Productivity and technical change: Measurement and testing

This paper considers two specifications, namely, the time trend (TT) and general index (GI) of technical change. These models are extended to accommodate the TFP growth accounting relationship in to the econometric model. We also propose a formal test to determine whether the TT or the GI model is appropriate for the data. I would like to thank Badi Baltagi for his comments and Peter Schmidt for suggesting the test proposed in the paper. None, other than me, is responsible for any remaining errors.     

Population growth and economic and social development

This article sets forth 3 positions on population growth: 1) rapid population growth is a central development problem that implies lower living standards for the poor; 2) proposals for reducing population growth raise difficult questions about the proper domain of public policy, yet it is acceptable for governments to attempt to influence private decisions about family size; and 3) the experience in many developing countries shows that quick, effective measures can be taken to reduce fertility. Rapid population growth has slowed development because it exacerbates the difficult choice between higher consumption in the present and the investment needed to bring higher consumption in the future. As populations grow, larger investments are needed just to maintain current capital/person. It further threatens the balance between natural resources and people and creates severe economic and social problems in urban areas. Public policy must provide alternative ways for poor families to secure the benefits provided by large family size. That is, governments need to provide tangible evidence that it really is in the best interests of parents to have fewer children. Also required is greater infomation about and access to fertility control. When family planning services have been widespread and affordable, fertility has decline faster than social and economic progress alone would predict. There is a need for immediate action to improve women's status and to make education, family planning, and primary health care more available. Although economic and social progress help to slow population growth, rapid population growth hinders development. Thus, governments must act simultaneously on both fronts. Accumulating evidence on population growth in developing countries shows that is the combination of social development and family planning that reduces fertility.     

Hierarchies and entrepreneurship

We establish a correlation between the hierarchical structure of a firm and the likelihood of business creation among its former employees, using a sample of 16 million observations of Swedish workers and a novel proxy for hierarchies based on occupation data. Conditional on firm size and many other variables, employees in firms with more layers are less likely to enter entrepreneurship, to become self-employed, and to switch to another employer. The effects of layers are much stronger for business creation than for job-switching and they are stronger for entrepreneurship than for self-employment. We discuss two potential explanations for the distinctive hierarchy effect we find. Part of the effect could be to be due to preference sorting by employees, and part due to employees in firms with fewer layers having a broader range of skills. One test showing that the probability of entrepreneurship increases with their prior rank in an organization is consistent with ability sorting and inconsistent with preference sorting.     

Export and Income Growth in Japan and Taiwan

Economic theory suggests that export growth promotes economic growth. Yet empirical research has not found clear support for the export-led growth hypothesis, even for the newly industrialized economies where the theory should be most applicable. This paper provides an explanation for the apparent discrepancy between the theory and the empirical results. It shows that causality inferences on the export-led growth hypothesis are sensitive to unit roots or near-unit roots in the time series and to the lag structure chosen for causality tests. Therefore, the issues of unit root and lag structure deserve scrutiny in empirical research.     

Hedonic models and air pollution: Twenty-five years and counting

This paper reports a meta analysis of how effectively hedonic property models have detected the influence of air pollution on housing prices. Probit estimates are reported describing how data, model specification, and local property market conditions in cities represented in thirty-seven studies influence the ability of hedonic models to uncover negative, statistically significant relationships between housing prices and air pollution measures.Partial support for this research was provided by the Russell Sage Foundation. Thanks are due David Cordray, Heidi Hartman, and Larry Hedges of the Foundation's Meta-Analysis Panel for constructive comments, to Ray Palmquist for suggestions and assistance in assembling the results from his studies, to Rick Freeman and Tom Tietenberg and two anonymous referees for comments on the research, and to Barbara Scott for constructive editing of earlier drafts of this paper.     

Immigration and economic welfare: resource and environmental aspects

"The relation between immigration and the economic welfare of residents is analyzed for resource-rich economies (such as Australia) both under competitive conditions and when various distortions are present. Immigration provides efficiency gains for residents under distortion-free competition for standard 'gains from trade' reasons. Such reasons, however, tend to be ignored by immigration and 'optimal population' theorists who raise the issue of restricting immigration without explicitly referring to the distortions. In situations where distortions and externalities are present, we argue that it is generally preferable to devise policies which specifically target the distortions than to restrict immigration."     

