testing the long run implications of the neoclassical growth model abstract the long run implications of the one factor neoclassical growth model are tested by investigating the cointegrating relations between the log of output consumption and investment and the real interest rate with the exceptions of austria and the united kingdom the evidence for the united states and to a lesser extent for canada japan and the federal republic of germany is favorable to the neoclassical growth model a simple extension to a multicountry setting proved however to be unsuccessful national outputs nor consumption series are driven by just one common stochastic trend

a confirmatory analysis of the unit root hypothesis for oecd consumption income ratios this article investigates the existence of a unit root in the consumption income ratio for a sample of 23 oecd countries over the period 1960 to 2005 for that purpose we first use recently developed unit root tests with good size and power second we employ the more powerful panel unit root tests of pesaran 2003 and smith et al 2004 that take the null of nonstationarity and a bootstrap version of the test of hadri 2000 that takes stationarity as the null hypothesis overall our confirmatory analysis renders clear cut evidence that oecd consumption income ratios contain a unit root

cointegration in a macroeconomic system abstract this paper represents an exploratory study that investigates the vector autoregressive properties of a time series system containing six main indicators of the austrian economy gross domestic product gdp private consumption investment gdp deflator interest rate wages interest focuses on cointegrating structures in the system i e on linear combinations of some trending variates that generate stationary series johansen s 1987 procedure identifies three relations of this kind it is also tried to give an economic interpretation to these relations more extensively a variety of sensitivity experiments are performed which make somehow original use of the technique of canonical correlations contrary to the sensitivity experiments a critical assessment of the identified structure by medium term forecasting until 1999 sheds considerable doubt on its correctness at most one or two cointegrating relations may help to increase forecasting precision relative to traditional vector autoregression which do not use the idea of cointegration at all on the other hand using all three identified relations seems to impose excess stationarity on the system which is not replicated by actual data behavior

valuing morbidity from wildfire smoke exposure a comparison of revealed and stated preference techniques estimating the economic benefits of reduced health damages due to improvements in environmental quality continues to challenge economists we review welfare measures associated with reduced wildfire smoke exposure and a unique dataset from california s station fire of 2009 allows for a comparison of cost of illness coi estimates with willingness to pay wtp measures the wtp for one less symptom day is estimated to be 87 and 95 using the defensive behavior and contingent valuation methods respectively these wtp estimates are not statistically different but do differ from a 3 traditional daily coi estimate and 17 comprehensive daily coi estimate jel q51 q53

on conservation of renewable resources with stock dependent return and nonconcave production textabstractthis paper analyzes conservation and extinction of renewable resources when the production function is nonconcave and the return function depends on consumption and the resource stock the paper focuses on the efficiency of global conservation a safe standard of conservation and extinction which outcome obtains depends on the marginal rate of substitution between investment and the stock in addition to the discount factor and the marginal productivity of the resource conservation may be efficient even if the discounted intrinsic growth rate of the resource is less than 1 journal of economic literature classification numbers d90 q20

harvesting and conservation in a predator prey system abstract optimal harvesting of prey in a predator prey ecosystem is studied under the condition that the existence of the predator has value predators birds and humans fishers compete for prey shellfish the behavior of the system is studied and conditions for optimal control are deduced various optimal harvest rates are identified for particular ecosystem and economic parameters we discuss optimal harvest rates focusing on system characteristics that lead to the survival of birds the approach path towards an optimal regime is shown qualitatively for different types of optimal harvest regimes

stochastic growth with correlated production shocks this paper extends the stochastic growth model of brock and mirman j econ theory 4 1972 497 513 to allow the production shocks to be correlated over time the resultant optimal savings and consumption policies depend not only upon the current level of output but also upon the most recent realization of the random shock the properties of these policy functions are studied and it is shown that the markov process on output capital stock and consumption resulting from the application of these policies converges to a stationary distribution

