SCREENING FOR A CHRONIC DISEASE: A MULTIPLE STAGE DURATION MODEL WITH PARTIAL OBSERVABILITY

We estimate a dynamic multistage duration model to investigate how early detection of diabetes can delay the onset of lower extremity complications and death. We allow for partial observability of the disease stage, unmeasured heterogeneity, and endogenous timing of diabetes screening. Timely diagnosis appears important. We evaluate the effectiveness of two potential policies to reduce the monetary costs of frequent screening in terms of lost longevity. Compared to the status quo, the more restrictive policy yields an implicit value for an additional year of life of about $50,000, whereas the less restrictive policy implies a value of about $120,000.     

Fundamentals versus external shocks: Brazil's growing exposure to currency crises

While financial globalization does not lack theoretical economic merit, the more far-reaching practical consequences of this phenomenon are often not fully appreciated from the vantage point of North America or the European Union. In particular, globalization can make it more difficult for emerging economies to achieve macroeconomic stabilization. This is especially true if the countries in question have chosen the vehicle of pegged exchange rates as an important element of domestic anti-inflation policy. The chief macroeconomic difficulties for emerging economies in a world of volatile capital flows can include a loss of monetary control, a real appreciation of the domestic currency, and a worsening of economic fundamentals leading to damaging currency crises. This paper concentrates on the recent experience of Brazil as illustrative of the abject plight faced by many developing countries attempting to secure economic stabilization against the background of the present globalized international economy.This paper has benefitted from discussion with participants of the Forty-Sixth International Atlantic Economic Conference, Boston, MA, October 8–11, 1998.     

Estimating the Impact of WTO and Domestic Reforms on the Indian Cotton and Textile Sectors: a General-Equilibrium Approach

The agreement to abolish the quotas on textiles and clothing introduced under the Multi‐fiber Arrangement (MFA) will create a new and much more competitive world market for India's exports of textiles and clothing. India's inefficient and costly policies, such as cotton export quotas, the hank yarn obligation, and the restrictive policies on foreign investment that have held back productivity in the Indian apparel sector, will impose serious costs. The authors consider the implications of reforming these policies in an open trading environment using a multiregion, applied general‐equilibrium model. They find that the costs of these policies to India increase substantially following abolition of the MFA; the benefits to India from domestic reforms are considerably enhanced when there is global free trade in textiles and apparel.     

Central city crime and suburban economic growth

This paper explores the relationship between inner-city crime patterns and suburban income growth, analysing data on 318 US counties for selected metropolitan statistical areas of 32 states within the United States from 1982 to 1997. The findings suggest that violent crime does seem to have a negative impact on close-in suburbs, with a less negative impact farther away from the central city (becoming positive at some point). While results are not as robust as we had hoped they are consistent with flight to further-out suburbs rather than migration to different metropolitan areas in response to urban crime.     

Using Empirical Point Elasticities to Teach Tax Incidence

Using point elasticities rather than using either arc elasticities or slopes of demand and supply curves provides the best method for teaching students about the economic impacts of excise taxes. Not only does a point-elasticity approach simplify theoretical analysis of tax impacts, but it also allows instructors to take advantage of publicly available empirical estimates of demand and supply elasticities to show students how theoretical results can be applied to real-world tax policy issues. To illustrate these advantages, the authors use several available estimates of point elasticities of demand and supply of raw sugar to calculate the economic impacts of a recently proposed penny-per-pound tax on raw cane sugar grown in the Florida Everglades.     

Revealed preferences in macroeconomic policy decisions

This paper extends the usual instrument-target framework by directly estimating macroeconomic policy preferences over a number of policy targets using a derived reduced form and then solving the nonlinear optimality conditions for optimal instrument choice. Solving the optimality equations using observations on predetermined variables yields the implicit set of preference weights which induced the observed choices. The derivation format parallels the integrability discussions about consumer preferences implicitly expressed through demand functions. The approach is applied to a simple macro model estimated over the period from 1955 through 1972.     

Productivity Dispersion and Measurement Error

Several reasons have been put forward to explain the high dispersion of productivity across establishments: quality of management, different input usage and market distortions, to name but a few. Although it is acknowledged that a sizable portion of productivity dispersion may also be due to measurement error, little research has been devoted to identifying how much they contribute. We outline a novel procedure for identifying the role of measurement error in explaining the empirical dispersion of productivity across establishments. The starting point of our framework is the errors-in-variable model consisting of a measurement equation and a structural equation for latent productivity. We estimate the variance of the measurement error and subsequently estimate the variance of the latent productivity variable, which is not contaminated by measurement error. Using Norwegian data on the manufacture of food products, we find that about one percent of the measured dispersion stems from measurement error.