Testing Symmetry and Homogeneity in the Almost Ideal Demand System with Co‐integrated Data using Fully Modified Estimation and the Bootstrap

Conventional seemingly unrelated estimation of the almost ideal demand system is shown to lead to small sample bias and distortions in the size of a Wald test for symmetry and homogeneity when the data are co‐integrated. A fully modified estimator is developed in an attempt to remedy these problems. It is shown that this estimator reduces the small sample bias but fails to eliminate the size distortion. Bootstrapping is shown to be ineffective as a method of removing small sample bias in both the conventional and fully modified estimators. Bootstrapping is effective, however, as a method of removing size distortion and performs equally well in this respect with both estimators.     

Retesting symmetry and homogeneity in a cointegrated demand system with bootstrapping: The case of meat demand in Greece

A small Almost Ideal Demand System is estimated for Greek meat consumption using the Johansen procedure in conjunction with parametric bootstrapping and Bartlett corrections. Asymptotic Wald and likelihood ratio tests broadly support the predicted number of cointegrating relationships but reject symmetry and homogeneity. Bootstrapping and Bartlett corrections give support to symmetry and homogeneity but give less support for the predicted number of cointegrating relationships.Jel classification: C32 D12First version received: September 2001/Final version received: March 2003     

Military experience and corporate tax avoidance

We find that managers with military experience pursue less tax avoidance than other managers and pay an estimated $1–$2 million more in corporate taxes per firm-year. These managers also undertake less aggressive tax planning strategies with smaller tax reserves and fewer tax havens. Although they leave tax money on the table, boards hiring these managers benefit from reductions in other gray areas in corporate reporting. The broad implications are as follows: for employee selection, boards can consider employees’ personal characteristics as a control mechanism when outputs are difficult to contract ex ante or measure ex post.     

Determinants of technical efficiency of crop and livestock farms in Poland

Poland, one of the candidate countries for European Union membership, is currently experiencing acute structural problems within its agriculture sector. This article analyses technical efficiency and its determinants for a panel of individual farms in Poland specialized in crop and livestock production in 2000. Technical efficiency is estimated with stochastic frontier analysis (SFA) and confidence intervals are constructed. Determinants of inefficiency are also evaluated. The SFA results are compared with results using Data Envelopment Analysis (DEA). On average, livestock farms are more technically efficient than crop farms. For both specializations, the size–efficiency relationship is positive, that is large farms are more efficient. The SFA findings are generally supported by the DEA results. Soil quality and the degree of integration with downstream markets are highly important determinants of efficiency. The use of factor markets (land and labour) is important for crop farms, while livestock farms can rely on family labour and own land. Also, education is a constraint to efficiency particularly for crop farms.     

Integrating spatial dependence into Stochastic Frontier Analysis

An approach to incorporate spatial dependence into stochastic frontier analysis is developed and applied to a sample of 215 dairy farms in England and Wales. A number of alternative specifications for the spatial weight matrix are used to analyse the effect of these on the estimation of spatial dependence. Estimation is conducted using a Bayesian approach and results indicate that spatial dependence is present when explaining technical inefficiency.     

A comparison of proxy variable and stochastic latent variable approaches to the measurement of bias in technological change in south african agriculture*

Technical change is inherently unobservable and has conventionally been represented by proxy variables, from simple time trends to more sophisticated knowledge stock variables. This paper follows Lambert and Shonkwiler (1995) in modelling technical change as a stochastic unobservable variable and tests this formulation against the alternative of using R&D and patent indices. This is done by fitting a system of share equations, derived from the dual profit function, to production data for South African agriculture. Each equation includes both unobserved technical change components and technical proxy variables. Variable deletion tests show that conventional proxy variables fail to explain the biases of technological change, while cointegration tests show that technical change is both stochastic and biased. The latent variables provide estimates of biases that are consistent with past studies and the historical record and can be explained by policy change in South Africa following WWII. The demonstration of high rates of return to R&D is not sufficient to justify R&D activity when biased technological change exacerbates input use and welfare distortions within and without the sector. * We thank the University of Pretoria for funding the study and the referees and delegates for many useful comments.     

Dichotomous‐choice contingent valuation with ‘dont know’ responses and misreporting

A new approach is presented that simultaneously deals with Misreporting and Don't Know (DK) responses within a dichotomous‐choice contingent valuation framework. Utilising a modification of the standard Bayesian Probit framework, a Gibbs with Metropolis–Hastings algorithm is used to estimate the posterior densities for the parameters of interest. Several model specifications are applied to two contingent valuation datasets: one on wolf management plans, and one on the US Fee Demonstration Program. We find that DKs are more likely to be from people who would be predicted to have positive utility for the bid. Therefore, a DK is more likely to be a YES than a NO. We also find evidence of misreporting, primarily in favour of the NO option. The inclusion of DK responses has an unpredictable impact on willingness‐to‐pay estimates, since it impacts differently on the results for the two datasets we examine. Copyright © 2009 John Wiley & Sons, Ltd.     

The determinants of debt maturity in Australian firms

We examine the determinants of debt maturity in the Australian capital market with the Top 400 firms listed on the Australian Securities Exchange for the period 1989–2006. We find that Australian firms not only exhibit a positive leverage–maturity relationship but also use short‐term debt to signal their high quality to the market. Our results are robust to different estimation methods that control for endogeneity and error‐dependence. We also find that ignoring the interaction between leverage and maturity can lead to erroneous conclusions about the support for the matching principle, the agency costs hypothesis and the transaction costs hypothesis.     

Hong Kong-Inflation and Liquidity

Property-Keep stepping on the brakes The Hong Kong Monetary Authority (HKMA) on 10 June announced new measures to tackle housing-price in- flation. The intention this time, as in previous rounds, is to limit leverage. The government also said it would introduce more land supply in Q3-2011, which would create about 6,000 new residential units. In 2010, 13,405 residential units were completed. The HKMA’s latest measures came as leverage levels