Embodying Embodiment in a Structural,Macroeconomic Input-Output Model

In this paper, I develop a regression-based system of labour productivity equations that account for capital-embodied technological change and I incorporate this system into IDLIFT, a structural, macroeconomic input-output model of the US economy. Builders of regression-based forecasting models have long had difficulty finding labour productivity equations that exhibit the "Solowian' property that movements in investment should cause accompanying movements in labour productivity. The production theory developed by Solow and others dictates that this causation is driven by the effect of traditional capital deepening as well as technological change embodied in capital. Lack of measurement of the latter has hampered the ability of researchers to estimate properly the productivity-investment relationship. Recent research by Wilson (2001) has alleviated this difficulty by estimating industry-level embodied technological change. In this paper, I utilize those estimates to construct capital stocks adjusted for technological change and then use these adjusted stocks to estimate Solow-type labour productivity equations. It is shown that replacing IDLIFT's former productivity equations, based on changes in output and time trends, with the new equations, results in a convergence between the dynamic behaviour of the model and that predicted by traditional (Solowian) production theory.     

Cross sectional and panel estimation of convergence

Cross sectional estimation of convergence regressions is known to be hazardous if there is convergence towards heterogeneous steady state values. In this paper, Monte Carlo methods are used to investigate the implications of this parameter heterogeneity problem. The cross sectional and pooled OLS estimators are compared with a panel estimator which is unaffected by heterogeneity. If there is heterogeneity, the latter outperforms both the unconditional and conditional cross sectional and pooled OLS estimators.     

The Economics of Grain Cleaning on the Prairies

In the Canadian grain marketing system, grains have typically been cleaned to very tight levels at port elevators. In recent years, changes in rail rates, livestock production and grain handling technology are pressuring the system for change. A mathematical programming model of vertical marketing functions in western Canada is developed to determine optimal locations for cleaning. Cleaning margins are positive in all regions of the prairies. Grain cleaning is found generally to be more efficient on the prairies than at the ports. However, grain cleaning will continue at ports to some extent because of inadequate capacity at country positions and sunk costs at port facilities and because primary elevators will likely clean only the dominant grains. Dans le système canadien de commercialisation des céreales, les grains passent généralement par un nettoyage très rigoureux aux silos portuaires. Ces dernières années, les changements affectant les tarifs ferroviaires, les productions animales et la technologie de manutention des céréales rendent cependant nécessaire un changement du système. Les auteurs utilisent un modéle mathématique de programmation des fonctions verticales de mise en marché pour déterminer les emplacements idéaux pour le nettoyage du grain. Les marges commerciales des nettoyeurs étaient positives dans toutes les régions des Prairies et le nettoyage était généralement plus efficient dans cette partie di pays qu'aux situations portuaires. Il continuera cependant à sefaire à ces derniers endroits dans une certaine mesure, en raison du manque de capacités suffisantes aux emplacements de campagne, des coûts irrécupérabies aux installations portuaires et du fait que les élévateurs primaires ne nettoieront vraisemblablement que les céréales commercialement le plus importantes.     

Firm-specific cost savings and market power

Summary. We report a policy experiment that illustrates a potential problem of using historical pass-through rates as a means of predicting the competitive consequences of projected firm-specific cost savings in antitrust contexts, particularly in merger analysis. The effects of cost savings on welfare can vary vastly, depending on how the savings affect the industry supply schedule. In a capacity-constrained price-setting oligopoly, we observe that cost savings can overwhelm behaviorally salient market power incentives when the savings affect marginal (high cost) units. However, cost savings of the same magnitude on an infra-marginal unit leave market power unchanged.     

Strategic planning for marketers.

The merits of strategic planning as a marketing tool are discussed in this article which takes the view that although marketers claim to be future-oriented, they focus too little attention on long-term planning and forecasting. Strategic planning, as defined by these authors, usually encompasses periods of between five and twenty-five years and places less emphasis on the past as an absolute predictor of the future. It takes a more probabilistic view of the future than conventional marketing strategy and looks at the corporation as but one component interacting with the total environment. Inputs are examined in terms of environmental, social, political, technological and economic importance. Because of its futuristic orientation, an important tenant of strategic planning is the preparation of several alternative scenarios ranging from most to least likely. By planning for a wide-range of future market conditions, a corporation is more able to be flexible by anticipating the course of future events, and is less likely to become a captive reactor--as the authors believe is now the case. An example of strategic planning at General Elecric is cited.     

