Search

The article discusses how economic and policy conditions interact to affect labor market outcomes. Topics discussed include link between economic downturns and Social Security Disability Insurance (SSDI) enrollment; evolution of SSDI enrollment and employment rates in zip codes; and impact of SSDI hassle costs on program enrollment and employment in the wake of the Great Recession.

This paper considers the attenuation of agglomeration economies. Put another way: how close is close? The paper presents evidence of agglomeration effects operating at various levels of spatial aggregation, including the regional, metropolitan, and neighborhood scales. In fact, agglomeration effects also seem to operate below the neighborhood level, including within buildings and organizations. These effects attenuate, with nearby activity exerting the strongest effects. The attenuation of agglomeration economies has implications for urban spatial structure, the microfoundations of agglomeration economies, and commercial real estate. It also affects the ability of governments and businesses to internalize agglomeration economies. [ABSTRACT FROM AUTHOR]

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced sweeping changes to individual and corporate taxation. We summarize the major provisions, trace the origins of the Act, and compare it to previous tax changes. We also examine the effects on the government budget, economic activity, and distribution of resources. Based on evidence through 2019, we find that the TCJA clearly raised federal debt and increased after-tax incomes, disproportionately increasing incomes for the most affluent. Its effects on GDP and median wages seem modest at best, although clear counterfactuals are difficult to identify. The impact on investment is less certain, and research is only recently emerging that addresses this question. Empirical analysis of longer-term effects may prove difficult due to the disruptions created by the COVID-19 pandemic starting in 2020. [ABSTRACT FROM AUTHOR]

Using Canadian administrative data, this paper presents evidence of revenue and productivity spillovers across firms at fine spatial scales. Accounting for the endogenous sorting of firms across space, we estimate an average elasticity of firm revenue and productivity with respect to the average quality of other firms within 75 meters of 0.024. We find scant evidence that the average firm benefits from being surrounded by a greater amount of economic activity at this spatial scale. Sorting of higher-quality firms into more productive locations and higher average and aggregate quality peer groups is salient in the data. [ABSTRACT FROM AUTHOR]

This section presents commentaries on articles about Chinese planning and economy published in the May 1973 issue of the American Economic Review. It is enlightening to learn from Dwight H. Perkins' paper about the problems which the People's Republic of China has had in formulating and implementing consistent plans for development. Perkins also raised but does not resolve some of the central issues of planning and plan implementation in China. Imports can be an efficient source of goods which can relieve unforeseen bottlenecks and exports can permit the utilization of capacity which might otherwise remain idle. Perkins' argument may be interpreted as meaning that the signals of resource misallocation or plan disruption are somehow clearer and stronger when foreign trade is not available as an offset. With regards to the paper by Ta-Chung Liu and Kung-Chia Yeh, it is clear that they have employed considerable ingenuity in assessing the overall economic performance of China. However, the source of the differences in the incremental fixed capital-output ratios may not be in the differences in the mix of industries and projects in China as compared to other countries, but in the relative inefficiency with which investment projects are carried out.

The article focuses on economic effects of social distancing amid COVID-19 pandemic which depend on the structure of production network. Topics discussed include share of workers affected by social distancing and show how it disrupts national production through the network of input-output linkages; interaction between epidemiologic models of contagion and the macroeconomy; and role of complementarities and incomplete markets in generating supply-driven demand shortages.

The article discusses about the adapting to the COVID-19 Pandemic. Topics of discussion includes time-variation in the endogenous behavioral response of economic activity during the pandemic. The time-varying parameters allow us to distinguish between four sources of time variation: the endogenous self-protective response, the effect of economic activity on transmission.

The article discusses about the study conducted on the usage of High-Frequency Transaction Data during COVID-19 pandemic. Topics of discussion includes the public health measures including social distancing and mobility restrictions lead to a significant cost to the economy. The firms faced immediate cash flow pressure from the sudden halt in economic activities, leading to massive unemployment and business shutdown that feeds the demand.

