There were two dramatic changes in United States (U.S.) government policy toward the monetary role of gold in the last 100 years. The first was in 1933-34. Private holdings of gold were nationalized in March 1933. Then, the U.S. Treasury adopted a new parity for the U.S. dollar of $35.00 an ounce at the end of January 1934. Gold production surged, the private demand for gold fell sharply and the U

The United States has ceded to the rest of the world managing the dollar’s value. For a generation, the U.S. authorities have all but withdrawn from the foreign exchange market. Yet the dollar does not float freely as a result of this hands-off U.S. policy. Instead, other authorities manage the dollar exchange rates, albeit separately. These authorities make heavier purchases of dollars in its downswings

During the quarter century of severe U.S. monetary inflation starting in the mid-1990s, the rest of the world failed to implement defensive strategies against its spread. In contrast, during the U.S.’ greatest peacetime inflation from the late 1960s to the late 1970s, there was powerful and increasingly successful defence against the spread of monetary inflation by the U.S. hegemon, most notably in

The Nordic countries of Denmark, Finland, Norway and Sweden have had persistent current account surpluses in recent decades. While oil production set Norway apart, the emergence of the surpluses in Finland and Sweden coincided with a financial crisis in both countries and can be traced to a rise in national saving. These surpluses have persisted in the decades since the crisis. The same pattern can

Using data for Guyana that spans the period 1980 to 2017, this study assessed the impact of efficiency-adjusted public capital on the country’s overall economic growth and expenditures for private investment. This paper contributes to the literature in four ways. First, it constructed an efficiency-adjusted and unadjusted public capital stock series for Guyana, a less developed country within the Caribbean

This paper shows that so-called modern monetary theory (MMT) lacks a sound economic foundation for its far-reaching policy recommendations. This paper’s main contribution to the literature concerns the theoretical foundation of MMT. A simple macroeconomic model shows that MMT is indistinguishable from the Keynesian cross model, as well as a neoclassical macroeconomic model, even when taking account

If the world oil market is efficient, arbitrage should lead the West Texas Intermediate and Brent crude oil price indexes to converge whenever they stray apart. From the beginning of the sample on May 20, 1987 until December 1, 2010 when U.S. oil production began to accelerate due to hydraulic fracturing (fracking), the two series were cointegrated. However, from this point formerly nonbinding constraints

A correction to this paper has been published: https://doi.org/10.1007/s11293-021-09708-3

Funding for early-stage biomedical innovation has become more difficult to secure at the same time that medical breakthroughs seem to be occurring at ever increasing rates. One explanation for this counterintuitive trend is that increasing scientific knowledge can actually lead to greater economic risk for investors in the life sciences. While the Human Genome Project, high-throughput screening, genetic

The returns to carry-trades are controversially discussed. There seems to be no unifying risk-based explanation of currency returns and stock returns, while the countries’ interest rate differential plays a leading part in the carry-trade performance. Therefore, this paper addresses carry-trade returns from a risk-pricing perspective and examines if these returns can be connected to cross-country differences

If cryptocurrencies are perceived as financial innovations that could disrupt domestic and international financial systems, it becomes imperative for economists to incorporate these virtual currencies into existing money market models. Cryptocurrencies, when fully adopted by the general public, would transmit into the financial system via money demand. Cryptocurrencies serve as money and non-money

Older adults with the human immunodeficiency virus or HIV (OAWH), people 50 years and older, are aging with the disease and experience low quality of life. Mental health disorders trigger and worsen health inequalities with larger impacts on the quality of life of OAWH. This paper evaluated two rival health interventions using a standard decision-analytic model and quantified the cost per quality-adjusted

Remarkable transformation of the U.S. international investment position occurred over the last 40 years. U.S. net foreign assets were larger than combined net foreign assets of all other creditors. By 1990, foreign-owned U.S. securities and real assets were larger than U.S. owned foreign securities and assets. This change occurred without the U.S. Treasury borrowing in foreign currency and few U.S

The essence of monetary hegemony is the power of one monetary authority to influence monetary conditions outside its jurisdiction. Such power did not exist under the gold standard but came into existence for the U.S. Federal Reserve in the aftermath of the First World War. The basis of that power was the massive drain of gold out of Europe into the U.S. during its period of neutrality and the scope

The paper uses historical data on interest rates from 1920 to 2016 to explore whether a world rate of interest exists and whether a monetary hegemon affects it. The first principal component of long-term interest rates accounts for 75% of the variation in a matrix of 17 countries and proxies for the world rate of interest. The U.S. played the role of a hegemon, influencing long-term bond rates. After

