Michael R. Donihue

Do faculty salaries rise with job seniority

Abstract Previous research suggests that academic salaries fall with greater job seniority. Using a 1988 national survey, we find that the return to seniority is positive over a lengthy employment period. Tenure status and academic rank also affect the return to seniority

The Economic Impact of Shale Gas Development: A Natural Experiment along the New York / Pennsylvania Border

We investigate local economic impacts of shale gas development using the natural experiment of the discontinuity in regulation caused by New Yorks 2008 moratorium on fracking. Using county- and zip-code-level data for 2001–2013 to examine differences in New York and Pennsylvania counties before and after the moratorium, we find that shale gas development has a positive local impact on employment and wages in the natural resource, mining, and construction sectors and an offsetting reduction in employment in the manufacturing sector. Overall, we find no statistically significant local effects on total employment or on wages.

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.

Decomposing Consumer Wealth Effects: Evidence on the Role of Real Estate Assets Following the Wealth Cycle of 1990-2002

During the period from 1990 to 2002, U.S. households experienced a dramatic wealth cycle, induced by a 369-percent appreciation in the value of real per capita liquid stock-market assets, followed by a 55-percent decline. However, despite predictions at the time by some analysts relying on life-cycle models of consumption, consumer spending in real terms continued to rise throughout this period. Using data from 1990 to 2005, traditional approaches to estimating macroeconomic wealth effects on consumption confront two puzzles: (i) econometric evidence of a stable cointegrating relationship among consumption, income, and wealth is weak at best; and (ii) life-cycle models that rely on aggregate measures of wealth cannot explain why consumption did not collapse when the value of stock-market assets declined so dramatically. We address both puzzles by decomposing wealth according to the liquidity of household assets. In particular, we find that significant appreciation in the value of real estate assets that occurred after the peak of the wealth cycle helped to sustain consumer spending from 2001 to 2005.

Teaching Economic Forecasting to Undergraduates

A course in economic forecasting at a liberal arts college is described. The course provides undergraduates with an opportunity to construct and maintain a macroeconomic model of the U.S. economy and use it to apply their theoretical training to real-world issues. Students in the course publish a newsletter that features their model-based forecasts for the national and regional economies.

Using mixed frequency data to improve macroeconomic forecasts of inventory investment

This paper briefly reviews and extends the evidence on the importance of inventory investment in business cycles. A method for combining high-frequency observations with forecasts of a conventional quarterly econometric model is then proposed. The method is applied to the Michigan Quarterly Econometric Model of the U.S. Economy to see if improved forecasts of inventory investment can be obtained. The use of a small set of monthly indicators is found to yield improved forecasts of real GNP but are of little help in forecasting inventory investment. A more comprehensive set of monthly indicators including inventory and sales may be needed to obtain improved estimates of quarterly inventory investment.