An estimation of import demand,export supply and technical change for Korea

This paper estimates import demand and export supply functions for Korea based on the translog restricted profit (or GNP) function. It also estimates biases of technological change and applies decomposition analysis to examine the effects of technical change on input demand within the profit function framework. Our findings show that (a) factor inputs, as well as outputs, are, in general, moderately price-elastic and substitutable among each other. (b) the production of investment goods, as well as export goods, is capital-intensive while the production of consumption goods is labout-intensive, (c) technical change is labour-saving and is biased against imports, and (d) there has been a rapid decline of export supply price-elasticity which may be attributable to the rapid growth of export share of GDP (from 4% in 1964 to 38% in 1983). The larger the relative size of export sector and the faster the rate of its growth, the harder will it be to expand export production by drawing own resources from the domestic sector.     

Heterogeneous labor and the dynamics of aggregate labor demand: Some estimations using panel data

In this article we pay attention to the conditions that make an aggregate labor demand equation consistent with the underlying model at a more disaggregated level when heterogeneity exists across firms or across workers. It is argued that this consistency rests on the condition that employment evolves in the same direction in all firms and for all skill levels.Moreover, it is shown empirically that even though the above condition is satisfied, satisfactory estimations of an aggregated model can hide misspecification problems that become apparent when one also estimates the underlying disaggregated models.     

On the relative importance of demand and supply shocks: a panel VAR study for US states

This article is a panel VAR study of demand and supply shocks in the USA using state-level data where structural shocks are decomposed into state idiosyncratic and common components. Decomposition suggests that in all instances, idiosyncratic state shocks rather than common shocks have larger impact and explain most variation in both the state-level unemployment rate and real gross state product. Further, demand shocks are the primary driving force in unemployment rate fluctuations, while both demand and supply are important in output movements to varying degree of impact and importance depending on the use of quarterly or annual data.     

LIML estimation of import demand and export supply elasticities

I apply limited-information maximum likelihood (LIML) to estimate import demand and export supply elasticities for a range of eurozone countries. The results highlight inconsistencies in the parameters estimated by LIML relative to an estimator that is robust to heteroskedasticity. The nature of the structural equations reveals complications generated by the limiting behavior of the parameters that can be replicated in finite samples. The results of simulations underscore improvements in parameter estimates in a three-dimensional panel, suggesting that the problem of limiting behaviour can be overcome in larger dataset/panels.     

Residential demand estimation for bundled fixed-line and wireless mobile broadband services

This article is the first investigation of residential Internet markets in Thailand, in particular Bangkok. Bangkok is an interesting market to study as it is Thailand’s most populous province, and supports an advanced economy. The study offers a comprehensive discussion of the process to obtain cross-price elasticity estimates when Internet services are bundled. Interestingly, the empirical results reveal positive cross-price effects, i.e. Internet alternatives are viewed as substitutes by respondents in this market. This finding is plausible as the services differ essentially in their model of delivery.     

Spatial analysis of municipal water demand: a panel data approach

While the municipal water demand literature is well developed, one area that is understudied is the impact of spatial effects. After controlling for factors shown to impact demand, this study applies spatial econometric methods via a spatial weights matrix to a panel municipal water consumption data set. While diagnostics suggest the presence of spatial lag and spatial error, thus indicating the potential usefulness of spatial empirical methods, several important pitfalls must be acknowledged. First, the application of spatial weights in a panel setting is computationally intensive, especially when the number of time periods or observations is large, and perhaps necessitates aggregation. Second, because most users in a municipality are likely to be subject to similar utility action, climate, etc., a spatial lag signal may be spurious. Third, because premises served by the utility may enter or exit the data set through time, the requirement of balanced panels requires careful consideration. Fourth, if the option to use premises-level (or similar) data or aggregated data is available, it is typically advisable to use premises-level data despite the possible presence of spatial effects.     

