absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth abstract this study examines the effects of foreign direct investment fdi and equity foreign portfolio investment efpi on economic growth using data on 80 countries from 1979 through 1998 the results largely suggest that lagged fdi and efpi do not have direct unmitigated positive effects on growth but some data are consistent with the view that the effects of fdi and efpi are contingent on the absorptive capacity of host countries with particular respect to financial or institutional development moreover extreme bound analysis eba of significant results indicates that the estimates are robust compared to other empirical studies on growth

fixed costs of adjustment coordination and industry investment we test whether smooth industry level investment dynamics result from explicit aggregation of asynchronous and possibly lumpy firm level investment we compare the deviations of optimal from actual firm behavior across industries categorized by their ratios of idiosyncratic uncertainty to the sum of idiosyncratic and aggregate uncertainty the deviations are represented by the residuals of a cointegrating regression that is derived from the firm s first order condition under no adjustment costs in support of models with asynchronous firm decisions we find a significant negative relationship across industries between idiosyncratic uncertainty and the persistence of these residuals

international technology transfer and the technology gap abstract we build a quality ladders product cycle model that explores how the quality of technology transferred through foreign direct investment fdi is linked to innovation and imitation when the absorptive capacity of ldcs is limited successful imitation of low quality levels makes fdi involving high quality levels possible through reduction of the technology gap a subsidy to imitation or a tax on low quality fdi production encourages imitation relative to innovation thus releasing the constraint faced by foreign firms seeking to produce in the south these forces that stimulate high quality fdi raise southern welfare through lower prices faster innovation and higher wages

financial shocks and corporate investment in emerging markets we examine how cross firm and cross country heterogeneity shapes the responses of corporate investment in emerging markets to changes in u s monetary policy and financial market volatility the latter proxying for uncertainty we find that in response to increases in u s monetary policy rates or financial market volatility financially weaker firms reduce investment by more than financially strong firms we also show that firms with stronger balance sheets delay investment voluntarily when faced with higher uncertainty finally we find that stronger macroeconomic fundamentals lower public debt or higher international reserves help to buffer corporate investment from increases in u s monetary policy rates

marketed surplus under risk do peasants agree with sandmo using a newly defined notion of aversion to income risk the behavior of the marketed surplus producer under price risk is characterized unlike the familiar case first examined by sandmo output depends on both ordinal preferences for goods and on risk attitudes conditions are found that yield an output level under risk that is smaller than under certainty if these conditions do not hold both risk and risk aversion may have a positive effect on output implications for econometric studies of risk attitudes are considered and illustrated with an example finally we examine the effect of uncertainty on the peasant s long run equilibrium

inventory behavior with permanent sales shocks abstract empirically adf tests fail to reject the null hypothesis that sales are i 1 we build a model of inventory behavior that incorporates permanent sales shocks analytically the model with i 1 sales implies that the variance ratio of log production to log sales is one in the long run regardless of the strength of production smoothing stockout avoidance or cost shocks but that at business cycle horizons the conditional variance ratio conditional on past production and sales is greater than one we explain analytically using our model and intuitively four traditional inventory puzzles and three puzzles about inventories and monetary policy

economic welfare evaluations for producers under uncertainty the validity of producer and consumer surplus measures of firm welfare under risk is examined under constant absolute risk aversion and output price uncertainty only these measures are an exact measure of firm welfare as defined by compensating variation equivalent variation or the change in the certainty equivalent under decreasing absolute risk aversion qualitative comparisons of various measures are discussed for example producer s surplus as measured by the area above the uncompensated risk averse supply curve overstates the compensating variation of a change in expected price of output procedures for calculating firm welfare under production uncertainty and a variety of economic environments are proposed generally these procedures are applicable only when absolute risk aversion is constant

monetary policy and investment dynamics evidence from disaggregate data we use disaggregated data on the components of private fixed investment pfi to estimate industry level responses of real investment and capital prices to unanticipated monetary policy the response functions derive from a restricted large scale var estimated over 1959 2007 our results point to significant cross sector heterogeneity in the behavior of pfi prices and quantities for assets belonging to the equipment category of fixed investment we find that quantities rather than prices absorb most of the fallout from a policy shock by contrast the price effects tend to be higher and the output effects lower for nonresidential structures

