Franklin G. Mixon

A discrete-time hazard model of lottery adoption

This paper uses conventional logit probablitities to estimate a discrete-time hazard model of lottery adoption. The data set consists of a time-series of cross-sections on states in the US. Our findings suggests that politicians are more likely to support the decision. A lottery is more likely to be adopted of ther is a favourable climate for gambling in the state and if a bordering state has adopted a lottery.

Exchange rate adjustment and output in Greece and Cyprus: evidence from panel data

This paper studies the effect of currency depreciation in Greece and Cyprus using panel data from 1969 to 1998. An empirical model, which includes monetary as well as fiscal variables in addition to exchange rates, is developed. Two versions of this model, one with the real exchange rate and another with the nominal exchange rate and foreign-to-domestic price ratio are estimated. Before estimating the model the time series properties of the data are diagnosed using unit root and cointegration tests. The estimated results suggest that the exchange rate depreciation is expansionary in the short run. In the medium and long run it is neutral to the economy.

Cartel (In)Stability on Survivor Island

Abstract In this study, the author investigates a recent phenomenon in American culture–reality-based television–as fertile ground for pedagogical examples. Specifically, the author examines cartel behavior among contestants on the 2000 edition of CBSs popular reality show Survivor. Using anecdotes regarding contestant behavior on the show, the author examines incentives to both form cartels and cheat on cartel decisions.

The Decay of Norms and the Production of Social Order: Conceptual and Empirical Models

This note explores the decay of social norms using a model of the production of social order in the context of ‘rules’ employed by cities/municipalities to ‘govern’ activities during Halloween. The empirical results suggest that population homogeneity, the upper class’ scope for ‘purchasing’ norm conformity from middle and lower classes, the abundance of social capital and the cohesiveness of family units are all important determinants of the likelihood that a city or locale will employ formal order-producing mechanisms during the Halloween period. The results are supportive of the seminal work on norms by Becker (1996) and others.

Building Institutions and Foreign Direct Investment in Latin America

ABSTRACT This exploratory study of inward foreign direct investment-FDI-in Latin America examines the extent to which institution building1 has occurred in seven Latin American countries and, concomitantly, the impact it has had on increasing inward FDI in the region. Elements of institution building examined in the present study include political risk, capital markets liberalization, and privatization. These variables are modeled by individual country, thus facilitating cross-country comparisons. In six of the seven countries, institutional reform, as measured by capital account liberalization and/or political risk reform, is a statistically significant determinant of FDI over time. Results for privatization vary more significantly by country. In several cases (e.g., Brazil, Chile, Columbia and Mexico), an anomalous result is found regarding the relationship between privatization and FDI over time. For Argentina, Peru, and Venezuela, privatization is positively related to FDI; in the case of Peru, privatization is only marginally significant, while it is highly significant for Venezuela. The results suggest that, for Venezuela, both privatization of commercial enterprise and other institutional reforms, such as current account practice reform and general political risk reform, have been important determinants of FDI inflows. RESUMEN. Este estudio exploratorio sobre la inversión extranjera directa-IED-en Latinoamérica analiza el alcance que dichas instituciones han alcanzado en siete países latinoamericanos y, concomitantemente, el impacto que han tenido sobre el aumento de la IED en la región. Los elementos de la constitución institucional analizados en este estudio incluyen el riesgo político, mercados de capital, liberalización y privatización. Estas variables han sido indicadas por país lo que facilita, por ende, la comparación de lo que ocurren entre los diversos países. En seis de los siete países las reformas institucionales, tal cual fueron medidas por la liberalización de las cuentas de capital y/o el riesgo político son, a lo largo del tiempo, un determinante estadístico de la IED. Los resultados de la privatización varían más notoriamente por país. En muchos casos (Ej.: Brasil, Chile, Colombia y México), los resultados encontrados son anómalos con respecto a la relación que existe entre la privatización y la IED. En el caso de Argentina, Perú y Venezuela, la privatización está relacionada positivamente a la IED; mientras que en el Perú, la privatización apenas tiene una importancia marginal, y es mucho más relevante para Venezuela. Los resultados obtenidos sugieren que, para Venezuela, tanto la privatización de las empresas comerciales como otras reformas institucionales, por ejemplo la práctica de la reforma de las cuentas de cuentas corrientes y la reforma general del riesgo político, han jugado un papel preponderante sobre las entradas de la IED. RESUMO. Este estudo exploratório sobre investimento direto estrangeiro para dentro-FDI-na América Latina examina em que medida o estabelecimento de instituições vem ocorrendo em sete países latino-americanos e, concomitantemente, o impacto que o mesmo vem causando no crescimento do FDI para dentro na região. Elementos da constituição de instituições examinados neste estudo incluem risco político, liberalização de mercados de capital e privatização. Estas variáveis foram consideradas para cada país individualmente, facilitando assim comparações interpaíses. Em seis dos sete países, a reforma institucional, mensurada pela existência de liberalização do capital e/ou reforma política, é um fator determinante estatisticamente significante da existência de FDI ao longo do tempo. Os resultados relativos à privatização variam mais significativamente de país para país. Em vários casos (por exemplo, Brasil, Chile, Colômbia e México), um resultado anômalo foi encontrado no que diz respeito à relação existente entre privatização e FDI ao longo do tempo. Na Argentina, no Peru e na Venezuela a privatização está positivamente relacionada ao FDI; no caso do Peru, a privatização é apenas marginalmente significante, enquanto que no da Venezuela é altamente significante. Os resultados sugerem que, para a Venezuela, tanto a privatização de empresas comerciais quanto outras reformas institucionais, tais como reforma bancária e reforma política em geral, têm sido importantes fatores determinantes dos fluxos de entrada de FDI.