An estimation of Feldstein's dynamic adjustment model for physicians' services with Austrian data

Zusammenfassung Eine anhaltende Überschußnachfrage nach Arzt-Diensten (Feldstein, 1970: Permanent Excess Demand Hypothesis) läßt sich im Bereich der Primärnachfrage als Folge sogenannten moralischen Hasardierens der Patienten und im Bereich der Sekundärnachfrage als Folge einer Nachfrageinduktion durch einkommensmaximierende Mediziner erklären. Da die Überschußnachfrage-Hypothese eine Überversorgung mit Arzt-Diensten auf Grund einer umfassenden Krankenversicherung impliziert, wurde sie in der gesundheitspolitischen Diskussion heftig bestritten. Feldstein (1970) bestätigte für die Vereinigten Staaten die Existenz einer anhaltenden Überschußnachfrage. Unter geringfügigen Abänderungen liefert das Feldstein'sche Modell für Österreich für die private (Zusatz-)Krankenversicherung inhaltlich das gleiche Ergebnis. Um die Genannte Hypothese auch für die öffentliche Krankenversicherung, die in Österreich weitaus bedeutsamer ist als die private, zu untersuchen, wurde eine andere Methode gewählt. Statt eines ökonometrischen Modells wurden zwei Intensitätsresiduen aus trivial-arithmetischen Beziehungen zwischen Wachstumsraten gebildet. Sowohl die Intensivierung der Behandlung der einzelnen Patienten wie die Erhöhung der Zehandlungen pro Arzt im Zeitraum von 1964 bis 1980 spricht für eine Bestätigung der obigen Hypothese.

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For helpful comments I am indepted to W. Schönbäck and two unknown referees.     

Nonlinearity in dynamic adjustment: Semiparametric estimation of panel labor supply

We estimate a semiparametric dynamic panel data model by the local linear kernel method and we interpret the slope of the nonparametric component function as a varying slope coefficient. Thus, the slope coefficient is a smooth, but otherwise unknown, function of some of the regressors. A Monte Carlo experiment is reported to examine the finite sample performance of the local linear estimator. We apply the estimation method to a labor supply equation for men from the triannual Survey of Income and Program Participation (SIPP). Specification tests based on the estimated labor supply elasticities, partial adjustment coefficients, and residuals demonstrate the improvements from a semiparametric partially linear model. Our empirical results point to a need by economists to revisit the issue of the speed of labor market adjustment to policy induced shifts in labor demand and to take more formal econometric account of heterogeneity in wage effects when studying the distributional consequences of tax reforms for labor supply earnings. First version received: July 2000/Final version received: January 2001     

Asymptotically unbiased estimation of autocovariances and autocorrelations for panel data with incidental trends

We consider the estimation of autocovariances using panel data with incidental trends under double asymptotics. The conventional autocovariance estimator suffers from a bias whose value is approximated by twice the long-run variance. We propose a bias-corrected estimator.     

Reassessing forest products demand functions in Europe using a panel cointegration approach

In a panel of European countries, we analyse paper products, sawnwood and wood panels consumption data. With this object, we use a classical demand model where national consumption depends on real GDP and real prices. In contrast to previous panel estimations in the literature, we highlight non-stationarity time series which can lead to spurious regressions. We explicitly take into account the issue by using recent panel cointegration techniques. Cointegration is present for printing paper and fibreboard, though less clear cut for other products. Then we estimate demand elasticities and find that GDP elasticities are significantly lower than estimates from the literature. Finally, we simulate the implications of modified demand elasticities by using a partial equilibrium model of the forest sector. For most products, changes in elasticities would lead to lower projected demand and lower prices over a 20-year time horizon. Lower demand for solid wood and wood fibre would lead to less tensions with fuel wood- and wood-based chemical markets. In a context of rising interest for renewable bio-based products, updated long-term demand models contribute to the analysis of the forest sector’s sustainability.     

Modelling money demand for a panel of eight transitional economies

In this article, we estimate money demand functions for a panel of eight transitional economies, using quarterly data for the period 1995:01 1995 to 2005:03. We find that real M1 and real M2 and their determinants, namely real income and short-term domestic interest rate, are cointegrated, both for individual countries as well as for the panel. Long-run elasticities suggest that consistent with theory, real income positively and nominal interest rate negatively impact real money demand. Our test for panel Granger causality suggests short-run bidirectional causality between M1 and M2 and their determinants. Finally, our tests for stability of the money demand functions reveal more cases of unstable money demand functions when M2 is used as a proxy for money demand.     

An estimation of the future demand for portable Internet service in Korea

Portable Internet service (PIS), which refers to wireless Internet service that can be accessed via a portable terminal at every time and at any place, is scheduled to be launched in Korea in early 2006. Thus, both the government and the industry need to obtain quantitative information on the future demand for the service. This study attempts to estimate future demand for the PIS, to analyze the determinants of the demand, and to conduct pre-test-market evaluation of the service. To this end, the dichotomous choice contingent valuation method is employed. On the whole, respondents accepted the contingent market and were willing to contribute a significant amount, on average. This willingness varies according to individual characteristics. Finally, the study discusses the importance of including valuation method in a pre-test-market evaluation of the PIS and presents the implications of the results, such as the mean willingness to pay (WTP) and the effects of individual characteristics and concerns about the service on the WTP.     

