An economic rationale for a system of loglinear asset demand functions

Summary In this paper we derived a system of asset demand functions from an expected utility maximization model, in which the utility function satisfies both the decreasing absolute risk aversion as well as the increasing relative risk aversion criteria. The rates of return are assumed to be distributed as a multivariate log-normal distribution. It is shown that a system of log-linear asset demand functions follows from the exact model as an approximation and performs better than similar types of linear asset demand functions which follow from a negative exponential utility function.I am grateful to Professor A. R. Bergstrom and Mr. R. E. Bailey for their comments on an earlier draft. Comments from the referee of this journal helped me to improve my presentation. I am also grateful to Professor R. Bandyopadhyay for his comments. I am solely responsible for any errors.     

An integration of short run neokeynesian analysis and growth theory

Summary The paper provides a synthesis of short run Neo-Keynesian theory and long run growth models. The general approach is illustrated with the analysis of the short run and long run effect of changes in government spending when government budget deficits and surpluses are bond-financed. Such pure fiscal policy actions are shown to have long run effects on real variables even in a full employment model. The stability properties of the model turn out to depend crucially on the speed of adjustment of inflationary expectations.This paper is based on my Ph.D. DissertationTemporary Equilibrium and Long-Run Equilibrium. The advice and help of James Tobin, Gary Smith and Katsuhito Iwai are gratefully acknowledged. I have also benefitted from discussions with Gregory Chow. The detailed and wide-ranging comments of Dr. Th. C. M. J. van de Klundert and Dr. S. K. Kuipers on earlier drafts of this paper were most valuable, both as regards substance and form.Assistant Professor of Economics and International Affairs, Princeton University.     

Payment Instruments as Perceived by Consumers – Results from a Household Survey

Summary Survey results show that Dutch consumers perceive paying in cash as an inexpensive way to pay, compared to paying with electronic payment cards. This finding partly explains the low usage of electronic payment cards in point-of-sale (POS) payments. The objective of the survey was to identify price and non-price features of payment instruments that can be used to stimulate the use of electronic payment cards. Their attractiveness can be increased, through technological modifications that enhance their convenience and by increasing the number of acceptance points. Making it less expensive for consumers to pay with payment cards could also increase the usage of payment cards. I would like to thank Rein Kieviet, Maarten van Rooij, Stijn Schmitz, Ariena van Wageningen and especially Corrie Vis of CentERdata for their help in collecting the data. Furthermore, I would like to thank two anonymous referees, Wilko Bolt, Hans Brits, Jeff Dominitz, Beth Kiser, Beth Klee, Jed Kolko, Philip Maier, Carlo Winder and participants of the DNB lunch seminar, the FRB research seminar and the Boston FED ‘Consumer behaviour and Payment Choice’ conference for their valuable comments on earlier versions of this paper. All remaining errors are my own. The views expressed in this paper are mine and do not necessarily reflect those of the Nederlandsche Bank.     

Finnish mortality in the eighteenth century: A reply

Abstract

In SEHR No.2, 1978, Eino ]utikkala took issue on a number of points with my article published in SEHR No.2, 1977, and I should like to make several comments in reply, Firstly, I have found it misleading to call the results of my data adjustments as ‘correction coefficients’. This term tends to suggest that my corrections produce precise results, an impression which the caveats explicitly stated in my text were designed to prevent. My purpose was to provide a rough suggestion of, and an approximation to the extent of errors, since it would have profited no one had I concluded the study with the simple acknowledgment of gaps in the registers and the admission that there is no way of determining their extent. Because this type of research is still relatively new, and because there seemed to be no other way of assessing the number of infants who died below one year of age, but were omitted from the registers of ‘baptised’ and ‘buried’, the national figures were used for the corrections, and an attempt was made to ensure that this approach did not lead to an overestimation of error.     

