THE FISCAL MULTIPLIER AND ECONOMIC POLICY ANALYSIS IN THE UNITED STATES

The Great Recession sparked wide interest in the economic effects of fiscal policy. That interest is reflected in an ongoing debate over the size of the fiscal multiplier. This survey article addresses three questions: What models do economists use to estimate that multiplier? Why do estimates of it vary widely? How can economists use those estimates to judiciously analyze U.S. economic policy? (JEL E62, H30, H50)     

SIZE MATTERS: THE ECONOMIC VALUE OF BEACH EROSION AND NOURISHMENT IN SOUTHERN CALIFORNIA

Despite the widespread use of nourishment in California, few studies estimate the welfare benefits of increased beach width. This paper relies on panel data funded by National Oceanic and Atmospheric Administration and other agencies. Beach choices of respondents were combined with beach attribute data to reveal how changes in width affect choice and the economic value of beach visits. We use a random‐utility approach to show that the value of beach width varies for different types of beach uses: water contact, sand‐, and pavement‐based activities. We also find that the marginal value of beach width depends on initial beach width. (JEL Q50)     

Inside the Crystal Ball of Finance: Understanding Financial Economists' Attitudes to Market and Society

Market economists are thought to wield tremendous power—not only over financial markets but over governments that stray from the ‘market way’. Still, there is mystery about what economists think, and how they form their judgements. This article reports results from a survey of over 50 financial market economists from leading financial institutions in Australia conducted in December 2003 and January 2004. It provides insight into the opinions of economists who impact on markets and policy, especially through media commentary. The article identifies their economic and social views, comparing them with the Australian public. We then examine how professional views of economists differ from their personal views. Differences in professional and private views—especially over the role of government and labour markets—are an opportunity to ponder how judgements are formed and used. We offer tentative answers to the question: do these professionals—highly paid for their opinions—occasionally self‐censor?     

ROY MODEL SORTING AND NONRANDOM SELECTION IN THE VALUATION OF A STATISTICAL LIFE*

Wage‐hedonics is used to recover the value of a statistical life (VSL) by exploiting the fact that workers choosing riskier occupations are compensated with a higher wage. Roy (Oxford Economic Papers 3 (1951), 135–46) suggests that observed wage distributions will be distorted if individuals choose jobs according to idiosyncratic returns. We describe how this type of sorting biases wage‐hedonic VSL estimates and implement two new estimation strategies that correct that bias. Using data from the Current Population Surveys, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications.     

IN TANDEM OR OUT OF SYNC? ACADEMIC ECONOMICS RESEARCH AND PUBLIC POLICY MEASURES

This paper investigates whether academic research attention to certain policy‐related measures (including gross domestic product, unemployment, and inflation) is correlated with empirical measurements of the measures themselves. In other words, when unemployment rises, does research attention to the matter increase? Or do economists pursue research (in the short run) relatively uninfluenced by policy shocks on the ground? Text analysis implies that economic attention to key policy terms does correlate with empirical movements of the terms in most instances; however, the stronger and more consistent correlation is between use of policy terms in the literature and discussion of them by the broader public. (JEL A11, H00)     

Accuracy and reliability of Spanish regional accounts (CRE-95)

Are estimates accurate? Are these data reliable? Can we evaluate whether successive revisions of the first estimate bring additional information, or whether they are due to the correction of earlier inaccuracies of bias, which does not add any useful information to economic analysts? The response is that a statistical technique, known in economic literature as news versus noise analysis can be used to answer these questions. These concepts were first introduced in ground breaking articles by Mankiw et?al. (1984) on revisions to money stock and Mankiw and Shapiro (1986) on revisions to Gross National Product in the United States. This method claims that the proximity of the first estimate to the definitive one can be a clue as to its quality. Many studies investigate the magnitude and nature of errors contained throughout the National Account System estimates; however, economic literature offers no option for judging accuracy and reliability in the main Regional Account aggregates, and therefore, this methodology is adopted to assess the accuracy and reliability of the revision process of the Gross Value Added (GVA) growth rates at basic prices, 1995 Base, within the Spanish Regional Accounts (CRE-95). For that purpose, this study examines five comprehensive revisions analyses for a range of eighteen Autonomous Communities (NUTS-2) during 1999. Main conclusions are: the quality of the estimates tends to increase over time; and the process can be explained better as reflecting new information than as correcting measurement errors so that the National Statistics Institute??s procedure can be deemed to be suitable.     

