the less volatile u s economy a bayesian investigation of timing breadth and potential explanations using a bayesian model comparison strategy we search for a volatility reduction in u s real gross domestic product gdp growth within the postwar sample we find that aggregate real gdp growth has been less volatile since the early 1980s and that this volatility reduction is concentrated in the cyclical component of real gdp sales and production growth in many of the components of real gdp display similar reductions in volatility suggesting the aggregate volatility reduction does not have a narrow source we also document structural breaks in inflation dynamics that occurred over a similar time frame as the gdp volatility reduction

distribution of research gains in multistage production systems research irrespective of the incidence of the levy and benefits no longer is valid we have no disagreement with this important observation but we are concerned about the lack of reliable estimates of the elasticity of substitution building on muth s analysis for which we suggest some changes we explore further the sensitivity of the effects of the distribution of benefits of research to different ways in which research can impact on a multistage production system and to the effects of the elasticities

religiosity and earnings management international evidence from the banking industry using an international sample of banks we study how differences in religiosity across countries affect earnings management given that religiosity is a major source of morality and ethical behavior it may reduce excessive risk taking and act as deterrence for earnings manipulations therefore we predict lower earnings management in societies that have higher religiosity consistent with expectations our cross country analysis indicates that religiosity is negatively related to income increasing earnings management for loss avoidance and just meeting or beating prior year s earnings we also find that religiosity reduces income increasing earnings management through abnormal loan loss provisions in additional tests we document that religiosity increases the information value of bank earnings with both earnings persistence and cash flow predictability being enhanced by higher religiosity for the crisis period analysis i e 2007 2009 our evidence shows that banks in countries with higher religiosity exhibit lower probability of reporting asset deterioration and lower probability of having poor performance

losses from effluent taxes and quotas under uncertainty recent theoretical papers by adar and griffin j environ econ manag 3 178 188 1976 fishelson j environ econ manag 3 189 197 1976 and weitzman rev econ studies41 477 491 1974 show that different expected social losses arise from using effluent taxes and quotas as alternative control instruments when marginal control costs are uncertain key assumptions in these analyses are linear marginal cost and benefit functions and an additive error for the marginal cost function to reflect uncertainty in this paper empirically derived nonlinear functions and more realistic multiplicative error terms are used to estimate expected control and damage costs and to identify empirically the mix of control instruments that minimizes expected losses

public regulation of agricultural biotechnology field tests economic implications of alternative approaches federal oversight of agricultural biotechnology field testing is based on public concerns that unknown consequences could arise from such tests and that firms may not adequately consider the public consequences of their research and development activities in this paper four general types of ex ante and ex post approaches to manage public risks from field testing are explored the analysis shows that the approaches are least effective at facilitating the research process yet controlling public risks when the research firm is small in size and potential damages exceed the value of the firm

evaluating generic milk promotion effectiveness with an imperfect competition model a framework is proposed for incorporating the degree of market competition in evaluating milk promotion effectiveness the imperfect competition model allows simultaneity in price and quantity with an endogenous fluid milk premium the model s usefulness is demonstrated with japanese generic milk promotion data results show a conventional exogenous price or exogenous premium model will underestimate returns to milk promotion

