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  • Author: Leighton Ku, Brian Bruen
  • Publication Date: 02-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Claims are sometimes made that immigrants use public benefits, such as Medicaid, the Supplemental Nutrition Assistance Program, or the Temporary Assistance for Needy Families programs, more often than those who are born in the United States. This report provides analyses, using the most recent data from the Census Bureau, that counter these claims. In reality, low-income non-citizen immigrants, including adults and children, are generally less likely to receive public benefits than those who are native-born. Moreover, when non-citizen immigrants receive benefits, the value of benefits they receive is usually lower than the value of benefits received by those born in the United States. The combination of lower average utilization and smaller average benefits indicates that the overall cost of public benefits is substantially less for low-income non-citizen immigrants than for comparable native-born adults and children. The report also explains that the lower use of public benefits by non-citizen immigrants is not surprising, since federal rules restrict immigrants' eligibility for these public benefit programs.
  • Topic: Economics, Health, Humanitarian Aid, Markets, Immigration
  • Political Geography: United States
  • Author: Brink Lindsey
  • Publication Date: 10-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: For over a century, the trend line for the long-term growth of the U.S. economy has held remarkably steady. Notwithstanding huge changes over time in economic, social, and political conditions, growth in real gross domestic product (GDP) per capita has fluctuated fairly closely around an average annual rate of approximately 2 percent. Looking ahead, however, there are strong reasons for doubting that this historic norm can be maintained.
  • Topic: Economics, Globalization, International Trade and Finance, Markets, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 02-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Opponents of allowing younger workers to privately invest a portion of their Social Security taxes through personal accounts have long pointed to the supposed riskiness of private investment. The volatility of private capital markets over the past several years, and especially recent declines in the stock market, have seemed to bolster their argument.
  • Topic: Economics, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: United States
  • Author: Mark Wilson
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.
  • Topic: Economics, Labor Issues, Governance
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Streetcars are the latest urban planning fad, stimulated partly by the Obama administration's preference for funding transportation projects that promote "livability" (meaning living without automobiles) rather than mobility or cost-effective transportation. Toward that end, the administration wants to eliminate cost-effectiveness requirements for federal transportation grants, instead allowing non-cost-effective grants for projects promoting so-called livability. In anticipation of this change, numerous cities are preparing to apply for federal funds to build streetcar lines.
  • Topic: Economics, Environment, Government, Political Economy, Infrastructure
  • Political Geography: United States
  • Author: Thomas L. Hogan
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Privately issued money can benefit consumers in many ways, particularly in the areas of value stability and product variety. Decentralized currency production can benefit consumers by reducing inflation and increasing economic stability. Unlike a central bank, competing private banks must attract customers by providing innovative products, restricting the quantity of notes issued, and limiting the riskiness of their investing activities. Although the Federal Reserve currently has a de facto monopoly on the provision of currency in the United States, this was not always the case. Throughout most of U.S. history, private banks issued their own banknotes as currency. This practice continues today in a few countries and could be reinstituted in the United States with minimal changes to the banking system.
  • Topic: Economics, Government, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Morris A. Davis
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: For decades U.S. housing policy has focused on promoting homeownership. In this study, I show that the set of policies designed to further homeownership has been ineffective and expensive and that homeownership as a public policy goal is not well supported.
  • Topic: Economics, Government, Markets, Urbanization
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Although gasoline taxes have long been the main source of funding for building, maintaining, and operating America's network of highways, roads, and streets, the tax is at best an imperfect user fee. As such, Congress and the states should take action to transition from gas taxes to more efficient vehicle-mile fees.
  • Topic: Economics, Government, Communications, Infrastructure
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 04-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: News that the poverty rate has risen to 15.1 percent of Americans, the highest level in nearly a decade, has set off a predictable round of calls for increased government spending on social welfare programs. Yet this year the federal government will spend more than $668 billion on at least 126 different programs to fight poverty. And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty. That amounts to $20,610 for every poor person in America, or $61,830 per poor family of three.
