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20321. An Austrian Rehabilitation of the Phillips Curve

Author:
Robert F. Mulligan
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
William Niskanen (2002) estimated a Phillips curve for the United States using annual 1960–2000 data. By adding one-yearlagged terms in unemployment and inflation, he was able to show that this familiar equation is misspecified. In his improved specification, Niskanen found that the immediate impact of inflation is to reduce unemployment, confirming the traditional understanding of the Phillips-curve relationship, but also finding that after an interval as short as one year inflation has generally been followed by increased unemployment. Though Niskanen was perhaps unaware of it, his results lend strong support to the Austrian model of the business cycle. In that model, credit expansion results in a temporary but unsustainable expansion. Unemployment is lowered in the short run, but once the policy-induced malinvestment is recognized, total output and income will be permanently reduced, and unemployment will increase.

20322. Deposit Insurance and Banking Stability

Author:
Kam Hon Chu
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Many financial systems were plagued by bank runs or subject to the risk of contagion when the recent financial tsunami unfolded. The runs on the U.S. banks Countrywide and IndyMac, Britain's Northern Rock, and Hong Kong's Bank of East Asia, among others, occurred about a few years ago, but they are still vivid to us. These runs were, of course, the symptoms rather than the root cause of the financial tsunami. In response to the most severe systemic global financial crisis since the Great Depression, policymakers and regulators in many countries have implemented various drastic regulatory measures to rescue the financial systems from meltdowns and to avert deep economic downturns. Such measures vary from country to country, but generally speaking they include governments' takeovers of banks or capital injections, quantitative easing techniques, provisions of liquidity by lax lender-of-last-resort lending, lower discount rates, and more generous deposit insurance.
Political Geography:
United States, Asia, and Hong Kong

20323. An Analysis of the Financial Services Bailout Vote

Author:
Jim F. Couch, Mark D. Foster, Keith Malone, and David L. Black
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Washington's remedy to the financial problems that began in 2008 was the Troubled Asset Relief Program (TARP)—the so called bailout of the banking system. Whatever its merits, it was, for the most part, unpopular with the American public. Lawmakers, fearful that the economy might actually collapse without some action, were likewise fearful that action—in the form of a payout to the Wall Street financiers—would prove to be harmful to them at the polls. Thus, politicians sought to assure the public that their vote on the measure would reflect Main Street virtues, not Wall Street greed.
Political Geography:
America

20324. Restructuring the U.S. Postal Service

Author:
Robert Carbaugh and Thomas Tenerelli
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
From 1775 when Benjamin Franklin was appointed as the first postmaster general of the United States, the agency known as the U.S. Postal Service (USPS) has grown to become an institution that delivers about half of the world's mail in rain, snow, and the dark of night. Employing about 656,000 workers and 260,000 vehicles and operating about 38,000 facilities nationwide, the USPS is the second-largest civilian employer in the United States, after WalMart. If the USPS was a private sector company, it would rank 28th in the 2009 Fortune 500 (U.S. Postal Service 2010).
Political Geography:
United States

20325. This Time Is Different: Eight Centuries of Financial Folly

Author:
Kurt Schuler
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Carmen Reinhart and Kenneth Rogoff's wide-ranging, quantitative study of financial crises is a landmark work. Reinhart and Rogoff have taken advantage of the advances of the last 20 years in economic history, personal computers, and the Internet to assemble a large data set covering most countries of any importance for the world economy. They are the first researchers to base their generalizations about financial crises on data that combine geographic breadth with great historical depth.

