1.
Efficient Bidding with Externalities
Ines Macho-Stadler
David Perez-Castrillo
David Wettstein
We
implement a family of efficient proposals to share benefits
generated
in environments with externalities. These proposals
extend
the Shapley value to games with externalities and are
parametrized
through the method by which the externalities are
averaged.
We construct two slightly different mechanisms: one for
environments
with negative externalities and the other for
positive
externalities. We show that the subgame perfect
equilibrium
outcomes of these mechanisms coincide with the
sharing
proposals.
Keywords:
Implementation, Externalities, Bidding, Shapley Value.
JEL: D62 C71
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:aub:autbar:641.05&r=all
2.
Permanent vs Transitory Components and Economic Fundamentals
Anthony Garratt (School of Economics,
Mathematics &
Statistics, Birkbeck College)
Donald Robertson
Stephen Wright (School of Economics,
Mathematics &
Statistics, Birkbeck College)
Any
non-stationary series can be decomposed into permanent (or
"trend")
and transitory (or "cycle") components. Typically some
atheoretic
pre-filtering procedure is applied to extract the
permanent
component. This paper argues that analysis of the
fundamental
underlying stationary economic processes should
instead
be central to this process. We present a new derivation
of
multivariate Beveridge-Nelson permanent and transitory
components,
whereby the latter can be derived explicitly as a
weighting
of observable stationary processes. This allows far
clearer
economic interpretations. Different assumptions on the
fundamental
stationary processes result in distinctly different
results;
but this reflects deep economic uncertainty. We
illustrate
with an example using Garratt et al's (2003a) small
VECM
model of the UK economy. Any non-stationary series can be
decomposed
into permanent (or "trend") and transitory (or "cycle")
components.
Typically some atheoretic pre-filtering procedure is
applied
to extract the permanent component. This paper argues
that
analysis of the fundamental underlying stationary economic
processes
should instead be central to this process. We present a
new
derivation of multivariate Beveridge-Nelson permanent and
transitory
components, whereby the latter can be derived
explicitly
as a weighting of observable stationary processes.
This
allows far clearer economic interpretations. Different
assumptions
on the fundamental stationary processes result in
distinctly
different results; but this reflects deep economic
uncertainty.
We illustrate with an example using Garratt et al's (
2003a)
small VECM model of the UK economy.
Keywords:
Multivariate Beveridge-Nelson, VECM, Economic
Fundamentals, Decomposition.
JEL: C1 C32 E0 E32 E37
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:bbk:bbkefp:0501&r=all
3. UK
Real-Time Macro Data Characteristics
Anthony Garratt (School of Economics,
Mathematics &
Statistics, Birkbeck College)
Shaun P Vahey
We
characterise the relationships between preliminary and
subsequent
measurements for 16 commonly-used UK macroeconomic
indicators
drawn from two existing real-time data sets and a new
nominal
variable database. Most preliminary measurements are
biased
predictors of subsequent measurements, with some revision
series
affected by multiple structural breaks. To illustrate how
these
findings facilitate real-time forecasting, we use a vector
autoregression
to generate real-time one-step-ahead probability
event
forecasts for 1990Q1 to 1999Q2. Ignoring the predictability
in
initial measurements understates considerably the probability
of above
trend output growth.
Keywords:
real-time data, structural breaks, probability event
forecasts
JEL: C22 C82 E00
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:bbk:bbkefp:0502&r=all
4.
Relative Performance Evaluation Contracts and Asset Market
Equilibrium
Sandeep Kapur (School of Economics,
Mathematics & Statistics,
Birkbeck College)
Allan Timmermann
We
analyse the equilibrium consequences of performance-based
contracts
for fund managers. Managerial remuneration is tied to a
fund's
absolute performance and its performance relative to rival
funds.
Investors choose whether or not to delegate their
investment
to better-informed fund managers; if they delegate
they
choose the parameters of the optimal contract subject to the
fund
manager's participation constraint. We find that the impact
of
relative performance evaluation on the equilibrium equity
premium
and on portfolio herding critically depends on whether
the participation
constraint is binding. Simple numerical
examples
suggest that the increased importance of delegation and
relative
performance evaluation may lower the equity premium.
Keywords:
portfolio delegation, relative performance evaluation,
equity premium
JEL: G11 G12 G23
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:bbk:bbkefp:0503&r=all
5.
Efficiency in Negotiation: Complexity and Costly Bargaining
Jihong Lee (School of Economics,
Mathematics & Statistics,
Birkbeck College)
Hamid Sabourian
Even
with complete information, two-person bargaining can
generate
a large number of equilibria, involving disagreements
and
inefficiencies, in (i) negotiation games where disagreement
payoffs are
endogenously determined (Busch and Wen, 1995) and (ii)
costly
bargaining games where there are
transaction/participation
costs (Anderlini and Felli, 2001). We
show
that when the players have (at the margin) a preference for
less
complex strategies only efficient equilibria survive in
negotiation
games (with sufficiently patient players) while, in
sharp
contrast, it is only the most inefficient outcome involving
perpetual
disagreement that survives in costly bargaining games.
We also
find that introducing small transaction costs to
negotiation
games dramatically alters the selection result:
perpetual
disagreement becomes the only feasible equilibrium
outcome.
Thus, in both alternating-offers bargaining games and
repeated
games with exit options (via bargaining and contracts),
complexity
considerations establish that the Coase Theorem is
valid if
and only if there are no transaction/participation costs.
Keywords:
Bargaining, Repeated Game, Coase Theorem, Transaction
Cost, Complexity, Bounded
Rationality, Automaton
JEL: C72 C78
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:bbk:bbkefp:0505&r=all
6.
SAVING, FUNDING AND ECONOMIC GROWTH
E Philip Davis
Yu-Wei Hu
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:bru:bruppp:05-02&r=all
7. An
Assessment of the Currency Board Regime in Bosnia and
Herzegovina
Vivek H. Dehejia and Nadja Kamhi
(Department of Economics,
Carleton University)
Date: 2004-06-15
Date: 2005-02-06
URL:
http://d.repec.org/n?u=RePEc:car:carecp:05-01&r=all
8.
Intertemporal and Spatial Location of Disposal Facilities
Francisco J. Andre (Universidad Pablo de
Olavide de Sevilla)
Francisco Velasco (Universidad de Sevilla)
Luis Gonzalez (Universidad de Sevilla)
The
optimal capacity and location of a sequence of landfills are
studied,
and the interactions between both decisions are pointed
out.
Deciding the capacity of a landfill has some spatial
implications,
because it effects the feasible region for the rest
of the
landfills, and some temporal implications because the
capacity
determines the lifetime of the landfill and hence the
instant
of time where the next landfills will need to be
constructed.
Some general mathematical properties of the solution
are
provided and interpreted from an economic point of view. The
resulting
problem turns out to be nonconvex and, therefore, it
can not
be solved by conventional optimization techniques. Some
global optimization
methods are used to solve the problem in a
particular
case to illustrate the behavior of the solution
depending
on the parameter values.
Keywords:
Landfilling, Optimal Capacity, Optimal Location,
Global Optimization.
JEL: C61 C63 Q30 R53
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_74&r=all
9.
Measuring polarization, inequality, welfare and poverty
Juan Gabriel Rodriguez (Universidad Rey
Juan Carlos de
Madrid e Instituto de Estudios Fiscales)
This
paper analyzes the relationship between polarization and
inequality,
welfare and poverty measures. First, the Wolfson
polarization
measure is generalized in terms of the between-
groups
and within-groups Gini components for income groups
separated
by any z income value. Second, it is shown that
polarization
is the difference between the welfare levels of rich
and poor
income groups when feelings of identification between
individuals
are based on their utility functions. Third, the
proposed
polarization measure is a function of the Sen poverty
index,
its extension due to Shorrocks (1995) and the normalized
poverty
deficit index when the z income value represents the
poverty
line. In addition, these results are linked to the
Esteban
and Ray (1994) and Esteban et al. (1999) polarization
measures.
Keywords:
polarization, inequality, welfare, poverty.
JEL: D39 D63 H30
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_75&r=all
10.
Analyzing the Determinants of Freight Shippers’ Behavior:
Own-Account versus Purchased Transport in
Andalusia.
Cristina Borra Marcos (Universidad de
Sevilla)
Luis Palma Martos (Universidad de Sevilla)
Previous
work in the demand for freight transportation has
focused
in the rail-truck substitution problem, leaving aside the
prior
own-account versus third-party tradeoff, often found in
transportation
decision-making. In Andalusia, domestic freight
transport
takes place mostly by road, an important part of which
is
own-account transport. The purpose of this paper is to analyze
shippers’
behavior relative to this question, paying particular
attention
to whether the decision to use a private form of
transport
is taken on a short term or on a medium term horizon.
In order
to provide a quantitative evaluation, as an illustrative
case,
the models developed are tested on data gathered by means
of a
sample survey conducted to Andalusian enterprises belonging
to the
food industry.
Keywords:
Freight transport demand, shippers’ behavior,
discrete-choice models, own-account
transport.
JEL: R41 C35
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_76&r=all
11.
Immigration and Pension Benefits in the Host-country
Juan A. Lacomba (Universidad de Granada)
Francisco M. Lagos (Universidad de Granada)
This
paper examines the role that low-skilled immigrant labor
force
plays in determining the benefits of the public pension of
the host
population. With an overlapping-generations model in
continuous
time which allows to identify which groups of native
population
are better or worse off with immigration and a fully
redistributive
pension system, we find that the retirement
benefits
and hence the welfare levels of the host population are
affected
in a different way whether sharing or not pension
benefits
with immigrants. In this sense, the youngest local
population
may prefer, contrary to the oldest ones, a policy of
closed
borders.
Keywords:
Immigration, welfare, pension benefits.
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_77&r=all
12.
Global and local indeterminacy and optimal environmental
public policies in an economy with public
abatement activities
Rafaela Perez Sanchez (Universidad
Complutense de Madrid)
Jesus Ruiz (Universidad Complutense de
Madrid)
We study
the dynamic properties of an endogenous growth model
with
pollution in which the government can control the pollution
through
distorting taxes on the pollutant firms and through
public
abatement activities. First, we characterize the
conditions
for indeterminacy of equilibria when the government is
benevolent
and chooses its tax policy by taking into account the
decentralized
competitive equilibrium. Under this second best
setup we
show that two balanced growth paths can be found (one
with a
low level of pollution and the other with a high level)
both of
which can be locally indeterminate. Therefore, under
indeterminacy,
the optimal public policies do not guarantee that
the
economy will converge towards the steady state characterized
by a low
level of pollution and neither guarantee that the
economy
will display, along the transition, low levels of
pollution.
Second, we show that the central planner solution
might
also display indeterminacy; in particular, two Pigouvian
taxes
can be found.
Keywords:
Global and local indeterminacy, Environmental taxes,
Pollution, Abatement, Pigouvian taxes
JEL: H23 O41 Q28
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_79&r=all
13.
Non-Catastrophic Endogenous Growth with Pollution and
Abatement
J.Aznar-Marquez (Univ.Miguel Hernandez
d'Elx)
J.R. Ruiz-Tamarit (Universitat de Valencia)
When
there are pollution externalities the competitive
equilibrium
is not Pareto-optimal nor environmentally sustainable
even if
abatement activities are endogenously decided. In this
paper we
introduce the possibility of an ecological catastrophe
like the
one predicted by the global climate change, imposing the
constraint
of an upper-limit to the pollutants stock. We
characterize
the socially optimal solution and study conditions
for the
sustainability of the balanced growth path. We find a
trade-off
between environmental quality and growth. The rate of
growth
depends negatively on the weight of environmental care in
the
utility function and positively on the population growth rate.
We show that
the emissions reduction recommended in the Kioto
protocol
is an appropriate policy to avoid the ecological
catastrophe
and ensure global efficiency and positive long-run
growth.
Keywords:
Environment, Externalities, Optimal Growth, Ecological
Catastrophe, Sustainability.
JEL: C61 C62 O41 Q5
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_80&r=all
14.
Characterizing the Optimal Composition of Government
Expenditures
Rafaela Perez Sanchez (Universidad
Complutense de Madrid)
This
paper extends the neoclassical growth model with productive
public
capital by including an infrastructure efficiency index,
which is
assumed to depend on a public choice variable, in
particular,
the share of public spending allocated to productive
public
consumption. A golden rule for the allocation of public
expenditure
between productive consumption and investment is
specified.
Under this framework, the observed path for the stock
of
infrastructures and the proposed efficiency index in the US
economy
during the last fifty years have been close to optimal: a
lower
stock of infrastructures has been accumulated, but it has
been
used more efficiently.
Keywords:
Public Expenditure Composition, Public Investment,
Public Consumption, Nominal and Effective
Infrastructures, Infrastructures
Efficiency Index
JEL: E62 E65 H40 H54 O41
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_81&r=all
15.
Network Externalities: Adoption of Low Emission Technologies
in the Automobile Market
Eftichios S. Sartzetakis (University of
Macedonia (Greece)
and University College of the Cariboo)
This
paper develops a simple model of the automobile market, in
which
significant network and environmental externalities are
present,
and examines consumers' choice of technology. There are
two
types of technology: one that currently dominates the market
but
imposes significant environmental costs, and one that is
expected
to be introduced and has zero environmental costs. We
find
that, in the absence of policy intervention, the benefits of
the
installed base and the price diferentials in favour of the
existing
technology will deter new users from adopting the clean
technology.
We consider diferent tax policies that will induce
adoption
provided it is welfare warranted. First, we analyze a
tax
policy on the dirty technology with the tax revenues
generated
being used for general purposes.Under this case, we
find that
the tax, to induce adoption, will be greater than the
marginal
environmental damage. Second, we consider the tax
revenue
generated from the dirty technology to be earmarked
towards
a future subsidy to the clean technology. In this case,
the tax
is found to be lower than the case where revenues are
used for
general purposes and more interesting is the fact that
the tax
can be set equal to the marginal damage. Finally, we
examine
the case where the government credibly commits a revenue
neutral
tax/subsidy policy prior to the introduction of the clean
technology
and we find that the tax and the subsidy expenditures
required
could be lower relative to the case without
precommitment.
Date: 2004
URL: http://d.repec.org/n?u=RePEc:cea:doctra:e2004_82&r=all
16.
Tradable emission permits in a federal system
Harrie A.A. Verbon (Tilburg University and
Center)
Cees A. Withagen (Tilburg University and
Center; Free
University Amsterdam and Tinbergen
Institute)
A system
of tradable permits in the standard setting is
effective
in attaining the policy objective with regard to
pollution
reduction at the least cost. This outcome is challenged
in case
of a tradable permit system in a federal state with
individual
states having discretionary power regarding
environmental
policy and where pollution is transboundary across
states.
This paper explores the opportunities of the central
authority
to influence the effectiveness of the system, under
different
institutional arrangements, through the initial
allocation
of permits
Keywords:
tradable permits, trade bans, fiscal federalism.
JEL: H21 H23 Q00
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_83&r=all
17.
Economic Evaluation of the Spanish port System Using the
Promethee Multicriteria decision Method
Jose Ignacio Castillo Manzano (Universidad
de Sevilla)
M? Teresa Arevalo Quijada (Universidad de
Sevilla)
M? Mercedes Castro Nuno (Universidad de
Sevilla)
Due to legislation
changes during the Nineties, the Spanish Port
System
has gone through a series of changes that, simultaneous
with a
period of economic expansion and generalized marine
traffic
growth, have affected the Port System's composition and
organization.
The gradual transformations produced, give shape to
a new
model of operation for Port Authorities, which now start to
be
managed under business criteria and procedures of functional
autonomy
and competition.Our work considers these circumstances
from the
approach offered by multiple objective decision models,
using
certain ratios with economic meaning which will allow
determining
how their relative ranking within the national set
has
varied. The great variety of available business ratios gives
the
problem a discrete multicriteria dimension. Thus we have
chosen
the Promethee method for our analysis, given its results
simplicity
and easy understanding for the decision agent, the
economic
interpretation of its parameters, and the stability of
its
results.
Keywords:
Spanish Port System, Multicriteria Analysis, Promethee
Method.
JEL: C61 H54
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:cea:doctra:e2004_84&r=all
18.
Quantifying Latin American firms'exposure to external factors
Sergio Pernice
Mariano Fernandez
Maria Alegre
This is
the last of a series of three working papers analyzing
the
basic characteristics of the economic environment in which
Latin
American firms operate and the optimal design of incentive
programs
compatible with such environment. Executive pay-for-
performance
compensation schemes are usually based on stock
returns.
However, stock returns change in response to forces
beyond management
control (e.g., market crushes). The economic
environment
in which Latin American firms operate is highly
unstable,
which means that this is a very important limitation
for
Latin American firms. In the present paper, we present a
procedure
to decompose variability in stock returns in order to
identify
and measure components that respond to external factors
beyond
management control. For this, we have created indices that
capture
statistically the external influences that affect stock
returns.
We show how such indices can be used to construct a risk
profile
that allows management to know to what extent observed
outcomes
depend on external factors, versus their own actions. In
addition,
these indices can be used as a basis to develop
"indexed
options": financial instruments designed to factor out
the
effects of external risks, making it possible for executives
to be
evaluated only on the basis of the value they generate. We
show
that these indices can be developed out of purely local
information,
but that the solutions tend to be moderately
unstable,
which implies that compensation instruments developed
with
this methodology should be of relatively short maturity.
Date: 2004-12
URL: http://d.repec.org/n?u=RePEc:cem:doctra:282&r=all
19.
Optimal Portfolio Management for Individual Pension Plans
Christian Gollier
We
explore the various arguments for and against the
recommendation
that younger households should invest a larger
share of
their pension wealth in risky assets. The ability of
young
agents to compensate their financial losses by saving more
during
their career provides the strongest argument in favour of
younger
people investing more aggressively in the stock market.
Meanreversion
in stock returns yields another argument. However,
the
uninsurability of the risky human capital goes in the
opposite
direction, together with the imperfect knowledge that
young
investors have about the distribution of asset returns.
Keywords:
dynamic portfolio choice, pension plan, retirement,
time horizon
JEL: G11
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1394&r=all
20.
Innovation Strategies in a Competitive Dynamic Setting
Ruslan Lukach
Joseph Plasmans
Peter M. Kort
This
paper presents a dynamic model of a competitive R&D and
production
duopoly subject to knowledge spillovers. Two
asymmetric
firms operate for a limited period of time and dispose
their knowledge
capital in the end. Both firms and the social
planner
prefer the R&D-cooperative strategy over the competitive
one
regardless of the intensity of knowledge spillovers.
Accumulation
of knowledge capital results allows the monopolist
to have
lower marginal cost of production and charge a lower
market
price than a fully competitive duopoly. Being able to
define
the degree of knowledge exchange when creating a research
joint
venture, the firms do not necessary choose the highest
degree
of cooperation available.
Keywords:
innovation, R&D, spillovers, cooperation
JEL: C72 D21 O31
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1395&r=all
21. Why
are More Redistributive Social Security Systems Smaller?
A Median Voter Approach
Marko Kothenburger
Panu Poutvaara
Paola Profeta
We
suggest a political economy explanation for the stylized fact
that
intragenerationally more redistributive social security
systems
are smaller. Our key insight is that linking benefits to
past
earnings (less redistributiveness) reduces the efficiency
cost of
social security (due to endogenous labor supply). This
encourages
voters who benefit from social security to support
higher contribution
rates in political equilibrium. We test our
theory
with a numerical analysis of eight European countries. Our
simple,
but suggestive median voter model performs relatively
well in
explaining the stylized fact and cross-country
differences
in social security contribution rates.
Keywords:
earnings-related and flat-rate benefits, social
security, public pensions, median
voter model
JEL: D72 H55
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1397&r=all
22. Free
Choice of Unfunded Systems: A First Assessment
Gabrielle Demange
The
first pillars of social security systems differ widely
across
European countries both in the contribution rate and intra-
generational
redistribution. What would the impact of these
differences
be if EU citizens had free access to all systems?
This
paper aims to highlight some basic features of this question
in a
very simple two-country model.
Keywords:
unfunded systems, intragenerational redistribution,
free choice
JEL: H55 H87
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1398&r=all
23.
Sustainability of Portuguese Fiscal Policy in Historical
Perspective
Carlos Fonseca Marinheiro
This paper
analyses the sustainability of Portuguese public
finances,
making use of a long dataset with more than a full
century
of observations. The use of such a long dataset is
appropriate
because both unit root and cointegration tests
require
a long period of data. The sustainability testing
procedure
is based on unit root and cointegration tests. We find
considerable
evidence in favour of sustainability for the 1903-
2003
period. The overall conclusion of sustainability for the
1903-2003
period is not maintained for the more recent 1975-2003
period,
which is characterised by the largest GDP deficit ratios
of our
sample. This latter period appears to signal a shift to an
unsustainable
path in Portuguese fiscal policy. Hence, our
results
suggest that fiscal consolidation efforts must, in fact,
be
continued in Portugal.
Keywords:
fiscal sustainability, sustainability of public debt,
intertemporal budget constraint,
government deficits
and debt, Portugal
JEL: E60 H60
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1399&r=all
24. The
Effect of Monetary Unification on Public Debt and its
Real Return
Roel Beetsma
Koen Vermeylen
We
explore the implications of monetary unification for real
interest
rates and (relative) public debt levels. The adoption of
a common
monetary policy renders the risk-return characteristics
of the
participating countries more similar, so that the
substitutability
of their public debt increases after unification.
This
implies that the average expected real return on the debt
increases.
Also, the share of the unionwide debt issued by
relatively
myopic governments or of countries that initially have
a
relatively dependent central bank increases after unification.
This may
put the political sustainability of the union under
pressure.
A transfer scheme that penalizes debt increases beyond
the
union average is able to undo the interest rate effect of
unification,
but magnifies the spread in relative debt levels.
Keywords:
monetary union, (relative) public debt, interest rates,
externalities, substitutability,
central bank
independence
JEL: E42 E62 E63 F33
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1400&r=all
25. Is
It All Oil?
Frank Asche
Petter Osmundsen
Maria Sandsmark
After
opening up of the Interconnector, the liberalized UK
natural
gas market and the regulated Continental gas markets
became
physically integrated. The oil-linked Continental gas
price
became dominant, due to both the large volume of the
Continental
market and to the fact that the significant call
options
embedded in the complex take-or-pay contracts make these
contracts
the marginal source of supply. However, in an interim
period –
after deregulation of the UK gas market (1995) and the
opening
up of the Interconnector (1998) – the UK gas market had
neither
government price regulation nor a physical Continental
gas
linkage. We use this period – which for natural gas markets
displays
an unusual combination of deregulation and autarky –
as a
natural experiment to explore if decoupling of natural gas
prices
from prices of other energy commodities, such as oil and
electricity,
took place. Using monthly price data, we find a
highly
integrated market where wholesale demand seems to be for
energy
rather than a specific energy source.
Keywords:
energy markets, price interlinkages, cointegration
analysis
JEL: C32 L10 L90 Q48
Date: 2005
URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_1401&r=all
26.
Media Capture in a Democracy: The Role of Wealth
Concentration
Giacomo Corneo
Since
objective news coverage is vital to democracy, captured
media
can seriously distort collective decisions. The current
paper
develops a voting model where citizens are uncertain about
the
welfare effects induced by alternative policy options and
derive
information about those effects from the mass media. The
media
might however secretly collude with interest groups in
order to
influence the public opinion. In the case of voting over
the
level of a productivity-enhancing public bad, it is shown
that an
increase in the concentration of firm ownership makes the
occurrence
of media bias more likely. Although media bias is not
always
welfare worsening, conditions for it to raise welfare are
restrictive.
Keywords:
mass media, public bads, voting, wealth inequality
JEL: D72 H41
Date: 2005
URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_1402&r=all
27.
Ageing, Funded Pensions and the Dutch Economy
Lans Bovenberg
Thijs Knaap
This
paper attempts to paint a coherent picture of the effects
of
ageing on a small, open, economy with large pension funds in
different
institutional settings. Quantitative scenarios are
projected
with an applied computable general equilibrium model
with
institutional details. We find that ageing leads to a
tighter
labor market, increasing costs for both pension funds and
the
government, and leaving the economy vulnerable to financial
and
further demographic shocks. We show that defined benefit
pension
arrangements can be destabilizing, but less so if an
average-wage
variable-indexation contract is chosen. Government
can help
by adopting a policy of tax smoothing, but the single
most
important determinant of the net burden of ageing is the
eventual
size of the increase in labor market participation of
older
workers. The intergenerational welfare effects of
demographic
shocks and changes in international interest rates
are
sizable and should be an integral part of the assessment of
different
policy instruments.
Keywords:
ageing, funded pensions, applied general equilibrium
models, the Netherlands
JEL: E17 H30 J18
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1403&r=all
28. The
Incentive Effect of Fiscal Equalization Transfers on Tax
Policy
Thiess Buttner
A
theoretical analysis considers the impact of a typical system
of
redistributive “fiscal equalization” transfers on the
taxing
effort of local jurisdictions. More specifically, it shows
that the
marginal contribution rate, i.e. the rate at which an
increase
in the tax base reduces those transfers, might be
positively
associated with the local tax rate while the volume of
grants
received is likely to be inversely related to the tax base.
These
predictions are tested in an empirical analysis of the tax
policy
of German municipalities. In order to identify the
incentive
effect the analysis exploits discontinuities in the
rules of
the fiscal equalization system as well as policy changes.
The
empirical results support the existence of an incentive
effect,
suggesting that the high marginal contribution rates
induce
the municipalities to raise their business tax rates
significantly.
Keywords:
fiscal equalization, tax competition, fiscal
federalism, incentive effect of
taxation, regression
discontinuity
JEL: H71 H77
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1404&r=all
29.