  • Topic: Economics, Government, Poverty
  • Political Geography: United States, America
  • Author: Patric H. Hendershott, Kevin Villani
  • Publication Date: 03-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The current narrative regarding the 2008 systemic financial system collapse is that numerous seemingly unrelated events occurred in unregulated or underregulated markets, requiring widespread bailouts of actors across the financial spectrum, from mortgage borrowers to investors in money market funds. The Financial Crisis Inquiry Commission, created by the U.S. Congress to investigate the causes of the crisis, promotes this politically convenient narrative, and the 2010 Dodd-Frank Act operationalizes it by completing the progressive extension of federal protection and regulation of banking and finance that began in the 1930s so that it now covers virtually all financial activities, including hedge funds and proprietary trading. The Dodd-Frank Act further charges the newly created Financial Stability Oversight Council, made up of politicians, bureaucrats, and university professors, with preventing a subsequent systemic crisis.
  • Topic: Economics, Government, Markets, Global Recession, Financial Crisis
  • Political Geography: United States
  • Author: David Kirby, Emily McClintock Ekins
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Many people on the left still dismiss the tea party as the same old religious right, but the evidence says they are wrong. The tea party has strong libertarian roots and is a functionally libertarian influence on the Republican Party.
  • Topic: Democratization, Economics, Politics, Insurgency, Financial Crisis
  • Political Geography: United States
  • Author: Mark A. Calabria, Emily McClintock Ekins
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: During the financial crisis of 2008, the financial markets would have been better served if the credit rating agency industry had been more competitive. We present evidence that suggests the Securities and Exchange Commission's designation of Nationally Recognized Statistical Rating Organizations (NRSROs) inadvertently created a de facto oligopoly, which primarily propped up three firms: Moody's, S, and Fitch. We also explain the rationale behind the NRSRO designation given to credit rating agencies (CRAs) and demonstrate that it was not intended to be an oligopolistic mechanism or to reduce investor due diligence, but rather was intended to protect consumers. Although CRAs were indirectly constrained by their reputation among investors, the lack of competition allowed for greater market complacency. Government regulatory use of credit ratings inflated the market demand for NRSRO ratings, despite the decreasing informational value of credit ratings. It is unlikely that this sort of regulatory framework could result in anything except misaligned incentives among economic actors and distorted market information that provides inaccurate signals to investors and other financial actors. Given the importance of our capital infrastructure and the power of credit rating agencies in our financial markets, and despite the good intentions of the uses of the NRSRO designation, it is not worth the cost and should be abolished. Regulators should work to eliminate regulatory reliance on credit ratings for financial safety and soundness. These regulatory reforms will, in turn, reduce CRA oligopolistic power and the artificial demand for their ratings.
  • Topic: Economics, Markets, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Tad DeHaven
  • Publication Date: 07-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Rising federal spending and huge deficits are pushing the nation toward a financial and economic crisis. Policymakers should find and eliminate wasteful, damaging, and unneeded programs in the federal budget. One good way to save money would be to cut subsidies to businesses. Corporate welfare in the federal budget costs taxpayers almost $100 billion a year.
  • Topic: Economics, Markets, Monetary Policy, Financial Crisis
  • Political Geography: United States
  • Author: Benjamin Zycher
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This study examines the prospective economic effects of a reduction below the current baseline in defense outlays of $100 billion per year over 10 years.
  • Topic: Security, Defense Policy, Economics, Labor Issues
  • Political Geography: United States
  • Author: Jagadeesh Gokhale
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Official federal budget accounts are constructed exclusively in terms of current cash flows – receipts from taxes and fees and outlays on purchases and transfers. But cash-flows do not reveal economically relevant information about who benefits and who loses from government policies. Cash flows also do not reveal how changes in government's policies redistribute resources within and across generations, including reducing the tax burden on today's generations and increasing it on future ones. Because most government transact ions are targeted by age and gender, the federal government can bring about large resource transfers across generations. Intergenerational resource transfers will grow larger as the composition of budget receipts and expenditures changes with relatively faster growth of age-and-gender-related social insurance program. Intergenerational redistributions across generations through federal government operations could substantially affect different generations' economic expectations and choices and exert powerful long-term effects on economic outcomes.
  • Topic: Economics, Government, Health, Human Welfare, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Gerald P. O'Driscoll Jr.
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Advocates of central bank reform must examine why central banks emerged and what forces sustain them. They did not arise in an institutional vacuum, and will not be reformed in an institutional vacuum. The historical origins of central banks explain how they came into existence. The forces sustaining and feeding their growth may differ from those explaining their origin.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Alan Reynolds
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This paper confirms recent studies which find little or no sustained increase in the inequality of disposable income for the U.S. population as a whole over the past 20 years, even though estimates of the top 1 percent's share of pretax, pretransfer (market) income spiked upward in 1986-88, 1997-2000 and 2003-2007.
