Variations in Economic Analysis (eBook)

J. Richard Aronson is the William L. Clayton Professor of Business and Economics at Lehigh University and Honorary Professor of Economics at the University of York (UK). He served as a Fulbright Research Scholar at the University of York in both 1978 and 1996. Professor Aronson is also the Director of Lehigh’s Martindale Center ofr the Study of Private Enterprise and a member of the Employee Retirement Study Commission of the Commonwealth of Pennsylvania. Finally, he is co-editor with Eli Schartz of Management Polices in Local Government Finance for the International City Management Association, now in its fifth edition. Harriet L. Parmet is Professor Emerita in the Department of Modern Languages and Literature at Lehigh University, where she has taught Hebrew since 1976. She specializes in modern Jewish literature, particularly the work of American Jewish women writers and such personalities as Penina Moise, Rebecca Gratz, and Haviva Reik. She has lectured widely in the Lehigh Valley. Co-founder of the Jewish Colloquia Series, Parmet’s work has appeared in journals such as Midstream, Journal for Feminist Studies in Religion, Shofar, Holocaust and Genocide Studies, Feminist Teacher, Delos, Judaism, and Jewish Spectator. She is the author of The Terror of Our Days: Four American Poets Respond to the Holocaust. Robert J. Thornton is MacFarlane Professor of Economics at Lehigh University. His areas of research include labor market discrimination, unions and collective bargaining, occupational licensing, and forensic economics. He has written or edited many books and collective volumes, most recently Fundamentals of Labor Economics (2005, with Thomas Hyclak and Geraint Johnes) and Developments in Litigation Economics (with Patrick Gaugan). He is also the author of numerous articles which have appeard in such as the Industrial and Labor Relations Review, Journal of Human Resources, Oxford Bulletin of Economics and Statistics, and the Journal of Economic Perspectives. He has also written the Lexicon of Intentionally Ambiguous Recommendations (Barnes and Noble Books, 2005).

Contents 6
Introduction 8
My Favorite Two Corporate Finance Puzzles 12
The Dividend Puzzle 12
Other Studies of the Puzzle 15
My Conclusion 15
The Capital Structure Puzzle 16
Conclusion 18
References 18
The Solvency of Federal Welfare Entitlement Programs: Social Security and Medicare 19
Introduction 19
Generational Accounting, Fiscal Imbalance, and Generational Imbalance 20
Generational Accounting and Fiscal Imbalance 21
Generational Imbalance 22
Measuring Americas Fiscal Imbalance 23
The Need to Achieve Fiscal Balance 23
Making Welfare Financially Viable 25
Increase Program Revenues 25
Reduce Program-related Benefits 26
Change the Federal Tax System to Increase the Federal Government's Revenue 26
Change the Benefits Structure to Reduce the Cost of Providing Benefits 27
A Utopian Perspective on Welfare 29
Privatizing Social Security 29
Kotlikoff's Plan for a Uniform Comprehensive System of Health Insurance, the Medical Security System (MSS) 32
Notes 33
References 35
The Corporate Sector as a Net Exporter of Funds: Additional Evidence 36
Why Do Firms Issue Debt? 41
The Model 45
The Structure of the Model 45
General Comments on the Form of the Equations 46
Empirical Estimation of the Equation System 47
Main Empirical Results 49
Conclusion 51
Notes 53
References 54
Piscal Folicy 101Economic Policy Meets Partisan Politics 56
The Battle for a Capital Gains Rate Reduction 56
The Storal of this Mory? 58
The Clinton 1993 Stimulus Bill 58
The Storal of this Mory? 59
The Balanced Budget Agreement of 1997 59
The Storal of this Mory? 60
Opportunities Lost and the Road Ahead 60
Social Security 61
Health Care 62
National Security 63
Tax Reform 63
Notes 63
A Taxonomy of Utility Functions 65
Introduction 65
The Friedman and Savage Hypothesis 66
Relationship between UW , GUW and Behavioral Finance 68
The Generalized UW Class of Functions 69
Subsets of GUW 70
General Considerations 71
Summary 72
Notes 72
References 72
Equilibrium and Disequilibrium Growth: a Commenton a Comment 74
Reputational Risk and Conflicts of Interestin Banking and Finance: The Evidence So Far 78
What Is Reputational Risk? 78
Sources of Reputational Risk 81
Valuing Reputation Risk 83
Reputational Risk and Conflicts of Interest 90
Controlling Conflicts of Interest 96
Conclusions 98
Notes 99
References 99
Seeking Common Ground on Globalization 101
The Pros and Cons of Globalization 101
Trends in Globalization 103
Developing Some Common Ground 104
The Future Global Economy 109
References 109
Tax Reform Then and Now 111
Methods of Integration 112
Conclusion 115
References 115
Joseph A. Schumpeter: Not Guilty of Plagiarismbut of ``Infelicities of Attribution'' 117
My Arrival at Lehigh University 117
The Intellectual Seeds of Innovator in Czernowitz, 19091911 119
The Genesis of the Innovator Concept 121
Schffles Unknown Legacy to Schumpeter 122
How Did I Find Schffles 1867 Book? 123
Infelicity of Attribution on Schumpeters Part 124
References 126
Economics and the Tanakh the Hebrew Bible 128
Introduction 128
Land and Money in Ancient Times 129
Money and Antiquity 129
Vulnerability of Wage Earners 130
Eli Ginsbergs Studies on the Economics of the Bible 131
Significance of the Jubilee 132
Ethics and Economics 133
The Economics of the Sabbath 134
Slavery in Israel 135
Conclusion 138
References 138
Muted Signals in Academe: Letters of Recommendationand Grade Inflation 140
Introduction 140
How Widespread Is the Problem? 141
Letters of Recommendation 141
Grade Inflation 143
The Benefits and Costs of Reference Letters and Grades as Signals 147
Conclusion 150
Notes 151
References 152
A Biography of Eli Schwartz 153
Contributors 157