Search

Begin New Search Publishing Institution The Cato Institute

481. On the Death of the Resurrected Short-Run Phillips Curve: A Further Investigation

Author:
Masoud Moghaddam and James E. Jenson
Publication Date:
01-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In a recent issue of this journal, Richard Reichel (2004) takes issue with the resurrected Phillips curve (PC) in William Niskanen's (2002) article. Accordingly, Niskanen's reformulation of the PC provides empirical evidence for a weak, but statistically significant, short-run (in the same year) tradeoff between inflation and unemployment rates in the United States. Furthermore, the unemployment rate is directly and significantly determined by the one-period lagged value of the inflation rate, which implies an upward sloping PC, consistent with the type of PC explicated by Milton Friedman (1987). Reichel's main point of contention is that the variables in the reformulated version of PC are nonstationary, meaning that statistical properties (such as conditional mean and variance) vary with time. Thus, Niskanen's findings are spurious.
Political Geography:
United States

482. Parrot Talk: The Repetition of Common Fallacies

Author:
Anthony de Jasay
Publication Date:
01-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Many social scientists and political journalists keep parrots as useful labor-saving pets. These parrots are hidden in their masters' bosoms and are so well trained that when they start talking, we believe we hear their masters' voices. One can nevertheless recognize that it is the parrot holding forth, by the fact that it is always the same few texts that are repeated. Most of the parrots like one or other of the brief texts that are reproduced here in italics.

483. Book Reviews: The Healthcare Fix: Universal Insurance for All Americans

Author:
Jagadeesh Gokhale
Publication Date:
01-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This book is about how and why a severe economic and financial crisis may well unfold in the United States within the next few years. The main reason: politicians have been increasingly profligate with the public purse—expanding government entitlement and nonentitlement spending, seemingly without regard for future economic consequences.
Political Geography:
United States

484. Book Reviews: See Government Grow: Education Politics from Johnson to Reagan

Author:
Neal McCluskey
Publication Date:
01-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Only a dozen years ago, the Republican Party platform called for abolition of the U.S. Department of Education. Perhaps a holdover from what many thought would be a government-leveling tidal wave when the GOP won control of both the U.S. House of Representatives and Senate in 1994, the 1996 platform declared that “the federal government has no constitutional authority to be involved in school curricula. . . . That is why we will abolish the Department of Education, end federal meddling in our schools, and promote family choice at all levels of learning.”
Political Geography:
United States

485. Book Reviews: Regulation and Public Interests: The Possibility of GOOD Regulatory Government

Author:
Peter Van Doren
Publication Date:
01-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In theory, scientific (positive) and philosophical (normative) inquiry are quite distinct. The former involves the testing of hypotheses through the use of experiments or the estimation of statistical models using data, while the latter utilizes theological or philosophical analysis to conclude how people and institutions should behave.

486. Aggregate Supply-Driven Deflation and Its Implications for Macroeconomic Stability

Author:
David Beckworth
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Deflation is generally considered to be inconsistent with macroeconomic stability. Any sustained decline in the price level is widely believed to be associated with weak to negative economic growth, a lower bound of zero on the policy interest rate, and an increase in financial disintermediation. However, a number of recent studies examining both historical, cross-country experience with deflation and more recent developments find that these concerns are not necessarily associated with deflation (Selgin 1997, 1999; Cleveland Federal Reserve 1998; Stern 2003; Bordo and Redish 2004; Bordo, Lane, and Redish 2004; Bordo and Filardo 2005; Borio and Filardo 2004; Farrell 2004; King 2004; The Economist 2004, 2005; White 2006). They show that the deflationary experiences that shape the modern economic psyche, the Great Depression in the 1930s and Japan in the 1990s, are not truly representative of all deflation outcomes. These studies contend that a broader, historical perspective reveals a more nuanced view of deflation, one that requires taking seriously the possibility of both a malign deflation, a deflation originating from a collapse in aggregate demand, and a benign deflation, a deflation originating from an increase in aggregate supply.
Political Geography:
Japan

