The warren court,inequality and the poor

This paper presents a gender perspective of the Trade Adjustment Assistance (TAA) program. The TAA is the primary US policy to assist the transition of workers displaced due to trade related economic restructuring. In comparison to the relatively substantial research on gendering trade policies in developing economies there is very limited focus on gendering policy responses to trade in the US. We argue that there is a specific gender trend in the trade-displacement patterns in the US which calls for a gender sensitive policy response. We examine the TAA in light of this trend and offer some suggestions for a gendered approach to providing assistance to workers negotiating an increasingly flexible global labor market.     

Small firms in Portugal: a selective survey of stylized facts,economic analysis,and policy implications

I survey a number of stylized facts pertaining to the dynamics of firm entry, growth, and exit in competitive industries. I focus particularly on data for Portugal, although I also consider, for comparison purposes, data from other countries. I then present a series of theoretical models that attempt to explain the stylized facts and evaluate the welfare impact of market distortions. Finally, I derive a number of policy implications, all centered around the notion of economic mobility.

Rigidities,Living Conditions,and Institutions in the Far North

The remoteness and geography of Alaska create service access rigidities that are difficult to overcome. The delivery of basic services like healthcare, police protection, and justice are often inadequate in rural places. The continued employment of neoclassical assumptions in policy making is a primary reason policies fail to overcome the barriers. A broader scope of analysis can inform the issues faced by rural residents and provide insight into alternate solutions.

Sovereign-Wealth Funds: the institutional dimension

In the recent past, the operations of the capital-rich Sovereign-Wealth Funds (SWFs) went on increasing in the global capital markets. As the global economic crisis that started in 2007 deepened, SWF operations dramatically spurted, leading to further progressive increase in their significance for the global capital markets. For all appearances they are going to be important financial players in the foreseeable future. This article focuses on the basic concept of SWFs, their structure and operations. It attempts to analyze and elucidate on them. Notwithstanding the fact that SWFs are an instrument of enhancing liquidity and financial resource allocation in the international capital market, they managed to become a source of controversies. Consequently they became a source of escalation in financial protectionism in several advanced industrial economies, in particular the USA. The article concludes that this was unwarranted. Recently SWFs have attempted to device an array of best practices to improve the transparency of their global financial operations. These measures are expected to enhance the acceptance of SWFs as well as global recognition of their operations. They would also help in dispelling the negative image that SWFs have held in several advanced industrial economies.

Pricing-to-market tests in instrumental regressions: Case of the transportation equipment industry

Pricing-to-market (PTM) theory suggests that exporting monopolistic firms adjust their destination-specific mark-ups in the face of exchange rate shocks. A large proportion of the existing evidence for PTM comes from Wald tests applied to OLS- and IV-estimated parameters of single-equation models. Such tests can seriously over-reject in the presence of endogeneity and weak instruments so that some of the available results supporting PTM could be spurious. In this paper we revisit the PTM evidence for Japanese and German exporting firms in the transportation equipment industry. Using the model of Marston (1990), we apply exogeneity and LR-LIML-based tests for which the error probability is controlled irrespective of the quality of the available instruments. Our results show right-hand-side endogeneity in almost all of the examined PTM equations. In addition, we find that statistical decisions often differ depending on whether they are based on the traditional Wald test or on our proposed test.The authors would like to thank Philippe Barla, Jean-Thomas Bernard, Christos Constantatos, Larry Schembri, seminar participants at the Bank of Canada, and two anonymous referees for useful comments and suggestions. Thanks also to Richard Marston for providing data. Finally, a special thanks to Marjorie Santos for excellent research assistance. All remaining errors are our own and should not be attributed to the Bank of Canada.First version received: May 2002/Final version received: December 2002     

Measuring environmental efficiency of industry: a case study of thermal power generation in India

Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.06 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 6/ while decreasing generation of pollution by 6%. This result shows that there are incentives or win–win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. This result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in India to reduce air pollution.