What do recent advances in economic geography teach us about the spatial distribution of economic activity? We show that the equilibrium distribution of economic activity can be determined simply by the intersection of labor supply and demand curves. We discuss how to estimate these curves and highlight the importance of global geography—the connections between locations through the trading network—in determining how various policy relevant changes to geography shape the spatial economy. [ABSTRACT FROM AUTHOR]

This paper develops a dynamic model of mismatch. Workers and jobs are randomly allocated to labor markets. Each market clears, but some have excess (unemployed) workers and some have excess (vacant) jobs. As workers and jobs switch markets, unemployed workers find vacancies and employed workers become unemployed. The model is quantitatively consistent with the business cycle frequency comovement of unemployment, vacancies, and the job finding rate and explains much of these variables' volatility. It can also address cyclicality in the separation rate into unemployment and duration dependence in the job finding rate. The results are robust to some nonrandom mobility. [ABSTRACT FROM AUTHOR]

The article presents a survey on enterprise restructuring in transition. Over the last decade, more than 150,000 large enterprises in 27 transition countries have encountered revolutionary changes in every aspect of their political and economic environments. Some enterprises have responded to the challenge, entering world markets with great dynamism and becoming indistinguishable from their competitors in mature market economies. Many others remain mired in their past, undergoing protracted deaths, delayed at times by their slippage into a world of barter and subsidies. Thus the revolutionary changes in transition countries have been matched by enormous variance in the degree to which enterprises have restructured their operations and responded successfully to events. With changes in the institutional and policy environment much faster and more encompassing than in virtually any other historical episode, this is as close to a policy laboratory as economies gets. This mammoth quasi-experiment offers lessons of profound importance for economic studies and economic policy. Since the pace at which firms restructure is a fundamental determinant of economic growth, analysis of the determinants of restructuring in formerly socialist countries sheds light on the bases of economic progress.

Developing economies have found it hard to use natural resource wealth to improve their economic performance. Utilizing resource endowments is a multistage economic and political problem that requires private investment to discover and extract the resource, fiscal regimes to capture revenue, judicious spending and investment decisions, and policies to manage volatility and mitigate adverse impacts on the rest of the economy. Experience is mixed, with some successes (such as Botswana and Malaysia) and more failures. This paper reviews the challenges that are faced in successfully managing resource wealth, the evidence on country performance, and the reasons for disappointing results. [ABSTRACT FROM AUTHOR]

Is inequality harmful for growth? We suggest that it is. In a society where distributional conflict is important, political decisions produce economic policies that tax investment and growth-promoting activities in order to redistribute income. The paper formulates a theoretical model that captures this idea. The model's implications are supported by the evidence. Both historical panel data and postwar cross sections indicate a significant and large negative relation between inequality and growth. This relation is only present in democracies. [ABSTRACT FROM AUTHOR]

This paper exploits a data rich environment to provide direct econometric estimates of time-varying macroeconomic uncertainty. Our estimates display significant independent variations from popular uncertainty proxies, suggesting that much of the variation in the proxies is not driven by uncertainty. Quantitatively important uncertainty episodes appear far more infrequently than indicated by popular uncertainty proxies, but when they do occur, they are larger, more persistent, and are more correlated with real activity. Our estimates provide a benchmark to evaluate theories for which uncertainty shocks play a role in business cycles. (JEL C53, D81, E32, G12, G35, L25) [ABSTRACT FROM AUTHOR]

So much has been written on the theory of interest rates and their influence; yet so indecisive have been the available facts. As usual, theories are more abundant as the facts are few. It has been assumed, for example, that the 60 or 90 day rate on commercial paper is the typical interest rate and that its gyrations are characteristic of interest rates generally. As a matter of fact, this rate applies probably to scarcely 1 per cent of the total amount of money loaned in one form or another in the United States. The questions here to be considered are: what are the typical and dominant interest rates of the country; how much do they vary; and how much influence has this variation on the changes in the trade cycle? The discount rate of the Federal Reserve banks, applying to a sum which in recent years has varied as widely as from nearly 3 billions to less than 200 millions; range of rate within this period, 3 to 7 per cent. There is the large volume of current and casual credit extended by manufacturers, jobbers, retailers and dealers of all sorts to their customers.