Utility and economics

Summary Although utility has been the central concept in economics, economists have paid relatively little attention to its measurement. Generally, utility is measured indirectly via the revealed preference approach. We discuss problems with this approach and next introduce alternative direct measurement methods. The direct measurement methods are seen to spawn a so-called theory of preference formation, which explains differences in utility functions of different individuals. The similarities of this theory with related theories in sociology and psychology, and various sorts of empirical evidence, are reviewed. The paper concludes with a discussion of the implications of these findings for economic theories.This is a slightly adapted version of my inaugural address at Tilburg University. I thank Tom Wansbeek for his helpful comments.     

Estimation of demand systems using both time series and cross section data

Summary This article deals with three models of complete systems of demand equations (Rotterdam model, AIDS and CBS model). After the models and the theoretical restrictions have been described the parameters are estimated subject to an increasing number of restrictions and using aggregate time series for the Netherlands on five commodity groups. As the initial results are not altogether satisfactory an attempt is made to improve the estimates by combining the time-series information with cross section data from the Dutch 1974/1975 budget survey. While the revised estimates of the income elasticities are more plausible than the initial ones, the reverse is true for the estimated price elasticities. This paper originated when I was a student of economics at the University of Amsterdam. I am greatly indebted to J.G. Odink who never failed to support and inspire me while I worked on this paper. Also I thank J.S. Cramer, D.A. Kodde and J. van Driel for their comments on an earlier draft, and G. Ridder for his econometric advice. Finally the comments of two anonymous referees are gratefully acknowledged. Of course all remaining errors and omissions are my own.     

Factor substitution and manpower planning reconsidered

Summary This paper explores anew the factor substitution assumptions of manpower planning activities. It finds several flaws in the oft-repeated argument that manpower planning studies should be abandoned in favor of rate of return analysis because the planning approach depends upon the assumption of fixed-coefficient production functions and the latter approach does not. For one thing, the choice of methodological approach depends upon matters other than the observed value of the elasticity of substitution. For another, it is not clear that factor substitutability has necessarily been ignored in either the theory or practice of manpower planning.I am Indebted both to a number of my OSU colleagues and to the Editors of this Journal for helpful comments on a preliminary draft of this paper. For customary reasons, I assume full responsibility for any remaining errors of fact or interpretation. Since a portion of the paper draws upon research supported by an award to the OSU Center for Human Resource Research from the National Science Foundation, I would also like to acknowledge that support. The views expressed, of course, should not necessarily be attributed to the National Science Foundation.     

Patenting activity and elements of market structure in the Dutch manufacturing industry

Summary On the basis of econometric analysis this survey shows how patent intensity (number of patents in relation to sales) is positively influenced by technological opportunity and expected profit, and negatively by industry size and concentration. In addition, it is investigated whether patents can be used as a proxy for both inventive and innovative activity. To this question no definite answer could be given. A contradictory relationship was found between the R&D/sales ratio and the patents/sales ratio, which in this case merely shows how research based on firm data and industry data can come up with very different results. A general implication is that for studies on the Dutch manufacturing industry the aggregation from firm level to industry level should be treated with caution.The author works for Corporate Development & Economics Department of Unilever N.V. The views expressed in this article do not necessarily coincide with those of my employer.This article is based on the dissertation that I wrote for the MA in Economics programme at the University of East Anglia (UK). I would like to thank Dr S. Davies, Dr B. Lyons, and G. Hockley Morley for their useful comments, Vanda Morgan for her help with the language and Eline Rossen for her help in finalising this paper. Any errors are mine.     

Oligopoly in loan and deposit markets: an econometric application to the Netherlands

Summary This paper presents evidence on the degree of oligopoly in Dutch loan and deposit markets. Using cointegration tests, dynamic specifications are developed for the demand for mortgages, the supply of savings deposits and the associated interest rates. Simultaneous estimation of this model over the period 1957–1990 reveals that in recent years, both markets were significantly more oligopolistic than in Cournot equilibrium. However, competition for mortgages has significantly intensified since the late 1950s. The degree of oligopoly in the market for savings deposits, on the other hand, shows a significant rise over the sample period, probably owing to increased market concentration.This paper, which is a revised version of chapter 4 of my (unpublished) Ph.D. thesis, has greatly benefited from the comments by Lex Hoogduin, Gerard Korteweg and two anonymous referees of this journal. Thanks are also due to Coby Hogewoning and Gwan Tjia, who assisted in collecting the data. All errors and opinions are mine.     