An econometric assessment of telecommunications prices and consumer surplus in Mexico using panel data

We analyze telecommunications prices in Mexico by using a panel data of countries similar to Mexico to estimate demand models for mobile and fixed-line telecommunications. We find that Mexico’s actual mobile and fixed-line prices are below the predicted prices based on similar countries’ prices. Mexican consumers are paying lower prices than what one would expect based on comparisons of comparable countries. We calculate that in 2011 Mexican consumers received at least $4–$5 billion (USD) in consumer surplus from these lower mobile prices and in 2010 they received over $1 billion (USD) in consumer surplus from these lower fixed-line prices. These findings are in contrast to the general perception that concentrated telecommunications markets in Mexico are resulting in high prices and harming consumers.     

GMM estimation of panel data models with time-varying slope coefficients

A difference/system generalized method of moments (GMM) model that imposes time-constant coefficients is common in empirical studies using panel data. However, a rejection by the Sargan–Hansen test is sometimes a serious concern for researchers. We highlight the fact that the Sargan–Hansen test for GMM estimators applied to panel data is a joint test of valid orthogonality conditions and coefficient stability over time. A possible reason for a rejection is therefore that the slope coefficients vary over time. One solution is to estimate an empirical model in which the coefficients are time specific. We apply this solution to the system GMM estimator of simple nondynamic Cobb–Douglas production functions for a selection of Swedish industries and find that relaxing the assumption of constant slope coefficients results in more satisfactory outcomes of the Sargan–Hansen test.     

Demand for international telephone traffic in Spain: An econometric study using provincial panel data

In this study we model the demand for outgoing international telephone traffic in Spain. We make use of a standard theoretical framework that incorporates the special characteristics of this type of telephone service. Consequently, equations for real expenditure per line and for the number of international calls per line are estimated.We use annual data for the 50 Spanish provinces for the period 1985–1989, and employ appropriate panel data techniques. The selected equations (one for expenditure per line in international traffic and another for the number of international calls per line) pass a battery of diagnostics. We conclude that this type of traffic, whether measured by expenditure per line or by the number of international calls per line, presents both high income and price elasticities. Moreover we find that price and income affect both the number of calls and their average duration.Likewise, we find a significant increase in social welfare when a tariff rebalancing that maintains the profit of the operating company is carried out.     

A panel data approach to the demand for money and the effects of financial reforms in the Asian countries

Alternative panel data estimation methods are used to estimate the cointegrating equations for the demand for money (M1) for a panel of 14 Asian countries from 1970 to 2005. The effects of financial reforms are analyzed with estimates for two sets of sub-samples and two break dates. Our results show that money demand function has been stable and financial reforms are yet to have any significant effects. Since there is no evidence for instability in the demand for money, the central banks of these countries should use money supply, instead of the rate of interest, as the monetary policy instrument.     

Inequality and development: Evidence from semiparametric estimation with panel data

Evidences from nonparametric and semiparametric unbalanced panel data models with fixed effects show that Kuznet’s inverted-U relationship is confirmed when economic development reaches a threshold. The model tests justify semiparametric specification. The integrated net contribution of control variables to inequality reduction is significant.     

Reducing urban public transport costs by tendering lots: a panel data estimation

Allotment is, for urban authorities, a governance strategy to reduce public transport costs. It consists of dividing a network into several lots, so as to multiply the number of calls for tender. On the one hand, gains should be obtained by increasing competition for the market and reducing the costs of obtaining accurate information. On the other hand, cutting a network into several parts is also expected to have negative consequences on production costs, in terms of lower returns to scale. Many industry stakeholders believe that the latter element more than compensates for the former. In this article, we estimate a translog cost function with a panel of 141 French urban public transport networks. Our main conclusion is that scale economies are exhausted for a production of about 3 million vehicle-kilometres per year. Therefore, as far as returns to scale are concerned, allotment would reduce the costs of public transport services for the main cities of our sample. A second dividend for allotment is then presented and implies that the assumed trade-off between returns to scale and increased competition is irrelevant.     

Household demand for fats and oils: two-step estimation of a censored demand system

A censored system of household fat and oil demand equations is estimated with a two-step procedure, using cross-sectional data from the 1987–1988 US Nationwide Food Consumption Survey. Own price and total expenditure elasticities are close to unity and there is no evidence of gross substitutability. Compensated elasticities suggest net substitution among the products considered.