Estimating regional construction cost differences: Theory and evidence

The economic theory of cost functions is employed to derive geographic cost differentials for construction projects located across the United States. Assuming a Cobb-Douglas production technology, cost function estimates are obtained and used to calculate the regional cost differentials for major US cities relative to Washington, DC. Explanations are provided for adjusting these regional cost differentials according to additional information available on input prices or expected future inflation rates specific to particular locations.     

Tax competition in a Bertrand model

We show that in Bertrand models pure-strategy equilibria exist only under extraordinarily restrictive assumptions. We analyze tax competition between two countries for foreign investment. In the symmetric case of equal gross profits of the firms, zero-taxation is the unique equilibrium in pure strategies. If gross profits differ between countries only -equilibria can exist. However, if the tax rate applies to foreign investment as well as to domestic sources no equilibria exist in pure strategies. The same holds true if countries compete for firms that differ in gross profit opportunities, unless extremely unrealistic conditions are met.     

The Responses of Interest Rate Spreads to Information Releases

This study examines the responses of three popular futures interest-rate spreads--the MOB (Municipals over Treasury bonds), the NOB (Notes over Treasury bonds), and the TED (Treasury Bills over Eurodollars) to macroeconomic news. We find responses to differ across the three spreads. The most pronounced responses are displayed by the MOB, followed by the NOB and the TED. We also find that the spreads take time to adjust to news in the announcements.     

A SIBLINGS ANALYSIS OF THE EFFECTS OF ALCOHOL CONSUMPTION ONSET ON EDUCATIONAL ATTAINMENT

This article examines the relationship between youthful drinking and educational attainment using data on same-sex siblings pairs from the 1979–90 panels of the National Longitudinal Survey of Youth. We consider different estimators that can be constructed using siblings data, including estimators that adopt key restrictions of the standard regression, family fixed effect, and instrumental variable approaches. We also consider the properties of these estimators under more general conditions and show that under very plausible assumptions the effect of drinking on schooling can be bounded. The study finds that estimates of the schooling consequences of youthful drinking are very sensitive to specification issues. The research concludes that the actual effects of youthful drinking on education are likely to be small.     

Political Determinants of Intergovernmental Grants: Evidence From Argentina

This paper explores the determinants of federal grants allocation across provincial states in Argentina. Our analysis suggests that the redistributive pattern implicit in the federal system of intergovernmental grants cannot be explained on normative grounds exclusively. In order to understand the rationale behind federal grants distribution, a positive approach could render better results. Specifically, we claim that the distribution of federal grants could be associated with political variables such as the political representation of jurisdictions at Congress. The econometric analysis suggests that the significant disparity observed in the per capita representation across different provinces is an important factor explaining the allocation of those transfers. In this respect, overrepresented provinces, both at the senate and at the lower chamber, have received, on average, higher resources from the national government compared to more populous and less represented states. These results are consistent with those observed in other countries.