the family as the health producer when spouses are nash bargainers the grossman model is extended to a situation in which the family is regarded as the producer of individual health and spouses are nash bargainers the model has implications for the interaction between family structure income and the stocks of health capital and the bargaining strength of different family members the main insight is that the possibility of divorce affects the distribution of health capital between family members we analyse inter alia the impact on the distribution of health particularly regarding child health of changes in family policies related to the dissolution of the family

the effect of children on adult demands for health risk reductions we examine patterns in adults willingness to pay for health risk reductions we allow both their marginal utilities of income and their marginal disutilities from health risks to vary systematically with the structures of their households demand by adults for programs which reduce their own health risks is found to be influenced by 1 their parenthood status 2 the numbers of children in different age brackets currently in their households 3 the ages of the adults themselves 4 the latency period before they would fall ill and 5 whether there will still be children in the household at that time for younger adults willingness to pay by parents is greater than for non parents and increases with each additional young child for middle aged adults willingness to pay for corresponding risk reductions falls when teenagers are present and falls further with each additional teenager in the household language en

interpreting econometric evidence the behaviour of consumers expenditure in the uk abstract the dynamic models of consumers expenditure proposed by davidson et al 1978 and hendry and von ungern sternberg 1979 are re appraised in the light of hall s 1978 analysis of the empirical implications of the life cycle permanent income hypothesis in particular that the series for consumption should obey a random walk apart from trend in an attempt to reconcile the conflicting findings monte carlo experiments are used to demonstrate that if the davidson et al model were actually correct the hall model would appear to give a good description of the data and would probably not be rejected all the models are re estimated with new data for the uk and these data do reject a modified random walk specification in conclusion we discuss the issue of income exogeneity and comment on questions of model selection and interpretation

harvest policies and nonmarket valuation in a predator prey system abstract although prey may not have commercial value their economic value can be ascertained in a predator prey model if the predator has a harvest value the economic optimal recovery path of the predator and prey are carefully described when growth is quadratic in the predator prey and linear in prey predator parameter values in part resembling pacific halibut are used to provide numerical illustrations

disequilibrium buffer stocks and consumers expenditure on non durables the authors examine the importance of a disequilibrium real balance effect on non durable consumers expenditure in the u k using cointegration techniques and the johansen procedure they first establish a desired long run demand function for liquid assets depending on income wealth and a set of interest rates deviations of liquidity from this desired level cause changes in consumption via intertemporal substitution but via its effect on disequilibrium liquidity consumption is modeled in an error correction framework and is also found to depend on income and financial wealth both the disequilibrium liquidity and wealth terms may be picking up the effects of financial liberalization e g mortgage leak on consumption as funds released will be temporarily held in financial assets they also find some evidence that changes in the distribution of income have an independent effect on aggregate consumption copyright 1991 by mit press

inflation and savings international evidence on inflation induced income losses the fall in the average propensity to consume a p c in the i970s in most industrialised countries has been the subject of much debate it has been ascribed to a wide variety of causes most important it has been widely interpreted as a typical example of a situation in which economic forecasting has failed simply because it did not take into account the psychological effects of rapid changes in the economic environment given the inability of economists to predict sudden changes in consumer expectations these would naturally set severe limits to the usefulness of economic forecasting this paper takes a different approach to the problem it contends that the true fall in the a p c has been considerably lower than indicated by the statistics the argument runs roughly as follows the increase in the rate of inflation has led to a net transfer of real resources away from the personal sector this transfer was due to the fall in the real value of net monetary assets held by the personal sector and issued by the public and business sectors of the economy consumers considered this fall as negative income and adjusted their expenditure accordingly the definition of personal sector disposable income used in the national accounts statistics does not include such a correction in inflationary periods this leads to a large overestimate of true personal sector disposable income given this overestimate of the denominator it is hardly surprising that measured c y should fall when the rate of inflation rises the simplicity of this theory indicates that it can quite easily be subjected to empirical testing the tests proposed in this paper are based on a novel specification of the consumption function developed by davidson et al i978 henceforth dhsy this function has a solid theoretical foundation good statistical properties and allows both shortand long run phenomena to be easily incorporated in an acceptable manner simple theoretical considerations indicate roughly how one should go about measuring true income this corrected measure of income can be incorporated into the consumption function to be estimated in such a way that the coefficient of the correction term is endogenously determined in the regression the statistical properties of the resulting regressions are the evidence leading to a rejection or tentative acceptance of the theory

