Joe A. Stone, Price Elasticities of Demand for Imports and Exports: Industry Estimates for the U.S., The E.E.C. and Japan, The Review of Economics and Statistics, Vol. 61, No. 2 (May, 1979), pp. 306-312

This paper tests if variations in the treatment of expenditures by state and local governments are an explanation for the inconsistent results of previous tax studies. Estimates for net investment and employment in manufacturing for 1962-82 support this conjecture, indicating that state and local taxes have a negative effect when the revenues are devoted to transfer-payment programs and that (with taxes held constant) increases in expenditures on health, education, consistent with the "vicious circle" phenomenon, do not appear simply to reflect common cyclical movements, and provide evidence of structural linkages implicit in previous results for growth in state personal income.

This paper offers the first integrated test of the electoral model of business cycles. The test begins with unrestricted estimates of presidential electoral patterns in U.S. economic outcomes (real GNP, unemployment, and inflation) and policies (money growth and the adjusted budget surplus). These estimates are then used to determine whether the estimated electoral patterns in macropolicy yield predicted electoral patterns for macro outcomes that are consistent with estimates of both actual electoral patterns in outcomes and voting behavior. The results indicate that four-year electoral cycles in macroeconomic outcomes and policies are strongly significant for the United States for the period 1951I to 1986II.

SUPPLY behavior in international trade has been notoriously difficult to capture empirically. Indeed, so few published supply studies exist that Stern, Francis, and Schumacher's (1976) bibliographical survey of price elasticities in international trade devotes over 350 pages to demand estimates but barely 10 pages to supply estimates. In recent years, only Goldstein and Khan (1978) and Dunlevy (1980), using simultaneous-equation estimation techniques, have reported estimates of supply behavior in international trade.' Exogenous shocks to demand and supply for traded goods in general influence both quantity and price. For supply estimates, it is unclear a priori whether the response is more appropriately specified with quantity or price as the dependent variable. However, if supplying firms in an uncertain world pursue pricing strategies based on past market performance (as in Zabel (1981)), the appropriate specification is a supply-price equation. In this case, prices respond to lagged quantities, which implies that the traditional supply-quantity specification (with present and past prices as explanatory variables) cannot capture the dynamic supply behavior. In this study, we explore the hypothesis that previous attempts to estimate supply behavior have generally failed not only because of the well-known problem of simultaneity bias, but also because quantity rather than price was specified as the dependent variable. Section II presents and discusses traditional supply-quantity equations based on quarterly data for aggregate exports and imports for the United Kingdom and the United States from 1947 to 1979. Section III briefly discusses the theoretical rationale of a supply-price specification and presents estimates of supply-price equations based on the same data. Section IV evaluates the empirical evidence to determine whether a supply-quantity or supply-price formulation is more appropriate, and compares estimates of long-run price elasticities of supply based on the two approaches. A final section summarizes the conclusions.

Stephen E. Haynes, Joe A. Stone, Secular and Cyclical Responses of U.S. Trade to Income: An Evaluation of Traditional Models, The Review of Economics and Statistics, Vol. 65, No. 1 (Feb., 1983), pp. 87-95

The right conclusion could be that there is a strong connection between the spectral components with specified periods. A possible economic interpretation could identify a strong long-term (in the sense of the specified periods) connection between both series. But that would still not allow us to say anything concerning the size and direction of the time delay between the two series. For such an analysis we would have to, at least, consider the phase angles between the components. Because of the ambivalent meaning of the phase angle (in relation to the direction and number of periods) the final answer could come only from the time domain analysis. However, the fact that only spectral components with longer periods, i.e., smaller frequencies, show coherency suggests something else: In order to influence the balance of trade the changes in the terms of trade should be durable enough. Mathematical formalization of this concept of durability would therefore be helpful. I would propose that further research be done in this respect.