Capital accumulation,income distribution and endogenous fertility in an overlapping generations general equilibrium model

A study is conducted in attempts to increase the understanding of the links between macroeconomic effects and causes of population growth in formulating policy. An overlapping generations general equilibrium model is employed aggregating household decisions about fertility, savings, and investment in the human capital of children with the objective of studying intertemporal relationships among population growth, income distribution, inter-generation social mobility, skill composition of the labor force, and household income. As a result of endogenous fertility, the equilibrium path attains steady state from the second generation. Income tax transfer, child taxation, and social security taxation policies are also examined in the paper. A structural explanation is given for the inverse household income-child quantity and negative child quality-quantity relationships seen in developing countries. In a Cobb-Douglas economy, these relationships hold in the short-run, potentially working over the long-run in other economies. Overall, the model shows that group interests may hinder emergence of perfect capital markets with private initiatives. Where developing countries are concerned, these results have strong implications for population policy. A policy mix of building good quality schools, or subsidizing rural education, introducing a formal social security program, and providing high-yield, risk-free investments, banking, and insurance services to the poor is recommended.     

There is relevance in the classroom: Analysis of present methods of teaching business ethics

In 1988 the Journal of Business Ethics published a paper by David Mathison entitled Business Ethics Cases and Decision Models: A Call for Relevancy in the Classroom. Mathison argued that the present methods of teaching business ethics may be inappropriate for MBA students. He believes that faculty are teaching at one decision-making level and that students are and will be functioning on another (lower) level. The purpose of this paper is to respond to Mathison's arguments and offer support for the present methods and materials used to teach Master level ethics classes. The support includes suggested class discussion ideas and assignments.Victoria K. Strong is a graduate student at Bentley College. She returned to school to pursue a Master of Science in Accountancy after working in the engineering profession for 12 years. She received her B.S. in Mechanical Engineering in 1984. Her business experience includes positions as Mechanical Design Engineer and Unit Supervisor of an engineering development laboratory. Alan N. Hoffman is an Associate Professor of Management at Bentley College. He received his DBA from Indiana University. Dr. Hoffman's writing has been published in the Academy of Management Journal and Human Relations.The authors would like to thank Carolyn Colt and the entire spring 1988 MG520-class for their valuable contributions.     

Gut issue

Unions are willing to strike over it, and companies are ready to draw the line, too. Now both sides are turning to Congress to fix the health insurance mess. This is the first of two articles on responses to the growing health care crisis. A report on state efforts begins on p. 708.     

Post OPA-90 Vessel Oil Transfer Spill Prevention: The Effectiveness of Coast Guard Enforcement

Although oil spills from tanker accidents receive the most publicity, most vessel spills are not the result of accidents but of oil transfer activities. We investigate determinants of the size of vessel oil transfer spills as well as the effectiveness of Coast Guard enforcement activities in reducing their size. Vessel out-of-water and in-water oil transfer spillage functions are estimated utilizing tobit regression and detailed data on individual vessel oil transfer spills as well as Coast Guard safety/environmental enforcement activity data for the 1991–1995 period. Our estimation results suggest that Coast Guard hull but not machinery inspections are effective in reducing both out-of-water and in-water spills; patrols by air, but not by boat, are effective in reducing out-of-water spills; but neither is effective in reducing in-water spills. The results also show that the type of vessel (oil- and non-oil-cargo), vessel characteristics, vessel operations, weather/visibility conditions, and waterway type are determinants of post OPA-90 vessel oil transfer spills.     

Enforcing Emissions Trading when Emissions Permits are Bankable

We propose enforcement strategies for emissions trading programs with bankable emissions permits that guarantee complete compliance with minimal enforcement costs. Our strategies emphasize imperfect monitoring supported by a high unit penalty for reporting violations, and tying this penalty directly to equilibrium permit prices. This approach is quite different from several existing enforcement strategies that emphasize high unit penalties for emissions in excess of permit holdings. Our analysis suggests that a high penalty for excess emissions cannot be used to conserve monitoring effort, and that it may actually increase the amount of monitoring necessary to maintain compliance.The authors are grateful to Anthony Heyes and three anonymous referees for their valuable comments. Partial support for this research was provided by the Cooperative State Research Extension, Education Service, U. S. Department of Agriculture, Massachusetts Agricultural Experiment Station under Project No. MAS00871.     