Advertisement Size and Goods-Buyer Characteristics: Some Empirical Results

Abstract This article provides empirical tests of hypotheses developed by Phillip Nelson and others within the economics of information literature since 1961. Specifically, this study provides empirical justification of Nelsons hypothesis regarding the size of advertisements for various types of goods, such as search goods, experience goods, and credence goods. Buyer differences (income, mobility) are also employed in order to test the robustness of these seminal hypotheses. The econometric results presented here provide some support for the notion that advertisements for goods whose quality can be verified only after purchase (if at all) goes beyond the relation of product brand to product function, and that the size of the advertisement does have important implications regarding seller reputation.

Economies of scale in state lotteries: an update and statistical test

Until 1985, research in the economics literature on state lotteries was based on the simplifying assumption that administrative costs were constant. DeBoer (1985) provided empirical evidence supporting the idea that average administrative costs are not constant, but decline with output. In other words, DeBoer found evidence for the presence of economies of scale in the provision of state lotteries. The purpose of this study is to update and improve upon DeBoers estimation of the lottery cost function. Unlike DeBoer, we statistically test for the presence of economies of scale in the administration of state lottery games. This study suggests that large scale lottery operations by larger states have lower per-unit costs than lotteries on smaller scales. Our study firmly establishes the presence of statistically significant economies of scale in the provision of state lotteries.

Integrating the concept of rent seeking into the principles of economics classroom: evidence from survey data

Abstract This study offers survey evidence that measures the diffusion of the rent-seeking concept within principles of economics textbooks and classrooms. Data from 18 widely used, mainstream principles textbooks and survey data from students at three large, public universities in the South suggest that dissemination of this concept has been largely successful overall. Future research should concentrate on larger sample sizes and more control variables, as pointed out within the study.

The diffusion of judicially provided employment protection: the employment-at-will doctrine

Labour economists in the private sector of the United States have historically expressed concerns that private-sector employers too often terminate employees employment without just cause. Because the USA lakes statutory restrictions against such actions, many state judicial branches seem to have taken a leading role in providing some degree of employment security. The present note tests the ‘intensity’ of the occurrence (across states) of judicially provided employment protection, as a function of several demographic, labour and political variables across states. The maximum likelihood tobit results point out that education attainment of the voting population, the current rate of unemployment, and population density of the state are important factors that lead judicial branches of government (across states) to provide such protection at different points in time. The note supports several findings of a previous study by Kesselring and Pittman (1993) which models the dependent variable as a zero/one dummy...

How robust is the rationality assumption in economics? A statistical test based on student grade distributions

Abstract This note re-addresses the question of the rationality of economic actors in a new setting. We examine the distribution of final course grades for a “Principles of Economics Class” in an effort to draw conclusions about rational student work effort. Based on the concepts of the opportunity cost of time, the relative reward for earning various grades (based on university codes for determining grade points) and the concept of rationality, we expect to find a greater percentage of grades at the lower end of the distribution for each grade level. We find statistical evidence that there are more students at the lower end of each grade interval than at the upper end. This result is consistent with what economists have long conjectured: students are rational in the allocation of study time.