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4781. How do Canadian Hours Worked Respond to a Technology Shock?

Author:
Robert J. Vigfusson, Lawrence J. Christiano, and Martin Eichenbaum
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper investigates the response of hours worked to a permanent technology shock. Based on annual data from Canada, we argue that hours worked rise after a positive technology shock. We obtain a similar result using annual data from the United States. These results contradict a large literature that claims that a positive technology shock causes hours worked to fall. We find that the different results are due to the literature making a specification error in the statistical model of per capital hours worked. Finally, we present results that Canadian monetary policy has accommodated technology shocks.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Canada and North America

4782. Precautionary Savings and the Wealth Distribution with Illiquid Durables

Author:
Joseph W. Gruber and Robert F. Martin
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the role an illiquid durable consumption good plays in determining the level of precautionary savings and the distribution of wealth in a standard Aiyagari model (i.e. a model with heterogeneous agents, idiosyncratic uncertainty, and borrowing constraints). Transactions costs induce an inaction region over which the durable stock and the associated user cost are not adjusted in response to changes in income, increasing, on average, the volatility of non-durable consumption. The volatility of total consumption is then a function of the share of the durable good in the utility function and the width of the inaction region. We are particularly interested in parameterizations which increase the precautionary motive for saving through an increase in "committed expenditure risk." We find, for an empirically relevant share of durable consumption and for all transaction costs below an upper threshold, that the level of precautionary savings is increasing in the transaction costs. Transaction costs have only a modest impact on the degree of wealth dispersion, as measured by the Gini index, as the associated increase in savings is close to linear in wealth. While we are unable to match the dispersion of wealth in the data, we increase the dispersion over a single asset model (Gini index of .71 for financial assets and .37 for total wealth) and we are able to match the relative dispersion of financial to durable assets, i.e. we find financial assets much more unequal than durable assets. We also match the ratio of housing wealth to total wealth for the median agent. We calibrate the model to data from the PSID, the CES, and the SCF.
Topic:
Economics, Emerging Markets, International Trade and Finance, and Science and Technology

4783. The Patriot Act Under Fire

Author:
John Yoo and Eric Posner
Publication Date:
12-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Criticisms of the Patriot Act as unconstitutional and as a danger to individual rights are unfounded. Any marginal reduction in peacetime liberties entailed by the act seems to be a reasonable price to pay for an important weapon in fighting al Qaeda and other terrorists.
Topic:
International Relations, Foreign Policy, Democratization, and Economics

4784. U.S. Steel Tariffs Give Safeguards a Bad Name

Author:
Claude E. Barfield
Publication Date:
12-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
President Bush's decision to revoke tariffs on imported steel products may lead the European Union to challenge other U.S. trade policies. Any such steps are likely to meet with stiff U.S. resistance, however, because the mechanism for resolving such disputes in the World Trade Organization is widely seen in the United States as lacking legitimacy.
Topic:
International Relations, Foreign Policy, Democratization, and Economics
Political Geography:
United States

4785. The Case for Being Mean

Author:
Frederick M. Hess
Publication Date:
12-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Performance-based accountability promises to ensure that every student, regardless of background, masters crucial knowledge and skills. But to realize that promise, accountability needs to be coercive, that is, it must confront failure with real consequences for both educators and students.
Topic:
International Relations, Foreign Policy, Democratization, and Economics
Political Geography:
United States

4786. Out of the Asylum, into the Cell

Author:
Sally Satel
Publication Date:
11-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Prisons have become default mental-health treatment centers to the severe detriment of those experiencing genuine mental illness. Properly treating—rather than criminalizing—mental illness requires reforming our fragmented mental healthcare system and relaxing regulations to encourage patients to seek treatment.
Topic:
International Relations, Foreign Policy, Democratization, and Economics

4787. The Long, Hard Slog

Author:
Reuel Marc Gerecht
Publication Date:
11-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Real progress has been made in the war on terror-al Qaeda no longer enjoys state-sponsorship, and Iraq is moving toward democracy. But because neither the rogue regimes nor the "holy warriors" in the region can afford to allow the United States to successfully introduce democracy into Iraq, we must expect them to ratchet up the level of violence to prevent that from happening.
Topic:
International Relations, Foreign Policy, Democratization, and Economics
Political Geography:
United States, Iraq, and Middle East

4788. A Jobless Recovery?

Author:
Allan H. Meltzer
Publication Date:
11-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
While Alan Greenspan and most analysts continue to discuss the loss of millions of manufacturing jobs since the Bush administration took office, the Labor Department Household Survey shows such claims to be either wrong or greatly exaggerated.
Topic:
International Relations, Foreign Policy, Democratization, and Economics
Political Geography:
Russia, Europe, and Asia

4789. Unfair and Unbalanced

Author:
Joshua Muravchik
Publication Date:
09-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The longstanding media practice of whitewashing tyrannical regimes and their actions continues in most coverage of the Israeli-Palestinian conflict. Journalists must figure out how to avoid giving a tyranny the upper hand when it takes on a democracy.
Topic:
International Relations, Foreign Policy, Democratization, and Economics
Political Geography:
Middle East, Israel, and Palestine

4790. Divorcing Voters, Again

Author:
John R. Lott Jr.
Publication Date:
09-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Supporters predicted that the McCain-Feingold Act would make elections more competitive and voter-friendly, as well as reduce corruption. However, past federal and state regulations have merely succeeded in protecting incumbents from competition and have divorced voters further from the political process.
Topic:
International Relations, Foreign Policy, Democratization, and Economics