distribution of research gains in multistage production systems comment in a recent paper freebairn davis and edwards hereafter fde have examined an interesting and neglected aspect of the distribution of benefits from research agricultural production is seen to comprise three stages input supply farm production and farm to retail marketing fde have explored the distribution of the benefit stemming from a downwards shift in the supply function at any one of the stages they conclude these benefits are distributed according to the elasticities of consumer demand and supply facing each stage furthermore under the special assumptions they employ this distribution is independent of which of the three supply functions is shifted by research they conclude albeit with due caution that the choice of agricultural research projects should not be limited to farm production research alone especially in view of the cost shares of purchased inputs and marketing services in the retail value of food in fact they argue they farmers may receive greater benefits from off farm oriented research than from farm oriented research p 39 this finding has potentially important implications for agricultural research policy it immediately spurs one to ask whether research funded by the farmer or the fisc might have neglected opportunities for research related to farm inputs or marketing to reach their result fde assume a all supply and demand curves are linear b research induces parallel shifts in supply curves c farmers cannot substitute nonfarm inputs for inputs supplied by farmers in production of the farm product and d marketing firms cannot substitute marketing inputs for raw farm products in the production of retail commodities the purpose of this note is to emphasize the importance of these elasticities of factor substitution in determining the distribution of research benefits between the three stages to do this we use a simple but general two factor model in which we focus attention on the elasticity of factor substitution between marketing services and raw farm products in the third stage marketing this model is not restricted to linear supply and demand curves nor to an elasticity of substitution of zero we maintain the assumptions of parallel shifts of supply curves induced by research and a perfectly elastic supply of marketing services in a revision of fde s application to the u s hog industry the distribution of research benefits is shown to depend crucially on the elasticity of factor substitution their result that such distribution is independent of the stage in which research shifts the supply curve downwards follows only for the special case in which that elasticity is zero this is clearly a restrictive assumption a reexamination of some of the policy issues raised by fde once the assumption is relaxed would seem to be warranted

a century of research on agricultural markets this article provides a perspective on major innovations in research on agricultural markets over the past century we review research on market structure and performance vertical coordination arrangements and institutions for producer collective action contributions to empirical modeling of agricultural price determination and marketing margins are also evaluated as are innovations in research on spatial market relationships and the role of storage finally we discuss contributions to understanding market information systems and the functioning of market based mechanisms for agri

industrialization and consolidation in the u s food sector implications for competition and welfare good sources for information on recent developments in food market structure include barkema drabenstott and welch u s department of agriculture 1996b and rogers my objective is not to add to this literature but rather to consider what we have learned as a profession about the rapid consolidation in food processing and distribution what are its implications for market power economic efficiency and the distribution of economic welfare among producers consumers and marketers

an equilibrium displacement approach to oligopoly market analysis an application to trade in the korean infant formula market this article uses an equilibrium displacement model edm to assess the impact of a change in trade policy in the korean infant formula market that is assumed to be oligopolistic domestic oligopolists compete in a market for a homogenous good with importing firms who enjoy the same level of market power as the domestic producers within an edm framework we investigate how the market adjusts to a new equilibrium in response to an external policy shock that improves access to foreign goods our empirical work consists of two steps we first econometrically estimate the market demand elasticity and market power parameter then using these estimates we simulate our edm model to assess the distributional effects of tariff cuts and other changes in marginal cost simulation results show that with a lower market price and increased consumption the change in consumer surplus resulting from tariff reduction is unambiguously positive but that the change in social welfare can be in either direction depending on who receives market rents associated with imports when importing firms are domestic the domestic welfare change is definitely positive however in the case of foreign importing firms the direction of the welfare change crucially depends on the demand elasticity

risk perceptions endogenous demand and regulation of agricultural biotechnology abstract this paper presents a dynamic model of optimal product regulation in which consumer acceptance and the rate of product innovation are included as endogenous variables insights derived from the model are used to critically evaluate recent policy controversies regarding regulation of agricultural biotechnology the results of the analysis indicate that if regulatory policy significantly affects consumer risk perceptions more stringent regulatory requirements than those based solely on scientific risk assessment may be economically efficient when demand is endogenously affected by regulatory policies industry may also benefit from stronger regulations even if this results in a significant increase in product development costs

testing hypotheses about firm behavior in the cigarette industry data on the effects of excise taxes are used to investigate the level of competition in the cigarette industry a lower bound on the numbers equivalent of firms in the context of the conjectural variations model is derived and estimated results point to at least a moderately high level of competition and in particular allow for the rejection of the perfect cartel model this paper relies on comparative statics results and hence circumvents recent criticisms of a study of monopoly behavior in the cigarette industry

