Firm exit,technological progress and trade

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher productivity firms survive longer, most firm closures are young firms, higher productivity exporters are more likely to continue to export compared to less productive exporters and market exits as well as firm closures are typically preceded by periods of contracting market shares. The present paper shows that the simple inclusion of exogenous economy wide technological progress into the standard Melitz (2003) model generates a tractable dynamic framework that generates endogenous exit decisions of firms in line with the stylized facts. Furthermore, we derive the effects of faster technological progress and trade liberalization on export market exit and firm closure.     

A Regime‐Switching Approach to Modeling Rental Prices of U.K. Real Estate Sectors

This article uses regime‐switching models of the threshold type to analyze the adjustment process of rental prices for three U.K. commercial real estate sectors over the period 1974–2008. The nonlinear models outperform their linear counterparts in in‐sample fit. Their out‐of‐sample forecasting ability is better whenever the corresponding linear models contain a significant amount of neglected nonlinearity. Regime switches are triggered when the growth rates of rental price exceed certain threshold levels. For the industrial and retail sectors such regime switches occur in situations of strong excess demand, for the office sector they occur when there is strong excess supply.     

China＇s Outward Direct and Portfolio Investments

This paper analyzes developments and trends related to China's outward direct and financial investments by examining Chinese firms’overseas acquisitions, China's holdings of US Treasury securities, and the recently formally launched Qualified Domestic Institutional Investor programs. Strategies should be developed to reach optimal decisions for both direct and portfolio investments. We argue that China should have a longer‐term view for both direct and portfolio investments, enabling China to become the leader in Asia while maintaining its sustainable growth objective. China should invest heavily in the development of the Asian bond market and the Asian Currency Fund when making both portfolio and direct investment decisions.     

The Effectiveness of Gun Control Laws:

ABSTRACT In the July, 1998 issue of The American Journal of Economics and Sociology Professor Tomislav V. Kovandzic strongly criticized the 1997 work on gun control by Kwon, Scott, Safranski and Bae, which appears in the same journal. A rejoinder by Kwon et al. refuted Kovnanzic's criticisms and the authors stand by their published results. The purpose of this comment is to reconsider some of the points raised by Kovandzic and to consider other issues not raised in the original exchange. The bottom line is that several of the criticisms by Kovandzic are valid and, in fact, other serious econometric problems may plague the original paper by Kwon et al.     

The Simple Welfare Economics of Network Externalities and the Uneasy Case for Subscribership Subsidies

The goal of universal service has dominated the telecommunications policy landscape for at least the past half century. This policy objective has been promoted with cross subsidies from long-distance telecommunications services to subscribers to local telecommunications service. The economic rationale for these cross subsidies is network externalities. In this paper, we show that: (1) the presence of network externalities, even if substantial in overall magnitude, does not generally justify a subscribership subsidy, even a well-designed one; and (2) the empirical realities of telecommunications markets make it unlikely that subscribership subsidies of any kind will increase social welfare.     

Total factor productivity, the east Asian miracle, and the world production frontier

Total Factor Productivity, the East Asian Miracle, and the World Production Frontier. — The post WWII growth of the East Asian Tiger states has stimulated the discussion about its determinants. Young and Krugman hold that high capital accumulation rather than gains in efficiency or technological progress has spurred growth. Nelson and Pack, however, have recently criticized the methods of measuring technological progress. Applying the nonparametric approach to frontier production function determination and the Malmquist index of total factor productivity change, the authors take up this criticism. They calculate productivity indicators for a sample of 18 American, Asian, and European countries. For the Tiger states, their results confirm that capital accumulation was the main source of growth in 1960-1973, whereas they find evidence for an increasing importance of efficiency improvements for the growth in 1973-1990.