On estimating the mean of the selected normal population under the LINEX loss function

Following Parsian and Farsipour (1999), we consider the problem of estimating the mean of the selected normal population, from two normal populations with unknown means and common known variance, under the LINEX loss function. Some admissibility results for a subclass of equivariant estimators are derived and a sufficient condition for the inadmissibility of an arbitrary equivariant estimator is provided. As a consequence, several of the estimators proposed by Parsian and Farsipour (1999) are shown to be inadmissible and better estimators are obtained. Received January 2001/Revised May 2002     

Trade and Renewable Resources in a Second Best World: An Overview

We provide an overview and introduction to the emerging field of trade and renewable resources, and discuss the potential impact of trade liberalization on welfare and resource conservation. A key factor determining the effect of trade reform is the institutional context or property rights regime, and our survey is organized such that it loosely follows the development of new insights with respect to institutions in this literature. This implies a transition from the benevolent planners model to the polar opposite benchmark of open access in the 1990s. Currently the pendulum is swinging back towards management and regulation, but institutions are treated as endogenous. We discuss and compare various key models in some detail and search for common ground between protagonists and antagonists of free trade. Paper based on Keynote address by Erwin Bulte, 12th Annual Conference of the European Association of Environmental and Resource Economists, Bilbao (Spain), June 28–30, 2003.     

Auctions for PURPA purchases: A simulation study

Competition was introduced into the electric utility industry with the passage of the Public Utilities Regulatory Policy Act (PURPA) of 1978. Increasing interest has appeared in structuring the PURPA purchase market into an auction system. This paper addresses the design issues associated with setting up such markets and introduces a simulation model to study them. The simulation analysis is guided by theoretical issues such as the alleged inefficiency of first-price auctions. We find that efficiency concerns raised about first-price auctions turn out to be less important than simple theoretical concerns would suggest.     

Employee Rights, Employee Responsibilities and Knowledge Sharing in Intelligent Organization

Much is currently being written about the need to encourage employees to share knowledge in order for companies to maintain a role as an intelligent organization in a technologically sophisticated environment. However, there is little written of the relationship between employee rights to satisfactory employment conditions, employee responsibilities in decision-making, and employee willingness to share their knowledge collaboratively. This paper seeks to redress this gap by discussing the importance of the relationship between employee rights and responsibilities and employee willingness to share knowledge. The reaction of a group of employees (academics) employed in an Intelligent Organization (university) to a reduction in their rights and responsibilities is discussed in order to design a framework of employee rights and responsibilities required for knowledge sharing in intelligent organizations.     

The Exchange Rate and Inflation in the UK

The United Kingdom is a highly open economy, and has a monetary policy strategy of targeting inflation in consumer prices. In this paper, we look at the evidence from the UK on inflation behaviour, and examine the propositions from several theoretical models about inflation dynamics in an open economy, focusing in particular on the hypothesized connections between the exchange rate and consumer price inflation. Theoretical open‐economy macroeconomic models ‘cover the waterfront’ on this issue, ranging from ‘exchange rate disconnect’ to a rigid link between nominal exchange rate changes and inflation. We estimate on UK data the open‐economy Phillips curves implied by the alternative explanations. We argue that, of the alternatives considered, only a model where imports are modelled as an intermediate good, as in McCallum and Nelson (1999) , provides a reasonable match with the data. Unlike the standard model, in which imports are treated as a final consumer good, the intermediate‐goods specification provides support for a policy of CPI inflation targeting.     

Reserve ratios: A proposal for change

The paper addresses the problem of Fed control of the money supply and the inherent instability of a fractional reserve banking system which Friedman covered in A Program for Monetary Stability. While Friedman proposed a 100 percent reserve requirement as a solution, this work suggests a change from imposing legal reserve ratios on specific liabilities to one of imposing them on total bank liabilities. Reserve ratios are compared to tax rates. Friedman's proposal is to increase the tax rate to 100 percent on specific liabilities and pay interest on reserve balances at the Fed. The proposal of this paper is to keep the tax rates (present reserve ratios) but change the tax base. It is shown that the Fed would gain control over the maximum expansion of banks, but would lose direct control over specific liabilities. The Fed would not tax some liabilities and subsidize others. The Fed could concentrate on setting the tone of the money market and allow the public to use whatever set of bank liabilities it desires as money without specific penalty.     

Bureaucrats as "Social Engineers": Federal Welfare Programs in Herbert Hoover's America

A bstract . Historians interested in 20th century American reform often seek to analyze the ideologies of political leaders separately from the institutions that these same leaders created. Such emphases on ideas, as opposed to actions, has, for example, led "revisionist" American historians to argue that the presidencies of Herbert Hoover and Franklin D. Roosevelt were "conceptually continuous." Our examination of the major social welfare programs undertaken by the federal government in the 1920s disputes this claim. Examination of the operations of the federal bureaucracy instead of the rhetoric of politicians demonstrates the existence of decided policy differences between the Hoover and Roosevelt eras. "Efficiency" analogues dominant during the Hoover era were replaced with "direct service-provider" approaches which created a clear distinction between private and public welfare programs. Elements of "continuity" between the two eras have been overdrawn. Background is provided for increased understanding of some of the policy implications of America's contemporary welfare debate—particularly about "rehabilitation" strategies and/or rationales for action in the social welfare field.     

Introduction to the symposium: The discipline of applied general equilibrium

Summary The use of general equilibrium models in applied research imposes a discipline in which model structures can easily be compared and contrasted and model results can be interpreted using a well understood and rigorously developed theoretical framework. These features allow researchers to compare results across modeling efforts and to build on the experience of others in deriving results and formulating questions. This paper first presents a brief critical history of applied general equilibrium analysis. It then summarizes the contributions of eight other papers in this issue.We are grateful to Gary Hansen, Ellen McGrattan, and Richard Rogerson for helpful discussions of this paper. We also want to thank the members of the Applied Theory Workshop at the University of Minnesota, who helped referee and edit the papers in this issue: Fernando Alvarez, Raphael Bergoeing, Betsy Caucutt, Ricardo Cavalcanti, Antonia Diaz, Ron Edwards, Andres Erosa, Terry Fitzgerald, Ron Gecan, Doug Gollin, Karine Moe, François Ortalo-Magne, and Marcelo Veracierto. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.     

The Legislator as Political Entrepreneur: Investment in Political Capital

This paper applies the standard Austrian theory of capital investment to the standard interest group model of legislator behavior. Distinguishing between reputational capital and representative capital as interdependent forms of political capital, I argue that legislator behavior (specifically roll call voting) can be explained as entrepreneurial investment in political capital under uncertainty. I discuss several examples in which this approach can potentially add predictive power regarding legislative voting.