Technological condition for balanced growth: A criticism and restatement

According to prevailing opinion, only the neutral form of technological progress in the Harrod sense is consistent with balanced growth in a one-sector constant returns-to-scale economy. Though various definitions of balanced growth are in use in the literature, the above highly restrictive technological condition is believed to hold for all of them. The paper demonstrates that this belief is not correct. The condition is shown to be false if the definition of balanced growth (i) does not require the constancy of the marginal product of capital (or the interest rate), and (ii) permits the time semiinfinite or indeed any finite balanced growth path. More specifically, under (i) and (ii) there exists a balanced growth path consistent with a significantly wide class of technological changes of the capital-using (labour-saving) form in the Harrod sense. Alternatively, this condition is correct if either (i) the interest rate is required to be constant or (ii) growth is balanced if it is such for all time—that is, for both past and future. The condition is also correct if the socioeconomic institutions are such that the constancy of the savings ratio implies the constancy of the capital share.     

Testing price equations

How inflation and unemployment are related in both the short run and long run is perhaps the key question in macroeconomics. This paper tests various price equations using quarterly U.S. data from 1952 to the present. Issues treated are the following. (1) Estimating price and wage equations in which wages affect prices and vice versa versus estimating “reduced-form” price equations with no wage explanatory variables. (2) Estimating price equations in (log) level terms, first difference (i.e., inflation) terms, and second difference (i.e., change in inflation) terms. (3) The treatment of expectations. (4) The choice and functional form of the demand variable. (5) The choice of the cost-shock variable. The results suggest that the best specification is a price equation in level terms imbedded in a price-wage model, where the wage equation is also in level terms. The best cost-shock variable is the import price deflator, and the best demand variable is the unemployment rate. There is some evidence of a nonlinear effect of the unemployment rate on the price level at low values of the unemployment rate. Many of the results in this paper are contrary to common views in the literature, but the empirical support for them is strong.     

Quantile regression with sample selection: Estimating women's return to education in the U.S.

This study uses quantile regression techniques to analyze changes in the returns to education for women. The data used is the March Current Population Survey for the years 1968, 1973, 1979, 1986 and 1990. The first step in estimating the single (linear) index selection equation uses Ichimura's (1993) semiparametric procedure. To correct for an unknown form of a sample selection bias in the quantile regression, the second step incorporates a nonparametric method, using an idea similar to one developed by Heckman (1980) and Newey (1991) for mean regression, and Buchinsky (1998) for quantile regression.  The results show that: (a) the returns to education increased enormously for the younger cohorts, but very little for the older cohorts; (b) in general the returns are higher at the lower quantiles in the beginning of the sample period and higher at the higher quantiles by the end of the sample period; (c) there is a significant sample selection bias for all age groups at almost all quantiles; (d) toward the end of the sample period there is a significant convergence of the returns at the various quantiles, especially for the younger cohorts and age groups; and (e) the semiparametric estimates of the selection equation are considerably different from those obtained for a parametric probit model.     

Spatial price dependence by time scale: Empirical evidence from the international butter markets

The objective of the present work is to investigate price dependence (co-movement) in the international butter markets. This is pursued using monthly wholesale prices from Oceania and the European Union and two non-parametric tools, namely, the copulas and the wavelets. The empirical results suggest that: (a) The price linkages in the two butter-producing regions are weak in the short-run but they become much stronger in the long-run. (b) The time horizon (time scale) is relevant not only for the intensity but for the structure of price co-movement as well; in the long-run, there is an asymmetry in price dependence in the sense that strong positive shocks are transmitted with a higher intensity compared to strong negative ones.     

Von Neumann-Morgenstern stable sets in matching problems

The following properties of the core of a one-to-one matching problem are well-known: (i) the core is non-empty; (ii) the core is a distributive lattice; and (iii) the set of unmatched agents is the same for any two matchings belonging to the core. The literature on two-sided matching focuses almost exclusively on the core and studies extensively its properties. Our main result is the following characterization of (Von Neumann-Morgenstern) stable sets in one-to-one matching problems. We show that a set V of matchings is a stable set of a one-to-one matching problem only if V is a maximal set satisfying the following properties: (a) the core is a subset of V; (b) V is a distributive lattice; and (c) the set of unmatched agents is the same for all matchings belonging to V. Furthermore, a set is a stable set if it is the unique maximal set satisfying properties (a), (b), and (c).     

