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.     

MONETARY INTEGRATION, INFLATION CONVERGENCE AND OUTPUT SHOCKS IN THE EUROPEAN MONETARY SYSTEM

Studies on monetary convergence in Europe have reached mixed conclusions, raising questions about whether the European Monetary System failed to expedite convergence, or whether convergence requires redefining. A definition of convergence is explored that conditions monetary policy on factors affecting real exchange rates. Inflation rates have converged, while unconditional monetary policies have not. Once conditioning factors are considered, much of the gap between inflation and monetary convergence is explained. Differences in output trends do not explain the gap, while velocity variability does. (JEL F33)     

INFLATION, HEDGING AND THE DEMAND FOR MONEY: SOME EMPIRICAL EVIDENCE

This paper explores the role of nominal rate of return uncertainty and inflation hedging as potentially important factors explaining the pattern of money demand. Using U.S. quarterly data over the period 1952.2–1982.4, it is shown that in conformity with theoretical considerations the nominal rate of return uncertainty variable tends to have a significantly positive effect and the inflation hedging variable (the covariance between nominal rate of return and inflation rate) a significantly negative effect on the demand for money. These findings seem to be reasonably robust in terms of various definitions of income, interest rates, inflation rate and money variables as well as in terms of different estimation methods.     

OUTPUT EFFECTS OF INFLATION WITH FIXED PRICE– AND QUANTITY–ADJUSTMENT COSTS

This article examines how the aggregate production varies with inflation when there are fixed price– and quantity–adjustment costs. It shows that such variation is determined by the elasticity of the firms’ marginal real revenue with respect to demand. The aggregate production decreases with inflation if this elasticity always exceeds minus unity, whereas the aggregate production increases with inflation if the elasticity is always less than minus unity. The aggregate production is independent of inflation in the special case that the elasticity always equals minus unity. The latter occurs if demand is derived from a log‐quadratic utility function. (JEL E31)     

OUR NEW MONETARY STANDARD: THE MEASUREMENT AND EFFECTS OF PRICE UNCERTAINTY, 1880–1973*

U. S. annual inflation rates over the last century are analyzed in an attempt to compare price unpredictability in the recent period with that during the 1880–1915 gold standard period. The movement from negative price change autocorrelations in the earlier period to strongly positive price change autocorrelations in the recent period, is shown to imply an upward shift in the amount of long-term relative to short-term price uncertainty. Empirical evidence on the relationship between the demand for money and actual price change, on the adjustment of interest rates to price changes and on the change in the composition of new corporate debt issues is presented. Evidence suggests that only over the last decade has the public generally recognized the fundamental change from a commodity to a fiduciary standard that has occurred in the underlying monetary framework.     

THE POLITICIZATION OF CLIMATE CHANGE AND POLARIZATION IN THE AMERICAN PUBLIC'S VIEWS OF GLOBAL WARMING, 2001–2010

We examine political polarization over climate change within the American public by analyzing data from 10 nationally representative Gallup Polls between 2001 and 2010. We find that liberals and Democrats are more likely to report beliefs consistent with the scientific consensus and express personal concern about global warming than are conservatives and Republicans. Further, the effects of educational attainment and self‐reported understanding on global warming beliefs and concern are positive for liberals and Democrats, but are weaker or negative for conservatives and Republicans. Last, significant ideological and partisan polarization has occurred on the issue of climate change over the past decade.     

MONEY, INCOME, AND PRICES IN THE UNITED KINGDOM: 1870–1913

This paper examines certain aspects of the operation of the gold standard and its effects on the United Kingdom in the period before World War I. Reduced-form tests and estimates of output and money-demand equations are presented. The major conclusions are (1) Prices and interest rates in the United Kingdom can be represented as being determined independently of the money stock and output in the United Kingdom; and (2) Evidence concerning Lucas's version of the natural-rate hypothesis indicates various inadequacies.     

