A New Variant of RESET for Distributed Lag Models

We propose a new variant of RESET that is appropriate for distributed lag models. Monte Carlo evidence on size and power strongly supports the use of the new variant instead of the traditional RESET.

The commodity-currency view of the Australian dollar: A multivariate cointegration approach

Using Australian quarterly data from the post-float period 1984:1-2003:1 and a partial system, we identify and estimate two cointegrating relations, one for the interest-rate differential and the other for the nominal exchange rate. Our estimate of the long-run elasticity of the exchange rate with respect to commodity prices is 0.939, which strongly supports the widely held view that the floating Australian dollar is a ‘commodity currency’. We also find that the PPP and UIP cannot be rejected so long as commodity prices are included in the cointegrating relations. Our model outperforms the random walk model in forecasting the exchange rate in the medium run.Australian dollar, commodity currency, cointegration

A Simple Approach to Testing the Potency of Government Purchases to Stimulate Aggregate Demand

Abstract: The paper proposes a new approach to testing the potency of government purchases to stimulate the economy by testing a set of conditions implied by the Ricardian Equivalence (RE) proposition that a typical household incorporates the government's budget constraint into its own. These conditions are as follows: (1) private consumption, income, and government purchases form a “levels relationshipâ€; and (2) considering consumption as the dependent variable, the coefficients of income and of government purchases are 1 and -1. The last restriction is also implied by the hypothesis that consumption and government purchases are perfect substitutes, however, so the proposed approach cannot distinguish between the perfect substitutability and the RE hypotheses. This restriction is thus referred to in the paper as the hypothesis of direct or ex ante full crowding out. If it holds, then the multiplier of government purchases is zero. Using US quarterly data, 1947.1-2012.1, the results suggest that a “levels relationship†exists and that the coefficient of government purchases is about -0.4 and significantly below -1, thus leading to the conclusion that government purchases stimulate aggregate demand and output

Adhesion of ethylene vinyl acetate copolymers to metals.

SIGLEAvailable from British Library Lending Division - LD:D65621/86 / BLDSC - British Library Document Supply CentreGBUnited Kingdo

How to Turn a Recession into a Depression: The Role of the Media, of the Politicians, and of the Political Analysts

By modifying slightly a standard neoclassical-synthesis macroeconomic model, this paper investigates the effects of an adverse supply or demand shock on output, employment, investment, prices, interest rates, and the exchange rate. The paper focuses on the possibility of the magnification of these effects by the media, the politicians, and the political analysts, who induce herd-behavior by overstating the size of the shock. I find that such behavior destabilizes the economy by magnifying the amplitude of the business cycle and by hurting private investment, which might cause expansions to be shorter and contractions to last longer

Failure in the market for reviewing economics papers: Good readers, bad referees, and ugly papers

The paper discusses the problem of incompetent and/or irresponsible refereeing of scientific papers, with emphasis on economics papers. To illustrate, I describe my own confrontation with erroneous published papers, and demonstrate that writing comments on such papers does not always solve the problem. Finally, based on previously suggested as well as on currently used solutions, I propose a change in the review process by abolishing referee anonymity and letting the authors appeal publicly if they think their papers have been evaluated improperly. This change will render the process self-correcting

How to Turn a Recession into a Depression: The Role of the Media, of the Politicians, and of the Political Analysts

By modifying slightly a standard neoclassical-synthesis macroeconomic model, this paper investigates the effects of an adverse supply or demand shock on output, employment, investment, prices, interest rates, and the exchange rate. The paper focuses on the possibility of the magnification of these effects by the media, the politicians, and the political analysts, who induce herd-behavior by overstating the size of the shock. I find that such behavior destabilizes the economy by magnifying the amplitude of the business cycle and by hurting private investment, which might cause expansions to be shorter and contractions to last longer

Failure in the market for reviewing economics papers: Good readers, bad referees, and ugly papers

The paper discusses the problem of incompetent and/or irresponsible refereeing of scientific papers, with emphasis on economics papers. To illustrate, I describe my own confrontation with erroneous published papers, and demonstrate that writing comments on such papers does not always solve the problem. Finally, based on previously suggested as well as on currently used solutions, I propose a change in the review process by abolishing referee anonymity and letting the authors appeal publicly if they think their papers have been evaluated improperly. This change will render the process self-correcting

Government Spending and Consumer Attitudes Toward Risk, Time Preference, and Intertemporal Substitution: An Econometric Analysis

We construct a model that considers the direct effects, if any, of government spending on the attitudes of a typical consumer toward risk, time preference, and intertemporal substitution. The null hypothesis is that a growing government sector does not affect the consumer's behavior, and the alternative is that it causes him to become less risk averse, more impatient to consume now rather than in the future, and less responsive to changes in real interest rates. If the alternative hypothesis is correct, then government growth may lead to lower economic growth. Using Greek annual aggregate data, 1960-1990, we can reject the null hypothesis

Government Spending and Consumer Attitudes Toward Risk, Time Preference, and Intertemporal Substitution: An Econometric Analysis

We construct a model that considers the direct effects, if any, of government spending on the attitudes of a typical consumer toward risk, time preference, and intertemporal substitution. The null hypothesis is that a growing government sector does not affect the consumer's behavior, and the alternative is that it causes him to become less risk averse, more impatient to consume now rather than in the future, and less responsive to changes in real interest rates. If the alternative hypothesis is correct, then government growth may lead to lower economic growth. Using Greek annual aggregate data, 1960-1990, we can reject the null hypothesis