APPLICATION OF PANEL DATA MODELS IN BENCHMARKING ANALYSIS OF THE ELECTRICITY DISTRIBUTION SECTOR*

ABSTRACT ** : This paper explores the application of several panel data models in measuring productive efficiency of the electricity distribution sector. Stochastic Frontier Analysis has been used to estimate the cost‐efficiency of 59 distribution utilities operating over a nine‐year period in Switzerland. The estimated coefficients and inefficiency scores are compared across three different panel data models. The results indicate that individual efficiency estimates are sensitive to the econometric specification of unobserved firm‐specific heterogeneity. This paper shows that alternative panel models such as the ‘true’ random effects model proposed by Greene (2005) could be used to explore the possible impacts of unobserved firm‐specific factors on efficiency estimates. When these factors are specified as a separate stochastic term, the efficiency estimates are substantially higher suggesting that conventional models could confound efficiency differences with other unobserved variations among companies. On the other hand, refined specification of unobserved heterogeneity might lead to an underestimation of inefficiencies by mistaking potential persistent inefficiencies as external factors. Given that specification of inefficiency and heterogeneity relies on non‐testable assumptions, there is no conclusive evidence in favour of one or the other specification. However, this paper argues that alternative panel data models along with conventional estimators can be used to obtain approximate lower and upper bounds for companies' efficiency scores.     

What Drives the Operating Performance of Privatised Firms?

Using a panel data analysis of Spanish privatised firms, we study how different factors influence the operating performance of divested companies. The results show that it is not privatisation per se but other factors that matter. After controlling for possible sample selection bias related to government timing of divestments, we find that the greater the relinquishment of State control and the smaller the percentage of ownership held by managers and/or employees, the better the firms’ post‐privatisation performance. Moreover, privatisations that are accompanied by liberalisation programmes and occur during buoyant economic cycles turn out to be more successful.     

THE ECONOMICS OF THE NON-DISTRIBUTION CONSTRAINT: A CRITICAL REAPPRAISAL

ABSTRACT ** ** Résumé en fin d'article; Zusammenfassung am Ende des Artikels; resumen al fin del artículo.
: This paper re‐examines the non‐distribution constraint as a key structural feature of non‐profit organization. It argues that its traditional understanding as a trustworthiness‐enhancing device is incomplete. This paper shows that the non‐distribution constraint is also a reflection of the directly utility‐enhancing character of involvement in non‐profit firms for their key stakeholders. This alternative explanation allows one to solve the central puzzle of trustworthiness theory: why doesn't the non‐distribution constraint destroy entrepreneurial motivation? Additionally, it helps one to understand the role of the non‐distribution constraint in economic theories of non‐profit organization that do not rely on trustworthiness theory. Finally, it enables one to logically integrate the different economic theories of non‐profit organization.     

TESTING CONSUMERS' ASYMMETRIC PERCEPTION OF CHANGES IN HOUSEHOLD FINANCIAL SITUATION

Using empirical analysis, this study shows that individuals perceive negative changes in their financial situation as larger relative to positive changes. Evidence of this asymmetry is provided using survey data on individual expectations, perceptions, income, and wealth. The study's results are in line with results in the psychological‐economic literature but, contrary to that literature, are obtained by analyzing panel survey data, rather than experimental evidence. These results cast some doubts on the tendency of economists to treat symmetrically the relation between economic variables and income or wealth in their models.     

Growth,environment, and culture—encompassing competing ideologies in one ‘new growth’ model

The debate about growth and the environment is fragmented due to ideological differences. Mainstream neoclassical and environmental economists tend to ignore deeper worries about long-term growth and nature. I show how competing positions can be interpreted within a single unifying framework. The interpretative tool is cultural theory, whereas the framework is a Schumpeterian growth model including environmentally oriented research in addition to ‘ordinary’ research. The two diagonals of cultural theory belong to economists and skeptics, respectively. The differences along the diagonals are about facts; for instance, economists disagree about the extent to which environmentally oriented research can mitigate the effects of economic growth. These differences are reflected in choice of parameter values. The key difference between the diagonals is in the choice of objective function—should we be maximizing consumption or ‘nature’? The model will not resolve the debate, but it does add clarity, pinning down differences and indicating questions for research. A neoclassical model may encompass problems deeper than resource use and pollution, and values other than those of the consumer.     

