This paper examines the effect of drug prohibition on the black market prices of cocaine and heroin. The paper examines the ratio of retail to farmgate price for cocaine, heroin, and several legal goods, and it compares legal versus black market prices for cocaine and heroin. The results suggest that cocaine and heroin are substantially more expensive than they would be in a legalized market, but to a lesser degree than suggested in previous research.

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This paper examines a new possible explanation for the recent rejections of the life cycle-permanent income model of consumption: the treatment of seasonal fluctuations. The paper shows that when the seasonal fluctuations in consumption purchases are included in an analysis of the life cycle-permanent income model, there is no evidence in the aggregate data against the model. The estimates of the parameters of agents' utility functions obtained with seasonally unadjusted data are plausible, and the unadjusted data do not reject the overidentifying restrictions on the model.

This paper examines a new possible explanation for the recent rejections of the life cycle-permanent income model of consumption: the treatment of seasonal fluctuations. The paper shows that when the seasonal fluctuations in consumption purchases are included in an analysis of the life cycle-permanent income model, there is no evidence in the aggregate data against the model. The estimates of the parameters of agents' utility functions obtained with seasonally unadjusted data are plausible, and the unadjusted data do not reject the overidentifying restrictions on the model.

tag=1 data=Alcohol consumption during prohibition. by Jeffrey A. Miron and Jeffrey Zwiebel tag=2 data=Miron, Jeffrey A.%Zwiebel, Jeffrey tag=3 data=The American Economic Review, tag=4 data=81 tag=5 data=2 tag=6 data=May 1991 tag=7 data=242-247. tag=8 data=ALCOHOL%DRUGS tag=10 data=The burgeoning debate over drug legalisation in the United States has drawn renewed attention to the nation's experience with Prohibition. tag=11 data=1991/3/9 tag=12 data=91/0780 tag=13 data=CAB

We reexamine the expectations theory of the term structure using data at the short end of the maturity spectrum. We find that prior to the founding of the Federal Reserve System in 1915, the spread between long rates and short rates has substantial predictive power for the path of interest rates; after 1915, however, the spread contains much less predictive power. We then show that the short rate is approximately a random walk after the founding of the Fed but not before. This latter fact, coupled with even slight variation in the term premium, can explain the observed change in 1915 in the performance of the expectations theory. We suggest that the random walk character of the short rate may be attributable to the Federal Reserve's commitment to stabilizing interest rates.