Public capital stock and state productivity growth: Further evidence from an error components model

The contribution of different types of public infrastructure on private production is investigated using time-series of cross-section data for the 48 contiguous states over the period 1970–1986. A Cobb-Douglas production function is estimated with unobserved state-specific effects. Measurement errors in public capital stock and its components are detected and rectified.We would like to thank Baldev Raj and an anonymous referee for helpful comments. Also, Timothy J. Gronberg and Kay McAllister who thoroughly read the earlier draft and offered many constructive suggestions. We are, however, solely responsible for any remaining errors. The data set used in this research was generously provided by Alicia H. Munnell and Leah Cook of the Federal Reserve Bank of Boston. Nat Pinnoi acknowledges the research support provided by the Texas Transportation Institute.     

Quarterly US unemployment: Cycles,seasons and asymmetries

This paper documents three stylized facts for the quarterly unemployment rate in the United States. Firstly, unemployment is asymmetric over the business cycle, i.e. it rises sharply in recessions and it falls slowly in expansions. Secondly, its seasonal fluctuations are not constant across the two business cycle stages in the sense that there is less seasonality in recession periods. Thirdly, the effect of shocks to the unemployment rate in expansions seem transitory, while this effect is permanent in recessions. Some implications of these stylized facts for empirical macroeconomics and seasonal adjustment are discussed.     

Price determination and dynamic adjustments: An inverse demand system approach to meat products in the United States

In this study the process of retail meat price determination is depicted in the form of an inverse demand system taking into consideration the dynamic adjustments present in monthly consumption data. The general dynamic framework identifies both long run and short run effects in a systematic manner and allows direct estimation of the long run price and scale flexibilities that are consistent with theory. The empirical application based on monthly U.S. meat products data provides reasonable and promising results.The authors are senior econometrician, Department of Risk Management, TRS, American Express Co., Phoenix, and assistant professor, Department of Applied Economics, University of Minnesota, St. Paul, respectively. The work was performed when the first author was an assistant research scientist at the Center for Agricultural and Rural Development, Department of Economics, Iowa State University, Ames. Journal Paper No. J-15784 of the Iowa Agriculture and Home Economics Experiment Station, Ames, Iowa. Project No. 3109.     

Alcohol content and demand for alcoholic beverages: A system approach

This paper examines how alcohol content affects the consumption of alcoholic beverages in Finland. Three different quality hypotheses are studied and compared: Fisher and Shell, Theil, and an additive one. The comparison of the hypotheses is based on quality elasticities implied by the hypotheses. The results show that, under all hypotheses, alcohol content positively affects the demand for alcoholic beverages, and this effect depends negatively on income. The results of the comparison of the hypotheses show that the additive fits the data best. However, the other hypotheses are almost as good: Fisher and Shell's hypothesis better than Theil's.I would like to thank K. Koskela, A. Nyberg, M. Salo, M. Stenius, and I. Suoniemi for their useful comments and suggestions. The author bears sole responsibility for any remaining errors.     

Testing for capital mobility: A random coefficients approach

This paper extends the Feldstein-Horioka (1980), Feldstein (1983) and subsequent studies on the degree of capital mobility, by adopting a random coefficients model. This approach is more general in that it permits inter-country variations in the degree of capital mobility to arise due to the differences in size as well as in other institutional or structural characteristics. In addition, it is a refinement of stochastic laws as defined by Pratt and Schlaifer (1984, 1988). Our results point to significant inter-country differences in the degree of capital mobility, thereby lending support to the random coefficients approach. In particular, our results indicate that, on average, the degree of capital mobility is much higher than implied by fixed coefficients approach. Finally, country size itself does not appear to bear a systematic relationship with the degree of capital mobility as suggested by Murphy (1984).We are grateful to two anonymous referees, and Baldev Raj, Editor of the journal for helpful comments and suggestions. The usual caveat applies.     

