Age effects on consumer demand: an additive partially linear regression model

An additive partially linear regression model is used to estimate non-parametrically the effects of total expenditure and age in the context of Engel curves and to investigate the specification and welfare interpretation of the age effects in parametric models of consumer behaviour. Empirical analysis based on data drawn from the U.K. Family Expenditure Survey shows that modelling of the effects of age requires a more sophisticated approach than that generally adopted in parametric demand analysis. It also shows that failing to adequately capture these effects can have misleading welfare implications. JEL Classification: C14, D12
L'effet de l'âge sur la demande des consommateurs : un modèle de régression additif partiellement linéaire. On utilise un modèle de régression additif partiellement linéaire pour faire la calibration non paramétrique des effets de la dépense totale et de l'âge dans le contexte de courbes de Engel, et pour enquêter sur la spécification des effets d'âge et leur interprétation en termes de bien-être dans des modèles paramétriques de comportements du consommateur. L'analyse empirique est construite sur des données de la U.K. Family Expenditures Survey et montre que la modélisation des effets de l'âge réclame une approche plus sophistiquée que celle qui est généralement utilisée dans l'analyse paramétrique de la demande. On montre aussi que le manque à bien saisir ces effets peut conduire à des conclusions fausses pour ce qui est du niveau de bien-être.     

Tax Competition, Capital Mobility, and Public Good Provision Within a Trading Block

The authors examine a two–country general–equilibrium model of a two–country trading block where governments through tax policies attract mobile capital and provide an imported public consumption good. Within this framework the authors examine, among other things, how preferences over the public good and the size (population) of a country affect the Nash or cooperative equilibrium values of income tax rates in the two countries. The analysis identifies sufficient conditions under which (i) the Nash/cooperative equilibrium income tax rates are strategic substitutes or complements, and (ii) the Nash equilibrium income tax rates may be greater than the cooperative rates.     

Exogenous changes and policy reforms,labor migration,and welfare in a Keynesian economy

This paper examines the potential interaction between international labor migration, exogenous changes or policy reforms, and pre-existing distortions, such as generalized excess supply due to price-wage rigidities. Within this Keynesian income-expenditure context, it is suggested that (i) when international labor migration exists, the traditional Keynesian conclusions regarding the welfare effects of exogenous distortions, i.e., increase in exports need to be modified, and (ii) in the presence of price-wage rigidities, regardless of whether or not labor is internationally mobile, a policy reforming the country's tariff-subsidy structure may not be welfare improving.     

Self/paid-employment, public/private sector selection, and wage differentials

We use Probit models to account for the double selection problem of choice between, on the one hand, self- and paid-employment and, on the other, employment in the public and private sector. These models provide corrections for sample selection in wage equations for paid employees in the public and private sectors. Using a modified version of the Oaxaca and Ransom [J. Econom. 61 (1994) 5] procedure, we decompose the wage gap between the public and private sectors into a portion attributable to differences in characteristics, the public sector advantage, the private sector disadvantage and unobserved selection effects. Rich data for the Republic of Cyprus, a thriving economy with institutional features reminiscent of a developing economy, help determine the choice of type (self/paid) and sector (public/private) of employment. The human capital model describes the wage determination process satisfactorily. The size and distribution of public sector rents between men and women are similar to those in North America and are bracketed by results for developing countries.     

Challenges and directions in knowledge asset trading

This paper addresses the area that is at the intersection of knowledge management and electronic commerce. This area refers to the exchange and trade of explicit and implicit knowledge at an inter‐organizational level. Electronic knowledge marketplaces are currently emerging to address the opportunities and risks found in the purchase and selling of knowledge in the business‐to‐business (B2B) environment, the need for supporting long‐lasting relationships of knowledge exchange and the requirement for facilitating virtual community contexts where knowledge seekers can find suitable knowledge providers and knowledge providers can advertise and sell their available knowledge. The paper describes the business challenges associated with the design of an Internet‐based knowledge marketplace. INKASS, a European IST project, has stimulated this work and has provided real‐life verification on the arguments raised and on the positions adopted herein. Copyright © 2005 John Wiley & Sons, Ltd.     

