Committing and reneging: A dynamic model of policy regimes

Actual policy decisions are made in real time and are not irrevocable, but most policy modeling has largely neglected these mundane factors. In an environment of uncertainty, the ability to switch policies adds an option value to the choice problem. This “option to wait” makes the incumbent regime relatively more attractive (compared to the traditional once-and-for-all analysis), as does increased uncertainty, which increases the value of the option. Furthermore, because the commitment decision takes place in real time, policy choice displays hysteresis.     

A simultaneous equations model of the educational process

This paper models the educational process as a system of six simultaneous equations. The endogenous variables include a student's achievement, motivation, expectations, efficacy, and perceived parents' and teachers' expectations. The model also includes forty-eight individual, home, peer, teacher, and school exogenous variables. Using a sample of over sixteen thousand twelfth grade students from the Equality of Educational Opportunity survey, we estimate the model by two-stage least squares and present the reduced form and structural form equations. We find that many educational outputs jointly determine one another. Also, the results suggest that school and teacher variables have important effects on educational outcomes.     

A dynamic model of endogenous trade policy

Empirical evidence suggests that past levels of protection are significant determinants of current levels of protection. We investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies. We explore these intertemporal links in a small open economy in which lobbying and tariff policies are the outcome of a dynamic game among factor owners. The model can generate cycles with prolonged periods of free trade and/or prolonged periods of restricted trade (i.e., persistent trade policies). An interesting aspect of the environment is the role of lobbying as a partial substitute for intertemporal trade. JEL Classification: F13, C73
Un modèle dynamique de politique commerciale endogène. Les résultats d'analyses empiriques montrent que les niveaux passés de protection sont des facteurs importants dans l'explication des niveaux de protection actuels. Ce mémoire analyse les interactions dynamiques entre groupes d'intérêt et les liens endogènes qui en résultent entre les politiques commerciales présentes et futures. On explore ces liens intertemporels dans une petite économie ouverte où lobbying et politiques tarifaires sont le résultat d'un jeu dynamique entre les propriétaires des facteurs de production. Le modèle peut engendrer des cycles où on observe des périodes prolongées de libre commerce et/ou des périodes prolongées de commerce restreint (i.e. des politiques commerciales persistantes). Il appert que le rôle du lobbying est un substitut partiel pour le commerce intertemporel.     

A simultaneous equations model of finance and growth: FIML estimates for India

In the relationship between economic growth and financial development, it is generally conceded that both variables are likely to be interdependent. However, no attempt has been made so far to estimate a simultaneous equations model to test whether finance causes growth or vice versa. This article uses the Full Information Maximum Likelihood (FIML) method to estimate a two equations model of growth and finance for India to determine the strength of this interdependence. Our results show that Financial Developments (FD) have a small but significant permanent growth effect. However, there is no evidence to support the view that ‘where enterprise leads, finance follows’.     

Female earnings and the divorce rate: a simultaneous equations model

Economists have contributed a great deal of research, both theoretical and empirical, to the study of marital formation and dissolution. Many empirical examinations of marriage and divorce rates exist based on Becker's seminal contributions to the literature. All of these divorce studies are single equation models, with female earnings assumed exogenous. As discussed by Becker (1981), however, causality may run in the opposite direction as well: the divorce rate may influence female earnings. This paper estimates a simultaneous equations model in which divorce rates and female earnings are the jointly endogenous variables. Data are by state, for 1960, 1970, 1980 and 1990. The state-wide divorce rate equation is an extension of Waters and Ressler (1999), and the specification of a state-wide earnings equation follows standard human capital theory. The specification of joint endogeneity between female earnings and the divorce rate allows valid inferences to be made regarding the effect of female earnings on divorce for the first time. Most previous single equation studies of divorce have found that increases in female earnings significantly increase divorce rates. A simultaneous equations model will allow inferences to be made regarding the possibility of joint determination, which may cause a reevaluation of previous results.     

Structure,conduct and performance: a simultaneous equations approach

A simultaneous equations framework is used to study the relationship between structure, conduct and performance in US manufacturing in the 1980s and 1990s. The paper expands on earlier structure-conduct-performance studies by using a lag structure to signify that structure, conduct and performance do not affect one another contemporaneously. Findings support some aspects of the traditional structure-conduct-performance model, but challenge others. First, the data suggest that industry structure does not depend on current industry performance. Second, little evidence is found that industry conduct, proxied by advertising, is affected by industry structure. Third, results show that industry performance does not depend on industry conduct, though it is sensitive to industry structure. The main findings are that (1) concentration does not depend on firm profitability, though profitability depends on concentration, (2) advertising follows a process that is independent of the factors considered here, and (3) advertising seems to have no effect on profitability.     

