It is important but difficult to distinguish between desirable and undesirable effects of unemployment insurance (UI) that are observationally equivalent when designing optimal UI schemes. For example, a UI-induced rise in the wage rate caused by workers taking more time to match their skills with job vacancies is desirable. However, another view of the same observation is that UI causes permanently higher involuntary unemployment by raising the reservation wage. This paper avoids this problem by regarding the trade-off between the UI replacement rates and unemployment as an intermediate relationship that matters only as far as it impacts economic growth. An empirical analysis of UI replacement rates, unemployment rates, and growth rates using annual panel data finds UI replacement rates are associated with higher unemployment. However, no significant relationship is found between UI-related unemployment and the real growth rate of gross domestic product. (JEL D6, J65);Int'l Advances in Econ. Res. 7(4): p. 373 Nov. 01. ©All Rights Reserved

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This paper provides additional empirical evidence on the topic of the effectiveness and the impact of Federal Reserve intervention on U.S. exchange rates. Using a daily measure of exchange rate intervention in the yen/dollar and mark/dollar exchange markets for the period January 3, 1985 to March 19, 1997, this paper finds a statistically significant impact of intervention on spot rates. A generalized autoregressive conditional heteroskedasticity exchange rate equation is used to measure the impact of intervention on exchange rate uncertainty. This study finds that intervention is associated with a significant increase in the interday conditional variance (uncertainty) of both bilateral spot exchange rates. This supports the view of Friedman and Schwartz that exchange rate intervention serves to destabilize the foreign exchange market by introducing additional levels of exchange rate uncertainty. (JEL F31);Int'l Advances in Econ. Res. 7(4): p. 385 Nov. 01. ©All Rights Reserved

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Since intermediate goods play such a vital role in foreign trade, this paper develops a model that explains the benefits from intraindustry trade in differentiated intermediate goods. In comparison with a situation of autarchy, this type of trade causes an increase in the number of intermediate good varieties. In this way, the producers of final goods will benefit from intermediate good varieties, which are closer to the ideal for a specific production process. At the same time, the producers of intermediate goods will, under conditions of international division of labor, benefit from economies of scale. (JEL F0, F1, F2);Int'l Advances in Econ. Res. 7(4): p. 393 Nov. 01. ©All Rights Reserved

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This paper centers on Keynes' theory of money and his attack on the classical model. Keynes criticized the self-correcting model of the British orthodoxy along two separate lines. In the first, in which Keynes' theory of money was crucial, he took the institutional variables as given and examined the functional relationships. Keynes' burden was to undermine what he termed the "classical dichotomy," where money was a veil, playing no role in determining output and employment. Two key features of the orthodox model were loanable funds and quantity theories, and Keynes' theory of money emerged from the rejection of these theories. The key to his attack on the classical dichotomy was the speculative demand for money, which he presented as an indirect, unstable function of the interest rate. Hence, Keynes linked money demand to the interest rate. The interest rate was thus determined by monetary variables rather than real factors, contrary to British orthodox opinion. Keynes then demonstrated that intended investment and saving need not be equal at a full employment equilibrium. (JEL B00, E00);Int'l Advances in Econ. Res. 7(4): p. 409 Nov. 01. ©All Rights Reserved

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This paper reconsiders the evidence regarding the existence of executive and congressional influences on monetary policy in the U.S. Results regarding the source of the federal deficit (cyclical or structural) provide evidence that structural deficits occurring under Democratic presidential administrations have a significant impact on money growth rates, but those occurring under their Republican counterparts may not. Although the evidence regarding cyclical deficits is statistically weaker, their more limited influence on monetary growth rates appears to be similar regardless of whether they occur under Democratic or Republican presidents. This contrasts with previous research which suggests that cyclical deficits influence monetary growth rates under Democratic administrations while structural deficits generated a similar monetary response regardless of which party held the presidency. (JEL E52);Int'l Advances in Econ. Res. 7(4): p. 419 Nov. 01. ©All Rights Reserved

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This paper uses a balanced panel of taxpayers to examine the price and income elasticities for charitable contributions for nonitemizing taxpayers. One-way and two-way static fixed effects models are used to estimate these elasticities. Additionally, this paper incorporates dynamic panel analysis within the constraints of the data. The data are from the Individual Tax Model File panel of taxpayers, maintained by the University of Michigan. This paper finds no significant price elasticities for nonitemizers. The results of this paper would argue that there is no compelling economic reason to extend charitable contribution deductions to nonitemizers. (JEL H2);Int'l Advances in Econ. Res. 7(4): p. 431 Nov. 01. ©All Rights Reserved

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This paper initially refers to some of the classifications of services used by various authors, followed by the components that comprise nontourism services in Barbados and their linkages to the other sectors of the Barbados economy. Using regression analysis, variables that may influence nontourism services in the long and short run are then identified. In the long run, the variables that impact nontourism services are relative real incomes, tourist arrivals, merchandise imports, commercial bank credit, relative prices, and government policy. The short run is influenced by relative real incomes, tourist arrivals, and merchandise imports. Since tourist arrivals influence nontourism services in the long and short run, Barbados must still focus on tourism activity to maximize its foreign exchange potential from nontourism services. (JEL O50);Int'l Advances in Econ. Res. 7(4): p. 459 Nov. 01. ©All Rights Reserved

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The Ciudad Juárez maquiladora sector has grown enormously during the last three decades. To examine whether the trends underlying this remarkable performance are quantifiable, this paper analyzes the short-term time series characteristics of this portion of the metropolitan economy. The econometric methodologies employed include both univariate and transfer functions, with the latter using autoregressive integrated moving average analysis augmented by causality testing. Data are drawn for the sample period of January 1981 to December 1998. Empirical results indicate that inflation-adjusted wage rates, factories in operation, U.S. industrial performance, and the international value of the peso play important roles in determining month-to-month fluctuations in borderplex maquiladora payrolls. (JEL R23);Int'l Advances in Econ. Res. 7(4): p. 471 Nov. 01. ©All Rights Reserved

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This paper estimates educational choice, wage determination, and the rate of return to education in Taiwan using Taiwan's Manpower Utilization Survey data of 1996. As education investment is a self-selection process, this paper adopts a two-stage estimation method. First, a polychotomous ordered probit model is used to estimate the education decision. Second, the wage equations of different educational attainments are estimated by incorporating the possible selection bias obtained in the probit model. Finally, rates of return on each education level are calculated from the estimation results. (JEL I21, J24, J31) ;Int'l Advances in Econ. Res. 7(4): p. 479 Nov. 01. ©All Rights Reserved

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Copyright © International Atlantic Economic Society, May 2001

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Publication does not necessarily represent approval, concurrence, or official endorsement of the statements and opinions herein by the International Atlantic Economic Society. Publication number: ISSN 1083-0898.

Suggested Citation
International Advances in Economic Research, Volume 7, Number 4, November 2001