The new book, "Stabilizing the Dollar," brings under one cover much of the material the author has presented in numerous papers and develops the argument for his plan in such persuasive form that the reader can hardly escape regretting his inability to be converted. The writer desires to call attention briefly to the phase indicated in the title of this paper, i.e., the probability that if the author's plan were in operation the periods when prices are falling would be marked by sharp drops in money values that would be disastrous to many lines of business and would increase the distress that goes along with depressions in the recurring business cycles. Business mortality would rise, failures multiply and opportunities for mitigating disaster by spreading the losses over the community would lessen. The level might not rise as high as in the case of unstabilized prices, hence the distance of the fall might be shorter but the descent would be more abrupt, less subject to control. The process of credit inflation in connection with war finance has been made familiar in discussions too many to mention. The government received credit on the books of the banks in exchange for certificates of indebtedness.

The article presents a discussion related to business cycle written by Milton Gilbert and a reference to the paper written on the same topic by Jacques J. Polak and Rudolf R. Rhomberg. Europe has had only two recessions since the war, one in 1952 and one in 1958, contrasted with the four that the U.S. has had. The 1952 recession was due mainly to restraints exercised by the policy-making authorities for the purpose of correcting balance-of-payments difficulties, although the reaction from the Korean boom was also a factor, it was secondary. The 1958 recession was also due to policy restraints exerted during the three years from 1955 to 1957. These restraints were applied mostly to correct excess demand, overfull employment, and inflationary pressures, although balance-of-payments difficulties were a factor in some or most cases. Thus the only recessions resulted from policy measures, taken deliberately. The recessions also were ended by policy management. Restraints were relaxed when the authorities considered that expansion could be safely resumed. And it did resume.

The article offers information on the usefulness of remote sensing data for studying the association between Covid-19 pandemic-related changes in economic activity and intimate partner violence. It mentions that increase in intimate partner violence (IPV) has been at the core of the discussion, and a growing body of literature seeks to establish a causal association between pandemic-driven employment and income losses, and IPV incidence.

This paper provides new estimates of the macroeconomic effects of tax changes using a new narrative dataset for the United Kingdom. Identification is achieved by isolating 'exogenous' tax policy changes using the Romer and Romer narrative strategy. I find that a 1 percent cut in taxes increases GDP by 0.6 percent on impact and 2.5 percent over three years. The findings are remarkably similar to Romer and Romer narrative estimates for the United States, reinforcing the view that tax changes have powerful and persistent effects. 'Exogenous' tax changes are also shown to have contributed to important episodes in the UK business cycle. ( JEL E23, E32, E62, H20, H61) [ABSTRACT FROM AUTHOR]

In this article the authors examine the process of dating business cycles. The central focus of the article is on the process of aggregating real economic activity information related to a business cycle and dating it using 270 monthly economic indicators. A number of topics are addressed including the dating and aggregating processes employed by the U.S. National Bureau of Economic Research and its Business Cycle Dating Committee and a similar committee employed by Center for Economic and Policy Research.

Economists J.R. Norsworthy and David H. Malmquist have presented interesting comparisons of productivity growth in the Japanese and the U.S. manufacturing sectors. Their paper starts with the discussion of whether the conventional value-added or gross national product (GNP) measurement of output is an appropriate framework for productivity analysis. Some confusion frequently arises as to whether a production function should he structured on the basis of gross output or value-added output. Separability is a pivotal concept in the analysis of production structures, especially in relation to the existence of a real value-added aggregate. It is well known that there are two types of separability, which pertain to the existence of a real value-added function: weak separability and strong partial separability. The practical advantage of distinguishing these two different forum of separability is that the double-deflation method in conventional GNP accounting is justified only when strong partial separability holds.

The article discusses impact of COVID-19 crisis on negative shocks to an individual producer. Topics discussed include domestic and international supply chain problems due to pandemic; importance of production networks in amplifying and propagating supply and demand shocks; and information on arbitrary input-output network for understanding the economic fallout from COVID-19.

