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Atlantic
Economic Journal |
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| VOLUME 31 |
SEPTEMBER
2003
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NUMBER 3
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E-Mail: iaes@iaes.org
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| Table of Contents | Submission | Manuscript Instructions | Anthology Instructions | Membership | Web Founders | Endowment Fund | IAES Officers | Front Page | |||
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In a speech before the Mont Pelerin Society, William E.
Simon recommended that the U.S. government adopt five rules to achieve
stability and economic growth. Two of these rules deal with the budget
posture. The rules were based upon Simon's belief that excessive government
spending and recurring federal budget deficits significantly contributed
to the economic instabilities of the 1970s and 1980s, namely, high inflation,
high unemployment, and decreasing rates of production and private capital
accumulation. This paper seeks to explore the extent to which fiscal action
in these two decades had departed from Simon's recommendations and presents
evidence on the link between federal budget deficits and economic growth.
(JEL E6, H5, H6); Atlantic Econ. J., 31(3): pp. 219-232, Sept. 03.ŠAll
Rights Reserved
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This paper analyzes the role of William E. Simon in shaping
tax policy during his tenure as Treasury Secretary from 1974 to 1977.
Simon believed in supply-side economics. Therefore, the tax policy changes
that occurred during his time as Secretary involved reductions in tax
rates as well as simplification of rules. A far-reaching effect of the
1975 Tax Act was the introduction of the Earned Income Tax Credit, which
retains popular support today. Although these changes did not immediately
increase growth and curb inflation, Simon's attempts to reduce marginal
tax rates in the 1970s resulted in two decades of legislation to reduce
the influence of government on the economy, which resulted in budget surpluses
in the 1990s. (JEL H3, H24, E62); Atlantic Econ. J., 31(3): pp. 233-241,
Sept. 03.ŠAll Rights Reserved
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This paper offers an empirical test of the Simon's proposition:
Do conservative governments make a difference in monetary policy? Using
quarterly data on the inflation rate and the GDP gap, the authors test
the hypothesis during the tenure of two regimes: conservatives and non-conservatives,
and for two countries, the U.S. and the U.K. Under the assumption that
the monetary authority followed a Taylor rule, they evaluate monetary
policies pursued by alternative regimes in the two countries. Alternatively,
they assume that the monetary authority adjusts money growth in response
to deviations of inflation and GDP from their target levels. The estimation
results were mixed. The Simon's hypothesis was supported in the U.K. during
the Thatcher regime, but not in the U.S. during the Reagan's tenure. The
findings for the U.S. in contrast to those obtained for the U.K. indirectly
validate the Simon's contention that monetary policy in the U.S. is subject
to manipulation by interest groups (JEL E50, E52, E58); Atlantic Econ.
J., 31(3): pp. 242-254, Sept. 03.ŠAll Rights Reserved
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Using error-correction model (ECM) estimation, the paper
empirically examines the causality relationship between the federal government
budget deficit and the ex ante real interest rate yield on high grade
long term tax free municipal bonds in the U.S. To clarify this deficit
or interest rate relationship, the budget deficit is measured by the primary
budget deficit, which excludes net interest payments by the Treasury.
In a model that includes federal personal income tax rates and net international
capital flows, as well as money supply growth, the ECM estimates strongly
suggest a bi-directional relationship between the primary budget deficit
and the ex ante real interest rate yield. Budget deficits apparently do
matter! William Simon's concerns were justified. (JEL H61, H62, H69, E43,
E62); Atlantic Econ. J., 31(3): pp. 255-265, Sept. 03.ŠAll Rights Reserved
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The paper provides a bird's-eye view of the long and arduous
task of reforming the federal individual income tax. As a starting point
for reviewing the major reforms, the authors evaluate Secretary Simon's
criteria that underlie his contention that the "tax system was badly in
need of a thorough overhaul." Principles that should guide tax reforms
are spelled out. Conflicts that arise with the application of these principles
are highlighted. An examination of reform efforts in light of the principles
and criteria set in the Treasury Department's Blue Prints for Tax Reform
forms the basis for evaluating reforms enacted over the period 1978-2001.
The review suggests that we are partway towards achieving the tax man's
dream of equity, efficiency, and simplicity. (JEL H3, H24, E62); Atlantic
Econ. J., 31(3): pp. 266-282, Sept. 03.ŠAll Rights Reserved
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William E. Simon's Capacities' Approach to Liberty: An Essay in Economic Citizenship UTE SCHUMACHER AND GLADSTONE HUTCHINSON |
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This paper discusses the philosophical underpinnings of William E. Simon's productive public service and his championing of liberty in economic citizenship and the furtherance of entrepreneurial capitalism in America. The discussion suggests that his understanding and advocacy of the instrumental role of liberty made him distinctive among policymakers and unique among political and social conservatives. Two central themes are highlighted: the principle of liberty and private initiatives to further the cause of liberty. Secretary Simon was a passionate advocate for individual liberty being ascribed the highest value in American political life and called for vigilance against the unnecessary intervention of the state in people's lives. He committed his intellectual and financial resources to the promotion of these ideals through significant initiatives in support of institutions including universities and colleges, foundations and community organizations, and groups that exhibited a strong belief in, and support of, the cause of liberty. This, Secretary Simon believed, would "strengthen the free enterprise system and the spiritual values on which it rests." (JEL H10); Atlantic Econ. J., 31(3): pp. 283-288, Sept. 03.ŠAll Rights Reserved |
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