The deductibility of provincial business taxes in a federation with vertical fiscal externalities

Should provincial business taxes be deductible under a federal profit tax? We show that the ‘optimal deductible,’ which neutralizes the vertical fiscal externality between the federal and provincial government, is the change in the federal tax base per dollar of tax revenue collected by the provincial government. The optimal payroll tax deductibility rate depends on the extent to which it is shifted to workers and on the difference between the federal tax rates on profits and on labour income. Two apparently contradictory positions – full deductibility of a payroll tax and non‐deductibility – are special cases of our model. La déductibilité des taxes provinciales imposées aux entreprises dans une fédération où il y a des externalités fiscales verticales. Est‐ce que les taxes provinciales imposées aux entreprises devraient être déductibles de l'impôt fédéral sur les profits? Les auteurs montrent que l'optimum de déductibilité qui neutralise les externalités fiscales verticales entre le fédéral et les provinces est le changement dans la base d'imposition fédérale par dollar de revenu fiscal collecté par le gouvernement provincial. Le taux de déductibilité optimal d'un impôt sur les salaires dépend de la portion du fardeau fiscal qui est déportée vers les travailleurs et de la différence entre les taux d'imposition du fédéral sur les profits et sur le revenu du travail. Deux positions apparemment contradictoires – pleine déductibilité d'un impôt sur les salaires et déductibilité nulle – sont des cas spéciaux du modèle général.     

The Nature of Business Planning Undertaken by General Practitioner Fundholding Practices in the North West Region

This article focuses on a central feature of the former Conservative Government's approach to the National Health Service (NHS), the introduction of General Practitioner Fundholding. It examines the nature of business planning undertaken by fundholding practices in the North West Region by looking at the participation of various stakeholders in the business planning process, the business planning techniques adopted and the extent to which fundholding practices set and monitor their objectives.     

Of Course We Can Bootstrap DEA Scores! But Does It Mean Anything? Logic Trumps Wishful Thinking

Journal of Productivity Analysis -     

Japan's slow-down: monetary versus real explanations

Two kinds of view about the recent stagnation of the Japaneseeconomy have been particularly popular. The first adopts a 'monetary'perspective, arguing that Japan has fallen into a liquiditytrap from which only unconventional monetary policy can saveit. The second maintains that a large part of Japan's macroeconomicdifficulties is structural and related to problems in the 'real'side of the economy. We argue here that it is hard to justifya neat division between these real and monetary problems. Decliningexpectations of future productivity may have depressed realinterest rates and reduced monetary policy flexibility, butthey are also likely to have prompted real responses that havecontributed to stagnation. In the long run, the conclusionsof the two kinds of diagnosis are complementary, but in theshort term tension may exist, with loose monetary policy weakeningincentives for structural reform, and structural adjustmentexacerbating demand deficiency.     

Chasing Success: Health Sector Aid and Mortality

As many cases studies show, successful public health measures are being implemented in many places around the globe, and country-level mortality has fallen significantly in recent decades in all but a few countries. Are the two linked? Does development assistance for health (DAH) improve, on balance, recipient countries’ mortality trajectory? Using a new data source containing DAH on 96 high mortality countries, the regression analysis shows no effect of DAH on mortality. Other types of aid, including water development, also have no effect. Economic growth, on the other hand, has a strong negative effect on mortality. These findings confirm and build upon recent work by Williamson (2008) and are shown to be robust to a variety of sensitivity analyses and alternative model specifications and estimation methods.This analysis also shows that the effectiveness of DAH has not increased over time, even as the level of that funding has increased fourfold, though spending on infectious diseases and family planning may have caused small reductions in mortality. Furthermore, even though it is encouraging that DAH has tended to go where the need is highest, it also goes to states that have experienced the greatest mortality reductions in the recent past. In other words, DAH appears to be following success, rather than causing it.