Private Enterprise Research Center (PERC)
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The mission of the Private Enterprise Research Center (PERC) is to provide Texas A&M University, the state of Texas and the Nation with analysis of important policy issues. PERC actively supports academic research and market oriented solutions to public policy problems.
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Item The ACA and the States(Private Enterprise Research Center, Texas A&M University, 2015-01-01) Rettenmaier, Andrew J.; Saving, Thomas R.Item Alamos Alliance XXIX Executive Summary(Private Enterprise Research Center, Texas A&M University, 2022-04-07) Navarro, Carlos I.In this summary of the 29th edition of Alamos Alliance, participants and panelists addressed the issue of isolationist policies in response to the economic conditions caused by the Covid-19 pandemic, high inflation, and Russia’s invasion of Ukraine. The main topics of discussion include the return of ‘stagflation’ and the perils of fiscal mismanagement; the supply chain ‘mess,’ near-shoring and the future of open trade; and lost opportunities and radical uncertainty in Latin America. Speakers included Hernando de Soto (keynote), as well as Manuel Hinds, author of In Defense of Liberal Democracy, with a follow-up discussion led by Luis Rubio, Chairman of the Board of CIDAC-México Evalúa.Item Alamos Alliance XXVII 2020 Executive Summary(Private Enterprise Research Center, Texas A&M University, 2020-03-05) Navarro, Carlos I.; Salinas-Leon, RobertoWhy are capital markets dysfunctional in an era of excessive liquidity, low interest rates and modest inflation? Why has the Chilean economic model, an inspiration to many other nations over many years, come under vicious attack? What is driving the turn to socialism among younger generations? These topics were tackled at the 27th meeting of the annual Alamos Alliance, “Disruption and Discontent in the Global Economy: Addressing the New Challenges,� held from February 13-16, 2020 in Alamos, Mexico. This report summarizes the the keynote presentations given by Professor Douglas Irwin of Dartmouth College; Ricardo Hausmann, the Director of Harvard University’s Growth Lab at the Center for International Development; as well as talks given by Anne Krueger, Deirdre McCloskey, Luis de la Calle and Kevin Murphy, among others.Item Alamos Alliance XXVIII 2021 Executive Summary(Private Enterprise Research Center, Texas A&M University, 2021-05-19) Navarro, Carlos I.The year 2020 and the Covid-19 pandemic abruptly shifted the manner in which people interact, save, spend, work, and carry out day-to-day business. The 28th meeting of the annual Alamos Alliance, which was held virtually on April 30, 2021, addressed the economics of the Covid-19 disruption, the recent rise of cryptocurrency, and fiscal and monetary policy responses to the pandemic. This report summarizes the presentations given by Vice President & Chief Economist of World Bank Group Carmen Reinhart, Professor Casey Mulligan, Robert Topel, Kevin Murphy, former Texas Senator Phil Gramm, Anne Krueger, and Manuel Suarez Mier. A discussion with Manuel Sanchez, Tom Saving, Pedro Aspe and Sebastain Edwards on cryptocurrencies and inflation followed.Item Almost Stochastic Dominance: Magnitude Constraints on Risk Aversion(Private Enterprise Research Center, Texas A&M University, 2021-06-01) Liu, Liqun; Meyer, JackAlmost stochastic dominance (ASD) extends conventional first and second degree stochastic dominance by placing restrictions on the variability in the first and second derivatives of utility. Such restrictions increase the number of random variables for which a unanimous ranking of one over the other occurs. This paper advances an alternative approach to ASD in which the magnitude of absolute or relative risk aversion is constrained with both an upper bound and a lower bound. Using the results of Meyer (1977b), the paper provides cumulative distribution function (CDF) characterizations of these forms of ASD. Simple closed-form necessary and sufficient conditions for these ASD relations are determined for the special cases where the absolute or relative risk aversion is only bounded on one end or where the pair of random variables under comparison have single-crossing CDFs.Item Alternative Approaches to Comparative nth-Degree Risk Aversion(Private Enterprise Research Center, Texas A&M University, 2018-07-30) Liu, Liqun; Neilson, William S.Economists have used the risk premium and the probability premium that are revealed through individual choices to compare how risk averse