Journal of Economic and Social Measurement - Volume 37, issue 1-2

Authors: Guzmán, Giselle

Article Type: Research Article

Abstract: I present evidence of systematically heterogeneous expectations, a violation of the Rational Expectations Hypothesis. I demonstrate that the expectations of different gender and wealth cohorts have different relative abilities to predict inflation, interest rates, unemployment, income, stock prices, and the …housing market. There is evidence of differences in learning and cognition. Using a cross-sectional analysis, I demonstrate that the influence of gender on housing market expectations is robust in controlling for other demographic factors, such as income, education, race, age, and marital status. Over the full thirty-year sample period, as well as during the 2002–2006 housing bubble period, men were significantly more optimistic than women in their home price expectations with lower dispersion of expectations. The results cast doubt on the Rational Expectations Hypothesis and complement recent findings in the emerging field of Neuroeconomics. Show more

Keywords: Rational Expectations Hypothesis, heterogeneous expectations, gender, wealth, inflation, interest rates, unemployment, income, stock prices, housing market, income, education, race, age, and marital status, demographic factors, Gallup, Conference Board, Michigan, surveys, housing bubble, learning, cognition, expectations, sentiment, risk aversion, herding, contagion, speculative behavior, overconfidence, risk taking, economic forecasting, asset prices, bubbles, economic policy, Bayesian forecasts, testosterone, Neuroeconomics

DOI: 10.3233/JEM-2012-0357

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 1-60, 2012

Authors: Pierce, Justin R. | Schott, Peter K.

Article Type: Research Article

Abstract: While the relationship between international trade and domestic economic activity is an important topic in economics, research in this area has been slowed due to data limitations. In this paper we provide tools that improve the existing data in two …ways. First, we develop an algorithm that yields concordances between the ten-digit Harmonized System (HS) codes used to classify products in U.S. international trade and the SIC and NAICS industry codes used to classify domestic economic activity. These concordances then yield novel time series of industry-level international trade data for the years 1989 to 2009. Second, we provide concordances between HS codes and the SIC and NAICS product classes used to classify U.S. manufacturing production, allowing for matching at a more disaggregated level than was previously available. Show more

Keywords: International trade, industry classification

DOI: 10.3233/JEM-2012-0351

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 61-96, 2012

Authors: Dimand, Robert W. | Ben-El-Mechaiekh, Hichem

Article Type: Research Article

Abstract: General equilibrium was independently developed in Irving Fisher's 1891 Yale PhD dissertation in economics and mathematics, Mathematical Investigations in the Theory of Value and Prices (published the next year), which was the basis for his pioneering course "The Mathematical Theory …of Prices" in Yale's Mathematics Department in the 1890s. As part of his dissertation, Fisher constructed a hydraulic mechanism to simulate the computation of general equilibrium prices and quantities. Paul Samuelson modestly declared Fisher's thesis the greatest dissertation in economics, but Robert Dorfman suggested that Fisher was fortunate his thesis was not rejected for inadequate knowledge of the literature, since, knowing only Jevons and Auspitz and Lieben, Fisher discovered the writings of Walras and Edgeworth just a few weeks before submitting his final draft. Beyond independently rediscovering general equilibrium, Fisher took an ordinalist approach to preferences and utility, stating that the "foisting of Psychology on Economics [by Gossen, Jevons, and Edgeworth] seems to me inappropriate and vicious" and presenting total utility surfaces that would be termed indifference curves. Most of all, Fisher differed from his contemporaries in his emphasis on general equilibrium analysis that, at least in principle, would be computable and applicable. As William Brainard and Herbert Scarf [14] emphasize, the Fisher machine, the ingenious hydraulic mechanism constructed by Fisher to illustrate his dissertation by solving for equilibrium prices and quantities in a model economy, is a landmark both in the history of economic modeling and the history of pre-electronic computing. This paper examines the theory of general economic equilibrium presented in Fisher's dissertation, of which the celebrated Fisher machine was a greatly simplified attempt at implementation. Fisher's version of the theory is compared with the work of Walras, Edgeworth, and Pareto, with particular attention to Fisher's emphasis on ordinalism and computability. The paper also investigates the reception of Fisher [27] by Pareto and reviewers such as Edgeworth, Fiske, Kinley, and Phillips (collected in Dimand, ed., Irving Fisher: Critical Responses [21]), and its later influence and lack thereof. With regard to later influence, the paper investigates the extent of acquaintance with Fisher [27] in two institutions he helped create, the Econometric Society and the Cowles Commission for Research in Economics (and its successor the Cowles Foundation at Yale), as well as the problematic relationship of Fisher's early general equilibrium analysis to his later work in capital theory and monetary economics. Show more

Keywords: Irving Fisher, early computable general equilibrium, history of computing in economics

DOI: 10.3233/JEM-2012-0354

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 97-118, 2012

Authors: Thomas, Adam

Article Type: Research Article

Abstract: This study is motivated by an intriguing puzzle found in the literature on family formation: quantitative analyses tend to show that marriage is usually financially beneficial for low-income single mothers and their children, but, in the relevant qualitative literature, such …women often identify men's limited financial resources as a key reason for their remaining unmarried. I seek to reconcile these findings by examining the functional form of the relationship between men's earnings and their marital prospects. I find that this relationship is best described by models in which earnings are expressed as a percentile ranking relative to the earnings of one's peers. This finding persists across numerous alternative specifications and is robust to the use of an alternative method for calculating earnings. I conclude that many low-skilled men may, as a condition of becoming marriageable, be required to demonstrate that they are at least as capable as their peers of improving their partners' financial well-being. Show more

Keywords: Family formation, marriageability, functional form

DOI: 10.3233/JEM-2012-0353

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 119-144, 2012

Authors: Dupont-Kieffer, Ariane

Article Type: Research Article

Abstract: The specific Scandinavian contribution to national accounting relates to the links knitted by Ragnar Frisch and Erik Lindahl between macroeconomics and national accounts in the 1930's. They share a common epistemological aim and a common theoretical inheritance. Firstly they were …both driven by the ambition to get concepts and analytical framework for understanding business cycles and for designing economic policies. This conceptual work is strongly embodied to empirical investigations, national accounts being viewed as the experimental basis for macroeconomics and the base for policy and planning purposes. Secondly we will show that their common methodological ambition was rooted in sharing of the legacy of Wicksell's theoretical proposals. This could explain why Frisch and Lindahl both distinguish real items from financial items, real from financial accounts, real from financial economic circulation in order to stress the impact of money on real economic phenomena. They also attempted to carry on in their respective national accounts an ex ante/ex post analysis in order to underline the role of the agents' anticipations in the economic processes and cycles. Show more

Keywords: Macroeconomics, national accounts, economic policies

DOI: 10.3233/JEM-2012-0352

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 145-174, 2012

Article Type: Correction

Abstract: Correction to JESM 36-4 2011 pages 289–320 (Caroline Danielson et al. / Asset and reporting policies in the supplemental nutrition assistance program)

DOI: 10.3233/JEM-2012-0355

Citation: Journal of Economic and Social Measurement, vol. 37, no. 1-2, pp. 175-176, 2012