Is There a Free‐Market Economist in the House? The Policy Views of American Economic Association Members

A bstract .   People often suppose or imply that free-market economists constitute a significant portion of all economists. We surveyed American Economic Association members and asked their views on 18 specific forms of government activism. We find that about 8 percent of AEA members can be considered supporters of free-market principles, and that less than 3 percent may be called strong supporters. The data are broken down by voting behavior (Democratic or Republican). Even the average Republican AEA member is "middle-of-the-road," not free-market. We offer several possible explanations of the apparent difference between actual and attributed views.     

Statistical study of foreign exchange rates, empirical evidence of a price change scaling law, and intraday analysis

In this paper we present a statistical analysis of four foreign exchange spot rates against the U.S. Dollar with several million intra-day prices over 3 years. The analysis also includes gold prices and samples of daily foreign exchange prices over 15 years. The mean absolute changes of logarithmic prices are found to follow a scaling law against the time interval on which they are measured. This empirical law holds although the distributions of the price changes strongly differ for different interval sizes.Systematic variations of the volatility are found even during business hours by an intra-day analysis of price changes. Seasonal heteroskedasticity is observed with a period of one day as well as one week as the result of an analogous intra-week analysis; taking this into account is necessary for any future study of intra-day price change distributions and their generating process. The same type of analysis is also made for the bid-ask spreads.     

Simultaneity in the market for housing characteristics

The nature of simultaneity in the markets for housing characteristics is examined. Simultaneity is found to arise in the implicit markets for individual characteristics because of the presence of nonlinearity in the market (hedonic) price function for housing. However, this simultaneity is not the kind discussed by S. Rosen [J. Political Econ. 82, 34–55 (1974)] between firm supplies and household demands. As a result, the Rosen suggestion of identifying demand with firm supply shifters is inappropriate. Among the alternative approaches to identification, the most desirable involve use of data over two or more markets in which residence for a given household is exogenous to the choice of housing.     

Climate for Scandal: Corporate Environments that Contribute to Accounting Fraud

We examine the governance characteristics, earnings quality, growth rates, dividend policy, and compensation structure of 97 firms recently under investigation by the Securities and Exchange Commission (SEC) for accounting fraud. Our results show that the corporate environment most likely to lead to an accounting scandal manifests significant growth and accounting practices that are already pushing the envelope of earnings smoothing. Firms operating in this environment seem more likely to tip over the edge into fraud if there are fewer outsiders on the audit committee and outside directors appear overcommitted.     

Comparing forecasts from fixed and variable coefficient models: The case of money demand

In this paper we introduce a class of tentatively plausible, fixed-coefficient models of money demand and evaluate their forecast performance. When these models are reestimated allowing all coefficients to vary over time, the forecasting performance improves dramatically. Aside from offering insights about improved methods of analyzing time series data, the most promising direct use for point estimates derived from time-varying coefficients is as an aid in calibrating proposed models of the kind discussed here.