Extreme observations and non-normality in ARCH and GARCH

Most studies employing ARCH and GARCH models document the existence of severe excess kurtosis in the estimated residuals. This non-normality may be due to model misspecifications, structural changes, or outliers. We conduct simulation experiments to examine the impact of extreme observations on the estimated parameters and residuals in the ARCH models. Then, we propose an iterative algorithm to detect and correct for the non-normality generated by extreme observations and additive outliers. Results for the simulated data, US equity returns and $/£ exchange rates are presented. Correcting outliers dramatically reduces the non-normality and bias in the estimated coefficients for small samples.     

论农业可持续发展的科技创新机制

２１世纪的农业必然是可持续农业,如何促使常规农业向可持续方向发展,是当前学术界探讨的热门问题。本文从我国基本国情出发,提出实现我国农业可持椟发展必须依靠科技创新,并在这一基础上,探讨我国农业可持续发展的创新机制及其建立方式。     

Transaction costs and the use of cash and credit

Summary An overlapping generations model with spatial separation and transaction costs is developed that displays steady state equilibria in which both cash (fiat currency) and trade credit are used in exchange. Equilibria in which trade credit is used are not Pareto optimal. The question of the optimal quantity of money is addressed. Deflation is found to be optimal, contrary to the result for standard overlapping generations environments.This paper is based upon my dissertation, written for the University of Minnesota. I am grateful to Kathryn Combs, Michael Dotsey, Bruce Horning, Anne Villamil and seminar participants at numerous institutions for helpful comments. Most of all, I want to thank my advisor, Neil Wallace, for the attention he gave to my work. The views expressed in this paper are solely those of the author and do not necessarily reflect the views of the Federal Reserve Bank of Richmond or the Federal Reserve System.     

Money and credit with limited commitment and theft

We study the interplay among imperfect memory, limited commitment, and theft, in an environment that can support monetary exchange and credit. Imperfect memory makes money useful, but it also permits theft to go undetected, and therefore provides lucrative opportunities for thieves. Limited commitment constrains credit arrangements, and the constraints tend to tighten with imperfect memory, as this mitigates punishment for bad behavior in the credit market. Theft matters for optimal monetary policy, but at the optimum theft will not be observed in the model. The Friedman rule is in general not optimal with theft, and the optimal money growth rate tends to rise as the cost of theft falls.     

Product Market Integration and Heterogeneity—Rent Sharing and Pricing to Market

International product market integration makes market penetration easier and therefore creates both export opportunities and import threats. This changes the competitive position of firms and is associated with changes in trade, production, and specialization structures. The gains and losses in this process are unlikely to be equally shared due to heterogeneity across firms/sectors. In a Ricardian trade model with heterogeneity across firms, we find “pricing to market”—effects not only for exports, but also for pricing in the domestic market even for nontradables. Rents to be shared in wage bargaining differ across tradables and nontradables. It is shown that lower trade frictions affect the scope for “pricing to market” and cause wages to become more closely driven by (relative) productivity. Labor market prospects tend not to improve for low wage jobs, and not to deteriorate for high wage jobs.     

COPS and crime

The Violent Crime Control and Law Enforcement Act of 1994 established the Community Oriented Policing Services (COPS) program that provided grants to states and localities to pay up to 75% of the cost for new police hires for 3 years. To date, the COPS program has awarded almost $5 billion in hiring grants paying for 64,000 new police officers. We use annual data from 1990 through 2001 from 2074 cities with populations in excess of 10,000 to show that for each officer paid for by grant funds, the size of the force expands by 0.70 officers. The size of COPS grants are correlated with population and crime rates, but not the pre-COPS time trends in crime rates or the size of the police force. This allows us to use the size of COPS grants as an instrument for the size of the police force in regressions where crime is the outcome of interest. These models indicate that police added to the force by COPS generated statistically significant reductions in auto thefts, burglaries, robberies, and aggravated assaults.     

Political and Social Economics: Beyond Orthodoxy and Heterodoxy

Economists face at least two problems when they try to go interdisciplinary. One is how to adapt their theory where the original set of assumptions may fail to apply. This is a particular problem for economists who carry the “default” neoclassical model around in their heads. This paper outlines a map for keeping track of assumptions when doing interdisciplinary work. A second problem is how to take a theory designed for one discipline and turn it into something intelligible to practitioners of another. One needs a common language, and it is argued that general systems theory might help, even though it is not a complete language. The map proposed here provides a unified way to compare and contrast the approaches of different orthodox and heterodox traditions and better see what problems they are most suited to addressing.     

