Models for which the MLE and the conditional MLE coincide

The MLE, CMLE and MMLE coincide in a linear regression model with fixed individual effects. In this case, there is no incidental parameters problem and the MLE is consistent. The equivalence of these estimators is important because CMLE=MLE implies both the consistency of the MLE and the efficiency of the CMLE. In general, we cannot expect to find a CMLE or MMLE, since there may be no fixed-dimension sufficient statistic for the effects, nor an appropriate transformation of the data whose distribution does not depend on the effects. However, we show that the MLE, CMLE and MMLE do coincide in systems of seemingly unrelated regressions and in systems of simultaneous equations. We establish this result for systems in which (exogenous) variables in addition to (or other than) the intercept may have coefficients which vary over individuals, provided that the set of such variables is the same in every equation.The financial support of the National Science Foundation is gratefully acknowledged.     

DISCOUNT RATES AND ENERGY EFFICIENCY

Empirical studies provide compelling evidence that economic agents do not adopt the complete range of energy-efficient technologies that are cost-effective under prevailing prices and market conditions. Analysts commonly attribute this anomaly to the use of high discount rates in energy-related decisions-an interpretation that is difficult to reconcile with standard models of rational choice. This paper recasts the controversy from the perspective of economic theory and finds that market failures related to asymmetric information, bounded rationality, and transaction costs are major contributors to the so-called "efficiency gap."     

ORGANIZATIONAL CONTEXT AND THE INTERPRETATION OF STRATEGIC ISSUES: A NOTE ON CEOS’ INTERPRETATIONS OF FOREIGN INVESTMENT*

This paper explores the relationship between organizational context and the interpretation of strategic issues by examining the hypothesis that CEOs' interpretations of foreign investment in the USA are influenced by the organizational context in which they are embedded. Three aspects of organizational context - the global business experience of the firm; the firm's level of organizational inertia (as represented by firm age and size); and the resources available for responding - are examined as predictors of CEOs' perceptions of foreign investment as a threat or an opportunity. Analysis of data from 320 organizations, controlled by industry, shows that global business experience, firm size, and perceived capability are significant predictors of the perception of threat and opportunity. the discussion addresses the implications of these findings for future research on issue interpretation and organizational context.     

Economists and Data

This paper is concerned with one central question: the choice between theories, and the role played by data in that choice. It deals with the uses economists may make of data and the importance of understanding the institutional basis that gives rise to the data - an area in which labour economists have traditionally been particularly strong - and with the relevance of assumptions. It deals with the ultimate need to choose between competing theories (despite the role of conventionalism) on the basis of data rather than retreating into a comfortable 'methodological pluralism'. It considers the role of test replication, with reference to the practice in natural science (and its role there in checking scientific fraud) and concludes that, despite extensive technical problems of testing, economists have to accept a data check if the rhetoric of mathematical technicality is not to overwhelm the need to explain. Parallels are drawn with experience in physics (and the implications of the development of Chaos and Catastrophe for a naively predictionist view are noted), medicine and history (of which, it is argued, modern economists are far too neglectful).     

Racial differences in the feminization of poverty

The feminization of poverty refers to female householders and their children becoming an increasing percentage of the poor population. After examining effects of race on poverty of female-headed households from 1959 to 1989, this study investigates statistical relationships among female poverty, economic and labor market conditions, and transfer payments (specifically AFDC) by means of the Granger causality test over the period from 1966 to 1988. This study reinforces the plausible assumption that policies which would lower the unemployment rate of females and would increase real economic growth could be expected to reduce the number of poor female households.     

Retail pricing: Does channel length matter?

The number of intermediary levels between a manufacturer and the final market in a distribution channel varies from industry to industry. In some cases, none are used (i.e. the distribution function is vertically integrated), while several middleman levels are used in other cases (e.g. the use of a wholesaler, a jobber, and a retailer in the distribution of meat). In this paper we examine the effect of competition on the profit-maximizing length of the distribution channel. We find that the optimal number of middleman levels increases with the substitutability of products in the market, but that there are institutional limits on the maximum number of levels in a channel. The analysis also suggests that differences in the objectives of channel members (e.g. the maximization of total channel profit versus the maximization of each member's individual profit) affect optimal channel length: a goal of total channel profit maximization produces a channel at least as long as one of individual (non-co-operative) member profit maximization. The work thus complements existing research focusing on intra-channel (e.g. cost-based) explanations of channel length, using a framework similar to those investigating competitive incentives for vertical integration in distribution.     

Classification and aggregation: An application to industrial classification in cps data

In this paper we offer a method for deciding how to aggregate a set of elementary industries. The method is then applied to the problem of estimating a wage equation that allows for industry-specific effects. Our method explicitly formalizes the trade-off between goodness-of-fit and parsimony implicit in an aggregation problem. By varying the parameter of the assumed loss function, one obtains a whole sequence of aggregation levels. Further, the resulting sequence is consistent; that is, groupings formed at one level of aggregation will never be undone when one aggregates further.     

EFFECTS OF THE FARMER SUPPORT PROGRAMME AND CHANGES IN MARKETING POLICIES ON MAIZE PRODUCTION IN SOUTH AFRICA

This article analyses the effects of action aimed at narrowing the gap between South Africa's ‘two agricultures’, specifically the effects of the Farmer Support Programme (FSP) on structural aspects of maize production under different marketing policies. This is done by assembling a sectoral linear programming model of the South African summer-rainfall grain-producing area. The emphasis is on the inclusion of supply, demand and production risk. Results show that the effects of a successful FSP on specific interest groups, e.g. consumers of a specific product, or producers in a specific region, depend on the marketing policy followed, as well as on the effectiveness of the FSP. The analysis accentuates the interrelationships in South African crop production and illustrates how past policies ignored regional comparative advantages, distorted regional development and affected social welfare.     

Rafting the River: A Risk Management Expert System for Dynamic Problem Solving

Commercial project management systems focus on preproject planning and after-the-fact documentation, but not on the dynamic problem solving required in day-to-day project management. Yet the need for risk-oriented management is clear. To understand and control project risks, managers must be able to identify problems as they occur, immediately assess their downstream impacts, and plan a course of action. The Advanced Risk Management System (ARMS) is a prototype system built to address the issues of identifying, analyzing, prioritizing, monitoring, and controlling project risk. ARMS uses expert systems, data base management, and hypermedia technologies to capture and classify project schedule problems, to determine their semantic impacts to future activities, and to alert appropriate project personnel in advance of problem occurrence.