an empirical investigation of the effects of rounding on the spf probabilities of decline and output growth histograms i consider the possibility that respondents to the survey of professional forecasters round their probability forecasts of the event that real output will decline in the future as well as their reported output growth probability distributions i make various plausible assumptions about respondents rounding practices and show how these impinge upon the apparent mismatch between probability forecasts of a decline in output and the probabilities of this event implied by the annual output growth histograms i find that rounding accounts for about a quarter of the inconsistent pairs of forecasts

explanations of the inconsistencies in survey respondents forecasts a comparison of the point forecasts and the probability distributions of inflation and output growth made by individual respondents to the us survey of professional forecasters indicates that the two sets of forecasts are sometimes inconsistent we evaluate a number of possible explanations and find that not all forecasters update their histogram forecasts as new information arrives this is supported by the finding that the point forecasts are more accurate than the histograms in terms of first moment prediction c 2009 elsevier b v all rights reserved

plant closings and exit behaviour in declining industries the plant closing and exit strategies of firms operating in a declining industry are examined a dynamic game theoretic model is utilized the perfectness criterion is used to restrict the set of nash equilibria there are two key equilibrium results first when firms have the same number of plants high cost plants close before lower cost plants second a larger firm i e a firm operating more plants begins closing plants before a smaller firm as long as cost differences are not large copyright 1988 by the london school of economics and political science

comparing regional technical efficiency in uk manufacturing plants the case of northern ireland 1974 1995 this paper uses estimates based on the stochastic frontier production function approach applied to more than 200 four digit uk manufacturing industries covering the period 1974 95 it is shown that manufacturing plants in northern ireland on average operated at lower levels of technical efficiency when compared to their counterparts in other regions of the uk and especially plants located in south east england this lower level of efficiency in the province is analysed both at the aggregate level and the industry level at the industry level the province has fewer plants exhibiting the highest levels of efficiency within most industries and too few plants open and close to cleanse manufacturing of the worst plants and those plants that do open and close often do not have efficiency levels such as to bring about improvements to the aggregate efficiency level the major conclusion is that northern ireland needs to reduce the long tail of weaker plants that tend to drag down average efficiency one w

entry deterrence in a finitely lived industry the ghemawat and nalebuff 1985 exit model is extended to include an entry stage demand is high at the time of entry but is expected to eventually decline it is shown that equilibrium entry decisions may be critically affected by the prospect of a future decline in demand even when the latter is scheduled to occur in the arbitrarily distant future or is expected to be of arbitrarily short duration in all cases a unique perfect equilibrium for the entry game exists this equilibrium exhibits counterintuitive features for example the incumbent s and sometimes even the industry s output may be larger if the incumbent is a monopoly than if faced with a potential entrant

a note on the relation between size ownership status and plant s closure sunk costs vs strategic size liability abstract in this paper we test both sunk cost and strategic size liability predictions by looking at the exit behavior of a sample of italian manufacturing plants for this purpose we focus on plants size and ownership status in particular we distinguish independent plants from plants that belong to multi unit organizations as to these latter we further distinguish state owned from privately owned plants we also consider the impact upon the likelihood of closure of the size and nationality of the parent firm in addition and contrary to previous empirical work data allow us to control for differences in the cost structure of plants namely we use technology adoption dummies to take into account plants technological heterogeneity

forecast encompassing tests and probability forecasts we consider tests of forecast encompassing for probability forecasts for both quadratic and logarithmic scoring rules we propose test statistics for the null of forecast encompassing present the limiting distributions of the test statistics and investigate the impact of estimating the forecasting models parameters on these distributions the small sample performance is investigated in terms of small numbers of forecasts and model estimation sample sizes we show the usefulness of the tests for the evaluation of recession probability forecasts from logit models with different leading indicators as explanatory variables and for evaluating survey based probability forecasts copyright c 2010 john wiley sons ltd

exit with multiplant firms using an extension of ghemawat and nalebuff s 1985 model i analyze the outcome of industry decline when firms have multiplant operations the analysis reveals that no natural generalization of their strong empirical prediction that the larger of two single plant duopolists exits first holds in a multiplant setting the results also highlight a number of factors that affect the pattern of capacity removal during industry decline and lead to a discussion of the strategic implications of firms plant size choices in general the factors determining the pattern of capacity reduction can be quite complex and prediction in such settings often requires intimate knowledge of industry structure

