Economic Inquiry

Articles from Vol. 50, No. 4, October

2011 Editor's Report
The 2011 volume of Economic Inquiry consists of 72 papers in a wide variety and diverse set of fields, including microeconomics, macroeconomics, and empirical studies. Since my last report, Erwan Quintin has resigned, and Jim McGee has replaced...
Can Monetary Policy Influence Long-Term Interest Rates? It Depends
I. INTRODUCTION A stated goal of U.S. monetary policy is to maintain full employment in the U.S. economy. (1) To do so, however, means the Federal Reserve must be capable of stabilizing aggregate demand, particularly the historically volatile category...
Consumption, Sentiment, and Economic News
I. INTRODUCTION Since the introduction of surveys of consumer sentiment after World War II, it has been a puzzle why measures of consumer sentiment have predictive value for changes in consumer spending. Because sentiment measures are based on questions...
Direct Tests of Individual Preferences for Efficiency and Equity
I. INTRODUCTION Economics has a long history of using models of preferences to explain choices. Until recently, the preferences most commonly used have been self-regarding (or "economic man") preferences in which an agent cares about his own material...
Does Raising the School Leaving Age Reduce Teacher Effort? Evidence from a Policy Experiment
I. INTRODUCTION Raising the compulsory school leaving age (henceforth RoSLA) is a key policy instrument used to increase minimum educational attainment levels. Moreover, there is an ongoing debate in a number of countries, such as the United Kingdom...
Government Intervention to Prevent Bankruptcy: The Effect of Blind-Bidding Laws on Movie Theaters
I. INTRODUCTION The recent bailouts of the U.S. automotive and banking industries have generated renewed concern about the incentives that government intervention give failing firms in need of significant restructuring. Government intervention to...
How Does Globalization Affect the Implicit Tax Rates on Labor Income, Capital Income, and Consumption in the European Union?
I. INTRODUCTION This article analyzes the effects of globalization on the taxation of labor income, capital income, and consumption in the EU Member States. The theory of capital tax competition argues that, as capital becomes increasingly more...
Nonlinearities and the Sustainability of the Government's Intertemporal Budget Constraint
I. INTRODUCTION Fiscal policy sustainability is an important issue for European Union (EU) countries, which are subject to some forms of monitoring of their public finances. The European Stability and Growth Pact (ESGP) constrains the fiscal policy...
Payoff Levels, Loss Avoidance, and Equilibrium Selection in Games with Multiple Equilibria: An Experimental Study
I. INTRODUCTION Game-theoretic solution concepts carry the implication that a "change in payoff levels"--a modification to a game by adding the same (positive or negative) constant to all payoffs--should have no effect on behavior. Such changes...
Returns to Investors in Stocks in New Industries
I. INTRODUCTION One thousand dollars invested in America Online's initial public offering (IPO) in March 1992 became $295,545 by the end of 2000 when AOL was purchased by Time-Warner. This is an extraordinary payoff for shareholders: over 5% per...
Self-Employment, Efficiency Wage, and Public Policies
I. INTRODUCTION Self-employed workers constitute an important segment of the labor force. In Organization for Economic Cooperation and Development (OECD) countries, the proportion of self-employed workers varies between 8% and 30% (Blanchflower...
The Impact of Entitlements and Equity on Cooperative Bargaining: An Experiment
I. INTRODUCTION We consider a set of bargaining situations in which the disagreement outcome, or backstop, B, is chosen by a third party. For example, a government agency may signal that it will adopt as policy any agreement that stakeholders reach...
The Impact of Fiscal Policy on Profits
I. INTRODUCTION A large number of policy-making decisions rely on the key issue of the impact of fiscal policy on the economy. Therefore, it is not surprising that the effect of fiscal policy on macroeconomic aggregates has been extensively studied...
The Real Exchange Rate and Real Interest Differentials: The Role of the Trend-Cycle Decomposition
I. INTRODUCTION Finding a relationship between real exchange rates and real interest rate differentials is one of the important topics in the field of international macroeconomics. Despite the fact that the theory suggesting such a relationship...
The Role of Financial Literacy in Determining Retirement Plans
I. INTRODUCTION American workers develop retirement plans to maximize lifetime well-being, based upon their understanding of financial markets and financial mathematics along with their knowledge of their employer's retirement plans, Social Security,...
Who Makes a Good Leader? Cooperativeness, Optimism, and Leading-by-Example
"Then I would look for integrity. A leader sets an example, especially a strong leader. He or she is someone on whom people ... in the organization model themselves." Peter Drucker on Picking a Leader, excerpted from "The Daily Drucker" (Drucker [2004],...
Why Do Governments End Up with Debt? Short-Run Effects Matter
I. INTRODUCTION The last decades have been characterized by a quick accumulation of public debt. In the Organization for Economic Cooperation and Development (OECD) area, the ratio of public debt over GDP was equal to 59% in 1989 (OECD 2009). In...

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