productivity spillovers from foreign direct investment evidence from uk industry level panel data this paper examines intra industry productivity spillovers from foreign direct investment fdi in the uk manufacturing sector the empirical analysis uses panel data for 48 uk industries over the period 1991 1995 a major contribution is empirical evidence on spillover effects in situations where the host country is developed the results indicate that the very presence of fdi has a positive spillover impact on the productivity of uk owned firms the analysis also shows that the extent to which local firms benefit from the introduction of advanced technology depends largely on their own technological capabilities

foreign direct investment and total factor productivity growth new macro evidence although the role of foreign direct investment fdi in facilitating technology transfer is well known in the literature empirical evidence regarding the effect of fdi on growth is mixed the contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries using panel data for 49 countries over the period 1974 2008 and the existence of investment promotion agencies in the receiving countries as an instrument our results show that increased fdi stock leads to higher productivity growth we also find a significant positive effect on the interaction between fdi stock and distance to the technological frontier suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more fdi stock is accumulated

small sample bias and adjustment costs the response of most stock variables e g capital housing consumer durables and prices to exogenous impulses involves a dynamic or short run reaction and a target or long run reaction the difference between these two is typically attributed to some form of adjustment cost in this paper i argue that the small sample problems of cointegrating procedures used to estimate the long run component are particularly severe when adjustment costs are important more precisely elasticity estimates will tend to be biased downward i illustrate the empirical relevance of this by showing that the target elasticity of capital with respect to its cost is severely downward biased when estimated with conventional ols cointegration procedures once this is corrected the elasticity of the u s capital output ratio to the cost of capital is found to be large and close to minus one copyright 1994 by mit press

non convexities in the adjustment of different capital inputs a firm level investigation recent developments in investment research have highlighted the importance of non convexities and irreversibilities in firms adjustment of quasi fixed inputs aggregation across capital goods may smooth out the discontinuities associated with the adjustment of individual assets lack of suitable data is one of the reasons why empirical work has typically relied on the assumption of capital homogeneity in this paper we exploit a data set of 1539 italian firms which allows us to disaggregate capital into equipment and structures and purchases and sales of assets we construct measures of fundamental q to capture investment opportunities associated with each asset we uncover the pattern of dynamic adjustment by using non parametric techniques to relate each individual investment to its own fundamental q

foreign direct investment and export upgrading this study presents evidence suggesting that attracting foreign direct investment fdi offers potential for raising the quality of exports in developing countries our analysis relates unit values of exports at the four digit sitc level to data on sectors treated by investment promotion agencies as a priority in their efforts to attract fdi the sample covers 105 countries from 1984 to 2000 the findings are consistent with a positive effect of fdi on unit values of exports in developing countries the evidence for high income economies is ambiguous there is no indication that fdi increases the similarity of export structure of developing and developed economies

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

stock prices and demographic structure a cointegration approach abstract using cointegration methods i find a negative impact of the proportion of the population in the retirement age on stock prices in the us but no positive impact of the proportion of the population in the prime earning age

foreign direct investment and economic growth an increasingly endogenous relationship summary this paper investigates whether foreign direct investment fdi affects economic growth based on a panel of data for 84 countries over the period 1970 99 both single equation and simultaneous equation system techniques are applied to examine this relationship a significant endogenous relationship between fdi and economic growth is identified from the mid 1980s onwards fdi not only directly promotes economic growth by itself but also indirectly does so via its interaction terms the interaction of fdi with human capital exerts a strong positive effect on economic growth in developing countries while that of fdi with the technology gap has a significant negative impact

foreign investment and technology transfer a simple model abstract this paper develops a model in which international technology transfer through foreign direct investment emerges as an endogenized equilibrium phenomenon resulting from the strategic interaction between subsidiaries of multinational corporations and host country firms the model explicitly recognizes two types of costs the costs to the multinational of transferring technology to its subsidiaries and the learning costs of domestic firms the analysis points to the importance of the learning efforts of host country firms in increasing the rate at which mncs transfer technology the paper also explores some of the reasons why learning investment in host country firms may be suboptimal

does globalization affect growth evidence from a new index of globalization the study develops an index of globalization covering its three main dimensions economic integration social integration and political integration using panel data for 123 countries in 1970 2000 it is analysed empirically whether the overall index of globalization as well as sub indexes constructed to measure the single dimensions affect economic growth as the results show globalization indeed promotes growth the dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries although less robustly information flows also promote growth whereas political integration has no effect