on industry life cycles delay entry and shakeout in beer brewing abstract this paper proposes a new explanation for industry shakeout an event evident in the life cycle of many industries in which the number of firms drops significantly in a short interval of time based on an in depth analysis of the shakeout in the united states beer brewing industry between 1880 and 1890 we propose that industry shakeouts naturally follow periods of mass entry by firms similar patterns are evident in two other industries we briefly examine the us automobile and tire industries while entry rates fluctuate broadly in all these industries we find that the timing of exit for a given cohort of entrants is remarkably similar over time the exit hazard rate is peaked in the first two years of every cohort s life and drops dramatically to low and stable levels for subsequent ages in this sense mass exit follows mass entry and does not require a deep explanation it is the mass entry evident in the data for these industries that requires an explanation we propose a theoretical model of information accumulation to explain entry into an industry entrepreneurs are uncertain about the profitability of the industry and this uncertainty is resolved through sufficient accumulation of information regarding the fortunes of incumbent firms delay in entry occurs solely due to the fact that it takes time to accumulate sufficient information to support more entry the resulting entry pattern from simulations of the model looks much like that observed in the industries we study

technology use and plant closure abstract this paper aims to contribute to the empirical literature on industrial demography it analyzes a stratified sample of the italian metalworking industry composed of 810 plants with more than 10 employees it considers plant closure over the period 1989 1997 probit type econometric models are estimated in order to provide evidence on the explanatory factors of the likelihood of closure with special attention being devoted to technological variables the paper extends previous empirical results along a number of directions first in spite of the fact that use of advanced technologies especially in the design and engineering sphere favors survival remarkable differences do emerge between different individual technologies ceteris paribus plants having adopted technologies characterized by sizable product specific investments turn out to be less likely to be shut down in addition the ownership status of plants is found to influence the probability of closure likelihood of survival is lower for plants that belong to multi unit organizations than for those owned by single plant firms even though the difference between the two plant categories decreases with plant size altogether such results point to the relevance of irreversibility and sunk costs for understanding exit behavior

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

new firm survival new results using a hazard function a limitation of audretsch s 1991 study of new firm survival was the level of aggregation to industries this precluded linking establishment specific characteristics such as organizational structure and size to post entry performance the purpose of this paper is to relate the post entry performance of individual establishments not only to their technological and market structure environments but also to establishment specific characteristics we do this by estimating a hazard duration function for more than 12 000 individual establishments in u s manufacturing started in 1976 by tracking their subsequent performance over a ten year period we conclude that establishment specific characteristics which audretsch was not able to capture in his earlier study play an important role in shaping the exposure to risk confronting new establishments copyright 1995 by mit press

comparing the point predictions and subjective probability distributions of professional forecasters we use data from the survey of professional forecasters spf to compare point predictions of gross domestic product gdp growth and inflation with the subjective probability distributions held by forecasters we find that most spf point predictions are quite close to the central tendencies of forecasters subjective distributions tend to be asymmetric with spf forecasters tending to report point predictions that give a more favorable view of the economy than do their subjective means medians modes

exit from the hospital industry we study the exit of hospitals from the market for inpatient services more generous hospital reimbursement significantly reduces the probability of exit throughout the 1990s conditional on reimbursement levels hospital efficiency was not a significant determinant in the early 1990s but in the mid to late 1990s less efficient hospitals were significantly more likely to exit throughout the period high tech services increased the probability of survival and for profit hospitals were more likely to exit the role of medicare as a determinant of exit became less important in the latter half of the 1990s

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

impact of government intervention on employment change and plant closure in northern ireland 1983 97 harris r and trainor m 2007 impact of government intervention on employment change and plant closure in northern ireland 1983 97 regional studies 41 51 63 financial assistance to manufacturing industry is an important element of the industrial development policy in northern ireland this paper uses the individual plant level records of the annual respondents database ard for the northern ireland manufacturing sector 1983 97 matched to the plant level details of financial support provided by the industrial development board to examine the effect of selective financial assistance sfa on employment change and plant closure it is found that sfa concentrated on protecting existing rather than new enterprises in terms of employment change using a hazard model it is found that the receipt of sfa significantly reduced the probability of plant closure by on average between 15 and 24 harris r et trainor m 2007 l impact de l intervention gouvernementale sur l evolution de l emploi et la fe

