DOES GNP EXAGGERATE GROWTH IN “ACTUAL” OUTPUT? THE CASE OF THE UNITED STATES

Measures of national product can be misleading because there is nonmarket production. There are also distortions due to transactional activities, which are expenditures to support transactions, not actual output consumed. For 1950–89, this study recalculates output for the United States, adjusting for transactional activities and nonmarket production. Due to relatively rapid growth in transactional activities, GNP overstates output growth in the 1950s; because there was slow expansion of transactional activities in the early 1970s, GNP understates actual output. Since 1974, increases in transactional activities and shifts to market production lead GNP to exaggerate improvement of "actual" output per capita.     

What does it mean to find the face of the franchise? Physical attractiveness and the evaluation of athletic performance

We show that attractiveness, as measured by facial symmetry, leads to greater rewards in professional sports. National Football League quarterbacks who are more attractive are paid greater salaries and this premium persists after controlling for player performance.     

Nonlinearities and heterogeneity in environmental quality: An empirical analysis of deforestation

We use a panel data set of 59 developing countries over the 1972–1994 period to study the deforestation process. Relying on both parametric and semiparametric models, we examine nonlinearities and heterogeneity in the deforestation process. We first study the existence of an Environmental Kuznets Curve (EKC) and then analyze determinants of deforestation. Our data sample provides no evidence of an EKC. We also find that political institution failures may worsen the deforestation process in developing countries.     

Selection dynamics and adaptive behavior without much information

This paper uses the experimental method to investigate behavior in a coordination game when the information available to subjects is limited to their feasible choices and their experienced payoffs. In the experiment subjects converge to an absorbing state at rates that are orders of magnitude faster than reinforcement learning algorithms, but slower than under complete information. This state is very close to a mutual best response outcome. All cohorts converged to the market statistic predicted by the interior equilibrium regardless of the information conditions or the stability conditions. Eric Battalio programmed the graphical user interface. The National Science Foundation and Texas Advanced Research Program provided financial support. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation or the Texas Advanced Research Program.     

Offshoring and Reshoring: The Roles of Incomplete Contracts and Relative Bargaining Power

This paper demonstrates that an increase in bargaining power of Northern firms relative to that of their Southern contractors can trigger reshoring if the North-South wage differential is moderate, such that only industries with a high share of unskilled labor find outsourcing profitable. However, such an increase in Northern bargaining power can increase offshoring if the wage differential is so high that even industries with a low share of unskilled labor also offshore.     

The impact of rural roads and irrigation on household welfare: evidence from Vietnam

We measure the impact of road and irrigation projects on the livelihoods of households in the poorest and most remote areas of Vietnam using difference-in-difference estimators. We find that both rural road and irrigation projects help local households improve the access to safe water and welfare measured by a wealth index. The impact of irrigation projects is found to be larger than the impact of road projects. We also find heterogeneous impacts of road and irrigation projects. Households with higher levels of education tend to benefit more from road projects, while households with lower levels of education are likely to benefit more from irrigation projects.     

Measuring and Accounting for the Deprivation Gap of Portuguese Immigrants in Luxembourg

This paper examines the relative well‐being of Portuguese immigrants in Luxembourg by looking at indicators of material deprivation. We document material deprivation differences between immigrants and nationals—the “deprivation gap”—and measure the extent to which income differentials (and other sociodemographic differences) explain this gap using a combination of non‐parametric methods and a versatile graphical device. We find a large and significant deprivation gap against Portuguese immigrants, whatever the indicator considered. The extent to which the gap is merely a reflection of differences in income, however, depends on what deprivation items are taken into consideration. Income differences almost fully account for material deprivation differences when the latter is measured using the items included in the official EU social indicator of material deprivation. Inclusion of housing condition indicators mitigates this relationship and we then find compelling evidence that the deprivation gap is not entirely accounted for by income differentials.     

A new proof of the maximum principle

Summary. We offer a new proof of the maximum principle, by using the envelope theorem that is frequently used in the standard microeconomic theory. Received: April 11, 2002; revised version: June 26, 2002 Correspondence to: K. Shimomura     

Existence of a competitive equilibrium in a one sector growth model with heterogeneous agents and irreversible investment

Summary. We prove existence of a competitive equilibrium in a version of a Ramsey (one sector) model in which agents are heterogeneous and gross investment is constrained to be non negative. We do so by converting the infinite-dimensional fixed point problem stated in terms of prices and commodities into a finite-dimensional Negishi problem involving individual weights in a social value function. This method allows us to obtain detailed results concerning the properties of competitive equilibria. Because of the simplicity of the techniques utilized our approach is amenable to be adapted by practitioners in analogous problems often studied in macroeconomics. Received: September 13, 2001; revised version: December 9, 2002 RID="*" ID="*" We are grateful to Tapan Mitra for pointing out errors as well as making very valuable suggestions. Thanks are due to Raouf Boucekkine and Jorge Duran for additional helpful discussions. We also thank an anonymous referee for his/her helpful comments. The second author acknowledges the financial support of the Belgian Ministry of Scientific Research (Grant ARC 99/04-235 “Growth and incentive design”) and of the Belgian Federal Goverment (Grant PAI P5/10, “Equilibrium theory and optimization for public policy and industry regulation”). Correspondence to: C. Le Van