The timing and probability of FDI: an application to US multinational enterprises

An ‘option-pricing’ model is employed to analyse the timing of FDI. Assuming that the firm's profits are determined by the attractiveness of both the home and foreign countries, and that attractiveness follows a Brownian motion, an optimal trigger value of FDI is derived. The model shows that, contrary to the NPV rule, FDI entry should be delayed the greater the uncertainty of attractiveness in both locations. Another important result is that MNEs do not regard FDI as a risk-diversification tool. The results of the model were then tested empirically with US FDI data, using labour costs as a proxy for (the reciprocal of) attractiveness. The results support the findings of the analytical model.     

Linear SAM models for inequality changes analysis: an application to the Extremadurian economy

Social accounting matrices are adequate databases for the economic modelling. These matrices emphasize the role of households in the economy, and so, they usually disaggregate the household sector into several groups. This disaggregation allows social accounting matrices to be used for diverse income distribution analysis. The objective of this work is to use the linear SAM models to study how inequality is modified by several exogenous injections of income. The set of multipliers and indicators presented is applied to the economy of Extremadura – a region situated in the southwest of Spain. In particular, together with the accounting multipliers, two redistributed income matrices are presented to show how changes in final demand and in income transfers cause opposite effects in inequality. For contrasting these results, Gini and Theil indices are also used. Finally, a major reduction in both would result from an appropriate re-allocation of transfers.     

Born on the first of July: An (un)natural experiment in birth timing

It is well understood that government policies can distort behavior. But what is less often recognized is that the anticipated introduction of a policy can introduce its own distortions. We study one such “introduction effect,” using evidence from a unique policy change in Australia. In 2004, the Australian government announced that children born on or after July 1, 2004 would receive a $3000 “Baby Bonus.” Although the policy was only announced seven weeks before its introduction, parents appear to have behaved strategically in order to receive the benefit, with the number of births dipping sharply before the policy commenced. On July 1, 2004, more Australian children were born than on any other single date in the past thirty years. We estimate that over 1000 births were “moved” so as to ensure that their parents were eligible for the Baby Bonus, with about one quarter being moved by more than one week. Most of the effect was due to changes in the timing of induction and cesarean section procedures. We find evidence to suggest that babies who were shifted into the eligibility period were more likely to be of high birth weight. Two years later, on July 1, 2006, the Baby Bonus was increased, and we find that this again caused births to be moved from June to July. These birth timing events represent an opportunity for health researchers to study the impact of planned birthdays and hospital management issues.     

On interpreting probability distributions fitted to times of first adoption

This paper attempts to interpret the standard statistical distributions in the innovation diffusion context. A simple rule is provided for classifying a statistical distribution as being an internal, an external, or a mixed influence model. Two distributions, suitable as flexible mixed influence models, are used to analyze several well-known data sets.     

Goodness-of-fit techniques for count data models: an application to the demand for dental care in Spain

This paper compares the practical performance of alternative goodness-of-fit techniques for count data models in the context of a study of the determinants of demand for dental care in Spain. We apply alternative goodness-of-fit techniques to different specifications. In particular, we implement recently proposed specification tests which are consistent in the direction of general nonparametric alternatives. The analysis suggests that a negative binomial model is an appropriate specification for dental care demand. Dental health and income are identified as important predictors of individuals' behavior. First version received: April 2000/Final version received: March 2001     

A generalized framework for endogenous timing in duopoly games and an application to price-quantity competition

This paper extends the analysis of duopoly market by distinguishing two types of competition: (i) the basic form of competition where each firm is unrestricted in its choice of price and quantity and (ii) the non-basic form of competition where firms’ strategic choices over price and quantity are limited a priori. Our analysis focuses on the former rather than the latter. Under a very general setting of concave industrial revenue and asymmetric convex costs, we show that each firm typically makes more profit in the subgame perfect Nash equilibrium (SPNE) of the leader-follower price-quantity competition, one of the basic competition forms, than in the SPNE of the leader-follower price competition and that each firm always makes more profit under simultaneous move price-quantity competition than under simultaneous move price competition. We establish a generalized framework for endogenous timing in duopoly games which is capable of embodying and overcoming the inconsistency across the existing three frameworks in the field. We highlight the advantages of a 3-period general framework.     

Bayesian cost-effectiveness analysis for censored data: an application to antiplatelet therapy

Abstract

Objective:

Cost-effectiveness analysis (CEA) on trial-based data has played an important role in pharmacoeconomics. A regression model can be used to account for patient-level heterogeneity throughout covariates adjustment in CEA. However, the estimates from CEA could be biased if ignoring the censoring issue on effectiveness and costs. This study is to propose a regression model to account for both time-to-event effectiveness and cost.

Methods:

A bivariate regression model was proposed to analyze both effectiveness and cost simultaneously, while censored observations were also taken into account. The regression coefficients were estimated using a Bayesian approach by drawing a random sample from their posterior distribution derived from the Markov chain Monte Carlo (MCMC) method. The proposed method was illustrated using empirical data of anti-platelet therapies to the management of cardiovascular diseases for those patients with high risk of gastrointestinal (GI) bleeding, where cost-effectiveness between different therapies was analyzed under both censored and non-censored circumstances, where the effectiveness was defined as the time to re-hospitalization due to GI complications, and the cost was measured by the total drug expenditure.

Results:

Under censored circumstances, aspirin plus proton-pump inhibitors (PPIs) was considered more cost-effective than clopidogrel with/without PPIs, as shown in the cost-effectiveness acceptability curve, and clopidogrel was preferred to aspirin for a willingness-to-pay of 89 NTD for delaying 1 day to hospitalization due to GI complications.

