The Journal of Economics

Volume XXVI, No. 1, 2000


THE EFFECT OF TOURISM ON LOCAL GOVERNMENT SPENDING IN MISSOURI, 1992

Donald Carter, Katherine Frick, Diane Primont and Bruce Domazlicky 

The common view of tourism is that it brings a region mostly benefits with few additional costs. However, as Wong (1996) points out, increased tourism in a region frequently means increased governmental costs for such items as highways, police and fire protection, perhaps parks and recreation. Following Wong, we investigate the relationship between tourism in Missouri counties and local government expenditures. In contrast to Wong, we find no evidence of a positive relationship between tourism spending and local government expenditures in a county. (H7, R5)



THE RELATIVE EFFICIENCY OF FUEL ECONOMY STANDARDS VERSUS TAXES AS ENVIRONMENTAL POLICY INSTRUMENTS

Steven G. Thorpe 

This paper explores the comparative effects of automotive fuel economy standards and taxation on the levels of average fuel efficiency, air quality, and welfare. Theoretical and applied analyses reveal that fuel economy standards can substantially improve average fuel efficiency without having much impact on air quality and welfare, and in contrast, taxation improves air quality and increases welfare without significantly affecting average fuel efficiency. Thus, the results suggest that average fuel efficiency is too indirect a target for reducing automobile-related pollution so that compared to taxation fuel economy standards are a relatively costly means of environmental improvement. (Q2, D6)



MARKET VALUE OF MITIGATION AND PERCEIVED RISK: EMPIRICAL RESULTS

Kevin M. Simmons and Jamie Brown Kruse 

This paper explores the value of windstorm mitigation in a Gulf Coast city. Policymakers have long assumed that agents will not voluntarily mitigate for a natural disaster. Consequently, policy has focused on coercive measures. Data for the study contains detailed information on the inclusion of storm-blinds, a specific hurricane mitigation feature. Results indicate that homes with storm- blinds command a premium compared to homes without this feature, thereby questioning the assumption held by policymakers. This result, however, is limited to homes located on the island portion of the community indicating that agents differentiate the risk from one area to another. (D8)



SCHOOL QUALITY AND HOUSING VALUES

David M. Mitchell 

This paper uses a mulitplicative heteroskedasticity corrected hedonic equation to examine the issue of school quality and housing values within the city of Oklahoma City. The issue of whether homebuyers respond favorably to quality was explored. In addition to this, different measures of school quality were investigated to determine which measure was the most valid to a homebuyer when making their housing purchase. The results presented in this paper seem to indicate that the homebuyer places greater value on the socioeconomic makeup of a school rather than the school test scores or racial composition. (R21, H40)



THE CAPACITY DECISION WHEN PRODUCT DEMAND IS UNCERTAIN: A TIMING PROBLEM APPROACH

Jannett Highfill, David Quigg, Edward Sattler, and Robert Scott 

Suppose a firm faces a “timing problem” in its capacity decision: it must acquire capacity, a strict upper bound on production, and set its price before quantity demanded for its product is known. The paper shows that the uncertainty capacity is greater than the certainty capacity when the marginal cost of capacity is low; the reverse holds for high marginal costs. Although there is a systematic relationship between the certainty and uncertainty prices, such differences are small. Therefore, our results suggest that the primary effect of demand uncertainty is on the firm's optimal capacity, rather than on its optimal price. (D24, D81)



THE EFFECT OF REAL EXCHANGE RATE VOLATILITY ON BILATERAL SECTOR EXPORTS

Tammy A. Rapp and Nallapu N. Reddy 

This paper, utilizing cointegration and error correction models, examines the long run and short run impacts of exchange rate volatility on United States sector exports to Canada, France, Germany, Italy, Japan, and the United Kingdom. A long run cointegrating vector was found to exist for the majority of the sectors in all countries. However, there was not a consistent finding as to whether this relation was positive or negative. This, therefore, signifies the importance and relevance of investigating export trade by sectors rather than in aggregate since different sectors react differently to exchange rate volatility. The short run models provide evidence of the relevance of the long run equilibrating factor of the error correction term. However, only in a limited number of cases is exchange rate volatility causing trade in the Granger sense through lagged values. (F14, F30)