This article focuses on theories of economists on economic change. This paper argues that the ideas developed to date in evolutionary sociobiology are not adequate to deal with the questions of most interest to economists concerned with long run economic change, for example the evolution of technologies and institutions. The review here focuses on evolutionary analysis of long run and continuing economic change, and thus will deal only very selectively with evolutionary game theory. In the concluding section of this article, this paper reflects on the present state of evolutionary theorizing in economics.

This paper analyzed a real-business-cycle model of a small open economy. The model is parameterized. calibrated, and simulated to explore its ability to rationalize the observed pattern of postwar Canadian business fluctuations. The results show that the model mimics many of the stylized facts using moderate adjustment costs and minimal variability and persistence in the technological disturbances. In particular, the model is consistent with the observed positive correlation between savings and investment, even though financial capital is perfectly mobile, and with countercyclical fluctuations is external trade. [ABSTRACT FROM AUTHOR]

This article discusses the problem of explaining a household's choice of consumption and purchasing plans based on a model of intertemporal utility maximization. First, recent work on the microfoundations of monetary theory has shown the importance of transaction costs in explaining the role of money in economic activity. Second, in the area of short-run aggregate analysis, purchasing decisions are of more interest than consumption decisions because they are more closely related to the level of aggregate demand. Third, the area most closely related to the present problem is the inventory theory of the demand for money. This theory has been extended in recent years by several authors into a generalized theory of the size and timing of all sorts of transactions, including wage payments, commodity purchases and sales, and various financial transactions. The approach and techniques of the present paper are applicable to a broader class of models than the present one. For example one could assume that the household's income is received in the form of returns from holdings of a perpetuity that compounds continuously at the rate r, and that there is a set-up cost of selling the perpetuity. The present approach could be used to study such aggregate responses by assuming, for example, that households are identical except that at any time they are at different points within the transaction interval, with transaction dates that are smoothly distributed over households.

The article assesses the goals of economic development in the U.S. The theme of this paper is the need to be more specific on the goals of economic development and the interdependence between values and goals. The paper shall first review some recent work which bears on these relationships. Then proposed minimum humanistic goal for development will be discussed and, finally, the article shall suggest development strategies that may permit achievement of that goal. The currently accepted definition of development focuses upon the creation of conditions for self-sustained growth in per capita gross national product and the requisite modernization of economic, social, and political structures implicit in the achievement of this goal. Most of the discussion concerning development strategies has been in terms of contemporary tradeoffs among major policy packages, rather than in terms of sequences of more or less pure strategies. A cursory survey of the dynamic processes that have led to the development of the currently industrialized nations suggests, however, that the development process has in fact proceeded as a sequence of pure strategies, rather than in a progression of mutually balanced strategy mixes.

As of 2022, the share of US income accruing to labor is at its lowest level since the Great Depression. Updating previous studies with more recent observations, I document the continuing decline of the labor share for the United States, other countries, and various industries. I discuss how changes in technology and product, labor, and capital markets affect the trend of the labor share. I also examine its relationship with other macroeconomic trends, such as rising markups, higher concentration of economic activity, and globalization. I conclude by offering some perspectives on the economic and policy implications of the labor share decline. [ABSTRACT FROM AUTHOR]

This article focuses on the research paper of Professor Frank H. Knight on immutable law in economics. The exclusion in his paper is business cycles and presumably dynamic theory. They are not mentioned in the discussion of theory, and cycles are specifically classed in the category of "reality" where this term is opposed to "theory." Yet "theorists" study the cycle and other dynamic problems, and propound theories about them. Monopoly and all of its many variations and amalgamations are likewise excluded, relegated to "reality" as opposed to "theory." In Professor Knight's system, "economic theory" is again narrowed and estranged from reality through a kind of fatalistic attitude towards unrealistic assumptions which always "must" for some unaccountable reason be made. Professor Knight seems to have bound economic theory hand and foot with limiting and narrowing assumptions, and leaves the reader with the uncomfortable feeling that he can like it or lump it, for that is just the way "theory" is.