how great are the great ratios the balanced growth and neoclassical stochastic growth literatures imply stationarity of certain macroeconomic great ratios four such ratios are considered consumption output investment output the real interest rate and real money supply growth and evidence for ratio stationarity in the g7 countries is examined univariate unit root and stationarity tests are performed and analysis of the cointegrating relations between output consumption and investment is conducted almost no evidence of stationarity is found for the consumption output and investment output great ratios empirical evidence supports real money supply growth stationarity but is more mixed for the real interest rate

measuring benefits from air pollution control where do we stand measuring the benefits from reduced morbidity this paper presents a simple model of preventive health care similar to that of grossman 1972 and uses the model to define what a person would pay for a change in air quality the model assumes that one can build up resistance to acute illnes by increasing his stock of health capital however health capital decays at a rate which depends on air pollution for acute illness willingness to pay as derived from the model is greater than the benefit estimate computed using the damage function approach to illustrate the size of this discrepancy estimates of willingness to pay are computed using data from the michigan panel study of income dynamics the case for government providing information about risks rests secure in the theory of public goods informational scale economies and problems of dissemination conceivably call for a principal agent relationship in which certain types of decisions are delegated to the agency however the setting of standards and prohibitions is too simplistic it seldom recognizes that personal action tends to interact with and partially offset them 8 references

an investigation of the rationality of consumer valuations of multiple health risks after developing a conceptual analysis of consumer valuation of multiple risks we explore both economic and cognitive hypotheses regarding individual risk taking using a sample of over 1 500 consumers our study ascertains risk dollar tradeoffs for the risks associated with using an insecticide and a toilet bowl cleaner we observe the expected positive valuation of risk reductions and find empirical support for a diminishing in the valuation of risk reduction as the extent of the risk reduction increases we also find evidence of certainty premiums for the total elimination of one risk but no strong evidence of additional certainty premiums for the elimination of multiple risks strong reference risk effects are evident as increases in risk were valued much more greatly than were decreases

estimating the intrahousehold incidence of illness child health and gender inequality in the allocation of time in this paper the authors develop and implement a method for estimating the effects of infant morbidity on the differential allocation of time of family members based on discrete indicators of health and activity participation commonly available in survey data and within the context of a household model in which health is determined endogenously their estimates that take into account the simultaneity of health activity associations indicate that increased levels of infant morbidity significantly exacerbate existing differentials in the accumulation of human capital across teenage boys and girls in indonesia copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

has m2 demand in the usa become unstable evidence from an error correction model the purpose of this paper is to estimate an appropriate broad money demand function for the united states and to examine its stability after 1987 when the federal reserve system began using m2 as a policy guide special attention is paid to the model specification its dynamic structure and to its cointegration properties the results from various dynamic error correction models suggest that i the money demand relationship is stable ii most previously estimated models have undoubtedly misspecified the interest rate variable iii interest rate variability is another important determinant of real money demand and iv in contrast of previous studies the long run scale variable is real gdp whereas real consumer spending is the short run scale variable the sample period examined is 1953 1 to 1991 4

is the consumption income ratio stationary evidence from panel unit root tests this paper provides evidence on the stationarity of the consumption income ratio from a panel of 20 oecd countries using recently developed panel unit root tests which avoid the problem of low power associated with conventional unit root tests our findings suggest that the consumption income ratios in the oecd countries are generated by a nonstationary stochastic process

