Russell M. Rhine

Economic freedom and employment growth in U.S. states

We extend earlier models of economic growth and development by exploring the effect of economic freedom on U.S. state employment growth. We find that states with greater economic freedom - defined as the protection of private property and private markets operating with minimal government interference - experienced greater rates of employment growth. In addition, we find that less restrictive state and national government labor market policies have the greatest impact on employment growth in U.S. states. Except for labor market policies, we find that state employment growth is influenced by state and local government policies, but not the policies of all levels of government, including the national government. Our results suggest that policy-makers concerned with employment should seriously consider the degree to which their own labor market policies, as well as those of the national government, may be limiting economic growth and development in their respective states.

Economies of scale and optimal capital in nuclear and fossil fuel electricity production

This paper tests for economies of scale in the electric utility industry using a five-year panel data set that includes both fossil fuel and nuclear fuel electricity generation. In addition, a variable cost function is used as opposed to a total cost function because the assumption of cost-minimizing production inputs is not met. That is, electric utilities are overcapitalized. Therefore, the optimal capital stock is estimated, which is significantly less than the actual capital stock, and an estimate of economies of scale is generated. Evidence suggests that firms are operating on the negatively sloped portion of the long-run average cost curve near the trough. This indicates either slight economies of scale or no economies of scale.

Does government spending really crowd out charitable contributions? new time series evidence

We exploit the time series properties of charitable giving data to provide additional insights into the crowding out of charitable contributions in response to government spending. We find that the short-run and long-run government spending and charitable giving relationships are quite different - the long run relationship appears to be largely spurious, and estimates of the short-run relationship provide only weak evidence of crowding out. We also find that system estimation can improve upon the efficiency of single equation models used in previous works. Our results support the prestige theory of charitable giving and the rational ignorance of citizens.

Does Government Spending Influence Charitable Contributions or Vice Versa

We exploit the time series properties of charitable giving data to provide additional insights into the relationship between charitable contributions and government spending. Cointegration tests reveal a significant long-run relationship between several categories of charitable giving and government spending. Granger causality tests are designed to capture any short-run giving and spending relationship, and provide the opportunity to examine whether changes in fundraising efforts by charities influence government spending. Evidence suggests that charitable contributions to education responds quite differently to state and local government education expenditures versus federal government expenditures. We argue that the government spending and charitable giving relationship is dependent upon the source of government revenue and how this revenue is used by institutions of learning.

Rational expectations and M2 demand

This essay expands on existing studies of M2 money demand. It differs in that it applies a rational expectations approach to an adaptive expectation model. Unlike the adaptive expectations models, the author includes an explanatory variable for expectations of future inflation. The expectation variables used are: the actual inflation rate (t + 1) and the Livingston Survey from the Philadelphia Fed. By using the different measures of expectations the author is able to compare several adaptive expectations models that appear in the literature and the rational expectations models for fit and forecast ability. The empirical results are such that the importance of including the rational expectations variable is evident even though the overall fit of the equation is comparable to one of the existing adaptive expectations models.