WHAT ACCOUNTS FOR JAPAN'S HIGH RATE OF GROWTH?*

The purpose of this paper is to investigate the sources of economic growth in Japan and to compare the results with those in the U.S. and Europe as studied by E. F. Denison. The method used by Denison is followed as far as possible. The character of this paper is of fact finding, and the interpretation of results or the originality of methodology is not dealt with here. The results may be summarized as follows. (1) Japan's growth rate is two times that of Europe and three times that of the United States. (2) The contributions of labor, capital, and the residual to economic growth are all higher for Japan than for the U.S. or Europe. (3) Factors which account for the higher contribution of labor to economic growth are (a) the higher rate of increase in employment, (b) less shortening of working hours, and (c) improved age and sex composition. (4) Factors which account for the higher contribution of capital to economic growth are a higher rate of increase in capital input and the high elasticity of production with respect to capital. (5) Other notable points include: (a) the contribution of education is lower for Japan; (b) the capital-labor ratio in Japan increased remarkably; (c) capital's share of national income is higher; and (d) 60% of Japan's economic growth is accounted for by the residual.     

An economic evaluation attached to a single-centre,parallel group,unmasked, randomized controlled trial of a 3-day intensive social cognitive treatment (can do treatment) in patients with relapsing remitting multiple sclerosis and low disability

Abstract

Aims: This trial-based economic evaluation (EE) assesses from a societal perspective the cost-effectiveness of an intensive 3-day cognitive theory-based intervention (CDT), compared to care-as-usual, in patients with relapsing remitting multiple sclerosis (RRMS) and low disability (Expanded Disability Status Scale [EDDS] score < 4.0).

Materials and methods: The trial of the EE was registered in the Dutch Trial Register: Trial NL5158 (NTR5298). The incremental cost-effectiveness ratio (ICER) was expressed in cost on the Control sub-scale of the Multiple Sclerosis Self-Efficacy Scale (MSSES) and the incremental cost-utility ratio (ICUR) in the cost per Quality Adjusted Life Years (QALY) using the EQ-5D-5L. Bootstrap, sensitivity, and sub-group analyses were performed to determine the robustness of the findings.

Results: The two groups of 79 patients were similar in baseline characteristics. The base case ICER is situated in the northeast quadrant (€72 (40.74/€2,948)) due to a higher MSSES Control score and higher societal costs in the CDT group. The ICUR is situated in the northwest (inferior) quadrant due to losses in QALY and higher societal costs for the CDT group (?0.02/€2,948). Overall, bootstrap, sensitivity, and sub-group analyses confirm the base case findings. However, when the SF-6D is used as a study outcome, there is a high probability that the ICUR is situated in the northeast quadrant.

Limitations: The relative short follow-up time (6?months) and the unexpected increase in MSSES Control in the control group.

Conclusions: When using the EQ-5D-5L to calculate a QALY, CDT is not a cost-effective alternative in comparison to care as usual. However, when using self-efficacy or SF-6D as outcomes, there is a probability that CDT is cost-effective. Based on the current results, CDT for patients with RRMS clearly show its potential. However, an extended follow-up for the economic evaluation is warranted before a final decision on implementation can be made.     

Testing the Gaussian and Student's t copulas in a risk management framework

This paper introduces a semiparametric framework for selecting either a Gaussian or a Student's t copula in a d-dimensional setting. We compare the two models using four different approaches: (i) four goodness-of-fit graphical plots, (ii) a bootstrapped correlation matrix generated in each scenario with the empirical correlation matrix used as a benchmark, (iii) Value-at-Risk (VaR) and Expected Shortfall (ES) as risk measures, and (iv) co-Value-at-Risk (CoVaR) and Marginal Expected Shortfall (MES) as co-risk measures. We illustrate this four-step procedure using a portfolio of daily returns of six international stock indices. The VaR results confirm that the t-based copula model is an attractive alternative to the Gaussian. The ES analysis is less conclusive, and indicates that risk managers should jointly use the risk measure as well as the copula model. The results highlight the importance of promoting stress testing rather than ES in the risk management industry, particularly in the aftermath of a financial crisis.     

On income fluctuations and capital gains

We consider the infinite time horizon problem of asymptotically maximizing the expected accumulated discounted utility in a one-good production economy. The available capital in a given period is given by the production of the previous period plus a random variable. The product of the discount and interest factors is either (1) greater than or (2) equal to one. Under (1) the optimal policy exists under certain conditions and always under (2). The optimal capital sequence almost surely goes to infinity. Under (1) with conditions on the utility one almost surely reaches a capital level above which the sequence is increasing.     