parental behavior and the value of children s health a health production approach data on individual children and on sibling pairs are used to examine how family resource allocations affect children s health and to estimate willingness to pay for reduced acute illness in children results highlight the importance of accounting for the endogeneity of child health and suggest that children with greater stocks of health capital whose parents invest in preventive and remedial medical care experience fewer days of illness estimated willingness to pay to avoid one day of illness induced school loss is about 100 to 150 a range broadly consistent with limited prior evidence but sub stantially more than unit values applied in recent policy analyses all else equal willingness to pay is higher among single parents and for uninsured children and the estimated income elasticity is only 0 14 implied aggregate benefits of reductions in children s sick time associated with air pollution control may be substantial

a systems approach to the relationship between consumption and wealth the single equation approach to the determination of consumption due to hendry and von ungern sternberg hus is extended to a multi equation system which links decisions on consumption and the components of wealth the original hus approach has proved to be a very durable one being applicable to a number of countries and macroeconomic models this approach is extended to allow a role for rates of return as well as income and it is shown how this extension results in an error correction system the empirical analysis used is based on johansen s maximum likelihood extension of the co integration approach of engle and granger

the cyclical exploitation of renewable resource stocks may be optimal abstract the purpose of this paper is to illustrate that stable limit cycles represent a possible generic equilibrium strategy in renewable resource models if the considered resource provides positive externalities this possibility which has been thus far overlooked is demonstrated for a nonlinear variant of the widely quoted model of c w clark f h clarke and g r munro econometrica 47 25 47 1979

a cointegration analysis of the impact of the age structure of the population on the household saving rate in japan this paper analyzes the impact of the age structure of the population on japan s household saving rate by applying cointegration techniques to time series data for the 1955 1993 period it finds th

reinterpreting the dhsy 1978 consumption function with hindsight the justification for davidson hendry srba and yeo s dhsy s selection of their favoured equation is shown to be based upon contradicting assumptions about inflation the empirically supported model is argued not to have a theoretically justified error correction interpretation the exclusion of the intercept biases the error correction term such that it becomes significant and negative but undermines the theoretical plausibility of the long run target more generally the statistical need to include an intercept in any regression to avoid parameter bias is demonstrated the rise in inflation in the 1970s is not considered to be a credible explanation of the fall in the average propensity to consume apc from the 1950s and is shown to have questionable empirical support when a below unit income elasticity is allowed for the recent articles which have found support for dhsy s favoured formulation augmented by time varying parameters using the most contemporary uk data should be viewed with caution new interpretations for the dhsy model s persistent success are called for if it is not to be considered that dubious regressions have been resurrected

cointegration of consumption and disposable income evidence from twelve oecd countries one of the implications of the rational expectation permanent income hypothesis is that consumption and disposable income are cointegrated campbell 3 using tests that are developed in engle and granger 7 concludes that this implication holds on the quarterly aggregate data of the u s he finds that although a phillips perron test could not reject the nonstationarity of the disposable income and consumption processes an augmented dickey fuller test rejects the existence of a unit root in the residuals obtained from the least square regression of disposable income on consumption campbell and clarida 4 confirm those conclusions with the quarterly aggregate time series data of canada these tests however may yield different conclusions if they are applied to data from other countries this is because the unit root tests in the literature have rather weak power when they are applied to individual time series of moderate length particularly when the alternative is close to the null indeed attfield demery and duck 1 using quarterly aggregate time series data of the u k find that phillips perron test strongly rejects at the 1 level the nonstationarity of the disposable income process they also find no evidence at even the 10 level against a unit root in the residuals of the regression between disposable income and consumption with augmented dickey fuller tests of 1 or 4 lags campbell and clarida 4 indicate that for the united kingdom the unit root hypothesis for the disposable income is rejected at the 5 level and the hypothesis of no cointegration between consumption and disposable income can only be rejected at the 10 level 2