DETERMINING OUTPUT AND INFLATION VARIABILITY: ARE THE PHILLIPS CURVE AND THE MONETARY POLICY REACTION FUNCTION RESPONSIBLE?

This study analyzes the policy parameters in a Taylor monetary policy reaction function and a Phillips curve equation to determine the variability of inflation and output. The theoretical and empirical investigations yield two key results. First, countries with large parameters in the monetary policy reaction function have low and stable inflation. Second, countries with flatter Phillips curves (i.e., those with a higher degree of price stickiness) have larger output variability. This article also examines the determinants of inflation and output variability as well as determinants of the slope of the Phillips curve.(JEL E32 , E52 )     

THE LONG RUN BEHAVIOR OF THE INCOME VELOCITY OF MONEY IN FIVE ADVANCED COUNTRIES, 1870–1975: AN INSTITUTIONAL APPROACH

The income velocity of money in Canada, the United States, Great Britain, Norway and Sweden displays a U-shaped pattern over the last one hundred years. This paper presents and tests empirically an explanation for this secular pattern emphasizing the influence on velocity of institutional changes. The inclusion into a simple velocity function of institutional developments such as the process of monetization, the spread of commercial banking, financial development and the growth of economic stability improves the explanation of long-run movements in velocity provided by a regression of velocity on real permanent income per head and the interest rate.     

Radical-Party Politics in Illinois, 1880–1924*

Sufficient impressionistic evidence exists in the previous literature to warrant a detailed consideration of the voting behavior of working-class and minority groups in relation to radical third parties. The present paper is concerned with analyzing some of the sources of support for radical third parties in Illinois from 1880 to 1924. We find that a coalition between a rural proletariat and the urban working class appeared to be a potentially viable source of support for the Socialist Party of America, since the groups involved were both numerically large and potentially crucial in determining the outcome of any election. Yet the Socialists were never able to capture more than a very modest fraction of the total vote, and even among their potential backers, the electoral enthusiasm for the Socialists was fractionalized and unstable.     

TAX RATES,GOVERNANCE, AND THE INFORMAL ECONOMY IN HIGH‐INCOME COUNTRIES

Approximately 16.7% of output in high‐income OECD (Organisation for Economic Cooperation and Development) countries is produced informally. I present a model economy where entrepreneurs decide how much of their production to keep informal. Informality carries a risk of getting caught, taxed, and fined. Results from a model with differences in tax rates alone only agree to approximately 23% with data on informality. Taking into account both governance quality and tax rates, agreement between the model's results and data increases to 72%. A policy experiment raising governance quality in Greece, Italy, Spain, and Portugal to Finnish standards reduces informality by 13 percentage points. (JEL E26, H26, J24)     

INFLATION DYNAMICS AND THE OUTPUT‐INFLATION TRADE‐OFF: INTERNATIONAL PANEL DATA EVIDENCE

We explore the impact of inflation and its variability on the output‐inflation trade‐off using a single‐step approach in a panel data context. Previous empirical approaches focus on either cross‐country or country‐by‐country time‐series analyses. We employ a dynamic heterogeneous panel specification using an all‐encompassing estimation framework accounting for parameter heterogeneity, cross‐sectional dependence, dynamics, and nonstationarity. Our sample covers 60 countries from 1970 to 2010. While inflation variability reduces the trade‐off for specific periods and country groups, an unambiguous and more pronounced negative relation emerges between the inflation rate and the trade‐off. The findings are consistent with the New Keynesian view. (JEL E31, E12, C23)     