two individuals are. These behavioral, or choice-based, measures of risk aversion – such as the risk premium and the probability premium – are important because they can be used in experimental investigations into individual characteristics like gender, age, or income that affect the strength of risk aversion. Higher- degree risk aversion (e.g. downside risk aversion or prudence) has recently been shown to play critical roles in decision making under uncertainty. Consequently, it is important to study how to measure the strength of higher-degree risk aversion. In working paper 1805, Alternative Approaches to Comparative nth-Degree Risk Aversion, PERC researcher Liqun Liu and co-author William S. Neilson generalize the three main existing behavioral approaches to measuring risk aversion – including the probability premium approach, the risk premium approach, and the comparative statistics approach – to measuring higher-degree risk aversion. Findings show that, within the expected utility framework, behavior patterns in these behavioral approaches to measuring higher-degree risk aversion are equivalent and can be characterized by the same set of conditions on the utility functions.Item Am I the Big Fish? The Effect of Self-Perceived Ordinal Rank on Student Academic Performance in Middle School(Private Enterprise Research Center, Texas A&M University, 2018-12-20) Yu, HanIn the educational setting, it is well known that relative achievement can affect individual outcomes. The ordinal academic rank of a student may affect the student’s academic achievement through a student’s self-confidence, parental expectations, effort provision, etc. In this paper, the author investigates the causal impact of the self-perceived ordinal rank of middle school students on their test scores in Mathematics, Chinese and English using a randomized sample from China. This paper provides the first direct evidence showing that middle school students’ self-perceived ordinal rank has a positive and salient effect on their test scores in a later year in middle school. The results suggest that while students with a relatively better perceived academic performance benefit from perceiving a favorable relative position in study, students who believed that their ordinal rank is among the lowest in class suffer substantially more hurt with respect to future test scores. Moreover, the results suggest that perceiving a higher rank raises a student’s confidence in study and expectations on his/her own educational and occupational achievement in the future and more support from parents, teachers, and classmates in the present. Self-perceived rank also affects students' academic performance through effort provision and the quality of friends. The results also suggest a positive effect of female teachers on the self-perceived rank of female students.Item Am I the Big Fish? The Effects of Ordinal Rank on Student Academic Performance in Middle School(Private Enterprise Research Center, Texas A&M University, 2019-06-28) Yu, HanThe idea that through perseverance and hard work, one can achieve his or her dreams is a pervasive one. There is already an established literature that studies the link between relative achievement and individual outcomes, but findings on relative achievement in the classroom is rare. This article summarizes working paper 1811, where PERC Postdoctoral Associate Han Yu provides the first evidence from a developing country by studying the effects of academic class rank for 7th and 8th grade students from China. This paper also breaks new ground by providing the first direct evidence on the relationship between objective academic class rank and the rank perceived by students, as well as the impact of self-perceived rank on a student's future academic attainments.Item Analysis of the Biden Proposal to Equalize Saving Incentives(Private Enterprise Research Center, Texas A&M University, 2020-10-16) Jansen, Dennis W.; Liu, Liqun; Rettenmaier, Andrew J.Democratic Presidential Nominee Joe Biden has proposed replacing the current tax deductions on contributions to 401(k) retirement accounts with a uniform refundable tax credit that would be deposited into the taxpayer’s retirement account as a matching contribution. The stated goal of the tax credit is to give lower income workers added incentives to save for retirement, as it would be more generous to them than the current deductions allowed to 401(k) accounts. In PERC Policy Study 2003, authors Dennis W. Jansen, Liqun Liu and Andrew J. Rettenmaier estimate different savings scenarios of both low and high income workers nearing retirement, and compare earnings derived using current 401(k) and Roth savings plans to the proposed uniform tax credit. The authors find that, if enacted, lower income workers would use the tax credit, while higher income workers would switch to Roth savings plans, resulting in less tax revenue for the federal government. The plan would also result in the unequal treatment of workers who participate in defined contribution plans relative to workers in defined benefit pension plans.Item Are Charters the Best Alternative?