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

family labor supply and aggregate fluctuations abstract this paper considers an economy which is populated by a continuum of identical families consisting of two members the two members have different productivities and the family faces a fixed utility cost if both members supply labor simultaneously although both family members have the same preferences they display very different elasticities of labor supply a real business cycle model is calibrated and it is seen that this cross sectional heterogeneity results in interesting forms of aggregation bias

measurement of monopoly behavior an application to the cigarette industry a simple scheme is proposed to measure monopoly pricing behavior the coefficient of the tax rate term in a price equation identifies the ratio of price to marginal cost no direct measurement of costs is required so a major problem for other empirical studies of monopoly is avoided empirical results for cross section time series data support rejection of atomistic competition but also provide evidence against the operation of an effective cartel in the cigarette industry the model represents an alternative interpretation of related results in a recent paper by barzel application of the methodology to other markets is feasible

environmental policy based on strict liability implications of uncertainty and bankruptcy a firm level model is developed to analyze the impacts of bankruptcy and uncertain firm wealth on incentives for safety under a strict liability rule future damages and wealth are uncertain and a firm s income earning activities that possibly create damages are incorporated into the model this analysis shows that firms do not always undertake more of a risky activity than is socially desirable for the extremely hazardous industry case larger firms always undertake less of a risky activity than smaller firms for the cyclical industry case larger firms do not always conduct less of a risky activity than smaller firms

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

why has poland avoided the price liberalization trap the case of the hog pork sector price liberalization in the agri food economy in the transition economies is likely to slip into a trap food prices rocket up consumption declines but food supply does not catch up and even contracts however during the transition period following the 1989 price liberalization the polish hog pork sector succeeded in avoiding this trap by conducting market structure and econometric analysis this article looks for the reasons for this success in the polish hog pork sector the restructuring of state owned enterprises and the emergence of private firms introduced an effective price transmission mechanism between the processing retailing and farm levels this mechanism allowed farm supply to respond to changed demand and to take advantage of increased retail prices such a relatively efficient marketing system was made possible by a relatively stable macroeconomic environment and limited government intervention

a general equilibrium perspective on structural change in the rural economy a research study explored innovative methods for constructing computable general equilibrium cge models for rural structural change and development policy analysis these are the make matrix the personal consumption goods industrial goods matrix the occupation industry matrix and the map distance matrix modeling the cge for rural areas requires particular attention to the results of econometric tests on economics theories especially since rural communities are demographically and economically different from urban regions

religion and the method of earnings management evidence from china previous studies argue that religious firms are more ethical and thus engage less in accrual earnings management at odds with the ethical view we use a sample of chinese listed firms and show that firms in religious regions use more real earnings management we postulate that besides ethics religion also proxies for risk aversion which motivates firms to substitute accrual earnings management with real earnings management consistent with this view we show that the positive negative association between religiosity and real accrual earnings management is more pronounced for firms with lower litigation risk and for firms with less reputable auditors in addition we use a mediation model introduced by baron and kenny j pers soc psychol 51 6 1173 1182 1986 to show that religiosity affects earnings management through the channel of risk aversion we conclude that firms choose real earnings management over accrual based earnings management because of risk aversion rather than ethical reasons

value destruction and financial reporting decisions the comprehensive survey reported here allowed analysis of how senior u s financial executives make decisions related to performance measurement and voluntary disclosure chief financial officers were asked what earnings benchmarks they cared about and which factors motivated executives to exercise discretion even sacrifice economic value to deliver earnings these issues are crucially linked to stock market performance the results show that the destruction of shareholder value through legal means is pervasive perhaps even a routine way of doing business indeed the amount of value destroyed by companies striving to hit earnings targets exceeds the value lost in recent high profile fraud cases