Personal Security Accounts and Mandatory Annuitization in a
Dynastic Framework
Luisa Fuster
Ayse Imrohoroglu
Selahattin Imrohoroglu
The
aging of the populations in the OECD countries has prompted
various
calls for reforming the existing pay-as-you-go (PAYG)
pension
systems. Currently, there is renewed discussion in the
United
States about partial privatization where a fraction of the
social
security payroll tax would be diverted to Personal
Security
Accounts. In this paper, we quantitatively evaluate the
welfare
effects of reforming social security by introducing a PSA
with and
without mandatory annuitization in an economic
environment
with bequests and borrowing constraints. Our setup
allows
us to assess whether mandatory saving or mandatory
annuitization
of accumulated PSA wealth at retirement is welfare
enhancing,
and if so, for what type of individuals. Our setup
follows
Fuster, Imrohoroglu, and Imrohoroglu (2003) and studies
various
pension schemes in a two-sided altruistic framework where
social
security provides insurance against individual income and
lifespan
uncertainty. This framework is well suited to consider
the
annuity role of social security for single individuals versus
for
households where families also provide annuity insurance to
their
members. Our main findings can be summarized as follows: -
A majority
of households prefer a PSA reform (with or without
mandatory
annuitization) over the current PAYG pension system.
Aggregate
capital, output, and consumption, as well as
individuals'
lifetime welfare, are higher in the reformed pension
system. -
Mandatory annuitization benefits most households. In
light of
these findings, structuring the social security reform
along a
two-tiered system with a safety net for low income
households
that do not have access to family insurance, and
allowing
all households to accumulate retirement wealth faster
through
PSAs, and finally, requiring some level of annuitization
of this
wealth appear welfare improving for a large fraction of
households.
JEL: E20 E60
Date: 2005
URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_1405&r=all
30.
Policy Mix and Debt Sustainability: Evidence from Fiscal
Policy Rules
Peter Claeys
This
paper characterises rules-based fiscal policy setting.
Basically,
we translate a standard monetary policy rule into a
simple
fiscal policy rule. We then infer on fiscal policymakers'
reaction
coefficients by testing the rule with GMM. Interaction
is also
tested directly by the inclusion of monetary policy
setting.
Our results qualify existing evidence on systematic
fiscal
policy in two respects. First, fiscal policy usually
stabilises
public debt. And there is indeed substantial
interaction
between fiscal and monetary policy via the debt
channel.
Second, sustainability is achieved with a “stop-go”
cycle of
consolidation. Consolidation does not come at the cost
of less
cyclical stabilisation unless debt ratios are high.
Keywords:
monetary policy, fiscal policy, policy interaction and
policy rules, debt sustainability
JEL: E61 E63
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1406&r=all
31.
Supplier Discretion over Provision: Theory and an
Application to Medical Care
James Malcomson
Suppliers
who are better informed than purchasers, such as
physicians
treating insured patients, often have discretion over
what to
provide. This paper shows how, when the purchaser
observes
what is supplied but can observe neither recipient type
nor the actual
cost incurred, optimal provision differs from what
would be
efficient if the purchaser had full information, whether
or not
the supplier can extract informational rent. The analysis
is
applied to, among other things, data on tests for coronary
artery
disease and to Medicare diagnosis-related groups defined
by the
treatment given, not just the diagnosis, illustrating the
biases
in provision that result.
Keywords:
supplier discretion, procurement, public provision,
diagnosis-related groups, medicare,
prospective payment,
cost-effectiveness
JEL: D82 H42 I11 I18
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:ces:ceswps:_1407&r=all
32.
Distribution-Free Bounds for Serial Correlation Coefficients
in Heteroskedastic Symmetric Time Series
Jean-Marie Dufour
Abdeljelil Farhat
Marc Hallin
We
consider the problem of testing whether the observations X1,
? ? ?,
Xn of a time series are independent with unspecified (
possibly
nonidentical) distributions symmetric about a common
known
median. Various bounds on the distributions of serial
correlation
coefficients are proposed: exponential bounds, Eaton-
type
bounds, Chebyshev bounds and Berry-Esseen-Zolotarev bounds.
The bounds
are exact in finite samples, distribution-free and
easy to
compute. The performance of the bounds is evaluated and
compared
with traditional serial dependence tests in a simulation
experiment.
The procedures proposed are applied to U.S. data on
interest
rates (commercial paper rate). <P>Nous etudions le
probleme
qui consiste a tester l’hypothese que des
observations
X1, ? ? ?, Xn d’une serie chronologique sont
independantes
avec des distributions non specifiees (
possiblement
non identiques) symetriques autour d’une mediane
connue.
Nous proposons plusieurs bornes sur les distributions des
coefficients
d’autocorrelation : bornes exponen-tielles,
bornes
de type Eaton, bornes de Chebyshev et bornes de Berry-
Esseen-Zolotarev.
Les bornes sont exactes dans les echantillons
finis,
non parametriques et faciles a calculer. Nous evaluons
par
simulation la performance des bornes et comparons celle-ci a
celle de
tests d’autocorrelation traditionnels. Les
procedures
proposees sont appliquees a des donnees de taux
d’interet
americaines (“commercial paper rate”).
Keywords:
autocorrelation; serial dependence; nonparametric test;
distribution-free test;
heterogeneity;
heteroskedasticity; symmetric
distribution; robustness;
exact test; bound; exponential bound; large
deviations;
Chebyshev inequality; Berry-Esseen;
interest rates,
autocorrelation; serial dependence;
nonparametric test;
distribution-free test;
heterogeneity;
heteroskedasticity; symmetric
distribution; robustness;
exact test; bound; exponential bound;
large deviations;
Chebyshev inequality; Berry-Esseen;
interest rates
JEL: C14 C22 C12 C32 E4
Date: 2005-02-01
URL: http://d.repec.org/n?u=RePEc:cir:cirwor:2005s-04&r=all
33.
Group Formation and Voter Participation
Helios Herrera
Cesar Martinelli
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000463&r=all
34.
Individual Preferences for Giving
Ray Fisman
Shachar Kariv
Daniel Markovits
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000468&r=all
35.
Asymmetric Information about Rivals’ Types in Standard
Auctions: An Experiment
James Andreoni
Yeon-Koo Che
Jinwoo Kim
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000474&r=all
36.
Information Acquisition: Experimental Analysis of a
Boundedly Rational Model
Xavier Gabaix
David Laibson
Guillermo Moloche
Stephen Weinberg
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000480&r=all
37.
Optimal Defaults and Active Decisions
James Choi
David Laibson
Brigitte Madrian
Andrew Metrick
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000488&r=all
38. The
Sunk Cost Bias and Managerial Pricing Practices
Nabil Al-Najjar
Sandeep Baliga
David Besanko
Date: 2005-02-10
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000496&r=all
39. Art
and the Internet: Blessing the Curse?
Patrick Legros
Date: 2005-02-12
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000502&r=all
40.
Fertility and Social Security
Michele Boldrin
Maria Cristina De Nardi
Larry E. Jones
Date: 2005-02-13
URL:
http://d.repec.org/n?u=RePEc:cla:levrem:666156000000000506&r=all
41. THE EXPLANATORY
POWER OF TRUST AND COMMITMENT AND
STAKEHOLDERS’ SALIENCE: THEIR INFLUENCE ON
THE REVERSE
LOGISTICS PROGRAMS PERFORMANCE
Maria Jose Alvarez Gil
Pascual Berrone
F. Javier Husillos
Nora Lado
There is
a growing awareness among practitioners and scholars
regarding
the importance of Relationship Marketing and its
advantages
in the supply chain management context. This is
particularly
appropriate for Reverse Logistics (RL) activities,
which
are characterized by several relationships between
different
stakeholders and the firm. Drawing on multiple
theoretical
approaches, we propose that RL programs result from
the
combination of external, organizational, and individual
factors.
We emphasize the role of trust and commitment as key
influential
elements on the RL systems implementation and their
subsequent
performance.
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:cte:wbrepe:wb050303&r=all
42.
Generalized Fractional Programming With User Interaction
Birbil, S.I.
Frenk, J.B.G.
Zhang, S. (Erasmus Research Institute of
Management (ERIM),
RSM Erasmus University)
The
present paper proposes a new approach to solve generalized
fractional
programming problems through user interaction.
Capitalizing
on two alternatives, we review the Dinkelbach-type
methods
and set forth the main difficulty in applying these
methods.
In order to cope with this difficulty, we propose an
approximation
approach that can be controlled by a predetermined
parameter.
The proposed approach is promising particularly when a
decision
maker is involved in the solution process and agrees
upon
finding an effective but nearoptimal value in an efficient
manner.
The decision maker is asked to decide the parameter and
our
analysis shows how good is the value found by the
approximation
corresponding to this parameter. In addition, we
present
several observations that may be suitable for boosting up
the
performance of the proposed approach. Finally, we support our
discussion
through extensive numerical experiments.
Keywords:
generalized fractional programming;user interaction;
approximation approach;error
analysis;performance
improvement;
Date: 2004-06-21
URL: http://d.repec.org/n?u=RePEc:dgr:eureri:30001455&r=all
43.
Paradoxes of Modernist Consumption aˆ“ Reading Fashions
Dolfsma, W. (Erasmus Research Institute of
Management (ERIM),
RSM Erasmus University)
Fashion
is the quintessential post-modernist consumer practice,
or so
many hold. In this contribution, I argue that, on the
contrary,
fashion should be understood as a means of
communicating
one's commitment to modernist values. I introduce
the
framework of the Social Value Network, to relate such values
to
institutionalised consumption behaviour, allowing one to
signal
to others. Modernist values are not homogenous, and are in
important
ways contradictory, giving rise to the dynamics of
fashion
that can be observed.
Keywords:
consumption;modernism;fashion;identity;symbolic goods;
Date: 2004-06-23
URL:
http://d.repec.org/n?u=RePEc:dgr:eureri:30001459&r=all
44. Some
Economics of Digital Content
Dolfsma, W. (Erasmus Research Institute of
Management (ERIM),
RSM Erasmus University)
The
music industry is currently subject to changes influenced by
ongoing
digitalisation and informatization that are unprecedented.
Other
sectors can expect to undergo in the near future what the
media
industry is going through now aˆ“ the movie industry
being a
prime suspect. Each day, some 600,000 copies of movies
are
exchanged via the Internet, most of these in violation of the
copyright
laws. The disruptive nature of technological
development
makes that the market for entertainment products and
other
content undergoes fundamental changes. Where
aˆ?contentaˆ™
used to be exchanged attached to a
physical
carrier, increasingly it has the features of an
information
product.
Keywords:
internet market;digital content;product
differentiation;price
discrimination;consumer as
subcontractor;product development;
Date: 2004-06-23
URL:
http://d.repec.org/n?u=RePEc:dgr:eureri:30001460&r=all
45.
Shareholdersaˆ™ Voting at General Meetings: Evidence
from
the Netherlands
Jong, A. de
Mertens, G.
Roosenboom, P. (Erasmus Research Institute
of Management (
ERIM), RSM Erasmus University)
We study
annual general meetings of shareholders in the
Netherlands.
The Dutch corporate governance system is
characterized
by relatively concentrated shareholdings and large
stakes
owned by pension funds, banks and insurance companies. The
legal
protection of shareholders is poor due to takeover defenses,
such as
certificates, which deprive shareholders from their
voting
rights. An analysis of the minutes of 245 general meetings
in the
period 1998-2002 reveals that about 30% of the
shareholders
is present at the meeting. This is low in comparison
with
shareholder turn-out in Anglo-Saxon countries. Management
sponsors
all proposals at the meeting and only 9 out of 1,583
proposals
are rejected or withdrawn. Multivariate analyses of the
incidence
and extent of voting against a proposal show that firm
size and
the type of proposal are important determinants. Overall,
our
findings suggest that shareholders in the Netherlands have
hardly
any influence on management.
Keywords:
meetings;corporate governance;
Date: 2004-06-23
URL: http://d.repec.org/n?u=RePEc:dgr:eureri:30001461&r=all
46.
CHANNEL POWER IN MULTI-CHANNEL ENVIRONMENTS
Dekimpe, M.G.
Skiera, Bernd (Erasmus Research Institute
of Management (
ERIM), RSM Erasmus University)
In the literature,
little attention has been paid to instances
where
companies add an Internet channel to their direct channel
portfolio.
However, actively managing multiple sales channels
requires
knowing the customersaˆ™ channel preferences and
the
resulting channel power. Two key components of channel power
are (i)
the existing customersaˆ™ intrinsic loyalty to a
channel,
and (ii) the channelaˆ™s ability to attract new
customers.
We apply the Colombo and Morrison (1989) model to
analyze
the channel loyalty and conquesting power of two direct
channels
operated by a given firm. In addition, we analyze the
evolution
over time in each channelaˆ™s power, and test for
differences
in channel power among different product categories
offered
by the firm, and among different customer segments.
Keywords:
channel power;internet marketing;channel loyalty;
conquesting power;Colombo-Morrison
model;
Date: 2004-06-24
URL:
http://d.repec.org/n?u=RePEc:dgr:eureri:30001463&r=all
47.
META-HEURISTICS FOR DYNAMIC LOT SIZING: A REVIEW AND
COMPARISON OF SOLUTION APPROACHES
Jans, R.
Degraeve, Z. (Erasmus Research Institute of
Management (ERIM)
RSM Erasmus University)
Proofs
from complexity theory as well as computational
experiments
indicate that most lot sizing problems are hard to
solve.
Because these problems are so difficult, various solution
techniques
have been proposed to solve them. In the past decade,
meta-heuristics
such as tabu search, genetic algorithms and
simulated
annealing, have become popular and efficient tools for
solving
hard combinational optimization problems. We review the
various
meta-heuristics that have been specifically developed to
solve
lot sizing problems, discussing their main components such
as
representation, evaluation neighborhood definition and genetic
operators.
Further, we briefly review other solution approaches,
such as
dynamic programming, cutting planes, Dantzig-Wolfe
decomposition,
Lagrange relaxation and dedicated heuristics. This
allows
us to compare these techniques. Understanding their
respective
advantages and disadvantages gives insight into how we
can
integrate elements from several solution approaches into more
powerful
hybrid algorithms. Finally, we discuss general
guidelines
for computational experiments and illustrate these
with
several examples.
Keywords:
dynamic lotsizing;algorithms;meta-heuristics;Dantzig-
Wolfe decomposition;reformulations;
Date: 2004-06-24
URL: http://d.repec.org/n?u=RePEc:dgr:eureri:30001465&r=all
48.
General trimmed estimation: robust approach to nonlinear and
limited dependent variable models
Cizek,P. (Tilburg University, Center for
Economic Research)
High breakdown-point
regression estimators protect against large
errors
and data contamination. Motivated by some { the least
trimmed
squares and maximum trimmed likelihood estimators { we
propose
a general trimmed estimator, which uni?es and extends
many existing
robust procedures. We derive here the consistency
and rate
of convergence of the proposed general trimmed estimator
under
mild ?-mixing conditions and demonstrate its applicability
in
nonlinear regression, time series, limited dependent variable
models,
and panel data.
JEL: C13 C20 C24 C25
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:2004130&r=all
49. The
impact of overnight periods on option pricing
Boes,Mark-Jan
Drost,Feike C.
Werker,Bas J.M. (Tilburg University, Center
for Economic
Research)
This
paper investigates the effect of closed overnight exchanges
on
option prices. During the trading day asset prices follow the
literature
s standard affine model which allows asset prices to
exhibit
stochastic volatility and random jumps. Independently,
the
overnight asset price process is modelled by a single jump.
We find
that the overnight component reduces the variation in the
random
jump process significantly. However, neither the random
jumps
nor the overnight jumps alone are able to empirically
describe
all features of asset prices. We conclude that both
random
jumps during the day and overnight jumps are important in
explaining
option prices, where the latter account for about one
quarter
of total jump risk.
JEL: G11 G13
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200501&r=all
50.
Asset allocation in the euro-zone: industry or country based
Eiling,Esther
Gerad,Bruno
Roon,Frans de (Tilburg University, Center
for Economic
Research)
We
investigate the relative importance of country and industry
factors
as determinants of international equity returns in the
Euro-zone
over the period 1990 to 2003. We conduct our analysis
from a portfolio
performance perspective, using mean-variance
spanning
and efficiency tests as well as style analysis, and show
how to
adjust the tests for time varying market wide volatility.
Although
unconditional analysis over the full sample suggests
that
country-based or industry-based EMU-wide portfolios provide
similar
risk-return trade-offs, a rolling window analysis
indicates
a striking change in the structure of equity returns in
the
Euro-zone over the last decade. From 1992 to 1998 country-
based
strategies outperform industry-based strategies: country
based
strategies offer higher Sharpe ratios and higher
diversification
potential as indicated by both spanning tests and
style
analysis. In the preconvergence period, equity returns in
the
EMU-zone clearly had a country structure. In contrast, after
the
introduction of the Euro the country outperformance has
disappeared,
both in terms of mean-variance efficiency and in
terms of
mimicking abilities. Industry factors and country
factors
are now equally important. Our findings suggest that
following
the adoption of the single currency, Euro-zone sector-
based
strategies, while not dominating country-based strategies,
offer
similar risk return trade-offs and diversification benefits.
JEL: G11
G15
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200502&r=all
51. The
Bird core for minimum cost spanning tree problems
revisited: monotonicity and additivity
aspects
Tijs,Stef
Moretti,Stefano
Branzei,Rodica
Norde,Henk (Tilburg University, Center for
Economic Research)
A new
way is presented to de?ne for minimum cost spanning tree (
mcst-)
games the irreducible core, which is introduced by Bird in
1976.
The Bird core correspondence turns out to have interesting
monotonicity
and additivity properties and each stable cost
monotonic
allocation rule for mcst-problems is a selection of the
Bird
core correspondence. Using the additivity property an
axiomatic
characterization of the Bird core correspondence is
obtained.
JEL: C71
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200503&r=all
52. A
fixed point theorem for discontinuous functions
Herings,Jean-Jacques
Laan,Gerard van der
Talman,Dolf
Yang,Zaifu (Tilburg University, Center for
Economic Research)
In this
paper we prove the following fixed point theorem.
Consider
a non-empty bounded polyhedron P and a function f: P ?
P such
that for every x ? P for which f(x) = x there exists A >
0such that
for all y, z ? B(x, A) ? P it holds that (f(y) . y)
JEL: C62 C63
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200504&r=all
53.
Computing integral solutions of complementarity problems
Laan,Gerard van der
Talman,Dolf
Yang,Zaifu (Tilburg University, Center for
Economic Research)
In this
paper an algorithm is proposed to find an integral
solution
of (nonlinear) complementarity problems. The algorithm
starts
with a nonnegative integral point and generates a unique
sequence
of adjacent integral simplices of varying dimension.
Conditions
are stated under which the algorithm terminates with a
simplex
one of whose vertices is an integral solution of the
complementarity
problem under consideration.
JEL: C61 C62 C68 C72
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200505&r=all
54.
Birth spacing and neonatal mortality in India: dynamics,
frailty and fecundity
Bahiotra,Sonia
Soest,Arthur van (Tilburg University, Center
for Economic
Research)
A
dynamic panel data model of neonatal mortality and birth
spacing
is analyzed, accounting for causal effects of birth
spacing
on subsequent mortality and of mortality on the next
birth
interval, while controlling for unobserved heterogeneity in
mortality
(frailty) and birth spacing (fecundity). The model is
estimated
using micro data on about 29000 children of 6700 Indian
mothers,
for whom a complete retrospective record of fertility
and
child mortality is available. Information on sterilization is
used to
identify an equation for completion of family formation
that is
needed to account for right-censoring in the data. We
find
clear evidence of frailty, fecundity, and causal effects of
birth
spacing on mortality and vice versa, but find that birth
interval
effects can explain only a limited share of the
correlation
between neonatal mortality of successive children in
a
family.
JEL: J12 J13 C33
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200506&r=all
55.
Dominated families of shifted palm distributions
Nieuwenhuis,Gert (Tilburg University,
Center for Economic
Research)
In
stationary point process theory, the concept Palm
distribution
plays an important role. Many important results (
like for
instance Little s law, so important in many fields)
arise
from it. However, in the non-stationary case a whole family
of local
Palm distributions (PD s) has to be considered and the
concept
seems to loose its importance. The present paper mainly
considers
non-stationary point processes, and studies relations
between
the distribution P of a point process, the family {Px} of
PD s,
and the family {P0,x} of shifted PD s. Here P0,x is the
probability
distribution that is experienced from an occurrence (
arrival,
point, transaction) at x. It is attempted to regain some
of the
glance of the concept Palm distribution by considering
generalizations
of results that are basic for stationary point
processes.
Starting point is a refined version of Campbell s
equation,
which expresses the general relationship between the
distribution
P of the point process and the family {Px} of PD s.
It is
used to generalize the inversion formula, well known from
stationary
point process theory. This generalization is basic; it
leads to
several relations regarding the above distributions. In
the
second part of the research domination assumptions are
imposed:
either the null-sets of a time-stationary distribution
are also
null-sets of P or the nullsets of one event-stationary
distribution
are also null-sets of almost all shifted PD s. Under
such
domination regulations, P0,x can explicitly be expressed in
terms of
P and several stationary-case long-run properties can be
generalized.
The relationship between the two types of domination
assumptions
is carefully studied.
JEL: C49
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200507&r=all
56.
Maximin Latin hypercube designs in two dimensions
Dam,Edwin van
Husslage,Bart
Hertog,Dick den
Melissen,Hans (Tilburg University, Center
for Economic
Research)
JEL: C90
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200508&r=all
57.
Pollution standards, costly monitoring and fines
Arguedas,Carmen (Tilburg University, Center
for Economic
Research)
We
investigate the features of optimal regulatory policies
composed
of pollution standards and probabilities of inspection,
where
fines for non-compliance depend not only on the degree of
violation
but alson on nongravity factors. We show that optimal
policies
can induce either compliance or noncompliance with the
standards,
the latter being more plausible when monitoring costs
are
large and, surprisingly, when gravity-based fines are large.
Also,
both tghe convexity of the sanctions and the level of the
non-gravity-based
penalties play a key role as to whether optimal
policies
induce noncompliance.
JEL: D82 K32 K42 L51
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200509&r=all
58.
Optimal environmental standards under asymmetric information
and imperfect enforcement
Arguedas,Carmen (Tilburg University, Center
for Economic
Research)
We study
optimal policies composed of pollution standards,
probabilities
of inspection and fines dependant on the degree of
noncompliance
with the standards, in a context where regulated
firms
own private information. In contrast with previous
literature,
we show that optimal policies, being either pooling
or
separating, can imply violations to strictly positive
standards.
This results crucially depends on the monitoring costs,
the types
of firms and the regulator's degree of uncertainty.
JEL: D82 K32 K42 L51
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200510&r=all
59. Age
at immigration and educational attainment of young
immigrants
Ours, Jan C. van
Veenman,Justus (Tilburg University, Center
for Economic
Research)
For
immigrants who arrive in a country at a young age it is
easier
to assimilate than for teenagers. This paper investigates
up to
what immigration age the educational attainment of young
immigrants
in the Netherlands is similar to the educational
attainment
of secondgeneration immigrants, who were born in the
country
having at least one immigrant parent. It appears that
this
borderline immigration age depends on gender and country of
origin.
JEL: J15 J61
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200511&r=all
60.
Cannabis use when it's legal
Ours,Jan C. van (Tilburg University, Center
for Economic
Research)
This paper
uses information about prime age individuals living
in
Amsterdam, to study whether the use of alcohol, or tobacco
stimulates
the use cannabis, i.e. whether alcohol or cannabis are
stepping
stones for cannabis. The special element of the study is
that it
concerns the use in an environment where not only alcohol
and
tobacco but also cannabis is a legal drug. It turns out that
alcohol
and cannabis are intertemporal substitutes while tobacco
and
cannabis are intertemporal complements. Only tobacco is a
stepping
stone for cannabis use.
JEL: C41 D12 I19
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200512&r=all
61. The
economics of books
Canoy,Marcel
Ours,Jan C. van
Ploeg,Frederick van der (Tilburg University,
Center for
Economic Research)
The
tensions between books and book markets as expressions of
culture
and books as products in profit-making businesses are
analysed
and insights from the theory of industrial organisation
are
given. Governments intervene in the market for books through
laws
concerning prices of books, grants for authors and
publishers,
a lower value-added tax, public libraries and
education
in order to stimulate the diversity of books on offer,
increase
the density of retail outlets and to promote reading. An
overview
of the different ways by which countries differ in terms
of
market structures and government policies is given. Particular
attention
is paid to retail price maintenance. Due to differences
between
European countries it is not a good idea to harmonise
European
book policies. Our analysis suggests that the book
market
seems quite able to invent solutions to specific problems
of the
book trade and that, apart from promoting reading, there
is
little need for government intervention.
JEL: Z11 D4 D6 L1 L4
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200513&r=all
62.
Cannabis, cocaine and wages of prime age males
Ours,Jan C. van (Tilburg University, Center
Economic
Research)
This
paper uses a dataset collected among inhabitants of
Amsterdam,
to study whether wages of prime age male workers are
affected
by the use of cannabis and cocaine. The analysis shows
that
cocaine use and infrequent cannabis use do not affect wages.
Frequent
cannabis use has a negative wage effect. The age of
onset is
also important. The earlier current cannabis users have
started
to use cannabis the larger the negative impact on their
wage.
JEL: C41 D12 I19
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200514&r=all
63.
Cannabis, cocaine and jobs
Ours,Jan C. van (Tilburg University, Center
for Economic
Research)
This
paper uses a dataset collected among inhabitants of
Amsterdam,
to study the employment effects of the use of cannabis
and
cocaine. For females no negative effects of drug use on the
employment
rate are found. For males there is a negative
correlation
between past cannabis and cocaine use and employment.
However,
after correcting for the effect of unobserved personal
characteristics
there is no negative effect of cannabis use or
cocaine
use on the employment status of males.
JEL: C41 D12 I19
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200515&r=all
64.
Ecstacy and cocaine: patterns of use among prime age
individuals in Amsterdam
Ours,Jan C. van (Tilburg University, Center
for Economic
Research)
This
paper uses information about prime age individuals living
in
Amsterdam to study the patterns of use of ecstasy and cocaine.
The
information was collected in surveys in 1994, 1997 and 2001.
