THE STRUCTURE OF ECONOMETRIC ANALYSIS

Books reviewed in this article:
C. W. J. Granger, ed. (1990) Modelling Economic Series: Readings in Econometric Methodology. Oxford:
L. G. Godfrey (1988) Misspecification Tests in Econometrics: The Lagrange Multiplier Principle and Other Approaches. Cambridge:
Denis Sargan (Meghnad Desai, ed.) (1988) Lectures on Advanced Econometric Theory. Oxford:     

THE ECONOMETRIC ANALYSIS OF ECONOMIC POLICY

The application of econometric analysis to the process of economic policy formulation is considered. A framework is provided by the theory of reduction, specifically reductions where key information losses would invalidate policy. Consequently, model evaluation; the role of econometric models; forecasting; exogeneity; causality; constancy and invariance; unobservables; seasonality; and data integrability are considered, together with specific policy issues where econometrics can clarify the problems.     

IS THE WORLD SHORT OF SAVINGS?

The opening up of Eastern Europe may give rise to a surge in investment as the former socialist economies move to a market-based system. The scope for modernization of the region in terms of its industrial, environmental and social capital raises the question of how the increase in demand can be accommodated. Since the Ergonomic shock of the early 1980s, most of the world's net saving has been provided by Japan and West Germany in the form of huge current account surpluses. If GMU now implies a significant drop in German savings, does this mean, as the OECD has recently suggested that there is a risk that world savings will be inadequate?     

THE IMPACT OF ETHNIC HETEROGENEITY ON EDUCATION SPENDING: A SPATIAL ECONOMETRIC ANALYSIS OF UNITED STATES SCHOOL DISTRICTS

In the public finance literature it is well understood that a community's spending can be affected by neighboring communities’ spending. It is relatively straightforward to see why these spillovers exist. For example, if a school district increases its spending on public education, this could affect the spending level of neighboring school districts. This paper uses spatial analysis to test the hypothesis that a school district's ethnic heterogeneity affects support for public education. Using a Spatial Lag Model and a national panel of U.S. school districts, I find that spatial dependence does exist in the data and that ethnic heterogeneity is negatively related to school district spending.     

THE ECONOMETRICS OF THE HOLY GRAIL — A REVIEW OF ECONOMETRICS: ALCHEMY OR SCIENCE? ESSAYS IN ECONOMETRIC METHODOLOGY

Books reviewed in this article: David F. Hendry (1993) Econometrics: Alchemy or Science? Essays in Econometric Methodology     

THE ORGANIZATION OF INNOVATION IN THE UNITED STATES AND JAPAN: NEOCLASSICAL AND RELATIONAL CONTRACTING*

This article discusses the role of intermediate governance structures between vertically related industries in the specific context of technological innovation. In the United States, relations between firms in vertically related industries correspond closely to the neoclassical contracting model, characterized by arms-length, spot contracting on the open market. In Japan, inter-firm relations are more likely to involve relational contracting, characterized by stable bonding mechanisms and a dense historical network of economic ties between the parties to the exchange. We focus upon the kinyu keiretsu type of relational contracting between firms of unequal size and power in vertically related industries, which is a special case of the more generally studied kigyo shudan, or inter-market financial group. For illustrative purposes, we compare the contractual arrangements used to manage the development of new technology by 46 US and 27 Japanese semiconductor equipment firms. We conclude by speculating that the organization of innovation in the Japanese semiconductor equipment industry has accelerated their development of new technology and led to their extraordinarily rapid worldwide market penetration.     

THE FUTURE OF THE PANAMA CANAL IN A COMPETITIVE WORLD*

With the termination of the Panama Canal Treaty, a new mode of canal operation can be expected. The treaty affects the transfer of the Panama Canal from the United States to the Government of Panama at the end of the year 1999. Whether or not the Panamanian Government will maintain the current price of canal passage is the major concern of this paper. This paper forecasts the future traffic in the canal, and examines possible changes in canal pricing along with possible actions of canal users, under the framework of a gaming situation. The feasibility of building a new canal is also examined.