In a recent paper, Richard Steinberg (1987) examines the effects upon private donations of federal and local government spending for a public good. Unfortunately, when discussing the consequences of changes in local spending, he mis-specifies the demand function for donations. This error enables one to conclude from his model that it is a priori impossible for government to crowd out private donations one-for-one. Such a conclusion violates intuition because one-for-one crowding out should be at least theoretically possible. And Steinberg's model-when corrected-does allow donations to fall as much as the government increases its spending, as this comment will show. One can further conclude from the model presented in the body of Steinberg's paper that the structure of the government's tax policy has no effect on the level of crowding out. However, the corrected model implies that the government can influence changes in private donations that are caused by increased government spending. The degree of control depends upon the size of the donors' income effects and upon the ability of the government to allocate the extra tax burden.

In this paper we provide new evidence on the impact on the U.S. CPI of the appearance and growth of new types of product outlets. Our CPI food microdata permit a more detailed categorization of outlet types than in previous studies, and we can adjust for numerous differences in item characteristics. We also examine the effects of changes in outlet mix not only across outlet categories but also within those categories. In our sample, we find that the upward impact on price from increased item quality has offset most, but not all, of the downward impact of lower-priced outlets.

Most indexes in the Consumer Price Index (CPI) use a form of the “matched-model” approach. It is frequently assumed that this approach accurately reflects inflation for items that have no major trend in quality. In this paper we investigate that hypothesis using CPI data for retail food items. We find that CPI analysts may be correct on average when they decide that new and replacement items are similar in quality. We also find, however, that when sample items are replaced by items of significantly different quality the CPI imputation procedures may underestimate price change and overstate quality change.

We adapt techniques from the literature on chaos and nonlinear dynamics to detect misspecification in models of serially independent data by checking for dependence between the regressors and disturbances. Our tests are nonparametric in that they determine whether the distribution of the disturbances depends on the regressors without identifying a model of dependence or the distribution of the disturbances. In Monte Carlo simulations we find that these tests have good power against dependence caused by omitted variables, incorrect functional form, heteroskedasticity, and similar problems.We also apply our tests to detect misspecification in models of income imputation.

We measure the change in household spending caused by receipt of the economic stimulus payments of 2008, using questions added to the Consumer Expenditure Survey and variation from the randomized timing of disbursement. Households spent 12–30 percent (depending on specification) of their payments on nondurable goods during the three-month period of payment receipt, and a significant amount more on durable goods, primarily vehicles, bringing the total response to 50–90 percent of the payments. The responses are substantial and significant for older, lower-income, and home-owning households. Spending does not vary significantly with the method of disbursement (check versus electronic transfer). (JEL D12, D14, E21, E62)