  • Topic: Economics, Government, Markets, Social Stratification
  • Political Geography: United States
  • Author: Kevin Dowd, Martin Hutchinson, Jimi Hinchliffe, Simon Ashby
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The Basel regime is an international system of capital adequacy regulation designed to strengthen banks' financial health and the safety and soundness of the financial system as a whole. It originated with the 1988 Basel Accord, now known as Basel I, and was then overhauled. Basel II had still not been implemented in the United States when the financial crisis struck, and in the wake of the banking system collapse, regulators rushed out Basel III.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The debate over President Obama's fantastically expensive high-speed rail program has obscured the resurgence of a directly competing mode of transportation: intercity buses. Entrepreneurial immigrants from China and recently privatized British transportation companies have developed a new model for intercity bus operations that provides travelers with faster service at dramatically reduced fares.
  • Topic: Economics, Markets, Infrastructure, Governance
  • Political Geography: United States, China
  • Author: Patric H. Hendershott, Kevin Villani
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The United States' market-government hybrid mortgage system is unique in the world. No other nation has such heavy government intervention in housing finance. This hybrid system nurtured the excessively risky loans, financed with too much leverage, that fueled the U.S. housing bubble of the last decade and resulted in the systemic collapse of the global financial system.
  • Topic: Debt, Economics, Financial Crisis
  • Political Geography: United States
  • Author: David Reiss
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The federal government recently placed Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit driven, but as government-sponsored enterprises (GSEs) they also have a government-mandated mission to provide liquidity and stability to the U.S. mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.
  • Topic: Economics, Markets, Privatization, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. government is about to exceed its statutory debt limit of $14.3 trillion. But that actually underestimates the size of the fiscal time bomb that this country is facing. If one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion.
  • Topic: Debt, Economics, Human Welfare, Financial Crisis, Governance, Health Care Policy
  • Political Geography: United States
  • Author: Jared Lobdell
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: An October New York Times story remarked that “with just five weeks until its deadline, a secretive Congressional committee seeking ways to cut the federal deficit is far from a consensus, and party leaders may need to step in if they want to ensure agreement, say people involved in the panel's work.” We have this “supercommittee” of twelve members of Congress, ostensibly for the purpose of cutting a minimum $1.2 trillion from our deficit, chosen by four appointers, none agreeing with any other on exactly what ought to be done, representing mostly diametrically opposing wings of two parties with irreconcilable differences.
  • Topic: Debt, Economics, Global Recession, Monetary Policy, Financial Crisis
  • Political Geography: United States
  • Author: John Samples
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. Constitution vests all the “legislative powers” it grants in Congress. The Supreme Court allows Congress to delegate some authority to executive officials provided an “intelligible principle” guides such transfers. Congress quickly wrote and enacted the Emergency Economic Stabilization Act of 2008 in response to a financial crisis. The law authorized the secretary of the Treasury to spend up to $700 billion purchasing troubled mortgage assets or any financial instrument in order to attain 13 different goals. Most of these goals lacked any concrete meaning, and Congress did not establish any priorities among them. As a result, Congress lost control of the implementation of the law and unconstitutionally delegated its powers to the Treasury secretary. Congress also failed in the case of EESA to meet its constitutional obligations to deliberate, to check the other branches of government, or to be accountable to the American people. The implementation of EESA showed Congress to be largely irrelevant to policymaking by the Treasury secretary. These failures of Congress indicate that the current Supreme Court doctrine validating delegation of legislative powers should be revised to protect the rule of law and separation of powers.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: United States, America
  • Author: Christopher J. Conover
  • Publication Date: 10-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A well-established principle of public finance holds that taxes impose costs on society beyond the amount of revenue government collects. Estimates vary depending on the type of tax, but the “marginal excess burden” of federal taxes most likely ranges from 14 to 52 cents per dollar of tax revenue, averaging about 44 cents for all federal taxes.
