Paul J. Pieper

The Economics Major: A Cross-Sectional View.

The decline in economics majors is explained by the coincidental decline in demand for business majors and the falling rate of return to majoring in economics.

The world's greatest debtor nation?

Abstract The widely repeated assertion that the United States has become “the worlds greatest debtor nation” is based on reports of its “net international investment position.” This position relates not exclusively to debt but rather to the difference between net United States claims to foreign assets and net foreign claims to United States assets. Major portions are equities and direct investment, the latter valued at “book” or original cost. Estimates of the current value of direct investment, either market value on the basis of share prices or replacement cost, effect huge asymmetric adjustments. As United States direct investment abroad is generally much older, it has appreciated much more than foreign direct investment in the United States. With adjustments as well for the market value of gold and for bad debts, it is estimated that the United States net international investment position was more or less in balance at the end of 1987 and in only relatively small deficit at the end of 1988.

Real Foreign Investment in Perspective

Much concern regarding recent negative net foreign investment of the United States is misguided. It has frequently reflected misunderstanding of the nature of foreign investment and of misleading official measures. The extent of negative net foreign investment and, all the more so, its sum over the years, which is the presumed debt of the United States to the rest of the world, have been exaggerated. Correctly measured, which means taking into account changes in the value of the U.S. assets abroad that are usually ignored, they are not and do not threaten to be large relative to total income and wealth. Net foreign investment in the long run reflects relative growth and portfolio choices among nations. If the monetary authority does not prevent the fall of interest rates and exchange rates, rates of foreign investment can be expected, within a reasonable time, to be self-adjusting. They will then reflect underlying preferences and economic forces, interference with which is likely to do more harm than good.

National Saving and the Twin Deficits: Myth and Reality

That our budget and trade deficits have reduced national saving has been argued widely. But much discussion of saving and deficits is careless of definitions and irrelevant to the economic variables that should concern us. Net foreign investment, the other side of the coin of the trade deficit — or more properly, the current account deficit — is not what it appears to be. And the budget deficit may actually contribute to more national saving, rather than less.

The awarding of PhDs in the United States and Canada: war, the draft and other economic determinants

This article is concerned with the awarding of PhDs in the USA and Canada in the post-WW II period, overall, by gender and major academic discipline. The effects of the explanatory variables lagged by 6 years, to allow for time-to-degree completion, are consistent with the model. Military conscription with educational exemptions and the Vietnam War increased male PhDs in the USA, but, as expected, had no effect for US females or in Canada. This suggests that the war and draft effect for US males were not reflecting other unmeasured North American effects. Government expenditures on research and development enhanced the PhD production, especially for males and in the physical sciences. The cyclical indicator, the adult male unemployment rate, has a weak positive effect for males in both the USA and Canada, suggesting that during the post-WW II period, the positive effect on graduate-level education of the reduced opportunity cost of time due to a recession was stronger than the negative wealth effect of the recession. Other variables the same, there has been an increase over time in the female receipts of the PhD, but there is no such trend for males. While males still receive more PhDs per year than females, the gender gap has decreased over time.