Excise Taxes, Consumer Demand, Over-Shifting, and Tax Revenue

This paper examines over-shifting in excise taxes, using the constant elasticity demand function under monopolistic competition. We apply the solution for price from this model to previous studies to obtain estimated price elasticities of demand. We also derive the excise tax, which maximizes tax revenue under this formulation, resulting in a revenue-maximizing tax-price ratio based upon the price elasticity. The model is applied to some previous experience regarding excise tax increases for alcoholic beverages and cigarettes. Our study offers structural insights behind empirical research that finds over-shifting. The model can also be used to help construct excise tax policy

Redefining the Monetary Agggregates: A Clean Sweep

This paper focuses on the role of sweep programs in properly measuring money. We propose new monetary aggregates that adjust the conventional measures to account for the medium of exchange capability of funds in sweep programs. Using data on swept funds in retail and commercial demand deposit (DD) sweep programs, we provide time series of monthly data on the sweep-adjusted money measures. By the twenty-first century, DD sweeps have led to distortion in reported MZM of approximately 3 percent, 5 percent for M2, and 6 percent for M2M. Underreporting of M1 due to retail and DD sweep programs is almost 70 percent.

Interest on Bank Reserves and Optimal Sweeping

This paper utilizes a profit maximizing banking model to analyze sweeping behavior. Comparative statics results indicate that sweeping responds positively to increases in bank loan rates and reserve ratios and negatively to increases in the interest rate on reserves or to exogenous increases in bank deposits or equity. Sweeping generates greater responsiveness in lending to changes in loan rates or the interest rate on reserves and lower responsiveness to exogenous changes in reserve ratios or equity. Empirical analysis of an explicit condition that we derive relating sweeping to the interest rate on reserves suggests with an unchanged reserve requirement, the Fed could eliminate sweeping by setting the interest rate on reserves to no less than 3.67 percentage points below the market loan rate. The range of interest rates on reserves that lead to zero sweeping increases sharply, however, as the required reserve ratio is reduced

Survive Then Thrive: Talent, Research Motivation, and Completing the Economics Ph.D.

This study investigates the completion of the Ph.D. in Economics. We use ex ante information, based solely upon reviewing a set of individual applications from former doctoral students. Estimation for determining success is done by logit, multinomial logit, and generalized ordered logit. We find that students need different skills and attributes to succeed at each distinct and sequential stage of the doctoral program. Significant determinants for passing the comprehensive exams include high GRE verbal and quantitative scores, a Masters degree, and a prior focus on economics. Research motivation and math preparation play significant roles in completing the dissertation, but having a Masters degree and economics preparation becomes insignificant. GRE scores disappear as a significant determinant for completion in the generalized ordered logit estimates, which emphasize the sequential nature of the Economics Ph.D. program

A Time-Series Econometric Model of the Upstate New York Economy

The purpose of the research described in this report is to produce an econometric model of the Upstate New York economy and two metropolitan areas within it—Albany and Syracuse. The model is intended to satisfy three main criteria. First, the model should be capable of capturing the dynamic nature of the local economy. This simply reflects the widely held belief that the local economy’s response to various external forces and policies is unlikely to be immediate. Second, the model ought to be capable of generating short-run forecasts. In particular, quarterly forecasts for one or two years are preferred to long-run forecasts. This is done in order to be most useful to the planning purposes of Niagara Mohawk. Third, the model is to be developed and maintained by economists knowledgeable of the local economy and estimated specifically for the local economies using locally available data

The Effect of Cigarette Taxation on Prices: An Empirical Analysis using Local-Level Data

This paper combines new, author-collected tax data with data both from the American Chamber of Commerce Researchers Association (ACCRA) cost of living index (COLI) and from the Tax Burden on Tobacco (TBT) to measure the relative effects of city, county and state excise cigarette taxation on cigarette prices. The results indicate that a $1 increase in the state excise cigarette tax increases cigarette prices between$1.10 and $1.14, but that a$1 increase in a city or county-level excise tax increases prices by $1.07. These findings are similar between premium and generic cigarette brands. Additionally, urban areas located near states with lower cigarette taxes tend to have lower cigarette prices relative to urban areas located near states with the same or higher tax rates