Federal Reserve Bank of Dallas

About: Federal Reserve Bank of Dallas is a other organization based out in Dallas, Texas, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 196 authors who have published 994 publications receiving 35508 citations.

Core Import Price Inflation in the United States

Abstract: The cross-section distribution of U.S. import prices exhibits some of the fat-tailed characteristics that are well documented for the cross-section distribution of U.S. consumer prices. This suggests that limited-influence estimators of core import price inflation might outperform headline or traditional measures of core import price inflation. We examine whether limited influence estimators of core import price inflation help forecast overall import price inflation. They do not. However, limited influence estimators of core import price inflation do seem to have some predictive power for headline consumer price inflation in the medium term.

Government Organization and Power

Abstract: I. INTRODUCTION Economists have systematically examined the economics of government finance and long ago established that the means of financing government creates inefficiencies in the market. For instance, see Baumol and Bradford (1970) and Diamond and Mirrlees (1971a, 1971b). What may be less well examined and understood is that--apart from the distortions that arise from the means of government finance--government officials can have an incentive to provide a combination of services and taxes that are nonoptimal, as in Niskanen (1997). The ability of government to exercise coercive and pricing power creates these incentives. A growing number of articles explore the effect of government power on its size. For example, Anderson and Tollison (1988) and Rogers and Rogers (1995) examine the implications of pricing power for government size. In his work on bureaucracy, Niskanen (1971) considered the implications of coercive power for government size. Olson (1991), McGuire and Olson (1996), Niskanen (1997), and McGuire (2001) examine the implications of the joint exercise of coercive and pricing powers by an autocratic government. To our knowledge, however, no previous work explicitly distinguishes between the coercive and pricing powers of government, and none systematically examines all the possible combinations of coercive and pricing powers. In the present analysis, we develop a simple theoretical framework that allows us to examine on an integrated basis the exercise of government power. The framework abstracts from any distortions in the means of government finance and separates government power into two dimensions--pure coercive power and pure pricing power. Pure coercive power is the ability of a government to compel consumers to accept more of the public good than they desire at each tax price through fiat. Coercive power typically arises when citizens are unable to exit a jurisdiction costlessly, and the government is able to push citizens beyond what they would accept in a voluntary relationship. Pure pricing power is the government's ability to restrict output along a given demand curve and earn rents by doing so. Pricing power typically arises when the government has limited competition and faces a downward-sloping demand curve for its services. We consider four polar combinations of coercive and pricing power in comparison to the social optimum: Lindahl democracy, monopoly, Niskanen bureaucracy, and autocracy. As shown in Figure 1, the government in Lindahl democracy exercises neither coercive nor pricing power. A monopoly government is able to restrict its output and exercise pricing power to earn rents in a traditional monopolistic fashion, but it cannot engage price discrimination or expropriation to obtain any remaining consumer surplus from its citizens. A Niskanen bureaucracy can exact all of the surplus that consumers obtain from the public goods it provides, but it must use the surplus in the production of public goods. It cannot exercise pricing power and restrict output to obtain rents as a monopoly would. An autocracy exercises both coercive and pricing power. In practice, democratic governments are likely to have both coercive and pricing powers, rather than to conform to the Lindahl ideal. Our analytical framework allows us to clarify and reconcile the differences between some of the previous contributions to the literature on government power and size in democracy. A government can simultaneously use its coercive power to grow too large and its pricing power to restrict its output and earn rents. Furthermore, government size or rents alone may be poor indicators of the extent to which government fails to achieve optimality in its provision of services. Government power may be used to generate rents, provide too much government service, or a combination of both. II. SOCIAL OPTIMUM Consider a jurisdiction or economy with n identical individuals and two goods--a purely public good and a purely private good. …

An Exploration Into the Effects of Dynamic Economic Stabilization

Abstract: This paper analyzes the stochastic properties of a dynamic general equilibrium model under two government policies which might be interpreted as ‘countercyclical’ fiscal policies. In one case, we examine the effects on fluctuations of government spending on infrastructure investment in an economy in which public capital is an input to the aggregate production function. In the other, we examine the effects on aggregate business cycle fluctuations of a proportional tax on lay-offs. Our results find only weak evidence for the stabilizing effects of either policy.