Semi‐parametric estimation of consumption‐based equivalence scales: the case of Germany

Consumption‐based equivalence scales are estimated by applying the extended partially linear model (EPLM) to the 1998 German Income and Consumption Survey (EVS). In this model the equivalence scales are identified from nonlinearities in household demand. The econometric framework should not therefore impose strong restrictions on the functional forms of household expenditure shares. The chosen semi‐parametric specification meets this requirement. It is flexible, it yields ‐consistent parameter estimates and it is consistent with consumer theory. Estimated equivalence scales are below or in the range of the expert equivalence scales of the German social benefits system. Copyright © 2006 John Wiley & Sons, Ltd.     

Property tax and urban sprawl: Theory and implications for US cities

We develop a model that adopts a log-linear utility function with a variable elasticity of substitution greater than one and show that increasing the property tax reduces city size unambiguously. We then test this result using a dataset of effective property tax rates we developed using GIS methods for 448 urbanized areas. The empirical analysis estimates a regression equation relating an urbanized area's size to the property tax rate measure and other control variables such as population, income, agricultural rent, and transportation expenditure. We find that higher property taxes indeed result in smaller cities.     

Estimating school district expenditure functions under conditions of closed-end matching aid

Several studies have used ordinary least squares (OLS) to estimate school district expenditure functions for states with closed-end matching aid. The present paper demonstrates that the estimates of these studies may be inconsistent. A two-stage technique which guarantees consistent estimates is described and is used to estimate the price elasticity of expenditure for Pennsylvania school districts. The two-stage estimates indicate expenditure to be substantially more price-elastic than do the OLS estimates. The two-stage technique is appropriate for estimating any input demand or expenditure function when closed-end matching aid is involved.     

Substitution Bias and Cost of Living Variability for U.S. Demographic Groups:

A bstract . Intertemporal cost of living variability is analyzed for households with differing income levels and family characteristics. These indexes are based upon the parameter estimates of a comprehensive system of expenditure equations, the quadratic expenditure system. Despite considerable differences in the group-specific share parameters as well as nonlinearities in the Engle curves for each group, little variation occurs in these indexes for several U.S. price series over the 1967–1984 time period. As a result, we find little evidence that group-specific fixed weight indexes are better cost of living approximations than a general Consumer Price Index even though all substitution bias estimates, by income and household type, are quite small.     

Diagnostic Tests for the Necessity of Weight in Regression With Survey Data

To weight or not to weight in regression analyses with survey data has been debated in the literature. The problem is essentially a tradeoff between the bias and the variance of the regression coefficient estimator. An array of diagnostic tests for informative weights have been developed. Nonetheless, studies comparing the performance of the tests, especially for finite samples, are scarce, and the theoretical equivalence of some tests has not been investigated. Focusing on the linear regression setting, we review a collection of such tests and propose enhanced versions of some of them that require an auxiliary regression model for the weight. Further, the equivalence of two popular tests is established which has not been reported before. In contrast to existing reviews with no empirical comparison, we compare the sizes and powers of the tests in simulation studies. The reviewed tests are applied to a regression analysis of the family expenditure using the data from the China Family Panel Study.     

Increasing the price variation in a repeated cross section

Insufficient price variation seriously hampers many applications of consumer demand models. This paper examines the empirical performance of a potential remedy for this problem that was suggested by [Lewbel, A., 1989. Identification and estimation of equivalence scales under weak separability. Review of Economic Studies 56, 311–316], the construction of individual specific price indices for bundles of goods. These individual specific price indices allow for a population with heterogeneity in preferences for goods within a given bundle of goods. We confine ourselves to heterogeneous Cobb Douglas within bundle preferences, while between bundles, we allow for several parametric and even general nonparametric specifications. In a variety of settings, we show that such prices produce superior empirical results than the ones obtained through the traditional practice of using aggregate price indices. Our empirical analysis is based on the British Family Expenditure Survey data, and uses several categories of food. Both in parametric as well as nonparametric models, we obtain higher precision of estimates for parameters or functions, as well as economically more plausible results.     

Does expenditure in public governance guarantee less corruption? Non-linearities and complementarities of the rule of law

Corruption is an endemic societal problem with profound implications in the development of nations. In combating this issue, cross-national evidence supporting the effectiveness of the rule of law seems at odds with poorly realized outcomes from reforms inspired in the academic literature. This paper provides an explanation for such contradiction. By building a computational approach, we develop three methodological novelties into the empirical study of corruption: (1) modeling government expenditure as a more adequate intervention variable than traditional indicators, (2) generating large within-country variation by means of bottom-up simulations (instead of cross-national data pooling), and (2) accounting for all possible interactions between covariates through a spillover network. Our estimates suggest that, the least developed a country is, the more difficult it is to find the right combination of policies that lead to reductions in corruption. We characterize this difficulty through a rugged landscape that governments navigate when changing the total budget size and the relative expenditure towards the rule of law. Importantly our method helps identifying the—country-specific—policy issues that complement the rule of law in the fight against corruption.

