Price convergence in US cities: a cointegration approach with two structural breaks

This article investigates how the price indices of major cities of the US respond to the shock from a city and from monetary policy. We find that the crisis of Bretton Woods system in 1968 and the oil crisis in 1974 should be incorporated as structural breaks in monetary policy variables and price indices. Using cointegration technique with structural break in our aggregated data, we find that the average half-life is 1.75 years, which is closer to what some of others found in disaggregated data, and that the interest rate is an effective tool for controlling cities’ price in short run.     

A college athletics recruiting game to teach the economics of rent-seeking

The authors of this article describe an adaptation of the rent-seeking game by Goeree and Holt (1999) to the recruiting of athletes by NCAA Division I football and basketball teams. Students engage in an effort-based lottery, i.e., recruiting to sign a blue-chip prospect. The winner gets the prize—the player's marginal revenue product in excess of his grant in aid. Students recruit in three scenarios: by recruiting legally, by recruiting legally or with illegal bribes, and by offering wages to athletes in an auction. The authors demonstrate the game's use in a principles course, but it is easily adaptable to other courses. To aid instructors unfamiliar with sports and NCAA recruiting, they include a comprehensive lesson plan with suggested readings and multimedia.     

International pharmaceutical supply prices: Definitions — problems — policy implications

In cases where the buyer and the seller of goods and services are companies belonging to the same group the prices charged for goods and services are called ‘international delivery prices’ or ‘international transfer prices’. The peculiarities of research-based companies are such that attempts to ascertain in practice what constitutes an ‘appropriate’ international delivery price are beset by a number of problems. Any scheme that is devised to solve the problems of international transfer prices should feature general ‘rules’ on how the various countries ought to share in central costs. As international transfer prices are a prerequisite for an efficient world economy based on the division of labour an agreement should be reached on the design and content of suitable delivery price systems for a research-intensive industry.     

On a family of data-based transformed models useful in forecasting technological substitutions

This paper examines, via real data, some well known models for technology substitution analysis. We propose a family of data-based transformed models that will include the models under examination as special cases. The basic thrust of the paper is the recognition that for technology substitution analysis, the observations are time series data and hence are not independent. Also, the functional form of the model should be determined by both theoretical considerations as well as the data on hand. This suggests that the traditional ordinary least squares procedure used in estimating the parameters and the resulting forecasting procedures are not adequate. The existing models examined here are Fisher–Pry, Gompertz, Weibull, and Normal. We stress the statistical aspects of the models and their relative merits in terms of predictive power. The criteria used for the purpose of comparison are the mean squared deviation and the mean absolute deviation of the predicted values compared with the actual observations.     

Asymptotic distributions in random graphs with applications to social networks

Various kinds of subgraph counts have been proposed as important statistics in the social sciences: for instance, in connection with studies of the structural properties of social networks. Since the empirical structure in question often involves an element of randomness, subgraph counts are random variables and, consequently, we need to describe their probabilistic properties. In this paper we give a survey of results dealing with the asymptotic distributions of general subgraph counts for a number of standard graph distributions. Although we do not include proofs for all the results, we illustrate the methodology used through studies of asymptotic behaviour for certain subgraph counts.     

New issues in long-term care

Employer sponsorship of long-term care programs is a growing trend, one that is likely to continue, no matter what direction national health care reform takes.     

Pareto optimal improvements for sunspots: The golden rule as a target for stabilization

Summary The stationary sunspot equilibria of a simple one good OLG economy are considered. These equilibria are known to be suboptimal. We show that, for any such equilibrium allocation, there always exists a Pareto optimal improvement which has the additional property of reaching the Golden Rule in finite time, i.e., the monetary steady state acts as a target. We also show that, in general, periodic allocations cannot be used as targets. The result is interpreted as a welfare theoretical justification for stabilization policy.This paper is based on my dissertation at SUNY Stony Brook. I would like to thank my supervisor, T. J. Muench, for his advice and encouragement. O. Galor's comments on a previous draft, and discussions with M. Kurz, J. Peck, H. M. Polemarchakis, B. Smith, and I. Zilcha, are gratefully acknowledged. Comments from F. Marhuenda, two referees and, especially, the Co-Editor, M. Woodford, did much to improve the exposition. Thanks are due to the Lady Davis Foundation for supporting my stay at the Hebrew University, and the IVIE and DGICYT PB92-0342 at Alicante, where successive drafts were prepared.