estimating the long run user cost elasticity abstract the user cost elasticity is a parameter of central importance in economics if the supply curve for capital is upward sloping as is more likely in a large economy like the u s and shocks to demand are important as they are likely to be over the business cycle estimates of the user cost elasticity that rely on high frequency movements in the variables will tend to be biased applying cointegration techniques to a small open economy yields an estimate of the long run user cost elasticity that is about 75 larger in absolute value than the best existing estimate

nonconvex factor adjustments in equilibrium business cycle models do nonlinearities matter recent empirical analysis has found nonlinearities to be important in understanding aggregated investment using an equilibrium business cycle model we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs we find that while such costs lead to nontrivial nonlinearities in aggregate investment demand equilibrium investment is effectively unchanged our finding based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity is robust to the introduction of shocks to the relative price of investment goods

the normalized ces production function theory and empirics abstract the elasticity of substitution between capital and labor and in turn the direction of technical change are critical parameters in many fields of economics until recently though the application of production functions with specifically non unitary substitution elasticities i e non cobb douglas was hampered by empirical and theoretical uncertainties as recently revealed normalization of production technology systems holds out the promise of resolving many of those uncertainties we survey and assess the intrinsic links between production as conceptualized in a production function factor substitution as made most explicit in constant elasticity of substitution functions and normalization defined by the fixing of baseline values for relevant variables first we recall how the normalized constant elasticity of substitution function came into existence and what normalization implies for its formal properties then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth next we discuss the benefits normalization brings for empirical estimation and empirical growth research finally we identify promising areas of future research

externalities and technology transfer through multinational corporations a theoretical analysis abstract this paper examines the optimal behavior of a multinational firm s subsidiary in a host country when learning of its production techniques by its native rivals occurs in a dynamic framework it is shown among other things that a it is worthwhile for the subsidiary to import better technology from its parent firm and that b such technology transfer may not benefit the firms of the host country despite their learning while the host country as a whole does benefit

labour on the family farm a theory under uncertainty an extension abstract in a framework developed by p j dawson the effects of output price risk on the family labour supply and its demand for hired labour are investigated in particular the effects of changes in autonomous income expected output price family composition and farm size are studied comparative statics is used to sign these effects revealing the importance of the behavior of the measures of absolute relative and partial risk aversion in determining them it is shown that some of the effects may be determined only via empirical research

the environmental impact of industrialization and foreign direct investment abstract in recent years the major concern about the environment has been the emissions of greenhouse gases and the consequent impact on climate change there is a huge interest among scholars in examining factors that contribute to environmental degradation in this study we examined the environmental impact of foreign direct investment and industrialization in 36 selected african countries using data for the period 1980 2014 we proxied the environment with a number of factors including carbon dioxide nitrous oxide methane and total greenhouse gases emissions employing the pooled mean group estimation technique we found that the effect of industrialization on the environment is generally insignificant however the effect of foreign direct investment on the environment is found to be largely significant policy implications of these findings are discussed

inflation tax rules and investment some econometric evidence this paper presents econometric evidence on the effect of tax incentives on business investment in the united states in the period from 1953 through1978 the analysis emphasizes that the interaction of inflation and existing tax rules has contributed substantially to the decline of business investment since the late 1960 s because the investment process is far too complex for any simple econometric model to be convincing i have estimated three quite different models of investment behavior the strength of the empirical evidence rests on the fact that all three specifications support the same conclusion more generally the analysis and evidence show that theoretical models of macroeconomic equilibrium should specify explicitly the role of distortionary taxes especially taxes on capital income the failure to include such tax rules can have dramatic and misleading effects on the qualitative as well as the quantitative properties of macroeconomic theories this paper was presented as the fisher shultz lecture at the fourth world congress of the econometric society 29 august 1980 in aix en province this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this abstract was borrowed from another version of this item

irreversibilities in fixed capital adjustment abstract using two largely novel datasets we examine how colombians and mexicans invest in response to imbalances between actual and desired capital stock levels nonparametric estimates of the average adjustment function support the presence of irreversibilities but not of nonconvexities

cointegration factor shares and production function parameters abstract this note evaluates the usefulness of cointegration relations for estimating production function parameters as pioneered by caballero 1994 while using long run variation to estimate production function parameters is a desirable estimation strategy this note demonstrates that the cointegration model will not be informative for estimating substitution parameters