(Private Enterprise Research Center, Texas A&M University, 2016-01-01) Gronberg, Timothy; Jansen, Dennis; Taylor, LoriTexas has been part of the charter school movement since 1995, when the 74th Texas Legislature authorized the State Board of Education to establish open enrollment (OE) charter schools in the state. According to the Texas Education Agency, in 2010-11 there were 199 OE charter districts operating 482 campuses in Texas, serving 133,697 students, nearly 3% of public school students in the state. Despite the growing role of these alternative schools in the U.S. edcucational system, they are seldom studied. In Working Paper 1606, we provide the first careful empirical study of the costs of alternative education. Their results show charters to be more cost-efficient in providing alternative education compared to traditional public school districts.Item Are Charters the Best Alternative? A Cost Frontier Analysis(Private Enterprise Research Center, Texas A&M University, 2016-09-01) Gronberg, Timothy J.; Jansen, Dennis W.; Taylor, Lori L.Texas has been part of the charter school movement since 1995, when the 74th Texas Legislature authorized the State Board of Education to establish open enrollment (OE) charter schools in the state. According to the Texas Education Agency, in 2010-11 there were 199 OE charter districts operating 482 campuses in Texas, serving 133,697 students, nearly 3% of public school students in the state. Despite the growing role of these alternative schools in the U.S. edcucational system, they are seldom studied. In Working Paper 1606, PERC Research Fellow Timothy J. Gronberg, PERC Jordan Professor Dennis W. Jansen, and Lori L. Taylor, provide the first careful empirical study of the costs of alternative education. Their results show charters to be more cost-efficient in providing alternative education compared to traditional public school districtsItem Are We Taming Health Care Spending(Private Enterprise Research Center, Texas A&M University, 2014-01-01) Rettenmaier, Andrew J.; Saving, Thomas R.Item BCS Economy at the Start of 2023(Private Enterprise Research Center, Texas A&M University, 2023-01-26) Rettenmaier, Andrew J.This presentation, “State of the Local Economy at the Beginning of 2023,� covers topics from PERC’s Economic Indicators report, including the Business-Cycle Index, nonfarm employment, unemployment, inflation-adjusted GDP, national and local air travel, and inflation.Item The Border Adjustment Tax and Corporate Tax Reform(Private Enterprise Research Center, Texas A&M University, 2017-05-01) Liu, Liqun; Saving, Thomas R.Both House Republicans' 2016 tax plan and, more recently, President Trump's tax plan envision a rate cut for the corporate income tax (CIT): from the current 35% to 20% (the House plan) or 15% (the president's plan). To offset any potential revenue loss due to the CIT rate cut, some economists propose a border adjustment tax (BAT). The BAT based on a new 15% CIT is equivalent to shifting the 15% CIT from being entirely on exports to entirely on imports. Because we regularly run a trade deficit, the proponents of the BAT argue, some or all of the lost revenue caused by the CIT rate reduction can be recovered by the BAT. This study examines the role of the BAT in raising revenues. It finds that some previously neglected factors would significantly compromise the BAT's ability to generate net revenues, with or without a fully offsetting appreciation of the dollar. These factors include an increase in imports price, a decrease in exports price, and dollar appreciation's asymmetric effects on imports and exports, all of which work to reduce the trade deficit or even turn it into a surplus.Item Business Cycle Implications of Firm Market Power in Labor and Product Markets(Private Enterprise Research Center, Texas A&M University, 2021-05-06) Zubairy, Sarah; Alpanda, SamiIn this paper, Sarah Zubairy Sami Alpanda analyze the business cycle implications of firms having oligopsony power in labor markets, as well as oligopoly power in product markets, within