Dynamic almost ideal demand systems: an empirical analysis of alcohol expenditure in Ireland

This paper presents a dynamic form of the Almost Ideal Demand System (AIDS). Three versions of the static AIDS model are employed to determine the preferred long-run equilibrium model and represents the short-run dynamics by an error correction mechanism. This estimation procedure is then applied to alcohol expenditure in Ireland. The estimated point elasticities are consistent with previous studies and a priori expectations. Beer and spirits are found to be price inelastic in both the short and long run. While wine is price inelastic in the short run and price elastic in the long run.     

Book Reviews

Much research has shown that mortgage rates exert a negative influence on housing prices. This study analyses the long- and short-run relationships between housing prices and mortgage rates using advanced nonstructural estimation methods. As expected, a bivariate specification and a four-variable housing demand specification both show that these variables have a long-run relationship, and that there is a rather inelastic response of housing prices to changes in mortgage rates. However, contrary to previous research, the results from Granger non-causality tests, impulse response functions and variance decompositions reveal that there is virtually no short-run influence from mortgage rates to housing prices.     

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.     

Is there evidence of creative destruction in the Turkish manufacturing sector? Lessons from a cross-industry analysis of aggregate productivity growth

This paper examines the Schumpeterian creative destruction process by decomposing and analysing aggregate industry-level productivity growth in three Turkish manufacturing industries. The results are somewhat supportive of the Schumpeterian hypothesis given that the productivity effects within plants contributed the most to the aggregate level productivity growth. However, the results generally contradict the insight that plants entering the market have higher productivity than plants that exit the market. This supports Caballero and Hammour's (NBER Working Paper No. 7720, 2000) arguments that institutional and market constraints may interfere with the proper functioning of Schumpeter's creative destruction process.     

Measuring worker flows

The study explores differences between two measurement concepts of worker flows widely used in the literature referred to as the turnover and reallocation concepts. It is found that measuring worker flows by the turnover concept leads to substantially (about 5% of total employment) higher worker flow estimates and slightly increases age, size and industry group effects on firm level worker flows as well as differences between growing and declining firms relative to the reallocation concept.     

Options-based forecasts of futures prices in the presence of limit moves

The reported analysis examines a simultaneous estimation option-based approach to forecast futures prices in the presence of daily price limit moves. The procedure explicitly allows for changing implied volatilities by estimating the implied futures price and the implied volatility simultaneously. Using futures and futures options data for three agricultural commodities, it is found that the simultaneous estimation approach accounts for the abrupt changes in implied volatility associated with limit moves and generates more accurate price forecasts than conventional methods that rely on only one implied variable.     

Immigration and the unemployment benefit programme in Australia

A widely held view is that immigrants contribute to public debt through their over representation in the unemployment benefit programme. An empirical investigation, based on the 1990 Income Distribution Survey, finds support for this view. In contrast to the US and Canadian studies, this paper observes that the probability of receiving unemployment benefits is higher for immigrants than the native-born population and immigrants, who participate in the unemployment benefit programme, also receive a greater amount of unemployment benefits.     

Compositional data analysis and zeros in micro data

The application of compositional data analysis methods in economics has some attraction. The methodology relies upon the use of 'log-ratios' in the statistical analysis. Such an approach is not possible when the data to be analysed include observations where the observed budget share is zero. We, therefore, consider and extend the methods of compositional data analysis in the situation where the data to be analysed include observations where the observed budget share is zero. The modified compositional data methods are discussed both in statistical terms and through potential economic interpretations of the method. Further, the modified methodology is applied to the 1988-89 Australian Household Expenditure Survey yielding estimates for a system of Engel curves.     

The demand for paper and paperboard: econometric models for the European Union

Cost minimization theory suggests national demand equations for paper and paperboard in which demand is a negative function of the price of paper and paperboard, and a positive function of gross national product. A dynamic version of this model was estimated with data from European Union countries, for newsprint, printing and writing paper, and other paper and paperboard. Country-by-country equations proved unstable. Pooling the data across countries, with dummy variables to account for fixed country effects, led to well defined short-term and long-term elasticities with respect to price and gross national product. The hypothesis that income and price elasticities were the same across the European Union countries could not be rejected at the 1% significance level, for the three product groups. From 1969 to 1995, most of the growth in demand had been due to the growth in national product, while price increases had only a small negative effect.