Since the late 1950s, the rest of the world has come to use the dollar to an extent that justifies speaking of the dollar’s global domain. The rest of the world denominates much debt in U.S. dollars, extending U.S. monetary policy’s sway. In addition, in outstanding foreign exchange deals, the rest of the world has undertaken to pay still more in U.S. dollars: off-balance-sheet dollar debts buried

This paper considers the persistence of earnings differentials between wage earners and the self-employed through modeling overconfidence. The model examines challenges of limited information and its impact in the decision-making process. Using a Bayesian setting and concentrating specifically on the entrepreneur’s entry decision, the model shows how limited information can lead to substantial overestimation

When participating in an auction is costly, a potential bidder has to decide whether to enter the auction or not. The extent to which the potential bidders know their private cost before making their entry decisions determines how selective the entry process is. Endogenous selective entry is common in many auctions and it has important implications for designing auctions, in particular, choosing the

Both the efficient market hypothesis and modern portfolio theory rest on the assumptions of the Gaussian probability distribution and independence of consecutive returns. This paper provides a brief excursion into the history of capital market research. A measure of long-range dependence (Hurst exponent) was applied to daily returns of selected stock indices and individual firms. The Hurst exponent

This paper investigates the public-private remuneration pattern in South Africa since the introduction of an inflation-targeting framework in 2000. Co-integration tests and analysis confirm that there is a stable, long-run relationship between nominal and real remuneration in the public and private sector. The adjustment to the deviations from this long-run relationship is strong and significant for

This paper models a consumer loan market with a vertical structure where an upstream monopolist supplies funds to downstream nonbanks. The nonbanks supply funds to consumers in the consumer loans market. An inverse demand function of the consumer is linear. The downstream nonbank freely enters the market as long as it earns a positive profit. First, this paper derives free-entry equilibrium without

There is growing evidence of risks associated with excessive technology use, especially among teens and young adults. However, little is known about the characteristics of those who are at elevated risk of being problematic users. Using data from the 2012 Current Population Survey Internet Use Supplement and Educational Supplement for teens and young adults, this study developed a conceptual framework

The initial online publication contained several typesetting errors. The original article has been corrected.

Competition is a key feature of the market process assumed to improve market outcomes. But how strong is the relationship between competition and positive consumer experiences, and how does the relationship vary across space and type of competitor? Phoenix is a suitable setting in which to explore these questions because it is a major metropolitan area with thousands of unique restaurants rated on

This paper presents a new rationalization for bailouts of sovereign debt in monetary unions, such as those observed during the recent Euro crisis. It introduces a model where member countries of the monetary union are ex-ante identical, and each derives utility from consumption and disutility from the union-wide inflation rate. The union’s central bank is utilitarian and lacks commitment. Countries

This paper uses a three-tax linear model to study the optimal tax mix numerically. The three aggregate taxes relate to labour, capital and commodities. The most striking result is that with a linear expenditure system based on econometric estimates, indirect (i.e. commodity) taxation dominates the optimal tax mix, with over 80% of tax revenue coming from indirect taxes. Although some analytical justification

Japanese exports did not immediately react to the depreciations of the yen after a change in the economic policy framework in 2012, with the launching of Abenomics. This article focuses on the Japanese foreign sector and investigates the extent to which exchange rate changes affect Japanese real exports. After studying the dynamic properties of the included time series variables, a vector error correction

Public policy aimed at reducing consumption of tobacco or alcohol products often results in purchases of lower-taxed alternatives. Many studies find tobacco and alcohol to be habit-forming, so taxing these commodities often has little impact in reducing purchases. There is much evidence that different alcohol and tobacco products are either substitutes or complements in use but these studies exclude

This paper investigates the presence of herding behavior across a spectrum of commodities (i.e., agricultural, energy, precious metals, and metals) futures prices obtained from Datastream. For the first time in English-language literature, this study provides an explicit investigation of the role of deviations of U.S. monetary policy decisions from a standard Taylor-type monetary rule, in driving herding

Using hourly and weekly wages from the Canadian Labour Force Survey from 2000 until 2018, workers were separated into full-time and part-time and the following striking observation was documented. The overall gender wage gap is larger than either the full-time pay gap or the part-time pay gap, even after controlling for detailed personal and job characteristics. This result is a consequence of two

