MOONLIGHTING OVER THE BUSINESS CYCLE

Using data from the 1979 National Longitudinal Survey of Youth, we examine the cyclicality of moonlighting by gender. We estimate a random-effects Tobit model of moonlighting among working men and women and find that while male moonlighting behavior does not fluctuate significantly with the business cycle, female moonlighting does. The cyclicality of female moonlighting has, nonetheless, varied over the course of the past 35 yr. Female moonlighting seemed to behave countercyclically during much of the 1980s and early 1990s, confirming the popular media belief that moonlighting is more likely to occur during periods of economic distress. Yet, this countercyclical behavior disappears during the 1993–1999 period to become procyclical by the early twentieth century. The recent procyclicality of female moonlighting supports the idea that female workers respond to a need for "just-in-time" employment following the economic upturn of the mid- to late 1990s. ( JEL J2, E32)     

RELIGIOUS REFERENCE GROUPS AND THE PERSISTENCE OF NORMATIVE BEHAVIOR: AN EMPIRICAL TEST

Reference groups and significant others are vitally important in both the formation and the persistence or change of normative as well as deviant behavior patterns. Thus one's initial religious beliefs and behavior (or lack thereof) reflect the socializing influence of the family. However, the situation may change when young people leave home for education or work, as demonstrated by research that shows decreases in religious beliefs or church attendance when young people leave home to attend college. In contrast to the pattern whereby religiosity declines in a college or university environment, we maintain that students who develop close ties with others who are religious, especially in a highly religious community, will maintain the same patterns of high commitment developed in their families. Specifically, we hypothesize that religious beliefs and participation will be positively related to (1) parents' religious beliefs and practices and (2) current friends' religious beliefs and participation. These hypotheses were tested with a sample of college students living on campus (n = 339). The data support the argument that students' current religious beliefs and behavior are related to both their parents' religiosity and the reinforcing effects of the religiosity of their current friends.     

THE MONTE CARLO CYCLE IN BUSINESS ACTIVITY

NBER business"cycle" reference dates and aggregate economic time series are examined for evidence of regular cyclic behavior. A simple contingency table test is used on the reference dates, and aggregate series are fit with a second-order autoregression. The results are negative. Apparently the business "cycle" is an optical illusion or, as Irving Fisher called it, a "Monte Carlo cycle." These are the cycles superstitious gamblers believe govern their luck.     

AN EMPIRICAL TEST OF THE MEDIAN VOTER MODEL

This paper uses data at the school district level for 257 Michigan school districts to estimate the Bowen equilibrium level of expenditures in each district. The estimation uses a theoretical model of millage referenda that is developed in the paper. Then, the estimated Bowen equilibrium level of expenditures in each district is compared with the actual level. In the average district, the actual level of expenditures is less than 3 percent away from the estimated Bowen equilibrium. This evidence strongly suggests that, for educational expenditures at least, the theoretical median voter model provides a good explanation of empirical reality.     

FURTHER EVIDENCE ON THE MONTE CARLO CYCLE IN BUSINESS ACTIVITY

This paper tests the null hypothesis that "cycles" in business activity are merely Monte Carlo cycles. It compares the actual distribution of expansionary and contractionary phase duration times with those which would be expected under the null hypothesis. If the probability of a phase turning point is constant during a small interval of time, rather than increasing, the duration times of upswings and downswings should be exponentially distributed. Goodness of fit statistics were calculated for each phase for the post World War II time series of: five coincident indicators, inverted unemployment rate, and production index. The evidence found here supports the Monte Carlo thesis.     

AN EMPIRICAL MODEL OF PRICE AND OUTPUT BEHAVIOR

This paper proposes a model of short-run price and output behavior and undertakes an initial empirical investigation of the model with data from the manufacturing sector of the U.S. Economy. The model provides a relatively precise specification of the various factors that influence prices and output, and joint maximum likelihood techniques are used to estimate the parameters of the model. The empirical results support the proposition that demand-oriented forces primarily influence output while cost-push forces primarily influence prices and indicate that real interest rates affect both prices and output.     