managing interacting species in unassessed fisheries abstract this paper addresses the management of multispecies fisheries and suggests the use of restricted fishing policies as an interesting option for unassessed fisheries as is the case within developing countries specifically we consider a predator prey system under two potential management policies an unrestricted regime where agents can compete to harvest from both species and a second one where they are allowed to harvest only predators the performance of both policies is compared from an ecological and an economic point of view for a sufficiently large number of agents or for strong biological interaction parameters the assumed restricted fishing policy yields both higher long run stock levels and profits thus this contribution suggests that such a policy while requiring weaker monitoring governance than instruments based on outputs such as quotas or taxes would meet environmental and economic objectives finally several features of the analysis are discussed including targeting prey instead of predator and the issue of compliance

marine ecosystem considerations and second best management we compare how the long run distribution of fishing activities is affected in multispecies fisheries when facing different second best control rules 1 species specific landing regulation and 2 global input regulation we show how this depends on the economic returns and on the type of ecological interaction considered we highlight specifically that fishing effort does not necessarily increase on nontargeted species and decrease on targeted species and that the characterization of second best efficient instruments may differ drastically depending on the nature of the interaction

more powerful panel data unit root tests with an application to mean reversion in real exchange rates unit root tests seeking mean or trend reversion are frequently applied to panel data we show that more powerful variants of commonly applied tests are readily available moreover power gains persist when the modifications are applied to bootstrap procedures that may be employed when cross correlation of a rather general sort among individual panel members is suspected copyright 2004 john wiley sons ltd

an investigation of the long run properties of aggregate non durable consumers expenditure in the united this paper estimates the effects of the modeling of nondurable consumption in the light of the five years of new data since the publication of the paper by j e h davidson et al 1978 and the development of the new cointegration technique of r f engle and c w j granger 1987 existing models are found to be inadequate on two grounds they fail parameter stability tests and they do not contain a suitable equilibrium specification the paper uses the cointegration approach to search for an encompassing model that is both stable and cointegrates the main finding is that the analysis must be extended to allow for differential income effects caused by changing higher rate income tax bands copyright 1989 by royal economic society

parental altruism and the value of avoiding acute illness are kids worth more than parents abstract a model describing parents preferences to relieve their own and their children s acute illnesses is estimated using stated preference data estimated marginal rates of substitution mrs between child and parent illness are about two indicating that parents value children s illness attributes twice as highly as their own the mrs is larger for younger children falls toward unity as the child approaches adulthood and appears to reflect parental altruism rather than parent child differences in initial health or illness costs intra family allocations may compensate for chronic health impairments parents willingness to pay to avoid own or child illness increases with income declines with fertility increases at a decreasing rate with duration and number of symptoms and depends on perceived discomfort and activity restrictions current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children s health particularly in african american families

aggregate consumption and the distribution of income in the united kingdom an econometric analysis blinder i975 explained this omission by arguing that with the ascendancy of the friedman 1957 and modigliani and brumberg i954 models of consumer behaviour the view that income distribution affected aggregate consumption fell into disrepute in academic circles it was supplanted by the view that marginal and perhaps even average propensities to consume are constant over the income distribution pp 447 8 the life cycle model as is well known derives the aggregate consumption function from the hypothesis that the consumer chooses the time path of consumption which maximises lifetime utility subject to the constraint that the present discounted value of all consumption plus the present discounted value of the bequest if any is equal to lifetime disposable resources a consequence of such a hypothesis is that consumption at each instant is proportional to lifetime disposable resources with the constant of proportionality dependent only on age length of life the rate of interest and tastes in their empirical work friedman and modigliani may also have had to ignore income distribution due to lack of data however blinder 1975 went on to show that even under the life cycle hypothesis provided that the marginal utility of bequests say f was different