人口老龄化与劳动力发展规划

随着人口老龄化程度的提高和劳动力短缺问题的加重,越来越多的发达国家开始研究劳动力发展与规划问题。中国目前虽然从总体来看还没有出现劳动力短缺的问题,但是随着人口老龄化高峰的到来,劳动力规模缩小和一些劳动技能出现短缺却是必然的趋势。为了应对未来人口老龄化所带来的劳动力问题,做到未雨绸缪,有必要从现在开始启动适合中国国情的劳动力发展与规划的研究,分析在人口老龄化较高程度下劳动力在宏观和微观层面上的供求格局和变化趋势,寻求未来合理有效利用劳动力的最佳途径。     

Immigration and Economic Welfare: Resource and Environmental Aspects*

The relation between immigration and the economic welfare of residents b analyzed for resource-rich economies (such as Australia) both under competitive conditions and when various distortions are present Immigration provides efficiency gains for residents under distortion–free competition for standard ‘gains from trade’ reasons. Such reasons, however, tend to be ignored by immigration and ‘optimal population’ theorists who raise the issue of restricting immigration without explicitly referring to the distortions. In situations where distortions and externalities are present, we argue that it is generally preferable to devise policies which specifically target the distortions than to restrict immigration.     

Regulatory and Supervisory Independence and Financial Stability

Despite its importance, the issue of financial sector regulatoryand supervisory independence (RSI) has received only marginalattention in literature and practice. However, experience hasdemonstrated that improper supervisory arrangements have contributedsignificantly to the deepening of several recent systemic bankingcrises. In this paper we argue that RSI is important for financialstability for the same reasons that central bank independence(CBI) is important for monetary stability. The paper lays outfour key dimensions of RSI-regulatory, supervisory, institutionalbudgetary - and discusses ways to achieve them. We also discussinstitutional arrangements needed to make independence workin practice. The key issue in this respect is that agency independenceand accountability need to go hand in hand. The paper discussesa number of accountability arrangements. (JEL G18, G28, K23,L50).     

Markets and jungles

Economic institutions determine prospects for growth and development. This paper examines necessary conditions for an economy to support institutions that implement markets. Agents differ in land holdings, skill, and power. A competitive market assigns land to the skilled, not necessarily to the powerful. Therefore a market?allocation needs to be robust to coalitional expropriation. In a dynamic setting, market payoffs may induce sufficient inequality in next period??s endowments for markets to alternate with expropriation in a limit cycle, decreasing efficiency and amplifying macroeconomic fluctuations. Long run stability of markets is favored by higher social mobility, more initial equality, and less mismatch between skill and land.     

Delinquency and gender

The determinants of juvenile delinquency for males and females using the Delinquency in a Birth Cohort II Study are investigated. Ordered probit models for juvenile arrest are estimated separately for males and females. The results indicate that juvenile arrests for both males and females are more likely for non-whites and for those who leave education early. Males and females behave differently, in that males are more likely to be repeat offenders.     

Sovereign rents and quality of tax policy and administration

Windfall revenues from foreign aid or natural resource exports can weaken governments’ incentives to design or maintain efficient tax systems. Cross-country data for developing countries provide evidence for this hypothesis, using a World Bank indicator on “efficiency of revenue mobilization.” Aid’s negative effects on quality of tax systems are robust to correcting for potential reverse causality, to changes in the sample, and to alternative estimation methods. Revenues from natural resources are also associated with lower-quality tax systems, but results are somewhat sensitive to the choice of resource dependence indicators, and to a few extreme values in the data. Disaggregating by resource type, revenues from fuel exports are found to be more strongly associated than revenues from metals and ores exports with inefficient tax systems.     

Return and volatility transmission between oil prices and oil-exporting and oil-importing countries

This paper provides further evidence of the comovements and dynamic volatility spillovers between stock markets and oil prices for a sample of five oil-importing countries (USA, Italy, Germany, Netherland and France) and four oil-exporting countries (United Arab Emirates, Kuwait, Saudi Arabia and Venezuela). We make use of a multivariate GJR-DCC-GARCH approach developed by Glosten et al. (1993). The results show that: i) dynamic correlations do not differ for oil-importing and oil-exporting economies; ii) cross-market comovements as measured by conditional correlation coefficients increase positively in response to significant aggregate demand (precautionary demand) and oil price shocks due to global business cycle fluctuations or world turmoil; iii) oil prices exhibit positive correlation with stock markets; and iv) oil assets are not a good ‘safe haven’ for protection against stock market losses during periods of turmoil.