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.     

FRIEDMAN'S METHODOLOGY OF POSITIVE ECONOMICS: A SOFT READING

In his "Methodology of Positive Economics" Friedman aimed to provide a useful heuristic for working economists and not a sophisticated philosophical analysis. Hence, one should be cautious about reading specific philosophical positions, such as instrumentalism, into it. In the context of its time, it was a plea for a positivistic interplay of theory and observation. On such a reading Friedman's plea for unrealistic assumptions becomes much more defensible, and Friedman's essay is broadly consistent with the methodology that most economists now affirm, at least in principle.     

A CHANGE POINT ANALYSIS OF THE IMPACT OF "ENVIRONMENTAL FEDERALISM" ON AGGREGATE AIR QUALITY IN THE UNITED STATES: 1940–98

During President Reagan's administration, environmental policy making was substantially shifted from the federal level to the state and local levels. We use techniques in Bai (1997a, 1997b) to determine change points in the trends of three important air pollution series. We find that the beneficial trends in the emission series began with federal legislation and were not due to the Reagan devolution. However, second-round change point tests indicate that the beneficial trends in the emissions series that began with federal legislation continued unabated following the Reagan devolution. (JEL Q20 , C50 )     

Children's Dispositions Toward Proprietary Drugs and the Role of Television Drug Advertising

This study of 668 children aged 8 to 13 from diverse socialbackgrounds suggests that children are, to a measurable extent,influenced by exposure to TV advertising for proprietary drugsbut that the net result is moderate dispositions rather thanstrongly favorable dispositions toward these products. Subgroupanalysis confirms the generality of these conclusions: somesubgroups appear to be more responsive to TV drug advertisingbut none show strongly favorable attitudes or behaviors towardproprietary drugs.