NOVELTY EFFECTS OF NEW FACILITIES ON ATTENDANCE AT PROFESSIONAL SPORTING EVENTS

We investigate the effect of new facilities on attendance in professional baseball, basketball, and football from 1969 to 2001. We find a strong, persistent effect in baseball and basketball, and little effect in football. Size and duration estimates imply that baseball teams sell 2,500,794 additional tickets over the first eight seasons, basketball teams 293,878 over the first nine seasons, and football teams 137,792 over the first five seasons, implying an increase in revenues that could defray public subsidies that state and local governments provide for new sports construction projects. Rough calculations suggest that stadium subsidies are an inefficient method of subsidizing professional sports franchises. (JEL R39 , D12 , L83 )     

Rational expectations for large CGE models: A practical algorithm and a policy application

We describe a simple iterative method for solving large dynamic CGE models under rational expectations. Details are given for Australia's MONASH model but the approach applies to a wide range of CGE models. The method is automated in the RunMONASH Windows software, putting CGE modelling under rational expectations within the reach of non-specialist modellers. We provide an illustrative application in which MONASH results under rational expectations are compared with results under static expectations. The application and supporting software can be downloaded. Results from the application are interpreted in terms of elementary economic mechanisms.     

Testing the significance and the non-linearity of the Phillips trade-off in the Euro Area

This paper tests the significance and the non-linearity of the Phillips trade-off in the aggregate Euro Area, in an unobserved components model of stochastic NAIRU and trend output featuring the Phillips equation and the Okun law as main identifying equations, with quarterly data for 1970:I-2002:III. The Phillips curve turns out to be linear and its trade-off statistically significant, while non-linearity shows up in the Okun relation. The results prove to be robust to alternative lag length structures of the model, and to alternative non-linear functional forms. The trend-cycle decompositions estimated with the model capture the main features of the Euro Area’s recent macroeconomic record.First version received: 1 September 2003 / Final version received: June 2004CEMPRE - Centro de Estudos Macroeconómicos e Previsão - is supported by the Fundação para a Ciência e a Tecnologia, Portugal, through the Programa Operacional Ciência, Tecnologia e Inovação (POCTI) of the Quadro Comunitário de Apoio III, which is financed by FEDER and Portuguese funds.We thank comments on earlier versions by Fabio Canova, Miguel St Aubyn, Alvaro Almeida, Pete Richardson, Kevin Ross, and two anonymous referees. We acknowledge James D. Hamilton’s help with the confidence bands. The usual disclaimer applies.     

HUMAN CAPITAL AND CONVERGENCE: A PRODUCTION‐FRONTIER APPROACH*

Using nonparametric, production‐frontier methods, we decompose labor productivity growth into components attributable to technological change (shifts in the world production frontier), technological catch‐up (movements toward or away from the frontier), and physical and human capital accumulation (movements along the frontier). We find that (1) technological change is decidedly nonneutral, (2) productivity growth is driven primarily by physical and human capital accumulation, (3) the increased international dispersion of productivity is explained primarily by physical capital accumulation, and (4) international polarization (the shift from a unimodal to a bimodal distribution) is brought about primarily by efficiency changes (technological catch‐up).     

French revolution or industrial revolution? A note on the contrasting experiences of England and France up to 1800

At the end of the eighteenth century, England and France both underwent revolutions: France the French Revolution, England the industrial revolution. This note sheds new light on these contrasting experiences in the histories of England and France by looking at the evolution of real consumer prices in London and Paris in the centuries leading up to 1800. Whilst in London, building workers were facing low and stable consumer prices over the period, leaving plenty of scope for a demand-driven consumer revolution (in particular after 1650), their Parisian counterparts had to engage in a year-long grind to maintain a decent living, and often had to cut consumption to make ends meet. The exercise conducted in the present paper gives a quantitative and economic underpinning to the notion that the French revolution did not arise out of nowhere, but rather had its roots in centuries of hardship amongst working class people as they struggled to make a living.     

DEALING WITH UNCERTAINTY: ROBUST RULES IN MONETARY POLICY

We argue that in seeking to insure against model uncertainty, monetary policy makers are often ready to trade ex post performance for greater certainty in the outcome. They thus look for rules that although not optimal ex post, have certain properties that qualify them as robust. We apply first, Gul's approach of ‘disappointment’ aversion to describe policy makers' aversion to uncertainty and then define the properties the notion of ‘robustness’ entails. With these two tools we then link the desirability of such robust rules to the degree of policy makers' aversion to uncertainty. We thus show that provided such robust rules exist, a larger degree of disappointment aversion leads to a greater emphasis on robustness in policy implementation.