A comparative dynamic analysis of a growth model under alternate policy regimes

Comparative dynamic analysis is conducted on a growth model with variable price levels and wage rates. A perturbation technique is used to compare the economy's time paths near a balanced growth path in response to alternate policy regimes. Various dynamic policy multipliers are calculated in response to some of the alternate policy regimes such as the balanced-budget fiscal regime, the constant price regime, the full-employment regime, etc., to examine their dynamic implications on the economy's behavior. Temporary deviations in the fiscal variables are found to leave no permanent effects under all but one of the regimes examined.     

A simultaneous equations study of research and development intensity

This paper presents a simultaneous equations model of profitability, concentration, advertising, and research and development outlays. We find that research and development intensity tends to increase in more concentrated industries, although this effect is negated in industries where technological opportunities are excellent. Also, high levels of research and development may reduce concentration while tending to add to industry profitability. These results suggest that the government should not be concerned with the possibility of an adverse impact of market concentration on research and development, although the evidence suggests that certain high technology industries may be at a small risk.     

Earnings differentials and occupational segregation by gender: A simultaneous equations approach

Models of male/female earnings differentials which include explanatory variables such as occupational distribution and participation rates are criticized for failing to account for the simultaneity of the relationships involved. An alternative, eight-equation model of earnings differentials, participation differentials and occupational segregation is developed. Application of the model to Australian census data is discussed.     

Uncertainty,informational spillovers and policy reform: A gravity model approach

Reforms often occur in waves, seemingly cascading from country to country. We argue that such reform waves can be driven by informational spillovers: uncertainty about the outcome of reform is reduced by learning from the experience of similar countries. We motivate this hypothesis with a simple theoretical model of informational spillovers and learning, and then test it empirically using an approach inspired by the gravity model. We find evidence of informational spillovers both with respect to both political and economic liberalization. While the previous literature has focused only on economic reform, we find that the spillovers are particularly important for political changes.     

能源消费、结构突变与中国经济增长:1952-2005

能源是现代经济增长的必要支撑,但是在理论上,能源与经济增长的关系并不明确.本文采用向量误差修正模型结合结构穿变分析,实证检验基于生产函数的能源消费与中国经济增长的关系.结果显示,"大跃进"的终结与大庆油田的量产,引发产业结构与能源结构的变迁,导致1961年能源消费也现结构突变.这使得1952-2005年能源消费与中国经济增长之间不存在长期均衡关系,但1962-2005年二者间具有协整关系.在短期能源消费内生于经济增长,长期中经济增长是能源消费变动的诱因.需要指也的是,如果忽略产业结构的影响,会低估能源消费在经济增长中的作用.     

Technological forecasting at the Korean stock market: A dynamic competition analysis using Lotka–Volterra model

The purpose of this paper is to attempt to analyze the dynamic relationship between the Korean Stock Exchange (KSE) and Korean Securities Dealers Automated Quotation (KOSDAQ), two competing markets at the Korean stock market, in the viewpoint of technological forecasting of competition. The Lotka–Volterra system of equations, one well-known competitive diffusion models, is adopted to represent the competitive situations of the Korean stock market and it is estimated using daily empirical index data of KSE and KOSDAQ during 1997–2001. The results show that there existed a predator–prey relationships between two markets in which KSE acted as a prey for the time being after the emergence of KOSDAQ. This interaction was altered to symbiotic relationship and finally to pure competition relationship. We also perform an equilibrium analysis of the estimated Lotka–Volterra equations. As a result, we find that there is an equilibrium point in a dynamic sense. However, the equilibrium point could be unstable in the latest pure competition relationship.     

Basic needs fulfillment and economic growth: A simultaneous model

The relationship between basic needs fulfillment and productivity change is examined using a growth model which is explicitly simultaneous in national output and generalized measures of health, nutrition, and education. Consistent and relatively efficient parameter estimates are obtained through the application of three-stage least squares, using data from a large sample of poor countries in Africa, Asia, and Southern America. The results give support to the hypothesis that changes in basic welfare are strong contributors to labor productivity change, and conversely. In addition, they suggest substantial differences in the pattern of simultaneous interaction at different income and welfare levels.     

The dynamic behaviour of a simple macroeconomic model with a tax based incomes policy

Tax based incomes policies are studied in a mark-up pricing framework with adaptive expectations. Stability may be endangered by such polities. Implications of these stability effects for policy decisions are drawn.     

International migration,economic policy and human capital accumulation: a simulation study

"This paper examines the economic policy implications of international migration and human capital accumulation within a dynamic general equilibrium model. Each country produces by means of physical and human capital of two types (skilled and unskilled labour). Along optimal growth paths in a world of diverging population growth rates immigration can only be beneficial when the free rider effect (i.e., not paying for training costs) exceeds the capital dilution effect of an increase in population growth. Under quite general conditions the optimal immigration rate is zero."