Discussion of “How Does Intrinsic Motivation Improve Auditor Judgment in Complex Audit Tasks?”

Kadous and Zhou (2018) investigate experimentally how intrinsic motivation improves auditor judgment in complex audit tasks. In my discussion, I elaborate on my comments from the 2016 CAR Conference. Specifically, I comment in the first part of my discussion on the motivation and contribution of the paper, the underlying theory, the experiment and the results. The second part of my discussion is focused on the broader picture of the paper for which I offer some thoughts based on cross‐fertilization of insights from the archival auditing research and I conclude with providing some suggestions for further research.     

Discussion of “Communicated Values as Informal Controls: Promoting Quality While Undermining Productivity?”

Kachelmeier, Thornock, and Williamson ( 2016 ) investigate experimentally whether an employer's value statement can affect the way employees cognitively represent how they should approach a multi‐attribute task, and therefore performance. Counter‐intuitively, but consistent with their theory, they find that the value statement negatively affects performance for piece‐rate incentivized participants. In my discussion, I elaborate on my comments from the 2013 CAR Conference. Specifically, I discuss contexts where a firm's value statement may have positive effects on performance, and the importance of conducting research investigating how the decisions made by management accountants affect learning.     

Measuring the Economic Costs and Benefits of the EU

The EU has pursued protectionist policies not merely in food but also in manufacturing at the customs union level. In services it has not dismantled much of the existing national protectionism. The economic costs are calculated here at some 3% of GDP for the UK and some 2% for the rest of the EU. Added to its social interventionism, these costs suggest that the EU has put political integration before economic efficiency. This paper draws heavily on my book with Vidya Mahambare and Eric Nowell (Minford et al., 2005). I am grateful for helpful comments to Kim Huynh, Michele Fratianni and other participants at the IU 2006 conference in Fratianni’s honour. I contributed this paper in recognition of many pleasurable discussions with Michele over the years on this and many other topics. JEL Classification Numbers: F13, F14     

Duration of unemployment in the Dutch youth labour market

Summary This paper is concerned with the specification and estimation of a one-state proportional hazard model to explain the duration of unemployment in the Dutch youth labour market. Special attention is given explaining the unequal distribution of unemployment experiences among young labour force participants. The model is estimated using data from a 1984 national random sample of young people unemployed in May and interviewed in October/November. It is found that the replacement ratio has no significant effect. The predicted youth wage on the other hand is significant. The paper also presents and compares different functional forms for modelling duration dependence and heterogeneity.A more extensive version of this paper was published by the Organisation for Strategic Labour Market Research (OSA) in The Hague as working paper nr. 14, 1985. We wish to thank this organisation for its encouragement and for its financial support. We also wish to thank M. Bom, J. Hartog, T. Manders, E. de Regt and G. Ridder for their comments and help.     

A Review of the Empirical Literature on FDI Determinants

This paper surveys the recent burgeoning literature that empirically examines the foreign direct investment (FDI) decisions of multinational enterprises (MNEs) and the resulting aggregate location of FDI across the world. The contribution of the paper is to evaluate what we can say with relative confidence about FDI as a profession, given the evidence, and what we cannot have much confidence in at this point. Suggestions are made for future research directions. This paper was written for an International Atlantic Economic Society session at the 2005 ASSA conference in Philadelphia, PA. I thank Ron Davies, Walid Hejazi, and an anonymous referee for excellent comments and suggestions. All remaining errors are my own.     

Stability in Keynesian and neoclassical growth models: A comment on Kuipers

Summary This article comments on a recent article by Kuipers on Keynesian and neoclassical theories of economic growth. It is argued that Kuipers' analysis of his Harrodian variant is too restrictive to answer the question of stability of the full-capacity steady growth path. An alternative Harrodian variant, which, in contrast to Kuipers' model, includes the possibility of unfulfilled demand growth expectations, is specified, and it is shown that this model is unstable. This result has important consequences for Kuipers' ranking of Keynesian and neoclassical theories in a general theory of economic growth according to their respectively medium-term and long-term character. This article has been greatly benefited from comments of S.K. Kuipers and H.A.A.M. Thoben. All views expressed and remaining errors are solely my responsibility.     