multivariate estimates of the permanent components of gnp and stock prices the economic assumption that a present value relation holds between consumption and income and between stock prices and dividends or the statistical assumption that the consumption income ratio and the dividend price ratio are stationary imply that the permanent or random walk component in each series of a pair must be the same as the permanent component in the other series of a pair either assumption then allows us to estimate the variance of the permanent component of one series gnp stock prices from the variance of the permanent component of the other consumption dividends or from the covariance of the two series permanent components this paper presents such estimates and finds that the permanent components are about half those estimated by similar univariate methods a series of recent papers has examined the importance of a potential unit root to the behavior of real gnp campbell and mankiw 1986 1987 cochrane 1986 clark 1987 and stock prices fama and french 1986 lo and mai if by 0 the series is stationary the response can be any real number which is the innovation in these estimates instead of forcing us to ask the dichotomous question is there a unit root or not they allow us to continuously measure the importance of a potential unit root the actual estimating technique used in these papers varied somewhat cochrane poterba and summers and lo and mai if a series is stationary the variance of k differences will tend to a precursor to this paper appeared under the title spectral density estimates of unit roots we thank masanao aoki lam hansen masao ogaki and chris sims for helpful suggestions the computer programs and data used in this paper are available on request from the authors

risk rationality and religious portfolios i introduction this paper builds on two assumptions the first self evident the second more controversial together they yield a provocative theory of religious behavior and organization the first assumption is that religion involves a great deal of risk those who engage in religious acts cannot know that their efforts will have the desired effects religious acts thus have the character of risky investments exacting resource costs in return for uncertain rewards the second assumption is that people choose their religious behavior rationally weighing the costs and benefits of religious behavior and seeking to limit the risk associated with religious choices churches and other religious firms employ a variety of institutional arrangements that mitigate religious risk most arrangements follow one of two major risk management strategies which in turn give rise to two different styles of religion one centers on collective production the other on private production and diversified consumption collective religion is congregationally oriented and tends to employ exclusivity and costly prohibitions to limit free riding and maintain high levels of commitment private religion is less susceptible to free rider problems but also less capable of generating commitment private religion tends to center on client practitioner relationships or fee for service transactions and consumers tend not to form exclusive attachments to a single religious firm outright payments for goods and services overshadow costly demands for an austere deviant or sacrificial life style a large body of descriptive historic and anecdotal evidence confirms these predictions and illustrates their range of application the concluding sections of the paper apply the proposed theory to a series of contrasts asian versus western religion mainstream churches versus exclusive sects new age versus standard american religion and greco roman paganism versus judeo christian monotheism ii religious commodities and the problem of risk economic models of religious behavior typically begin by assuming that individuals allocate their time and money so as to maximize their utility from religious commodities r and all other secular commodities s the production of religious commodities depends on personal inputs of time and money but may also depend on past experience religious human capital styles of behavior such as diet dress and sexual practices and the time and money inputs of others such as fellow church members see azzi and ehrenberg 1975 sullivan 1985 and iannaccone 1992 for formal analyses and empirical tests with the exception of durkin and greeley 1991 and montgomery 1992 previous models take belief as given thereby sidestepping the issue of risk but religious commodities do involve risk sermons and scriptures do emphasize the need for faith and people do wrestle with and often yield to doubt insights from secular markets and the economics of uncertainty explain a broad range of behaviors and institutions that arise in response to religious risk in particular they highlight two different risk reducing strategies one of which centers on exclusivity and collective production the other centers on diversification and private production managing risk through collective action religious congregations the would be believer faces a situation not unlike the would be used car buyer used cars are classic experience goods nelson 1970 since potential buyers are hard pressed to determine car quality in advance of purchase sellers thus have an incentive to overstate the value of their merchandise and to disguise its true nature used car buyers in turn are aware of the sellers incentive to misrepresent their products and so will attempt to increase their stock of information and or reduce their risk in many ways they may demand guarantees seek information from third parties investigate the seller s reputation and so forth

does religion mitigate earnings management evidence from china using a sample of 11 357 firm year observations from the chinese stock market for the period of 2001 2011 we investigate whether and how religion can mitigate earnings management specifically based on geographic proximity based religion variables we provide strong and robust evidence to show that religion is significantly negatively associated with the extent of earnings management suggesting that religion can serve as a set of social norms to mitigate corporate unethical behavior such as earnings management our findings also reveal that the negative association between religion and earnings management is less pronounced for firms with closer distance to the regulatory centers than for their counterparts implying the substitutive effects between religion and the distance to regulators the proxy for regulatory intensity on mitigating earnings management the above results are robust to different measures of earnings management various religion variables and a variety of sensitivity tests