the context of a New Keynesian dynamic stochastic general equilibrium model with firm entry and exit. Relative to the standard setup with monopolistic competition in both goods and labor markets, the strategic interaction between intermediate goods firms in the current setup results in larger price markups as well as wage markdowns, while the slopes of the aggregate price and wage Phillips curves become flatter. These effects are strengthened in a strongly non-linear fashion as the number of firms in each sector decline. Oligopsonistic labor markets also render wage shocks expansionary, unlike in the standard setup. Results indicate that a secular increase in industry concentration would not only reduce the labor share of income, but also weaken the pass-through from firms’ marginal costs to prices and from productivity increases to real wages.Item Business Impact of Covid-19 Pandemic, Bryan-College Station Follow-up Survey Results(Private Enterprise Research Center, Texas A&M University, 2020-12-11) PERC StaffThis follow-up survey is the second of two surveys that includes responses from businesses in the Bryan-College Station area on the impact of the Covid-19 pandemic on operations and supply chain, workforce, and finance. The survey, created by staff at the Private Enterprise Research Center and distributed by the BCS Chamber, was conducted November 2-6, 2020. A total of 217 follow-up surveys were completed. The following report also compares responses from the initial survey, which was carried out June 8-16, 2020 and had 499 respondents.Item Business Impact of Covid-19 Pandemic, Bryan-College Station Survey Results(Private Enterprise Research Center, Texas A&M University, 2020-07-15) Bullock, Ashley; Jansen, Dennis W.; Navarro, Carlos I.; Rettenmaier, Andrew J.This survey includes responses from businesses in the Bryan-College Station area on the impact of the Covid-19 pandemic on operations, employment, and financial situations. The survey, created by staff at the Private Enterprise Research Center and distributed by the BCS Chamber, was conducted June 8 through 16 and received responses from 499 individual businesses.Item Cadillacs for All(Private Enterprise Research Center, Texas A&M University, 2019-09-25) Jansen, Dennis W.; Liu, Liqun; Rettenmaier, Andrew J.Healthcare reform in the form of Medicare for All, which promises to reduce health care spending by reimbursing providers at Medicare’s rates per procedure, is now receiving renewed interest. This, along with the delay of the ‘Cadillac Tax,’ a provision of the Affordable Care Act that was created to tax employer-sponsored health insurance plans whose premiums exceeded specified thresholds, both have long run implications. In this issue of PERCspectives on Policy, authors Dennis W. Jansen, Liqun Liu, and Andrew J. Rettenmaier examine how each fit in the current debate and their potential effects on federal spending, revenues and deficits.Item Can Cryptocurrencies Successfully Compete in the Money Market?(Private Enterprise Research Center, Texas A&M University, 2021-03-17) Saving, Thomas R.The cryptocurrency revolution began with the introduction of Bitcoin in 2009. Today, there are now more than 4,000 cryptocurrencies and Bitcoin has a market capitalization of over $1 trillion. While these new digital entities are characterized as cryptocurrency, none actually circulate in day-to-day commerce. In policy study 2102, author Thomas R. Saving describes the necessary properties of money and compares them to cryptocurrency. As they are currently structured, cryptocurrencies are not going to compete in the privately produced money market but are better positioned to compete in the precious metals market.Item Can Electricity Demand Help Us Monitor the Economy?(Private Enterprise Research Center, Texas A&M University, 2022-07-12) Sekhposyan, Tatevik; Kouchekinia, NoahThe recent pandemic has emphasized the importance of high-frequency economic variables. Electricity consumption, particularly important as a production input, is one such variable. However, electricity consumption typically exhibits marked seasonal fluctuations, which mask the fluctuations that are interesting from a business cycle perspective. In policy study 2202, PERC Professor Tatevik Sekhposyan and coauthor Noah Kouchekinia show that after capturing the seasonal effects associated with weather and calendar events, electricity consumption can provide a rapid reflection of the state of the economy. This may be particularly valuable for measuring regional economic activity, where official statistics are slower to arrive.