The paper examines the determinants of short-run fluctuations in residential construction during the 1946-59 period. The paper explains how the short cycles are measured and describes some of their characteristics. It considers the relationship between fluctuations in residential construction and changes in the supply of mortgage credit. Many observers have noted that residential construction appears to be quite sensitive to credit conditions in the short run but little evidence for this relationship has yet been produced. The analysis is broadened to show the relationship between fluctuations in residential construction and in aggregate economic activity. Again, it has been widely noted that residential construction has had a generally stabilizing or counter-cyclical influence on the economy but no very adequate or complete explanation of this tendency has been provided. The procedure used to identify "cycles" in residential construction activity is similar to that used by the National Bureau of Economic Research, except in one respect. search, except in one respect. Cycles in residential construction are defined in terms of movements in three related series rather than only one, a movement is not recognized as "real" unless it is found in each of the series.

The article presents information related to the American Economic Association. It reports that the 2004 Nominating Committee of the American Economic Association, in accordance with Article IV, Section 2 of the Bylaws of the American Economic Association, President-elect Martin Feldstein has appointed a Nominating Committee for 2004 consisting of John Shoven, Susan M. Collins, James M. Poterba, Truman F. Bewley, Angus S. Deaton, Janet Yellin, Richard H. Thaler and Edward Glaeser. The article also presents the information that the Committee on the Status of Women in the Economics Profession of the American Economic Association will sponsor sessions at the January 2005 American Economic Association meetings in Philadelphia. The association will be organizing three sessions on gender-related topics and three sessions on non-gender-related topics. For the gender-related sessions, the association is particularly interested in receiving proposals on aspects of women's activities in the economics profession, on the economics of spousal relationships and on issues of child care.

In this article, we review the internal geographic mobility of immigrants and natives in the United States in the recent decades, with a focus on the period since 2000. We confirm a continuing secular decline in mobility already pointed out by the existing literature, and we show that it persisted in the post great recession period. We then focus on foreign-born and establish that, on average, they did not have total mobility rates higher than that of natives. However, their mobility response to local economic conditions was stronger than the response of natives in the period from 1980 to 2017. A review of recent research reveals that the higher elasticity of mobility of immigrants to economic conditions is a combination of lower sensitivity to local prices, higher propensity to move in the early years after immigration, and strong economic success of cities that were immigrant enclaves in the 1980s. [ABSTRACT FROM AUTHOR]

The article presents information about the book "Governments, Globalization, and International Business," edited by John H. Dunning. Seventeen papers in the book describe and analyze the implications of the deepening structural interdependence of the world economy for the governance of economic activity of nation states. Part 1 of the book provides a historical and spatial perspective on governments and the macro-organization of economic activity; an economist's view of globalization and national government policies; a business analytic approach to governments and globalization; an international political economy perspective; and a discussion of state sovereignty in a networked global economy. Part 2 of the book investigates the interface between governments, globalization, and international business activity through country and regional case studies of Canada, Australia, the United Kingdom, the United States, France, Germany, Sweden, Japan, East Asia, and Latin America. Part 3 of the book draws implications for national government policy and for supra-national government, addressing whether there should be multilateral rules on foreign direct investment.

This article focuses on the book "A Financial History of the Netherlands," edited by Marjolein T. Hart, Joost Jonker and Jan Luitten van Zanden. This book contains eight papers present the findings of a new wave of research into the financial, history of the Netherlands. An introductory essay outlines the development of the political-institutional structure of the Netherlands and the specific economic development of the region. Subsequent papers cover public finance from 1550 to 1700; currency and banking from 1500 to 1800; public finance from 1700 to 1914; banking and currency from 1814 to 1914; old rules and new conditions, 1914-40; and development toward a new maturity, 1940-90.

