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Creator: Barbosa, Antonio S. Pinto; Jovanovic, Boyan, 1951-; and Spiegel, Mark Series: Conference on economics and politics Abstract: This paper analyzes how political stability depends on economic factors. Fluctuations in groups' economic capacities and in their abilities to engage in rent-seeking or predatory behavior create periodic incentives for those groups to renege on their social obligations. A constitution remains in force so long as no party wishes to defect to the noncooperative situation, and it is reinstituted as soon as each party finds it to its advantage to revert to cooperation. Partnerships of equals are easier to sustain than are arrangements in which one party is more powerful in some economic or noneconomic trait. In this sense, inequality is bad for social welfare. Surprisingly, perhaps, it is the rich, and not the poor segments of society who in our model pose the greater threat to the stability of the social order. Using cross-country data, we test and confirm the prediction that most constitutional disruptions should be accompanied by increases in income inequality.
Keyword: Economic models, Social problems, Welfare, and Interest groups Subject (JEL): E52 - Monetary Policy and D72 - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior -
Creator: Chari, V. V. and Cole, Harold Linh, 1957- Series: Conference on economics and politics Keyword: Free rider and Government policies Subject (JEL): D72 - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior and H41 - Public Goods -
Creator: Hinich, Melvin J. and Weber, Warren E. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 096 Abstract: In this paper we present a consistent estimator for a linear filter (distributed lag) when the independent variable is subject to observational error. Unlike the standard errors-in-variables estimator which uses instrumental variables, our estimator works directly with observed data. It is based on the Hilbert transform relationship between the phase and the log gain of a minimum phase-lag linear filter. The results of using our method to estimate a known filter and to estimate the relationship between consumption and income demonstrate that the method performs quite well even when the noise-to-signal ratio for the observed independent variable is large. We also develop a criterion for determining whether an estimated phase function is minimum phase-lag.
Keyword: Linear filter, Hilbert transform, Minimum phase-lag, Phase unwrapping, and Errors-in-variables -
Creator: Alvarez, Fernando, 1964-; Díaz-Giménez, Javier; Fitzgerald, Terry J.; and Prescott, Edward C. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 153 Abstract: In this paper we develop a computable general equilibrium economy that models the banking sector explicitly. Banks intermediate between households and between the household sector and the government sector. Households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement. Banks pool households’ savings and they purchase interest-bearing government debt and non-interest bearing reserves. We use this structure to answer two sets of questions: one normative in nature that evaluates the welfare costs of alternative monetary and tax policies, and one positive in nature that studies the real effects of following a procyclical interest-rate policy rule.