optimal generic advertising in an imperfectly competitive food industry with variable proportions abstract this paper determines the impact of food industry market power on farmers incentives to promote in a situation where funds for promotion are raised through a per unit assessment on farm output and food industry technology is characterized by variable proportions specifically building on earlier studies by azzam am j agric econ 80 1998 76 and holloway am j agric econ 73 1991 979 muth s oxford econ papers 16 1965 221 model is extended to consider the farm level impacts of generic advertising when downstream firms possess oligopoly and or oligopsony power and advertising expenditure is endogenous at the market level applying the model to the us beef industry we find that for plausible parameter values market power reduces farmers incentives to promote however the disincentive is moderated by factor substitution and effectively vanishes as the factor substitution elasticity approaches the retail demand elasticity this suggests that the dorfman steiner theorem suitably modified to account for factor substitution suffices to indicate optimal advertising intensity in the us beef sector

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

the farm retail price spread in an imperfectly competitive food industry in a previous article in this journal gardner investigated the effects of three distinct forces affecting food system equilibria shifts in retail demand shifts in farm commodity supply and shifts in marketing input supply he derived comparative static predictions about how the quotient of retail and farm prices the retailfarm price ratio would adjust to changes in each of these exogenous effects the investigation was conducted within a framework that

welfare implications of oligopoly in u s food manufacturing a statistical procedure is used to show that increased concentration in u s food manufacturing industries is associated with increased total input productivity a price leadership model is employed in order to estimate total welfare loss if an elasticity of 1 is assumed deadweight loss to society is estimated at 0 5 of food value if an elasticity of 0 5 is assumed total loss to consumers amounts to 6 11 of food value which is 10 billion in 1975 the increase in total factor productivity which is linked to concentration is roughly sufficient to offset the entire loss to consumers

earnings management and earnings quality abstract viewing the detection of earnings management from the perspective of a crime scene investigator sheds new light on prior research on earnings management and its close relative earnings quality the works of ball and shivakumar 2008 earnings quality at initial public offerings journal of accounting and economics in press and teoh et al 1998 earnings management and the subsequent market performance of initial public offerings journal of finance 53 1935 1974 are used to illustrate the application of seven components of a crime scene investigation to earnings management research

dynamic oligopoly in the rice export market a linear quadratic dynamic oligopoly model is used to estimate the competitiveness of the rice export market the model nests various market structures using either open loop or feedback strategies the estimated feedback model implies a less competitive market structure than the estimated open loop model the rice export market is oligopolistic but it is closer to competitive than collusive copyright 1989 by mit press

the integration of the market for soybeans and soybean products abstract this article addresses the question of whether soybeans soybean meal and soybean oil produced in the usa and exported were part of a single world geographic market during the decade of the 1980s an answer to this question is sought using an approach to defining a geographic market based on the notion of instantaneous causality the empirical results based on prices for soybeans soybean meal and soybean oil for three spatially diffuse locations suggest that there was but a single identifiable world market for these commodities over the period of study this has implications for the continued presence of soybean production subsidies and discussions on international agreements designed to reduce or eliminate these subsidies

the rewards to meeting or beating earnings expectations abstract this paper finds that firms that meet or beat current analysts earnings expectations mbe enjoy a higher return over the quarter than firms with similar quarterly earnings forecast errors that fail to meet these expectations further such a premium to mbe although somewhat smaller exists in the cases where mbe is likely to have been achieved through earnings or expectations management the findings also indicate that the premium to mbe is a leading indicator of future performance this premium and its predictive ability are only marginally affected by whether the mbe is genuine or the result of earnings or expectations management