The 1980s Economic Growth Weakness in Europe: Focusing on the Supply Side*

For some years now, most West European economies (including Germany) have been operating with a striking lack of dynamic growth The consequences are that (i) domestic unemployment stays stubbornly at high levels. (ii) the capital stock is ageing, which makes European firms more vulnerable to growing international competition; (iii) the production structure does not shift sufficiently to keep abreast of current technological breakthroughs (iv) the attractiveness of Europe as a location for investment suffers, and (v) the correction of the large external imbalances among the major trading nations is delayed. The paper emphasizes that Europe's predicament is basically due to supply rigidities of various kind They have been created on the one hand by the governments' persistence in completing the Welfare State up to a point at which behaviour patterns and attiudes in society have been seriously deformed On the other hand governments have been caught in a train of well-organized special-interest groups and as a result, have spread defensive interventions in markets over ever wider areas of the economy. The key to getting Europe's economies back onto a path of sustained non-inflationary, job-creating growth, for which there is certainly much potential, lies in the provision of a climate favourable to imaginative and risk-taking investors and innovators As domestic demand is expanding it is now essential to enhance the supply responsiveness of the economic system Steady and foreseeable policies at the microeconomic level can help a lot They must aim at (i) dismantling non-tariff barriers in international trade, including the long overdue overhaul of the Common Agricultural Policy; (ü) cutting public subsidies across-the-board and using the corresponding budget savings for significant tax cuts; and (iii) deregulating the economy where needed, in particular in services and the labour market The official commitment to complete a truly common market in the EC by the end of 1992 should impart a strong momentum to supply-oriented policies, since widespread deregulation is central to the prospects of reaching this objective efficiently.     

(S,s) inventory dynamics and self-organized criticality

This paper proposes a new model of self-organized criticality in order to explain large fluctuations of aggregate production in an (S,s) economy. It is shown that the inventory distribution in an (S,s) economy always converges to a unique steady state, and that aggregate production exhibits a peculiar instability at the steady state: the propagation effect of a demand shock on aggregate production follows a power law.The model differs from previous models of self-organized criticality in that it incorporates a global interaction in the network. The global interaction is interpreted as a representation of market transactions with which economists are familiar. The other novelty of the paper is that an intrinsic instability of (S,s) economies is found. Many small non-linearities in the (S,s) economy may not be cancelled out in aggregation. Instead, they play a key role in organizing the fluctuations of aggregate production.     

Political Business Cycles and Partisan Politics: Evidence from a Developing Economy

This paper explores whether the evidence supports the Political Business Cycle (PBC) theory, Partisan Theory (PT), and Rational Partisan Theory (RPT) using stock market data from Turkey, a rapidly growing developing economy. The results indicate that the PBC hypothesis is not supported by the data. We find permanent partisan effects in the conditional variance but not in returns. The conditional volatility of the returns is higher during the periods in which a leftist party or a coalition government is in office. We also find that the stock market returns temporarily decreases (increases) at the beginning of a right‐wing (left‐wing) government, providing evidence in favor of RPT.     

Advertising,consumer search costs and prices in a professional service market

Since stigler's (1961) seminal article on the economics of information it has been argued that producer advertising is a substitute for consumer search. This view of advertising has been implicit in recent liberalization of restrictions on advertising by professionals (e.g. lawyers, doctors, accountants, etc.). Using th e model of the price discriminating professional developed by Masson and Wu (1974) the impact of solicitor advertising on the level of conveyancing fees charged by a sample of Scottish Solicitors is estimated. The analysis distinguishes between different forms of advertising. The advertising-of-information theory cannot be rejected for some forms of advertising in one (property value) submarket but it can be in the other (higher property value) submarket. The evidence here rejects (i) the view that all advertising is a substitude for consumer search and (ii) the view that actions to reduce search costs (such as advertising) necessarily reduce price discrimination.     

Willingness to pay for environmental goods in Norway: A contingent valuation study with real payment

The study seeks to determine the maximum willingness to pay (MWTP) among a random sample of Norwegians, for membership in the largest environmentalist association in Norway, Norges Naturvernforbund (NNV). The study includes three stages: (1) a contingent valuation study, testing hypothetical MWTP; (2) those whose stated MWTP is at or above the current membership fee are then asked to pay this fee; (3) those individuals who do not pay in stage 2 are interviewed, and asked to consider revising their MWTP statement. The study is seemingly the first of its kind in comparing hypothetical and actual MWTP by typing valuation of a public good (the environment) to the value of a private good (membership of the NNV). The results show a rather poor correspondence between hypothetical and actual MWTP, since only 6 out of 64 who stated that they were willing to pay the membership fee in stage 1, actually paid this voluntarily in stage 2. Possible reasons for this discrepancy are discussed, on the basis of data from the telephone interview in stage 3, and on information gathered in stage 1. The data indicate that a substantial part of this discrepancy is due to MWTP being overstated in stage 1, but that other reasons also are important.     