endogenous technical advance and the stochastic trend in output a neoclassical approach abstract in the recent endogenous growth literature the trend in output is stochastic while investment in scientific knowledge is treated as analogous to a capital stock this paper models both research and development r d and disembodied technical advance using neo classical equations which specify the equilibrium stocks as a function of prices and output the elasticity of r d in the production function estimated using factor shares is time varying and increasing returns to scale are increasing in all factors the most important aspect of the model is that the equilibrium rate of technical advance is not cyclically invariant but co moves with output at business cycle frequencies this allows the production function to behave as a stochastic trend growth accounting demonstrates that long term variations in the rate of productivity growth have been associated mainly with low frequency fluctuations in the rate of disembodied technical advance with secondary effects from the stocks of r d and physical capital during the high productivity period 1948 1972 technical advance contributed 1 48 percentage points per year to output with 0 98 accounted for by r d the productivity slowdown of the mid 1970s was accounted by a gradual decline in the effect of r d and a more abrupt collapse in disembodied technology the subsequent productivity revival was associated with two accelerations in disembodied technical advance the first beginning in the early 1980s and the second in the mid 1990s the production function is simulated in a small econometric model model simulations find that exogenous shocks to the inflation rate generate significant variations in growth by inducing fluctuations in disembodied technology

labour on the family farm a theory under uncertainty abstract this paper develops a theory of the family farm in conditions of uncertainty where attention is focussed on the labour input decisions specifically the farm family is faced with two labour decisions namely with respect to hired labour and to family labour the framework for analysis is expected utility maximisation the analysis has implications for agricultural policy since policy pronouncements of economists are typically based on models which assume perfect certainty these pronouncements do not survive the incorporation of uncertainty

capital adjustment patterns in swedish manufacturing firms what model do they suggest in this paper we study the capital adjustment process in swedish manufacturing firms and relate the empirical findings to standard models of firm behavior in the presence of impediments to capital adjustments we find that i a model with irreversible capital goes a very long way in capturing the salient features of firm level capital adjustment behavior to see this an integrated approach is necessary since different alternative models do well in certain comparative dimensions but not in others ii the partial adjustment model generally fails to explain capital adjustment patterns iii the capital accumulation process is a highly volatile and non persistent process on the firm level iv firms adjustment behavior is asymmetric in that they are more likely to tolerate excess capital than shortages of capital and finally v the estimated adjustment function implies that aggregate investment is relatively unresponsive to aggregate shocks in deep recessions as compared to the responsiveness in normal times

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

fdi and economic growth new evidence on the role of financial markets this study uses a threshold regression model and finds new evidence that the positive impact of fdi on growth kicks in only after financial market development exceeds a threshold level until then the benefit of fdi is non existent

the interest rate learning and inventory investment this paper presents a model that provides an explanation based on regime switching in the real interest rate and learning of why tests based on stock adjustment models euler equations or decision rules which emphasize short run fluctuations in inventories and the interest rate are unlikely to uncover a negative relationship between inventories and the real interest rate the model however predicts that inventories will respond to long run movements that is to regime shifts in the real interest rate tests emphasizing cointegration techniques confirm this prediction and show a significant long run relationship between inventories and the real interest rate

broken symmetry symmetry and price uncertainty or short and long run comparative statics of the competitive firm abstract the notion of broken or hidden symmetry is applied to a long run characterization of a competitive firm operating under price uncertainty the main result of the paper is the restoration of a slutsky type symmetry of the input demand functions within an expected utility framework which does not involve any assumption about risk aversion a second conclusion is that economic relations expressed in terms of relative quantities are essential in the long run comparative statics under price uncertainty

zeros and lumps in investment empirical evidence on irreversibilities and nonconvexities the objective of this paper is to investigate if and how capital adjustment departs from the smooth pattern implied by standard model based on convex adjustment costs using norwegian micro data we start by documenting the intermittent and lumpy nature of investment rates we then present two pieces of econometric evidence on these issues first we estimate a discrete hazard model to determine the probability of having an episode of high investment conditional on the length of the interval from the last high investment episode second we estimate a switching regression model that allows for the response of the investment rate to fundamentals to differ across regimes in both cases we investigate the aggregate implications of our results

