Labor Choices of Farm Families: Substitutes, Complements and Simultaneous Decision Making
Hilary H. Smith


Depository Institution Failures: The Deposit Insurance Connection
Gerald P. O'Driscoll, Jr.
Published as: O'Driscoll Jr., Gerald P. (1988), "Bank Failures: The Deposit Insurance Connection," Contemporary Economic Policy 6 (2): 1-12.
Abstract: It is generally accepted that banks must be regulated so as to avoid the moral hazard situation that deposit insurance generates. Accepting this argument implies that expanded bank powers must await deposit insurance reform. This article rejects the accepted view and argues instead that the existing regulatory system enhances rather than diminishes the riskiness of banks' portfolios. The article argues that the benefits from permitting banks to diversify probably would outweigh the costs. It concludes, however, that deposit insurance is a major culprit in the current wave of bank failures.


Lower Oil Prices and State Employment
S. P. A. Brown and John K. Hill
Published as: Brown, S.P.A. and John K. Hill (1988), "Lower Oil Prices and State Employment," Contemporary Economic Policy 6 (3): 60-68.
Abstract: Even after two years of adjustment, it was apparent that the sharp drop in oil prices occurring during late 1985 and early 1986 would have a profound effect on the regional distribution of employment in the United States. In this paper, we develop and implement a procedure for quantifying the long-term consequences of lower oil prices on employment in each of the 50 states. We use the estimates developed to determine how much of the variation in state employment growth during 1986 can be attributed to the oil price decline. We also use the estimates to gauge the feasibility of political action, such as an oil import tariff, to reverse the oil price decline.


The Capital Gains and Losses on U.S. Government Debt: 1942-1986
W. Michael Cox and Cara S. Lown
Published as: Cox, W. Michael and Cara S. Lown (1989), "The Capital Gains and Losses on U.S. Government Debt: 1942–1986," Review of Economics and Statistics 71 (1): 1-14.
Abstract: The capital gains and losses on U.S. Treasury securities are calculated and reported on a quarterly basis over the 1942-87 period. These data are then used to calculate an adjusted measure of the federal budget deficit for the years 1975-87. Whereas the rising trend in interest rates over the 1975-81 period substantially reduced the federal deficit, this study shows that the reversal of that trend over the 1981-86 period contributed even more greatly to an increase in the deficit. Also calculated and reported are holding-period rates of return on overall marketable Treasury debt, providing a contrast to existing interest rate series.


Random Coefficients Models of the Inflationary Consequences of Discretionary Central Bank Behavior
Kenneth J. Robinson
Abstract: There exists fairly widespread agreement that, especially over a long-run time period, inflation is always and everywhere a monetary phenomenon. This proposition, however, leaves unanswered the question why a central bank would allow, or possibly persue, an inflationary monetary policy. To answer this questjon, a centrai bank objective function is derived which recognizes the existence of both benefits and costs associated with inflation. The empirical results indicate that while Federal Reserve behavior is random in nature, benefits, in the form of seigniorage, and costs, composed of deviations of unemployment from the policymaker's preferred rate, are significant factors in explaining Federal Reserve behavior.


Increasing the Efficiency of Pooled Estimation with a Block Covariance Structure
Jeffery W. Gunther and Ronald H. Schmidt
Published as: Gunther, Jeffery W. and Ronald H. Schmidt (1993), "Increasing the Efficiency of Pooled Estimation with a Block–Diagonal Covariance Structure," The Annals of Regional Science 27 (2): 133-142.
Abstract: A small number of time-series observations relative to regions precludes estimation of the entire structure of regional dependence in a pooled regression model. The resulting need for parsimonious models of regional dependence can be satisfied through the use of spatial autocorrelation structures. This article explores an alternative methodology that allows the researcher to estimate disturbance covariances for regions that are closely linked, even when the number of time-series observations is relatively low. The approach presented here shares the advantage of spatial autocorrelation structures in being parsimonious, but offers the additional advantage of relying more completely on sample information to provide estimates of dependence between regions within specified regional groups. Monte Carlo experiments suggest that block-covariance models offer substantial efficiency gains over simple heteroskedastic models. The experiments also suggest that when the number of time-series observations is limited and the correlations of disturbances between regions are small, block structures yield efficiency gains over a full-information model.


The Incidence of Sanctions Against U.S. Employers of Illegal Aliens
John K. Hill and James E. Pearce
Published as: Hill, John K. and James E. Pearce (1990), "The Incidence of Sanctions Against U.S. Employers of Illegal Aliens," Journal of Political Economy 98 (1): 28-44.
Abstract: This article assesses the significance of sanctions against employers of illegal aliens for resource allocation and income distribution in the United States. Data from the 1980 Census of Population are used to identify the industries likely to be monitored most closely by the immigration authorities. A general equilibrium incidence analysis then is carried out using alternative assumptions about the overall level of enforcement. Estimates are made of the effects sanctions will have on the real wages of legal U.S. workers.


Financial Innovation and Monetary Policy Effectiveness
Cara S. Lown
Abstract: How financial innovation and financial intenmediaries affect the Federal Reserve's ability to target the monetary aggregates and/or interest rates has been a long standing debate in macroeconomics. With the recent development of new money market instruments and the growth of money market funds this issue is again being discussed. This article develops a model of the financial sector to examine how the growth in money market funds has altered the effectiveness of monetary policy. The work presented in this paper differs fnom previous work in that the important actors in the model are specified from first principles. The majon conclusion reached is that, when an explicit role for the intermediary is specified, the asset choice of the money market fund is the key variable in determining the effectiveness of monetary policy.