The
analysis shows that the use of ecstasy and cocaine is mainly
influenced
by calendar year, family situation, and parental
cannabis
use. Individuals that are more likely to use cocaine are
also
more likely to use ecstacy. Whether or not an individual
starts
using ecstasy or cocaine is highly age dependent, i.e. it
usually
happens between age 20 and 35. If an individual has not
used at
age 35 he or she is very unlikely to do so at a later age.
The
entrance of ecstasy in the Amsterdam drugs market in the
course
of the 1990s did not reduce the use of cocaine.
JEL: D12 I19
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200516&r=all
65.
Solving SDP's in non-commutative algebras part I: the dual-
scaling algorithm
Klerk,E. de
Pasechnik,D.V. (Tilburg University, Center
for Economic
Research)
Semidefinite
programming (SDP) may be viewed as an extension of
linear
programming (LP), and most interior point methods (IPM s)
for LP
can be extended to solve SDP problems. However, it is far
more
difficult to exploit data structures (especially sparsity)
in the
SDP case. In this paper we will look at the data structure
where
the SDP data matrices lie in a low dimensional matrix
algebra.
This data structure occurs in several applications,
including
the lower bounding of the stability number in certain
graphs
and the crossing number in complete bipartite graphs. We
will
show that one can reduce the linear algebra involved in an
iteration
of an IPM to involve matrices of the size of the
dimension
of the matrix algebra only. In other words, the
original
sizes of the data matrices do not appear in the
computational
complexity bound. In particular, we will work out
the
details for the dual scaling algorithm, since a dual method
is most
suitable for the types of applications we have in mind.
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200517&r=all
66.
Innovation and environmental stringency: the case of sulfur
dioxide abatement
Vries,Frans P. de
Withagen,Cees (Tilburg University, Center
for Economic
Research)
A weak version
of the Porter hypothesis claims that strict
environmental
policy provides positive innovation incentives,
hence
triggering improved competitiveness and securing
environmental
quality. In a comparative way, this paper
empirically
tests this hypothesis across countries by linking
environmental
stringency to innovation proxied by patents in the
field of
SO2 abatement over the period 1970-2000. Three different
models
of environmental stringency are examined. Two of these
models
do not reveal a positive significant effect on innovation
as a
result of increased stringency. In the theoretically
preferred
model, however, a positive relationship between
environmental
stringency and innovation is obtained.
JEL: L51 L94 O31
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200518&r=all
67.
Characterizing distance-regularity of graphs by the spectrum
Dam,E.R. van
Haemers,W.H.
Koolen,J.H.
Spence,E. (Tilburg University, Center for
Economic Research)
We characterize
the distance-regular Ivanov-Ivanov-Faradjev
graph
from the spectrum, and construct cospectral graphs of the
Johnson
graphs, Doubled Odd graphs, Grassmann graphs, Doubled
Grassmann
graphs, antipodal covers of complete bipartite graphs,
and many
of the Taylor graphs. We survey the known results on
cospectral
graphs of the Hamming graphs, and of all distance-
regular
graphs on at most 70 vertices.
JEL: C0
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200519&r=all
68. A
concede-and-divide rule for bankruptcy problems
Quant,Marieke
Borm,Peter
Maaten,Rogier
The
concede-and-divide rule is a basic solution for bankruptcy
problems
with two claimants. An extension of the concede-and-
divide rule
to bankruptcy problems with more than two claimants
is
provided. This extension not only uses the concede-and-divide
principle
in its procedural definition, but also preserves the
main
properties of the concede-and-divide rule.
JEL: C79 D63 D74
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200520&r=all
69.
Dynamics in the use of drugs
Ours,Jan C. van (Tilburg University, Center
for Economic
Research)
This
paper uses information about prime age individuals living
in
Amsterdam to study the dynamics in the use of drugs, in
particular
alcohol, tobacco, cannabis, cocaine, and ecstasy. The
analysis
concerns starting rates, transitions from non-use to use,
as well
as quit rates, transitions from use to non-use.
Particular
attention is given to the effect of the age of onset
on quit
behavior. The empirical analysis shows that for most of
the
drugs investigated the age of onset has a positive effect on
the quit
rate. The earlier individuals start using a particular
drug the
less likely they are to stop using that drug.
JEL: C41 D12 I19
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200521&r=all
70.
Patterns in payout policy and payout channel choice of UK
firms in the 1990s
Renneboog,Luc
Trojanowski,Grzegorz (Tilburg University,
Center for
Economic Research)
The
paper examines the payout policy of UK firms listed on the
London
Stock Exchange during the 1990s. We complement the
existing
payout literature studies by analyzing jointly the
trends
in dividends and share repurchases. Unlike in the US, we
find
that, in the UK, firms do not demonstrate a decreasing
propensity
to distribute funds to shareholders. The role of share
repurchases
is increasing, but dividends still constitute a vast
proportion
of the total payout. Firms repurchasing shares usually
pay
dividends as well. We also document that there is a strong
relationship
between the presence of blockholders and the choice
of the
payout channel: firms with concentrated ownership tend to
opt for
dividends rather than share repurchases, irrespectively
of the
identity of the controlling shareholder. We argue that the
differential
taxation of dividends and capital gains as well as
the
insider trading regulation affect the relative attractiveness
of
dividends and share repurchases to large shareholders.
JEL: G35 G32 G30
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200522&r=all
71. Is investment-cash
flow sensitivity caused by the agency
costs or asymmetric information?: evidence
from the UK
Pawlina,Grzegorz
Renneboog,Luc (Tilburg University, Center
for Economic
Research)
We
investigate the investment-cash flow sensitivity of a large
sample
of the UK listed firms and confirm that investment is
strongly
cash flow-sensitive. Is this suboptimal investment
policy
the result of agency problems when managers with high
discretion
overinvest, or of asymmetric information when managers
owning
equity are underinvesting if the market (erroneously)
demands
too high a risk premium? We find that the observed cash
flow
sensitivity results mainly from the agency costs of free
cash
flow. The magnitude of the relationship depends on insider
ownership
in a nonmonotonic way. Furthermore, we obtain that
outside
blockholders, such as financial institutions, the
government,
and industrial firms (only at high control levels),
reduce
the cash flow sensitivity of investment via effective
monitoring.
Finally, financial institutions appear to play a role
in
mitigating informational asymmetries between firms and capital
markets.
We corroborate our findings by performing additional
tests based
on the stochastic efficient frontier approach and
power
indices.
JEL: D92 G31 G32
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:kubcen:200523&r=all
72.
Globalisation, EU expansion and consequences for MNE location
Narula ,Rajneesh (MERIT)
Many of
the EU accession countries are confident that membership
will
result in substantially increased inward foreign direct
investment
(FDI). At the same time, other peripheral EU members (
such as
Spain and Portugal) are concerned that FDI will be
displaced
to these new countries. I postulate that the new
members
cannot expect the same increased FDI flows that resulted
to
earlier EU entrants. Both groups of countries cannot base
their
industrial development strategy on passive reliance on such
flows.
Reliance on low costs and other ''generic'' advantages
such as
basic infrastructure is myopic in a globalised world.
Benefiting
from FDI requires a comprehensive strategy to build up
domestic
absorptive capacity and upgrading of the quality of
their
location advantages, since they are faced with increased
competition
for FDI not just from other European countries but
also
from other parts of the world, most notably Asia.
Keywords:
international economics and trade ;
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:umamer:2005003&r=all
73.
Simultaneous Estimation of Income and Price Elasticities of
Export Demand, Scale Economies and Total
Factor Productivity
Growth for Brazil
Mutz,Christine
Ziesemer,Thomas (MERIT)
This
paper focuses on a model in which low (high) export demand
elasticities
and the fact that developing countries are importers
of
capital goods help explaining the slow (high) growth of these
countries.
The question arises whether export demand elasticities
are low
or high. For answering this question, export demand
elasticities
for the case of Brazil are estimated using a growth
model.
As a by-product of estimating the model, we obtain
estimates
for total-factor productivity growth and for scale
economies.
Based on the results from estimation we calculate
steady-state
growth rates, engine and handmaiden effects of
growth
as well as dynamic steady-state gains from trade. The
model
and the results are discussed in regard to several strands
of
literature.
Keywords:
international economics and trade ;
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:umamer:2005004&r=all
74. An
Assessment of Measurement Invariance between Online and
Mail Surveys
Deutskens,Elisabeth
Ruyter,Ko,de
Wetzels,Martin (METEOR)
One of
the latest trends in marketing research is the increasing
use of
online surveys, which offer lower costs and faster
responses.
Yet, critics question whether data collected via
online
surveys are equivalent to data collected via traditional
mail
surveys. Since existing evidence from the comparison of Web-
based
and paper-and-pencil surveys is inconclusive, we
empirically
examine the equivalence of online and traditional
mail
surveys in a marketing context.
Keywords:
marketing ;
Date: 2005
URL:
http://d.repec.org/n?u=RePEc:dgr:umamet:2005003&r=all
75.
Stochastic dominance equilibria in two-person noncooperative
games
Perea,Andres
Peters,Hans
Schulteis,Tim
Vermeulen,Dries (METEOR)
Two-person
noncooperative games with finitely many pure
strategies
and ordinal preferences over pure outcomes are
considered,
in which probability distributions resulting from
mixed
strategies are evaluated according to t-degree stochastic
dominance.
A t-best reply is a strategy that induces a t-degree
stochastically
undominated distribution, and a t-equilibrium is a
pair of
t-best replies. The paper provides a characterization and
existence
proofs of t-equilibria in terms of representing utility
functions,
and shows that for t becoming large-which can be
interpreted
as the players becoming more risk averse-behavior
converges
to a specific form of max-min play. More precisely,
this
means that in the limit each player puts all weight on a
strategy
that maximizes the worst outcome for the opponent,
within
the supports of the strategies in the limiting sequenceof
t-equilibria.
Keywords:
microeconomics ;
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:umamet:2005004&r=all
76.
Forecasting Dutch GDP using Large Scale Factor Models
A.H.J. den Reijer
This
paper applies large scale factor models to Dutch quarterly
data
inorder to generate forecasts of GDP growth rates for an
horizon up
to 8 quarters ahead. The data set consists of the
series
underlying the cen- tral bank?s macroeconomic structural
model
for the Netherlands sup- plemented with leading indicator
variables.
In a pseudo out-of-sample forecasting context, we
select
optimal models in the time dimension and the optimal size
of the
ordered data set in the cross-sectional dimension. The
main
empirical ?ndings of this paper are that the cross-sectional
opti-
mization substantially improves the forecasting performance
of the
factor models. However, only the dynamic factor model
systematically
outper- forms and encompasses the autoregressive
benchmark
model with an op- timal subset of the data of around
110
series. The forecasting gains in terms of mean squared errors
range
from 10% to 30% for forecast horizons up to 6 quarters
ahead.
Keywords:
Factor models; Forecasting; Leading Indicators.
JEL: C43 C51 E32
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:dnb:dnbwpp:028&r=all
77. A
PCA Factor Repeat Sales Index (1973-2001) To Forecast
Apartment Prices in Paris (France)
Baroni, Michel (ESSEC Business School)
Barthelemy, Fabrice (THEMA, Universite de
Cergy-Pontoise)
Mokrane, Mahdi (IXIS-AEW Europe)
In this paper
we address the issue of building a repeat sales
index,
based on factors. This is an extension of a companion
paper,
Baroni, Barthelemy and Mokrane (2001, BBM) in which we
had
built a factorial index as a selected linear function of
existing
economics and financial variables. Here we offer a more
general
and robust model based on a Principal Components Analysis
PCA). We
apply this methodology to the Paris residential market.
We use
the CD-BIEN database that contains more than 220 000
repeat
sales transactions for residential apartments in the Paris
area
covering the period 1973-2001 period. Our PCA index for the
Paris
and close surrounding area is estimated and its
characteristics
and robustness are analysed depending on:
estimation
period, choice of observations, periodicity and
reversibility.
We then compare it to the traditional WRS repeat
sales
index developed by Case & Shiller (1987). Finally we show
that
contrary to the WRS index, our index can be used to forecast
apartment
prices.
Keywords:
Real estate indices; Repeat sales; Factors; PCA; Index
forecasting
JEL: C20 G00
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:ebg:essewp:dr-05002&r=all
78.
Market Power in the Spanish Electricity Auction.
Aitor Ciarreta (Universidad del Pais Vasco)
Mari Paz Espinosa (Universidad del Pais
Vasco)
Keywords:
market power, electricity market
JEL: L11 L13 L51
Date: 2005-02-11
URL:
http://d.repec.org/n?u=RePEc:ehu:dfaeii:200504&r=all
79. Competition,
Regulation, and Intellectual Property
Management in Genetically Modified Foods:
Evidence from
Survey Data
Pierre Regibeau
Katharine Rockett
We
present survey results regarding a series of hypotheses on
industry
structure, regulation and patent policy towards GM food
crops,
focussing on the stages of the industry that generate
innovations
and approved products for sale to the farming sector.
Licensing
as a means of delegating litigation and regulatory
costs
comes out as one of the most consistent themes in our
responses.
We link this practice to a two-tiered industry
structure,
a weak relation between litigation threat and research
trajectory,
and a perception by our respondents that patents - as
well as patent
design - are "one step removed" from their
research
decisions.
Date: 2005-01-13
URL:
http://d.repec.org/n?u=RePEc:esx:essedp:591&r=all
80. Per
Jacobsson Lecture: Some New Directions for Financial
Stability?
Charles Goodhart
This
paper is a copy of the author’s Per Jacobsson Lecture
given at
the University of Zurich on an occasion hosted by the
Bank for
International Settlements on Sunday June 27th, 2004. It
is
reproduced with the kind permission of the Per Jacobsson
Foundation.
Date: 2004-09
URL:
http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp158&r=all
81. How
Do We Achieve Regulatory Convergence In Practice?
Olivia Hague
Callum
McCarthy joined the FSA in September 2003 from the Office
of Gas and
Electricity Markets where he was Chairman and Chief
Executive.
He had previously held senior positions in Barclays
Bank,
BZW and Kleinwort Benson, as well Department for Trade and
Industry.
He is an economist and graduate of the School of
Business
at Stanford University, where he was a Sloan Fellow.
The
lecture was given as part of a full-day conference hosted by
the
Financial Markets Group, LSE and held in honour of Tommaso
Padoa-Schioppa
on 8th December 2004.
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp159&r=all
82. The
Knowledge Lift: The Swedish Adult Education Program that
Aimed to Eliminate Low Worker Skill Levels
James Albrecht (Georgetown University),
Gerard J. van den
Berg (Free University Amsterdam), and
Susan Vroman (
Georgetown University) (Department of
Economics, Georgetown
University)
The
Swedish adult education program known as the Knowledge Lift
is
unprecedented in its size and scope, aiming to raise the skill
level of
all low-skilled workers towards the medium level. This
paper
evaluates the effects of program participation on
individual
labor market outcomes, notably employment and annual
income,
as well as on the labor market equilibrium. For the
effects
at the individual level, we apply fixed effect methods
allowing
for treatment effect heterogeneity. The data are based
on a
number of matched longitudinal administrative data sets
covering
the full population of Sweden. For the equilibrium
effects,
we analyze an equilibrium search model with
heterogeneous
worker skills. This model is calibrated using pre-
program
observations. Classification-JEL Codes: J240, J410, I280
Keywords:
returns to education, training, program evaluation,
wages, participation, unemployment,
schooling, Swedish
labor market, selectivity bias,
treatment effect.
URL:
http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~05-05-08&r=all
83. Does
Sovereign Risk Differ for Domestic and Foreign
Investors? Evidence from Scandinavian Bond
Markets,
1938–1948
Waldenstrom, Daniel (Dept. of Economics,
Stockholm School
of Economics)
This
paper shows that geographical investor heterogeneity
strongly
influences sovereign risk. While standard sovereign debt
models
mainly attribute the absence of sovereign defaults to
foreign
creditor retaliation, a new theoretical literature argues
that
domestic creditors also affect borrowing governments’
default
decisions through channels of domestic politics. This
paper
examines this controversy using a newly assembled dataset
on
cross-listed Scandinavian sovereign yields traded at markets
that
abruptly went from integration to segmentation by capital
controls
and World War II. The results strongly suggest that
domestic
and foreign bond investors assessed different sovereign
risks
whereas more standard explanations based on macroeconomic
factors,
portfolio choice or risk aversion added little
explanatory
value. The study also documents large effects on
recorded
asset prices from institutional trading constraints (e.g.
price limits), an issue largely neglected by
previous research
in
historical long-run asset returns.
Keywords:
Sovereign risk; Investor heterogeneity; Market
segmentation; Domestic debt;
Political economy;
Historical finance; Cliometrics
JEL: F34 G15 G18 N20 N24 N44
Date: 2005-02-09
URL:
http://d.repec.org/n?u=RePEc:hhs:hastef:0585&r=all
84. Do
hedonic price indexes change history? The case of
electrification
Edquist, Harald (Dept. of Economic
Statistics, Stockholm
School of Economics)
Rapid
price decreases for ICT-products in the 1990s have been
largely
attributed to the introduction of hedonic price indexes.
Would
hedonic price indexing also have large effects on measured
price
and productivity during other technological breakthroughs?
This
paper investigates the impact of hedonic and matched model
methods on
historical data for electric motors in Sweden
1900–35.
The results show that during the productivity boom of
the
1920s, current prices for electric motors decreased by 13.2
and 12.2
percent per year depending on whether hedonic or matched
model
price indexes were used. This indicates high productivity
growth
in the industry producing electric motors in 1920–29. In
contrast
to Sweden, the US annual total factor productivity
growth
was only, according to current best estimates, 3.5 percent
in Electric
machinery compared to 5.3 percent in manufacturing in
1920–29.
However, hedonic price indexes were not used to
calculate
US productivity. Finally, it is shown that the price
decreases
for electric motors in the 1920s were on par with the
price
decreases for ICT-equipment in the 1990s, even if hedonic
indexing
is used.
Keywords:
Hedonic price index; Electric motor; Productivity
growth; Electrification; ICT
revolution; Productivity
growth; General Purpose Technologies
JEL: L60
N60 O10 O14 O33 O40
Date: 2005-02-16
URL:
http://d.repec.org/n?u=RePEc:hhs:hastef:0586&r=all
85.
Effects of decentralization on school resources
Ahlin, Asa (Uppsala University)
Mork, Eva (IFAU - Institute for Labour
Market Policy
Evaluation)
Sweden
has undertaken major national reforms of its schooling
sector
which, consequently, has been classified as one of the
most
decentralized ones in the OECD. This paper investigates the
extent to
which local tax base, grants, preferences and
structural
characteristics affected local schooling resources as
decentralization
took place. We use municipal data for the period
1989–95
which covers the key reform years without confounding
decentralization
with institutional changes after 1995. The main
arguments
against decentralization are not supported by our
findings.
First, school spending as well as teacher density is
found to
be more equally distributed across municipalities
following
decentralization. Second, local tax capacity does not
influence
schooling resources more in the decentralized regime
than in
the centralized regime. We also find that the form in
which
grants are distributed matter: Targeted grants have a
significant
positive impact on resources while general grants
have
not.
Keywords:
School resources; school finance reform;
decentralization
JEL: H40 H52 H70
Date: 2005-02-12
URL:
http://d.repec.org/n?u=RePEc:hhs:ifauwp:2005_005&r=all
86.
Clearing vs. Leakage: Does Note Monopoly Increase Money and
Credit Cycles?
Hortlund, Per (The Ratio Institute)
The
effects of note monopolisation on the amplitude of money and
credit
cycles are studied. Note monopolisation trades clearing
for leakage.
If the central bank's reserve ratio is larger than
that of
the commercial banks, and if the currency-deposit ratio
is
sufficiently large, the leakage effect could domi-nate the
loss-of-clearing
effect (base expansion), such that the credit
capacity
of the banking system decreases. This was the case when
the Bank
of Sweden gained a note monopoly in 1904. Money and
credit
cycles should therefore have become smaller. Swedish bank
data for
1871–1938 reveal that money cycles became smaller, but
credit
cycles larger. The latter is attributed to an increasing
time-demand
deposit ratio, which increases the credit capacity of
the
banking system.
Keywords:
Clearing mechanism; Credit expansion; Currency-deposit
ratio; Fiduciary money; Free banking;
Leakage; Money
multiplier
JEL: E32 E42 E51
Date: 2005-02-16
URL:
http://d.repec.org/n?u=RePEc:hhs:ratioi:0067&r=all
87.
Two-sided network effects, bank interchange fees, and the
allocation of fixed costs
Bergman, Mats (Dept. of Economics,
Stockholm University)
Two-sided
network effects in card payment systems are analysed
under
different market structures, e.g., competition, one-sided
monopoly,
bilateral monopoly and duopoly; with and without an
interchange
fee; for the so-called Baxter case of non-strategic
merchants.
A partial ranking of market structures according to
their
welfare effects is provided. Fixed central (card) system
costs
are introduced and analysed under free entry and duopoly.
It is
shown that under free entry, a per-transaction distribution
of fixed
costs is preferrable to dividing the fixed cost in equal
proportions
between the paritcipants. Under duopoly, (and no
entry) a
fixed division of central costs will yield lower prices.
Keywords:
Two-sided markets; card payentd; payment systems;
acquiring; issuing; market structure
JEL: G21 L11 L44
Date: 2005-01-03
URL:
http://d.repec.org/n?u=RePEc:hhs:sunrpe:2005_0001&r=all
88.
Antidepressants and the Suicide Rate: Is There Really a
Connection?
Dahlberg, Matz (Department of Economics)
Lundin, Douglas (Lakemedelsformansnamnden)
Recent
research claims that the major part of the observed
reduction
in suicide rates during the 1990’s can be explained
by the
increase in the prescription of antidepressants. This
conclusion
is however based on research that only looks at raw
correlations;
confounding effects from other variables are not
controlled
for. Using a rich data set, we reinvestigate the issue.
After
controlling for other covariates, observed as well as
unobserved,
that might affect the suicide rate, we find, overall,
no
statistically significant effects from antidepressants on the
suicide rate;
when we do get significant effects, they are
positive
for young persons. Regarding the latter result, more
research
is needed before any firm policy conclusion can be made.
Keywords:
Suicide; antidepressants; Poisson fixed effects
JEL: C23 I12
Date: 2005-01-15
URL:
http://d.repec.org/n?u=RePEc:hhs:uunewp:2005_004&r=all
89.
Latent Variables in a Travel Mode Choice Model: Attitudinal
and Behavioural Indicator Variables
Vredin Johansson, Maria (Department of
Economics)
Heldt, Tobias (Department of Economics)
Johansson, Per (Department of Economics)
In a
travel mode choice context, we use survey data to construct
and test
the significance of five individual specific latent
variables
– environmental preferences, safety, comfort,
convenience
and flexibility - postulated to be important for
modal
choice. Whereas the construction of the safety and
environmental
preference variables is based on behavioural
indicator
variables, the construction of the comfort, convenience
and
flexibility variables is based on attitudinal indicator
variables.
Our main findings are that the latent variables
enriched
discrete choice model outperforms the traditional
discrete
choice model and that the construct reliability of the
“attitudinal”
latent variables is higher than that of the
“behavioural”
latent variables. Important for the choice of
travel
mode are modal travel time and cost and the individual’s
preferences
for flexibility and comfort as well as her
environmental
preferences.
Keywords:
Modal choice; latent variable; discrete choice model;
modal safety
JEL: C35 R41
Date: 2005-02-07
URL:
http://d.repec.org/n?u=RePEc:hhs:uunewp:2005_005&r=all
90.
Failure of the WTO Ministerial Conference at Cancun: Reasons
and Remedies
Robert E. Baldwin
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-53&r=all
91. WTO
Negotiations and Other Agricultural Trade Issues in Japan
Masayoshi Honma
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-54&r=all
92. The
Evolution of Japan's Aggressive Legalism
Ichiro Araki
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-55&r=all
93.
Trade and location: A moving example motivated by Japan
Alan V. Deardorff
If trade
costs matter for trade, and if distance matters for at
least
some trade costs, then location matters for trade. This may
be
especially important for Japan, given its distance from other
developed
countries and proximity to a number of developing
countries.
This paper explores the relationship between location
and
trade in a simple partial equilibrium model of a single
homogeneous
good that may be produced and traded by three
countries
located on a plane. Six equilibrium regimes arise in
this
model, depending on trade costs compared to differences in
autarky
prices. The results are the following: For a country
whose
autarky price lies between those of the other countries, it
will
export the good if it is close to the high-cost country,
import
it if it is close to the low-cost country, and not trade
it at
all if it is too far from both. The location of such a
country
is also important for the trade of the other countries.
Finally,
although a fall in trade costs increases, up to a point,
the
geographic scope for a country to trade, beyond that point it
cannot
make trade possible for an intermediate-cost country that
is too remote
to trade. The results suggest that Japan, with
factor
endowments similar to other developed countries but
located
closer to many developing countries, should dominate
trade
with its developing-country neighbors.
Keywords:
Trade costs, Location
JEL: F1
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-56&r=all
94.
Measuring network effects on trade: are Japanese affiliates
distinctive?
Theresa M. Greaney
This paper
examines network effects on trade by comparing the
trade
patterns of foreign affiliates in the United States with
the
trade patterns of U.S.-owned firms. The evidence strongly
supports
the following hypotheses: 1) foreign affiliates behave
differently
from U.S. firms in their trade patterns; 2) in
particular,
foreign affiliates display strong home biases in
their
trade patterns; and 3) among the foreign affiliates,
Japanese
affiliates demonstrate by far the strongest home bias in
their
trade patterns. Controlling for income and distance effects,
foreign
affiliates from Canada, France, Germany, the Netherlands
and
Switzerland traded on average 17 times more with their
respective
home countries and those from the United Kingdom
traded
30 times more with the United Kingdom, while Japanese
affiliates
traded a whopping 130 times more with Japan.
Keywords:
Network effects, Foreign affiliates, Trade patterns
JEL: F14 F23
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-57&r=all
95.
Judging Japan's FDI: The verdict from a dartboard model
Keith Head
John Ries
We
evaluate Japan's inward and outward FDI performance using
theoretical
benchmarks based on the premise that management teams
headquartered
around the world bid for the production facilities
located
in each country. Our model incorporates the assumption
that
bids are inversely proportionate to distance. It accurately
predicts
the multilateral shares of FDI stocks for most important
countries.