Detecting news in aggregate accounting earnings: implications for stock market valuation

How much news is there in aggregate accounting earnings? I provide evidence that earnings changes at the stock market level are correlated with new information about not only expected future cash flows but also discount rates. A comprehensive investigation of the link to discount rates reveals that aggregate earnings changes are tied to news about all components of the expected future stock market return, i.e., the real riskless rate, expected inflation, and the expected equity risk premium. Over the sample period studied, cash flow news and discount rate news in aggregate earnings changes covary positively and have offsetting impacts on stock market prices. As a result, stock market prices appear to be insensitive to aggregate earnings changes. The findings highlight the importance of separating cash flow news from discount rate news when evaluating the information content of accounting earnings at the stock market level. Overall, my study sheds new light on the informativeness and relevance of accounting earnings for valuation at the stock market level.     

Entrepreneurship in post‐conflict transition1

We examine new self‐employment entry and its viability in Bosnia and Herzegovina, using a rich household survey for the years 2001–2004. We find that wealthier households are more likely to engage in viable self‐employment and create employment suggesting an important role for financing constraints. Specifically, although having an existing bank relationship is not significantly related to the entry decision, it is positively related to the survival for new entrepreneurs and their employment creation. We also find a non‐linear relationship between remittances and entry in that individuals not receiving remittances are more likely to enter self‐employment; but, if they do receive them, the likelihood of starting a business increases in the fraction of wealth received from domestic remittances. Finally, people working in the informal sector are more likely to become viable entrepreneurs, particularly those provided with loans from micro‐credit organizations. These findings support the perception of the informal sector as an incubator for formal self‐employment in the early years of transition.     

Location equilibria in a mixed duopsony with a cooperative

This work analyses a two‐stage price–location game between a profit maximising firm and a primary producers' cooperative. According to the results, the location equilibria are not fixed but depend on the intrinsic competitiveness of the spatial market. As the intrinsic competitiveness rises, the cooperative tends to be located closer to the middle point of the market. The limited differentiation in location entails an efficiency loss which is nevertheless smaller than that associated with the competition of two profit maximising firms (pure duopsony) on exactly the same spatial market. The superiority of a mixed duopsony lies in the fact that the resulting equilibrium locations entail lower total transportation cost relative to those of a pure duopsony.     

A Markov regime switching approach for hedging energy commodities

This paper estimates constant and dynamic hedge ratios in the New York Mercantile Exchange oil futures markets and examines their hedging performance. We also introduce a Markov regime switching vector error correction model with GARCH error structure. This specification links the concept of disequilibrium with that of uncertainty (as measured by the conditional second moments) across high and low volatility regimes. Overall, in and out-of-sample tests indicate that state dependent hedge ratios are able to provide significant reduction in portfolio risk.     

Quadratic Differential Demand Systems and the Retail Demand for Pork in Great Britain

The primary objective of this paper is to derive a general synthetic quadratic (rank 3) differential demand system which nests within it a range of testable differential demand models including the quadratic AIDS, CBS, Rotterdam and NBR systems. A model selection test procedure is also outlined. These differential systems are then applied and tested to analyse the monthly retail demand for cuts of pork in Great Britain over the period 1989–2000. The empirical results suggest that a quadratic differential AIDS model is most appropriate for the pork demand system studied, but that the need for inclusion of quadratic income/expenditure terms is not universal for every cut within the demand system. Quadratic expenditure effects were appropriate for pork chops and leg roasts, but log linear expenditure effects were adequate for bellies, shoulders and loin roasts. Roasting cuts were expenditure and own price elastic, with pork loins, chops and bellies all expenditure and own price inelastic.