Child participation,nature of work,and fertility demand: a theoretical analysis

A model of utility maximization with home production of children and standard of living is used to analyze the fertility behavior of a subsistence farming household in an agricultural lesser developed country. Assuming children as both consumer and producer goods, and assuming a prestige cost of their participation in labor force, the author derived alternative levels of fertility demand. The following different conditions of child participation were identified depending upon the size of the prestige cost and the resultant net gain from child work: (1) participation in wage-labor, if marginal child income from the family farm is less than marginal wage income; (2) participation in family farm works only, if the larger wage income is neutralized by a higher prestige cost, implying a lower child contribution; (3) participation in family farm works only, if its marginal child income is greater than wage income, thus providing the largest child contribution; and (4) no participation in labor force at all, implied by a very high prestige cost and resulting in no child contribution. The household demands a larger number of children under conditions (1) and (3) than under conditions (2) and (4). The results are then used to draw inferences regarding fertility behavior across different landholding households. It appears that landholding reduces fertility initially, increases it at the intermediate levels, and then decreases it when the household becomes a non-cultivating rental income earner. The nonmonotonic landholding-fertility relationship explains the contradictory empirical evidence which exists in the literature while also suggesting important implications for fertility regulation policy.     

Causality Between Exports and Economic Growth: The Empirical Evidence from Shanghai

The export-led growth hypothesis is tested using monthly time series data for Shanghai (one of the major exporting provinces in China) using the Granger no-causality procedure developed by Toda and Yamamoto (1995) in a vector autoregresion (VAR) model. This paper builds on the existing literature in three distinct ways. This is the first study of the export-led growth hypothesis which employs a regional dataset (Shanghai). Second, the paper follows Riezman et al . (1996) in controlling for the growth of imports to avoid a spurious causality result; and finally, the use of the methodology by Toda and Yamamoto is expected to improve the standard F -statistics in the causality test process. The research finds one-way Granger causality running from GDP to exports     

Ex-ante evaluation of the consumers' preference for the 4th generation mobile communications service

Research about next-generation mobile communications (MCs) technology has become an issue in these days since MCs bear a close relationship to our daily lives. The third generation (3G) MCs technology is now evolving into the fourth generation (4G) MCs technology. An initial analysis of potential consumer preferences for the technology is essential to ensure successful strategies and changes. This paper attempts to apply a choice experiment to evaluating consumers' willingness to pay (WTP) for each attributes of the 4G technology. The experiment encompasses five attributes: data rates, the quality of communications service, the number of broadcasting channels, video-on-demand (VOD) service, and supplementary services. We consider the trade-offs between the price and attributes of the 4G for selecting a preferred alternative and derive the marginal WTP (MWTP) estimate for each attribute. The results indicate that the average MWTP for the improved communications service is KRW 4443 (USD 4.03) and the average MWTP for one more broadcasting channel is KRW 67 (USD 0.06). The average MWTPs for VOD and supplementary services is KRW 1932 (USD 1.75) and KRW 1601 (USD 1.45), respectively.     

On ridge estimators for the negative binomial regression model

The negative binomial (NB) regression model is very popular in applied research when analyzing count data. The commonly used maximum likelihood (ML) estimator is very sensitive to highly intercorrelated explanatory variables. Therefore, a NB ridge regression estimator (NBRR) is proposed as a robust option of estimating the parameters of the NB model in the presence of multicollinearity. To investigate the performance of the NBRR and the traditional ML approach the mean squared error (MSE) is calculated using Monte Carlo simulations. The simulated result indicated that some of the proposed NBRR methods should always be preferred to the ML method.     

An analysis of bargaining power for milk cooperatives and milk processors in Florida

The Florida dairy market has a few fluid milk processors and many dairy farmers. The dairy farmers are represented in negotiation with the processors by a cooperative. This research builds a theoretical model of bargaining between the processors and a cooperative. The model is applied to the Florida dairy market to examine price negotiations between Florida milk processors and a dairy cooperative. An expectation maximization (EM) algorithm along with maximum likelihood estimation is used to estimate the econometric disequilibrium model with time series data for the period of October 1998 to May 2009. The results show that the class I price set by the Federal Milk Marketing Order is the major factor influencing the cooperative’s supply reservation price. Negotiated quantity and production seasonality affect the processors’ demand reservation price. The processors appear to be more patient and have higher average bargaining power (0.8804) than the cooperative (0.1196). The highest (lowest) bargaining power for the cooperative (processors) occurred in 2008 and the lowest (highest) bargaining power for the cooperative (processors) occurred in 2001.     

Approachability with bounded memory

We study Blackwell's approachability in repeated games with vector payoffs when the approaching player is restricted to use strategies with bounded memory: either strategies with bounded recall, or strategies that can be implemented by finite automata. Our main finding is that the following three statements are equivalent for closed sets. (i) The set is approachable with bounded recall strategies. (ii) The set is approachable with strategies that can be implemented with finite automata. (iii) The set contains a convex approachable set. Using our results we show that (i) there are almost-regret-free strategies with bounded memory, (ii) there is a strategy with bounded memory to choose the best among several experts, and (iii) Hart and Mas-Colell's adaptive learning procedure can be achieved using strategies with bounded memory.