Classification of unemployment: Analytical and policy relevance

Summary The purpose of this paper is to evaluate the way unemployment can be decomposed in several components, and to discuss the analytical and political relevance of such a decomposition. The paper deals systematically with the classifications of unemployment that can be found in the current international literature and fits them into a coherent framework. Finally, the relevance for economic policy of decomposing unemployment into components is discussed.This paper is based on Muysken (1988), which was written with the help of a grant from the Organization of Strategic Labour Market Research (OSA). I would like to thank the Department of Economics of the University Catholique de Louvain for their hospitality during two visits, which enabled me to write this paper and the above-mentioned report. I would like to thank S.K. Kuipers for comments on an earlier version of this paper.     

On the relationship between Dutch and German interest rates

Summary In this paper the relationship between Dutch and German short-term and long-term interest rates is examined. Using cointegration techniques, it is found that the covered interest parity hypothesis holds for short-term interest rates. This evidence supports the recent shift of emphasis of Dutch monetary policy. It appears that the uncovered short-term interest differential is stationary. The long-term interest differential is stationary with a shift in mean. This does not imply that the uncovered interest parity (UIP) holds. Using the indirect approach suggested by Fama (1984), we show that a risk premium exists and that, therefore, UIP does not hold.The authors would like to thank H. Garretsen, L.H. Hoogduin, J. Jacobs, C.A. de Kam and two anonymous referees for their helpful comments on a previous version of this paper.Economic Bureau NMB-Postbank.     

Technical progress,factor substitutability and models of production: II

Summary This paper is the concluding installment of a series which surveys a number of fundamental production tenets. This examines and hence compares the properties of several production models which result from alternative pairings of the progress and substitutability assumptions discussed in part 1. Part I appeared in a recent issue ofDe Economist.I again thank E. Ray Canterbery, Simon K. Kuipers, T. Krishma Kumar, and Th. van de Klundert for their comments. I also thank Chiu-Yeung Chan, Franklin M. Fisher, and William F. James for their help with a few specifies. The responsibility for errors is mine alone.     

Income distribution: Second thoughts

Summary As a follow-up of his book on income distribution the author reformulates his version on the scarcity theory of income from productive contributions. The need to introduce into an earnings theory several job characteristics, non-cognitive as well as cognitive, and the corresponding personality traits is stressed, the latter subdivided into innate and learnable capabilities. The theory is presented in two alternative mathematical versions: one where job and person characteristics are continuous and one where they have discrete values and their frequencies assume continuous values. Although, mainly in the United States, numerous empirical inquiries have been made, job characteristics and the corresponding personal characteristics have not been included in sufficient number.I want to express my profound gratitude to Professor Robert H. Haveman, who not only published a deep-delving review article on my book Income Distribution: Analysis and Policies but also commented on an earlier text of the present article. I also owe a great debt to Professor Jan Pen who in a long series of discussions challenged a number of my concepts and figures. Finally I want to thank Dr. S. K. Kuipers for helpful comments on an earlier draft.     

Bank Capital Regulation,Economic Stability,and Monetary Policy: What Does the Academic Literature Tell Us?

This paper surveys academic research exploring the macroeconomic and monetary policy implications of the Basel I and Basel II systems of risk-based capital requirements. This research indicates that regulatory tightening of capital ratios can generate aggregate shocks, that capital regulation can enhance the procyclicality already inherent in banking, and that capital requirements can influence macroeconomic outcomes and alter the monetary policy transmission mechanism. The paper offers suggestions for future avenues of research on the interplay between bank capital regulation, the economy, and monetary policymaking. Although any errors are my own, I received very helpful comments on earlier versions from Kenneth Kopecky, John Pattison, and Jack Tatom. I am grateful for research support from Networks Financial Institute.