487. Sustained Economic Growth: Do Institutions Matter, and Which One Prevails?

Author:
Abdoul' Ganiou Mijiyawa
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In 1965, the growth rate of per capita GDP in Niger and Nigeria was 2.1 percent and 4.2 percent, respectively, and 2.9 percent in Botswana. From 1966 to 1969, however, Niger and Nigeria recorded a negative growth rate, while Botswana continued to experience a positive growth rate over the same period. In 1990, the growth rate of per capita GDP was 1 percent in Ghana and 5.2 percent in Nigeria. Yet, from 1991 to 1994, the growth rate was negative in Nigeria and positive in Ghana. Why does the trajectory of economic growth episodes differ among countries? In other words, why is economic growth more sustainable in some countries than in others?
Topic:
Economics
Political Geography:
Nigeria and Ghana

488. Censoring and Destroying Information in the Information Age

Author:
J. R. Clark and Dwight R. Lee
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Almost everyone knows the importance of information and communication to economic progress. The more information we have the more productive we can be, both individually and collectively. The easier it is for us to communicate our information to others and to receive their information, the more likely we will make production and consumption choices that serve the interests of all. No wonder people are so impressed with the recent breakthroughs in information and communication technology that have moved us into what has become known as the “information age.” Who could possibly condone, much less recommend, policies that destroy and distort valuable information by censoring its communication? Far more than you might think!
Topic:
Communications

489. State Fiscal Crises: Are Rapid Spending Increases to Blame?

Author:
Dean Stansel and David T. Mitchell
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
During recessions, state governments frequently face substantial midyear budget shortfalls. Numerous states are now experiencing such crises again. These fiscal crises are often blamed on the cyclical decline in revenue growth or reductions in federal aid. Others have suggested that enacting rapid spending increases during expansionary years—rather than using the revenue windfalls for tax cuts or increases in rainy day funds—may be an important contributing factor to those budget shortfalls. Using data from the 2001 recession, we find support for that “overspending” hypothesis. While neither the mere presence nor the size of a rainy day fund were significant predictors of fiscal stress, faster increases in spending are positively and significantly associated with fiscal stress. When rainy day funds work, it is the strength of their withdrawal rules that matter. These results have important implications for fiscal policy choices. States that restrain spending growth during expansionary years and implement strong rainy day fund withdrawal rules are likely to face less severe fiscal crises during recessions.

490. Small States: Not Handicapped and Under-Aided, but Advantaged and Over-Aided

Author:
Swaminathan S. Anklesaria Aiyar
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Small states have long been viewed by international organizations as a special category with special handicaps requiring special assistance. The United Nations has created an Office of the High Representative for the Least Developed Countries, Land locked Developing Countries, and Small Island Developing States. The very wording makes it clear that the UN regards small developing states that are landlocked or islands as being on par with the least developed countries. A very substantial academic literature has been devoted to small states, to which the World Bank and Common-wealth Secretariat have made contributions. They constituted a Joint Task Force that submitted a report in April 2000, Small States: Meeting Challenges in the Global Economy, proposing an agenda for assisting such states in various ways, including increasing foreign aid (World Bank 2000). This report was followed in 2005 by a review of progress on the 2000 agenda, Towards an Outward-Oriented Development Strategy for Small States(Briguglio, Persaud, and Stern 2005), henceforth referred to as the World Bank-Common-wealth review. This review also suggested increasing foreign aid. In2006, the Independent Evaluation Group (IEG 2006) of the World Bank produced an evaluation of World Bank assistance to small states. During that same year, the World Bank also commissioned four regional studies of small states, which formed the basis of a subsequent book, Small States, Smart Solutions(Favaro 2008).Finally, in 2008, the World Bank released The Growth Report, also known as the Spence Commission report, which devoted a special section to small states (World Bank 2008)
Topic:
United Nations