ADVANCING THE THEORY OF THE COOPERATIVE ORGANIZATION: THE COOPERATIVE AS A TRUE HYBRID

ABSTRACT: What is a cooperative? Is it a form of vertical integration, an independent organization or an intermediate form of governance between the market and the hierarchy? This paper contributes to the economic theory of the cooperative organization by examining it from a comparative economic perspective. Departing from Williamson's one‐dimensional continuum of governance structures, the paper adopts the view that governance structures exhibit multiple dimensions and true hybrids are market‐like on some of these dimensions while hierarchy‐like on others. I show that the cooperative blends market‐like attributes with hierarchy‐like mechanisms and thus should be viewed as a true hybrid rather than as an intermediate form. The paper concludes with a discussion about the usefulness of this approach and potential avenues for future research.     

THE SIZE OF FISCAL MULTIPLIERS AND THE STANCE OF MONETARY POLICY IN DEVELOPING ECONOMIES

Implementing fiscal programs during monetary policy expansions seems to improve significantly their economic stimulus. We find this result by estimating the effect of government consumption shocks on gross domestic product (GDP) using a panel of 23 developing economies. Our goal is to better understand the reasons for the low fiscal multipliers found in the literature by performing estimations for alternative exchange rate regimes, business‐cycle phases, and monetary policy stances. In addition, we perform counterfactual simulations to analyze the possible gains from fiscal‐monetary policy coordination. Our results also show lower multipliers in developing economies with flexible regimes, especially during economic slowdowns. (JEL E62, E63, F32)     

ASSESSING THE RELATIVE IMPACTS OF ECONOMIC EDUCATION SCHOLARSHIP: AN APPLICATION OF THE HARZING DATABASE

Despite the rising prominence of economic education scholarship, little work has been done to document how economic education scholarship is faring in the academic world. Unlike prior research in this genre, this study assesses the relative impacts of economic education scholarship by examining published research in (strictly) economic education journals. In order to do so, we use the Harzing database of citations to articles published in (strictly) economic education journals from 1990 to the present. Supporting some of the measures found in prior research, we find that the Journal of Economic Education (JEE) is unambiguously the dominant source of influential scholarship in the field of economic education. Interestingly, the JEE's closest competitors among active economic education journals are the International Review of Economics Education and Computers in Higher Education Economics Research, both of which are published under the auspices of the Economics Network, which is located in the UK. Following these two journals in our ranking is the Journal of Economics and Finance Education, a relatively new journal launch.     

ON THE APPLICATION OF EFFICIENCY ANALYSIS TO THE STUDY OF THE DIMENSIONS OF HUMAN DEVELOPMENT

This paper is an attempt to translate empirically some of the categorizations of human development reviewed by Alkire (2002) . It compares the estimates of human development obtained on the basis of Sen's (1985 ) capability approach, Narayan et al.'s (2000 ) dimensions of well‐being, Cummins (1996 ) domains of life satisfaction and Allardt's (1993 ) comparative Scandinavian welfare study. To obtain these estimates of human development use is made of techniques developed in efficiency analysis, an approach rarely applied to the study of consumption and standards of living (see, however, Lovell et al., 1994 ). Our database is the British Household Panel Survey. Our findings vindicate the multidimensional approach to human development but show a great empirical resemblance between the four conceptual approaches to well‐being.     

What made Economists so Politically Influential? Governance-related Ideas and Institutional Entrepreneurship in the Economic Liberalisation of Israel and beyond

Liberal economists are known to be one of the driving forces behind economic liberalisation in various countries, but how did they become so politically influential? Constructivists generally suggest that during economic crises liberal economists persuaded decision-makers to adopt pro-market policy ideas as solutions for economic turbulence. While this answer is true, it is also only partial because it disregards the role played by governance-related ideas and institutional entrepreneurship in the political actions of liberal economists. I argue that ideas regarding decision-making mechanisms provided liberal economists with the basis for creatively exploiting pre-liberalisation institutions, such as central banks and central budget offices, through which these economists enhanced their long-term political influence. An in-depth examination of a paradigmatic case of economic liberalisation driven by liberal economists – Israel's Stabilisation Plan – exemplifies that argument. The existence of like-minded economists and similar pre-liberalisation policy-making institutions in many other countries hints that the Israeli experience is not unique.     