The theory predicts lower shares of FDI for Japan than
its
share of the world economy. Japan's actual share of outward
FDI
exceeds its inward share -as the model predicts- but both
currently
lie below the benchmark predictions.
Keywords:
Foreign direct investment, gravity, mergers and
acquisitions, openness
JEL: F21 F23
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-58&r=all
96.
Intellectual Property Rights in Agriculture and the
Interests of Asian-Pacific
Keith E. Maskus
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-59&r=all
97.
Determinants of high-royalty contracts and the impact of
stronger protection of intellectual
property rights in Japan
Sadao Nagaoka
This
paper first reviews how Japan has strengthened the
protection
of intellectual property rights (IPRs), focusing on
the
expansion of the patentable subject matter, the restriction
of the
possibility of compulsory licensing, stronger deterrence
against
infringement and the introduction of the doctrine of
equivalents.
Second, based on the statistical analysis of sector-
level
panel data, it shows that (1)R&D intensity of domestic
industry,
trademark licensing, cross-licensing and, to a smaller
degree,
monopoly provisions are the significant determinants of
the
incidence of high-royalty contracts, and (2)Stronger
protection
of intellectual property rights looks to have
increased
the incidence of high-royalty contracts in the latter
part of
1990s in the Japanese industries for which patent is
important
for appropriability.
Keywords:
Intellectual property rights, Licensing contract,
Appropriability, Patent
JEL: F23 O34
Date: 2004-12
URL: http://d.repec.org/n?u=RePEc:hst:hstdps:d04-60&r=all
98. East
Asia's Antidumping Problem
Thomas J. Prusa
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-61&r=all
99. An
Evaluation of Japan's First Safeguards Actions
Arata Kuno
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-62&r=all
100.
Computational Analysis of the Menu of U.S.-Japan Trade
Policies
Drusilla K. Brown
Kozo Kiyota
Robert M. Stern
Date: 2004-12
URL: http://d.repec.org/n?u=RePEc:hst:hstdps:d04-63&r=all
101.
Foreign outsourcing and firm-level characteristics:
evidence from Japanese manufacturers
Eiichi Tomiura
Based on
micro data of 118,300 firms without firm-size
thresholds
covering all manufacturing industries in Japan, this
paper
investigates the foreign outsourcing, distinguished
explicitly
from domestic outsourcing, at the firm level. Less
than
three percent of the firms are outsourcing their production
across
national borders. The fixed entry cost for foreign
outsourcing
is significant and related with the firm's human
skills
and foreign business experience. The firms tend to
outsource
more of their activities overseas when their
productivity
is higher or when their products are more labor-
intensive.
Keywords:
Foreign outsourcing, Firm-level data, Productivity,
Capital-labor ratio
JEL: F1 F23 J31
Date: 2004-12
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-64&r=all
102.
International Comparison in Historical Perspective:
Reconstructing the 1934-36 Benchmark
Purchasing Power Parity
for Japan, Korea and Taiwan
Kyoji Fukao
Debin Ma
Tangjun Yuan
This
article provides the first expenditure approach estimate of
purchasing
power parity (PPP) converters for 1934-36 Japan, Korea
and
Taiwan. We matched all together 70 to 80 types of goods and
services
for private consumption, government expenditure and
investment
using three levels of weights derived from actual
expenditure
surveys. We find that the 1934-6 average prices of
Korea
for private consumption, investment and government
expenditure
were about 0.86, 0.89 and 0.98 times that of Japan
respectively;
and for Taiwan 0.84, 0.87 and 0.95 respectively.
This gives
the 1934-6 Korea and Taiwan overall GDE average price
levels
of 0.87 and 0.86 respectively that of Japan. Our new
benchmark
estimate is an improvement over existing converters
based
either on exchange rates or the 1990 backward projection
method,
which was embedded with index number biases. It provides
a vital
link for a long-term overview of structural change,
ethnic
income distribution and the historical convergence or
divergence
for these three economies in the past century.
Date: 2005-01
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-66&r=all
103. The
Determinants of Exit from Nursing Homes and the Price
Elasticity of Nursing Home Care: Evidence
from Japanese
Micro-level Data
Haruko Noguchi
Satoshi Shimizutani
This
study examines how the price mechanism affects the length
of
residents' nursing home stay and their destination after exit.
The
purpose of this analysis is to evaluate policy options to
reduce
the number of socially institutionalized elderly nursing
home
residents in Japan. To address these issues, we take
advantage
of micro-level data from The Survey on Care Service
Providers
compiled by the Japanese government. Our duration
estimates
show that the price elasticity of the hazard of exit
from
welfare care facilities was 1.7 (95% CI: 0.4-3.0) and 1.8 (
95% CI:
0.0-3.8) from health care facilities. The probit
estimates
show that a 1 percentage point increase in copayments
leads to
an increase in the probability of returning home by 0.
04% for
patients of welfare care facilities and 3.7% for those of
health
care facilities. In contrast, the price elasticity of the
probability
of being re-hospitalized is -3.3% for patients of
health
care facilities and -1.9% for those of medical care
facilities.
An appropriate price policy may work well to shorten
patients'
length of stay and to reduce the number of the socially
institutionalized.
Since the effects of the introduction of a
price
mechanism may differ for different types of facilities,
public
policies aimed at broadening residents' range of choices
need to
be designed with care and incorporate an appropriate risk
adjustment
system to provide a safety net for those elderly
highly at
risk of being socially institutionalized.
Date: 2005-01
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-67&r=all
104.
Contrasts in Vital Rates: Madras and Punjab in the Colonial
Period
Osamu Saito
Mihoko Takahama
Ryuichi Kaneko
It is
well known that there have been persistent differences in
demographic
rates between northern and southern areas in post-
independence
India: in the north marital fertility is higher,
infant
mortality higher and life expectancy shorter than in the
south.
As Tim Dyson has shown for infant mortality, this probably
has
pre-independence origins. In this paper the post-WWII
contrasts
in demographic performances between north and south
India
will be traced back to the colonial period. By choosing
Madras
and Punjab, by selecting districts whose registration
statistics
are reasonably usable in each province (Madras:
Coimbatore,
Salem, North Arcot, South Arcot, and Tilnelvelli;
Punjab:
Gurdaspur, Jallundur, Amritsar, Hoshiarpur, Ferozepore,
and
Ambala, Karnal and Rohtak), and then by adopting W. Brass's
relational
Gompertz fertility model, logit life-table system and
growth
balance method, as exemplified by Dyson's seminal work on
Berar, we
estimate annual series of e0 and TFR for both provinces.
The
series clearly show that even in the colonial period both
fertility
and mortality were higher in the north than in the
south,
which will have wider implications in historical contexts.
Date: 2005-01
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-68&r=all
105. A
Test of Serial Independence of Deviations from
Cointegrating Relations
Hiroaki Chigira
Date: 2005-01
URL: http://d.repec.org/n?u=RePEc:hst:hstdps:d04-69&r=all
106.
Divesture of Foreign Manufacturing Affiliates: Country
Platforms, Multinational Plant Networks,
and Foreign
Investor Agglomeration
Rene Belderbos
Jianglei Zou
We
develop hypotheses concerning the impact of multinational
firms'
international plant configuration and host country foreign
investor
agglomeration on the divesture of manufacturing
affiliates,
drawing on real option theory and location and
agglomeration
theory. We test our hypotheses on a comprehensive
sample
of 1080 Asian manufacturing affiliates of Japanese
multinational
firms in the electronics industry during the
turbulent
years preceding and into the Asian financial crisis (
1995-1999).
We find evidence that multinational firms both create
flexibility
options through maintaining a multinational plant
network
of platform affiliates in multiple Asian countries, and
exercise
this flexibility option through divestments and
relocation
of manufacturing activities within the network. Firms
most
responsive to Japanese investor agglomeration or inter-firm
buyer-supplier
agglomeration within vertical business groups have
a higher
probability of divesture, suggesting that agglomeration
leads to
'adverse selection' of firms and affiliates with weaker
competitiveness.
Keywords:
Divsture, agglomeration, multinational firms, networks
Date: 2005-01
URL:
http://d.repec.org/n?u=RePEc:hst:hstdps:d04-72&r=all
107.
Nonprofit and For-profit Providers in Japan's At-home Care
Industry: Evidence on Quality of Service
and Household Choice
Haruko Noguchi
Satoshi Shimizutani
In 2000,
government deregulation along with the introduction of
the long-term
insurance scheme for the first time allowed for-
profit
providers of at-home care for the elderly to compete
directly
with nonprofit operators. According to the contract
failure
hypothesis, we would expect consumers to prefer nonprofit
providers
over their for-profit counterparts as a result of
information
asymmetry and non-distributional constraints. This
study
takes advantage of household level data to examine whether
households'
choice of care provider is biased toward nonprofits.
We find
that nonprofit providers to command a larger market share,
but this
is at least partly explained by having operated in the
market
longer and by continuing restrictions in medical and
institutional
care that confer various advantages on nonprofit
providers.
However, we do find that user with better knowledge of
providers
tend to favor for-profit providers, suggesting that
measures
to reduce information asymmetries may help to provide a
more
level playing field.
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:hst:hstdps:d04-73&r=all
108.
Schools, School Quality and Academic Achievement: Evidence
from the Philippines
Bacolod, Marigee
Tobias, Justin
A broad
literature seeks to assess the importance of schools,
proxies for
school quality, and family background on children's
achievement
growth using the education production function. Using
rich
data from the Philippines, we introduce and estimate a model
that
imposes little structure on the relationship between intake
achievement
and follow-up achievement and evaluate school
performance
based on this estimated relationship. Our methods
nest
typical value added specifications that use test score gains
as the
outcome variable and models assuming linearity in the
relationship
between intake and follow-up scores. We find
evidence
against the use of value-added models for our data and
show
that such models give very different assessments of school
performance
in the Philippines. Using a variety of tests we find
that schools
matter in the production of student achievement,
though
variation in performance across schools only explain about
6
percent of the total (conditional) variation in follow-up
achievement.
Schools providing basic facilities - in particular
schools
providing electricity - are found to perform much better
in the
production of achievement growth.
Date: 2005-02-11
URL:
http://d.repec.org/n?u=RePEc:isu:genres:12249&r=all
109.
Risk Management Instruments for Water Reallocations
Hart, Chad E.
Federal
and state governments are searching for programs and/or
policies
to deal with the risks linked with uncertainty in water
supplies
and demands. Within the United States, competition among
agricultural,
urban, and environmental concerns for water is
increasing.
Drought conditions and water use restrictions have,
at
times, limited water supplies for these varied uses. The
federal
government stands in a unique position as both a major
supplier
and demander of water. As such, the federal government
has put
forward several programs for water conservation,
information,
and usage. One area in which the federal government
has not
made significant progress is the issue of risk management
and
compensation for water reallocations. When natural forces or
government
policies trigger water use restrictions, the
restricted
water users may or may not be compensated by current
programs.
This paper explores how current policies may or may not
cover
agricultural losses due to water use restrictions and
outlines
several government policy proposals and market-based
methods
to mitigate the risks from water restrictions. Given the
diversity
of the agents involved and the watersheds covered, it
is
likely that no one program will be the “best” program to
address
the issue. The “best” program for a given combination
of
agents in a watershed will depend upon the types of agents and
the
possible uses of the water.
Date: 2005-02-16
URL: http://d.repec.org/n?u=RePEc:isu:genres:12251&r=all
110. The
Distribution of Wages in Poland, 1992-2002
Newell, Andrew (University of Sussex and
IZA Bonn)
Socha, Mieczyslaw W. (University of Warsaw)
This
paper analyses the changes in the size distribution of
wages in
Poland over a decade of transition. Until about 1998
there
were some forces tending to increase wage inequality and
other
forces contracting it. The result was a relatively constant
level of
inequality. Privatisation was the main force tending to
increase
wage inequality, partly because it generated major
increases
in the relative wages of professional and managerial
workers.
We demonstrate how private firms tend to pay less at the
bottom
end of the wage distribution and more at the top end. The
main
force contracting the variance of wages was the decline,
between
1992 and 1998 in labour market participation of those
with low
levels of education. Wage inequality seems to have
increased
since 2000. Suggestively, whereas privatisation has
continued,
the decline in participation has halted.
Keywords:
wages, Poland
JEL: J31 P23
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:iza:izadps:dp1485&r=all
111.
Social Security in Belgium: Distributive Outcomes
Jousten, Alain (Universite de Liege, CEPR
and IZA Bonn)
Lefebvre, Mathieu (Universite de Liege)
Perelman, Sergio (Universite de Liege)
Pestieau, Pierre (Universite de Liege, CEPR
and DELTA)
The
paper analyzes the link between old-age income programs and
economic
outcomes in Belgium. We use a simulation methodology to
construct
an average pension generosity variable. Our regression
analysis
explores the link with distributional outcomes in income,
consumption
and more subjective indicators. Results document the
weak
link between average generosity and distributional outcomes
across a
heterogeneous population.
Keywords:
pensions, inequality, social security, elderly
JEL: H31 H55 I31 I32
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1486&r=all
112.
What Can Happiness Research Tell Us About Altruism?
Evidence from the German Socio-Economic
Panel
Schwarze, Johannes (University of Bamberg,
DIW Berlin and
IZA Bonn)
Winkelmann, Rainer (University of Zurich,
CEPR and IZA Bonn)
Much
progress has been made in recent years on developing and
applying
a direct measure of utility using survey questions on
subjective
well-being. In this paper we explore whether this new
type of measurement
can be fruitfully applied to the study of
interdependent
utility in general, and altruism between parents
and
children in particular. We introduce an appropriate
econometric
methodology and, using data from the German Socio-
Economic
Panel for the years 2000-2002, find that the parents’
self-reported
happiness depends positively, albeit not very
strongly,
on the happiness of adult children who moved out.
Keywords:
utility function, extended family, fixed effects,
ordered probit
JEL: D6 D64 C25 J10
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:iza:izadps:dp1487&r=all
113.
Socio-Economic Status, Health Shocks, Life Satisfaction and
Mortality: Evidence from an Increasing
Mixed Proportional
Hazard Model
Frijters, Paul (RSSS, Australian National
University)
Haisken-DeNew, John (RWI Essen and IZA
Bonn)
Shields, Michael A. (University of
Melbourne and IZA Bonn)
The
socio-economic gradient in health remains a controversial
topic in
economics and other social sciences. In this paper we
develop
a new duration model that allows for unobserved
persistent
individual-specific health shocks and provides new
evidence
on the roles of socioeconomic characteristics in
determining
length of life using 19-years of high-quality panel
data
from the German Socio-Economic Panel. We also contribute to
the
rapidly growing literature on life satisfaction by testing if
more
satisfied people live longer. Our results clearly confirm
the importance
of income, education and marriage as important
factors
in determining longevity. For example, a one-log point
increase
in real household monthly income leads to a 12% decline
in the
probability of death. We find a large role for unobserved
health
shocks, with 5-years of shocks explaining the same amount
of the
variation in length of life as all the other observed
individual
and socio-economic characteristics (with the exception
of age)
combined. Individuals with a high level of life
satisfaction
when initially interviewed live significantly longer,
but this
effect is completely due to the fact that less
satisfied
individuals are typically less healthy. We are also
able to
confirm the findings of previous studies that self-
assessed
health status has significant explanatory power in
predicting
future mortality and is therefore a useful measure of
morbidity.
Finally, we suggest that the duration model developed
in this
paper is a useful tool when analyzing a wide-range of
single-spell
durations where individual-specific shocks are
likely
to be important.
Keywords:
income, education, marriage, life satisfaction, shocks,
mortality, duration analysis
JEL: I1 C23
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1488&r=all
114. Job
Security and Job Protection
Clark, Andrew (PSE and IZA Bonn)
Postel-Vinay, Fabien (PSE, CREST-INSEE,
CEPR and IZA Bonn)
We
construct indicators of the perception of job security for
various types
of jobs in 12 European countries using individual
data
from the European Community Household Panel (ECHP). We then
consider
the relation between reported job security and OECD
summary
measures of Employment Protection Legislation (EPL)
strictness
on one hand, and Unemployment Insurance Benefit (UIB)
generosity
on the other. We find that, after controlling for
selection
into job types, workers feel most secure in permanent
public
sector jobs, least secure in temporary jobs, with
permanent
private sector jobs occupying an intermediate position.
We also
find that perceived job security in both permanent
private
and temporary jobs is positively correlated with UIB
generosity,
while the relationship with EPL strictness is
negative:
workers feel less secure in countries where jobs are
more
protected. These correlations are absent for permanent
public
jobs, suggesting that such jobs are perceived to be by and
large
insulated from labor market fluctuations.
Keywords:
perceived job security, Employment Protection
Legislation, Unemployment Insurance
Benefits
JEL: J28 J65 I31
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:iza:izadps:dp1489&r=all
115.
School vouchers Italian style
Giorgio BRUNELLO
Daniele CHECCHI
School
vouchers introduced recently in some Italian regions have
lowered
the cost of private schools. On one side, we provide evid
ence
that Italian private schools may be selected for different r
easons
than quality considerations. On the other side, by exploit
ing
individual data on voucher applicants, we present evidence th
at the
percentage of voucher applicants is higher the higher the
average
quality of private schools, which we explain with the fac
t that
better quality schools provide better services to students
including information and consulting on
vouchers. We show that
enrolment
in private schools responds sluggishly to changes in tu
ition
induced by vouchers. Under stringent assumptions, we estima
te the
slopes of demand and supply of private education in the la
rgest
Italian region, Lombardy, during the first two years since
implementation
of a voucher scheme, and provide a quantitative as
sessment
of the long – term impact of vouchers on tuition fees
an d
enrolment in private schools
Keywords:
school vouchers
URL:
http://d.repec.org/n?u=RePEc:mil:wpdepa:2005-06&r=all
116.
Economic Adjustment of Recent Retirees to Adverse Wealth
Shocks
Gabor Kezdi (Central European University)
Purvi Sevak (Hunter College)
Since
the mid-nineties, the stock market has had an
unprecedented
impact on the wealth of current and future retirees.
Using
data from the Current Population Survey and the Health and
Retirement
Study, this report estimates consumption and labor
supply
responses of individuals in their 50s and 60s to the
recent
stock market downturn. We estimate an elasticity of
consumption
with respect to wealth changes ranging from five to
seven
percent. This implies that households respond to a decline
in
wealth by reducing their consumption by 5 to 7 percent of the
wealth
decline. For example, if a household's wealth declined by
$100,000,
this estimate suggests they would reduce their annual
consumption
by $5,000 to $7,000. Among retirees, we do not
observe
any re-entry into the labor force in response to wealth
losses
due to stock market declines. This suggests that
retirement
is more or less an absorbing state, for either supply
or
demand reasons: once an individual retires, it is very
difficult
to become employed once again.
Date: 2004-04
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp075&r=all
117. SSI
for the Aged and the Problem of 'Take-Up'
Todd E. Elder (Institute of Labor and
Industrial Relations)
Elizabeth T. Powers (Institute of Government and Public
Affairs)
The
Supplemental Security Income (SSI) program provides an
income
and health care safety net for the elderly poor. The
phenomenon
of apparently eligible households that do not enroll
in, or
'take up' SSI has been noted as a severe problem since the
program's
inception in 1974. This paper examines SSI eligibility,
applications,
and participation in the aged population from 1984 (
the most
recent year analyzed in the literature to date) through
1997. We
are fortunate to have administrative data on SSI use
that is
linked to various panels of the SIPP. We use this
information
to estimate the SSI-aged application choice. The key
findings
from the earlier literature are sensitive with respect
to exact
sample specification, alternative approaches to imputing
the
expected SSI benefit, and more detailed information on
application
and receipt culled from administrative files. Our
findings
suggest that cash benefits may be less influential, and
Medicaid
access through SSI more influential, than previously
estimated.
Date: 2004-01
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp076&r=all
118. How
to Evaluate the Effects of Social Security Policies on
Retirement and Saving When Firm Policies
Affect the
Opportunities Facing Older Individuals
Alan L. Gustman (Dartmouth College and
NBER)
Thomas L. Steinmeier (Texas Tech
University)
This
project uses data from the Health and Retirement Study to
examine,
in the context of a structural retirement model, the
effects
on retirement of non-wage aspects of employment emanating
from
firm side factors. Factors examined include minimum hours
constraints,
layoffs, physical and mental requirements of the job,
informal
pressures to retire, accommodations made by the
employer
when a person has a health problem, and retirement
windows.
The most important effects found pertain to minimum
hours
constraints. Should minimum hours constraints be abolished,
the
percent of the population ages 62 to 69 who are completely
retired
will decline by 10 to 15 percentage points. The fraction
in this
age group who are working in partial retirement jobs will
increase
by roughly twenty percentage points of the population.
Were
minimum hours constraints abolished, more than twice as many
people
would enter partial retirement as would leave full time
work. As
a result, total FTE employment would increase were
minimum
hours constraints eliminated. Increasing the importance
of
partial retirement would affect the role of the earnings test
and
liquidity of the Social Security system, although the
increase
in partial retirement would be largely, but not entirely
offset by
the decline in full time work. This would limit the
size of
any effects on Social Security finances. Authors’
Acknowledgment
This paper was supported by a grant from the U.S.
Social
Security Administration (SSA) to the Michigan Retirement
Research
Center, UM 03-03. The opinions and conclusions are
solely
those of the authors and should not be construed as
representing
the opinions or policy of SSA, the Michigan
Retirement
Research Center, or the National Bureau of Economic
Research.
Alan L. Gustman is Loren Berry Professor of Economics
at
Dartmouth College, Department of Economics, Hanover, N.H.
03755
(alan.l.gustman@dartmouth.edu). Thomas L. Steinmeier is
Professor
of Economics, Texas Tech University, Department of
Economics,
Lubbock, Texas 79409 (Thomas.Steinmeier@TTU.edu).
Date: 2004-06
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp078&r=all
119. The
Impact of the 1996 SSI Childhood Disability Reforms:
Evidence from Matched SIPP-SSA Data
Lynn A. Karoly (RAND)
Paul S. Davies (Social Security
Administration)
The
Personal Responsibility and Work Opportunity Reconciliation
Act of
1996 changed the definition of disability used to
determine
eligibility for disabled children under the
Supplemental
Security Income (SSI) program and made other changes
in the
program. The law required the redetermination of
eligibility
status for children potentially affected by the new
definition
of disability. As a result, an estimated 100,000
children
were expected to lose SSI benefits. The goal of this
paper is
to understand the impact of benefit loss on affected
children
and their families. The analysis draws on data from the
1992,
1993 and 1996 panels of the Survey of Income and Program
Participation
matched with Social Security Administration records
on SSI
program participation. The data are used to analyze the
impact
of the loss of SSI income as a result of the 1996
legislation
on family labor supply, welfare program participation,
and
income and poverty. Compared with families that lost SSI
benefits
due to normal attrition from the program, the excess
benefit
loss due to the 1996 childhood disability reforms is
associated
with lower levels of family labor supply, higher
levels
of participation in AFDC/TANF and food stamps, and lower
levels
of family income relative to poverty. For some outcomes,
these
effects—measured one month after benefit loss—persist
for up
to 12 months.
Date: 2004-06
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp079&r=all
120.
Decaying Asymmetric Information and Adverse Selection in
Annuities
David McCarthy (Tanaka Business School,
Imperial College)
This
paper develops an equilibrium model of the annuities market
where agents
have private information about their mortality, and
where
the predictive value of this information decays over time.
The
paper shows that in this case, insurance companies will
observe
a duration-related trend in the mortality of annuitants
under
certain conditions. This effect is tested for using a Cox
proportional
hazards methodology and data from the South African
annuities
market, which since the early 1990’s has permitted
phased
withdrawals of retirement savings instead of mandating
pure
annuitisation. Evidence is equivocal: substantial
differences
are found between the duration-related mortality
trends
of different insurance companies, data problems seem to
have
some effect, and factors outside the model which might
change
the results cannot be excluded. However, the presence of a
strong
duration-related trend cannot be decisively rejected. The
observed
trend indicates that mortality at earlier policy
durations
is better than at later durations by the equivalent of
about 6
years of age, although data factors cannot be precluded
as a
cause of this trend.
Date: 2004-06
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp080&r=all
121.
Understanding Patterns of Social Security Benefit Receipt,
Pensions Incomes, Retirement and Saving by
Race, Ethnicity,
Gender and Marital Status: A Structural
Approach
Alan L. Gustman (Dartmouth College and
NBER)
Thomas L. Steinmeier (Texas Tech
University)
In this
paper we use data from the Health and Retirement Study
to
examine differences in retirement behavior, wealth, Social
Security
and pension benefits by race and gender. The differences
observed
among groups are sometimes substantial. We then estimate
models
jointly explaining retirement and wealth by race and
gender.
We decompose differences in outcomes into those due to
differences
in parameters of the preference function for leisure
and
goods, time preference rates, and those due to differences in
the
circumstances of the members of each group. By circumstances
we mean
both the opportunity set, and factors that determine the
disutility
of continued work, such as health status. We find that
differences
in outcomes among white, black and Hispanic males are
not due
to differences in preferences for leisure and goods
consumption,
but are due both to differences in time preference
and to
differences in circumstances. Differences in outcomes
between
men and women are primarily due to differences in
preferences.
Authors’ Acknowledgement This paper was supported
by a
grant from the U.S. Social Security Administration (SSA) to
the
Michigan Retirement Research Center, UM 03-13. The opinions
and
conclusions are solely those of the authors and should not be
construed
as representing the opinions or policy of SSA, the
Michigan
Retirement Research Center, or the National Bureau of
Economic
Research. Alan L. Gustman is Loren Berry Professor of
Economics
at Dartmouth College, Department of Economics, Hanover,
N.H. 03755
(alan.l.gustman@dartmouth.edu). Thomas L. Steinmeier
is
Professor of Economics, Texas Tech University, Department of
Economics,
Lubbock, Texas 79409 (Thomas.Steinmeier@TTU.edu).
Date: 2004-07
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp082&r=all
122.
