An Index Number Method for Estimating Scale Economies and Technical Processes Using Time-series of Cross-section Data: Sources of Total Factor Productivity Growth for Japanese Manufacturing, 1964–1988

Sample multicollinearity often makes it difficult to estimate returns to scale. We present an index number method to overcome potential multicollinearity problems when the production function is homogeneous of degree k . We apply our method to estimate empirically the effects of returns to scale and technical progress on growth in total factor productivity (TFP) using establishment data for Japanese manufacturing industries. We find that, while significant scale economies exist in many manufacturing industries, the TFP growth in the last twenty-five years is attributable primarily to technical progress. This finding also validates the current practice of assuming constant-returns-to-scale production functions in macroeconometric modelling.
JEL Classification Numbers: C43, D24, 030.     

The conditions of collective action for local commons management: the case of irrigation in the Philippines

We examine factors affecting the success and failure of collective action toward the management of local commons. Using cross‐section survey data on the activities of irrigators' associations in the Philippines, regression analysis is conducted to identify factors underlying the success and failure in farmers' organizing collective action for the maintenance and operation of irrigation systems. We find that collective action is difficult to organize where (a) water supply is uniformly abundant; (b) water supply is greatly different between upper and lower streams in lateral; (c) the size of the association is large; (d) population density is low; (e) the share of nonfarm households is high; and (f) the history of irrigated farming is short. Our findings suggest that these difficulties can be overcome with adequate supports of state agencies to promote community‐level cooperation.     

Purchasing Power Parity and the Taylor Rule

It is well known that there is a large degree of uncertainty around Rogoff's consensus half‐life of the real exchange rate. To obtain a more efficient estimator, we develop a system method that combines the Taylor rule and a standard exchange rate model to estimate half‐lives. Further, we propose a median unbiased estimator for the system method based on the generalized method of moments with non‐parametric grid bootstrap confidence intervals. Applying the method to real exchange rates of 18 developed countries against the US dollar, we find that most half‐life estimates from the single equation method fall in the range of 3–5 years, with wide confidence intervals that extend to positive infinity. In contrast, the system method yields median‐unbiased estimates that are typically shorter than 1 year, with much sharper 95% confidence intervals. Our Monte Carlo simulation results are consistent with an interpretation of these results that the true half‐lives are short but long half‐life estimates from single‐equation methods are caused by the high degree of uncertainty of these methods. Copyright © 2014 John Wiley & Sons, Ltd.     

TOUGH LOVE AND INTERGENERATIONAL ALTRUISM*

This article develops and studies a tough love model of intergenerational altruism. We model tough love by modifying the Barro‐Becker standard altruism model in two ways. First, the child’s discount factor is endogenously determined, so lower childhood consumption leads to a higher discount factor later in life. Second, the parent evaluates the child’s lifetime utility with a constant high discount factor. Our model predicts that parental transfers will fall when the child’s discount factor falls. This is in contrast with the standard altruism model, which predicts that parental transfers are independent of exogenous changes in the child’s discount factor.     

Does Culture Matter in Inter-Firm Cooperation? Research Consortia in Japan and the USA

Collaborative research consortia allow firms to pursue scale and scope economies in research, finance large costly proposals, share risks, avoid unnecessary duplication, internalize the externalities created by research spillovers, and allow the use of firm-specific complementary skills and resources. In this study we examine the evolution of cooperative research organizations in the USA and Japan. We explore the factors which influence the emergence of alternative forms of cooperation. Specifically, we examine the role of culture and the institutional environment in molding the organization of cooperation between firms in R&D and the consequences of such cooperation. © 1997 John Wiley & Sons, Ltd.     

Capital Imports and Tariffs

This paper develops a three‐sector, three‐factor specific factor model with a tariff and presents conditions under which capital imports and tariffs can be welfare enhancing in a developing country. The impact on welfare depends on the tariff revenue effect and the repatriation effect. A capital import is welfare enhancing if it reduces the domestic output of imports. A tariff is welfare enhancing only if it reduces the return to foreign capital.     

Market Price Response of World Rice Research

Using the total number of research publications as a proxy, the output of rice research in the world is estimated to be highly responsive in the short run to price fluctuations in the international rice market. The results suggest a danger of the inducement mechanism of public investment in the agricultural production infrastructure being misguided by cyclical price changes, thereby leading to recurrent food shortages and oversupplies in a cobweb-like manner.     

On the new export sector in developing countries

Abstract

Many developing countries are establishing a new export sector by accepting foreign direct investment. Developing a three-sectors three-factors general equilibrium model with tariff, this paper considers the condition under which the acceptance of direct investment is desirable for the developing countries. We show that the factor intensity rankings among the sectors play a key role on the welfare effects and that direct investment increases the output of both the new export and the traditional export sector and promotes the export-led growth in developing countries.