Patricia A. Hutton

‘Optimal’ model selection when the true relationship is weak and occurs with a delay

Abstract A Monte Carlo comparison of five model selection criteria indicates that when the true relationship is weak and delayed, Theils (1961) criterion or the selection of the most significant lag structure is most likely to result in the correct inference.

Understanding Student Cheating and What Educators Can Do about It.

Abstract. This article reviews the empirical evidence on college student cheating and places it in a context that combines economic theories of benefit/cost analysis and unobservable behavior with social network analysis of how widespread rule breaking can develop in an organization. The implications are that students cheat because the benefit/cost tradeoff favors cheating; that the problem of unobservable behavior can be substantially mitigated by promoting academic integrity as the social norm; and that many factors that have contributed to the development of more and stronger relationships between college students have helped to promote cheating. The article makes ten specific recommendations for educators.

A New Test of Money-Income Causality

This paper investigates the prima facie causal relationship between money and income employing a methodology--the multiple rank F test--the results of which are invariant to monotonic transformations of all variables and robust over alternative distributions of the errors. In contrast to prior functional-form dependent parametric analyses, evidence of prima facie causality between money and income is found for the 1970-88 time period. This evidence is consistent with an elementary theoretical framework in which the direction and strength of causality is dependent upon the definition of money. Copyright 1992 by Ohio State University Press.

Small sample properties of the multiple rank F-test with lagged dependent variables

Abstract The parametric and multiple rank F -tests are compared using Monte Carlo methods in a leading linear lagged dependent variable model for different error distributions, sample sizes and strengths of relationship.

Keynesian Involuntary Unemployment and Sticky Nominal Wages

This paper presents a model in which sticky nominal wages and Keynesian involuntary unemployment result as a consequence of the intertemporal optimization decisions of profit-maximizing monopsonistic firms and fully rational and informed workers in an uncertain environment. Uncertainty associated with the business cycle and its impact on product price generates disequilibrium wages and identifies the labor demand function in contractions and the supply of labor in expansions. The theoretical prediction of a negative relationship between real wages and employment during contractions and a positive relationship during expansions is strongly supported by the empirical evidence presented. Copyright 1996 by Royal Economic Society.

On the causality of intraurban location

Abstract The patterns of decentralization of employment and population in American metropolitan areas are now well known to most urban economists. While much time and space has been devoted to the economic and social causes of suburbanization, understanding the nature of the process of decentralization is a prerequisite for the implementation of any government policy directed at the reversal or a slowing of the process. As Mills and Price ( J. Urban Econom. , 12 , 1–17 (1984)) suggest, an uncertainty about the root causes of decentralization prevents an enlightened discussion of the appropriateness or desirability of various types of government intervention. Simple facts and causal models may have profound effects on the directions policy makers look for in government intervention. The issue of causality lies at the heart of the process of decentralization, and causality conclusions must be scrutinized before being accepted.

A Functional-Form-Free Test of the Research and Development/Firm Size Relationship

Parametric testing of the relationship between research and development (R&D) and firm size is limited by the hypothesized functional form, predominantly assumed to be linear in the logarithms of both variables. With a transformation of variables, the null hypothesis of constant returns to scale can be tested employing the multiple-rank F-test procedure. The findings of this analytical approach suggest that R&D intensity varies with firm size in some industries but not in others, and where it does vary, there is more evidence that R&D intensity is negatively rather than positively related to firm size.

Market Failures and the Corporation

The competitive “market failures” identified by Samuelson and Diamond in a certain world, justify government intervention in a free market and are a major influence on cur-rent macroeconomic theory. We demonstrate that they arise from modeling firms as self-employed agents instead of corporations. Corporations with transferable equity can make intertemporal contracts, including the optimal lifecycle income of its stakeholders, which are irrational for unincorporated firms. They eliminate the need for individuals to trade, be paid their marginal product, and save. Corporations eliminate the alleged “market failures”, need for government intervention, and a motivation for current macroeconomic modeling.