This research has two goals: to measure the extent of assortative (non-random) mating by college major in the United States, and to assess the extent to which assortative mating by college major increases earnings inequality among college-educated couples. Assortative mating of college graduates with other college graduates has been extensively studied, but research on assortative mating by field of

While the research linking interest rates to government deficits is extensive, the impact of other tax-related variables is uncommon. This study seeks to add to the literature on credit markets by exploring the impact of not only the budget deficit but also average effective personal income tax rates and personal income tax evasion as explanatory variables. To the best of our knowledge this study is

Abstract This paper analyzes the extent to which the filming of the popular television show Game of Thrones affected tourism in the Croatian city of Dubrovnik. Using monthly data and applying difference-in-differences, the study shows that the impact of airing Game of Thrones episodes filmed in Dubrovnik corresponded to approximately 5000 additional tourism overnights per month, or approximately 59

Abstract This study examines the relationship between firm-level tax evasion and corruption. The literature has considered the corruption-firm tax evasion nexus to some extent, however, the heterogeneous impact of bribes on tax evasion has been largely ignored. We posit that the impact of bribes on tax evasion is conditional on the prevalence of tax evasion. Using firm-level information from the Business

In recent years, a number of papers have looked at the adoption and diffusion of taxes across national, state, and local governments. Spending pressures, reductions in tax collection costs, median voter preferences, and social learning have been found to play an important role in the adoption of the income tax. Spatial econometrics were used to study the diffusions of income taxes across states from

How does individual tax compliance respond to a change in the audit rate? Most all empirical evidence suggests that an increase in the audit rate increases the compliance rate, a result that is also consistent with standard theoretical analysis of the individual compliance decision. However, this empirical evidence is typically based on estimating an average response across all taxpayers and an average

Abstract This paper examines the impact of unemployment and inflation on family income shares. Unemployment and inflation are decomposed into their structural (long-term), cyclical (short-term), anticipated and unanticipated components, respectively. I propose a new framework to analyze family income quintile shares by using a two-state Markov-switching model, also known as Hamilton’s regime-switching

Recent literature questions the relative advantage of community banks vs. non-community banks in small business funding. Using the Federal Deposit Insurance Corporation’s definition of a community bank, the study re-examines the role of community banks in providing funding to small businesses using the Community Reinvestment Act (CRA) small business lending data over the period 2003 to 2016. The empirical

Standard models of indirect price discrimination generate a separating equilibrium in which all consumers choose bundles on their demand curves. Low-demand consumers voluntarily choose to pay a higher unit price for small quantities because the discount is offered by the monopolist at prohibitively high quantity. These models implicitly assume the low-demand consumer would purchase the higher quantity

During the first ten seasons of integrated Major League Baseball, black batters were hit by pitches about 86% more often per plate-appearance than white batters. However, on average black players during this period were superior players. To investigate to what extent the difference in hit-by-pitch can be explained by performance and characteristics other than race, we use a fractional logit model to

This paper analyzes the first macroeconomic textbook based on modern monetary theory (MMT) written by Mitchell, Watts and Wray. MMT is a heterodox theory that a government need not worry about budget and monetary constraints and excessive inflation until a country achieves its goals of full employment, first-class healthcare for all citizens, and other desirable policies. Their textbook, Macroeconomics

Recent demographic and economic research has analyzed the expected increase in the proportion of the population who are elderly. One consequence of an increasing elderly population is expansion in health care utilization, hence funding problems may arise.. European institutions encourage member states to promote good health among their citizens to mitigate the ageing effects on the health care system

Previous research has found that shorter men have significantly worse life outcomes than taller men. Using the 1979 version of the National Longitudinal Survey of Youth, this paper uses maximum likelihood estimations to test whether these worse outcomes translate into shorter men drinking more heavily. Results show that, at ages 29–47, taller men are more likely to drink alcohol, but among drinkers

This paper uses a higher moment capital asset pricing model to characterize the returns of several types of hedge fund indices. The quantile regression approach is used to test for any possible changes in the coefficients of the model. The hypothesis that the parameters are stable across the distribution of returns is tested and rejected. The most stable coefficient is the second moment (beta) coefficient

This paper provides new evidence supporting the hypothesis that patriotism and nationalism influence personal trade policy preferences in addition to the typical economic determinants. It also examines the interaction of the 9/11 terrorist attacks along with patriotism and nationalism on policy preferences. Using the Heckscher-Ohlin model as a theoretical framework, ordered probit estimations were

