Natural Gas Pipelines: Rent Revealed
S. P. A. Brown


Financial Stability and FDIC Insurance
Roger W. Garrison, Eugenie D. Short and Gerald P. O'Driscoll, Jr.
Published as: Garrison, Roger W., Eugenie D. Short and Gerald P. O'Driscoll, Jr. (1988), "Financial Stability and FDIC Insurance," in The Financial Services Revolution: Policy Directions for the Future,Vol. 1, eds. Catherine England and Thomas F. Huertas (Netherlands: Springer), 187-207.
Abstract: The Federal Deposit Insurance Corporation (FDIC) was created over five decades ago to increase the stability of the banking system. Questions of how and whether the FDIC enhances stability or welfare are now being raised in the economic literature. Buser et al. (1981) argue that deposit insurance has been deliberately under-priced so that the FDIC’s package deal, which includes both insurance and regulation, will be attractive to banks. These authors identify a deadweight loss associated with this particular incentive structure. Campbell and Glenn (1984) discuss the determinants of the optimal policies regarding deposit-insurance pricing and bank closings. They show that appropriate policy depends in an important way on the nature of the mechanism for determining insolvency. Chan and Mak (1984) show that, given some exogenously determined constraint on the bank-failure rate, a risk-sensitive premium for deposit insurance may be ill-advised. These authors focus their analysis on the trade-off between depositors’ welfare and the soundness of the insurance system.


Tax Indexation and Inflationary Finance
W. Michael Cox and Michael Williams


Insulating Policies for Large and Small Countries
W. Michael Cox and Douglas McTaggart
Abstract: In this paper we investigate policies for the large and small country that provide complete insulation from foreign real and monetary disturbances. We find that when there exists two channels of transmission, the integrated commodity and capital markets, using only exchange rate policies does not provide complete insulation. However, floating the exchange rate and pursuing a specific interest rate target does. In terms of output variability however, insulating policies may be undesirable.


Small Sample Efficiency Gains From a First Observation Correction for Hatanaka's Estimator of the Lagged Dependent Variable-Serial Correlation Regression Model
Thomas B. Fomby
Published as: Fomby, Thomas B. (1987), "Small Sample Efficiency Gains From a First Observation Correction for Hatanaka's Estimator of the Lagged Dependent Variable-Serial Correlation Regression Model," Communications in Statistics – Simulation and Computation 16 (2): 551-571.
Abstract: Evidence presented by Fomby and Guilkey (1983) suggests that Hatanaka's estimator of the coefficients in the lagged dependent variable-serial correlation regression model performs poorly, not because of poor selection of the estimate of the autocorrelation coefficient, but because of the lack of a first observation correction. This study conducts a Monte Carlo investigationof the small sample efficiency gains obtainable from a first observation correction suggested by Harvey (1981). Results presented here indicate that substantial gains result from the first observation correction. However, in comparing Hatanaka's procedure with first observation correction to maximum likelihood search, it appears that ignoring the determinantal term of the full likelihood function causes some loss of small sample efficiency. Thus, when computer costsand programming constraints are not binding, maximum likelihood search is to be recommended. In contrast, users who have access to only rudimentary least squares programs would be well served when using Hatanaka's two-step procedure with first observation correction because of the ease of calculating consistent standard errors of the estimates.


Transportation Technologies and the Optimal Depletion of West Coast Oil Reserves
Roger H. Dunstan and Ronald H. Schmidt


Price Expectations, Uncertainty, and Changes in Drilling Activity
Ronald H. Schmidt
Abstract: Estimated models of drilling activity often use stationary lag structures of past prices to capture the effects of price expectations. Results from a model of optimal depletion by members of a competitive fringe, however, suggest replacing the price expectations variable with the difference between expected growth rates in prices and the firm's discount rate to explain changes in drilling activity. Using oil price growth rates for each month estimated with information available at that time, empirical results were found to support the theoretical claim by yielding better goodness-of-fit results than were found with models using lagged price structures.


Safety-Net Mechanisms: The Case of International Lending
Gerald P. O'Driscoll, Jr.
Publised as: O'Driscoll Jr., Gerald P. and Eugenie S. Short (1984), "Safety-Net Mechanisms: The Case of International Lending," Cato Journal 4 (1): 185-204.


Do Workers Earn Less Along the U.S.–Mexico Border?
Alberto E. Davila and J. Peter Mattil


Some Time Series Methods of Forecasting the Texas Economy
James G. Hoehn and William C. Gruben, with Thomas B. Fomby


Potential Effects of State Regulatory Agencies on the Post-Decontrol Natural Gas Market
Ronald H. Schmidt