NEW FACTS ABOUT FIRM RISK ACROSS COUNTRIES AND OVER THE BUSINESS CYCLE

The characteristics of firm‐level risk over the cycle and across countries are studied in this paper. Low idiosyncratic firm‐level risk is found to be a feature of highly developed, stable economies, whereas the countercyclicality of firm‐level risk is associated with flexible as well as stable economies. These facts are uncovered with the help of a theoretical model where small, risk‐averse firms display procyclical risk, whereas larger, risk‐neutral firms have countercyclical risk patterns that depend on the rigidity of the business environment. The predictions of the model are then confirmed by the data using a large international firm‐level database (ORBIS) together with the World Bank Doing Business Database, during the “Great Recession” across 55 countries. The findings are critical for the growing literature of uncertainty driven business cycles, and show that firm‐level uncertainty cannot be treated as an exogenous parameter. (JEL D21, D22, E32, F44, L11, L25)     

IMPERFECT COMPETITION and BUSINESS CYCLES: AN EMPIRICAL INVESTIGATION

Does imperfect competition increase the magnitude of business cycles? If so, the variability of an industry's employment and output should be positively related to the market power of firms in that industry. This paper demonstrates that the opposite is true: U.S. manufacturing industries with high price-cost margins display less employment variability than do low-markup industries. These high-markup industries display less price variability as well. Highly concentrated industries, however, do display more employment variability. To some degree, markups may reflect labor hoarding rather than market power; this may account for part, but not all, of the negative correlation between markups and variability.     

EDUCATIONAL SCREENING BY CERTIFICATES: AN EMPIRICAL TEST

This paper argues that the relevant test of wage screening effects should be based on educational certificates rather than years of schooling. This is because information conveyed to firms about individual productivity through years of schooling is not sufficiently refined for making individual wage offer decisions. Although it may be useful for making hiring decisions.     

AN EMPIRICAL INVESTIGATION OF ASYMMETRIC BEHAVIOR IN CORPORATE DIVIDEND POLICY

Employing three alternative measures of ability to pay, we find support for the Lintner hypothesis that firms pursue a long-run target payout ratio and also that current earnings better explain long-run dividends than cash flows or stock prices. The evidence further indicates that corporations adjust dividends with a ratchet effect, raising them more readily than they lower them. More specifically, when dividends are below target levels, firms move toward equilibrium by increasing them, but when dividends are above target levels, firms approach equilibrium by restricting dividend increases as earnings rise.     

INTERNATIONAL EVIDENCE ON FRIEDMAN'S THEORY OF THE BUSINESS CYCLE

Milton Friedman's theory of the business cycle implies two empirical regularities tested for here. One regularity is that business cycles are asymmetric: The size of a contraction affects the size of the following expansion, but not vice versa. The second regularity is that a supply-side ceiling to aggregate output limits the size of expansions. Friedman's correlation methods yield only very weak support for the asymmetry hypothesis when applied to real GNP data of eight OECD countries. A time series model with a ceiling component fits the data well for a majority of the countries.     

POLITICAL MODELS OF THE BUSINESS CYCLE SHOULD BE REVIVED

Political models of the business cycle have typically been ignored because they appear inconsistent with rational behavior and because empirical evidence is inconclusive. This paper addresses the second issue, demonstrating for U.S. real GNP, unemployment, and inflation that electoral cycles (persistent patterns across electoral terms) are significant, but apparently only for Republican incumbents, and that partisan cycles (persistent differences between parties) are also significant. These findings are consistent with the conjecture that a minority party is more constrained by electoral concerns, whereas a majority party is freer to pursue partisan objectives.     

AN EMPIRICAL EXAMINATION OF THE AVERCH-JOHNSON EFFECT

In this paper the Averch-Johnson thesis of a capital bias in regulated firms is examined empirically. This is accomplished by estimating a system of factor demand functions using individual plant data from the electric power industry. Results obtained do not provide support for the A-J effect and it is suggested that there are a number of reasons this could have been expected a priori. finally, the implied parameters of the production function are derived and presented; the values are in line with other estimates of the production function for the electric power industry.     

CATASTROPHE THEORY AND THE BUSINESS CYCLE

We use the approach of R. Thom's "Catastrophe Theory" to construct a generalization of Kaldor's 1940 trade cycle. The model allows for cyclic behavior which exhibits either rapid recoveries (recessions) or slow recoveries (depressions) .     

NONLINEAR BUSINESS CYCLE DYNAMICS: CROSS-COUNTRY EVIDENCE ON THE PERSISTENCE OF AGGREGATE SHOCKS

We look for asymmetries in the dynamics of real GDP growth for the G7 countries, using a model by Beaudry and Koop that allows the depth of a recession to influence the rate of growth of output. We find evidence supporting these nonlinearities in four countries, including the United States, but we do not find evidence that the asymmetries are common even among the four countries exhibiting asymmetric behavior. A modification of the model to distinguish between the recession and recovery phases of a business cycle does not change this general finding. The asymmetries discovered by Beaudry and Koop do not appear to be common among the G7 nations. (JEL E32)