Precautionary Saving Over the Lifecycle
John Laitner (Institute for Social
Research)
This
paper studies the quantitative importance of precautionary
wealth
accumulation relative to life—cycle saving for
retirement.
Section 1 examines panel data on earnings from the
PSID.
Using a bivariate normal model of random effects, we find
that
second— period—of—life earnings are strongly
positively
correlated with initial earnings but have a higher
variance.
Section 2 studies the consequences for life—cycle
saving.
Households know their youthful earning power as they
enter
the labor market, but only in midlife do they learn their
actual
second—period earning ability. For plausible
calibrations,
precautionary saving only adds 5—6% to
aggregative
life—cycle wealth accumulation. Nevertheless, we
find
that, given borrowing constraints on households’ behavior,
the
variety of earning profiles that our bivariate normal model
generates
itself stimulates more than twice as much extra wealth
accumulation
as precautionary saving.
Date: 2004-03
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp083&r=all
123.
Global Aging: Issues, Answers, More Questions
Axel Borsch-Supan (University of Mannheim
and NBER)
Global aging
will be a major determinant of long run economic
development
in industrial and developing countries. The extent of
the
demographic changes is dramatic and will deeply affect future
labor,
financial and goods markets. The expected strain on public
budgets
and especially social security has already received
prominent
attention, but the aging poses many other economic
challenges
that threaten productivity and growth if they remain
unaddressed.
While aging is global, there are marked differences
in the
speed and the extent of the aging processes across
countries.
These differences are likely to generate different
growth
paths and change the international pecking order, e.g.
within
the G8 countries. Due to the globalization of labor,
financial
and goods markets, however, these differential
demographic
developments will also precipitate trade and factor
movements.
Exploiting these movements offers large chances during
the
aging process. The purpose of this paper is to review the
most
important economic chances and challenges due to global
aging.
It summarizes what we know and identifies research areas
where it
is important to know more.
Date: 2004-06
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp084&r=all
124. Back
to Work: Expectations and Realizations of Work After
Retirement
Nicole Maestas (RAND)
This
paper analyzes labor force re-entry after retirement in an
effort
to understand whether these “unretirement” transitions
are
largely unexpected (perhaps resulting from failures in
planning
or unexpected financial shocks) or planned (perhaps
representing
a more complex retirement process). Nearly one-half
of
retirees follow a nontraditional retirement path that involves
partial
retirement and/or unretirement, and the unretirement rate
among
those observed at least five years after their first
retirement
is 24 percent. The unretirement rate is even higher
among
those retiring at younger ages (as high as 36 percent among
those
retiring at ages 51-52). I find that unretirement was
anticipated
for all but nine percent of retirees. If anything,
expectations
err on the side of excessive pessimism about the
future
rather than unwarranted optimism. Unretirement appears to
be
qualitatively similar to partial retirement and there is some
evidence
of a substantial correlation in the post-retirement
labor
supply transitions of married couples.
Date: 2004-07
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp085&r=all
125. The
Impact of Health Status and Out-of-Pocket Medical
Expenditures on Annuity Valuation
Cassio M. Turra (University of
Pennsylvania)
Olivia S. Mitchell (University of
Pennsylvania)
This
paper describes how differences in health status at
retirement
can influence the decision to purchase a life annuity.
We
extend previous research on annuitization decisions by
incorporating
the effect of health differentials via differences
in
survival throughout the latter portion of life. Next, we
consider
how precautionary savings motivated by uncertain out-of-
pocket
medical expenses influence annuitization decisions. Our
results
show that annuities become less attractive to people
facing
uncertain medical expenses. While full annuitization would
still be
optimal if annuity markets were truly complete and both
life-
and health-contingent, lacking this, annuity equivalent
wealth
values are much lower for those in poor health, as
compared
to persons in good health.
Date: 2004-07
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp086&r=all
126.
Welfare Reform and Immigrant Participation in the
Supplemental Security Income Program
Paul S. Davies (Social Security
Administration)
Michael J. Greenwood (University of
Colorado at Boulder)
We
examine the effect of the 1996 welfare reform legislation on
participation
in the Supplemental Security Income (SSI) program
by
immigrants. Although none of the immigrants on the SSI rolls
before
welfare reform lost eligibility, the potential exists for
future
impacts on the SSI caseload and the well-being of recent
immigrants.
We use microdata files from the Social Security
Administration’s
Continuous Work History Sample matched to
administrative
data on SSI participation for the period 1993 to
1999. We
estimate simple models of SSI participation and compare
our
results to the existing literature. We then estimate a series
of
difference-in-differences models of SSI participation. These
models
compare SSI participation by immigrants relative to
nativeborn
individuals, and among affected immigrants relative to
unaffected
immigrants and native-born individuals, before and
after
welfare reform. Descriptive results indicate that the
percentage
of immigrants and natives receiving SSI decreased
after
welfare reform, but by a larger percentage for natives than
for
immigrants. The probability of SSI participation decreased
after
welfare reform for immigrants who were affected by the
legislation
relative to immigrants who were unaffected. The
difference-in-differences
estimate is positive for immigrants
relative
to otherwise similar natives, but the estimated effect
among
affected immigrants is about half as large as the effect
for unaffected
immigrants. When the sample is limited to low
earners
as a proxy for the SSI means test, the results are
qualitatively
unchanged but quantitatively much stronger.
Authors’
Acknowledgements We are grateful to Ulyses Balderas
for
assisting with the collection of some data used here. A
previous
version of this paper was presented at the 2004 Western
Regional
Science Association Annual Meeting, February 25-28, 2004,
Maui,
HI.
Date: 2004-09
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp087&r=all
127.
Grasshoppers, Ants and Pre-Retirement Wealth: A Test of
Permanent Income Consumers
Erik Hurst (University of Chicago and NBER)
This
paper shows that households who enter retirement with low
wealth
consistently followed non-permanent income consumption
rules
during their working years. Using the Panel Study of Income
Dynamics
(PSID), household wealth in 1989 is predicted for a
sample
of 50-65 year olds using both current and past income,
occupation,
demographic, employment, and health characteristics.
Using
the residuals from this first stage regression, the sample
of
pre-retired households is subsetted into households who save
‘lower’
than predicted and all other households. By
construction,
these households had similar opportunities to save;
the
average household in both these sub-samples are very similar
along
all observable income and demographic characteristics. It
is then
shown that households in the low wealth residual sample
had much
larger declines in consumption upon retirement. Such a
result
is consistent with the household having inadequately
planned
for retirement. The panel component of the PSID is then
used to
analyze the consumption behavior of these households
early in
their lifecycle. It is shown that these low pre-
retirement
wealth households had consumption growth that
responded
to predictable changes in income during their early
working
years. No such behavior was found among the other pre-
retired
households. Moreover, the low wealth residual households
responded
both to predictable income increases as well as
predictable
income declines, a result that is inconsistent with a
liquidity
constraints explanation. After ruling out other
theories
of consumption to explain these facts, it is concluded
that
households who entered retirement with lower than predicted
wealth
consistently followed near sighted consumption plans
during
their working lives.
Date: 2004-09
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp088&r=all
128.
Obesity, Disability, and Movement Onto the Disability
Insurance Rolls
Richard V. Burkhauser (Cornell University)
John Cawley (Cornell University)
Between
the early 1980s and 2002, both the prevalence of obesity
and the
number of beneficiaries of the Social Security Disability
Insurance
program doubled. We test whether these trends are
related;
specifically, we test whether obesity causes disability
and
movement onto the disability rolls. We estimate models of
instrumental
variables using two nationally representative data
sets,
the Panel Survey of Income Dynamics and the National
Longitudinal
Survey of Youth, 1979 Cohort. The results are mixed
but we
find evidence that weight increases the probability of
health-related
work limitations and the probability of receiving
disability
related income. Our results suggest that the failure
to treat
obesity as endogenous leads to dramatic underestimates
of the
link between obesity and disability outcomes. Authors’
Acknowledgements
We thank seminar participants at Ohio State
University
and the 2004 Conference of the Social Security
Retirement
Research Consortium for their helpful comments. We
gratefully
acknowledge financial support from the University of
Michigan
Retirement Research Consortium and the Bronfenbrenner
Life
Course Center at Cornell University. We thank Shuaizhang
Feng for
expert research assistance.
Date: 2004-10
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp089&r=all
129. The
Social Security Retirement Earning Test,Retirement and
Benefit Claiming
Alan L. Gustman (Dartmouth College and
NBER)
Thomas L. Steimeier (Texas Tech University)
This
paper introduces the age at which Social Security benefits
are
claimed as an additional outcome in a structural model of
retirement
and wealth. The model is then used to simulate the
effects
of abolishing the remainder of the Social Security
earnings
test, between age 62 and the full retirement age.
Estimates
are based on data for married men from the first six
waves of
the Health and Retirement Study. From age 62 through
full
retirement age, the earnings test reduces the share working
full
time by about four percent of the married male population,
which
entails a reduction of about ten percent in the number of
married
males of that age at full time work. However, abolishing
the
earnings test would adversely affect the cash-flow of the
system.
If the earnings test were abolished between early and
full
retirement age, the share of married men claiming Social
Security
benefits would increase by about 10 percentage points,
and
average benefit payments would increase by about $1,800 per
recipient,
to be offset eventually by actuarially fair or better
than
fair reductions in benefit payouts throughout their 70s, 80s
and 90s.
One can increase the employment of older persons either
by
abolishing the earnings test or by increasing the early
entitlement
age under Social Security. A major difference on the
funding
side is that abolishing the earning test results in an
earlier
flow of benefit payments from Social Security, worsening
the
cash-flow problems of the system, while increasing the early
entitlement
age delays the flow of benefit payments from the
system, improving
its liquidity.
Date: 2004-09
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp090&r=all
130.
Using a Structural Retirement Model to Simulate the Effect
of Changes to the OASDI and Medicare
Programs
John Bound (University of Michigan and
NBER)
Todd Stinebrickner (University of Western
Ontario)
Timothy Waidman (Urban Institute)
In this
paper, we specify a dynamic programming model that
addresses
the interplay among health, financial resources, and
the
labor market behavior of men in the later part of their
working
lives. The model is estimated using data from the Health
and
Retirement Study. We use the model to simulate the impact on
behavior
of raising the normal retirement age, eliminating early
retirement
altogether and introducing universal health insurance.
Date: 2004-10
URL:
http://d.repec.org/n?u=RePEc:mrr:papers:wp091&r=all
131.
Order Flow and the Formation of Dealer Bids: Information
Flows and Strategic Behavior in the Government
of Canada
Securities Auctions
Ali Hortacsu
Samita Sareen
Is
order-flow an important component of private information
possessed
by traders in government securities markets? Utilizing
a
detailed data set on Government of Canada securities auctions,
we argue
that the answer is yes. Direct participation in these
auctions
is limited to government securities dealers. However,
non-dealer
customers can also submit bids through dealers. We
document
patterns of strategic behavior by both sides of the
market,
dealers and customers, that support the hypothesis that
customer
bids provide valuable order-flow information to dealers.
Dealer
bids respond to privately observed customer bids, and
dealers
observing customer bid can predict the auction cutoff
price
better. Customers also respond strategically to dealers'
use of
the information contained in their bids.
JEL: G1 L1
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11116&r=all
132. An
Integrated Model of Downtown Parking and Traffic
Congestion
Richard Arnott
Eren Inci
This
paper presents a downtown parking model that integrates
traffic
congestion and saturated on-street parking. We assume
that the
stock of cars cruising for parking adds to traffic
congestion.
Two major results come out from the model, one of
which is
robust. The robust one is that, whether or not the
amount
of on-street parking is optimal, it is efficient to raise
the
on-street parking fee to the point where cruising for parking
is
eliminated without parking becoming unsaturated. The other is
that, if
the parking fee is fixed at a sub-optimal level, it is
second-best
optimal to increase the amount of curbside allocated
to parking
until cruising for parking is eliminated without
parking
becoming unsaturated.
JEL: R4
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11118&r=all
133. The
Term Structure of the Risk-Return Tradeoff
John Y. Campbell
Luis Viceira
Recent
research in empirical finance has documented that
expected
excess returns on bonds and stocks, real interest rates,
and risk
shift over time in predictable ways. Furthermore, these
shifts tend
to persist over long periods of time. In this paper
we
propose an empirical model that is able to capture these
complex
dynamics, yet is simple to apply in practice, and we
explore
its implications for asset allocation. Changes in
investment
opportunities can alter the risk-return tradeoff of
bonds,
stocks, and cash across investment horizons, thus creating
a ``term
structure of the risk-return tradeoff.'' We show how to
extract
this term structure from our parsimonious model of return
dynamics,
and illustrate our approach using data from the U.S.
stock
and bond markets. We find that asset return predictability
has
important effects on the variance and correlation structure
of
returns on stocks, bonds and T-bills across investment
horizons.
JEL: G12
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11119&r=all
134.
Proprietary vs. Public Domain Licensing of Software and
Research Products
Alfonso Gambardella
Bronwyn H. Hall
We study
the production of knowledge when many researchers or
inventors
are involved, in a setting where tensions can arise
between
individual public and private contributions. We first
show
that without some kind of coordination, production of the
public knowledge
good (science or research software or database)
is
sub-optimal. Then we demonstrate that if "lead" researchers
are able
to establish a norm of contribution to the public good,
a better
outcome can be achieved, and we show that the General
Public
License (GPL) used in the provision of open source
software
is one of such mechanisms. Our results are then applied
to the
specific setting where the knowledge being produced is
software
or a database that will be used by academic researchers
and possibly
by private firms, using as an example a product
familiar
to economists, econometric software. We conclude by
discussing
some of the ways in which pricing can ameliorate the
problem
of providing these products to academic researchers.
JEL: O31
O34 L22 L86
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11120&r=all
135.
Social Security, Demographic Trends, and Economic Growth:
Theory and Evidence from the International
Experience
Isaac Ehrlich
Jinyoung Kim
The
worldwide problem with pay-as-you-go (PAYG) social security
systems
isn't just financial. This study indicates that these
systems
may have exerted adverse effects on key demographic
factors,
private savings, and long-term growth rates. Through a
comprehensive
endogenous-growth model where human capital is the
engine
of growth, family choices affect human capital formation,
and
family formation itself is a choice variable, we show that
social
security taxes and benefits can create adverse incentive
effects
on family formation and subsequent household choices, and
that
these effects cannot be fully neutralized by counteracting
intergenerational
transfers within families. We implement the
model
using calibrated simulations as well as panel data from 57
countries
over 32 years (1960-92). We find that PAYG tax measures
account
for a sizeable part of the downward trends in family
formation
and fertility worldwide, and for a slowdown in the
rates of
savings and economic growth, especially in OECD
countries.
JEL: J1 O1
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11121&r=all
136.
Junior is Rich: Bequests as Consumption
George M. Constantinides
John B. Donaldson
Rajnish Mehra
We
explore the consequences for asset pricing of admitting a
bequest
motive into an otherwise standard overlapping generations
model
where agents trade equity and perpetual debt securities.
Prices of
securities are seen to be approximately 50% higher in
an
economy with bequests as compared to an otherwise identical
one
where bequests are absent. Robust estimates of the equity
premium
are obtained in several cases where the desire to leave
bequests
is modest relative to the desire for old age consumption.
JEL: D91 D1 E2 E60 G11
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11122&r=all
137.
Understanding Strategic Bidding in Restructured Electricity
Markets: A Case Study of ERCOT
Ali Hortacsu
Steven L. Puller
We
examine the bidding behavior of firms competing on ERCOT, the
hourly
electricity balancing market in Texas. We characterize an
equilibrium
model of bidding into this uniform-price divisible-
good
auction market. Using detailed firm-level data on bids and
marginal
costs of generation, we find that firms with large
stakes
in the market performed close to theoretical benchmarks of
static,
profit-maximizing bidding derived from our model. However,
several
smaller firms utilized excessively steep bid schedules
that
deviated significantly from our theoretical benchmarks, in a
manner
that could not be empirically accounted for by the
presence
of technological adjustment costs, transmission
constraints,
or collusive behavior. Our results suggest that
payoff
scale matters in firms' willingness and ability to
participate
in complex, strategic market environments. Finally,
although
smaller firms moved closer to theoretical bidding
benchmarks
over time, their bidding patterns contributed to
productive
inefficiency in this newly restructured market, along
with
efficiency losses due to the close-to optimal exercise of
market
power by larger firms.
JEL: L1 L2 L5 L9
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11123&r=all
138.
Does Educational Tracking Affect Performance and Inequality?
Differences-in-Differences Evidence across
Countries
Eric A. Hanushek
Ludger Woessmann
Even
though some countries track students into differing-ability
schools
by age 10, others keep their entire secondary-school
system
comprehensive. To estimate the effects of such
institutional
differences in the face of country heterogeneity,
we
employ an international differences-in-differences approach.
We
identify tracking effects by comparing differences in outcome
between
primary and secondary school across tracked and non-
tracked
systems. Six international student assessments provide
eight pairs
of achievement contrasts for between 18 and 26 cross-
country
comparisons. The results suggest that early tracking
increases
educational inequality. While less clear, there is also
a
tendency for early tracking to reduce mean performance.
Therefore,
there does not appear to be any equity-efficiency
trade-off.
JEL: I2
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11124&r=all
139.
Reconsidering Expectations of Economic Growth after World
War II from the Perspective of 2004
Robert W. Fogel
At the
close of World War II, there were wide-ranging debates
about
the future of economic developments. Historical experience
has
since shown that these forecasts were uniformly too
pessimistic.
Expectations for the American economy focused on the
likelihood
of secular stagnation; this topic continued to be
debated
throughout the post-World War II expansion. Concerns
raised
during the late 1960s and early 1970s about rapid
population
growth smothering the potential for economic growth in
less
developed countries were contradicted when during the mid-
and
late-1970s, fertility rates in third world countries began to
decline
very rapidly. Predictions that food production would not
be able to
keep up with population growth have also been proven
wrong,
as between 1961 and 2000 calories per capita worldwide
have
increased by 24 percent, despite the doubling of the global
population.
The extraordinary economic growth in Southeast and
East Asia
had also been unforeseen by economists.
JEL: O10
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11125&r=all
140.
Profitable Investments or Dissipated Cash? Evidence on the
Investment-Cash Flow Relationship From Oil
and Gas Lease
Bidding
Marianne Bertrand
Sendhil Mullainathan
The
strong positive relationship between corporate cash flow and
investment
has been interpreted through the lens of both agency-
and
non-agency-based models. In this paper, we distinguish
between
these two interpretations using project-level data in the
oil and
gas industry. The specific projects we consider are
auctioned-off
leases that give mineral exploration rights to
tracts
of federal land. We find the standard positive
relationship
between investment and cash flow in this data, in
that
positive shocks to residual cash flow (netting out firm and
time
effects) are associated with higher spending on these leases.
Interestingly,
the increased investment comes from an increase
in the
price paid per tract with little to no change in the total
number
of tracts or total acreage of land bought. The positive
association
between price and cash flow holds even after
controlling
for a set of tract and firm characteristics that
might be
ex-ante related to expected return on a given tract.
This
data is most useful, however, because we can directly
observe
the eventual productivity of each of these projects. We
find
that the increase in price induced by higher cash flow is
associated
with lower average productivity. In fact, the total
number
of productive tracts does not increase with cash flow. In
other
words, while higher cash flow is associated with higher
spending
on these projects, higher cash flow does not lead to
higher
revenues from these projects. Combining this finding with
the lack
of a quantity response, we conclude that our results are
best
described by an agency model where managers use cash flow to
simplify
their job (or live a ``quiet life'') rather than
``empire-build.''
JEL: G3
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11126&r=all
141.
Vehicle Currency Use in International Trade
Linda S. Goldberg
Cedric Tille
Although
currency invoicing in international trade transactions
is
central to the transmission of monetary policy, the forces
motivating
the choice of currency have long been debated. We
introduce
a model wherein agents involved in international trade
can
invoice in the exporter's currency, the importer's currency,
or a
third-country vehicle currency. The model is designed to
contrast
the contribution of macroeconomic variability with that
of
industry-specific features in the selection of an invoice
currency.
We show that producers in industries with high demand
elasticities
are more likely than producers in other industries
to
display herding in their choice of currency. This industry-
related
force is more influential than local macroeconomic
performance
in determining producers' choices. Drawing on data on
invoice
currency use in exports and imports for twenty-four
countries,
we document that the dollar is the currency of choice
for most
transactions involving the United States. The dollar is
also
extensively used as a vehicle currency in international
trade
flows that do not directly involve the United States.
Consistent
with the results of our model, this last finding is
largely
attributable to international trade in reference-priced
and
organized-exchange traded goods. Although the magnitude of
business-cycle
volatility matters for invoicing of more
differentiated
products, it is less central for invoicing
nondifferentiated
goods.
JEL: F3 F4
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11127&r=all
142.
Shirking, Sharing Risk, and Shelving: The Role of
University License Contracts
Marie Thursby
Jerry Thursby
Emmanuel Dechenaux
University
license contracts are more complex than the fixed
fees and
royalties typically examined by economists. We provide
theoretical
and empirical evidence that suggests milestones,
annual
payments, and consulting are common because moral hazard,
risk
sharing, and adverse selection all play a role when
embryonic
inventions are licensed. Milestones address inventor
moral
hazard without the inefficiency inherent in royalties.
Royalties
are optimal only when the licensee is risk averse. The
potential
for a licensee to shelve inventions is an adverse
selection
problem which can be addressed by annual fees if
shelving
is unintentional, but requires milestones if the firm
licenses
an invention with the intention to shelve it. Whether
annual
fees or milestones prevent shelving depends on the
university
credibly threatening to take the license back from a
shelving
firm. When such a threat is not credible an upfront fee
is
needed. This supports the rationale for Bayh-Dole march-in
rights
but also shows the need for the exercise of these rights
can be
obviated by contracts.
JEL: D82 L14 O3
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11128&r=all
143. Why
Have Housing Prices Gone Up?
Edward L. Glaeser
Joseph Gyourko
Raven Saks
Since
1950, housing prices have risen regularly by almost two
percent
per year. Between 1950 and 1970, this increase reflects
rising
housing quality and construction costs. Since 1970, this
increase
reflects the increasing difficulty of obtaining
regulatory
approval for building new homes. In this paper, we
present
a simple model of regulatory approval that suggests a
number
of explanations for this change including changing
judicial
tastes, decreasing ability to bribe regulators, rising
incomes
and greater tastes for amenities, and improvements in the
ability
of homeowners to organize and influence local decisions.
Our
preliminary evidence suggests that there was a significant
increase
in the ability of local residents to block new projects
and a
change of cities from urban growth machines to homeowners'
cooperatives.
JEL: O2
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11129&r=all
144.
Trends in Hours, Balanced Growth, and the Role of
Technology in the Business Cycle
Jordi Gali
The
present paper revisits a property embedded in most dynamic
macroeconomic
models: the stationarity of hours worked. First, I
argue
that, contrary to what is often believed, there are many
reasons
why hours could be nonstationary in those models, while
preserving
the property of balanced growth. Second, I show that
the
postwar evidence for most industrialized economies is clearly
at odds
with the assumption of stationary hours per capita. Third,
I
examine the implications of that evidence for the role of
technology
as a source of economic fluctuations in the G7
countries.
JEL: E32
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11130&r=all
145.
Evaluation of Exchange-Rate, Capital Market, and
Dollarization Regimes in the Presence of
Sudden Stops
Assaf Razin
Yona Rubinstein
The
literature has not being able to identify clear-cut real
effects
of exchange-rate regimes on output growth. Similarly, no
definitive
view emerges from the literature in regard to the
effects
of open capital markets on macroeconomic performance. The
paper
attributes the failure of the literature to fundamental
flaws,
consisting of ignoring non-linearities in the effects of
exchange
rate and capital-market liberalization regimes, on the
macroeconomic
performance. The paper develops a methodology
consisting
of accounting for the "crisis-prone state of the
economy",
summarized by a projected probability of crisis, due to
sudden
stops in international capital inflows. We apply the new
methodology
to a cross-country panel of 100 low and middle-income
countries.
Findings indicate that the effects of exchange rate
regimes,
and liberalization regimes, on macroeconomic performance
go
through two distinct channels: a direct channel via the real
side of
the economy, and an indirect channel via the financial
side,
which influences the probability of sudden stops. We also
analyze
how the projected probability of sudden stops affects the
level of
dollarization, and provide estimates for the effect of
dollarization
on growth.
JEL: F4
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11131&r=all
146. The
Market Price of Aggregate Risk and the Wealth
Distribution
Hanno Lustig
I
introduce bankruptcy into a complete markets model with a
continuum
of ex ante identical agents who have power utility.
Shares
in a Lucas tree serve as collateral. The model yields a
large
equity premium, a low risk-free rate and a time-varying
market
price of risk for reasonable risk aversion. Bankruptcy
gives
rise to a second risk factor in addition to aggregate
consumption
growth risk. This liquidity risk is created by
binding
solvency constraints. The risk is measured by one moment
of the
wealth distribution, which multiplies the standard Breeden-
Lucas
stochastic discount factor. This captures the aggregate
shadow
cost of the solvency constraints. The economy is said to
experience
a negative liquidity shock when this growth rate is
high and
a large fraction of agents faces severely binding
solvency
constraints. These shocks occur in recessions. The
average
investor wants a high excess return on stocks to
compensate
for the extra liquidity risk, because of low stock
returns in
recessions. In that sense stocks are "bad collateral".
The
adjustment to the Breeden-Lucas stochastic discount factor
raises
the unconditional risk premium and induces time variation
in
conditional risk premia.
JEL: G0
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11132&r=all
147.
Sudden Stops and Output Drops
V.V. Chari
Patrick Kehoe
Ellen R. McGrattan
In
recent financial crises and in recent theoretical studies of
them,
abrupt declines in capital inflows, or sudden stops, have
been
linked with large drops in output. Do sudden stops cause
output
drops? No, according to a standard equilibrium model in
which
sudden stops are generated by an abrupt tightening of a
country's
collateral constraint on foreign borrowing. In this
model,
in fact, sudden stops lead to output increases, not
decreases.
