PRICE DISCRIMINATION AT THE LINKS

This paper reports on an econometric analysis of the pricing structures at 46 public access golf courses in the San Francisco area. Comparisons among several attempts to get a generic measure of price discrimination suggest that the standard deviation of the prices charged is the best measure. Using narrowly cast measures of price discrimination, the paper successfully distinguishes among several different types. Measures of price discrimination can be significant regressors, yet the overwhelming majority of existing work excludes such a variable, leading to biased estimates of the other parameters.     

INSTITUTIONAL PRESERVATION AT THE FEDERAL RESERVE

This paper explains and presents supporting evidence for the hypothesis that institutional preservation is the central motive for Federal Reserve decision makers' behavior. Welfare maximization can, under certain conditions (i.e., via a vote maximization motive or the direct attribution of socially desirable goals), be a part of the preservation hypothesis, but it is inconsistent with substantial parts of Federal Reserve behavior. This paper presents evidence of this inconsistent behavior that the preservation hypothesis can explain. Such evidence includes opposing better coordination with voters'choices, creating an internally authorized fund that makes foreign loans without congressional authorization, opposing better monetary control procedures, organizing lobbying campaigns to defeat legislation to audit the Federal Reserve and make its meetings open to public scrutiny, failing to take minutes after legislation was enacted, and impairing information dispersal about funding for the Watergate burglars. The paper analyzes, in terms of institutional preservation, the results of recent research on the relationship of central banks' independence from short-run political forces and their anti-inflationary monetary policies.     

AGRICULTURAL POLICY AT THE CROSSROADS—AGAIN

American agriculture is suffering from severe structural adjustments and from its worst financial depression since landmark price and income policies were legislated more than half a century ago. As much as one-third of the $220 billion in agricultural debt is now delinquent, nonaccrual, or subject to renegotiation. Land values have fallen precipitously in the past few years. Farm foreclosures are near 1930 Depression levels. The congressional debate over programs that could determine the course of U.S. agriculture for the remainder of the century began in the summer of 1985.     

STABILIZATION POLICY AT THE ZERO LOWER BOUND

We construct a monetary economy with aggregate liquidity shocks and heterogeneous idiosyncratic preference shocks. In this environment, not all agents are satiated at the zero lower bound (ZLB) even when the Friedman rule is the best interest‐rate policy the central bank can implement. As a consequence, central bank stabilization policy, which takes the form of repo arrangements in response to aggregate demand shocks, temporarily relaxes the liquidity constraint of impatient agents at the ZLB. Due to a pecuniary externality, this policy may have beneficial general equilibrium effects for patient agents even if they are unconstrained in their money balances.     

A SOBER LOOK AT THE COSTS OF INTOXICATION

Advocates of increased government regulation of intoxicating substances often cite the "social cost" of such goods. A close examination of studies that calculate the social cost of intoxication reveals a variety of recurring methodological errors. These studies do not clearly distinguish external costs from private costs. They do not systematically compare the costs associated with the regulation of intoxicant use with the costs of intoxicant consumption, nor do they even estimate the social benefits associated with intoxication or compare them with the social costs. Unless these problems are addressed, social cost calculation will be dismissed as a tool for political lobbying.     

UNITED STATES-CHINA TRADE AT THE COMMODITY LEVEL AND THE YUAN-DOLLAR EXCHANGE RATE

In 1978 when China began her economic reforms of moving toward a free market economy and trade liberalization, the trade balance between China and the United States was in favor of the United States in the magnitude of 600 million dollars. Over the 1978–2002 period, however, it has changed in favor of China such that in 2002 China had a surplus of 120 billion dollars against the United States. Over the same period, the Chinese yuan has depreciated almost fourfold. Is real depreciation of the yuan against the dollar a factor in the trade between the two countries? In this article, we employ data at the industry level (88 two‐ and three‐digit industries) and recent advances in error‐correction modeling to show that indeed the real yuan‐dollar rate has played a significant role. This contradicts most previous research that used trade data at the aggregate level. (JEL F31, F32, F14)     

THE SOURCES OF GROWTH AT DIFFERENT STAGES OF DEVELOPMENT

Cross-country growth regressions have become an increasingly common tool in empirical development research. But these regressions typically do not attempt to distinguish among countries in different stages of development. Three empirical methods are used to test for such differences. Several of the factors known to affect economic growth are shown to operate differently for countries in different portions of the global income distribution. The results have implications for the role of financial markets, openness and factor accumulation in promoting growth. (JEL O150 , O160 , O400 )     

ANOTHER LOOK AT THE RELATIONSHIP BETWEEN INNOVATION PROXIES*

Shortcomings in the treatment of intangible investment in company accounts imply that there is no statistical collection for innovative activity which abides by the logic used for other economic activity data. As a consequence, analysts rely on innovation proxies derived from administrative and survey data. However, it is still unclear exactly how the different proxies are correlated, and whether the choice amongst different proxies matters. In the light of the innovation measurement, this paper takes another look at the relationship between different proxies of firm innovation. The results show that firm‐level correlations between survey‐based indicators and other proxies for innovation are highest for manufacturing firms and for product innovations.     

THE RELATIONSHIP BETWEEN ILLEGAL DRUG PRICES AT THE RETAIL USER AND SELLER LEVELS

This article uses 1985–2000 DEA data on marijuana and cocaine prices in various metropolitan areas to empirically test two contrasting theories of the relationship between illegal drug prices at the retail seller and user levels. Regression results overwhelmingly reject a multiplicative model in which the ratio of prices at the two levels is constant, but strongly support an additive model in which the difference between these prices is constant. This finding reduces the attractiveness of policies aimed at raising wholesale prices, because retail price responses, and thus potential drug demand deterrence, would be substantially smaller than commonly assumed. (JEL D40 , I18 , K42 )