Dual Labor Markets and Trade Reform in China

This paper specifically models rigidities in the labor market in China and analyzes the effect of labor market liberalization on economic growth using a computable general equilibrium (CGE) model. Our results indicate that labor market reforms are essential to the realization of significant gains from China's accession in November 2001 to the World Trade Organization (WTO). In the absence of labor market reform, the gains to accession to the WTO are estimated to be minimal.     

Postgraduate Education and Labor Market Outcomes: An Empirical Analysis Using Micro Data from Japan

Using a large micro dataset from Japan, this paper provides evidence on the relationship between postgraduate education and labor‐market outcomes. According to the analysis, the key findings include: (1) The employment‐to‐population rates of females and elderly people with postgraduate educations are higher than those with undergraduate educations. (2) The postgraduate wage premium relative to undergraduates is approximately 30–40 percent, which is similar in magnitude for male and female workers. (3) The wage reduction after age 60 is less for workers with a postgraduate education. (4) The private rate of return to postgraduate education exceeds 10 percent.     

Win/Loss Data and Consumer Switching Costs: Measuring Diversion Ratios and the Impact of Mergers*

We propose an identification strategy for diversion based on win/loss data. First, we show that win/loss data from the merging firms and market shares in two periods for all firms are sufficient to identify the diversion ratios between the merging partners. Second, we show that win/loss data from the merging firms alone are sufficient for partial identification, and we construct a lower bound that provides a good approximation to the diversion ratio when switching costs are high. We demonstrate the performance of our method with numerical simulations and with an application to the Anthem/Cigna merger.     

Nonparametric estimation of scalar diffusion models of interest rates using asymmetric kernels

This paper proposes an asymmetric kernel-based method for nonparametric estimation of scalar diffusion models of spot interest rates. We derive the asymptotic theory for the asymmetric kernel estimators of the drift and diffusion functions for general and positive recurrent processes and illustrate the advantages of the Gamma kernel for bias correction and efficiency gains. The finite-sample properties and the practical relevance of the proposed nonparametric estimators for bond and option pricing are evaluated using actual and simulated data for U.S. interest rates.     

The Torrens–Ricardo Principle of Comparative Advantage: an Extension*

The Torrens–Ricardo Principle of Comparative Advantage rests on the special assumptions that, both in autarky and under free trade, all countries can produce all commodities and that, in autarkic equilibrium, each country consumes all producible commodities, at least incipiently. We reformulate the Principle to accommodate alternative assumptions. In our reformulation the emphasis is on marginal rates of substitution, not on the traditional marginal rates of transformation in production. It is shown in effect that, in existing formulations, the supply side is assigned a role that it can rarely sustain.     

Pricing Options With Curved Boundaries1

This paper provides a general valuation method for the European options whose payoff is restricted by curved boundaries contractually set on the underlying asset price process when it follows the geometric Brownian motion. Our result is based on the generalization of the Levy formula on the Brownian motion by T. W. Anderson in sequential analysis. We give the explicit probability formula that the geometric Brownian motion reaches in an interval at the maturity date without hitting either the lower or the upper curved boundaries. Although the general pricing formulae for options with boundaries are expressed as infinite series in the general case, our numerical study suggests that the convergence of the series is rapid. Our results include the formulae for options with a lower boundary by Merton (1973), for path-dependent options by Goldman, Sossin, and Gatto (1979), and for some corporate securities as special cases.     

Models of regional growth: An empirical evaluation

Cross section data are used to test two types of regional growth models: the demand and the supply based models. While the demand based model explained twice as much of the interregional variations in growth rates as did the supply model, we found that the basic element of the supply model, factor mobility, contributes significantly to the determination of regional growth. A model combining both demand and supply is developed and fitted tothe data. The performance of this model as judged by goodness of fit and dynamic simulations is remarkable. Long-run implications are derived from dynamic simulations.     

Conjoint analysis of demand for IP telephony: the case of Japan

With the recent diffusion of broadband (BB) services, Internet protocol (IP) telephony is expected to spread significantly in Japan. This article investigates the demand for IP telephony by using conjoint analysis. Projecting IP telephony demand also contributes to Japanese info-communication policy discussions. Two points are made. First, IP telephony is still currently considered an optional supplement or an add-on service option of high-speed BB Internet access services in Japan rather than a close substitute of existing plain old telephone service (POTS). At this point, we find little evidence that many households will promptly forsake their fixed line service for IP telephony. Second, we conclude that the key condition for the proliferation of IP telephony is the complete guarantee of quality of service (QoS), including voice quality, number portability, fax usage and emergency access, comparable to or exceeding that of existing POTS.