This article focuses on the book "Improving the Global Economy: Keynesianism and the growth in output and employment," edited by Paul Davidson and Jan A. Krecel. This book contains Sixteen papers, resulting from the Fourth International Post Keynesian Workshop, held in 1996 in Knoxville, Tennessee, address issues of consumption, investment, and government spending; whether Keynes's employment policies can reach the underclass; Keynes and economic development; and income distribution. Papers discuss aggregate consumption and the economics of Keynes; the fictional basis of modern macroeconomics; a direct test of Keynes's theory of investment; Keynes and the susceptibility of investment; different views on uncertainty and some policy implications; disequilibrium pricing, critical equilibrium, and the real cycle.

This article presents information on the book "Private Authority and International Affairs," by A. Claire Cutler, Virginia Haufler and Tony Porter. In this book ten papers explore the phenomenon of international private authority that results from formal or informal cooperation among firms to establish international frameworks for their economic activity. Papers also discuss the private rules of online commerce, private and public management of international mineral markets, the standards regime for communication and information technologies, bond-rating agencies and coordination in the global political economy

Digital technology is the representation of information in bits. This technology has reduced the cost of storage, computation, and transmission of data. Research on digital economics examines whether and how digital technology changes economic activity. In this review, we emphasize the reduction in five distinct economic costs associated with digital economic activity: search costs, replication costs, transportation costs, tracking costs, and verification costs. (JEL D24, D83, L86, O33, R41) [ABSTRACT FROM AUTHOR]

In movies and novels, tax havens are often settings for shady international deals; in practice, they are rather less flashy. Tax havens, also known as 'offshore financial centers' or 'international financial centers,' are countries and territories that offer low tax rates and favorable regulatory policies to foreign investors. For example, tax havens typically tax inbound investment at zero or very low rates and further encourage investment with telecommunications and transportation facilities, other business infrastructure, favorable legal environments, and limited bureaucratic hurdles to starting new firms. Tax havens are small; most are islands; all but a few have populations below one million; and they have above-average incomes. The United States and other higher-tax countries frequently express concerns over how tax havens may affect their economies. Do they erode domestic tax collections; attract economic activity away from higher-tax countries; facilitate criminal activities; or reduce the transparency of financial accounts and so impede the smooth operation and regulation of legal and financial systems around the world. Do they contribute to excessive international tax competition? These concerns are plausible, albeit often founded on anecdotal rather than systematic evidence. Yet tax haven policies may also benefit other economies and even facilitate the effective operation of the tax systems of other countries. This paper evaluates evidence of the economic effects of tax havens. [ABSTRACT FROM AUTHOR]

This paper exploits the division of Germany after the Second World War and the reunification of East and West Germany in 1990 as a natural experiment to provide evidence for the importance of market access for economic development. In line with a standard new economic geography model, we find that, following division, cities in West Germany close to the East-West German border experienced a substantial decline in population growth relative to other West German cities. We show that the model can account for the quantitative magnitude of our findings and provide additional evidence against alternative possible explanations. (JEL F15, N94, R12, R23) [ABSTRACT FROM AUTHOR]

Over the postwar period, many industrialized countries have experienced significant medium-frequency oscillations between periods of robust growth versus relative stagnation. Conventional business cycle filters, however, tend to sweep these oscillations into the trend. In this paper we explore whether they may, instead, reflect a persistent response of economic activity to the high-frequency fluctuations normally associated with the cycle. We define as the medium-term cycle the sum of the high and medium-frequency variation in the data, and then show that these kinds of fluctuations are substantially more volatile and persistent than are the conventional measures. These fluctuations, further, feature significant procyclical movements in both embodied and disembodied technological change, and research and development (R&D), as well as the efficiency and intensity of resource utilization. We then develop a model of medium-term business cycles. A virtue of the framework is that, in addition to offering a unified approach to explaining the high- and medium-frequency variation in the data, it fully endogenizes the movements in productivity that appear central to the persistence of these fluctuations. For comparison, we also explore how well an exogenous productivity model can explain the facts. (JEL E3, O3). [ABSTRACT FROM AUTHOR]

The article discusses the book Classics in Institutional Economics: The Founders, 1890-1945, vol. 5., by Wesley Clair Mitchell. Nine previously published papers of Wesley Clair Mitchell shed light on the institutionalist tradition, which Mitchell helped found. Papers discuss the rationality of economic activity; the backward art of spending money; the wider aspects of business cycles; the role of money in economic theory. The book also discusses economist Jeremy Bentham's felicific calculus; quantitative analysis in economic theory; economic organization and business cycles; intelligence and the guidance of economic evolution; and the point of departure of the National Bureau of Economic Research in studying business cycles.