20326. Afghanistan: A Cultural and Political History

Author:
Malou Innocent
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In the Western mind, Afghanistan conjures up a rugged land of fractious, tribal people. From Alexander the Great and Genghis Khan, to Tamerlane and Mughal emperor Babur, virtually no conqueror has escaped “the graveyard of empires” unscathed. Even modern, industrial empires—the British and the Russian— suffered heavy losses. Why have foreign attempts to conquer Afghanistan proved so ineffective? Why did the U.S. invasion fail to bring stability?
Political Geography:
Afghanistan and United States

20327. The Ideological Origins of American Federalism

Author:
Ilya Somin
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
As has often been the case in American history, federalism is once again a major focus of political debate. Numerous recent political conflicts focus at least in part on the constitutional balance of power between the states and the central government. The lawsuits challenging the recently passed Obama health care plan, the federal bailout of state governments during the current economic crisis, and the conflicts over social issues such as medical marijuana and assisted suicide are just a few of the more prominent examples.
Topic:
Government
Political Geography:
America

20328. The Economics of Microfinance

Author:
Bryan Barnett
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
It is one of the sad facts of recent human history that the economic prosperity enjoyed by so many remains unknown to most of the rest. The causes of poverty have long been debated and much has been spent in the effort to ameliorate it. Reliable estimates suggest as much as $2.3 trillion has been spent over the last several decades, most of it in the form of sponsored aid programs conceived and pursued by governments and large foundations in developed countries. Despite this investment, however, poverty remains widespread and has worsened in many places, especially in Africa. These basic facts now fuel a vigorous debate over the scale and ultimate value of traditional aid programs and a search for more effective solutions.
Topic:
Government
Political Geography:
Africa

20329. Radical Islam in Gaza

Publication Date:
03-2011
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
The recent Israel-Hamas escalation returns a spotlight to Gaza and the Islamist movement's relationship with more militant organisations. Gaza arouses multiple concerns: does Hamas seeks to impose religious law; has its purported Islamisation stimulated growth of Salafi-Jihadi groups; and will al-Qaeda offshoots find a foothold there? Hamas faces competition from more radical Islamist groups, though their numbers are few, organisation poor, achievements against Israel so far minor and chances of threatening Gaza's government slight. The significance of Gaza's Salafi-Jihadis is less military capability than constraints they impose on Hamas: they are an ideological challenge; they appeal to members of its military wing, a powerful constituency; through attacks within and from Gaza, they threaten security; by criticising Hamas for not fighting Israel or implementing Sharia, they exert pressure for more militancy and Islamisation. The policy of isolating Gaza and ignoring Hamas exacerbates this problem. As the international community seeks new ways to address political Islam in the Arab upheaval's wake, Gaza is not the worst place to start.
Topic:
Islam, Terrorism, and Armed Struggle
Political Geography:
Middle East, Israel, Arabia, and Gaza

20330. TrAid+ Channeling Development Assistance to Results

Author:
Alex Ergo and Ingo Puhl
Publication Date:
03-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Development assistance is meant to improve the lives of poor people in developing countries, but the effectiveness of aid in meeting this goal is uncertain. Demonstrating failure—or success—is difficult because traditional donor financing mechanisms track inputs, not results. This is compounded by poor coordination between actors and a lack of transparency, accountability, and country ownership. Development assistance that is ineffective or has unknown outcomes wastes resources, erodes the constituency for aid, and most importantly fails to improve the lives of poor people as much as it could. TrAid+ is a new mechanism that aims to address these problems by creating a market for certified development outputs—outputs for which both the delivery and the quality have been verified. By ensuring that these outputs, such as safe deliveries or gas connections, meet certain standards, trAid+ acts as a third-party stamp of approval that donors, tax payers, recipient-country governments, service providers, and beneficiaries can trust to know that their aid is being used effectively and is contributing to the development objectives of the recipient country. And trAid+ makes all information accessible online, making it easier for funders to link with projects that are working and projects that are working to link with anyone interested in purchasing certified development outputs. TrAid+ can be tailored to any sector where outputs can be clearly defined and measured, whether health, education, infrastructure, or agriculture. This paper describes the trAid+ concept in detail and proposes practical steps to establish the trAid+ platform.
Topic:
Development, Humanitarian Aid, Poverty, and Foreign Aid