An examination of the quantitative effects of a well-
known
sudden stop, in Mexico in the mid-1990s, confirms that a
drop in
output accompanying a sudden stop cannot be accounted for
by the
sudden stop alone. To generate an output drop during a
financial
crisis, as other studies have done, the model must
include
other economic frictions which have negative effects on
output
large enough to overwhelm the positive effect of the
sudden
stop.
JEL: F4 F41 E3 E32
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11133&r=all
148. A
Framework for Exploring the Macroeconomic Determinants of
Systematic Risk
Torben G. Andersen
Tim
Bollerslev
Francis X. Diebold
Jin (Ginger) Wu
We
selectively survey, unify and extend the literature on
realized
volatility of financial asset returns. Rather than
focusing
exclusively on characterizing the properties of realized
volatility,
we progress by examining economically interesting
functions
of realized volatility, namely realized betas for
equity
portfolios, relating them both to their underlying
realized
variance and covariance parts and to underlying
macroeconomic
fundamentals.
JEL: G12
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11134&r=all
149. How
Does Job-Protected Maternity Leave Affect Mothers'
Employment and Infant Health?
Michael Baker
Kevin Milligan
Maternity
leaves can affect mothers%u2019 and infants%u2019
welfare
if they first affect the amount of time working women
stay at
home post birth. We provide new evidence of the labor
supply
effects of these leaves from an analysis of the
introduction
and expansion of job-protected maternity leave in
Canada.
The substantial variation in leave entitlements across
mothers
by time and space is likely exogenous to their unobserved
characteristics.
This is important because unobserved
heterogeneity
correlated with leave entitlement potentially
biases
many previous studies of this topic. We find that modest
mandates
of 17-18 weeks do not increase the time mothers spend at
home.
The physical demands of birth and private arrangements
appear
to render short mandates redundant. These mandates do,
however,
decrease the proportion of women quitting their jobs,
increase
leave taking, and increase the proportion returning to
their
pre-birth employers. In contrast, we find that expansions
of
job-protected leaves to lengths up to 70 weeks do increase the
time
spent at home (as well as leave-taking and job continuity).
We also
examine whether this increase in time at home affects
infant
health, finding no evidence of an effect on the incidence
of low
birth weight or infant mortality.
JEL: J13 J32
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11135&r=all
150.
Smart Institutions, Foolish Choices? The Limited Partner
Performance Puzzle
Josh Lerner
Antoinette Schoar
Wan Wong
The
returns that institutional investors realize from private
equity
investments differ dramatically across institutions. Using
detailed
and hitherto unexplored records of fund investors and
performance,
we document large heterogeneity in the performance
of
different classes of limited partners. In particular,
endowments%u2019
annual returns are nearly 14% greater than
average.
Funds selected by investment advisors and banks lag
sharply.
These results are robust to controlling for the type and
year of
the investment, as well as to the use of different
specifications.
Analyses of reinvestment decisions and young
funds
suggest that the results are not primarily due to
endowments%u2019
greater access to established funds. Finally, we
examine
the differences in the choice of intermediaries across
various
institutional investors and their relationship to success.
We find
that LPs that have higher average IRRs also tend to
invest
in older funds and have a smaller fraction of GPs in their
geographic
area, and that the performance of university
endowments
is correlated with measures of the quality and loyalty
of the
student body.
JEL: G1 G2
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11136&r=all
151. The
U.S. Current Account and the Dollar
Oliver Blanchard
Francesco Giavazzi
Filipa Sa
There
are two main forces behind the large U.S. current account
deficits.
First, an increase in the U.S. demand for foreign goods.
Second,
an increase in the foreign demand for U.S. assets. Both
forces
have contributed to steadily increasing current account
deficits
since the mid--1990s. This increase has been accompanied
by a
real dollar appreciation until late 2001, and a real
depreciation
since. The depreciation has accelerated recently,
raising
the questions of whether and how much more is to come,
and if
so, against which currencies, the euro, the yen, or the
renminbi.
Our purpose in this paper is to explore these issues.
Our
theoretical contribution is to develop a simple portfolio
model of
exchange rate and current account determination, and to
use it
to interpret the past and explore alternative scenarios
for the
future. Our practical conclusions are that substantially
more depreciation
is to come, surely against the yen and the
renminbi,
and probably against the euro.
JEL: E3 F21 F32 F41
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11137&r=all
152. Are
Alcohol Excise Taxes Good For Us? Short and Long-Term
Effects on Mortality Rates
Philip J. Cook
Jan Ostermann
Frank A. Sloan
Regression
results from a 30-year panel of the state-level data
indicate
that changes in alcohol-excise taxes cause a reduction
in
drinking and lower all-cause mortality in the short run. But
those
results do not fully capture the long-term mortality
effects
of a permanent change in drinking levels. In particular,
since
moderate drinking has a protective effect against heart
disease
in middle age, it is possible that a reduction in per
capita
drinking will result in some people drinking "too little"
and
dying sooner than they otherwise would. To explore that
possibility,
we simulate the effect of a one percent reduction in
drinking
on all-cause mortality for the age group 35-69, using
several
alternative assumptions about how the reduction is
distributed
across this population. We find that the long-term
mortality
effect of a one percent reduction in drinking is
essentially
nil.
JEL: I12
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11138&r=all
153.
Assessing Consumer Gains from a Drug Price Control Policy
in the U.S.
Rexford Santerre
John A. Vernon
This
paper uses national data for the period 1960 to 2000 to
estimate
an aggregate private consumer demand for pharmaceuticals
in the
U.S. The estimated demand curve is then used to simulate
the
value of consumer surplus gains from a drug price control
regime
that holds drug price increases to the same rate of growth
as the
general consumer price level over the time period from
1981 to
2000. Based upon a 7 percent real interest rate, we find
that the
future value of consumer surplus gains from this
hypothetical
policy would have been $319 billion at the end of
2000.
According to a recent study, that same drug price control
regime
would have led to 198 fewer new drugs being brought to the
U.S.
market over this period. Therefore, we approximate that the
average
social opportunity cost per drug developed during this
period
to be approximately $1.6 billion. Recent research on the
value of
pharmaceuticals suggests that the social benefits of a
new drug
may be far greater than this estimated social
opportunity
cost.
JEL: I1 L5 K2
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11139&r=all
154.
Constraining Managers without Owners: Governance of the Not-
for-Profit Enterprise
Mihir A. Desai
Robert J. Yetman
In the
absence of owners, how effective are the constraints
imposed
by the state in promoting effective firm governance? This
paper
develops state-level indices of the legal and reporting
rules
facing not-for-profits and examines the effects of these
rules on
not-for-profit behavior. Stronger non-distribution
constraints
are associated with greater charitable expenditures
and
foundation payouts while more stringent reporting
requirements
are associated with lower insider compensation. The
paper
also examines how governance influences an alternative
metric
of not-for-profit performance %uF818 the provision of
social
insurance. Stronger governance measures are associated
with
intertemporal smoothing of resources and greater activity in
response
to negative economic shocks.
JEL: L30
G30 H40 K20
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11140&r=all
155. The
War Against Drug Producers
Herschel I. Grossman
Daniel Mejia
This
paper develops a model of a war against the producers of
illegal
hard drugs. This war occurs on two fronts. First, to
prevent
the cultivation of crops that are the raw material for
producing
drugs the state engages the drug producers in conflict
over the
control of arable land. Second, to impede further the
production
and exportation of drugs the state attempts to
eradicate
crops and to interdict drug shipments. The model also
includes
an interested outsider who uses both a stick and a
carrot
to strengthen the resolve of the state in its war against
drug
producers. The results of the calibration of the model yield
an
estimate that from 2001 through 2003 subsidies from the United
States
to the Colombian armed forces under Plan Colombia caused a
decrease
in the exportation of drugs from Colombia to about 44
percent
of what exportation was before Plan Colombia was
implemented.
The results of the calibration of the model also
suggests
that a more efficient allocation of the about $2 billion
that the
United States spent on Plan Colombia through 2003 would
have involved
larger subsidies to the conflict over control of
arable
land and smaller subsidies to eradication and interdiction
efforts.
JEL: D74 K42
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:nbr:nberwo:11141&r=all
156. A
Simple Recursive Forecasting Model
Wiliam Branch (University of Californis -
Irvine)
George W. Evans (University of Oregon
Economics Department)
We
compare the performance of alternative recursive forecasting
models.
A simple constant gain algorithm, used widely in the
learning
literature, both forecasts well out of sample and also
provides
the best fit to the Survey of Professional Forecasters.
Keywords:
constant gain, recursive learning, expectations
JEL: E37 D84 D83
Date: 2005-02-01
Date: 2005-02-01
URL:
http://d.repec.org/n?u=RePEc:ore:uoecwp:2005-3&r=all
157. On
rank estimation in symmetric matrices: the case of
indefinite matrix estimators
Stephen G. Donald (University of Texas at
Austin)
Natercia Fortuna (CEMPRE, Faculdade de
Economia do Porto)
Vladas Pipiras (University of North
Carolina at Chapel Hill)
We focus
on the problem of rank estimation in an unknown
symmetric
matrix based on a symmetric, asymptotically normal
estimator
of the matrix. The related positive definite limit
covariance
matrix is assumed to be estimated consistently, and to
have
either a Kronecker product or an arbitrary structure. These
assumptions
are standard although they also exclude the case when
the matrix
estimator is positive or negative semidefinite. We
adapt
and reexamine here some available rank tests, and introduce
a new
rank test based on the eigenvalues of the matrix estimator.
We
discuss several applications where rank estimation in
symmetric
matrices is of interest, and also provide a small
simulation
study and an application.
Keywords:
rank, symmetric matrix, eigenvalues, matrix
decompositions, estimation,
asymptotic normality,
consistency
JEL: C12 C13
Date: 2005-02
URL:
http://d.repec.org/n?u=RePEc:por:fepwps:167&r=all
158. The
role of technical efficiency in takeovers : evidence
from the french cheese industry, 1985-2000
Chaaban, J.
Requillart, V.
Trevisiol, A.
The paper
aims to identify whether production characteristics,
such as
technical efficiency and returns to scale, affect
takeovers.
Applying a two-stage procedure on original panel data
on
french ceese manufacturers, the paper first estimates firm-
specific
productive efficiency and scale economies using Data
Envelopment
Analysis. The paper then uses the findings of the
first
stage to evaluate a random effects logit model of the
determinants
of takeover in the french cheese industry for the
period
1985-2000. The paper finds that technical efficiency is
not a
significant determinat of takeovers, whereas the nature of
scale
economies is. Firms with Decreasing Returns to Scale (i. e.
an
over-sized production capacity) face a higher risk of takeover.
This suggests
that cheese manufacturers have been seeking to
expand
their milk processing capacities by acquiring large firms.
This
proves to be an indirect consequence of the non-transferable
milk
quota regime affecting the scarce milk input commodity. ...
French
Abstract : Ce papier vise a identifier si les
caracteristiques
de production, telles que l'efficacite et les
economies
d'echelle, affectent le rachat des entreprises.
Appliquant
une methode a deux etapes sur des donnees
originales
de panel issue de l'industrie fromagere en France, on
estime
d'abord les economies d'echelles et l'efficacite
technique
pour chaque firme en utilisant la methode Data
Envelopment
Analysis DEA. On utilise les resultats de la
premiere
etape pour estimer un modele de logit aleatoire des
determinants
du rachat des entreprises dans l'industrie
fromagere
francaise pour la periode 1985-2000. Les resultats
montrent
que les economies d'echelle, et non l'efficacite
technique,
sont un facteur essentiel dans la decision
d'acquisition
d'une entreprise par une autre. On montre aussi que
les
entreprises rachetees ont des rendements decroissants (donc
une
structure et une taille relativement grande), des charges
financieres
elevees (traduisant un certain endettement) mais
ne
constituent pas de cooperatives.
Keywords:
TECHNICAL EFFICIENCY; TAKEOVERS; MARKET STRUCTURE;
DATA ENVELOPMENT ANALYSIS; PANEL
DATA; CHEESE INDUSTRY ;
INDUSTRIE FROMAGERE; CONCENTRATION
D'ENTREPRISES;
MODELE; ECONOMIE D'ECHELLE;
EFFICACITE; PANEL
JEL: C23 L11 L66
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:rea:inrawp:200416&r=all
159.
Import demand estimation with country and product effects :
application of multi-way unbalanced panel
data models to
Lebanese imports
Boumahdi, R.
Chaaban, J.
Thomas, A.
Ce
papier presente une nouvelle approche pour l'evaluation
empirique
des elasticites de demande d'importation. Cette
approche
utilise un systeme de demande d'importation flexible (
Almost
Ideal Demand System : AIDS) couple d'un modele
econometrique
incorporant une specification du terme d'erreur
multi-niveaux
adaptee aux cylindrees dans le cas des panels. En
utilisant
des donnees issues de l'administration des douanes
libanaises,
on effectue une analyse empirique a un niveau tres
desagrege
des parts d'importation. Un systeme de parts
d'importation
est estime pour les principaux produits agricoles
europeens
en controlant pour des effets fixes produits, pays et
annee,
et en evaluant les effets prix relatifs aux concurrents
non
europeens. Les resultats confirment que la structure du
terme
d'erreur du modele empirique est plus riche que celle
generalement
utilisee dans la litterature.
Keywords:
IMPORTATION; PANEL; ELASTICITE ECONOMIE; MODELE
ECONOMETRIQUE; DOUANE ; LIBAN
JEL: C23 D12 F17
Date: 2004
URL:
http://d.repec.org/n?u=RePEc:rea:inrawp:200417&r=all
160. Performance Improvement Through Supply Chain Collaboration:
Conventional Wisdom Versus Empirical Findings
A. VEREECKE
S. MUYLLE
Supply chain collaboration is claimed to yield significant
improvements in multiple performance areas: it is believed to
reduce costs, to increase quality, to improve delivery, to
augment flexibility, to cut procurement cost and lead time, and
to stimulate innovativeness. Yet empirical support for the
relationship between supply chain collaboration and performance
improvement is scarce. Our research adds to this emerging stream
of research by providing empirical evidence from the
engineering/assembly industries, based on data collected through
the International Manufacturing Strategy Survey (IMSS) in Europe.
The study reveals that supply chain collaboration is no guarantee
for success: performance improvement is only weakly related to
the extent of collaboration with customers or suppliers. However,
strong improvers in multiple performance areas are found to be
heavily engaged in collaboration projects with customers and
suppliers, through extensive information exchange and higher
levels of structural coordination.
Keywords: supply chain management, collaboration, performance
improvement
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:rug:rugwps:05/291&r=all
161. Incorporating sequential information into traditional
classification models by using an element/position-
sensitive SAM
A. PRINZIE
D. VAN DEN POEL
The inability to capture sequential patterns is a typical
drawback of predictive classification methods. This caveat might
be overcome by modeling sequential independent variables by
sequence-analysis methods. Combining classification methods with
sequenceanalysis methods enables classification models to
incorporate non-time varying as well as sequential independent
variables. In this paper, we precede a classification model by an
element/position-sensitive Sequence-Alignment Method (SAM)
followed by the asymmetric, disjoint Taylor-Butina clustering
algorithm with the aim to distinguish clusters with respect to
the sequential dimension. We illustrate this procedure on a
customer-attrition model as a decisionsupport system for customer
retention of an International Financial-Services Provider (IFSP).
The binary customer-churn classification model following the new
approach significantly outperforms an attrition model which
incorporates the sequential information directly into the
classification method.
Keywords: sequence analysis, binary classification methods,
Sequence-Alignment Method, asymmetric clustering,
customer-relationship management, churn analysis
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:rug:rugwps:05/292&r=all
162. Inflation Targeting, Committee Decision Making and
Uncertainty: The Case of the Bank of England’s MPC
Arnab Bhattacharjee
Sean Holly
The transparency and openness of the monetary policymaking
process at the Bank of England has provided very detailed
information on both the decisions of individual members of the
Monetary Policy Committee and the information on which they are
based. In this paper we consider this decision making process in
the context of a model in which inflation forecast targeting is
used but there is heterogeneity among the members of the
committee. We find that internally generated forecasts of output
and market generated expectations of medium term inflation
provide the best description of discrete changes in interest
rates. We also find a role for asset prices through the equity
market, foreign exchange market and housing prices. There are
also identifiable forms of heterogeneity among members of the
committee that improves the predictability of interest rate
changes. This can be thought of as supporting the argument that
full transparency of monetary policy decision making can be
welfare enhancing.
Keywords: Intertemporal macro; Monetary policy; interest rates;
monetary policy committee; committee decision making.
JEL: E42 E43 E50
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:san:cdmawp:0503&r=all
163. Weird Ties? Growth, Cycles and Firm Dynamics in an Agent-
Based Model with Financial-Market Imperfections
Mauro Napoletano, Domenico Delli Gatti, Giorgio Fagiolo,
Mauro Gallegati
This paper studies how the interplay between technological
shocks and financial variables shapes the properties of
macroeconomic dynamics. Most of the existing literature has based
the analysis of aggregate macroeconomic regularities on the
representative agent hypothesis (RAH). However, recent empirical
research on longitudinal micro data sets has revealed a picture
of business cycles and growth dynamics that is very far from the
homogeneous one postulated in models based on the RAH. In this
work, we make a preliminary step in bridging this empirical
evidence with theoretical explanations. We propose an agent-based
model with heterogeneous firms, which interact in an economy
characterized by financial-market imperfections and costly
adoption of new technologies. Monte-Carlo simulations show that
the model is able jointly to replicate a wide range of stylised
facts characterizing both macroeconomic time-series (e.g. output
and investment) and firms' microeconomic dynamics (e.g. size,
growth, and productivity).
Keywords: Financial Market Imperfections, Business Fluctuations,
Economic Growth, Firm Size, Firm Growth, Productivity
Growth, Agent-Based Models.
URL: http://d.repec.org/n?u=RePEc:ssa:lemwps:2005/03&r=all
164. "Exchange Rate Misalignment: A New Test of Long-Run PPP
Based on Cross-Country Data"
Pan A. Yotopoulos (University of Florence and (emeritus)
Stanford University)
Yasuyuki Sawada (Faculty of Economics, University of Tokyo)
We formulate and implement a new empirical procedure to examine
the validity of PPP in the long-run for 153 countries by using
the familiar cross-country data set of Heston, Summers, and Aten (
2002). Unlike the existing studies that rely on mean reversion of
real exchange rates, we explicitly examine country-specificity in
the deviations of the nominal exchange rate from PPP. We find,
first, that out of a total of 153 countries, 132 countries have
achieved PPP within twenty years, 1980-2000 and 105 countries
have attained PPP over ten years, 1990-2000. Second, according to
the results, our method can be accepted as a workable shortcut of
the direct, fullinformation approach of Yotopoulos (1996) that
tests for long-run PPP utilizing micro-ICP data. This becomes an
important characteristic of this paper since comprehensive micro-
ICP data are no longer easily available. As a by-product, of the
empirical validation of our shortcut approach, our empirical
results are in favor of the Ricardo-Balassa-Samuelson effect.
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:tky:fseres:2005cf318&r=all
165. "Testing for the Null Hypothesis of Cointegration with
Structural Breaks"
Yoichi Arai (Faculty of Economics, University of Tokyo)
Eiji Kurozumi (Department of Economics, Hitotsubashi
University)
In this paper we propose residual-based tests for the null
hypothesis of cointegration with structural breaks against the
alternative of no cointegration. The Lagrange Multiplier test is
proposed and its limiting distribution is obtained for the case
in which the timing of a structural break is known. Then the test
statistic is extended in two ways to deal with a structural break
of unknown timing. The first test statistic, a plug-in version of
the test statistic for known timing, replaces the true break
point by the estimated one. We also propose a second test
statistic where the break point is chosen to be most favorable
for the null hypothesis. We show the limiting properties of both
statistics under the null as well as the alternative. Critical
values are calculated for the tests by simulation methods. Finite-
sample simulations show that the empirical size of the test is
close to the nominal one unless the regression error is very
persistent and that the test rejects the null when no
cointegrating relationship with a structural break is present.
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:tky:fseres:2005cf319&r=all
166. Welfare Effects of Tax Policy in Open Economies:
Stabilization and Cooperation.
Henry Kim
This paper studies optimal tax policy design problem by
employing a two-country dynamic general equilibrium model with
incomplete asset markets. We investigate the possibility of
welfare-improving active, contingent tax policies (tax rates
respond to changes in productivity) on consumption, and capital
and labor income taxes. Unlike the conventional wisdom regarding
stabilization policies, procyclical factor income tax policy is
optimal in open economy. Procyclical tax policy generates
efficiency gains by correcting market incompleteness. Optimal tax
policy under cooperative equilibrium is similar to that under the
Nash equilibrium and welfare gains from tax policy coordination
is quite small.
Keywords: optimal tax, procyclical, countercyclical,
stabilization, cooperation.
JEL: F4 E6
URL: http://d.repec.org/n?u=RePEc:tuf:tuftec:0503&r=all
167. Applying perturbation methods to incomplete market models
with exogenous borrowing constraints
Henry Kim
This paper solves an incomplete market model with infinite
number of agents and exogenous borrowing constraints described in
den Haan, Judd and Juillard (2004). We apply the idea of
“barrier methods” to convert optimization problem with
borrowing constraints as inequalities into a problem with
equality constraints, and the converted model is solved by a
second-order perturbation method. The simulation results of
impulse responses and second moments match the standardized
features of incomplete market models. Accuracy of the solution is
in a reasonable range but significantly decreases when the
economy is near the borrowing limit or moves away from the steady
state.
Keywords: perturbation, barrier method, borrowing constraint,
incomplete market, accuracy.
JEL: C63 C68 C88 F41
URL: http://d.repec.org/n?u=RePEc:tuf:tuftec:0504&r=all
168. Calculating and Using Second Order Accurate Solutions of
Discrete Time Dynamic Equilibrium Models
Henry Kim
We describe an algorithm for calculating second order
approximations to the solutions to nonlinear stochastic rational
expectations models. The paper also explains methods for using
such an approximate solution to generate forecasts, simulated
time paths for the model, and evaluations of expected welfare
differences across different versions of a model. The paper gives
conditions for local validity of the approximation that allow for
disturbance distributions with unbounded support and allow for
non-stationarity of the solution process.
URL: http://d.repec.org/n?u=RePEc:tuf:tuftec:0505&r=all
169. International Capital Flows and Boom-Bust Cycles in the
Asia Pacific Region
Henry Kim
This paper documents evidence of business cycle synchronization
in selected Asia Pacific countries in the 1990s. We explain
business cycle synchronization by the channel of international
capital flows. Using the VAR method, we find that most Asian
countries experience boom-bust cycles following capital inflows,
where the boom in output is mostly driven by consumption and
investment. Empirical evidence shows that capital flows in the
region are highly correlated, which supports the conclusion that
capital market liberalization has contributed to business cycle
synchronization in Asia. We also find that business cycles in the
Asian crisis countries are highly synchronized with those in
Japan.
Keywords: business cycle synchronization, capital flows, boom-
bust cycles, financial integration
JEL: F02 F36 F41
URL: http://d.repec.org/n?u=RePEc:tuf:tuftec:0506&r=all
170. Fear of Floating in East Asia
Henry Kim
We examine the de facto exchange rate arrangements in East Asia
by applying the methods suggested by Calvo and Reinhart (2002)
and Kim (2004). Estimation results suggest that three East Asian
countries in our sample adopted a hard peg or a peg with capital
account restrictions in the post-crisis period. Five East Asian
countries in our sample moved toward a more flexible exchange
rate arrangement in the post-crisis period. At least three of
these five countries (Korea, Indonesia and Thailand) achieved the
level of exchange rate flexibility that is close to the level
accomplished in the free floater such as Australia. These results
suggest that “Fear of Floating” of East Asian countries is
not prevalent in the post-crisis period and that the bi-polar
view has some support in East Asian samples.
Keywords: Bi-polar View, De Facto Exchange Rate Arrangements, De
Jure Exchange Rate Arrangements, East Asia, Fear of
Floating
JEL: F02 F36 F41
URL: http://d.repec.org/n?u=RePEc:tuf:tuftec:0507&r=all
171. Air Pollution Convergente and Economic Growth across
European Countries
Francisco Alvarez (Universidad Complutense de Madrid)
Gustavo A. Marrero (Universidad Complutense de Madrid)
Luis Puch (Universidad Complutense de Madrid. Facultad de CC.
Economicas y Empresariales. Dpto. Economia Cuantitativa.)
This paper analyses the role of macroeconomic performance in
shaping the evolution of air pollutants in a panel of European
countries from 1990 to 2000. The analysis is addressed in
connection with EU environmental regulation and taking into
account macroeconomic performance. We start by documenting the
patterns of crosscountry differences among different pollutants.
We then interpret these differences within a neoclassical growth
model with pollution. Three main pieces of evidence are presented.
First, we analyze the existence of convergence of pollution
levels within European economies. Second, we rank countries
according to its performance in terms of emissions and growth.
Third, we evaluate the evolution of emissions in terms of the
targets signed for 2010.
Date: 2004
URL: http://d.repec.org/n?u=RePEc:ucm:doicae:0406&r=all
172. Delivering Skills: Apprenticeship Program Sponsorship and
Transition from Training
Cihan Bilginsoy
Formal apprenticeship programs in the US construction industry
are organized under one of three forms: jointly by unions and
management in the unionized sector, and unilaterally by a group
of employers or by a single employer in the open shop sector. I
use parametric survival analysis to compare completion and quit
rates of electrical and mechanical trades apprentices across
program types, controlling for sex, race, education, wage,
program size, and unemployment rate among other factors. I find
substantial and statistically significant differences in terms of
the probability of completion and cancellation and the duration
of apprenticeship. Apprentices in joint programs, regardless of
demographic characteristics, have the highest probability of
completion, followed by unilateral multiple and unilateral single
employers, but their average time to graduation is longer. The
mean duration of a cancelled apprenticeship in open shop programs
does not appear to be long enough for apprentices to accumulate a
substantial amount of skills. Although non-joint programs
graduate a smaller fraction of their apprentices, those who
graduate do so at a significantly faster pace than their
counterparts in joint programs.
