The effect of tax rates and uncertainty on contributory crowding out

This uncertain dictator experiment found support for partial crowding out. Ninety-seven percent of private contributions were crowded out when tax rates were increased from 0 to 10 percent of income. Subjects who were uncertain whether they would be the donor or charity recipient pledged larger contributions and had lower levels of crowding out. Crowding out appeared asymmetric in that decreases in government contributions did not stimulate equivalent increases in private contributions. In the case of certainty, donors actually decreased contributions when government contributions decreased. The donor's gender did not influence contributory behavior.Funding for this experiment was provided by the Dean of the School of Business and Public Affairs.     

ON COMPARING MACROECONOMIC MODELS USING FORECAST ENCOMPASSING TESTS

ABSTRACT It is clearly of interest to macroeconomists to be able to evaluate whether one large-scale macroeconometric model ‘is better’ than another. Although comparisons between models are sometimes invidious, because the purposes for which the models were built differ, it is the case that formal comparisons of two models' statistical properties are rare. This is in spite of considerable theoretical advances in the econometric methodology, namely the development and use of non-nested and encompassing tests. Chong and Hendry (1986) advocate the use of the forecast encompassing regressions, where the outturns are regressed on competing (one-step-ahead) forecasts. This paper reports the findings of applying this rather easy-to-use method of comparing large scale macroeconometric models. The forecast data we use are those published by three macroeconometric modelling groups, namely: Liverpool; the National Institute; and The London Business School. Forecasts for up to three years ahead are published for unemployment, growth, and inflation, throughout the 1980's. Forecast encompassing tests fail to separate one model from another, based on one-year-ahead forecasts. Each model ‘wins’ once. However, the conclusions are not the same as using root-mean-square-forecast-error criteria, illustrating Clements and Hendry's (1994) observation that minimum root-mean-square-forecast-error is neither necessary nor sufficient for a model to have constant parameters, to provide accurate forecasts, or to encompass its rivals.     

Innovation pathway to profitability: the role of entrepreneurial orientation and marketing capabilities

Drawing from the marketing capabilities and innovation literatures, we identify aprocess by which a firm’s entrepreneurial orientation impacts profits and show that it is dependent on marketing capabilities. Using a half-longitudinal design we integrate survey data with performance metrics over two time periods, from a sample of 190 firms. While the effect of entrepreneurial orientation (EO) on innovation is enhanced by architectural marketing capabilities, the effect of innovation outcomes on profits is enhanced by specialized marketing capabilities. Ultimately, the pathway from EO to performance, mediated by innovation, is positively significant at higher levels of both marketing capabilities. The results uncovered using Bayesian conditional process modeling, are robust to alternate model specifications, endogeneity tests, and provide insights into the capabilities-based understanding of entrepreneurism-marketing interface. We discuss resource allocation implications for managers as they attempt to maximize profits through innovation.     

Comments on “Black Americans in the 21st Century: Should We Be Optimistic or Concerned?”

In “Black Americans in the 21st Century: Should we be Optimistic or Concerned?”, Dr. Angel Harris discusses a number of facts about the myriad gaps in performance between black Americans and white Americans. In what follows, I present evidence that suggests that a combination of race-conscious policies and early-childhood investments should be included in any policy that seeks to reduce the gaps in performance between black Americans and white Americans.     

The existence of a real value-added function in the Canadian manufacturing sector

Sims (1969), Gordon (1969), and Arrow (1972) have demonstrated that the capability of using real value-added to measure the output of a sector when material inputs are employed in the production process rests upon primary factor inputs being weakly separable from material inputs. In Canada, the double deflation technique is used by Statistics Canada to measure the real value-added output of an industry; this technique assumes strong separability. This paper tests both of these separability hypotheses for the Canadian manufacturing sector using data from 1950 to 1972 and a translogarithmic production function. Our tests lead us to reject both the strong and weak separability hypotheses. Furthermore, our estimates of the Allen partial elasticity of substitution of capital for labor are radically different from the results of previous Canadian studies.