  • Topic: Economics, Government, Markets
  • Political Geography: United States
  • Author: Michael F. Cannon
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: President Barack Obama, former U.S. Senate majority leader Tom Daschle, and others propose a new government agency that would evaluate the relative effectiveness of medical treatments. The need for “comparative-effectiveness research” is great. Evidence suggests Americans spend $700 billion annually on medical care that provides no value. Yet patients, providers, and purchasers typically lack the necessary information to distinguish between high- and low-value services.
  • Topic: Economics, Government, Health, Privatization
  • Political Geography: United States
  • Author: John H. Cochrane
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: None of us has health insurance, really. If you develop a long-term condition such as heart disease or cancer, and if you then lose your job or are divorced, you can lose your health insurance. You now have a preexisting condition, and insurance will be enormously expensive—if it's available at all. Free markets can solve this problem, and provide life-long, portable health security, while enhancing consumer choice and competition. “Heath-status insurance” is the key. If you are diagnosed with a long-term, expensive condition, a health-status insurance policy will give you the resources to pay higher medical insurance premiums. Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses. With health-status insurance, you can always obtain medical insurance, no matter how sick you get, with no change in out-of-pocket costs.
  • Topic: Economics, Health, Markets, Privatization
  • Political Geography: United States
  • Author: Jagadeesh Gokhale
  • Publication Date: 03-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This Policy Analysis explains the antecedents of the current global financial crisis and critically examines the reasoning behind the U.S. Treasury and Federal Reserve's actions to prop up the financial sector. It argues that recovery from the financial crisis is likely to be slow with or without the government's bailout actions. An oil price spike and a wealth shock in housing initiated the financial crisis. Declines in stock values are intensifying that shock, threatening to deepen the current recession as U.S. consumers and investors cut their expenditures. An offsetting wealth injection from additional risk-bearing investors could initiate a quicker recovery. Thus, supporters of government intervention justify the bailout's debt-financed fund injections—in essence, they want to compel future taxpayers to join the group of today's risk bearing investors.
  • Topic: Economics, Globalization, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: Vern McKinley, Gary Gegenheimer
  • Publication Date: 04-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A financial-institution bailout involves government intervention through a transaction or forbearance targeted to a financial institution or group of financial institutions. The action is preemptive as the financial institution does not fail and go out of business, but remains a going concern, benefiting creditors, shareholders, or counterparties. In the absence of a bailout, the financial institution would either be forced to go through receivership or bankruptcy in the prescribed legal form, or have its role in financial intermediation disrupted.
  • Topic: Economics, Government, Political Economy, Privatization
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Everyone agrees that the recent financial crisis started with the deflation of the housing bubble. But what caused the bubble? Answering this question is important both for identifying the best short-term policies and for fixing the credit crisis, as well as for developing long-term policies aimed at preventing another crisis in the future.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: United States, California, Georgia
  • Author: Jagadeesh Gokhale, Peter Van Doren
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Many commentators have argued that if the Federal Reserve had followed a stricter monetary policy earlier this decade when the housing bubble was forming, and if Congress had not deregulated banking but had imposed tighter financial standards, the housing boom and bust—and the subsequent financial crisis and recession—would have been averted. In this paper, we investigate those claims and dispute them. We are skeptical that economists can detect bubbles in real time through technical means with any degree of unanimity. Even if they could, we doubt the Fed would have altered its policy in the early 21st century, and we suspect that political leaders would have exerted considerable pressure to maintain that policy. Concerning regulation, we find that the banking reform of the late 1990s had little effect on the housing boom and bust, and that the many reform ideas currently proposed would have done little or nothing to avert the crisis.
  • Topic: Economics, Government, Markets, Financial Crisis
  • Political Geography: United States
  • Author: Michael F. Cannon
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In March 2009, President Barack Obama said, “If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way.” This paper explains how letting workers control their health care dollars and tearing down regulatory barriers to competition would control costs, expand choice, improve health care quality, and make health coverage more secure.
  • Topic: Economics, Health, Markets
  • Political Geography: United States
  • Author: Tad DeHaven
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. Department of Housing and Urban Development has long been plagued by scandals, mismanagement, and policy failures. Most recently, HUD's subsidies and failed oversight of Fannie Mae and Freddie Mac helped to inflate the housing bubble, which ultimately burst and cascaded into a major financial crisis.
  • Topic: Development, Economics, Markets, Financial Crisis
  • Political Geography: United States