Keywords: Apprenticeship; turnover; construction survival
analysis
JEL: J24 J63 M53
Date: 2005-01
URL: http://d.repec.org/n?u=RePEc:uta:papers:2005_01&r=all
173. Why Only Some Industries Unionize: Insights from
Reciprocity Theory
Flynn, Sean Masaki (Vassar College Department of Economics)
This paper argues that the degree to which a given industry’s
labor contracts are complete or incomplete is the major factor
determining whether its workforce will be unionized. For instance,
assembly line industries feature complete labor contracts
because of the nature of the production technology: Either a
worker keeps up with the line, or he does not. In such a
situation, there is no chance for a reciprocal gift exchange
under which firms offer high wages in exchange for high effort
levels. The result is low wages that make workers prone to
unionization. By contrast, jobs that feature incomplete contracts
lawyers, computer programmers, economists) already have
reciprocity and gift exchange in place. Such benefits guarantee
to workers that their better interests will be looked after by a
management that wishes to maintain a positive and productive
labor-management interaction.
Date: 2004-11
URL: http://d.repec.org/n?u=RePEc:vas:papers:64&r=all
174. The manufacturing profile of flexible and low-cost
producers: an empiral study
Vereecke, A.
Pandelaere, E.
Since the introduction of the concepts of lean manufacturing,
agility and mass customization it is questioned to what extent
the trade-off between cost and flexibility still holds. It has
been the objective of our research to test the trade-off theory
empirically using the data of the International Manufacturing
Strategy Survey (IMSS). Our research confirms the well accepted
manufacturing profile of low cost producers, which typically use
a line process, and of flexible producers, which typically
produce in a job shop. However, we also observe that some
companies manage to overcome the cost/flexibility trade-off, by
introducing the concept of postponed manufacturing. These
companies are characterized by an assembly-to-order policy of
standardized semi-finished products, produced in a line process.
Flexibility and low cost are thus obtained by playing with the
position of the decoupling point.
Keywords: manufacturing strategy, mass customization,
flexibility Note
Date: 2005-01-14
URL: http://d.repec.org/n?u=RePEc:vlg:vlgwps:2004-21&r=all
175. The interface between Corporate Governance and Corporate
Social Responsibility and its relevance for the financial
and insurance sector
Van den Berghe, L.
Louche, C.
Based on the argument that Corporate Social Responsibility is
not just a fashion but rather the future from another angle, this
paper explores the link between corporate governance and
corporate social responsibility in insurance. Although insurance
industries have been less exposed to criticisms than other
sectors, like any other business, they are subject to increasing
societal scrutiny. After a reconsideration of the corporate
governance paradigms and mechanisms, the paper analyses the
relevance of corporate social responsibility and corporate
governance for the insurance sector. It explores its positive and
negative externalities and its role as institutional investor.
The paper also provides policy recommendations for mainstreaming
corporate social responsibility within the sector.
Keywords: Note
Date: 2005-01-17
URL: http://d.repec.org/n?u=RePEc:vlg:vlgwps:2004-22&r=all
176. A network-based approach on opportunity recognition
Arenius, P.
De Clercq, D.
This paper argues that individuals differ in terms of their
perception of opportunities because of the differences between
the networks they are embedded in. We focus on two aspects of
individuals’ embeddedness in networks, that is, (1)
individuals’ belonging to residential areas that are more or
less likely to be characterized by network cohesion, and (2)
individuals’ differential access to network contacts based on
the level of human capital they hold. Our analyses show that the
nature of one’s residential area influences the perception of
entrepreneurial opportunities. Further, we find a positive effect
for education, i.e., people with a higher educational level are
more likely to perceive entrepreneurial opportunities compared to
those with a lower educational level.
Keywords: Note
Date: 2005-01-17
URL: http://d.repec.org/n?u=RePEc:vlg:vlgwps:2004-23&r=all
177. Environment as Cultural Heritage: The Armenian Diaspora’s
Willingness-to-Pay
Hua Wang (World Bank)
Craig Meisner (World Bank)
Benoit Laplante
Laplante, Meisner, and Wang present a study of willingness-to-
pay of the Armenian Diaspora in the United States to protect
Armenia’s Lake Sevan, a unique and precious symbol of the
Armenian cultural heritage. Dichotomous choice contingent
valuation questions were asked in mail surveys to elicit
respondents’ willingness to pay for the protection of Lake
Sevan. The results show that on average, each household of the
Armenian Diaspora in the United States would be willing to
provide a one-time donation of approximately US$80 to prevent a
further degradation of Lake Sevan, and approximately US$280 to
restore the quality of the lake by increasing its water level by
three meters. This paper—a product of the Infrastructure and
Environment Team, Development Research Group—is part of a
larger effort in the group to understand environmental economics.
Keywords: Environment; Globalization
Date: 2005-02-11
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3520&r=all
178. Religious School Enrollment in Pakistan: A Look at the Data
Jishnu Das (World Bank)
Tahir Andrabi
Asim Ijaz Khwaja
Tristan Zajonc
Bold assertions have been made in policy reports and popular
articles on the high and increasing enrollment in Pakistani
religious schools, commonly known as madrassas. Given the
importance placed on the subject by policymakers in Pakistan and
those internationally, it is troubling that none of the reports
and articles reviewed based their analysis on publicly available
data or established statistical methodologies. The authors of
this paper use published data sources and a census of schooling
choice to show that existing estimates are inflated by an order
of magnitude. Madrassas account for less than 1 percent of all
enrollment in the country and there is no evidence of a dramatic
increase in recent years. The educational landscape in Pakistan
has changed substantially in the past decade, but this is due to
an explosion of private schools, an important fact that has been
left out of the debate on Pakistani education. Moreover, when the
authors look at school choice, they find that no one explanation
fits the data. While most existing theories of madrassa
enrollment are based on household attributes (for instance, a
preference for religious schooling or the household’s access to
other schooling options), the data show that among households
with at least one child enrolled in a madrassa, 75 percent send
their second (and/or third) child to a public or private school
or both. Widely promoted theories simply do not explain this
substantial variation within households. This paper—a product
of the Public Services Team, Development Research Group—is part
of a larger effort in the group to examine issues relating to
educational outcomes.
Keywords: Education; Poverty; Social Development
Date: 2005-02-11
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3521&r=all
179. China’s Employment Challenges and Strategies after the
WTO Accession
Douglas Zhihua Zeng
Although China has made impressive progress in economic
development and improving social well-being, it is facing many
daunting challenges while transforming toward a knowledge and
service-based economy and further opening up to international
competition after its WTO accession in the context of knowledge
revolution. One of the biggest challenges is how to create
100–300 million new jobs in the coming decade to absorb the
millions of laid-offs, rural emigrants, and newly added labor
force. China has been successful in building high-technology
parks and information and communications technology (ICT)
industries, but they are limited in terms of employment
generation, while most of the traditional labor-intensive
industries are losing competitiveness due to low productivity. To
combat the unprecedented employment challenge, China must
implement a systemic and sustained strategy, which may consist of
the following policy thrusts: encouraging the private sector;
promoting small and medium enterprises; expanding the service
sector; reforming the state-owned enterprises; strengthening the
social security system; improving labor market flexibility; and
establishing mass retraining programs. This paper—a product of
the Knowledge for Development Division, World Bank Institute—is
part of a larger effort in the institute to provide country-
focused knowledge services for client countries.
Keywords: Industry; Labor & Employment; Macroecon & Growth
Date: 2005-02-11
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3522&r=all
180. School Meals, Educational Achievement, and School
Competition: Evidence from a Randomized Evaluation
Christel Vermeersch
Michael Kremer (Harvard University)
Vermeersch and Kremer examine the effects of subsidized school
meals on school participation, educational achievement, and
school finance in a developing country setting. They use data
from a program that was implemented in 25 randomly chosen
preschools in a pool of 50. Children’s school participation was
30 percent higher in the treatment group than in the comparison
group. The meals program led to higher curriculum test scores,
but only in schools where the teacher was relatively experienced
prior to the program. The school meals displaced teaching time
and led to larger class sizes. Despite improved incentives,
teacher absenteeism remained at a high level of 30 percent.
Treatment schools raised their fees, and comparison schools close
to treatment schools decreased their fees. Some of the price
effects are caused by a combination of capacity constraints and
pupil transfers that would not happen if the school meals were
ordered in all schools. The intention-to-treat estimator of the
effect of the randomized program incorporates those price effects,
and therefore it should be considered a lower bound on the
effect of generalized school meals. This insight on price effects
generalizes to other randomized program evaluations. This
paper—a product of the Poverty Reduction and Economic
Management 2, Africa Technical Families—is part of a larger
effort in the region to increase our understanding of the impact
of programs aimed at reaching the Millennium Development Goals.
Keywords: Education; Health & Population
Date: 2005-02-11
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3523&r=all
181. Sowing and Reaping: Institutional Quality and Project
Outcomes in Developing Countries
David Dollar (World Bank)
Victoria Levin
Much of the academic debate on the effectiveness of foreign aid
is centered on the relationship between aid and growth. Different
aid-growth studies find conflicting results: aid promotes growth
everywhere; aid has a zero or negative impact on growth
everywhere; or the effect of aid on growth depends on recipient-
specific characteristics, such as the quality of institutions and
policies. Although these studies fuel an interesting debate,
cross-sectional macroeconomic studies cannot be the last word on
the topic of aid effectiveness. In this paper, Dollar and Levin
introduce microeconomic evidence on factors conducive to the
success of aid-funded projects in developing countries. The
authors use the success rate of World Bank-financed projects in
the 1990s, as determined by the Operations Evaluation Department,
as their dependent variable. Using instrumental variables
estimation, the authors find that existence of high-quality
institutions in a recipient country raises the probability that
aid will be used effectively. There is also some evidence that
geography matters, but location in Sub-Saharan Africa is a more
robust indicator of lower project success rate than tropical
climate. The authors proceed to disaggregate the success rate of
World Bank projects by lending instrument type and by investment
sector, finding that different institutions are more important
for different types of projects. The finding of a strong
relationship between institutional quality and project success
serves to provide further support to the hypothesis that aid
effectiveness is conditional on institutions and policies of the
recipient country. This paper—a product of Development Policy,
Development Economics Senior Vice Presidency—is part of a
larger effort in the Bank to examine aid effectiveness.
Keywords: Governance; International Economics; Globalization
Date: 2005-02-15
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3524&r=all
182. Economic Evaluation of Housing Subsidy Systems: A
Methodology with Application to Morocco
David le Blanc
Most countries do not use one single type of housing subsidy but
combine many of them. Le Blanc provides operational criteria that
allow evaluation of systems of housing subsidies, both at the
individual program level and at the aggregate (country) level. He
examines the public finance assessment criteria used by different
authors to analyze subsidy programs and confront them
systematically. Le Blanc ends up with a “map” of criteria,
which covers the range of topics interesting to policymakers. For
each criterion, he tries to provide empirical measures that can
be retrieved from existing programs. He then provides an
aggregation method allowing a synthesis of diagnoses about the
“quality” of the housing subsidies system at the country
level. The aggregation technique offers a simple way to visualize
the main features of a subsidy system, as well as the effects on
the system of reforms or improvements of particular programs. The
author applies the methodology to the system prevailing in
Morocco in 1995 and 2004. The analysis shows that the most
visible subsidies might not have been the most inefficient, nor
the most resource consuming for the state. Examination of policy
changes since 1995 shows that while the most visible subsidies
received nearly all the government’s attention, large invisible
subsidies remain at the heart of Morocco’s housing policy. The
framework used here is very general and can be used to compare
the Moroccan system with those of similar countries. This
paper—a product of the Urban Unit, Transport and Urban
Development Department—is part of a larger effort in the
department to provide evaluation frameworks to better understand
housing markets in developing countries.
Keywords: Infrastructure; Poverty; Urban Development
Date: 2005-02-17
URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3529&r=all
183. A Stochastic Expected Utility Theory
Pavlo R. Blavatskyy
This paper proposes a new model that explains the violations of
expected utility theory through the role of random errors. The
paper analyzes decision making under risk when individuals make
random errors when they compute expected utilities. Errors are
drawn from the normal distribution, which is truncated so that
the stochastic utility of a lottery cannot be greater (lower)
than the utility of the highest (lowest) possible outcome. The
standard deviation of random errors is higher for lotteries with
a wider range of possible outcomes. It converges to zero for
lotteries converging to a degenerate lottery. The model explains
all major stylized empirical facts such as the Allais paradox and
the fourfold pattern of risk attitudes. The model fits the data
from ten well-known experimental studies at least as good as
cumulative prospect theory.
Keywords: decision theory, stochastic utility, expected utility
theory, cumulative prospect theory
JEL: C91 D81
URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:231&r=all
184. On the distribution of stock-market returns - Implications
of Evolutionary Finance
Stefan Reimann
Risk management and asset pricing benefit from simple functional
descriptions of the distribution of real asset returns. Recently,
several authors have proposed that asset returns in real stock
markets are distributed according to a hyperbolic distribution.
While asset returns are generated by trades over time, the
natural question is: What does economic theory imply concerning
return distributions? We propose a simple model of price
formation and, thus, return distribution which is based on
economic reasoning. The markets behavior is represented by a pair
consisting of a time-constant strategy and a dynamical trading
strategy generating a flow between funds. Simulations of the
price dynamics generate returns with fat-tail behavior in line
with that of a hyperbolic distribution.
Keywords: Asset returns, hyperbolic distribution, evolutionary
finance
JEL: G12 C51
URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:232&r=all
185. Axiomatization of a Preference for Most Probable Winner
Pavlo R. Blavatskyy
In binary choice between discrete outcome lotteries, an
individual may prefer lottery L1 to lottery L2 when the
probability that L1 delivers a better outcome than L2 is higher
than the probability that L2 delivers a better outcome than L1.
Such a preference can be rationalized by three standard axioms (
solvability, convexity and symmetry) and one less standard axiom (
a fanning-in). A preference for the most probable winner can be
represented by a skewsymmetric bilinear utility function. Such a
utility function has the structure of a regret theory when
lottery outcomes are perceived as ordinal and the assumption of
regret aversion is replaced with a preference for a win. The
empirical evidence supporting the proposed system of axioms is
discussed.
Keywords: expected utility theory, axiomatization, betweenness,
fanning-in, skew-symmetric bilinear utility, regret
theory
JEL: C91 D81
URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:239&r=all
186. VAT in Ukraine: An Interim Report
Richard M. Bird (Rotman School of Management, University of
Toronto)
This paper consider some aspects of how the value-added tax (VAT)
has functioned to date in Ukraine, focusing on linkages between
tax design, tax administration, and the structure of the economy.
Two problems that have dominated much discussion of the Ukrainian
VAT in recent years ? arrears and refunds ? are closely linked to
more fundamental economic and political conditions and hence
cannot be resolved simply by redesigning either tax law or tax
administration, although various problems do of course exist with
respect to both law and administration, as developed in the paper.
In addition, the equity implications of a VAT in a country like
Ukraine with a large ?underground? economy are discussed, as is
the recent adoption of a ?simplified? tax system that in some
respects seems less likely to resolve the underlying problems
than to exacerbate them. In short, while Ukraine has, under
difficult circumstances, managed to implement what is in form a
modern VAT in a surprisingly short time, there is still much to
be done before the tax works as it should.
Keywords: value-added tax, Ukraine
JEL: P35 H25
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:ttp:itpwps:0503&r=all
187. Changing with the Times: Success, Failure and Inertia in
Canadian Federal Arrangements, 1945-2002
Richard M. Bird
Francois Vaillancourt (Rotman School of Management,
University of Toronto)
In this paper, following an introductory section setting out
some salient characteristics of the country and its key
institutions, we examine three aspects of Canada?s federal
arrangements over the last half century. We have chosen these
three examples to illustrate, first, an instance in which
successful changes were gradually made over time to accommodate
changing economic and political circumstances, second, an
instance in which the outcome of even greater efforts at changing
institutions in the face of political demands was a resounding
failure, and, finally, an instance in which, despite the apparent
economic desirability of a change, none has even been attempted.
The success story is the marked change that has taken place in
the sharing of the personal income tax between the federal and
the provincial governments. The failure is the unsuccessful
attempt to amend the Constitution Act of 1982 to satisfy the
demands of Qu?bec, the majority francophone province in Canada.
Finally, the story that has not happened is the creation of a
national securities commission to replace the existing provincial
commissions.
Keywords: Canada, fiscal federalism, constitutional reform,
securities regulation
JEL: H11 H77 G28 N42
Date: 2005
URL: http://d.repec.org/n?u=RePEc:ttp:itpwps:0504&r=all
188. Value-Added Taxes in Developing and Transitional Countries:
Lessons and Questions
Richard M. Bird (International Tax Program, Rotman School of
Management, University of Toronto)
The value-added tax has, in recent decades, become the most
important single tax in most developing and transitional
economies. This paper reviews some problems that have emerged as
important as more experience has been gained with how VATs really
work in many such countries and suggests some lines of research
that need to be explored further to overcome those problems.
Keywords: value-added tax, developing countries, transitional
countries
JEL: H25 R10
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:ttp:itpwps:0505&r=all
189. Protecting minorities through the average voting rules
Regis Renault
Alain Trannoy (Ehess, Greqam-Idep)
Properties of an average voting rule - the outcome being some
weighted average of votes - are investigated, with particular
attention to its ability to protect minorities. The unique
average voting outcome is characterized with a median formula
which depends on the voters’ preferred allocations and some
parameters constructed from the voters’ weights. We provide
necessary and sufficient conditions for the average outcome to be
above the majority outcome. A minority is said to be protected by
a switch in voting rule if the voting outcome becomes closer to
the median bliss point of the minority. A sufficient condition
for minority protection is that, either the minority’s weight
is sufficiently large or the majority outcome is too unfavorable
to the minority. Applications to the composition of public goods
and to public expenditures level are considered. We end by
exploring the combined use of average and majority voting in a
two-stage procedure for determining both the level and the
composition of public expenditures.
Keywords: minority, majority voting, public goods, Nash
equilibrium.
JEL: D74 H41 I22
Date: 2003-04
URL: http://d.repec.org/n?u=RePEc:iep:wpidep:0303&r=all
190. A Dominance Approach to Well-Being Inequality Across
Countries
Christophe Muller (Departamento de Fundamentos del
An‡lisis Economico, Universidad de Alicante, Alicante,
Spain.)
Alain Trannoy (EHESS, GREQAM-IDEP)
This paper proposes a dominance approach to study well-being in-
equality across countries at the world level. We consider a class
of well-being indices based on the three attributes considered in
the HDI (Human Development Index). Indices are required to
satisfy preference for egali-tarian marginal distributions of
income, health and education, inclination for less correlation
between attributes and priority to poor countries for allocating
funds to improve health and education. We exhibit su ?cient
conditions which are easy to implement to check dominance over
the de-fined class of well-being
Keywords: Multidimensioned Welfare; Multivariate Inequality,
Well-Being Dimensions, Human Development Index
JEL: O15 D31
Date: 2003-11
URL: http://d.repec.org/n?u=RePEc:iep:wpidep:0313&r=all
191. World Urbanization Prospects : an alternative to the UN
model of projection compatible with urban transition theory
Philippe Bocquier (DIAL, IRD, Paris)
(english) This paper proposes to critically examine the United
Nations projections on urbanisation. Both the estimates of
current trends based on national data and the method of
projection are evaluated. The theory of urban transition is used
as an alternative hypothesis for projections. Alternative
projections are proposed using a polynomial model and compared to
the UN projections, which are based on a linear model. The
conclusions are that UN projections may overestimate the urban
population for the year 2030 by almost one billion, or 19% in
relative term. The overestimation would be particularly more
pronounced for developing countries and may exceed 30% in Africa,
India and Oceania. _________________________________ (francais)
Cet article se propose d’examiner d’une maniere critique les
projections urbaines des Nations Unies. Les estimations des
tendances recentes basees sur les donnees nationales sont
evaluees, de meme que la methode de projection. La theorie
de la transition urbaine est utilisee comme une alternative pour
les projections. Des projections alternatives sont proposees sur
la base d’un modele polynomial et sont comparees a celle des
NU, qui sont fondees sur un modele lineaire. Les conclusions
sont que les projections des NU pourraient surestimer de pres
d’un milliard la population urbaine en 2030, soit 19% en terme
relatif. La surestimation serait particulierement plus
prononcee pour les pays en developpement et pourrait exceder
30% en Afrique, en Inde et en Oceanie.
Keywords: urbanisation, projections, transition urbaine, modele,
pauvrete, environnement, pays en developpement, pays
developpes,urban transition, model, poverty,
environment, developing countries, developed countries.
Date: 2004-10
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200408&r=all
192. Which Human Capital Matters for Rich and Poor’s Wages?
Evidence from Matched Worker-Firm Data from Tunisia
Christophe Muller (Departamento de Fundamentos del Analisis
Economico Universidad de Alicante, Campus de San Vicente)
Christophe Nordman (DIAL, IRD, Paris)
(francais) Nous analysons les rendements du capital humain a
partir de donnees liees employeurs-employes collectees en
Tunisie en 1999 et indiquons comment ces rendements different de
ceux generalement obtenus dans les pays industrialises avec ce
type de donnees. Nous developpons une nouvelle methode fondee
sur une analyse factorielle des caracteristiques d'entreprise
qui rapproche nos resultats, en ce qui concerne le rendement de
l’education, de ceux que l'on obtient en utilisant des
equations de salaire a effets fixes d'entreprise. Notre
technique d'estimation fournit une interpretation de ces effets
en distinguant l'impact sur les salaires du capital humain
propres aux etablissements. En outre, l'inclusion dans l'analyse
de trois caracteristiques d'entreprise facilement mobilisables
procure des resultats tres proches de ceux obtenus lorsque
toute l'information disponible sur la structure d'appariement des
donnees est utilisee. L'introduction de l'approche factorielle
confirme l'idee selon laquelle le capital humain peut constituer
une source positive d'externalite intra entreprise. Un
travailleur d'une qualification donnee serait plus productif et
donc mieux remunere dans un environnement fortement dote en
capital humain. Toutefois, les travailleurs pauvres ne semblent
pas pouvoir beneficier des qualifications de leur entreprise.
En revanche, les pauvres profitent d'un emploi dans le secteur
des textiles en termes de remuneration, contrairement aux
travailleurs a salaires medians et eleves.
_________________________________ (english) We study the returns
to human capital for workers observed in Tunisian matched worker-
firm data in 1999. This tells us how these returns differ from
those obtained in industrialised countries with matched data. We
develop a new method based on multivariate analysis of firm
characteristics, which allows us most of the benefits obtained by
introducing firm fixed effects in wage equations for studying the
effect of education. It also provides a human capital
interpretation of these firm effects. Moreover, using three firm
characteristics easily collectable yields results close to those
obtained by using the matched structure of the data. Wage
regressions including the computed factors confirm that human
capital is associated with positive intra-firm externality on
wages. Therefore, a given worker would be more productive and
better paid in an environment strongly endowed in human capital.
However, the poorest workers do not take advantage of human
capital in the firm. Conversely, the poor benefit from working in
the textile sector in terms of wages unlike the middle and high
wage workers.
Keywords: wage, returns to human capital, matched worker-firm
data, quantile regressions, factor analysis, Tunisia
JEL: J24 J31 O12
Date: 2004-10
Date: 2004-10
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200409&r=all
193. Who deserves aid? Equality of opportunity,international aid
and poverty reduction
Denis Cogneau (DIAL, IRD, Paris)
Jean-David Naudet (AFD, Departement de la Recherche)
(english) We build and implement a normative procedure to
allocate international aid based on equality of opportunity
concerning the risk of poverty. This is an alternative to Collier
and Dollar’s proposal (2001) which stresses the impact of aid
on worldwide poverty reduction. The big problem with their
approach, as regards distributive justice, is that it leaves very
great inequality in poverty risk between inhabitants of countries
with widely varying structural disadvantages. We draw on post-
welfarist theories of social justice, especially those of John
Roemer. However our proposal is very different to that of
Llavador and Roemer (2001), which has serious methodological
errors and reaches contradictory conclusions. Our proposed
allocations, like those of Collier and Dollar, differ from
current aid allocation by giving more to the poorest countries.
Apart from this agreement, our equality of opportunity principle
takes account of structural disadvantages to growth rather than
quality of past policies. Our kind of allocation shares out
poverty risks much more fairly among the world’s population,
while reducing global poverty almost as effectively as Collier
and Dollar's. _________________________________ (francais) Nous
elaborons et mettons en oeuvre une procedure normative
d’allocation de l’aide internationale entre les pays, fondee
sur le principe de l’egalite des chances vis-a-vis du risque
de pauvrete. Cette procedure constitue une alternative a celle
de Collier et Dollar (2001) qui maximise l’impact de l’aide
sur la reduction de la pauvrete dans le monde. Du point de vue
de la justice distributive, l’allocation de Collier et Dollar
presente en effet l’inconvenient majeur de laisser subsister
de tres larges inegalites de risques de pauvrete entre des
individus vivant dans des pays dont les handicaps structurels
sont tres differents. Notre travail s’inspire des theories
« post-welfaristes » de la justice sociale, et en particulier
de l’approche de John Roemer. Il fait toutefois une proposition
tres differente de celle de Llavador et Roemer (2001) qui
comporte d’importants defauts de methode et aboutit selon
nous a des resultats contradictoires. Comme les allocations
preconisees par Collier et Dollar, les solutions proposees ici
different de la repartition actuelle de l’aide dans le sens
ou elles privilegient les pays les plus pauvres. Au-dela de ce
resultat commun, le principe d’egalite des chances que nous
mettons en avant conduit a prendre en compte les handicaps
structurels de croissance plutot que la qualite des politiques
passees. Enfin, le type d’allocation que nous proposons
egalise beaucoup mieux les risques de pauvrete entre les
citoyens du monde, tout en reduisant presque aussi efficacement
la pauvrete mondiale que l’allocation de Collier et Dollar.