Analysis of Austrian stocks: Testing for stability and randomness

This paper is concerned with subjecting two popular assumptions about the behavior of stock market prices to empirical tests: first, the random walk hypothesis developed by Bachelier (1900), Osborne (1959), and Mandelbrot (1963); second, the stable distributions hypothesis by Mandelbrot (1963) and Fama (1965). For this purpose, ten time series from the Vienna Stock Exchange were used. The first hypothesis was tested using both non-parametric and parametric methods. To obtain evidence with regard to the seond hypothesis, a graphical procedure and statistical estimation on the basis of the empirical characteristic function were applied. On analysis of our data, it turned out that, at least for the time period under consideration (1985–1990), severe doubts are cast on the above assumptions.We gratefully acknowledge the help of Peter Mitter, Institute for Advanced Studies, and Franz Köstl, Österreichische Kontrollbank, who provided us with the necessary data, and the comments of the anonymous referees.     

Demographic links to savings in life cycle models: identification of issues for LDCs

The author considers the potential for a link between the recent pattern of demographic transition and intertemporal and inter-country variations in savings rates. Fertility, infant mortality, life expectancy, and levels of female and child labor force participation are among the various demographic factors which affect national savings rates through their effects upon age structure, age-specific individual savings behavior, and their general equilibrium effects upon interest rates, wage rates, and income distribution. The author establishes a simple discrete time life cycle model of savings, explains the issues related to age structure, and discusses the effect of age-specific savings functions, the general equilibrium effects of demographic factors, the effects of life expectancies and child mortalities, and the nature of social security coverages in less developed countries, as well as issues which are especially important for less developed countries. A new strategy for empirically evaluating demographic policies is proposed. That is, one can estimate the age profile of earnings, saving and fertility rates from household survey data. The life tables can then be used to compute the aggregate savings rate and population size. Any demographic policy which affects the fertility rate, life expectancy, and investment in the quality of children will change the aggregate saving and population growth rates. These two aggregate effects could be compared to evaluate demographic policies. The author stresses, however, that changes in different demographic factors will have different short-run and long-run effects upon the savings rate which will also depend upon whether such changes are transitory or permanent.     

Natural conjugate priors for the instrumental variables regression model applied to the Angrist–Krueger data

We propose a natural conjugate prior for the instrumental variables regression model. The prior is a natural conjugate one since the marginal prior and posterior of the structural parameter have the same functional expressions which directly reveal the update from prior to posterior. The Jeffreys prior results from a specific setting of the prior parameters and results in a marginal posterior of the structural parameter that has an identical functional form as the sampling density of the limited information maximum likelihood estimator. We construct informative priors for the Angrist–Krueger [1991. Does compulsory school attendance affect schooling and earnings? Quarterly Journal of Economics 106, 979–1014] data and show that the marginal posterior of the return on education in the US coincides with the marginal posterior from the Southern region when we use the Jeffreys prior. This result occurs since the instruments are the strongest in the Southern region and the posterior using the Jeffreys prior, identical to maximum likelihood, focusses on the strongest available instruments. We construct informative priors for the other regions that make their posteriors of the return on education similar to that of the US and the Southern region. These priors show the amount of prior information needed to obtain comparable results for all regions.     

Time dependent solution of a queueing problem with correlated batch arrivals and general service time distribution

This paper considers the transient behaviour of queueing problem in which (i) the arrivals occur in batches of variable size (ii) the arrival and no arrival of a batch at two consecutive transition marks are correlated (iii) the service time distribution for each, unit is general with probability density functionD(x). TheLaplace transform of various probability generating functions of queue length are obtained and some particular cases are derived therefrom.