     

政府审计、公款消费与费用操纵

采用双重差分方法实证检验政府审计对国有企业公款消费的影响,研究发现：在政府审计介入当年及以后年度,被审计的国企控股上市公司消费性现金支出费用化率和波动性显著下降,公款消费实质性减少,公款消费计入存货的费用操纵行为显著减少,政府审计对公款消费的监督和治理职能得以证实;然而,管理层仍然可能会将消费性现金支出转入非流动资产处置损失等营业外支出科目,并且在政府审计介入之后,消费性现金支出的粘性并没有显著降低,可见政府审计并没有完全解决公款消费相关的代理问题。     

Nonparametric function estimation subject to monotonicity, convexity and other shape constraints

This paper uses free-knot and fixed-knot regression splines in a Bayesian context to develop methods for the nonparametric estimation of functions subject to shape constraints in models with log-concave likelihood functions. The shape constraints we consider include monotonicity, convexity and functions with a single minimum. A computationally efficient MCMC sampling algorithm is developed that converges faster than previous methods for non-Gaussian models. Simulation results indicate the monotonically constrained function estimates have good small sample properties relative to (i) unconstrained function estimates, and (ii) function estimates obtained from other constrained estimation methods when such methods exist. Also, asymptotic results show the methodology provides consistent estimates for a large class of smooth functions. Two detailed illustrations exemplify the ideas.     

Fiscal Policy and Economic Growth

This paper surveys the literature on fiscal policy and economic growth. We present a unifying framework for the analysis of long run growth implications of government expenditures and revenues. We find that several tax rates and expenditure categories exhibit a direct impact on the growth rate of the economy. In a creative synthesis we have assigned the relevant literature to the twelve introduced policy variables. Due to the equivalence of some policy variables we are left with six degrees of freedom, where we need four to internalize the model's intrinsic externalities, leaving two instruments to conduct short run fiscal policy.     

Strategies for measuring risk in public use microdata files

Statistical agencies have the responsibility to design data release strategies which will not violate pledges of nondisclosure either through intent or neglect. In addition to ethical and legal concerns, statistical offices must be mindful that violating pledges of confidentiality may undermine an agency's ability to collect data due to loss of public trust. Statistical organizations also have the obligation to make information available to a variety of individuals and institutions to allow for informed discussion from differing perspectives on a range of issues. However, it is through fine, accurate detail on a file that risks of disclosure arise. In this report we discuss strategies for controlling risk in the release of public use microdata files. The equivalence class structure of a microdata file is defined and we show how the classic entropy function can be employed on the equivalence class structure to provide a measure of relative risk.     

Investment Frictions and the Aggregate Output Loss in China

Investment frictions reduce, delay or protract investment expenditure that is necessary for firms to capture growth opportunities. Using a capital adjustment costs framework, this article estimates the gap between China's actual and frictionless aggregate output. It applies the method of simulated moments to a fully structural investment model on a panel of Chinese firms and takes into account potential unobserved heterogeneities and measurement error in the data. The estimated capital adjustment costs imply that if Chinese firms had faced a lower level of adjustment costs such as in the US, China's aggregate output would be 25% higher.     

Afriat’s Theorem and Samuelson’s ‘Eternal Darkness’

Suppose that we have access to a finite set of expenditure data drawn from an individual consumer, i.e., how much of each good has been purchased and at what prices. Afriat (1967) was the first to establish necessary and sufficient conditions on such a data set for rationalizability by utility maximization. In this note, we provide a new and simple proof of Afriat’s Theorem, the explicit steps of which help to more deeply understand the driving force behind one of the more curious features of the result itself, namely that a concave rationalization is without loss of generality in a classical finite data setting. Our proof stresses the importance of the non-uniqueness of a utility representation along with the finiteness of the data set in ensuring the existence of a concave utility function that rationalizes the data.     

Median unbiased estimates for M.L.R.-families

Summary Lehmann [p. 83] has shown that some families of probability measures with monotone likelihood ratios (m.l.r.) admit median unbiased estimates which are optimum in the sense that among all median unbiased estimates they minimize the expected loss for any loss function which assumes its minimal value zero for the “true” parameter value and is nondecreasing as the parameter moves away from the true value in either direction. This very strong optimum property was proved under the assumption that all probability measures of the m.l.r.-family have continuous distribution functions, that they are mutually absolutely continuous and that each element of the support is the median of somep-measure of the family. This result does therefore not cover important cases such as the binomial families or thePoisson family. The purpose of the present paper is to show the existence ofrandomized median unbiased estimates with the same optimum property for m.l.r.-families which are closed and connected with respect to the strong topology. Such families are always dominated. We do, however, neither assume that thep-measures are mutually absolutely continuous nor that the distribution functions are continuous. We remark that the use of randomized estimates is indispensable here because nonrandomized median unbiased estimates do not always exist in the general case.     

