Employment Effects of the Federal Minimum Wage

This paper describes an empirical study of the effects of federal minimum wage policy on aggregate employment, on the employment of various demographic groups, and on employment in low-wage industries. The analytical framework permits separate testing both for direct employment effects of the level and coverage of the minimum wage and for indirect employment effects resulting from a possible role for the minimum wage as a cause of monetary nonneutrality. Another innovation in this study is the inclusion of rational expectations of expected future relative minimum wages as determinants of the demands and supplies of labor services. The study finds that minimum-wage policy seems not to affect aggregate employment or average wages either directly or indirectly. Minimum-wage policy, however, has large and statistically significant effects on the industrial and demographic composition of employment, with employment decreasing in certain low-wage industries and for teenagers and for young men but increasing for young women and for adults. A major part of these effects are associated with anticipated future changes in the level of the minimum wage.

Monetary Information and Macroeconomic Fluctuations

This paper introduces contemporaneously available monetary data into an "equilibrium" model that combines rational expectations, market clearing, and incomplete information about monetary disturbances. Data on the current money stock involve a preliminary estimate that is subject to a subsequent process of gradual revision. The model implies the testable hypothesis that aggregate output and employment are uncorrelated with the contemporaneous measure of money growth implied by the difference between the currently available estimates of current and past money shocks. Rejection of this hypothesis provides strong evidence again at the equilibriums approach to modeling the relation between monetary disturbances and macro-economic fluctuations.

The Federal Minimum Wage, Inflation, and Employment

This study investigates the effects of Federal minimum wage policy on mini-mum wage employment, aggregate employment, and average wage rates. The theoretical analysis focuses on the possible effect of the Federal minimum wage in constraining wages and employment in a subset of labor markets, on the possible responses of labor suppliers to these constraints, and on the possible role of the policy of presetting the nominal minimum wage in making monetary policy nonneutral. Among the elements of the theoretical framework that are both distinctive and important are the assumptions that both the demands and supplies of labor services in the subset of constrained markets depend on the expected relative minimum wage in the near and distant future, as well as on the current relative minimum wage and on past levels of employment, and that the relevant expectations of both workers and employers about relative minimum wages are "rational."

Exchange Rate Appreciation, International Competitiveness And Purchasing Power Parity: The Shiomi Company Of Japan

In 2011 the ongoing appreciation in the yen against the US$led Japanese firm Shiomi to consider relocating its production facilities outside of Japan. As a prelude to making this decision, Shiomi commissioned an evaluation of the historical impact of the yen’s appreciation on Japanese competitiveness. This evaluation is the basis for two important lessons in international financial management.  First, it is the real exchange rate, rather than the nominal exchange rate, that determines the relative cost competitiveness of countries. Second, in accordance with the rules of purchasing power parity, the historical evaluation showed that higher inflation in the U.S. relative to Japan caused the ratio of Japanese to U.S. prices to fall at roughly the same rate as the yen’s appreciation against the US$. Thus the long-term appreciation in the yen had little impact on Japanese competitiveness. Students are asked to assess the relocation decision in light of the post-case data on exchange rates and consumer prices supplied in the case. The case is appropriate for use in an international financial management or international economics course

Tests of Equilibrium Macroeconomics Using Contemporaneous Monetary Data

This paper uses contemporaneous monetary data to carry out econometric tests of the "equilibrium" approach to modeling the relation between monetary disturbances and macroeconomic fluctuations. The theoretical analysis introduces into an equilibrium macroeconomic model the availability of preliminary data on current monetary aggregates and the process of accumulation of revised monetary data. The econometric analysis tests two hypotheses derived from this extended model. One hypothesis concerns the neutrality of perceived monetary policy. The other hypothesis concerns the nonneutrality of errors in preliminary monetary data. The econometric results imply rejection of both of these hypotheses. These tests provide strong evidence against the reality of the equilibrium approach.

Theory And Practice In CEO Pay: A Course Module And Integrative Case Based On Boeing Inc.

Business students may dream of receiving pay packages like that of Michael Eisner at Disney. However, many of them will work for the compensation consultant who determines the economics of the pay arrangements, for the valuation consultant who values the different components of the pay arrangements, for the accountant who must audit the financial statement impacts of the pay arrangements, or as a manager in the company whose employees respond to the incentives provided by the pay arrangements. No matter their eventual role, it is critical that every student understands these various aspects of executive pay arrangements, and how these practices have evolved over time. The course module presented herein is designed to effectively integrate these perspectives in as few as five or as many as nine 80-minute sessions that could be a substantive component of an MBA or Master of Accounting capstone course, or a component of a corporate governance elective. A case based on the CEO compensation of Boeing Inc. over the last 60 years provides a series of assignments that effectively integrate the module

The Uncovered Interest Rate Parity Anomaly And Foreign Exchange Market Turnover

The uncovered interest rate parity (UIP) anomaly is that high interest rate currencies appreciate, rather than depreciate, against low interest rate currencies. We show that the UIP anomalies apparent in six major currency pairs have diminished over our 1995-2010 sample period. We further show that the observed decline in deviations from UIP is associated with the substantially higher transaction volume now present in the foreign exchange markets. We interpret our findings as consistent with the proposition that the UIP anomaly dissipates as the foreign exchange markets become more efficient

Should we reduce the role of banks in the monetary policy process?

The traditional view of banks in the monetary and price level control process is based on banks being producers of money in the form of deposits. Some economists have recently argued, however, that growth of bank deposits has no affect on price level stability. They say that the role of banks in the monetary policy process could be reduced with no adverse effect on price level stability, principally by removing reserve requirements.Monetary policy ; Bank reserves ; Bank deposits

Accounting For Employee Stock Options With Service, Performance, And Market Conditions

The accounting for employee stock options has long been a subject of debate among executives, regulators, and standard-setters. The accounting standard passed by the Financial Accounting Standards Board (FASB) in 2004 allows for more creative design of these types of options. In this case, students learn about employee stock options with service, performance, and market conditions. They also learn how to value options with these conditions, and how to report them on company income statements under the new accounting guidance

Escape of anions from geminate recombination in THF due to charge delocalization

Geminate recombination of 24 radical anions (M˙−) with solvated protons (RH2+) was studied in tetrahydrofuran (THF) with pulse radiolysis. The recombination has two steps: (1) diffusion of M˙− and RH2+ together to form intimate (contact and solvent separated) ion pairs, driven by Coulomb attraction; (2) annihilation of anions due to proton transfer (PT) from RH2+ to M˙−. The non-exponential time-dependence of the geminate diffusion was determined. For all molecules protonated on O or N atoms the subsequent PT step is too fast