UNANTICIPATED MONEY GROWTH AND OUTPUT FLUCTUATIONS

A rational expectations model is developed in which prices are fixed during a period. The implications of this model are that output fluctuations are correlated with unanticipated aggregate demand but not with unanticipated inflation. Empirical tests of the model indicate that the persistence of business cycles cannot be explained solely by unanticipated aggregate demand .     

THE LONG-RUN LINK BETWEEN MONEY GROWTH AND INFLATION

Is inflation always a monetary phenomenon? Many economists believe that the link between money growth and inflation in the U.S. has weakened over the last two decades due in part to the Federal Reserve's policy experiment in 1979–1982 and innovations in the financial sector of the economy. I find that the long-run relationship between money growth and inflation is strong in a statistical sense and important economically. The key result is that the trend or growth component in CPI inflation is entirely due to the trend component of monetary base growth. (JEL C32, E31, E51)     

ESTIMATING THE FISHER EFFECT AND THE STOCHASTIC MONEY GROWTH PROCESS

This paper demonstrates that a change in the stochastic process generating money can alter the relationships between money and inflation and between inflation and interest rates. The extent to which inflation is forecastable is shown to depend significantly on the extent to which money is forecastable. Thus, the greater the persistence and forecastability of money, the greater the likelihood of observing a statistically significant Fisher effect.
US. data over the 1953–86 period are used to demonstrate that instability in the Fisher effect coincides with changes in the stochastic process generating money. There is a significantly stronger Fisher effect during a subsample in which money—and hence inflation—are more predictable.     

INFLATION AND GOVERNMENT DEFICITS

There is a pronounced positive correlation of inflation and government deficits in the United States since World War II. The purpose of this paper is to test the three leading explanations of this correlation. These three explanations are: (a) a deficit increases prices through a wealth effect; (b) a deficit results in the Federal Reserve purchasing debt, thus increasing the money supply and prices; and (c) expected inflation increases the deficit (which is the change in the nominal value of bonds). No support is found for either of the first two hypotheses. The results indicate that expected government deficits have no significance for future inflation.     

ANTICIPATED MONEY, UNANTICIPATED MONEY, AND OUTPUT: 1873–1930

Unanticipated money does, and anticipated money does not, influence output for the period between the Civil War and the Depression. These conclusions, reached using a two-step econometric procedure, appear robust for a wide variety of measures of output and for two alternate definitions of money.     

FEDERAL DEFICITS, MACRO-STABILIZATION GOALS, AND FEDERAL RESERVE BEHAVIOR

The effects of federal deficits on Federal Reserve behavior as proxied by changes in the growth rate of the monetary base are analyzed in this study. Multivariate Granger-causality tests are employed in the analysis. The deficit measure that is the focus of the analysis is the change in the real market value of privately held federal debt. The tests indicate that the deficit Granger-causes the monetary base. Additionally, concerns for financial market stability, real output, and exchange rate movements in the period of floating rates also affect Federal Reserve behavior.     

INTEREST RATES, EXPECTED FUTURE DEFICITS AND TAX PROPOSALS

Several recent publications have presented evidence suggesting a negative wealth effect in response to federal deficits. This paper investigates the hypothesis that rational economic agents use the legislative process to forecast the future path of federal deficits and then act on that information. A tax legislation variable, included in a reduced form interest rate equation, is tested for significance. The legislative variable that mirrors the effects of current and past deficits is often significant.     

COMOVEMENTS OF BUDGET DEFICITS, EXCHANGE RATES, AND OUTPUTS OF TRADED AND NON-TRADED GOODS

Between 1974:I-1989:II, it appears that U.S. budget deficits and real exchange rates are correlated. This paper attempts to provide a structural explanation of these comovements in government budget deficits and exchange rates. The model expands on previous works to include fiscal policy considerations in a stochastic set-up. It shows that within a simple two-country cash-in-advance constraint model, it is possible to have a positive correlation between budget deficits and exchange rates, as well as a negative correlation between exchange rates and domestic traded goods production.     

DRAMATURGY, POLITICS AND THE AXIAL MEDIA EVENT

Current theorizing on the role of media in politics and interpersonal relations in contemporary American society not only echoes questions about connections between modernity and viable democratic politics (Ortega y Gasset 1932; Jay 1973; Kornhauser 1959), but also tends to see the media as an insidious and even erosive cultural force (Debord 1983; 1990; Edelman 1967; 1988; Poster 1990; McKibben 1992). Politics is shaped by the mass media and by the dramatic engaging visual spectacles it presents. In this way, a dramaturgical social theory both reflects society and is a means to analyze it. Clearly, drama suffuses modern life figuratively and literally, in part because media genres compete with personal experience as ways of ordering problematic situations. Drama, in various forms, along with war and sport, is the dominant metaphor of our time. A dramaturgical framework emphasizing audience, performance, and theatrical aspects of everyday life, is therefore appropriate for examining changes in the relationships among media, politics, and interpersonal relations.     

IDENTITY POLITICS, PARTISANSHIP, AND VOTING FOR WOMEN CANDIDATES

In 1992 a record 14 women sought statewide office by running"as women" and as representatives of women. In this articlewe examine whether their appeals led to widespread vot ing onthe basis of gender identity. We find evidence that the sexof the voter is significantly related to voting for female candidatesin eight of 13 states, and among partisans of both parties aswell as Independents. Further, we find that these effects areamplified by Democratic female candidates who are rated as mostfeminist, and that this is especially the case for those withno partisan attachments.     

SEASONALITY AND THE MONETIZATION OF FEDERAL BUDGET DEFICITS

Prior findings that federal government budget deficits promptly lead to increases in the monetary base are unreliable. These findings are due largely to inadequate treatment of seasonality in post-war quarterly data. Once seasonality is properly modeled, no further short-run relation is apparent. Theory suggests that there may be a long-run relation between deficits and money growth. If such a relation exists, the sample of postwar U.S. data is too small to identify it.     

ELECTORAL POLITICS, INTEREST GROUPS, AND THE SIZE OF GOVERNMENT

This paper considers how government size responds to a change in the influence of interest groups. First, an election model is developed that has an equilibrium and in which interest groups have unequal influence. The authors then show that an increase in a group's influence per se does not cause government size to increase but does cause its size to increase when the government (1) cannot change tax shares or (2) provides a good benefiting one (untaxed) group, whose sole interest is in maximizing its consumption of the good. The paper concludes with a discussion of some of the normative implications.