FORECASTING U.S. MORTALITY:

This article compares two methodologies for modeling and forecasting statistical time series models of demographic processes: Box-Jenkins ARIMA and structural time series analysis. The Lee-Carter method is used to construct nonlinear demographic models of U.S. mortality rates for the total population, gender, and race and gender combined. Single time varying parameters of k, the index of mortality, are derived from these model and fitted and forecasted using the two methodologies. Forecasts of life expectancy at birth, e₀, are generated from these indexes of k. Results show marginal differences in fit and forecasts between the two statistical approaches with a slight advantage to structural models. Stability across models for both methodologies offers support for the robustness of this approach to demographic forecasting.     

BANKS,FREE BANKS,AND U.S. ECONOMIC GROWTH

The “Federalist financial revolution” may have jump‐started the U.S. economy into modern growth, but the Free Banking System (1837–1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county‐level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state‐chartered banks seem to have strong and positive effects on manufacturing and urbanization. (JEL G21, N21, O43)     

DEADWEIGHT LOSSES AND THE SAVING RESPONSE TO A DEFICIT

Several recent empirical studies have challenged the conventional wisdom that deficits cause a higher interest rate. Many economists are, however, critical of the seemingly implied theoretical justification—that every individual fully recognizes the size of the deficit and the extent to which it increases future tax liabilities. This paper demonstrates that far weaker information assumptions are needed to obtain an aggregate savings response equal to the deficit: a reallocation of deadweight losses causes Ricardians to save more than their share of the deficit to keep consumption unaffected, allowing for a substantial fraction of Keynesians who save less than their share.     

U.S. MILITARY EXPENDITURE AND THE DOLLAR

This paper examines the connection between U.S. military expenditure and the dollar-mark real exchange rate. Quarterly data for the period 1951.1–1986.3 are used to show that there exists a significant relationship linking real exchange rate, real military spending, and real GNP. The conclusion is based on evidence that these three variables are cointegrated.     

SCHOOL QUALITY AND RETURNS TO EDUCATION OF U.S. IMMIGRANTS

Using the U.S. labor market as a common point of reference, this article investigates the influence of source country school quality on the returns to education of immigrants. Based on 1980 and 1990 census data, we first estimate country-of-origin specific returns to education. Results reveal that immigrants from Japan and northern Europe receive high returns and immigrants from Central America receive low returns. Next we examine the relationship between school quality measures and these returns. Holding per capita GDP and other factors constant, immigrants from countries with lower pupil-teacher ratios and greater expenditures per pupil earn higher returns to education.)     

THE SWINGS OF U.S. INFLATION AND THE GIBSON PARADOX

In recent business cycles, U.S. inflation has experienced a reduction of volatility and a severe weakening in the correlation to the nominal interest rate (Gibson paradox). We examine these facts in an estimated dynamic stochastic general equilibrium model with money. Our findings point at a flatter New Keynesian Phillips Curve (higher price stickiness) and a lower persistence of markup shocks as the main explanatory factors. In addition, a higher interest‐rate elasticity of money demand, an increasing role of demand‐side shocks, and a less systematic behavior of Fed's monetary policy also account for the recent patterns of U.S. inflation dynamics. (JEL E32, E47)     

THE DETERMINANTS OF U.S. STATE ECONOMIC GROWTH: A LESS EXTREME BOUNDS ANALYSIS

This study investigates U.S. state economic growth from 1970 to 1999. I innovate on previous studies by developing a new approach for addressing "model uncertainty" issues associated with estimating growth equations. My approach borrows from the "extreme bounds analysis" approach of Leamer while also addressing concerns raised by Granger and Uhlig, Sala-i-Martin, and others that not all specifications are equally likely to be true. I then apply this approach to identify "robust" determinants of state economic growth. My analysis confirms the importance of productivity characteristics of the labor force and industrial composition of a state's economy. I also find that policy variables such as (1) size and structure of government and (2) taxation are robust and economically important determinants of state economic growth. ( JEL 040, 051, H10, H20, H30, H70, R11, R58, C51)     

THE U.S. LABOR INCOME SHARE AND AUTOMATION SHOCKS

The causes and consequences of the 1964–2016 swings in the U.S. labor income share/labor share (LS) are parsed through the lens of a structural model estimated on aggregate and LS series jointly. Where conventional models fall short, the present model yields a counter-cyclical LS unconditionally and in response to demand and monetary policy shocks, as well as a small wage pro-cyclicality, via moderate wage indexation. Shifts in automation, workers' market power, investment efficiency, and the relative price of investment account for 54%, 24%, 6%, and 4% of LS fluctuations, respectively. Automation shocks explain the lion's share of the post-2007 cyclical LS tumble and 11% of output cycles, and generate a distinctive counter-cyclical labor response. (JEL E32, E25, E52)     

THE U.S. EMBARGO ACT OF 1807: ITS IMPACT ON NEW ENGLAND MONEY, BANKING, AND ECONOMIC ACTIVITY

For half a century economists have debuted the impact of the Embargo Act of 1807 on the U.S. economy. Using New England bank statistics and the weekly prices of financial assets traded in the Boston market, hypotheses generated by a real business cycle model are tested. The study concludes that the embargo significantly fnfected the levels of real and nominal bunk loans, the real and nominal money stock, and current financial asset yields. Also, increased monetary und banking activity in Maine during the period supports the long-standing hypothesis that the embargo caused an increase in smuggling activity.     

