Economic Inquiry

Articles from Vol. 47, No. 4, October

A Brain Gain or a Brain Drain? Migration, Endogenous Fertility, and Human Capital Formation
I. INTRODUCTION It is traditionally argued that openness to international migration within a developing country can cause high-skilled workers to emigrate and thereby create a "brain drain" problem; (1) however, it has been demonstrated in recent...
Asymmetric Substitutability: Theory and Some Applications
I. INTRODUCTION Economics textbooks predominantly classify goods as either being (gross) substitutes or being (gross) complements. As is well known, when the cross-price derivative of the uncompensated demand for Good 1 with respect to the price...
Banking Spreads in Latin America
I. INTRODUCTION Financial intermediation in Latin America is low by international standards. Financial systems in Latin America are still largely bank based, but after a short period of strong credit growth sparked by financial liberalization in...
Costly External Finance and Investment Efficiency in a Market Equilibrium Model
I. INTRODUCTION A large body of research has stressed the quality of a country's financial markets as an important determinant of the firms' real investments and of economic development and growth. (1) But how exactly is investment affected by financial...
Deconstructing the Success of Real Business Cycles
I. INTRODUCTION A major achievement of Real Business Cycle (RBC) models has been their success at elegantly explaining a remarkably large fraction of business cycle fluctuations in aggregate variables based solely on exogenous variation in productivity....
Economic Inquiry Editor's Report
The 2008 volume of Economic Inquiry consists of 45 papers in a wide variety and diverse set of fields, including microeconomics, macroeconomics, and empirical studies. Since my last report, the regular co-editors are the same. Among the specialized...
Estimating a New Keynesian Phillips Curve with a Corrected Measure of Real Marginal Cost: Evidence in Japan
I. INTRODUCTION The New Keynesian Phillips curve (NKPC), which was developed most notably by Rotemberg (1982a) and Calvo (1983), holds a central place in the recent monetary economics. Yet, despite its theoretical importance, empirical studies do...
Foreign Direct Investment and Economic Growth: The Growth Accounting Perspective
I. INTRODUCTION During the past few decades, world foreign direct investment (FDI) flows have increased dramatically, with an annual average growth rate of over 20% in the 1980s and nearly 40% by the late 1990s (UNCTAD 2006). Such a significant...
Industrial Dynamics and the Neoclassical Growth Model
I. INTRODUCTION Economists have long pondered the impact of a changing industrial composition on the overall economy. Questions such as whether the decline in the manufacturing sector is a worrisome trend are only a recent variant of this question....
Inflation and Real Stock Returns Revisited
I. INTRODUCTION This article empirically reinvestigates the relationship between real stock returns and inflation. According to Fisher (1930), (1) in an efficient market, real stock returns should reflect expectations only about real factors such...
Moonlighting over the Business Cycle
I. INTRODUCTION During economic downturns, employment levels fall, unemployment rates increase, and real wages drop. As such, real wages are considered somewhat procyclical. Yet, very little is known about the cyclicality of multiple-job holding....
Preservation of Trade Secrets and Multinational Wage Premia
I. INTRODUCTION The notions that multinational corporations (MNCs) pay higher wages than domestic firms in less developed countries (LDCs) and that MNCs have superior technologies are so prevalent and widely held that they are often given as statements...
Studying the Effects of Household and Firm Credit on the Trade Balance: The Composition of Funds Matters
I. INTRODUCTION The implications of higher levels of financial development have been investigated in a large number of studies, both in the empirical growth and in the financial crisis literatures. (1) A widely used indicator of financial development...
The Determinants of U.S. State Economic Growth: A Less Extreme Bounds Analysis
[Correction added on June 27, 2008, after online publication: Equation (7) was incorrectly stated as AICc = T x ln([SSE/T]) + T x (T+k - 1/T - k -1). The correct statement is AICc = T x ln([SSE/T]) + T x ([T + k/T - k - 2).] I. INTRODUCTION It...
The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers
I. INTRODUCTION Since the early work of Mincer (1958), economists studying the returns to education have traditionally focused on the relation between education and wages. From the perspective of the associated literature, education creates value...
Twin Sons of Different Mothers: The Long and the Short of the Twin Deficits Debate
I. INTRODUCTION The relationship between the government budget deficit and the current account deficit has been a contentious subject in empirical macroeconomics for at least the past 20 yr. Papers have variously found a positive link, no link,...
War and Pestilence as Labor Market Shocks: U.S. Manufacturing Wage Growth 1914-1919
there is not a single expert machinist in the labor market today. If such a one exists he will be able to command his own wages... The Arkansas Gazette (October 22, 1918).1 I. INTRODUCTION The possibility of a worldwide influenza pandemic...