The objective of this paper is to examine the foundations of Modern Monetary Theory (MMT) by building upon the individual papers in this issue of the Atlantic Economic Journal by Mark Skousen and Patrick Newman. The foundations of MMT include five cornerstones. First, sovereign governments that are the sole supplier of a national currency (e.g., United States) can issue as much currency as they want

Modern monetary theory (MMT) argues that governments can never go bankrupt because they have the power to print money to finance budget deficits. Consequently, debt monetization can achieve virtually any government objective desired. This paper uses Austrian economics to argue that MMT suffers from the flaws of all forms of Keynesian economics, particularly the original version of the 1930s and 1940s

We evaluate the effect of performance-based scholarship programs for post-secondary students on student time use and effort and whether these effects are different for students we hypothesize may be more or less responsive to incentives. To do so, we administered a time-use survey as part of a randomized experiment in which community college students in New York City were randomly assigned to be eligible

This paper provides further evidence of the inconsistency of the Solow growth model with the observed cross-country variation in income levels and growth rates. I tackle the assumption of constant and identical technical progress rates across countries by providing country-specific estimates derived from a growth accounting exercise. The estimates of total factor productivity (TFP), commonly used as

Abstract This paper estimates growth models for a panel of 15 Asian countries during 40-plus years from the early 1970s to 2014. The focus then shifts to Malaysia for which an annual time-series model is also estimated for the same time period. Both types of models indicate significant influence of human capital either directly on output growth or on growth through total factor productivity. We find

Abstract Prior research has consistently documented a weight-related earnings penalty for females. However, there is debate concerning the existence of a similar wage penalty for men, with many studies having found no statistically significant effect. Prior research has also found a wage penalty associated with lower self-esteem. Drawing data from the 1979 cohort of the National Longitudinal Survey

This paper studies the stabilization and welfare properties of various monetary policy regimes in a tractable framework suitable for the analysis of monetary policy in a small open economy environment with imperfect pass-through and inflation indexation. Using welfare criteria to evaluate the best monetary policy, results show that price-level targeting performs well and provides an alternative method

Abstract Stock returns are generally difficult to explain, as they are comprised of many discrete channels of risk. Empirical asset pricing models (EAPM), such as the Fama-French five-factor model (FF5), have been used to partition these channels across a series of systematic risk factors, such as company size (total market equity), value (book-to-market ratio), investment, and operating profitability

There has been a rise in alternative work arrangements in recent years, with much variation in who selects these work arrangements and the reasons for doing so. Higher participation rates may stem in part from individual’s needs which are not met in more traditional jobs and is reflected in the impact they have on job satisfaction. This study explores variations in job satisfaction by work arrangement

Relying on the methodology of deviation cycle dynamics, we analyze whether the association of wealth inequality measures and the real, financial and housing cycle are nationally idiosyncratic. Making use of recently available long time series for France, the United Kingdom (U.K.) and the United States (U.S.), we establish evidence in support of stock market returns co-moving with wealth concentration

Innovation is the source of product differentiation and is protected by intellectual property rights such as patents and trade secrets. This innovation is a target of theft. Naturally, theft decreases incentives for innovation, which harm consumer utility. This paper addresses the link between innovation, theft and market structure. By expanding a simple monopolistic competition model to include innovation

In this paper, the interdependence between aggregate commodity prices and world gross domestic product (GDP) is studied by performing two empirical exercises with long-run data that starts in the nineteenth century. Long−term and medium-term cycles are computed and their degree of synchronization measured for different leads and lags. Causality tests are performed on the frequency domain. Both exercises

In mixed strategy games, the ability to randomize decisions is a critical strategic necessity, yet studies show that such rational behavior is sometimes elusive. This paper examines mixed strategy play in a natural setting, by looking at a pitcher’s decision to throw the ball to home plate or to throw it to first base in a pickoff play. In the absence of significant pressure, we find that pitchers

Abstract This paper investigates the role of happiness in portfolio choices. Previous literature has only emphasized the reverse association. An additional novelty of the paper is that the analysis focuses on a wider country sample, while the literature has mainly focused on the U.S. and U.K. economies. Based on micro data from five European countries, i.e., France, Germany, Italy, the Netherlands

The division of goods into types or characteristics has a long history in economics, but it has achieved new importance in the last 50 years. This paper presents a novel pedagogical differentiation of goods into search, experience and credence categories, in part by adding a new goods designation. We argue that there is an important class of meta-credence goods for which there is no possible means