MONETARY POLICY ACTIVISM UNDER MANAGED-FLOATING EXCHANGE RATES: A CROSS-COUNTRY COMPARISON

This paper assesses the degree and pattern of monetary policy activism in the United States, Canada, West Germany, the United Kingdom, and Japan during the recent period in which managed-floating exchange rates prevailed. Floating exchange rates enhance the potency of a discretionary monetary policy. Yet central banks in these countries shifted toward less discretionary monetary targeting during the late 1970s in response to rising inflationary pressures and expectations. But whether such targeting actually reduced policy activism is unclear since targets were expressed in wide ranges and often were missed. Following 1981, at least three of these countries–the United States, Canada, and the United Kingdom–reverted to an avowedly more discretionary pattern of response to changes in real demand pressures, interest rates, and exchange rates. Since mid-1986, Germany, the United Kingdom, and Japan–and, to a lesser extent, Canada–have intervened heavily in the foreign exchange market and so have greatly increased their official dollar holdings. Moreover, through August 1987, the effects of this intervention on these countries' domestic money supplies apparently have been sterilized only partially.     

ECONOMIC MODELING AND THE FALSE TRADEOFF BETWEEN ENVIRONMENTAL PROTECTION AND ECONOMIC GROWTH

One important element of the current policy debate on what measures should be taken to reduce greenhouse gas emissions is the controversy over the costs of reducing those emissions. "Top-down" macroeconomic and general equilibrium models give much higher estimates of the costs than "bottom-up" models based on microeconomic and engineering data. This paper investigates the causes of the divergence between the two modeling approaches. The conventional top-down models incorporate strong implicit assumptions about maximization, technical progress, and organizational efficiency that predetermine their results. However, these assumptions are questionable on both theoretical and empirical grounds. Economic assessment of policy alternatives would benefit. from analyses that take account of the actual characteristics of business firms and other organizations that emit greenhouse gases in the course of their activities.     

ENDANGERED SPECIES CONSERVATION ON PRIVATE LAND

This paper analyzes the effect of alternative institutional arrangements on the conservation of endangered species and economic activity on private land. Because a landowner does not capture the full value of species conservation, her preferences on land use will not coincide with social preferences. Under current law, the landowner has incentives to invest in lowering conservation value and to deny access to regulators in order to prevent collection of information. Paying compensation corrects many of these perverse incentives. An alternative approach is to limit the ability of landowners to affect the regulatory outcome. Whether it is better to entice landowners to make socially efficient decisions by paying compensation or to limit the ability of landowners to affect outcomes through changes in the regulatory regime depends on both practical implementation difficulties and distributive justice considerations.     

Rewards Available to Currency Futures Speculators: Compensation for Risk or Evidence of Inefficient Pricing?

Filter, channel and moving-average trading rules are compared with rules which use ARIMA price forecasts, by evaluating their ex ante performance for currency futures transactions from December 1981 to November 1987. All of the trading rules are profitable. Market efficiency is discussed Monte Carlo results strongly suggest that the trading profits are too large to be explained by the elusive, time-varying risk premium sought in forward market literature     

Racial Differences in Consumer Environmental Concern

Past research has suggested that black and white consumers differ in their concern for the environment. The general consensus has been that whites are significantly more concerned than blacks about environmental issues. Most of this research, however, Is limited in scope and fails to account for variables, such as education and income, which may help to explain these differences. This study investigates and analyzes black and white consumer environmental concern. Results of this study indicate that there are significant differences between African-Americans and white Americans in their environmental concern at lower income and educational levels. However, as income and education rise, the gap in environmental concern between blacks and whites significantly decreases. These findings provide important implications for policy makers in making decisions related to environmental education and protection as well as for businesses intending to target consumers with environmentally focused promotional campaigns.     

How Do Firms Respond to Political Uncertainty? Evidence from U.S. Gubernatorial Elections

We examine the joint response to political uncertainty along two margins: changes in real activity and voluntary disclosure. We focus on within-firm variation in exposure to ex ante competitive U.S. gubernatorial elections using data on preelection poll margins and firms’ state exposures. Despite real activity falling in the years leading up to a close election, we find that voluntary disclosure increases both in frequency and content, including mentions of risk in filings that reference states holding elections. Our tests use a decomposition of 8-K filings into real activity and voluntary disclosure to address the endogenous complementarity between these two responses. These results hold when using alternative ex ante measures of political uncertainty based on term-limited incumbents, historically competitive offices, or state legislature gridlock. Both effects of political uncertainty are stronger for firms in highly regulated industries and weaker for those least exposed to the local market, linking the real activity and disclosure responses to uncertainty.