Stock prices,production and interest rates: Comparison of three European countries with the USA

This paper investigates the relationships between stock returns, changes in production, and changes in interest rates in three European countries: France, Germany, and the United Kingdom. The results obtained using annual data are much more conclusive than those obtained using quarterly data. Stock returns are affected by current changes in interest rates and by future changes in production. The dependence on changes in interest rates seems to be higher than on changes in production. Furthermore, the influence of future changes in production on stock returns diminishes substantially when contemporaneous changes in interest rates are taken into account. With reference to these points, the European markets behave in a similar fashion, but are in sharp contrast with the U.S. market.I am very grateful to Kay Davidson, Patric Hendershott and two anonymous referees for useful comments and suggestions. I am solely responsible for all remaining errors.     

Expectations and intertemporal separability in an empirical model of consumption and investment under uncertainty

An intertemporal model of consumption and investment under uncertainty is formulated, and compared with the existing literature; it is argued that an assumption of myopia is necessary for its empirical applicability. It is estimated by maximum likelihood with quarterly British data. A specification search for a satisfactory form of expectations is made, and the estimated model is compared with a static demand system. Strong intertemporal separability is formulated as a nested hypothesis, and strongly rejected by a likelihood ratio test.     

Distribution dynamics and convergence in Latin America: A non-parametric analysis

This paper examines the dynamics of income distribution and convergence in Latin America during the period 1960 to 2000. Our results, based on the intradistribution dynamics approach, reveal a “twin peaks” dynamics, which echoes findings reported for the OECD, the Asia Pacific Basin and worldwide. Notable differences, however, are found between the income dynamics in Latin America and in these other regions. Further, our findings indicate that physical capital investment and health capital serve to explain Latin America’s “twin peaks” polarization. Other factors, such as geographical proximity, trade openness and human capital, are also found to help explaining it to some extent. We gratefully acknowledge the helpful comments and suggestions of the referee.     

Demand,innovation, and the dynamics of market structure: The role of experimental users and diverse preferences

The history of a number of industries is marked by a succession of eras, associated with different dominant technologies. Within any era, industry concentration tends to grow. Particular eras are broken by the introduction of a new technology which, while initially inferior to the established one in the prominent uses, has the potential to become competitive. In many case new entrants survive and grow, and the large established firms do not make the transition. In other cases, the established firms are able to switch over effectively, and compete in the new era. This paper explores a model which generates this pattern and has focused on the characteristics of the demand. We argue that the ability of the new firms exploring the new technology to survive long enough to get that technology effectively launched depends on the existence of fringe markets which the old technology does not serve well, or experimental users, or both. Established firms initially have little incentive to adopt the new technology, which initially is inferior to the technology they have mastered. New firms generally cannot survive in head-to-head conflict with established firms on the market well served by the latter. The new firms need to find a market that keeps them alive long enough so that they can develop the new technology to a point where it is competitive on the main market. Niche markets, or experimental users, can provide that space.

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Franco MalerbaEmail:

     

On latitude and affluence: The equatorial grand canyon

Our objective is to explain per capita GDPs by the countries' latitude, using PPP-based data for 138 countries in 1985 (PPP = purchasing power parity). A simple approach is formulated which nevertheless accounts for as much as two-thirds of the variance of the per capita GDPs.Theil is the McKethan-Matherly Eminent Scholar Emeritus and Courtesy Professor of Food and Resource Economics, while Galvez is an Associate in Research of the Bureau of Economic and Business Research, both at the University of Florida (UF). We thank Sri Devi Deepak, Charles B. Moss and James L. Seale of the UF Food and Resource Economics Department for helpful discussions and Robert Summers of the University of Pennsylvania for making the data available to us.     

The impact of the Paasche-Laspeyres choice upon econometric results

Does it make any difference to econometric results whether ones uses the Laspeyres or Paasche index? In general, the divergence between these two is small, suggesting that index choice makes little difference to econometric results. We estimate 72 Malthusian models and because the Paasche and Laspeyres indices we use show below average divergence, these reslts should be conservative. We find that parameters differ substantially, that parameter signs can be reversed, thatr ²s change markedly and that hypothesis test results are reversed. These findings indicate the importance of estimating exact indices.