Michael A. Ellis

The Determinants of State Government Debt Financing

This article analyzes the determinants of state debt financing-including the composition of government spending and the desire to make intergenerational transfers, as well as a variety of economic, political, and institutional factors. The authors find that a greater proportion of younger voters is correlated with increased debt at the state level, but a greater proportion of elderly voters is correlated with decreased debt, probably because of the composition of state government spending. Moreover, the authors find that political variables are largely irrelevant to the accumulation of debt at the state level and that some types of institutional restraints are effective in limiting the size of state debt.

Congressional influence on U.S. monetary policy: A reconsideration of the evidence

Abstract One of the few works that finds strong evidence of congressional influence on U.S. monetary policy is Grier (1991), which finds a direct relationship between the liberalism of the Senate oversight committee leadership and monetary base growth. We extend this analysis by considering a longer sample period and by considering the preferences of House oversight committee leaders, in addition to Senators. Griers evidence is not robust to these extensions. Where we do find correlation between congressional preferences and monetary base growth, increased liberalism of congressional oversight committees is associated with lower monetary base growth.

Congressional policy preferences and U.S. monetary policy

Abstract This paper shows that the evidence of congressional impotence in influencing U.S. monetary policy presented in Chopin et al. (1996) is robust to inclusion of a dummy variable for the tenure of House Banking Committee Chairman Wright Patman. This result is in contrast to the assertion of Grier (1996). Further, we show that specification problems of models of congressional influence over a sample period that extends beyond the mid-1980s can be the result of omitted variable bias. When macroeconomic variables, including oil price shocks, are included in the model, our results continue to hold. Contrasting our results with Griers indicates that the evidence concerning congressional influence is sensitive to the measure of congressional preferences.

Economic Structure and Seigniorage: A Dynamic Panel Data Analysis

Controlling for a more comprehensive set of economic structure variables and using system generalized method of moment (GMM) dynamic panel estimation, we consider the determinants of seigniorage. While we confirm some results found in previous literature, including an inverse relationship of financial development and exchange rate management to seigniorage, we find little evidence that political instability and polarization lead to greater reliance on seigniorage. We also find robust evidence that the size of the shadow economy and natural resource rents are directly related to seigniorage, the latter result likely a result of exchange rate management. Thus, an effective strategy to reduce reliance on seigniorage is to lower the incentives to operate in the shadow economy, while exchange rate management may be counter‐productive in countries with considerable natural resource rents.

Stabilization under capital controls

Abstract This paper considers a stabilization program consisting of a fixed exchange rate rule and a delayed fiscal adjustment. In contrast to the existing literature, it is assumed that there is no private capital mobility. The effects of such a program are substantially different than under capital mobility, since the access to international capital markets affects the ability of the private sector to smooth consumption prior to the fiscal component of the program.

The determinants of tenure on the Federal Reserve Board of Governors: should I stay or should I go?

This paper examines the quit behaviour of members of the Federal Reserve Board of Governors. We find that the probability of a member continuing is lower when the member is an economist, when the member comes to the Board from the private sector, and when their policy views differ from the Board as a whole. In addition, we find evidence that the President can exert influence on the Fed by the power of appointment. And in contrast with what one might expect, we find that salaries on the Board relative to the private sector do not seem to be an important factor in determining the decision to continue service on the Board.

Do natural resource revenues lower government reliance on seigniorage? The role of exchange rate policy

The study investigates how the degree of exchange rate management conditions the relationship between seigniorage and governments’ natural resource revenues using a sample of 140 countries over the period from 1971 to 2012. It also disaggregates natural resource revenues to investigate if this relationship holds across the various types of natural resources. The main approach is to estimate dynamic panel data interaction models. The study finds that under exchange rate regimes characterized as fixed or of limited flexibility an increase in natural resource rents is associated with an increase in seigniorage. Under crawling currency bands and managed floating, an increase in natural resource rents has little association with seigniorage. Under exchange rate regimes permitting greater exchange rate flexibility, greater natural resource rents allow less reliance on seigniorage. Additionally, the direct relationship between natural resource rents and seigniorage is driven mostly by oil and natural gas.

External debt and fiscal adjustment in anti-inflation programs☆

Abstract This note examines the effect of fiscal adjustments on the steady-state rate of inflation when the government is externally indebted. It is shown that the effect of such adjustments depends on the real exchange rate movements associated with each method used to reduce the budget deficit, since real exchange rate movements feedback to the government budget.