WITHIN U.S. TRADE AND THE LONG SHADOW OF THE AMERICAN SECESSION

Using data from U.S. commodity flow survey, we show that the historical Union–Confederacy border lowers contemporaneous trade between U.S. states by about 13%. The finding is robust over econometric models, survey waves, or aggregation levels. Including contemporaneous controls, such as network or institutional variables, lowers the estimate only slightly. Historical variables, such as slavery, do not explain the effect. Adding U.S. states unaffected by the Civil War, we argue that the friction is not merely reflecting unmeasured North–South differences. Finally, the border effect is larger for differentiated than for homogeneous goods, stressing the potential role for cultural factors and trust. (JEL F15, N72, N92, Z10)     

THE TECHNOLOGY FACTOR AND THE EXPORT PERFORMANCE OF U.S. MANUFACTURING INDUSTRIES

The paper examines two central theories advanced to explain the revealed comparative advantage of U.S. industries. The neo-technological account centers on the process of innovation among industries and is represented in the regression analysis by an R&D intensity variable. The neofactor theory advances both human and "physical" capital as important variables in determining countries' comparative advantage. Foreign protection is postulated to affect the export performance of U.S. industries. Generally the results suggest that U.S. revealed comparative advantage is most pronounced in R&D intensive industries that give the U.S. a temporary technological lead in world markets.     

RETURNS TO SKILLS AND PERSONNEL MANAGEMENT: U.S. DEPARTMENT OF DEFENSE SCIENTISTS AND ENGINEERS

Personnel records are used to examine compensation, recruitment, and retention of a group of highly skilled workers: civilian scientists and engineers in U.S. Department of Defense laboratories. In contrast to those of the private sector, returns to skills were largely flat for this group from 1982 to 1996. Despite this, quality and performance of recruits relative to earlier cohorts, and of those retained relative to those who left, remained stable. One explanation is the importance of defense industry–specific human capital. These results hold for three different pay plans, including the federal government's primary plan and two intended to introduce greater flexibility in personnel management. (JEL J31 , J44 , J45 , M52 )     

LEGISLATIVE TURNOVER,FISCAL POLICY,AND ECONOMIC GROWTH: EVIDENCE FROM U.S. STATE LEGISLATURES

Increased turnover among legislators can make them short‐sighted, affecting fiscal policy and economic growth. We exploit the exogenous variation in legislative turnover induced by term limit laws and by redistricting in the 50 U.S. states, finding that increased turnover increases capital spending by state governments, which may be designed to constrain future governments. The changes may cause long‐run distortions in the economy, reducing long‐term economic growth. (JEL H72, H73, H76)     

COMPETITION AND PRODUCTIVITY GROWTH: THE CASE OF THE U.S. TELEPHONE INDUSTRY

The article focuses on the relation of competition to changes in productivity. Specifically, it compares the experience of AT&T Long Lines, operating in an increasingly competitive market, with that of eight local telephone monopolies. Both the estimation of total factor productivity growth and the analysis of shifts in cost functions show a markedly faster change in efficiency in the effectively competitive market than for the local monopolies. The article also examines three channels through which competition produces differential changes in efficiency. The results support, by implication, a policy of permitting entry and increasing competition in local telephone markets. ( JEL L11, L96)     

MULTIREGIONAL FIRMS AND REGION SWITCHING IN THE U.S. MANUFACTURING SECTOR

I use data on U.S. manufacturing establishments to study the spatial reallocation of resources that takes place within surviving firms as they open and close establishments in different regions. To motivate the empirical analysis, I extend existing models of industry dynamics to include production‐location decisions within firms. Consistent with the theory, the empirical results show that only a fraction of firms make the same product in multiple regions, that multiregional firms are larger and more productive on average compared to single‐region firms, and that “region switching” is pervasive among multiregional firms and correlated with changes in firm and firm‐region characteristics. (JEL L2, F12, F23)     

STABILITY AND CHANGE IN THE U.S. PUBLIC'S KNOWLEDGE OF POLITICS

The U.S. public's current knowledge about politics is comparedwith levels of knowlege in the 1940s and 1950s. Fourteen questionsasked by Gallup on various surveys from 1945 to 1957 were includedon a larger survey of political knowledge conducted by telephonein 1989 with a randomly selected sample of 610 adult U.S. residents.On 8 of the 14 items, the percentage answering correctly in1989 was higher than in the earlier surveys (by 4–15 points).One item showed an increase of 1 percent, two were down 1 percent,and three others declined by 5 percent, 9 percent, and 10 percent.When level of education is controlled, however, levels of knowledgeappear to have declined for most of the items. A reanalysisof some of the original Gallup data is used to estimate theeffectiveness of schools in transmitting political informationin 1989 compared with the earlier years.