determining the appropriate deflation of nominal magnitudes in the uk consumption function a nonnested test approach this paper is concerned with the deflator s used to obtain series measured in real terms in the consumption function since the precise deflator s to be used in any particular specification is not uniquely determined by theoretical considerations alone we consider ways of approaching the issue empirically the starting point is to rearrange any given specification of the consumption function so that a nominal consumption variable is explained this implies that different deflators for consumption and other variables in the initial specification which are expressed in real terms define non nested models we therefore examine the issue of the appropriate method of deflation used non nested tests we consider the davidson hendry srba and yeo specification of the quarterly uk non durable consumption function and find that the preferred method of deflating consumption and income variables is to use the total durable and non durable consumption deflator we also examine the quarterly uk consumption

parental altruism and child lead exposure inferences from the demand for chelation therapy we use parents decisions to treat their children s body burdens of lead to infer parental ex ante willingness to pay for reduced burdens willingness to pay is estimated with a data set containing 256 observations the data were originally gathered to assess the impact of children s body lead burdens upon their intellectual and behavioral development our results indicate that parental ex ante willingness to pay for a 1 percent reduction in child body lead burden exceeds the estimated ex post savings in medical treatment and compensatory education costs caused by the same reduction

optimal harvesting of ecologically interdependent fish species abstract the optimal exploitation of a two species predator prey system is considered using lotka volterra type equations due to the density dependence of ecological efficiency both species should be harvested simultaneously over a range of relative prices beyond the limits of this price range either the prey species should be utilized indirectly by harvesting the predator or the predator should be eliminated to maximize the prey yield neglecting harvesting costs the simultaneous harvest of prey and predators requires that a unit of prey biomass increase in value by being processed by predators certain results from single species fishery models are shown not to apply to multispecies models these are as follows i optimal regulation of a free access fishery may call for subsidizing instead of taxing the harvest of predator species ii increasing the discount rate may at moderate levels imply that the optimal standing stock of biomass increases instead of decreasing iii a rising price or a falling cost per unit fishing effort of a species may raise and not lower the optimal standing stock of that species

heterogeneity intrafamily distribution and child health data were collected in candelaria colombia from 1968 to 1974 to evaluate the impact of child health services in all households in which there were any children under 6 years old to estimate the birth outcome equation and post birth health equation a subsample of 109 households was selected in which at least 2 children were born during the 7 year program the sample size was 238 children estimates of the parameters of the normalized weight equations were obtained using seemingly unrelated regression sur the family fixed effects procedure ffe and the lagged instrumental fixed effects technique life an illustrative dynamic model of intra family allocative behavior incorporating variations in individual child characteristics was formulated to show how both the timing of childbearing and child specific allocations vary with both family and child specific health endowments the information restrictions were used in the model associated with the sequencing of births to develop an estimation procedure which takes into account both intrafamily and interfamily heterogeneity longitudinal data on children and households compared estimates of the effects of birth order birth spacing and timing per capita food consumption inoculations and the incidence of breast feeding on the age standardized weight of children at 2 life cycle points at birth and within 6 months after birth the estimates indicated that healthier families for given income had more children and more closely spaced children but consumed no more food per capita than did less well endowed families these results imply that families behave so as to reduce inherent interfamily inequalities in child health however while the estimates suggest that the healthier the prior surviving child the more quickly parents are likely to have a subsequent child parents are also more likely to breastfeed an inherently healthier child

altruism fertility and the value of children health policy evaluation and intergenerational welfare abstract this paper accounts for the value of children and future generations in the evaluation of health policies this is achieved through the incorporation of altruism and fertility in a value of life type of framework we are able to express adults willingness to pay for changes in child mortality and also to incorporate the welfare of future generations in the evaluation of current policies our model clarifies a series of puzzles from the literature on the value of life and on intergenerational welfare comparisons we show that by incorporating altruism and fertility into the analysis of the recent u s experience the estimated welfare gain of a young adult from reductions in mortality easily doubles

the consumption function in macroeconomic models a comparative study 1984 the consumption function in macroeconomic models a comparative study applied economics vol 16 no 6 pp 799 838