the effect of the conservation reserve program on rural economies deriving a statistical verdict from a null finding this article suggests two methods for deriving a statistical verdict from a null finding allowing economists to more confidently conclude when not significant can be interpreted as no substantive effect the proposed methodologies can be extended to a variety of empirical contexts where size and power matter the example used to demonstrate the methods is the economic research service s 2004 report to congress that was charged with statistically identifying any unintended negative employment consequences of the conservation reserve program crp the report failed to identify a statistically significant negative long term effect of the crp on employment growth but the authors correctly cautioned that the verdict of no negative employment effect was only valid if the econometric test was statistically powerful we replicate the 2004 analysis and use new methods of statistical inference to resolve the two critical deficiencies that preclude estimation of statistical power a positing a compelling effect size and b providing an estimate of the variability of an unobserved alternative distribution using simulation methods we conclude that the test used in the report had high power for detecting employment effects of 1 or lower resulting from the crp equivalent to job losses reducing a conservative estimate of environmental benefits by one third

foreignness and exit over the life cycle of firms received wisdom indicates that owing to a liability of foreignness foreign firms exit with greater likelihood than do comparable domestic firms and that the difference attenuates as firms age and overcome the liability we posit that foreign firms are also intrinsically more volatile and footloose than domestic ones and that this leads to an increasing divergence between the exit rates of foreign and domestic firms empirically we find that the difference between exit rates of foreign firms and domestic firms increases with age as exit of foreign firms increases with age while that of purely domestic firms decreases exit rates of domestic based multinationals do not change significantly with age they are between those of foreign and purely domestic firms but are closer to the latter this suggests that the footlooseness observed for foreign firms is due to foreignness more than to multinationality

the devolution of declining industries in declining industries capacity must be reduced in order to restore profitability who bears this burden where production is all or nothing there is a unique subgame perfect equilibrium the largest firms exit first ghemawat and nalebuff 1985 in this paper firms continuously adjust capacity again there is a unique subgame perfect equilibrium all else equal large firms reduce capacity first and continue to do so until they shrink to the size of their formerly smaller rivals intuitively bigger firms have lower marginal revenue and correspondingly greater incentives to reduce capacity this prediction is supported by empirical findings

the survival of new plants start up conditions and post entry evolution abstract this paper examines the longevity of entrants we find size to be an important determinant of the chances of survival this being particularly relevant to de novo entrants as compared with entry by established firms current size is also found to be a better predictor of failure than initial size moreover our findings indicate that after controlling for size differences past growth matters for survival suggesting a partial adjustment process for firm size in the post entry period finally new plants are more likely to live longer if they enter growing industries or industries with little entry activity

entry and exit over the industry life cycle this article presents a theoretical model of the rivalry between two firms in a market that undergoes a life cycle of growth and eventual decline firms in this market have the option of exit and reentry in the equilibrium for the growth phase high entry costs can act like high exit costs thereby conveying a commitment advantage for some parameter configurations this advantage is sufficient to enable a high costfirm to preempt its lower cost rival during the decline phase the smaller duopolist is able to outlast its rival provided that the smaller firm s reentry costs are positive

evaluation of spatial effects of capital subsidies in the south of italy de castris m and pellegrini g evaluation of spatial effects of capital subsidies in the south of italy regional studies the spatial effects of capital subsidies are neglected in the literature even if several industrial policies have a strong spatial dimension this study disentangles the spillovers generated by subsidized firms from the spatial attraction across neighbour s areas that cannot be attributed to incentive the presence of specific spatial effects is tested on the reduced form of a spatial autoregressive model evaluating the implicit common factor restriction the empirical analysis considers the main regional policies in the period 1996 2001 in the south of italy the results suggest the presence of a modest spatial crowding out where subsidized regions attract employment from neighbouring areas de castris m et pellegrini g une evaluation des effets geographiques des subventions d equipement dans le sud de l italie regional studies la documentation ne fait aucune attention aux effe

hypotheses testing in economic science formulating and testing hypotheses is the heart of the scientific method to most agricultural economists yet formal hypotheses testing is now rarely found in agricultural economics literature king p 840 this note identifies some reasons why formal hypotheses are not used more widely in economic science it also suggests future directions for hypotheses testing various philosophies of science define the role and use of hypotheses the most important being logical positivism it holds that the approximate nature of reality can be learned from observing behavior in a world of unknown and unknowable true causal relationships because true causal relationships never can be observed our estimated economic expressions always contain stochastic error along with systematic relationships economic science as an evolving set of unrejected hypotheses is insufficiently descriptive of the real world to allow us to prespecify our empirical models precisely this raises questions about using statistical procedures for selecting as opposed to testing hypotheses