Conclusions:

Ignoring censoring problems could possibly bias the results in CEA. This study has provided an appropriate method to conduct regression-based CEA to improve the estimation which serves its purpose for CEA concerns.

Limitations:

The normality assumption for the cost and effectiveness in the bivariate normal regression needs to be examined, and the conclusions may be biased if this assumption is violated. However, when sample size is sufficiently large, a slight deviation from normality would not be a serious problem.     

Demand for cigarettes in Turkey: an application of count data models

Household cigarette demand in Turkey is examined using the zero-inflated negative binomial model to account for a large portion of households not reporting cigarette smoking or purchase and estimated using the data from the national household survey implemented in 2003. Data were divided into two main groups: families with and without teenagers. Results identify relevant household head and household characteristics needed to develop effective public policy to prevent the decision to begin to smoke and to reduce cigarette purchase to lower the future growth of government healthcare expenditures. Specifically, healthcare expenditure share, income, and cigarette-price elasticities are relevant in lowering cigarette purchases. The calculated price elasticities for cigarette demand falls within the range determined by studies conducted for developed countries including the member states of the European Union. An estimate of the effect of an increase in the excise tax lowering demand is provided.     

Decomposition analysis of consumers' demand changes: an application to Greek consumption data

A decomposition analysis for consumer demand functions is developed. Changes in Marshallian demand or expenditure shares functions over time are decomposed into a total substitution effect, an income effect, and a habit effect. This framework is applied to post-war Greek consumption patterns through a habit persistence version of the Quadratic Almost Ideal Demand System (QUAIDS). It is found that for all commodity categories (i.e., food, beverages and tobacco, footwear and clothing, settling and housing, and others) the income effect was the main driving force in explaining changes in both quantity demanded and expenditure shares, followed by habit and total substitution effects.     

Cointegration analysis with structural breaks and deterministic trends: an application to the Canadian dollar

This article applies recent developments in cointegration analysis with structural breaks and deterministic trends to analyse the relationship between the real Canada–US exchange rate and commodity prices. Previous empirical studies disagree on whether these variables are cointegrated. The root of disagreement could be in the handling of deterministic trends and potential structural breaks. I find that even after controlling for these matters, the question of whether the real exchange rate and commodity prices are cointegrated for Canada remains unresolved.     

The application of transformations to non-linear models

A transmuted model is introduced which allows non-additive error terms and is shown to be an extension of the Box-Cox transformation to intrinsically non-linear equations. Post-transformed models are used to analyze the underlying disturbance term structure with an empirical example presented to illustrate the increased flexibility provided by the transmuted model.     

Spatial shift-share analysis versus spatial filtering: an application to Spanish employment data

The aim of this work is to analyse the influence of spatial effects in the evolution of regional employment, thus improving the explanation of the existing differences. With this aim, two non-parametric techniques are proposed: spatial shift-share analysis and spatial filtering. Spatial shift-share models based on previously defined spatial weights matrix allow the identification and estimation of the spatial effects. Furthermore, spatial filtering techniques can be used in order to remove the effects of spatial correlation, thus allowing the decomposition of the employment variation into two components, respectively related to the spatial and structural effects. The application of both techniques to the spatial analysis of regional employment in Spain leads to some interesting findings and shows the main advantages and limitations of each of the considered procedures, together with the quantification of their sensitivity with regard to the considered weights matrix.     

Endogenous regressor binary choice models without instruments,with an application to migration

This paper shows identification of a semiparametric binary choice model containing an endogenous regressor, when no outside instrumental variable is available. A simple estimator, an easy test for endogeneity, and an empirical application to US migration data are provided.     

Estimation of nonparametric inefficiency effects stochastic frontier models with an application to British manufacturing

The purpose of this paper is to propose a simple stochastic frontier model with a non-parametric specification for covariates affecting the mean of technical inefficiency. We derive a simple two-step semiparametric estimation procedure to estimate the frontier parameters as well as the mean of the technical inefficiency. The consistency of the estimator and its asymptotic normality are shown. The proposed method is illustrated using a large panel data set of British manufacturing firms.     

Hospice costs and medicare reimbursement: an application of break-even analysis

The adequacy of Medicare reimbursement to cover hospice costs is examined using break-even analysis. Since hospice costs are high during the first few days after enrollment, a long period of enrollment is required for per diem reimbursement to cover costs. Under a variety of specifications, the length of stay required for the hospice to break even is greater than the median length of stay.     

A micro-analytic threshold model for the timing of first purchases of durable goods

A micro-analytic threshold model to describe the timing of household purchases of consumer durable goods is developed and tested. The model incorporates unobserved heterogeneity via a generalized gamma distribution and accounts for time varying covariates. Further, we employ estimation methods applicable or purchase data observed at periodic intervals of time. The model outperforms other competing models for predicting the timing of purchase of durable goods in terms of fit and predictive ability. In particular, this model outperforms the logit model and the diffusion model. The generalized gamma timing model predicts well the time to purchase the durable good; we show how it can be employed for micro-segmentation of households. Several research directions and applications are described.     

Estimating the surplus in the periphery: an application to Turkey

This note discusses how the economic surplus concept can beused to analyse the constraints the world system imposes oneconomic development. An estimation of the surplus for Turkeyfor 1980–96 utilises Köhler's unequal exchange analysisto measure the transfer of surplus abroad and the official minimumwage to calculate essential private consumption. The estimationyields the allocation of the surplus between non-essential consumption,investment and unrequited transfers abroad. The note assessesLippit's argument that the main obstacle to development is themisuse of the surplus in the domestic economy and not transfersabroad.