Ben L. Kyer

Assessing a disaggregated energy input: Using confidence intervals around translog elasticity estimates☆

The role of energy in the production of manufacturing output has been debated extensively in the literature, particularly its relationship with capital and labor. In an attempt to provide some clarification in this debate, a two-step methodology was used. First, under the assumption of a five-factor production function specification, we distinguished between electric and non-electric energy and assessed each components relationship with capital and labor. Second, we calculated both the Allen and price elasticities and constructed 95% confidence intervals around these values. Our approach led to the following conclusions: that the disaggregation of the energy input into electric and non-electric energy is justified; that capital and electric energy and capital and non-electric energy are substitutes, while labor and electric energy and labor and non-electric energy are complements in production; and that capital and energy are substitutes, while labor and energy are complements.

On the Keynes and Pigou effects in aggregate demand theory

Abstract The standard approach to the derivation of aggregate demand employs the IS-LM model with a flexible price level in which distinctions are drawn between the Keynes and Pigou effects. This paper is an extension of this traditional analysis and demonstrates that the slope of the economys aggregate demand function may be dichotomized and specified as the summation of these two effects. This result is then used to examine the impact of different conditions within the product and money markets. An expression for the price level elasticity of aggregate demand is also derived.

Monetary Policy Rules, Supply Shocks, and the Price-Level Elasticity of Aggregate Demand: A Graphical Examination.

The manner in which the price-level elasticity of aggregate demand affects alternative monetary policy rules designed to cope with random aggregate supply shocks is demonstrated in the two-dimension price and output graphs found in macroeconomics textbooks.

A Macroeconomic Approach to Teaching Supply-Side Economics.

A graphical approach shows that in order for the tax revenue to increase, following a reduction in the marginal rate, the increase of aggregate supply must be greater the lower the price level elasticity of aggregate demand.

Supply-Side Economics and the Price Level Elasticity of Aggregate Demand:

A concept that has been largely ignored in the economic literature is the price level elasticity of aggregate demand. The purpose of this article is to integrate this concept into supply-side economic theory and demonstrate the conditions under which decreased tax rates induce higher tax revenues. Within a standard aggregate demand, aggregate supply reduced form model, it is found that the relationship between tax rates and tax revenues depends on two factors: the tax rate elasticity of aggregate supply and the price level elasticity of aggregate demand. More specifically, it is found that a tax decrease that increases the aggregate supply of goods and services is more likely to also increase tax revenue when the price level elasticity of aggregate demand is greater. Alternatively, for a tax rate decrease to increase tax revenue, the tax rate elasticity of aggregate supply must be greater when the price level elasticity of aggregate demand is lower.

Economic Expansion and The Balance of Trade: The Role of Aggregate Demand Elasticity

This paper investigates the role of aggregate demand elasticity for the balance of trade when economic expansion occurs. We have two conclusions. First, when an economic expansion results from an increase of aggregate demand, the balance of trade deficit is larger the less elastic is aggregate demand with respect to the general price level. Second, when an economic expansion happens from an increase of short-run aggregate supply, the price level elasticity of aggregate demand determines both the direction of change of the balance of trade and the size of the resulting deficit or surplus. We show here that a relatively elastic aggregate demand can result in a balance of trade deficit, while a relatively inelastic aggregate demand can yield a balance of trade surplus.

A NOTE ON GOVERNMENT BUDGETS

The standard pedagogical examination of government budgets includes the distinction between cyclical and structural deficits and surpluses and changes thereof. This paper extends the regular classroom analysis and graphically demonstrates that cyclical changes in the government budget can be decomposed and stated as the summation of the expenditure effect and the revenue effect.

The macroeconomics of the equal pay act

Abstract This study uses simulations based on 1980 U.S. Census data to estimate the economic disruption that would occur if the wages of women and men were adjusted according to the principles of equal pay for equal work as set out in the Equal Pay Act of 1963. Disruption is measured by the effect such wage adjustments have on the macroeconomic variables of nominal Gross National Product and unemployment. A range of government policy options which could be used to ameliorate the impact of these adjustments in earnings is also examined.

Macroeconomic impact of occupational wage equality

Abstract This study uses simulations based on 1986 Current Population Survey Data to forecast the economic disruption that would occur if the wages of women and men were adjusted according to the principles of pay equity set forth in the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964. Disruption is measured by the effect such wage adjustments have on the macroeconomic variables of nominal gross national product (GNP) and unemployment. A range of government policy options which could be used to ameliorate the impact of these adjustments in earnings is examined.