David W. Findlay

Budget Deficits Expected Inflation and Short-Term Real Interest Rates: Evidence for the U.S.

This paper examines a number of issues concerning the determination of short-term real interest rates. We include actual inflation and several measures of expected inflation in order to determine whether empirical results are sensitive to the choice of the inflation variable. The results strongly suggest that the estimated coefficients are unaffected by the choice of the interest rate variable and, implicitly, the inflation variable. Deficits are not found to have a positive effect on all measures of the dependent variable, while increases in the real money supply and the inflation variables depress real interest rates. [311]

AN ANALYSIS OF ATTENDANCE AT MAJOR LEAGUE BASEBALL SPRING TRAINING GAMES

This article examines the determinants of game-day attendance during Major League Baseball’s 2002 spring training season in Florida. The model of game-day attendance includes location, quality of game, and time and weather variables. A censored Tobit estimation procedure is used to estimate the model. Results indicate that the quality of the game, average ticket price, and several location-specific factors affect attendance. Specifically, results suggest that changes in income have no effect on attendance while increases in ticket prices cause reductions in attendance. Furthermore, estimates of the price elasticity of demand for Major League Baseball during the spring training season are consistent with unitary elasticity. We also find that a number of factors unique to spring training, such as a nonresident fan base and split squads of players, significantly affect game-day attendance.

Military spending and interest rates

This paper examines a number of hypotheses about the determination of interest rates for the United States. In particular, we are most interested in the relative interest rate effects of changes in military and non‐military spending. We find that increases in military spending cause a significantly larger increase in interest rates than do increases in non‐military spending. These results are insensitive to alternative measures of the data, specifications of the interest rate equations and estimation procedures. Cuts in military spending can reduce the level of total government spending or can be transferred to other programs. Our results then suggest that the crowding out of private expenditures can be reduced when government shifts resources from military to non‐military spending.

The Political Business Cycle and Republican Administrations: an Empirical Investigation

This article examines the effects of the political business cycle on unemployment for the first quarter of 1951 through the fourth quarter of 1987. The results for the autoregressive model provide empirical support for the existence of a political business cycle during Republican administrations. A number of simulations are presented to illustrate the longer-term effects of the political business cycle on unemployment for this model and for the 1986 model offered by Allen, Sulock, and Sabo. These results suggest that the unemployment effects of the electoral cycle are not only statistically significant, but are also economically significant.

Relative prices, aggregate prices, and wage indexation

Abstract When a firm and workers set contingent wages and employment, potential movements in several different prices enter into consideration. The firms revenue depends on the selling price of its product. The workers have concerns about the prices of goods they buy, and the firms owners may buy a different bundle of goods. Unless owners acquire their own firms output or are fairly risk-averse relative to workers, wages will be indexed primarily to the price index of what workers buy and not to variations in the firms selling price. This has been reported to be the typical empirical pattern.

Modeling Imports in a Keynesian Expenditure Model

The author discusses several issues that instructors of introductory macroeconomics courses should consider when introducing imports in the Keynesian expenditure model. The analysis suggests that the specification of the import function should partially, if not completely, be the result of a simple discussion about the spending and import behaviors of the household, firm, and government sectors. The analysis also indicates that instructors who use certain import functions that are in some introductory textbooks will inadvertently impose restrictions on the model and potentially confuse students. The author examines several implications of the specification proposed by Robert Cherry (2001) and shows how the restrictions imposed by Cherrys specification make it difficult for instructors to present certain types of economic events and policies. The import function discussed here avoids these restrictions and allows instructors to present more easily certain types of examples.

A Note on Aggregate Price-Level Elasticity and Supply-Side Shocks

This note investigates several factors that influence the short-run and long-run effects of supply-side shocks on aggregate income and tax revenues—specifically, how changes in the price-level elasticities of the aggregate demand, short-run aggregate supply relationships, and changes in the magnitude of the shocks alter the macroeconomic effects of the shocks.