Instrumental variable estimation based on grouped data

The paper considers the estimation of the coefficients of a single equation in the presence of dummy intruments. We derive pseudo ML and GMM estimators based on moment restrictions induced either by the structural form or by the reduced form of the model. The performance of the estimators is evaluated for the non-Gaussian case. We allow for heteroscedasticity. The asymptotic distributions are based on parameter sequences where the number of instruments increases at the same rate as the sample size. Relaxing the usual Gaussian assumption is shown to affect the normal asymptotic distributions. As a result also recently suggested new specification tests for the validity of instruments depend on Gaussianity. Monte Carlo simulations confirm the accuracy of the asymptotic approach.     

Evaluation Periods and Asset Prices in a Market Experiment

We test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change the portfolio influence her risk attitude in markets. In line with the prediction of myopic loss aversion (Benartzi and Thaler (1995)), we find that more information and more flexibility result in less risk taking. Market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced. This result supports the findings from individual decision making, and shows that market interactions do not eliminate such behavior or its consequences for prices.     

Labour with different types of skills and jobs as production factors

Summary A Cobb-Douglas production function with labour of three different levels of education is proposed. The quantity of labour with primary education is defined as the number of people having jobs requiring primary education plus the number of people with primary education who actually have jobs requiring secondary education, the latter being given a weight above one. An analogous definition applies to the quantity of labour with secondary education, where some people will actually have jobs requiring either second or third-level schooling. A simple model where utility functions developed elsewhere are also involved is used to determine the income distribution over levels of education and jobs for given numbers of labourers with primary and secondary education. Doubling the number of those with second and thirdlevel schooling will reduce income differences to about one half. It affords the Board of Editors great pleasure to publish this paper by one of their members. This gives the Board the opportunity, also on behalf of the readers ofDe Economist, to congratulate Professor Tinbergen most cordially upon his 70th birthday, which he celebrated on 12th April, 1973.     

The economics of joint ventures in centrally planned and labor-managed economies

The paper analyzes the allocational and distributional issues connected with the operation of joint ventures by firms in Yugoslavia, several Eastern European countries and the People's Republic of China with Western firms. A variable-bargaining-power model is used to examine the behavior of joint ventures under the various institutional circumstances of these countries. Contrary to Brada's conclusions (J. Comp. Econ.1(2):167–181, June 1977), the present study indicates that the behavior of joint ventures in most of these countries is likely to be quite similar.     

Professional HRM Practices in Family Owned‐Managed Enterprises*

This study examines determinants of professional human resource management (HRM) practices within a sample of approximately 700 small to medium‐sized firms. Predictions from the agency theory and the resource‐based view of organizations lead to alternate hypotheses regarding the direct and indirect negative effects of family ownership and management on the usage of professional HRM practices. Results support predictions for both direct and indirect effects. These indirect effects occur through intermediary variables that reflect organizational complexity, such as firm size, (the presence of a) formal business plan, and HRM specialization. The findings lend partial support to both theories.     

International trade in a system of floating exchange rates

Since the introduction of the system of floating exchange rates policy-makers have been troubled by uncertainties regarding the effects of this system on international trade. Do exchange rate changes affect trade flows? Can governments manipulate exchange rates? Have countries been “injured” by exchange rate changes? What are the real costs of international monetary instability? Answers to these key questions are given in the following article.     

Misunderstandings concerning income distribution policies

Summary In this essay in honour of Professor P. Hennipman the latter's clarity and precision of expression are chosen as an example of how to avoid misunderstanding of his publications. As counterexamples some twenty-odd misunderstandings are set out by the essay's author in the field of income distribution policies, ranging from that specific subject to the theory of economic policy, to economic science and to science as a whole. Several of these misunderstandings are due to the essay's author, while others seem to prevail either among the general public or among scientists.