Hamid Baghestani

Do Revenues or Expenditures Respond to Budgetary Disequilibria

The post-World War II increase in the size of the federal government has led to a number of theoretical and empirical investigations of the sources of this growth. In particular, economists have questioned whether increases in the size of the federal budget tend to be initiated by changes in expenditures followed by revenue adjustments, by the reverse sequence, or both. Friedman, for example, argues that governments adjust expenditures to the level of revenues, so that control of taxation is essential to limit growth in government [13]. Alternatively, the spend-and-tax model posits that revenues will be adjusted to finance any politically chosen level of expenditures. A third perspective, reflecting the institutional separation of allocation and taxation functions of the federal government, hypothesizes the independent determination of revenues and expenditures. The goal of this investigation is to test these three alternative theories of the budgetary process for the United States.

On the predictive accuracy of crude oil futures prices

Abstract This paper evaluates the predictive accuracy of 1-, 3-, 6-, 9-, and 12-month ahead crude oil futures prices for 1991.01–2001.12. In addition to testing for unbiasedness, a naive forecasting model is constructed to generate comparable forecasts, as benchmarks. Our empirical findings reveal that futures prices and naive forecasts are unbiased at all forecast horizons. However, the 1-, and 12-month ahead futures prices are the only forecasts outperforming the naive, suggesting their potential usefulness in policy making. Continuing political instability of the Middle East and the inability of OPEC to offset market sentiment, among other factors, may in the future adversely affect the predictive accuracy of the 1- and 12-month ahead futures prices. Accordingly, caution must be exercised when utilizing such prices as a forecasting tool.

Purchasing power parity in the presence of foreign exchange black markets: the case of India

The empirical validity of

The causal relation between government revenue and spending: Evidence from Egypt and Jordan

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Cointegration analysis of the black market and official exchange rates in India

eb; as a long-run constraint between India and the US is examined in the preesence of foreign exchange black markets. In a triariate model, the official exchange rate is found to be coinergrated with both the price ratio and the black market exchange rate. Both the official exchange rate and price ratio respond to correct short-run departures from

On the rationality of US macroeconomic forecasts: evidence from a panel of professional forecasters

b;PPP

An error-correction modeling of US consumer spending: are there asymmetries?

eb;. Also, both the official and the black market exchange rates respond to correct departures from their own equilibrium relation. The two sources of endogeneity in the official rate follow rate follow as Indian authorities aimed to stabilize domestic prices and reduce uncertainty about the dollar price of rupees.

A Cointegration Analysis of the U.S. Money Supply Process

In investigating the causal relation between government revenue and spending, our empirical results support the tax-and-spend hypothesis for Egypt and the fiscal synchronization hypothesis for Jordan. Breaking away from these historical trends is essential for both countries to eliminate the budget deficit and therefore ensure the availability of domestic saving for private investment. To cope with unemployment and poverty, continuing privatization is recommended for both countries to improve productivity and efficiency in the domestic economy. Privatization should lead to higher domestic saving and investment and at the same time eliminate the budget deficit by enhancing revenue and curbing spending. (JEL H62, H63)

On the rationality of the Michigan monthly survey of inflationary expectations

The examination of stochastic properties of the black market and official exchange rates in India reveals that the series are cointegrated and, therefore, possess a longrun equilibrium relation. The black rate is found to be more sensitive to shocks, and at the same time, adjusts more quickly to departures from the long-run equilibrium relation. This is expected, since the policy-determined official rate was set by what seems to be a sluggish and/or arbitrary mechanism, and that the black had to largely respond and adjust to the exogenous shocks in order to maintain the long-run equilibrium relation.

On the information content of futures market and professional forecasts of interest rates

ASA–NBER survey data is used to check the rationality of US macroeconomic forecasts. It is found that of 75 forecast series examined, 51 are biased, 25 are both unbiased and efficient and only two pass the null hypothesis of orthogonality. This calls into question the validity of rational expectations hypothesis.