Keywords: International aid, Equality of Opportunity, Poverty
Reductions,Aide internationale, Egalite des chances,
reduction de la pauvrete
JEL: F35 I30 D63 O19 O40
Date: 2004-11
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200410&r=all
194. Education policy reforms and the quality of the school
system : a field study of primary schools in Madhya Pradesh,
India
Francois Leclercq (DIAL)
(english) Reforms of primary education undertaken in Madhya
Pradesh since the mid-1990’s have been said to be bringing the
state close to universal enrolment, yet they have sparked much
controversy and have hardly been the subject of any independent
research. This paper presents the results of a field study of
public schools conducted in Betul and Dewas districts in 2002.
Substantial progress has been made in enrolling underprivileged
children, but the quality of education now deserves more emphasis.
Indeed, the ‘education guarantee’ offered is incomplete, as
the schools under study are affected by low quantity and poor
quality of teaching. The potential for better school management
created by decentralisation does not actually translate into
adequate incentives (e.g. through the new training and inspection
system) for the local residents recently appointed as teachers to
work effectively. Meanwhile, there is a risk of fragmentation of
the school supply between different types of public and private
schools limiting the equalising impact of educational development
on rural society. _________________________________ (francais)
Les reformes de l’education primaire entreprises depuis le
milieu des annees 1990 dans l’Etat du Madhya Pradesh (Inde
centrale) ont vise a etendre le secteur public par la
creation de nombreuses ecoles et a en decentraliser la
gestion, tout en facilitant le developpement du secteur prive.
Le taux de scolarisation primaire aurait ainsi considerablement
augmente, mais ces reformes ont suscite des controverses
aigues, alors qu’il en existe peu d’etudes independantes.
Cet article presente les resultats d’une etude de terrain
menee dans les districts de Betul et Dewas en 2002, portant en
particulier sur un programme intitule «Education Guarantee
Scheme ». La scolarisation des enfants issus de milieux
defavorises a manifestement augmente, mais la « garantie
educative » en question est incomplete, la quantite et la
qualite de l’enseignement dispense dans les ecoles
etudiees etant insuffisantes. La decentralisation de la
gestion des ecoles (renforcant notamment la formation et
l’inspection des enseignants) ne resulte pas pour l’heure en
une structure incitative adequate pour que les habitants des
villages nommes instituteurs puissent enseigner de facon
efficace. Enfin, la coexistence de differents types d’ecoles
publiques et privees risque d’aboutir a une segregation
sociale du systeme scolaire qui pourrait limiter l’effet
egalisateur du developpement de l’education sur la societe
rurale.
Keywords: Education, school quality, school management,
decentralisation, human capital, India, education,
qualite de l’education, gestion du systeme
scolaire, decentralisation, capital humain, Education
Guarantee Scheme, Madhya Pradesh, Inde.
JEL: H4 I2 O15 O53
Date: 2003-10
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200312&r=all
195. Labor Market Transitions in Peru
Javier Herrera (DIAL, IRD, Paris)
Gerardo David Rosas Shady (Inter American Development Bank,
University of Paris 1 Pantheon-Sorbonne, DIAL)
(english) Traditional labor market analysis based solely on the
net unemployment rate fails to explain the apparent paradox
between a relatively moderate unemployment rate in Peru (around
10%, with a weak sensibility to wide macroeconomic fluctuations),
and the fact that unemployment is one of the major issues in Peru.
One possible explanation is that this static indicator of cross
section net unemployment balance is compatible with high flows in
and out of employment states. To address these issues we needed
to conduct a dynamic analysis using panel data. Using the
Peruvian national household survey (ENAHO), we constructed a
panel of working age individuals at the national level for the
period 1997-1999. Like previous work in developing countries, we
found that there is an important degree of job mobility in Peru.
We also found that most of the transitions occur between
employment and inactivity instead of between employment and
unemployment. We also showed that the rate of permanent
unemployment is very low so that unemployment would be
essentially a frictional phenomenon. Further, considering the
different transition states, we elaborated an unconditional
transition profile, including individual and household
characteristics, like gender, age and education levels for
example, associated with each transition status. Finally, after
examining these labor market transitions and the possible sample
selection bias, we estimated a multinomial logit model. This
model allowed us to appreciate the (conditional) incidence of
individual and household characteristics as well as the effects
of different shocks on the labor transition states.
_________________________________ (francais) Les analyses
traditionnelles du marche du travail s’averent incapables
d’expliquer le paradoxe apparent entre un taux de chomage
relativement modere dans un pays tel que le Perou (environ 10%,
taux peu sensible aux fortes fluctuations macro-economiques) et
la perception d’une grave crise de l’emploi. Une explication
possible pourrait resider dans le fait que cet indicateur
statique en coupe instantanee ne mesure pas les flux eleves
entre les situations d’emploi et d’inemploi. Pour analyser
ces questions, il est necessaire de conduire une analyse
dynamique sur donnees de panel. Nous avons ainsi construit un
panel national d’individus en age de travailler pour la
periode 1997-1999 a partir de l’enquete peruvienne aupres
des menages (ENAHO). Comme d’autres etudes realisees dans
des pays en developpement, nous constatons qu’il existe une
importante mobilite de l’emploi au Perou. Nous trouvons
egalement que la plupart des transitions interviennent entre
emploi et inactivite plutot qu’entre emploi et chomage. Le
taux de chomage permanent apparait tres faible et le chomage
serait donc essentiellement un phenomene frictionnel. Pour
aller plus loin, nous avons elabores des profils de transition
inconditionnels, incluant les caracteristiques individuelles et
du menage, telles que le genre, l’age, et le niveau
d’education, associe avec chaque etat de transition.
Finalement, apres avoir examine ces transitions sur le marche
du travail et les biais de selection possibles, nous avons
estime un modele logit multinomial. Ce modele nous a permis
d’apprecier l’incidence (conditionnelle) des
caracteristiques individuelles et des menages ainsi que des
differents chocs sur les etats de transition en matiere
d’emploi.
Date: 2003-11
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200314&r=all
196. Export Processing Zones in Madagascar : an Endangered
Success Story
Jean-Pierre Cling (DIAL)
Mireille Razafindrakoto (DIAL, IRD, Paris)
Francois Roubaud (DIAL, IRD, Paris)
(english) The success of export processing zones in Madagascar,
or Zone Franche, since 1990 is an isolated case in Africa, apart
from Mauritius. This paper explains that Zone Franche has had a
very significant macro-economic impact in terms of exports and
jobs. Thanks to Zone Franche, before the 2002 crisis Madagascar
had become the second largest African exporter of clothing, after
Mauritius. The average wages paid in Zone Franche are lower than
in the other formal sectors of activity, which is due to the
characteristics of the labour employed. On the contrary, social
conditions are better. The paper concludes that the future of
Zone Franche is threatened by the new multilateral trade
framework. _________________________________ (francais) Le
succes de la Zone Franche d’exportation a Madagascar depuis
1990 constitue un cas unique en Afrique avec celui de l’Ile
Maurice. Ce papier montre que la Zone Franche a eu un impact
macroeconomique tres important en termes d’exportations et
d’emplois. Grace a elle, Madagascar etait ainsi devenu le
deuxieme exportateur africain de produits de l’habillement
derriere l’Ile Maurice avant la crise politique de 2002. Les
salaires moyens verses dans la Zone Franche sont inferieurs a
ceux des autres secteurs formels d’activite. Mais cet ecart
est du aux caracteristiques de la main-d’oeuvre employee,
sachant que nos estimations ne mettent pas en evidence de
differences significatives dans le mode de remuneration
salariale entre la Zone Franche et le reste de l’economie. Par
ailleurs, les conditions sociales dans la Zone Franche sont
meilleures. Nous concluons en montrant que l’avenir de la Zone
Franche est menace par le nouveau cadre commercial multilateral.
Date: 2004-03
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200402&r=all
197. The effect of economic crisis on youth precariousness in
Nairobi. An analysis of itinerary to adulthood of three
generations of men and women
Alfred O. Agwanda (Universite de Nairobi)
Philippe Bocquier (DIAL, IRD)
Anne Khasakhala (Universite de Nairobi)
Samuel Owuor (Universite de Nairobi)
(english) Since the pioneer analysis of the labour market by the
ILO team in the early 1970s, the NUrIP, which collected about 1,
600 biographies among a sample of the Nairobi adult population,
is the first to provide for a comprehensive view of the social,
demographic and employment situation of Nairobi. The analyses
draw a picture of surprising stability of the process of entry
into adult life in Nairobi. The timing of events remains the same
and most of the delay experienced by the younger generation can
be attributed to the economic crisis of the 90s. The city of
Nairobi is first and foremost the main formal labour market in
Kenya. This characteristic that traces back into colonial time
vastly influences the model of circular migration between the
hinterland and the city and also the household and family
formation. Whereas employment is clearly the key to entry into
adult life for men, it plays a marginal role for women. That
might explain why the Nairobi labour market reacted to the
economic crisis of the 90s by rejecting females. Gender
differences are more striking than differences by generation or
by social or geographical origin. Discrimination against women on
the Nairobi labour market should be seriously considered as an
explanation for their declining labour participation.
_________________________________ (francais) Depuis l’analyse
pionniere sur le marche de l’emploi menee par le BIT au
debut des annees 1970, le NUrIP, qui a recueilli pres de 1.600
biographies aupres d’un echantillon de la population adulte
de Nairobi, est la premiere operation a offrir une vue globale
de l’emploi et de la situation sociodemographique a Nairobi.
Les analyses dressent l’image d’une surprenante stabilite du
processus d’entree dans la vie adulte a Nairobi. Le
calendrier des evenements reste le meme et le retard peut
etre explique essentiellement par la crise economique des
annees 1990. La ville de Nairobi joue d’abord et avant tout le
role du principal marche de l’emploi formel au Kenya. Cette
caracteristique, qui remonte aux temps coloniaux, influence
considerablement le modele de migration circulaire entre la
ville et l’interieur du pays, ainsi que la formation des
menages et la constitution de la famille. Alors que l’emploi
est clairement la cle d’entree dans la vie adulte pour les
hommes, il joue un role marginal pour les femmes. Cela peut
expliquer pourquoi le marche de l’emploi de Nairobi a reagi
a la crise des annees 1990 en rejetant les femmes. Les
differences de genre sont plus frappantes que les differences
entre generations et selon l’origine geographique ou sociale.
Les discriminations envers les femmes sur le marche de
l’emploi de Nairobi sont a considerer serieusement comme une
cause du declin du taux d’activite des femmes.
Date: 2004-06
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200404&r=all
198. Perspectives on growth and poverty reduction in Mali
Mohamed Ali Marouani (DIAL)
Marc Raffinot (DIAL, University Paris Dauphine,EURIsCO)
(english) Since the 1994 devaluation, growth resumed in Mali
without any significant decrease of poverty. This may be
explained by the high level of inequality, which has increased in
the recent period. The poverty reduction strategy described in
the PRSP relies mainly on increasing the supply of primary
education and basic health. This strategy is not likely to attain
its objectives. Increasing the budgetary allocation of these
sectors is not enough to improve the quality of public services
and the demand of education (especially of the poorest) will not
necessarily increase with its supply. Moreover, the poorest are
not likely to grasp the benefits in order to improve their living
conditions. The poorest are rural, unable to diversify their
agricultural income due to their weak assets and their difficulty
to access credit. In a dynamic approach, a redistributive policy
could give them the opportunity to invest in human capital before
migrating to other sectors where returns to education are higher.
However, this would work only if active policies in terms of job
creations and access to credit are implemented in the urban areas.
_________________________________ (francais) Depuis la
devaluation de 1994, le Mali a renoue avec la croissance, sans
que cela n’entame significativement l’incidence de la
pauvrete – ce qui s’explique notamment par la forte
inegalite des revenus qui s’est accrue sur la periode
recente. Le Cadre Strategique de Lutte contre la Pauvrete mise
surtout sur l’accroissement de l’offre d’education
primaire et de sante de base. Ces strategies risquent de
n’avoir pas tous les effets escomptes. Il n’est pas sur que
l’accroissement des sommes allouees a ces secteurs se
traduise par une amelioration des services publics et que la
demande d’education (notamment des pauvres) suive
l’evolution de l’offre. Il n’est pas evident non plus que
les plus pauvres soient en mesure de mettre a profit ces
accroissements pour ameliorer leurs conditions de vie. La quasi-
totalite des tres pauvres sont ruraux, incapables
d’ameliorer durablement leurs revenus agricoles en les
diversifiant, du fait de leurs faibles moyens et de leurs
difficultes d’acces au credit. Dans une perspective
dynamique, une politique de redistribution en faveur des plus
pauvres leur permettrait d’investir en capital humain pour
preparer leur migration vers des secteurs ou les rendements
sont plus eleves – ce qui suppose en meme temps des
politiques volontaristes de creations d’emplois et de
facilitation d’acces au credit dans les villes.
Keywords: Pro-poor growth policies, poverty reduction, PRSP,
Mali,Politiques de croissance pro-pauvres, lutte contre
la pauvrete, DSRP.
Date: 2004-09
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200405&r=all
199. Colonization, Institutions, and Inequality, A note on some
suggestive evidence
Denis Cogneau (DIAL, IRD, Paris)
Charlotte Guenard (DIAL)
What is the kind of institutions that affect economic
inequalities? Using a database on national income inequality for
73 non-European countries, we show that 'good governance' not
only contributes to the level of income but also to a more equal
distribution by increasing the income share of the middle class.
Beside this effect of the quality of capitalist institutions, we
also find an inverted U relationship between inequalities and the
extent of European settlement. We finally find a large and robust
correlation between the pre-colonial population density and the
present equality of income distribution. We argue that this
latter correlation may have to do with institutional dimensions
that are not captured by usual measures of institutional quality
in available databases. Countries which were more densely
populated in 1500 have indeed worse 'governance' but give larger
income shares to the poor. They had more structured pre-colonial
States, more often resisted to colonisation, and more often
adopted a mixed economic system. Many of them in fact ended with
a more equal land distribution. The equality in the distribution
of landholdings does appear as an important determinant of the
overall equality of income and of poverty which is independent
from 'usual' governance issues. _________________________________
Quels sont les types d’institutions qui influencent les
inegalites economiques ? En utilisant une base de donnees sur
les inegalites nationales de revenu sur un echantillon de 73
pays non europeens, nous montrons que la « bonne gouvernance »
contribue non seulement au niveau de revenu moyen des pays mais
aussi a une distribution plus egalitaire a travers
l’accroissement de la part de revenu recue par la classe
moyenne. A cote de cet effet de la qualite des institutions
capitalistes, nous trouvons une relation en U inverse entre les
inegalites et l’importance de la population de descendance
europeenne. Nous trouvons enfin une correlation large et
robuste entre la densite de population precoloniale et
l’egalite de la distribution actuelle du revenu. Nous
argumentons que cette derniere correlation reflete des
dimensions institutionnelles qui ne sont pas captees par les
mesures usuelles de qualite des institutions dans les bases de
donnees disponibles. Les pays qui etaient les plus densement
peuples au seizieme siecle ont en effet une moins bonne
gouvernance mais accordent une plus large part du revenu aux plus
pauvres. Ils avaient des Etats precoloniaux plus structures,
ont resiste plus souvent a la colonisation, et ont adopte
plus souvent un systeme d’economie mixte. Beaucoup d’entre
eux presentent une repartition des terres plus egalitaire.
L’egalite de la distribution des terres apparait comme un
determinant important de l’egalite globale des revenus et de
la pauvrete, independamment des standards de « gouvernance »
usuels.
Keywords: Colonisation, Inegalites, Institutions,
Developpement, Colonization, Inequalities,
Institutions, Development.
JEL: N37 O40 P51
Date: 2003-06
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200305&r=all
200. Agricultural surplus, division of labour and the emergence
of cities, a spatial general equilibrium model
Gilles Spielvogel (DIAL, IEP-Paris)
(english) In this paper, we expose the economic conditions of
cities emergence in a spatial general equilibrium framework. The
presence of increasing returns based on the division of labour,
transport costs and the possible existence of an agricultural
surplus are enough to generate different possible urban
equilibrium. A city may not be sustainable if internal transport
costs are too high. On the other hand, a persistent migratory
pressure may exist between the city and the surrounding rural
hinterland if the urban labour market is saturated. In addition,
we study the conditions of stability of the monocentric
equilibrium in the different cases.
_________________________________ (francais) Dans ce papier,
nous exposons les conditions economiques d’emergence des
villes dans le cadre d’un modele d’equilibre general
spatial. L’existence de rendements croissants bases sur la
division du travail, de couts de transport et la presence
eventuelle d’un surplus agricole conduisent a differentes
possibilites d’equilibre urbain. En raison de la contrainte
de subsistance, il est possible qu’aucune ville ne soit
soutenable si les couts de transport internes sont trop eleves.
D’un autre cote, la contrainte d’emploi urbain debouche
sur la saturation de tout ou partie du marche du travail urbain
et a la persistance d’une pression migratoire entre campagne
et ville. Par ailleurs, nous etudions les conditions de
stabilite du systeme urbain monocentrique dans les differents
cas d’equilibre.
Keywords: Urbanisation, division du travail, surplus agricole,
systeme urbain monocentrique, Urbanization, division
of labour, agricultural surplus, monocentric urban
system.
JEL: R13 R14 O18
Date: 2003-07
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200306&r=all
201. Migration and urbanization in francophone west Africa a
review of the recent empirical evidence
Cris Beauchemin (Universite de Montreal)
Philippe Bocquier (DIAL, IRD, Paris)
(english) This contribution proposes to re-examine the
contribution of migration to urbanization in the developing world,
by presenting a comprehensive review of research on Francophone
West Africa. The contribution of migration to urbanization is
examined from different points of view: demographic, geographic
and economic. The paper presents the context of urbanization,
describes new trends in migration flows between urban and rural
areas, and examines how migrants integrate in the city and fit in
the urban economy. The conclusions are that migrants adapt quite
well to the city and that urban integration problems do not
concern exclusively migrants but all city-dwellers, especially
the youths. However social and economic integration should also
be studied from the rural point of view, taking into
consideration the recent urban-torural migration flows and the
slow-down of urban growth. _________________________________ (
francais) Cette contribution se propose de reexaminer le role
des migrations dans l’urbanisation du monde en developpement,
en presentant une synthese des resultats de recherches menees
en Afrique de l’Ouest francophone. La contribution de la
migration a l’urbanisation est consideree du point de vue
tant demographique, qu’economique et geographique. Elle
presente le contexte de l’urbanisation, decrit les nouvelles
tendances des flux migratoires entre les milieux urbains et
ruraux, et analyse comment les migrants s’inserent dans la
ville et s’adapte a l’economie urbaine. Les conclusions
montrent que les migrants s’adaptent fort bien a la vie
urbaine et que les problemes d’insertion urbaine ne concernent
pas seulement les migrants mais tous les urbains, en particulier
les jeunes. Cependant, l’insertion economique et sociale
devrait egalement etre etudiee du point de vue rural, en
prenant en compte les flux migratoires recents de l’urbain au
rural, ainsi que le ralentissement de la croissance urbaine.
Date: 2003-09
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200309&r=all
202. Representative versus real households in the macro-economic
modeling of inequality
Francois Bourguignon (DELTA - World Bank, Paris)
Anne-Sophie Robilliard (DIAL, IRD, Paris)
Sherman Robinson (IFPRI, Washington D.C.)
To analyze issues of income distribution, most disaggregated
macroeconomic models of the Computable General Equilibrium (CGE)
type specify a few representative household groups (RHG)
differentiated by their endowments of factors of production. To
capture “within-group” inequality, it is often assumed, in
addition, that each RHG represents an aggregation of households
in which the distribution of relative income within each group
follows an exogenously fixed statistical law. Analysis of changes
in economic inequality in these models focuses on changes in
inequality between RHGs. Empirically, however, analysis of
household surveys indicates that changes in overall inequality
are usually due at least as much to changes in within-group
inequality as to changes in the between-group component. One way
to overcome this weakness in the RHG specification is to use real
households, as they are observed in standard household surveys,
in CGE models designed to analyze distributional issues. In this
integrated approach, the full heterogeneity of households,
reflecting differences in factor endowments, labor supply, and
consumption behavior, can be taken into account. With such a
model, one could explore how household heterogeneity combines
with market equilibrium mechanisms to produce more or less
inequality in economic welfare as a consequence of shocks or
policy changes. An integrated microsimulation-CGE model must be
quite large and raises many issues of model specification and
data reconciliation. This paper presents an alternative, top-down
method for integrating micro-economic data on real households
into modelling. It relies on a set of assumptions that yield a
degree of separability between the macro, or CGE, part of the
model and the micro-econometric modelling of income generation at
the household level. This method is used to analyze the impact of
a change in the foreign trade balance, and the resulting change
in the equilibrium real exchange rate, in Indonesia (before the
Asian financial crisis). A comparison with the standard RHG
approach is provided. _________________________________ Ce papier
presente une methodologie qui permet de s’affranchir de
l’hypothese de l’agent representatif couramment utilisee
dans les modeles d’Equilibre General Calculable (EGC). Il
s’agit de remplacer les traditionnels agregats correspondant
a d’hypothetiques « menages representatifs » par un
echantillon de menages reels, tires d’une enquete budget-
consommation. Cette approche permet de prendre en compte toute
l’heterogeneite des menages etudies, non seulement
economique mais egalement demographique, sociologique, etc. Ce
type d’approche presente neanmoins l’inconvenient de la
taille puisqu’il s’agit de manipuler des bases de donnees de
plusieurs milliers d’individus. Ce papier presente un modele
applique a l’Indonesie pour etudier l’impact social
d’un choc d’epargne exterieure et l’evolution du taux de
change reel d’equilibre qui resulte de ce choc (avant la
crise financiere asiatique). Les resultats obtenus sont
compares a ceux obtenus avec un modele plus “standard” a
menages representatifs.
Date: 2003-09
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200310&r=all
203. Analysing low intensity conflict in Africa using press
reports
Philippe Bocquier (DIAL, IRD, Paris)
Herve Maupeu (IFRA Kenya)
(english) Unreliability and biases prevent us from analysing
homicides using direct sources in most African countries.
Victimisation surveys in Africa proved to be considerably biased
regarding the recording of homicides. In the absence of more
reliable and exhaustive sources, press reports can reflect at
least some specific causes of death, on condition that a
political analysis of the relation between the press and the
political power is conducted. In this paper, using data collected
from a leading Kenyan newspaper, we were able to depict the
deaths since 1990 due to three main causes of collective violence
State violence (essentially the police), community clashes and
banditry. We used a historical as well as geographical approach
to determine the level and trend of the number of deaths as a
consequence of organised crime and political conflicts. In
addition, this analysis has helped us to point out the
discrepancies between the press discourses on insecurity and
political violence, and the reality of deaths reported by the
very same press. _________________________________ (francais)
Les sources directes sur les homicides ne sont generalement pas,
en Afrique, suffisamment fiables et souffrent de biais. Les
enquetes de victimation en Afrique se revelent egalement
tres biaisees en ce qui concerne l’estimation des homicides.
En l’absence de sources plus fiables et exhaustives, les
articles de presse peuvent au moins refleter quelques causes de
mortalite specifiques, a condition qu’une analyse politique
des relations entre la presse et le pouvoir politique soit
parallelement conduite. Dans ce document, nous utilisons des
donnees recueillies dans un quotidien majeur du Kenya pour
decrire depuis 1990 les deces dus a trois sources de violence
collective : la violence d’etat (essentiellement la police),
les violences communautaires et le banditisme. Nous utilisons une
approche a la fois geographique et historique pour determiner
le niveau et la tendance du nombre de deces resultant du crime
organise et des conflits politiques. Notre analyse permet de
plus d’identifier les divergences entre les discours parus dans
la presse sur l’insecurite et la violence politique, et la
realite des deces rapportes dans cette meme presse.
Date: 2003-12
URL: http://d.repec.org/n?u=RePEc:dia:wpaper:dt200315&r=all
204. Experiments on Auction Valuation and Endogenous Entry
Elena Katok (Laboratory for Economic Management and Auctions,
Penn State University)
Richard Engelbrecht-Wiggans (College of Business, University
of Illinois)
We present results of several experiments that deal with
endogenous entry in auctions and auction valuation. One
observation that is constant across all of the experiments we
report is that laboratory subjects have a difficult time
evaluating potential gains from auctions. Even after they are
given some experience with particular auctions, the uncertainty
inherent in the auctions (the probability of winning as well as
the potential gains from winning) makes it difficult for subjects
to compare different auction mechanisms. This highlights the need
for new experimental procedures to be used for testing theories
that involve endogenous auction entry in the laboratory.
Keywords: Experiments on Auction Valuation and Endogenous Entry
JEL: C72 D83 D44 C91
Date: 2004-10-01
Date: 2004-10-01
URL: http://d.repec.org/n?u=RePEc:lma:wpaper:ek1&r=all
205. How Effective are Electronic Reputation Mechanisms?
Gary Bolton (Laboratory for Economic Management and Auctions)
Electronic reputation or "feedback" mechanisms aim to mitigate
the moral hazard problems associated with exchange among
strangers by providing the type of information available in more
traditional close-knit groups, where members are frequently
involved in one another's dealings. In this paper, we compare
trading
in a market with online feedback (as implemented by many
Internet
markets) to a market without feedback, as well as to a
market
in which the same people interact with one another
repeatedly
(partners market). We find that, while the feedback
mechanism
induces quite a substantial improvement in transaction
efficiency,
it also exhibits a kind of public goods problem that,
unlike
in the partners market, the benefits of trust and
trustworthy
behavior go to the whole community and are not
completely
internalized. We discuss the implications of this
perspective
for improving feedback mechanisms.
Keywords:
Effective Electronic Reputation Mechanisms
Experimental Investigation
Date: 2003-08-01
Date: 2003-08-01
URL:
http://d.repec.org/n?u=RePEc:lma:wpaper:gb1&r=all
206.
Financial Intermediation and Credit Market Equilibrium: A
Model of Matching Market
Kaniska Dam (School of Economics,
Universidad de Guanajuato
/ UCL-CORE)
Keywords:
Financial Intermediation, Moral Hazard, Negatively
Assorted Matching
JEL: C78 D82 E44 G24
URL:
http://d.repec.org/n?u=RePEc:gua:wpaper:ec200301&r=all
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