Austrian Economics and Public Choice

The Review of Austrian Economics -     

Computerization and Structural Change

I develop three measures of structural change on the basis of U.S. data: changes in occupational composition, changes in input–output technical coefficients, and changes in capital coefficients. Using pooled cross-section, time-series data for 44 industries over the period from 1970 to 1990, I find that computer investment per worker has had a positive and significant effect on the degree of occupational change and changes in input and capital coefficients.     

Is the Income Elasticity of the Willingness to Pay for Pollution Control Constant?

How willingness to pay for environmental quality changes as incomes rise is a central question in several areas of environmental economics. This paper explores both theoretically and empirically whether or not the willingness to pay (WTP) for pollution control varies with income. Our model indicates that the income elasticity of the marginal WTP for pollution reduction is only constant under very restrictive conditions. Our empirical analysis tests the null hypothesis that the elasticity of the WTP for pollution control with respect to income is constant, employing a multi-country contingent valuation study of eutrophication reduction in the Baltic Sea. Our findings reject this hypothesis, and estimate an income elasticity of the WTP for eutrophication control of 0.1–0.2 for low-income respondents and 0.6–0.7 for high-income respondents. Thus, our empirical results suggest that the elasticity is not constant but is always less than one. This has implications for how benefits transfer exercises, and for theoretical explanations of the environmental Kuznets curve.     

Tradespace exploration of in-space communications network architectures

Making architectural decisions in long lifecycle systems is challenging because the time between system definition and end of operations can span multiple decades, resulting in shifts in stakeholder needs and major advances in technologies. Space-based communications using relay satellite constellations is one such example, requiring substantial up-front planning to define capabilities and size capacity due to the large investment of time and resources. Additionally, there are numerous viable system architectures. In this paper, we build on existing methods to develop a graph-based decision method to assess and explore architectural flexibility in the future evolution of long lifecycle systems. The tradespace graph defines edges between similar architectures, quantifies the switching cost between architectures, using graphs to analyse the potential system evolution pathways. In a test case on NASA communication satellites, we find that hosting government communications payloads, in particular optical payloads, on commercial satellites could reduce cost and increase flexibility of the NASA network.     

The Exchange Rate and Inflation in the UK

The United Kingdom is a highly open economy, and has a monetary policy strategy of targeting inflation in consumer prices. In this paper, we look at the evidence from the UK on inflation behaviour, and examine the propositions from several theoretical models about inflation dynamics in an open economy, focusing in particular on the hypothesized connections between the exchange rate and consumer price inflation. Theoretical open‐economy macroeconomic models ‘cover the waterfront’ on this issue, ranging from ‘exchange rate disconnect’ to a rigid link between nominal exchange rate changes and inflation. We estimate on UK data the open‐economy Phillips curves implied by the alternative explanations. We argue that, of the alternatives considered, only a model where imports are modelled as an intermediate good, as in McCallum and Nelson (1999) , provides a reasonable match with the data. Unlike the standard model, in which imports are treated as a final consumer good, the intermediate‐goods specification provides support for a policy of CPI inflation targeting.     

Analyzing the volume and nature of emergency medical calls during severe weather events using regression methodologies

An effective emergency medical service (EMS) response to emergency medical calls during extreme weather events is a critical public service. Nearly all models for allocating EMS resources focus on normal operating conditions. However, public health risks become even more critical during extreme weather events, and hence, EMS systems must consider additional needs that arise during weather events to effectively respond to and treat patients. This paper seeks to characterize how the volume and nature of EMS calls are affected during extreme weather events with a particular focus on emergency preparedness. In contrast to other studies on disaster relief, where the focus is on delivery of temporary commodities, we focus on the delivery of routine emergency services during blizzards and hurricane evacuations. The dependence of emergency service quality on weather conditions is explored through a case study using real-world data from Hanover County, Virginia. The results suggest that whether it is snowing is significant in nearly all of the regression models. Variables associated with increased highway congestion, which become important during hurricane evacuations, are positively correlated with an increased call volume and the likelihood of high-risk calls. The analysis can aid public safety leaders in preparing for extreme weather events.     

Evaluating DSGE model forecasts of comovements

This paper develops and applies tools to assess multivariate aspects of Bayesian Dynamic Stochastic General Equilibrium (DSGE) model forecasts and their ability to predict comovements among key macroeconomic variables. We construct posterior predictive checks to evaluate conditional and unconditional density forecasts, in addition to checks for root-mean-squared errors and event probabilities associated with these forecasts. The checks are implemented on a three-equation DSGE model as well as the Smets and Wouters (2007) model using real-time data. We find that the additional features incorporated into the Smets–Wouters model do not lead to a uniform improvement in the quality of density forecasts and prediction of comovements of output, inflation, and interest rates.     

Emotional intelligence and resilience as predictors of leadership in school administrators

This mixed‐method study of 48 P–12 school administrators across three southeastern states was done to begin investigation of the impact of nontraditional leadership factors. As evidenced by the results, there is a strong correlation between the factors of emotional intelligence and resilience and leadership success.     

The Licensing of Barbers in the USA

Barbering is one of the earliest professions to be licensed in the USA. This article discusses the origins of barber licensing, as well as its current status and scope, and then estimates the effects that such licensing has had on barbers' earnings. To estimate these effects we use micro‐level data from the 2000 US Census along with several measures of the strictness of state licensing of barbers. Our results suggest that certain licensing provisions may have increased barber earnings by between 11 and 22 per cent. The magnitude of our estimates is somewhat higher than those found in studies examining the effects of licensing in similar professions.