Robert P. Rebelein

A Classroom Experiment on Exchange Rate Determination with Purchasing Power Parity

The authors developed a classroom experiment on exchange rate determination appropriate for undergraduate courses in macroeconomics and international economics. In the experiment, students represent citizens from different countries and need to obtain currency to purchase goods. By participating in an auction to buy currency, students gain a better understanding of currency markets and exchange rates. The implicit framework for exchange rate determination is one in which prices are perfectly flexible (in the long run) so that purchasing power parity (PPP) prevails. Additional treatments allow students to examine the effects of price changes, tariffs, and nontradable goods on the exchange rate and to explore the possible resulting deviations from PPP. The experiment is suitable for classes of 8 to 50 students and can be run in as short a period as 30 minutes.

Making Cooperative Learning Effective for Economics

Teaching Innovations in Economics presents findings from the Teaching Innovations Program (TIP) funded by the National Science Foundation. The six-year project engaged economics professors in the use of interactive teaching in undergraduate economics courses. Each chapter offers an insightful explanation of an innovative teaching strategy and provides a description and examples of its effective use in undergraduate economics courses. The book’s conclusion assesses the results from an evaluation of the program that reports detailed findings on how TIP fundamentals have contributed to faculty development and successful outcomes.

Strategic Behavior, Debt Neutrality and Crowding Out

This article presents an overlapping generations model in which children seek to manipulate the size of the end-of-life bequest they receive from the parent. The author first uses numerical simulations to showthis intergenerational strategic behavior does not negate the debt neutrality assertions of Ricardian equivalence. Then, by introducing capital gains and inheritance taxes, the author shows the crowding out effect of government debt is notably smaller in models with strategic behavior; manipulation by children increases the importance of bequests, which forces parents to save (and bequeath) a larger portion of a debt-financed tax cut. In spite of the neutrality of debt under lump sum taxes, including intergenerational strategic behavior can significantly influence the outcome of government tax policies.

A General-Equilibrium Analysis of Public Policy for Pharmaceutical Prices

Retail sales of prescription drugs totaled

When do first-movers have an advantage? A Stackelberg classroom experiment

154.5 billion in 2001 and will likely exceed

Using the North American Industry Classification System (NAICS) to Identify National Industry Cluster Templates for Applied Regional Analysis

400 billion by 2010. This paper contrasts the welfare and distributional effects of the current patented-monopoly system with those of (1) a price ceiling on pharmaceutical products and (2) a universal insurance program covering pharmaceutical purchases. We use a version of the Kelton and Wallace (1995) two-good, general-equilibrium monopoly model in which a license is required to produce one good. Individuals have heterogeneous preferences, but are otherwise identical. Results indicate potential welfare gains for both the price-ceiling and universal-insurance policies, with very distinct distributional effects.

Defining and Measuring Marriage Penalties and Bonuses

ABSTRACT The timing of moves can dramatically affect firm profits and market outcomes. When firms choose output quantities, there is a first-mover advantage, and when firms choose prices, there is a second-mover advantage. Students often find it difficult to understand the differences between these two situations. This classroom experiment simulates each scenario in a way that makes it easy for students to understand the theoretical reasons for the different possible outcomes. The authors have developed a two-firm classroom experiment where students first play a Stackelberg game in which firms sequentially choose production quantities and then a Stackelberg game in which firms sequentially choose prices. When choosing quantities, it is advantageous to move first, and when choosing prices, it is advantageous to wait.