THE DEMAND FOR GASOLINE: EVIDENCE FROM HOUSEHOLD SURVEY DATA

In this paper we investigate the demand for gasoline in Canada using recent annual expenditure data from the Canadian Survey of Household Spending, over a 13‐year period from 1997 to 2009, on three expenditure categories in the transportation sector: gasoline, local transportation, and intercity transportation. In doing so, we use three of the most widely used locally flexible functional forms, the Almost Ideal Demand System (AIDS) of Deaton and Muellbauer (1980), the quadratic AIDS (QUAIDS) of Banks et al. (1997)—an extension of the simple AIDS model that can generate quadratic Engel curves—and the Minflex Laurent model of Barnett (1983), which can also generate quadratic Engel curves. We pay explicit attention to economic regularity, argue that unless regularity is attained by luck, flexible functional forms should always be estimated subject to regularity as suggested by Barnett (2002), and impose local curvature to produce inference consistent with neoclassical microeconomic theory. Our findings indicate that the curvature‐constrained Minflex Laurent model is the only model that is able to provide theoretically consistent estimates of the Canadian demand for gasoline. Our estimates show that the own‐price elasticity for gasoline demand in Canada is between ? 0.738 and ? 0.570 —less elastic than previously reported in the literature. Copyright © 2013 John Wiley & Sons, Ltd.     

Bayesian loss given default estimation for European sovereign bonds

We develop and apply a Bayesian model for the loss rates given defaults (LGDs) of European Sovereigns. Financial institutions are in need of LGD forecasts under Pillar II of the regulatory Basel Accord and the downturn in LGD forecasts under Pillar I. Both are challenging for portfolios with a small number of observations such as sovereigns. Our approach comprises parameter risk and generates LGD forecasts under both regular and downturn conditions. With sovereign-specific rating information, we found that average LGD estimates vary between 0.46 and 0.64, while downturn estimates lay between 0.50 and 0.86.     

Euromind‐ : A Density Estimate of Monthly Gross Domestic Product for the Euro Area

EuroMInd‐ is a density estimate of monthly gross domestic product (GDP) constructed according to a bottom‐up approach, pooling the density estimates of 11 GDP components, by output and expenditure type. The components' density estimates are obtained from a medium‐size dynamic factor model handling mixed frequencies of observation and ragged‐edged data structures. They reflect both parameter and filtering uncertainty and are obtained by implementing a bootstrap algorithm for simulating from the distribution of the maximum likelihood estimators of the model parameters, and conditional simulation filters for simulating from the predictive distribution of GDP. Both algorithms process the data sequentially as they become available in real time. The GDP density estimates for the output and expenditure approach are combined using alternative weighting schemes and evaluated with different tests based on the probability integral transform and by applying scoring rules. Copyright © 2016 John Wiley & Sons, Ltd.     

What do women want? Female suffrage and the size of government

The economic literature has attributed part of the increase in government expenditure over the 20th century to female voting. This is puzzling, considering that the political science literature has documented that women tended to be more conservative than men over the first half of the 20th century. We argue that the current estimates of this relationship are afflicted by endogeneity bias. Using data for 46 countries and a novel set of instruments related to the diffusion of female suffrage across the globe, we find that, on average, the introduction of female suffrage did not increase either social expenditures or total government expenditure.     

Building the Knowledge Stock: Lags,Depreciation, and Uncertainty in R&D Investment and Link with Productivity Growth

The search for an appropriate methodology to investigate the relation between R&D investment, knowledge stock and productivity growth is the main purpose of the paper. In analogy with physical assets, we present a model of knowledge capital formation which allows the calculation of the relevant user cost, as well. The proposed model accumulates R&D investment based on a stochastic gestation lag and a geometric depreciation of the stock. The basic parameters underlying the lag structure differ according to the types of research expenditure. The approach is applied to public R&D investment in Italian agriculture; the results provide interesting information about the economic structure of public research effort in Italian agriculture and plausible estimates of its internal rate of return.     

Demand for durable and nondurable goods,environmental policy and consumer welfare

If a tax on energy affects the demand for a nondurable good, the stock of a durable good, and the proportion of the energy consumption per unit of service of the durable good, an integrated approach for investigating consumer demand for durables and nondurables is required. The purpose of this paper is to employ the concept of a variable expenditure function with quasi-fixed durable goods as arguments in order to derive a demand system for nondurable goods in prices of the nondurables, in the stocks of durables, and in variable expenditure. From the envelope condition desired stocks of durables can be calculated and investment demand for durables can be determined. For an application we choose a variable expenditure function based on the almost ideal demand specification, and evaluate alternative environmental policy measures using the equivalent variation for comparing the welfare effects.