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

microeconomic adjustment hazards and aggregate dynamics the basic premise of this paper is that understanding aggregate dynamics requires considering that agents are heterogeneous and that they do not adjust continuously to the shocks they perceive we provide a general characterization of lumpy behavior at the microeconomic level in terms of an adjustment hazard function which relates the probability that a unit adjusts to the deviation of its state variable from its moving target we characterize rich cross sectionally dependent aggregate dynamics generated by nonconstant hazards we present an example based on u s manufacturing employment and job flows and find that increasinghazard models outperform constant hazard partial adjustment models in describing aggregate employment dynamics

could higher taxes increase the long run demand for capital theory and evidence for chile abstract on theoretical grounds alone there is no a priori reason why higher taxes should reduce the desired capital stock since a tax increase reduces marginal returns but also increases depreciation and interest payment allowances using a panel of chilean corporations this paper estimates a long run demand for capital valid for a general adjustment cost structure changes in the corporate tax rate are found to have no effect on the long run demand for capital furthermore when making investment decisions firms ignore the marginal rates paid by their stockholders suggesting the presence of a corporate veil

dynamic adjustment in us agriculture under climate change we construct a stochastic dynamic dual model to investigate the structural adjustment of two aggregate output and three aggregate input categories in us agriculture under stochastic climatic change more than a century of national annual data 1910 2011 is used in the empirical analysis no constraints on asset fixity are imposed results indicate that with rational expectations both output categories as well as all input categories exhibit quasi fixity in response to market change and stochastic climate change crops adjust more than twice as fast as livestock 49 versus 20 of the way toward their long run equilibrium in one year fertilizer adjusts most rapidly toward equilibrium levels 88 in one year and capital adjusts most slowly 5 in one year labor oscillates rather than converging smoothly toward equilibrium its distance from equilibrium is the same as if it adjusted 59 of the way toward its optimal level in one year failing to anticipate climate change dramatically slows the estimated rate of adjustment for two netputs and modestly speeds the rate for two others thus likely increasing overall adjustment costs failing to account for uncertainty in anticipated climate change has little impact on adjustment rates

foreign direct investment regulations and growth this paper explores the linkage between income growth rates and foreign direct investment fdi inflows so far the evidence is rather mixed as no robust relationship between fdi and income growth has been established the authors argue that countries need a sound business environment in the form of good government regulations to be able to benefit from fdi using a comprehensive data set for regulations they test this hypothesis and find evidence that excessive regulations restrict growth through fdi only in the most regulated economies this result holds true for different specifications of the econometric model including instrumental variable regressions

economic liberalization and price response of aggregate private investment time series evidence from india this paper presents evidence on the effects of economic liberalization of 1991 on the price responsiveness of aggregate private investment in india the wide ranging reforms are expected to increase the price response of private investment due to i the le chatelier effect ii a higher price elasticity of demand for final goods and iii possible relaxation of the credit constraint the empirical results based on alternative specifications estimation methods and sample periods show a dramatic increase in the price response the elasticity of investment with respect to the relative cost of capital has increased five times after the dismantling of the licence raj ce texte examine les effets de la liberalisation de 1991 sur la reponse des prix de l investissement prive agrege en inde on aurait pu s attendre a ce que ces reformes importantes accroissent la reponse des prix de l investissement privea cause i de l effet le chatelier ii de la plus forte elasticite de la demande de biens finaux et iii de la relaxation possible de la contrainte financiere les resultats empiriques fondes sur des specifications des methodes d estimation et des periodes d echantillonnage differentes suggerent un accroissement dramatique dans la reponse des prix l elasticite de l investissement par rapport au cout relatif du capital s est accru par un facteur de 5 apres le demantelement du regime raj

separability and risk in the static household production model the household production model highlights the possible interdependence of consumption and production decisions in the farm household the structure of this interdependence significantly affects the analytics both theoretical and econometric of farm households singh squire and straus 20 have an excellent discussion of this interdependence and its methodological implications a particular type of interdependence called interchangeably recursiveness or separability allows production decisions to be made independently of consumption decisions although the latter depends on the former through the budget constraint this separability is of interest because it justifies a large number of well developed methodological approaches in farm household studies among these being the various duality theory approaches sasaki and maruyama 19 and jorgenson and lau 10 both and independently found the existence of perfectly competitive goods and factor markets to be sufficient for the existence of separability under deterministic conditions while there are a large number of things that can upset this result even in the deterministic setting e g nonhomogeneity of labor as in kuroda and yotopoulos 13 and lopez 14 the recognition of the role of risk appears especially threatening to separability even in a competitive setting as pointed out by barnum and squire 1 if contingent claims markets exist or if households are risk neutral separability exists under risk situations but insurance markets may not exist and for many risks faced by the farming households could not unless heavily subsidized exist furthermore households have been variously shown to be risk averse 15 7 4 roe and graham tomasi 18 utilizing a multiplicative yield risk in the context of a dynamic model concluded that on the whole independence does not hold and estimating equations from certainty theory are not appropriate thus with respect to risk one can say that the die is loaded against separability this paper aims to show that there are risk specifications which allow separability for the household production model even in the absence of the contingent claims market in section ii we introduce the standard model of the household with commercial production it involves a household that produces an output which it partly consumes and partly sells in the market risk enters the revenue function either additively or multiplicatively we then introduce two definitions of separability in the sense of efficiency and in the sense of elasticity we show in section ii that additive risk whether on yield or on monetary revenue allows sepa

