Increasing returns to scale and the reverse flexible accelerator

We show that the flexible accelerator principle characterizes optimal investment behavior only when the firm's technology exhibits decreasing returns to scale throughout. When there are increasing returns we show that there is a range in which investment increases as the capital stock increases towards its long-run equilibrium level.     

A simultaneous equations model of the educational process

This paper models the educational process as a system of six simultaneous equations. The endogenous variables include a student's achievement, motivation, expectations, efficacy, and perceived parents' and teachers' expectations. The model also includes forty-eight individual, home, peer, teacher, and school exogenous variables. Using a sample of over sixteen thousand twelfth grade students from the Equality of Educational Opportunity survey, we estimate the model by two-stage least squares and present the reduced form and structural form equations. We find that many educational outputs jointly determine one another. Also, the results suggest that school and teacher variables have important effects on educational outcomes.     

The determination of government expenditure for short-term forecasting and policy simulation models

This paper analyzes the way short-term forecasting and policy simulation models currently treat government expenditure and the extent to which available research is indicative of future developments for this sector. Emphasis is placed on the problems of, and the necessity for, developing endogenous equations for the various transfers and goods and services expenditures. Consideration is also given to the adaption of budget estimates to form endogenous or exogenous variables for the models, the distinctive problems of including state and local government sectors, and the interaction of the different parts of government expenditure with the rest of the model.     

A COMPARISON OF PROCEDURES FOR ESTIMATING RETURNS TO RESEARCH USING PRODUCTION FUNCTIONS

The production function approach has been one of the two main ex-post procedures used to estimate the rate of return to agricultural research. A critical part of estimating the marginal internal rate of return (MIRR) is the procedure adopted to spread the benefits of research through time. Past studies using this approach have given only brief consideration to this computational procedure. The objective in this study was to review the different computational procedures used and, then, using cross-section production function estimates for U.S. agriculture, determine whether the MIRR estimates are sensitive to the computational procedure used. The results from this comparison indicate a large range in the estimates. The implication, then, is that careful consideration should be given to the choice of computational procedure, both when undertaking such a study and when comparing the results of different studies.     

Is advertising rational?

Advertising is not a process by which gullible consumers are persuaded to buy things they don't want, according to the authors of this paper. Instead, it furnishes consumers with some useful information. It is not so much the claims made by advertisers that are helpful, but the fact that they are willing to spend extravagant amounts of money on a product that is informative. The authors find tentative evidence for this view of advertising and discuss its implications.     

Ethics and environmental marketing

Corporations have scrambled to bring to market products positioned and advertised as addressing the needs of the environmentally-conscious consumer. The vast majority of claims presented in support of these products are best described, however, as confused, misleading or outright illegal. Ethical considerations have not yet been integrated into environmental marketing, and as a result, long-term harm on both the individual and societal level may result. A framework for reversing this trend is presented. It identifies the sequence of actions necessary for the development and communication of ethical environmental marketing claims. The sequence is based upon two aspects of ethical theory: moral style and normative behavior. Specific implications for marketers' actions at each stage in the sequence of framework development are also discussed.Dr. Joel J. Davis is Assistant Professor of Journalism at San Diego State University. Prior to joining the faculty at San Diego State, Dr. Davis was Vice President, Associate Director of Strategic Planning and Research at D'Arcy Masius Benton & Bowles Advertising.