THE LABOUR SUPPLY AND SAVINGS EFFECTS OF SUPERANNUATION TAX CHANGES*

This paper investigates the effects on labour supply, consumption and savings of a change in the superannuation tax structure, involving the taxation of contributions to a fund, pre‐retirement earnings of the fund, and the benefits received from the fund during retirement. The effects on lifetime plans of tax changes are investigated using a simple three‐period model in which the final period is retirement. The effects of unanticipated changes, requiring revisions to plans, are examined. Although the partial effects of particular tax changes are unambiguous, the effects of allowing for a government budget constraint mean that it is difficult to predict a priori how labour supply is likely to be affected. However, private savings unambiguously fall.     

COPYRIGHT AND BRANDS IN THE DIGITAL AGE: INTERNALIZING THE EXTERNALITIES OF MEANING

The adoption of binary code as the universal standard for globalized communications generates highly positive externalities of the kind often referred to as “network effects.” But what about meaning? What are the externalities associated with the formatting and circulation of meaning, and are they all positive? Within the digital paradigm, is it really possible to separate the notion of expression—covered by copyright—from the meanings conveyed? Isn't meaning closely related to the concept of brand? And on that assumption, how do copyright and trademark institutions work together to stimulate and promote the generation of meaningful information? To answer these questions, we will look at how the meaningful forms of expression—the “works”—that have historically been covered by copyright generate specific types of externality, both positive and negative, giving rise to both incentive and censorship mechanisms. We will then show how the institutions of copyright and author's rights that allow the appropriation of a meaning‐dependent good also confer a brand on it by identifying its sources. This leads to cross‐externalities between works of expression and publishing brands, with the result that copyright and trademark institutions cannot be completely separated from each other. (JEL K11, L5, L82, B25)     

CONTRADICTORY TRENDS IN GLOBAL INCOME INEQUALITY: A TALE OF TWO BIASES

Did global income inequality rise or fall over the last decades of the twentieth century? The answer depends on how cross‐country income comparisons are made. Exchange rate comparisons suggest that inequality rose whilst the purchasing power comparisons of the Penn World Table suggest it fell. We show that both measures of real incomes lead to biased international income comparisons. Exchange rate comparisons ignore the relative price of non‐tradables, whilst the fixed price method underlying the Penn World Table is subject to substitution bias. The contradictory trends are due to growing dissimilarity between national price structures increasing the degree of bias in each method. When we correct the income data to eliminate bias we find no compelling evidence of a significant change in world inequality.     

HOUSEHOLD PRODUCTION AND NATIONAL PRODUCTION: AN IMPROVEMENT OF THE RECORD

1 By no means is the home based production of housewives the only or even the most important aspect of nonmarket production. The entire question of work vs. leisure, and the distinction between leisure and nonmarket oriented production, are currently under intensive scrutiny. See for instance the work of Nordhaus and Tobin [7, especially appendix section A.3], Gronau [2] and items cited in Gronau. The omission from the national income accounts of work performed at home by males, non-married females, and “working wives” is extremely important. This paper is concerned only with married females because (1) they are the subject of what must be one of the oldest jokes in the subject of social accounting, and (2) the relationship of production by housewives to total production has changed in the past ten years or so, and that deserves some attention even if it is not the most important thing which has been happening with respect to the GNP.
Specifically, we will present estimates of the value of home based nonmarket production by housewives. These estimates will then be used to supplement various national product aggregates in order to calculate more accurate growth rates for the U.S. economy. We find that the value of nonmarket production by married women during the 1960's has averaged approximately thirty percent of the GNP and close to 40 percent of the national income. The inclusion of the nonmarket work of housewives in GNP would reduce the measured rate of growth of real GNP per potential worker by about ten percent, the exact amount depending on how the value of nonmarket work is estimated. Our estimates indicate a reduction in the absolute rate of growth of almost 0.25 percent.