empirical estimation and use of risk preferences an appraisal of estimation methods that use actual economic decisions the topic addressed in this paper concerns the conceptual basis estimation procedures and resources required for implementation of methods for estimating risk preferences by observing behavior an attempt is made to review and appraise previous literature as well as to explore some alternative approaches to begin it is important to contrast four general types of empirical settings of interest these are micro farm level macro market or other aggregations descriptive positivistic and prescriptive normative studies the prescriptive or conditionally normative studies seemingly have dominated agricultural economic studies of risk these generally have been micro in nature and have focused on

fdi productivity and financial development this paper examines the effect of foreign direct investment fdi on growth factor accumulation physical and human capital does not seem to be the main channel through which countries benefit f rom fdi instead we f ind that countries with well developed financial markets gain significantly

compensated optimal response under uncertainty in agricultural household models abstract this study derives the qualitative properties of a household s optimal consumption family labour hired labour and non labour input choices under price and or output risk through a slutsky type compensation without imposing any restriction on risk preference structure or production technology these compensated responses provide the underpinning for welfare analysis in agricultural household models under risk the framework for the evaluation of welfare effects of product and factor price interventions in a setting of output and price risk is developed the paper also outlines an empirical model for estimation of the compensated demand and supply responses and for validation of the paper s analytical results

on the interaction of financial frictions and fixed capital adjustment costs evidence from a panel of german firms abstract this paper analyzes the interaction of financial frictions and non convex adjustment costs non convex adjustment costs imply that firm level investment is lumpy firms invest infrequently but each investment is large this allows financial variables to influence investment along two margins they can alter the size of the stock of capital a company wishes to hold in the long run or they can influence the frequency at which investment projects are undertaken the empirical analysis of this paper reveals that finance has nearly no long run influence on the stock of capital in a sample of german companies by contrast the influence of finance on investment decisions is substantial consequently finance primarily affects investment frequencies and financial factors and fundamental capital productivity strongly interact in the determination of investment

user cost elasticity of capital revisited researchers still lack consensus about the size of the user cost elasticity of capital the divergence in prior estimates may have arisen because one of the two strands of research has neglected cointegration among capital its user costs and sales using german firm level panel data i show that estimating a distributed lag model prevalent in prior literature leads to low estimates of the user cost elasticity properly accounting for cointegration in an error correction model yields a much larger point estimate of the price elasticity of capital close to 1 non random sample attrition is found to be relatively unimportant

estimating long run economic equilibria with stochastic trends an asymptotic theory is provided to analyze a menu of currently existing estimators of cointegrated systems we study in detail the single equation ecm seecm approach of hendry our theoretical results lead to prescriptions for empirical work such as specifying seecm s nonlinearly and including lagged equilibrium relationships rather than lagged differences of the dependent variable as covariates simulations support these prescriptions and point to problems of overfitting not encountered in the semiparametric approach of phillips and hansen 1990

a two season agricultural household model of output and price uncertainty abstract this paper presents a two season model of a household s production consumption labor supply and storage decisions in an environment of output and price risk the analytical results in this study are markedly different from those of models prevalent in the mainstream of the agricultural household literature the empirical analysis that uses panel data from a village in india provides support for the theoretical results and underscores the seasonal dimension of the farmers choice problems the results also show that ignoring risk or risk averse preferences may introduce substantial downward bias in optimal response estimates

leaving teaching in the uk a duration analysis in this paper the authors analyze the decision by teachers to leave the profession their results affirm the importance of relative earnings in the tenure and turnover decisions of teachers the econometric modeling approach used yields important insights into the appropriateness of adopting a flexible semiparametric specification of the duration dependence structure and of the unobserved heterogeneity distribution in duration models copyright 1995 by royal economic society