1996. We find strong evidence to suggest that access to markets positively affects industry growth.     

Liberty,equality, and efficiency J. E. Meade New York: New York university press, 1993, ix, 256 pp.

This is a review article of a book by J. E. Meade. The first part of the book is a reprint of a book published in 1964. This is not described. The remainder of the book, 164 pages, deals with a fictitious island-nation, Agathotopia, which is a good but not perfect place to live. The Agathotopian economy is based on a type of firm in which capitalists and laborers both hold shares which received equal dividends. Other matters described include taxes, the treatment of the environment, and the way in which Agathotopia might fit into an international union such as the European Community. The reviewer suggests that recent trends toward increased labor-management, profit sharing, and stock ownership plans may make the labor-capital partnership a serious alternative in the future.     

U.S. States,the Medicaid Program,and Tax Smoothing

This paper tests the tax smoothing theory by focusing on its implication that a change in permanent government spending should result in an equal sized change in the tax rate. The effect of Medicaid, a state administered, federal and state funded medical insurance program for the poor, on state tax rates is investigated. The Medicaid program provides a natural experiment for this test as states are required to cover certain groups in order to receive federal matching money. Additionally, during the 1980s, a series of federal mandates greatly increased state Medicaid expenditures. Two stage least squares is used on a panel of U.S. states (1978-1994) to test whether changes in permanent state Medicaid expenditures resulted in equal sized tax rate changes. Tax smoothing as a positive theory of state government behavior is rejected. Additionally, it is found that this rejection cannot be attributed to the stringency of balanced budget rules.