Economic Inquiry

Articles from Vol. 46, No. 4, October

Differential Deposit Guarantees and the Effect of Monetary Policy on Bank Lending
I. INTRODUCTION The bank-lending channel (BLC) emphasizes the role of bank loans in the transmission of monetary policy. According to the BLC, contractionary monetary policy can decrease the loan supply of banks that face informational constraints....
Disaggregate Evidence on Price Stickiness and Implications for Macro Models
I. INTRODUCTION Fashions that take hold of the field of macroeconomics share important characteristics with the economy its practitioners seek to understand: approaches that are in vogue exhibit cycles with varying frequencies and amplitudes. During...
Do Capital Adequacy Requirements Matter for Monetary Policy?
I. INTRODUCTION Central bankers know that financial intermediation is important for achieving macroeconomic stability. Without a functioning banking system, an economy will grind to a halt. It is the job of regulators and supervisors to ensure that...
Has Wal-Mart Buried Mom and Pop?: The Impact of Wal-Mart on Self-Employment and Small Establishments in the United States
This paper explores the widely accepted view that Wal-Mart causes significant harm to the traditional small "mom and pop" business sector of the U.S. economy. We present the first rigorous econometric investigation of this issue by examining the rate...
Hedonic Imputation and the Price Index Problem: An Application to Housing
I. INTRODUCTION Price indexes play a significant role in modem economies. The consumer price index (CPI), for example, is used to index various government payments, as a target for monetary policy and as a benchmark in wage negotiations. Our focus...
Is the Price Elasticity of Money Demand Always Unity?
I. INTRODUCTION For much of history, money largely consisted of monetary metals. In particular, during late nineteenth and early twentieth centuries, many countries adopted gold standards and gold served as money--either directly as coins held by...
Optimal Wage Taxation When Human Capital and Employment Are Endogenous
I. INTRODUCTION Both equity and efficiency considerations have led to widespread support for government involvement in education and other human capital markets. (1) Given the dominant role of human capital as a determinant of national wealth--Davies...
Should Oil Prices Receive So Much Attention? an Evaluation of the Predictive Power of Oil Prices for the U.S. Economy
I. INTRODUCTION Oil prices are monitored by consumers, firms, financial market traders, and government officials and are the subject of much media coverage. This in large part reflects the view that higher oil prices tend to be followed by inflation...
The Cyclical Behavior of Prices and Relative Prices
I. INTRODUCTION Correlations between shocks to prices and output provide evidence on the source of macroeconomic shocks. For example, Den Haan (2000) found positive correlations at short forecast horizons and negative correlations at longer forecast...
The Gravity Model: An Illustration of Structural Estimation as Calibration
Dawkins, Srinivasan, and Whalley ("Calibration," Handbook of Econometrics, 2001) propose that estimation is calibration. We illustrate their point by examining a leading econometric application in the study of international and interregional trade...
The Impact of Paying Interest on Reserves in the Presence of Government Deficit Financing
This paper reexamines the impact that paying interest on reserves has on price level indeterminacy, volatility, and economic well-being. Unlike the previous literature, this model includes an after-tax deficit financed by assets (bonds and reserves)...
Volatility and Irish Exports
We analyze the impact of volatility per se on real exports for a small open economy concentrating on Irish trade with the United Kingdom and the United States. An important element is that we take account of the time lag between the trade decision...
What Determines Corruption? International Evidence from Microdata
I. INTRODUCTION A sizable literature has emerged recently to examine factors that impact the level of corruption across countries. For example, Ades and Di Tella (1999) found that corruption is higher in countries where domestic firms are sheltered...