Semiparametric binary regression models under shape constraints with an application to Indian schooling data

We consider estimation of the regression function in a semiparametric binary regression model defined through an appropriate link function (with emphasis on the logistic link) using likelihood-ratio based inversion. The dichotomous response variable Δ$\Delta$ is influenced by a set of covariates that can be partitioned as (X,Z)$(X,Z)$ where Z$Z$ (real valued) is the covariate of primary interest and X$X$ (vector valued) denotes a set of control variables. For any fixed X$X$, the conditional probability of the event of interest (Δ=1$\Delta =1$) is assumed to be a non-decreasing function of Z$Z$. The effect of the control variables is captured by a regression parameter β$\beta$. We show that the baseline conditional probability function (corresponding to X=0$X=0$) can be estimated by isotonic regression procedures and develop a likelihood ratio based method for constructing asymptotic confidence intervals for the conditional probability function (the regression function) that avoids the need to estimate nuisance parameters. Interestingly enough, the calibration of the likelihood ratio based confidence sets for the regression function no longer involves the usual χ²${\chi }^2$ quantiles, but those of the distribution of a new random variable that can be characterized as a functional of convex minorants of Brownian motion with quadratic drift. Confidence sets for the regression parameter β$\beta$ can however be constructed using asymptotically χ²${\chi }^2$ likelihood ratio statistics. The finite sample performance of the methods are assessed via a simulation study. The techniques of the paper are applied to data sets on primary school attendance among children belonging to different socio-economic groups in rural India.     

Financial development and the instability of open economies

This paper introduces a framework for analyzing the role of financial factors as a source of instability in small open economies. Our basic model is a dynamic open economy model with a tradeable good produced with capital and a country-specific factor. We also assume that firms face credit constraints, with the constraint being tighter at a lower level of financial development. A basic implication of this model is that economies at an intermediate level of financial development are more unstable than either very developed or very underdeveloped economies. This is true both in the sense that temporary shocks have large and persistent effects and also in the sense that these economies can exhibit cycles. Thus, countries that are going through a phase of financial development may become more unstable in the short run. Similarly, full capital account liberalization may destabilize the economy in economies at an intermediate level of financial development: phases of growth with capital inflows are followed by collapse with capital outflows. On the other hand, foreign direct investment does not destabilize.     

Information flow,expectations and job search: rural-to-urban migration process in India

"Probabilistic migration models assume that search for urban jobs is entirely an urban-based activity and that employment in free-entry activities is a transitional phase during which migrants are actively searching for formal sector employment. This paper tests the empirical validity of these assumptions using data, collected by the author in a sample survey in Delhi [India] in 1975-76, on 1,400 migrants from rural areas." Evidence is presented "that the migration process postulated in probabilistic models is not realistic in the case of Delhi. Over one-half of the sample had moved to Delhi after lining up specific jobs; a sizeable proportion expected to enter on arrival activities generally considered to be characterized by freedom of entry; and the majority of entrants into free-activities did not search for alternative employment and were engaged in the same activities at the time of the survey."     

Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis

Empirical evidence suggests that the size of the informal sector in the developing countries has increased considerably during the liberalized economic regime. The present paper purports to analyze the consequences of economic reforms on the wellbeing of the informal sector workforce using a three-sector general equilibrium model with two informal sectors. The theoretical analysis finds that different liberalized policies produce diverse effects on the informal wage and that these results are independent of the nature of capital mobility between the informal and the formal sectors. It also shows that labour market reforms, contrary to the common wisdom, are likely to produce favourable effects on the informal wage.     

The Contribution of Wheat to Australian Agriculture from 1861 to 1939

The influence of agriculture on Australia's nineteenth and twentieth century economic development is well known. While wool's contribution is rightly celebrated, the contribution of agricultural crops has received less attention. This paper focuses on one major staple, wheat, from 1861 to 1939. Both patent data and a new measure of technological progress, the cumulative number of wheat varieties tested for local adoption, are used to quantify the contribution of agricultural innovation to growth. We find innovation in this sector made an important contribution to the growth of total factor productivity over the period.     