forecasting aggregate consumers expenditure in the u k using the dhsy model the performance of the dhsy model in predicting the growth of aggregate consumers expenditure in the uk over the period 1985 1988 is examined the model is applied to four different combinations of consumption variable and data type results show in all cases the predictive performance of the dhsy model to be poor however applied to seasonally adjusted data an improvement can be achieved by allowing for systematic variation in coefficients in particular a variable coefficient dhsy model displays no tendency to underpredict the growth of total consumers expenditure and accurately captures the volatility of non durable expenditure

estimating a household production function heterogeneity the demand for health inputs and their effects on birth weight the household production literature emphasizes that technical or biological processes condition input selection by households in their production activities along with prices and income exogenous variations in health to the extent that they are perceived by individuals heterogeneity lead to correlations between inputs and health outcomes that cannot be used to derive causal conclusions therefore estimates of health technology must be obtained from a behavioral model in which health inputs are themselves choices consistent estimates are reported of the effect of endogenous inputs such as medical care smoking and fertility on birth weight and fetal growth in the presence of health heterogeneity

the causes of childhood obesity a survey childhood obesity rates are rapidly rising in many countries since it is highly likely that obesity will persist into adulthood current rates undermine the health and future of people in developed as well as developing countries this public health epidemic carries significant economic social as well as individual level consequences and has become a research topic of significant interest for various disciplines including economics we survey the literature in economics and related disciplines associated with the causes of childhood obesity and synthesize the results to provide a better understanding of the explanations for the rising childhood obesity rates this is an important step in crafting effective policies to combat global childhood obesity trends

the stationarity of consumption income ratios evidence from minimum lm unit root testing abstract previous research concerning the stationarity of the consumption income ratio is extended via the application of the minimum lm unit root tests of lee and strazicich 2003 lee j and strazicich m 2003 minimum lm unit root test with two structural breaks review of economics and statistics 85 1083 1089 it is found that incorporation of structural change under the null reverses earlier findings of non stationarity with the unit root hypothesis rejected for all 20 oecd economies examined

long run implications of neoclassical growth models empirical evidence from australia new zealand south korea and taiwan long run implications of the one factor neoclassical growth models are tested by using data from australia new zealand south korea and taiwan testable propositions about the long run relations between log of real output consumption and investment are investigated using unit root tests and cointegration analysis also common trends analysis is used to identify the sources of the permanent shocks driving the common long run trend further variance decomposition is used to examine the extent to which innovations to the common trend component are able to explain short run fluctuations in the data empirical results provide limited support for the neoclassical models in addition to productivity shocks permanent innovations to investment are found to be important components of the long run stochastic trend governing the dynamic behaviour of real output consumption and investment variance decomposition results suggest that although innovations to common trend components are important this is unable t

valuing changes in health risks a comparison of alternative measures essential to efficient provision of health safety and the environment is correct valuation of risks to human health in a world of scarcity difficult decisions concerning tradeoffs between health and other desirables are unavoidable in this paper we develop a model of health investment under uncertainty which yields a general expression for values of changes in risks to human health the preference based values of morbidity risks and mortality risks are ex ante dollar equivalents of changes in expected utility associated with risk changes the preference based values are related to two alternative measures costs of illness and preventive expenditures which are thought to be lower bounds on the value of risk reductions we demonstrate that these alternative measures are not even special cases of the more general measure and that the size relationships among the three measures are complex also we derive the relationship between the willingness to pay for risk changes and the consumer surpluses associated with health changes which occur with certainty the next section contains a brief review of the approaches to valuing changes in health

cointegration and dynamic time series models abstract this paper provides a survey of some of the recent developments in the field of econometric modelling with cointegrated time series in particular we describe the testing and estimation procedures which have become increasingly popular in the recent applied literature in addition to the two stage procedure proposed by engle and granger we consider extensions to the modelling of dynamic models with cointegrated variables such as the estimation of models with multiple cointegration vectors simultaneous systems models with seasonally integrated and cointegrated variables furthermore we illustrate the practical application of the techniques describes in the paper by means of a tutorial data set