KNOWLEDGE SPILLOVERS AND OUTPUT PER WORKER: AN INDUSTRY‐LEVEL ANALYSIS FOR OECD COUNTRIES

This study analyzes the impact of knowledge spillovers on output per worker at the industry level using a primal production function approach. The article makes three different contributions to the international spillovers literature: (1) it identifies trade‐related spillovers under alternative assumptions regarding the information transferred through imports; (2) it explores the importance of horizontal and vertical foreign direct investment (FDI) in knowledge spillovers; and (3) it looks at how institutional factors determine the impact of FDI‐related spillovers on productivity. The main findings of the study are: (1) international knowledge spillover is an important driver of industry output per worker, and the magnitude of this spillover effect varies with alternative assumptions about the information content embodied in imports, while high technology industries benefit significantly more from import‐related knowledge spillovers; and (2) the gains from FDI spillovers are primarily horizontal, but when institutional factors are considered, countries with stronger protection of intellectual property rights and a high “ease of doing business” tend to experience a substantial increase in the effectiveness of both horizontal and vertical FDI‐related spillovers. (JEL E24, F1, F6, O3, O4)     

TAX POLICY AND INCOME INEQUALITY IN THE UNITED STATES, 1979–2007

This paper assesses the effects of U.S. tax policy reforms on inequality over around three decades, from 1979 to 2007. It applies a new method for decomposing changes in government redistribution into (1) a direct policy effect resulting from policy changes and (2) the effects of changing market incomes. Over the period as a whole, the tax policy changes increased income inequality by pushing up the income share of high‐income earners (the top 20%). (JEL H23, H31, H53, P16)     

WORKING IN “HIGH-TECH”: RESEARCH ISSUES AND OPPORTUNITIES FOR THE INDUSTRIAL SOCIOLOGIST*

This article outlines some issues concerning the organization of work in the new “high technology” industries. High technology industries are defined as industries involved in the manufacture of electronic information processing machinery and related products. Two central tensions are key to understanding work in the new high technology industries. First, a limited reduction in the prevalance of repetitive tasks is counterbalanced by increasing isolation of workers due to semi-automated production processes. This tension may be mediated by intentional efforts on the part of unions and/or management to recreate meaningful work environments. Second, potential empowerment arising from the creation of new job related skills is frequently offset by continuing high unemployment in the broader labor market that is to some extent a result of the very success of high technology production tcchniques. Difficulties in realizing potential aspects of empowerment may be further amplified by large-scale utilization of female and minority labor in high technology industries in the West and Southwest. Research techniques of addressing these issues are also surveyed and evaluated.     

Languages of Class in US Party Platforms, 1880–1936

This article will explore the shifting use of class language in party platforms during the Lochner era, a period of increased class polarization, social unrest, and laissez faire judicial philosophy. It explores the ways in which political parties responded to the growing inequality of wealth and the judicial distaste for “class legislation.” Using as a dataset all available party platforms of the presidential elections years during this period, I analyze the impact of class identity and class consciousness on politics and social movements during this time, finding that (1) class language increased during this period, with its sharpest images and depictions found in third party platforms; (2) the use of class language was directly connected to calls for an end to “government by injunction” and very specific proposals for workers; (3) the two major parties often took on some of these specific recommendations in the following presidential cycle or cycles, but without the attendant class language; leading to (4) a general muting of explanations for the cause of industrial conflict (irrecoof industrialncilable interests of labor and capital) in favor of specific reforms leading to government as mediator, picked up primarily by the Democratic Party.     

PRICES,INFLATION, AND SMOKING ONSET: THE CASE OF ARGENTINA

This article examines the effect of tobacco prices on the decision to start smoking in Argentina. Argentina is an interesting case to explore given its high smoking rates, its recent experience with periods of very high and hyperinflation, and the mixed evidence of the effect of prices on smoking onset, particularly in low‐ and middle‐income countries. We used data from four cycles of two large national surveys conducted between 2005 and 2011 and discrete‐time hazard models. We found that tobacco prices had a statistically significant and fairly large impact on the hazard of smoking onset, and these findings were robust to alternative specifications. We also found that prices had little effect on the hazards of smoking onset during periods of hyper‐ and very high inflation, which provide some support for the notion that prices lose their informational role in such periods. Governments need to be cognizant that their most important policy tool to reduce tobacco use—taxes that increase real tobacco prices—is likely no longer effective during these times. (JEL C41, H20, I12, I18)