This paper develops a positive theory of insurrections that treats insurrection and its deterrence or suppression as economic activities that compete with production for scarce resources. The general equilibrium analytical framework reveals how the allocation of labor time among insurrection, soldiering, and production and the probabilistic distribution of income between the peasant families and the ruler's clientele both depend on the technology of insurrection. A central result is that equilibria with more time allocated to insurrection and a higher probability of a successful insurrection have lower production and total income but nevertheless can have higher expected income for the peasants. [ABSTRACT FROM AUTHOR]

This paper concerns the regulation of hazardous economic activities. Economists have generally viewed ex ante regulations (safety standards, Pigouvian fees) that regulate an activity before an accident occurs as substitutes for ex post policies (exposure to tort liability) for correcting externalities. This paper shows that where there is uncertainty, there are inefficiencies associated with the exclusive use of negligence liability and that ex ante regulation can correct the inefficiencies. In such a case it is efficient to set the safety standard below the level of precaution that would be called for if the standard were used alone. [ABSTRACT FROM AUTHOR]

In this paper I have reanalyzed the behavior of interest rates under inflationary conditions by using various inflationary expectation hypotheses. The results indicated that, when an inflationary expectation variable is used as the only independent variable in explaining changes in interest rates, the latter do not increase by the same amount as the former. This relationship improved substantially when a variable indicating the level of economic activity was introduced. The implication of this is that the expected real rates of interest do not remain constant but change in line with the business cycle. This result supports the view, held by Carlson and others and opposed by Fama, that interest rates alone may not be good predictors of inflation when the level of economic activity is changing rapidly. The paper tried also to give an empirical answer to a recent and growing body of theoretical literature that maintains that income taxes must have an effect on nominal rates of interest under inflationary conditions. It was shown that during the 1952-75 period people suffered from fiscal illusion in the sense that the effect of income taxes in reducing the net-of-taxes expected real rate of interest was ignored. This result is not considered surprising since that effect is still not widely recognized even by economists. This, of course, does not mean that individuals will continue to suffer from these illusions if inflation continues. [ABSTRACT FROM AUTHOR]

This article deals with aircraft noise as an externality of aeronautics industry using the effluent charge scheme. Airline noise is an externality in the traditional sense of being a byproduct of normal economic activity. It affects the population around airports in single-event bundles and around airports in single-event bundles and cumulatively. The transient nature of noise itself is unlike most other externalities. As with the others, however, general improvements in technology and increases in population have made the situation more difficult to tolerate. The combination of these things has led to a critical situation for the affected population since it involves its physical and mental health. From among the various methods of dealing with externalities, the effluent charge scheme was chose. It generally allows each firm to incorporate the environmental standard into its marginal operating choices. If each firm makes efficient decisions, then the cost to society of achieving an environmental standard will be minimum. In this paper, there are two modifications of the traditional charge scheme. One is that because of the well-known difficulties in specifying and estimating social costs, the direct noise abatement costs of achieving the environmental standard is used. The second is that airlines cannot be necessarily thought of as cost minimizes.

In many market-oriented economies, government restrictions upon economic activity are pervasive facts of life. These restrictions give rise to rents of a variety of forms, and people often compete for the rents. Sometimes, such competition is perfectly legal. In other instances, rent seeking takes other forms, such as bribery, corruption, smuggling, and black markets. It is the purpose of this paper to show some of the ways in which rent seeking is competitive, and to develop a simple model of competitive rent seeking for the important case when rents originate from quantitative restrictions upon international trade. A preliminary section of the paper is concerned with the competitive nature of rent seeking and the quantitative importance of rents for two countries, India and Turkey. In the second section, a formal model of rent seeking under quantitative restrictions on trade is developed and the propositions indicated above are established. A final section outlines some other forms of rent seeking and suggests some implications of the analysis.