Responsible Marketing and Its Impact on Business Performance: A Longitudinal Study

This research article explores, analyzes, and justifies the requirement of socially responsible activities of the corporation in the light of alternative approach to marketing promotion. In fact, this research claims for more societal activity-based promotion (responsible marketing) in place of product driven advertisement-based marketing (traditional) only. Thus, this research refutes the combined impact of societal activities (donation and employee expenditure) and advertisement (Advertisement Expenditure) on business performance (Profit/Sales). This has been analyzed with longitudinal (time series) data for 15 year period of the available 9 companies in capitaline database. Appropriate methodologies in regards to time series data have been performed. The findings are thought-provoking since the evidence of combined effect is not that much visible, though its impact in comparison with marginal effect is quite more. Finally, to conclude this research refutes the utility of advertising as a means of promotion, but at the same time, it indicates the changing direction of advertisement content from product feature-based to more societal activity-based.     

Is it the wage premium that targets worker turnovers?

The literature on FDI shows that there exists a wage premium that multinational enterprises (MNEs) pay to local workers and link this to a technology spillover argument. The MNEs pay higher wages to prevent worker turnovers and technology leakages. Literature relates the wage premium aspect of FDI using worker mobility data and uses worker turnovers and the technology spillover argument. We relate stock options in the FDI context of worker mobility and find in a simplified framework that the turnover of workers would depend on the relative payments of stock options.     

Optimal Organization of Surrogacy Contracts and Underinvestment

We develop a theoretical model of commercial gestational surrogacy in which a childless couple approaches a prospective surrogate, who is willing to gestate for the couple. We use a Principal-Agent framework with continuous effort to argue the following: in presence of limited liability of the surrogate, provision of optimal incentives (under non-contractible effort) is not feasible. Hence, a surrogate facing low outside option and having limited wealth is always found to put in sub-optimal care for the fetus. Put differently, the surrogate cannot be made a residual claimant (cannot be entitled with custody rights of the fetus) and therefore eliciting first best care is never optimal. But this result dramatically changes when the model is cast in discrete effort where inefficiency is likely only when the surrogate faces low outside option whereas we get multiple efficient contracts for higher outside option. Moreover, we see first-best efficient contracts may be implemented even without full transfer of custody rights to the surrogate.

     

Does Tariff Induce Intellectual Property Right Protection and Reduce Incidence of Piracy?

We consider a model with North exporting a copyrighted product to South where there is IPR violation, and South exports a basic good to North. We examine the impact of North's imposition of import tariff on South's monitoring of IPR violation and the incidence of piracy. If South values IPR compliance “lowly”, then tariff imposition do not alter the pre‐tariff no monitoring equilibrium outcome but unambiguously raises the incidence of piracy. If IPR compliance is valued “highly” then tariff either switches the equilibrium outcome from not monitoring to monitoring or increases its rate. However, the incidence of piracy may increase.     

Do Proprietary Algorithmic Traders Withdraw Liquidity during Market Stress?

We investigate the role of proprietary algorithmic traders in facilitating liquidity in a limit order market. Using order‐level data from the National Stock Exchange of India, we find that proprietary algorithmic traders increase limit order supply following periods of both high short‐term stock‐specific volatility and extreme stock price movement. Even following periods of high marketwide volatility, they do not decrease their supply of liquidity. We define orders from high‐frequency traders as a subclass of orders from proprietary algorithmic traders that are revised in less than three milliseconds. The behavior of high‐frequency trading mimics the behavior of its parent class. This is inconsistent with the theory that fast traders leave the market when stress situations arise, although their limit‐order‐supplying behavior becomes weaker when the increase in short‐term volatility is more informational than transitory. Agency algorithmic traders and nonalgorithmic traders behave opposite to proprietary algorithmic traders by reducing the supply of liquidity during stress situations. The presence of faster traders in the market possibly instills the fear of adverse selection in them. We document that the order imbalance of agency algorithmic traders is positively related to future short‐term returns, whereas the order imbalance of proprietary algorithmic traders is negatively related to future short‐term returns.