the family as producer of health an extended grossman model deriving a model where each family member is the producer of his own and other family members health shows that the family will not try to equalise marginal benefits and marginal costs of health capital for each family member they will rather invest in health until the rate of marginal consumption benefits equals the rate of marginal net effective costs of health capital the level of compensation in the social insurance system the effective price of care health related information and transfer payments will all affect the production possibility set and therefore the optimal level and distribution of family health

the uk consumption function and structural instability improving forecasting performance using a time varying parameter approach previous studies indicate that the poor forecasting performance of constant parameter uk consumption expenditure models is caused by structural instability in the underlying data generating process typically this instability is removed by reparameterization within the constant parameter framework an alternative modelling strategy is to allow some or all of the parameters to vary over time a uk non durable consumption expenditure model with time varying parameters is developed based on the permanent income hypothesis of friedman 1957 this model takes into account temporal changes in the average and marginal propensities to consume the variation in the parameter estimates is given an economic interpretation in terms of the influence of omitted variables namely uk financial liberalization and expectational changes the forecasting performance of this model is superior to that of two widely used constant parameter models further tests show that even if these constant parameter models are respeci

is the consumption income ratio stationary in african countries evidence from new time series tests that allow for structural breaks abstractthis article examines whether the consumption income ratio is stationary in 50 african countries we use the residual augmented least squares rals lm unit root test that allows for struct

realistic cross country consumption correlations in a two country equilibrium business cycle model abstract a well known feature of one good multi agent arrow debreu economies with edentical additively separable homothetic preferences is that the consumptions of all agents are perfectly correlated such economies are widely used in interpreting business cycles but seem to be inconsistent with observed cross country correlations of aggregate consumption this paper provides an example of a two country real business cycle model in which preferences are not separable between consumption and labor supply the model has a simple closed form solution closed form solution and allows for fluctuations in labor supply in equilibrium moreover it generates correlations between national consumption rates which are close to some of those observed in historical data jel f41

harvesting in an integrated general equilibrium model harvesting of prey biomass is analyzed in an integrated ecological economic system whose submodels a predator prey ecosystem and a simple economy are microfounded dynamic general equilibrium models these submodels are interdependent because the ecosystem responds to harvesting through the reactions of optimizing individual organisms by changing the provision of public ecosystem services to consumers general analytical results are derived regarding the impact of harvesting policies on short run equilibria of both submodels on population dynamics and on stationary states of the integrated model a key insight is that prey biomass carries a positive ecosystem price which needs to be added as a tax mark up to the economic price of harvested biomass to attain allocative efficiency further information on the dynamics is gained by resorting to numerical analysis of the policy regimes of zero harvesting laissez faire harvesting and efficient harvesting it is a matter of weighing costs and benefits of taking action whether the action is the inert one of leaving resources alone in order to conserve them or whether it involves exploiting a resource for so called material ends pearce 1976 p 320

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

international evidence on the long run implications of the neoclassical growth model quarterly data from the international finance statistics of the international monetary fund is used to test the long run implications of the neoclassical stochastic growth model for ten oecd countires canada france germany italy the netherlands norway switzerland japan the united kingdom and the united states in doing so johasen s maximum likelihood approach for estimating and testing long run stedy state relations in multivariate vector autoregressive models is used johansen s 1988 statistical analysis of cointegration vectors journal of economic dynamics and control 231 54

the overvaluation of purchasing power parity abstract recent panel studies of purchasing power parity have reported strong evidence of mean reversion in real exchange rates however these studies fail to control for cross sectional dependence in the data this failure has dramatic consequences raising the significance level of tests with a nominal size of 5 percent to as much as 50 percent it is shown in this paper that controlling for cross sectional dependence no evidence against the random walk null can be found in panels of up to 64 real exchange rates this finding cannot be attributed to low power as there is ample power in panels of this size to reject the unit root null