The article presents information about the book "The Revolution in Development Economics." Nineteen articles that were previously published, examined the shortcomings of conventional development theory and contrast that theory with the new development economics that focuses on the role of institutions, incentives and information in determining economic performance. The papers discusses the disregard of reality in much of the postwar literature on development economics, the poverty of nations, changing ideas about how developing economies can achieve prosperity; whether population growth is a drag on economic development.

The article attempts to explore certain fundamental relationships between economic activity carried on by one or more branches of the government and economic activities carried on by nongovernmental organizations and by individuals in the U.S. Except incidentally, the objective is to examine the basic problems rather than problems merely incidental to readjustment, when hostility ceases. Certain premises that are accepted in this paper are briefly discussed. The first one is that every government; and particularly every democratic government, will be under an impulsion to attempt to provide for the economic needs of substantially all its people; Secondly, the method will be an attempt to assure substantially general opportunity for useful work at adequate pay, accompanied by social security provision for the nonproductive periods of life, including childhood, maternity, sickness and old age. Thirdly, whenever any substantial gap appears in the generality of the provision achieved, government will be under pressure to fill that gap through direct entry into economic activity heretofore commonly carried on by nongovernmental agencies. Fourthly, the economic readjustments in large countries may be presumed to create problems of such magnitude that purely private activity cannot provide for them.

The article focuses on the income and capital formation. The first part of the report on national income and capital formation dealt with the share of capital formation in changes of the national product during the period from 1919 through 1932. The changes were studied both for the long cycle from 1921 to 1932 and for the four reference cycles established by the National Bureau's business cycle study; and the most comprehensive measure of economic activity utilized was the commodity product, approximately defined as the value of all services embodied in new commodities (thus excluding the value of direct services to ultimate consumers). The main measure sought was the share that capital formation contributed to the rise and decline of the commodity product during the established periods of cyclical expansion and contraction in the country's economic activity. There were also significant differences in the relative intensity of participation in the cyclical fluctuations of commodity product by the various specific components of capital formation.

The recent apparent abandonment of the principle of annually equating federal revenue levies to concurrent total expenditures is in accord with the currently much advocated suggestion that balancing the budget over the business cycle would tend to stabilize private economic activity. For such a policy to succeed the budgetary authority must have a revenue system which permits: 1) access to broad and stable tax bases; 2) highly reliable prediction at long range of the revenue yield to be expected from a given set of tax rates; and a) a distribution of tax burden in accordance with the will of the legislature. Our present revenue system--in particular, our federal income tax--does not fulfill these conditions. In this paper a mode of measuring taxable income and of making levies upon it is suggested which will fulfill the necessary conditions, viz., differential rates on "real income" or "final objective income." [ABSTRACT FROM AUTHOR]

The article presents an explanation on business cycle. In formal economics it is the practice to discuss production and consumption as two almost separate and distinct concepts. In fact, some economists stress one or the other and almost lose sight of any relationship existing between the two. Credit in U.S. economic system is that phenomenon which enable people to raise prices. In other words, expanded credit is one of determiners of price. It might be said that credit is price. Also, it might be described as apparent money gains or "paper profits." Without it the industrial, commercial, and financial system, taken as a whole, could not seem to "make money." But over the longer period of the entire business cycle it has been shown that the credit expanded and the credit contracted must be equal. The money "made" and the money "lost" offset each other. Therefore, over the complete period of the cycle, credit does not enter into price or into profit. Over the short period of a year or so it appears to; but over the longer period it does not. When the business cycle has been terminated and balanced through the condition of depression, it is seen that credit is neither goods, nor price, nor profit; it is inflation. It is seen, further, that incomes from one's shares from production on actually must pay for all commodities and services.