Cost‐ and Income‐based Measures of Human Capital

Human capital is increasingly believed to play an important role in the growth process, however, adequately measuring its stock remains controversial. In this paper three general approaches to measurement are identified; cost‐based, income‐based and educational stock‐based. This survey focuses on the first two approaches and provides a critical review of the theories and their applications to data from a range of countries. Particular emphasis is placed upon the work of Jorgenson and Fraumeni (1989, 1992) and some new results for New Zealand based upon their approach are also presented.     

Toddlers,teenagers, and terminal heights: the importance of puberty for male adult stature,Flanders, 1800–76

Does adult stature capture conditions at birth or at some other stage in the growth cycle? Anthropometrics is lauded as a method for capturing net nutritional status over all the growing years. However, it is frequently assumed that conditions at birth were most influential. Was this true for historical populations? This article examines the heights of Flemish men born between 1800 and 1876 to tease apart which moments of growth were most sensitive to disruption and reflected in final heights. It exploits two proximate crises in 1846–9 and 1853–6 as shocks that permit age effects to be revealed. These are affirmed through a study of food prices and death rates. Both approaches suggest a shift of the critical moment away from the first few years of life and towards the adolescent growth spurt as the most influential on terminal stature. Furthermore, just as height is accumulated over the growing years, conditions influencing growth need to be understood cumulatively. Economic conditions at the time of birth were not explanatory, but their collective effects from ages 11 to 18 years were strongly influential. At these ages, both health and nutrition mattered, to varying degrees. Teenagers, rather than toddlers, should be our guides to the past.     

ECONOMETRIC ISSUES IN MACROECONOMIC MODELS WITH GENERATED REGRESSORS

Abstract. The paper critically reviews the literature on the econometric issues raised by the use of generated regressors (GR) in empirical models. The economic rationale for the use of GR is considered, with examples being drawn from several macroeconomic examples, including New Classical Macroeconomic (NCM) models which postulate monetary ncutrality. Various estimation methods are discussed for models which include 'surprise' or 'unexpected' terms and the strengths and weaknesses of each approach are investigated. Drawing upon the work of McAleer and McKenzie (1991b), situations where the typically inefficient two-step estimation (2SE) method will be efficient are highlighted. Problems of model misspecification and measurement errors are also investigated. An empirical section highlights some of the dangers of using uncorrected 2SE estimation results through a careful consideration of many recent attempts to test the NCM monetary neutrality hypothesis.     

An Economic Analysis of the Returns to Canadian Swine Research: 1974–97

This paper reports a new set of estimates of the returns to swine research in Canada. These estimates are obtained using Agriculture and Agri‐Food Canada's Canadian Regional Agricultural Model (CRAM). Positive Mathematical Programming is incorporated into the model for use in this study. The CRAM allows the effects of supply shifts from technological change in the hog industry to interact with product and factor market conditions in the rest of Canadian agriculture. Extensive sensitivity analysis is conducted to examine the robustness of the return estimates under variations in some of the key assumptions employed in the analysis. The costs of public and private sector swine research are estimated. Public sector research costs are inclusive of the marginal excess burden of taxation. Overall, the estimated benefits from Canadian swine research are high relative to the estimated costs for the time period considered. Previous estimates of the returns to Canadian swine research were obtained by Huot et al. (1989) with a partial equilibrium model that did not allow for intra‐sectoral resource use adjustments. The estimated returns obtained in the present study are generally higher than those obtained by Huot et al. For example, the estimates obtained from the direct application of the econometrically estimated supply function in this study gave an internal rate of return of about 124% and a benefit‐cost ratio of 22.4 to 1. Huot et al reported comparable estimates of about 43% for the internal rate of return and 6–7 to 1 for the benefit‐cost ratio. The differences in returns are not solely attributable to the use of a multi‐market versus a single‐market partial equilibrium approach. There are also differences in the estimates of the marginal excess burden of taxation between the two studies. L'analyse que void présente une nouvelle série d'estimations quant au rendement de la recherche porcine au Canada. Ces estimations dérivent du Modèle d'analyse régionale de l'agriculture du Canada (MARAC) du ministère canadien de l'Agriculture et de l'Agroalimentaire. Aux fins de la présente étude, on avait intégré au modèle une programmation mathématique positive. Le MARAC autorise l'interaction entre les retombées d'une modification de l'offre attribuable au virage technologique de l'industrie porcine et les conditions du marché des produits et des facteurs dans le reste de l'agriculture canadienne. Les auteurs ont effectué une analyse de sensibilité poussée en vue d'établir la robustesse de leurs estimations quand variaient quelques‐unes des principales hypotheses de l'analyse. On a estimé le coût de la recherche sur les pores poursuivie par les secteurs public et privé. Dans le secteur public, le coût de la recherche incluait une charge fiscale légérement excessive. Dans l'ensemble, la recherche sur les porcs entreprise au Canada a rapporté beaucoup comparativement à ce qu'elle a coûté pendant la période à l'étude. Les estimations antérieures, établies par Huot et ses collaborateurs (1989), venaient d'un modèle àéquilibre partiel ne permettant aucun ajustement pour l'utilisation intra‐sectorielle des ressources. Les revenus estimés ici sont généralement plus élevés que ceux de Huot et de ses collaborateurs. Ainsi, une application directe de l'offre estimée par des méthodes économétriques à l'analyse donne un taux de rendement interne d'environ 124 % et un indice de rentabilité de 22,4 pour 1. À titre de comparaison, Huot et ses collaborateurs rapportent des résultats d'environ 43 % pour le taux de rendement interne et de 6 à 7 pour 1 en ce qui concerne l'indice de rentabilité. Pareil écart ne résulte pas uniquement du choix d'un modèle àéquilibre partiel reposant sur plusieurs marchés au lieu d'un seul; on relève aussi des variations dans l'estimation du léger excès de la charge fiscale entre les deux études.     

MEASURING NEW ZEALAND'S GDP 1865–1933: A COINTEGRATION-BASED APPROACH

Official and semi-official estimates of New Zealand's national income are available on an annual basis for the years since 1932. Retrospective, non-official, estimates are available from 1859. Chiefly these are constructed following Doblin's (1951) pioneering use of money stock data, velocity, and the implications of the Quantity Theory of Money, and include the estimates of Hawke (1975), Rankin (1992) and Cashin (1995).
This paper estimates New Zealand real GDP per capita with monetary data using valid, intervention-free, cointegration methods. The new measures avoid the ad hoc adjustments found in Rankin (1992), yet unlike Cashin (1995), they incoporate specific New Zealand monetary features. The new time series conform well with independent benchmarks and the historiography of the pre-1914 period. Alternatively, they suggest an interpretation of New Zealand's growth experience for years around World War One which differs from that of Australia, and from the findings of Rankin (1992) and Cashin (1995).