Approximating the distribution of the two-stage least squares estimator when the concentration parameter is small

This paper presents a new approximation to the exact sampling distribution of the instrumental variables estimator in simultaneous equations models. It differs from many of the approximations currently available, Edgeworth expansions for example, in that it is specifically designed to work well when the concentration parameter is small. The approximation is remarkable in that simultaneously: (i) it has an extremely simple final form; (ii) in situations for which it is designed it is typically much more accurate than is the large sample normal approximation; and (iii) it is able to capture most of those stylized facts that characterize lack of identification and weak instrument scenarios. The development leading to the approximation is also novel in that it introduces techniques of some independent interest not seen in this literature hitherto.     

Direct Labor Market Effects of Unemployment Insurance

It has been established that relatively high income families receive a disproportionately large share of UI benefits. Little information on the distribution of costs by income class is available, but it is quite possible that the upper income groups may also bear a disproportionately large share of the costs. More empirical research is needed before the redistributive effects of UI can be known with any degree of confidence. There is little argument about the desirability on income mainlenance grounds of extending Unemployment insurance benefits in a recessionary period, all other things being equal. U1 is quite efficient as an income maintenance tool for covered workers. With respect to the unemployment problem, though, it is feared by some that the program goes too far in maintaining the incomes of covered workers, and as a result any extension of UI benefits will aggravate the unemployment problem. The evidence presented here suggests that fears of a major increase in unemployment as a result of such changes are largely unwarranted. However, extended UI benefits would appear to have some small, nontrivial adverse impact on unemployment. Finally, it seems that UI's income distributional impact has been portrayed unjustly as pro-rich. It may be that income is transferred through the UI system from the relatively well-to-do to the relatively poor. There is no scientific way of bringing these considerations to bear in deciding whether or not to restructure the unemployment insurance system. This question can be answered only by invoking fundamental value judgments to decide how sociely would be better off, and I would not presume here to offer my own. This paper will have served its purpose if it has provided the basis for a more informed decision.     

More bang for the buck: Getting the most from accident investigations

An Incident Investigation system based on a combination of Fault Tree Analysis logic and the Deming Principles of Systems and Quality was developed during a three-year period. The system was given an excellent test in the investigation of the explosion of a tank car filled with methacrylic acid. In this case, the Event Tree constructed during the investigation was easily converted into a Fault Tree. The Fault Tree so constructed was then used to evaluate the effectiveness of proposed corrective changes to the production, loading, and analytical systems before the changes were actually implemented. By making use of these tools to guide the addition of feedback loops (“And” Gates in fault Tree terminology), the intrinsic safety of the methacrylic acid production and shipping system was greatly enhanced at a relatively low cost.     

Rationalizing the International Coffee Agreement virtually

From 1963 to 1989, the International Coffee Agreement controlled world trade in coffee. Like an export cartel, the organization included coffee exporters and importers as members. This paper seeks to understand the behavior of the ICA by treating it as an optimizing entity, which from social choice theory we know to be inherently troublesome. A social choice rule is specified for the ICA that is virtually implementable in Nash equilibrium. The empirical results provide arationalizing argument for the ICA, in the sense that if it sought to maximize the specified criterion function, we would expect it to behave precisely as it did behave.     

The conditional probability and the linear flow graph approaches to analyzing probabilistic causal systems

An alternative theoretical approach to the analysis for dichotomous causal systems that involve probabilistic causation, the conditional probability approach, has recently been explicated. It was shown that there exist various composition and decomposition rules for analyzing various kinds of general causal systems, and an important distinction between pure-“or”-and pure-“and”-causal systems was explicated. In this paper these earlier results are used to analyze a causal system which has been studied by J.A. Davis (1976), who uses his linear flow graph approach to analysis. The results of the conditional probability approach are compared to the linear flow graph, and it is shown that the two approaches lead to strikingly different results.     

The care and feeding of MBA's

Hiring MBA's represents an investment at a significant risk level, and data on the firm's historical experience with MBA investments should be maintained and evaluated. The characteristics of the MBA which count toward performance should be discovered. The authors suggest several: maturity measures, quantitative orientation, educational specialty, attitude toward work.