"The German Influence on the Origin of U.S. Federal Financial Rescues"

While federal financial rescues have become a common response to crises, federal provision of finance was not one of the original powers of the federal government. One man, Eugene Meyer, is largely responsible for the origin of federal financial rescues, through both the War Finance Corporation and Reconstruction Finance Corporation. Meyer learned laissez faire economics from William Graham Sumner at Yale. However, German economist Adolph Wagner’s state-socialism philosophy heavily influenced Meyer’s thinking, and Meyer developed an interventionist philosophy. Serving in key government positions, Meyer put his beliefs into practice. These channels of influence and the resulting policies are examined.Financial rescues; War Finance Corporation; Reconstruction Finance Corporation.

"Institutions and the Impact of Government Spending on Growth"

This paper reports the results of a study of the impact of government expenditures on economic growth, emphasizing how government effectiveness in developing nations influences the productivity of government spending. The effects of categories of government spending on growth are also examined. No significant positive effects are found for defense, education and health variables. Consumption expenditures have negative growth effects in developed and developing nations, with a more detrimental impact in developing nations with ineffective governments. Developing nations with ineffective governments benefit from capital expenditures. To stimulate growth, developing nations should limit their governments’ consumption spending and invest in infrastructure.Government spending, Institutional Quality, Economic Growth

"Minerals, Openness, Institutions and Growth: An Empirical Analysis"

Empirical evidence from a panel-data analysis indicates that a mineral resource curse exists for certain developing countries, but not for developed countries. Countries with weak institutions are cursed, while developing countries with strong institution are able to avoid the curse. These results are consistent the hypothesis that owners of mineral resources use weak institutions and openness to trade to stifle the development of human capital, to the detriment of growth of other sectors of the economy. Imports of manufactured goods substitute for the development of domestic manufacturing, so openness to trade correlates with lower growth in mineral dependent countries.Mineral Resources, Institutional Quality, Economics Growth

"Financial crisis, monetary policy reform and the monetary transmission mechanism in Turkey"

Turkey experienced a financial crisis in 2000-2001 which led to significant financial reforms. The reforms resulted in a switch to a floating exchange rate, granted greater central bank independence and pursuit of a more credible monetary policy. Investigation of the channels of monetary policy in both periods finds that monetary policy’s output effects have been strengthened considerable by the reforms. In the pre-crisis period monetary policy was highly inflationary, while in the post-crisis period, monetary policy targets low inflation and has become a tool for output stabilization. These results support the importance of central bank independence and a credible policy.monetary transmission mechanism, central bank independence, inflation targeting.

Deregulation for Development: A Tale of Two States

Economic stress led South Dakota and Delaware in the early 1980’s to eliminate their usury laws and enact other enabling legislation in an effort to attract a new industry and new jobs to their states. Sufficient time has now elapsed to assess the success of the policies adopted by these two states. Evidence suggests that both states benefited from their deregulatory actions but in different ways. These successful deregulations provide an important lesson for state-level authorities responsible for determining the regulatory environment.Regional Development, Deregulation, State Government Public Policy

"The Political Business Cycle: New Evidence from the Nixon Tapes"

Drawing from the personal tape recordings made during the presidency of Richard Nixon, we uncover and report in this paper new evidence that Nixon manipulated Arthur Burns and the Federal Reserve Bank into creating a political business cycle that helped secure Nixon’s reelection victory in 1972. Nixon understood the risks that his desired monetary policy imposed, but chose to trade longer-term economic costs to the economy for his own short-term political benefit.Monetary Policy; Political Business Cycle

The Political Economy of Wage and Price Controls: Evidence from the Nixon Tapes

On August 15, 1971, Richard Nixon imposed the first and only peacetime wage and price controls in U.S. history. The Nixon tapes, personal tape recordings made during the presidency of Richard Nixon, are now available to the public and provide a unique body of evidence to investigate the motivations for Nixon’s macroeconomic policies. We have uncovered and report in this paper evidence that Nixon manipulated both monetary and fiscal policies to create a political business cycle that helped secure his reelection victory in 1972. Nixon was very knowledgeable about economic matters and understood the risks to the economy of his macroeconomic policy actions and the imposition of wage and price controls, but chose to tradeoff longer-term economic costs to the economy for his own short-term political gain.Wage and Price Controls, Political Business Cycle, Macroeconomic Policy

"Eugene Meyer: From Laissez Faire to the Keynesian Revolution"

While federal financial intermediation in widely accepted, federal provision of finance was not one of the original powers of the federal government. Federal financial intermediation began during WW I through the War Finance Corporation (WFC). When the Wilson administration wanted to end the program after the war, one man, Republican Eugene Meyer fought to extend the life and expand role of the WFC. During the Great Contraction, Meyer, now Governor of the Federal Reserve Board, worked to temporarily revive the War Finance Corporation in the form of the Reconstruction Finance Corporation (RFC). However inadvertent to Meyer’s intentions, the RFC and related programs and agencies became the vehicles for a vastly expanded role for direct federal government finance during the New Deal years and to the present.