Homo Economicus and the Salem Witch Trials

The treatment of natural monopoly in textbooks is inconsistent with the distinction typically made between short- and long-run costs. A solution to the pedagogical problem is to introduce different planning horizons and to discuss the waste associated with costly entry and exit from the industry.     

Lessons from the Specific Factors Model of International Trade

The Specific Factors model is an excellent learning tool. It provides insights into the meaning of economic efficiency, how complex economies simultaneously determine prices and quantities (and that it is relative prices that matter), and how changes in demand conditions or technology can affect income distributions among owners of factors of production. The authors develop this model using spreadsheets. Spreadsheets help students deal with “what-if” questions within prepared spreadsheets. They also give students the chance to look into the workings of the model and to change its structure. The exercise spreadsheets provide important advantages over using “black-box” presentations. Moreover, using spreadsheets gives students an opportunity to practice their use of spreadsheet software.     

Factors Influencing the State-Level Settlement Pattern of the Undocumented Immigrant Population in the United States

This study empirically attempts to identify key factors determining the settlement patterns of undocumented immigrants within the United States. The estimations imply that undocumented immigrants appear to settle in states that border the Atlantic Ocean, Pacific Ocean, or the Gulf of Mexico, and states where median family income is higher, average January temperatures are higher, the percent of the state population that is Hispanic is higher, and where economic freedom is higher. On the other hand, undocumented immigrants are less likely to settle in states with a higher cost of living.     

The Impact of Legislative Tenure and Seniority on General Election Success: Econometric Evidence from U.S. House Races

The last four election-cycles in the U.S. House of Representatives (2004–2010) witnessed two shifts in political party control of that legislative body—from the Republicans to the Democrats in 2006 and then back to the Republicans in 2010. Nevertheless, U.S. House incumbents of both parties running for re-election tended to enjoy a sizeable advantage over their general-election challengers during the period. The advantage is even greater for incumbents who are members of the leadership, key committees, or have lengthy tenure. Our results show that, ceteris paribus, membership in the House leadership is worth on average 6.8 percentage points towards the incumbent’s expected vote-share, and that membership in either of the two top committees is worth an additional 1.3 such percentage points. A ten-term incumbent can expect another 2.0 percentage points of vote share. Lastly, our results also indicate the existence of a wave effect favoring Democratic incumbents in 2006, and a slightly smaller wave effect favoring Republican incumbents in 2010.     

The Impact of Fiscal and Other Economic Freedoms on Economic Growth: An Empirical Analysis

This empirical study investigates the impacts on economic growth of reduced fiscal freedom from both the taxing and spending sides. After controlling for nominal long term interest rates, net exports, federal government budget deficits, and other factors, panel two stage least squares estimations using a 4-year panel data set for the OECD nations as a group reveals that reduced fiscal freedom leads to a reduced rate of economic growth; furthermore, it is found that reduced freedom from excessive government size also leads to a reduced rate of economic growth.     

Factors explaining movements in the implied volatility surface

This article explores the relationship of changes in the S&P 500 index implied volatility surface to economic state variables. Observable variables can explain some of the variation in implied volatility, with the majority of explanatory power from index returns. Although the contemporaneous return is most important for explaining changes in short dated volatility, the path of the index is important for explaining changes in long dated volatility. Other variables also display statistically significant relations to volatility changes. Shocks to the Nikkei 225, short‐term interest rates, and the corporate/government bond yield spread are correlated with small, systematic changes in implied volatility. The results suggest a multifactor model for market volatility, with factors other than index returns adding negligible explanatory ability. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:915–937, 2002     

Ranking Economics Journals,Economics Departments,and Economists Using Teaching-Focused Research Productivity

This paper constructs new rankings of economics journals, economics departments, and economists that employ a measure of teaching-focused research productivity, an area of growing importance in recent years. The ranking methodologies presented here use information from articles that were published from 1991 through the early part of 2005 within the Journal of Economic Literature's “economic education” classifications (A200-A290). The Journal of Economic Literature tops the list of journals, followed by the Review of Economics and Statistics and the American Economic Review. Among the top institutions are Vanderbilt University, Indiana University, and the University of Wisconsin. Others that rank high here, such as Oberlin College and Denison University, do not often fare as well using methodologies that evaluate more traditional types of economics research. Finally, among the economists we find that John Siegfried, William Becker, and Michael Watts are ranked above other economists.     

INTERGOVERNMENTAL GRANTS AND THE POSITIONING OF PRESIDENTIAL PRIMARIES AND CAUCUSES: EMPIRICAL EVIDENCE FROM THE 1992, 1996, AND 2000 ELECTION CYCLES

The present study tests the theory that states can impact the size of the grants they receive (per capita) from the federal government by becoming pivotal players in the federal electoral (primary/caucus) process. That is, by rearranging their presidential primary and caucus dates, states can play an important role in determining the field of candidates for the two major political parties in the United States. States are then likely to be rewarded within the budgetary process at the federal level, which begins with the executive branch. Results from a simultaneous equation system suggest that the impact of the average movement of primaries/caucuses in the sample period (10.36 days closer to 1 January) results in an increase of federal grants of $362 million to $1.2 billion (over a two-year period) for the average state. These results are consistent with the current pattern in the American political process of more front-ended presidential primaries and caucuses.     

Expense preference behavior in trucking: An empirical note

This note offers a statistical model which points out that the goal of publicly regulated firms often deviates from profit-maximization. Using a large firm-level panel data set from the trucking industry, we offer estimates which suggest that firm managers of the more heavily regulated common carriers practice utility maximization through higher salaries and more lucrative benefits than the managers (CEOs) of less regulated contract carriers. Our results add to the body of empirical work which supplements the theory of the firm developed by Ronald Coase.