New Anti-Merger Theories: A Critique

The purpose of this paper is to evaluate two new anti-merger instruments, innovation markets and unilateral effects, on the basis of economic theory and evidence. I first discuss how the economics of antitrust has developed over the years, with the intention of characterizing the intellectual inheritance of 1990s’ antitrust regulators. Within this context, I then discuss each anti-merger instrument, how it has been applied in specific cases, and how it accords with underlying economic science. On the basis of these arguments, antitrust regulators should pause and reconsider the theoretical and empirical bases of applying unilateral effects and innovation markets to merger investigations.antitrust, mergers, innovation markets, unilateral effects

Congressional Trends to Tax and Spend: Examining Fiscal Voting Across Time and Chamber

This paper examines congressional spending preferences over time by party and chamber. The data employed is the annual vote index compiled by the National Taxpayers Union for 1979-2002. NTU scores are presented with and without adjusting for interchamber and intertemporal movements of the policy space over which the scores are calculated. Results indicate that the parties and chambers are much more stable over time, and exhibit a slighter liberal trend, with adjustments for movements in the policy space. In addition, during fiscal milestones the adjusted scores indicate less pronounced changes in spending preferences than the unadjusted data do.fiscal policy, legislator voting, ideal point estimation

Ignorance in Congressional Voting? Evidence from Policy Reversal on the Endangered Species Act

Objective: In 1978 Congress weakened several key provisions of the Endangered Species Act (ESA), which had been enacted only five years earlier. The objective is to compare alternative explanations for this policy reversal. Methods: Probit and multinomial logit models are used to explain empirically how senators voted in both 1973 and 1978, and to investigate why many senators switched their vote from supporting ESA to weakening it. Results: The findings here indicate that party affiliation and policymaker preferences were not important to the 1973 vote, but they were key variables in the 1978 votes and the vote-switching decision. Proxies for unexpected economic impacts of ESA on individual states have little explanatory power. Conclusions: Ignorance, as measured here, does not appear to explain this policy reversal. Rather, an influx of relatively conservative Democrats between 1973 and 1978 presents itself as the leading explanation.endangered species act, congressional voting

Strategic Institutional Choice: Voters, States, and Congressional Term Limits

This paper demonstrates that states’ decisions on limiting congressional terms are empirically determined by measures of relative political influence in Congress. States’ choices on term limits are quantified as a multiple-categorical variable that reflects variation in the stringency of term limits laws passed. Using 1992 data on the American states, the model controls for unobserved heterogeneity that is introduced by some voters having access to institutions of direct democracy. At 2002 state-level values for congressional tenure and federal spending, the model predicts approximately eight to ten additional states would choose to limit terms of their own congressional delegations, but are prohibited from doing so under a Supreme Court ruling. The results hold implications for institutional federalism and the potential passage of similar political institutions across the states.term limits; political institutions; federalism; political economy

The Endowment Effect in a Public Good Experiment

Previous tests of the endowment effect have usually observed WTA-WTP disparities. Here, a public good experiment is employed. Both account framing and duration framing treatments are introduced to alter subjects’ perceived control over an initial endowment. Results do not indicate that preferences shift in a way consistent with the endowment effect.endowment effect, public good, willingness to pay

New Anti-Merger Theories: A Critique

The purpose of this paper is to evaluate these new anti-merger instruments on the basis of economic theory and evidence. I first discuss how the economics of antitrust has developed over the years, with the intention of characterizing the intellectual inheritance of 1990s\u27 antitrust regulators. Within this context, I then discuss each anti-merger instrument, how it has been applied in specific cases, and how it accords with underlying economic science. On the basis of these arguments, antitrust regulators should pause and reconsider the theoretical and empirical bases of applying unilateral effects and innovation markets to merger investigations

Formulating the imputed cost of equity capital for priced services at Federal Reserve banks

This paper was presented at the conference "Economic Statistics: New Needs for the Twenty-First Century," cosponsored by the Federal Reserve Bank of New York, the Conference on Research in Income and Wealth, and the National Association for Business Economics, July 11, 2002. According to the 1980 Monetary Control Act, the Federal Reserve Banks must establish fees for their priced services to recover all operating costs as well as the imputed costs of capital and taxes that would be incurred by a profit-making firm. Since 2002, the Federal Reserve has made fundamental changes to the calculations used to set the imputed costs. This article describes and analyzes the current approach, which is based on a simple average of three methods as applied to a peer group of bank holding companies. The methods estimate the cost of equity capital from three perspectives_the historical average of comparable accounting earnings, the discounted value of expected future cash flows, and the equilibrium price of investment risk as per the capital asset pricing model. The authors show that the current approach also provides stable and sensible estimates of the cost of equity capital over the past twenty years.Federal Reserve banks - Service charges ; Bank holding companies ; Bank capital ; Depository Institutions Deregulation and Monetary Control Act of 1980

The Federal Reserve's imputed cost of equity capital: a survey

Federal Reserve System ; Capital assets pricing model

Natural Resource Dependence in Rural Mexico

The relationship between poverty and natural resources is complex and the empirical evidence to date, mostly from studies of forest activities and poverty, is inconclusive. The main purpose of this paper is to empirically identify the effects of household characteristics and of inequality at the village level on natural resource extraction and dependence. To do so we use data from the Mexico National Rural Household Survey (ENHRUM). Our results show that in rural Mexico natural resource extraction is predominantly an activity carried out by poor households. The same is true for dependence. We also show that there are important differences across Mexico in terms of both participation and dependence on resource income. These differences are most evident when one compares the south and north of the country. We also show that when relatively rich households participate in resource extraction their natural resource income is considerably higher than that of the poor.Resource extraction, Dependence, Poverty, Mexico, Community/Rural/Urban Development, Environmental Economics and Policy, International Development,