Anthony Myatt

An Approach to Testing the Effectiveness of the Teaching and Learning of Economics in High School

Based on data on students in a college economics principles course over a nine-year period, the authors conclude that high school economics does improve performance in the principles course but does not influence grades in intermediate theory classes.

The adverse supply-side effects of high interest rates and procyclical real wage movements

Despite widespread recognition that high interest rates may cause price increases through their influence on costs, this point has not been incorporated into simple aggregative macro models. We suggest a way of modifying the simple macro model to incorporate this effect, and by using reasonable parameter estimates, conclude that the supply side seems at least as responsive as the demand side to changes in real interest rates. An additional advantage of the amendment suggested in this note is that it is able to explain both procyclical and countercyclical movements in real wages.

Can fiscal spending be contractionary when interest rates have supply-side effects?☆

Abstract Can increased government spending cause a temporary recession? The answer is yes, if there exist direct aggregate supply-side effects of interest rates. Existing studies of this issue are incomplete for two reasons. First, the aggregate-demand and aggregate-supply effects of interest rates are not specified within an internally consistent framework and so cannot be compared properly. Second, interest rate expectations effects are ignored. This paper eliminates both these shortcomings and therefore better establishes the empirical relevance of the supply-side effects of interest rates. Nominal interest rates above 6% are sufficient for fiscal policy perversity.

Is policy perversity consistent with Keynesian business cycles

Abstract It has long been recognized that higher spending can, by raising interest rates and thereby firms’ short-run marginal costs, have stagflationary supply-side effects. This possibility has attracted little attention, probably because it seems inconsistent with the Keynesian view that recessions are caused by decreases, not increases, in demand. This note clarifies these issues by distinguishing between one-time and ongoing changes in spending, and concludes that the relevance of the fiscal perversity hypothesis is increased by the ongoing changes in how monetary policy is conducted.

Provincial Unemployment Rate Disparities: Revisited

Empirical studies of the influence of UJ generosity on unemployment rates face an ongoing problem with endogeneity of the UJ generosity variable. This occurs for two reasons. First, the replacement ratio will likely increase in a recession as the more remunerative but exposed jobs are laid off. Second, the ratio of the maximum duration of benefits to the minimum work requirement (a component of UJ generosity) will both increase in a recession and be higher in the high unemployment regions (see Osberg 1995). This issue can be nominally addressed by using lagged values of Ul generosity as instruments. However, with so much serial correlation in the time series data, this may not solve the problem. The purpose of this note is to estimate the impact of Ul generosity on provincial unemployment rate disparities while miminizing this problem. The crux of the issue is that the weighted standard deviation of unemployment rate disparities moves pro-cyclically, whereas Ul generosity moves counter-cyclically. When the standard deviation of unemployment rate disparities is the dependent variable and Ul generosity is an explanatory variable, any residual endogeneity of UJ generosity would tend to bias its coefficient in the negative direction. Thus, it should be harder to show a positive relation between Ul and unemployment rate disparities; but if we can show one, we should have more confidence in it.

Is There an Overemphasis on Perfectly Competitive Markets in Microeconomics Principles Texts

Microeconomic principles courses focus on perfectly competitive markets far more than other market structures. Perhaps this is because perfect competition: (1) describes many important real world markets; or, (2) usefully approximates many markets that are not literally perfectly competitive; or (3) is pedagogically useful as a simple model; or (4) is an ideal market structure to be used as a standard to evaluate the efficiency of other market structures and the merits of government intervention; or (5) provides a useful model of dynamic processes in a capitalist economy. We find none of these reasons sufficiently compelling. We conclude that focusing attention on a simple imperfectly competitive model would better convey the central lessons of modern microeconomics. Perfect competition would remain, but as a special case.

The Canadian Experience and the Lasting Impact of Economic Education

This chapter has two components. The first part begins with a description of governmental jurisdiction and course offerings in economic education typically found in Canadian high schools. This part continues with a discussion of course content, texts, and teacher preparation; it concludes by providing some indication of student enrollment in high school economics by province.