Haynes, Stephen E.

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    Econometrics of the forward premium puzzle
    (University of Oregon, Dept of Economics, 2005-09-15) Chakraborty, Avik, 1975-; Haynes, Stephen E., 1945-
    This paper explores from a new perspective the forward premium puzzle, i.e., why a regression of the change in the future spot exchange rate on the forward premium paradoxically yields a coefficient that is frequently negative. This traditional specification is compared theoretically and empirically to a "level" regression of the future spot rate on the current forward rate, which does not display the puzzle. We explore both non-rationality and risk premium explanations. The general conclusionis that, with non-rationality, any modest deviation from unity in the level coefficient becomes greatly magnified in the forward premium coefficient because of the stationary/nonstationary properties of the relevant variables, thereby generating the puzzle.
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    The Empirical Trap of Sign Reversals with Equality Restrictions
    (University of Oregon, Dept of Economics, 2005-01-15) Haynes, Stephen E., 1945-
    This note explores the insidious empirical trap posed by two common equality restrictions in regression analysis. The trap is that restricted coefficients can lie outside the interval of unrestricted coefficients and even reverse sign when negatively correlated regressors are added to one another or when positively correlated regressors are subtracted from one another.
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    ‘Guns and Butter’ in U.S. Presidential Elections
    (University of Oregon, Dept. of Economics, 2004-09-20) Haynes, Stephen E., 1945-; Stone, Joe A.
    Previous models of the popular vote in U.S. Presidential elections emphasize economic growth and price stability, the role of parties and incumbency, and pre-election expectations for the future. Despite the closeness of the pre-election polls in 2004, formal models instead predict a landslide victory for President Bush. An obvious question is whether this anomaly arises, at least in part, from national security concerns – in particular, the conflict in Iraq. We explore this pre-election anomaly by introducing two opposing electoral forces capturing national security concerns, which for the 2004 election reduces President Bush's predicted vote share. In general, the impact of national security concerns on the vote share of the incumbent (or the incumbent's party) can be substantial, whether positive, as in the 1944 election during World War II, or negative, as in the 1952 election during the Korean war and the 1968 election during the Vietnam war.