does religion mitigate tunneling evidence from chinese buddhism in the chinese stock market controlling shareholders often use inter corporate loans to expropriate a great amount of cash from listed firms through a process called tunneling using a sample of 10 170 firm year observations from the chinese stock market for the period of 2001 2010 i examine whether and how buddhism china s most influential religion can mitigate tunneling in particular using firm level buddhism data measured as the number of buddhist monasteries within a certain radius around chinese listed firms registered addresses this study provides strong evidence that buddhism intensity is significantly negatively associated with tunneling this finding is consistent with the view that buddhism has important influence on corporate behavior and can serve as a set of social norms and or an alternative mechanism to mitigate controlling shareholders unethical tunneling behavior in addition my findings also reveal that the negative association between buddhism intensity and tunneling is attenuated for firms that have high analyst coverage the results are robust to various measures of buddhism intensity and a variety of sensitivity tests

does religion matter to owner manager agency costs evidence from china in china buddhism and taoism are two major religions using a sample of 10 363 firm year observations from the chinese stock market for the period of 2001 2010 i provide strong and robust evidence that religion i e buddhism and taoism on the whole is significantly negatively associated with owner manager agency costs in particular using firm level religion data measured by the number of religious sites within a radius of certain distance around a listed firm s registered address i find that religion is significantly negatively positively associated with expense ratio asset utilization ratio the positive reverse proxy for owner manager agency costs this finding is consistent with the following view religiosity has remarkable effects on the way how an individual thinks and behaves and thereof can curb managers from unethical business practices moreover my findings suggest that the negative association between religion and owner manager agency costs is attenuated for firms with strong external monitoring mechanisms such as higher marketization and high quality auditors furthermore after separating buddhism from taoism my finding indicates that above conclusions are only available for buddhism suggesting that different religions may have asymmetric influence on owner manager agency costs above results are robust to various measures of religiosity and a variety of robustness checks

straight time and overtime in equilibrium abstract we formulate an equilibrium model of straight time and overtime wages by imposing restrictions on agents consumption sets and using a commodity space that includes employment lotteries we extract some time series implications from a linear quadratic approximation to our model evaluated at particular parameter values we use our model informally to interpret some features of observed time series for wages and employment

production growth and business cycles ii new directions abstract this paper outlines new directions for investigations of real business cycle models consideration of stochastic growth of exogenous and endogenous forms analysis of suboptimal outcomes arising due to externalities of distorting taxes and implications of labor market heterogeneity

the dynamic relationship between permanent and transitory components of u s business cycles this paper investigates the dynamic relationship between permanent and transitory components of post war u s business cycles we specify a time series model for real gnp and consumption in which the two share a common stochastic trend and transitory component and markov regime switching is used to model business cycle phases in these components the timing of switches between business cycle phases is allowed to differ across the permanent and transitory components we find strong evidence of a lead lag relationship between the switches in the two components specifically switches in the permanent component leads switches in the transitory component when entering recessions

structural breaks cointegration and the farm retail price spread for lamb this paper examines the farm retail price spread for lamb from monthly uk data for 1979 1993 using cointegration it examines seasonal patterns in producer and retail prices and seeks to identify a long run relationship between them results show that a long run relationship exists and that the direction of granger causality is from retail to producer prices lamb prices are therefore set in the retail market results also show that there is a structural break in the relationship in january 1990 when the price increases this coincides exactly with a change in policy

money prices interest rates and the business cycle the mechanisms governing the relationship of money prices and interest rates to the business cycle are the most studied and most disputed topics in macroeconomics in this paper we first document key empirical aspects of this relationship we then ask how well three benchmark rational expectations macroeconomic models a real business cycle model a sticky price model and a liquidity effect model account for these central facts while the models have diverse successses and failures none can account for the fact that real and nom inal interest rates are inverted leading indicators of real economic activity that is none of the models captures the post war u s business cycle fact that a high real or nominal interest rate in the current quarter predicts a low level of real economic activity two to four quarters in the future i introduction the positive correlation of monetary aggregates and real economic activity over the course of many business cycles is a key empirical fact about the u s economy indeed the dynamic dimension of this covariation is so strong and stable that a monetary variable has long been included in the commerce department s index of leading economic indica tors while this pattern of cyclical comovement is widely agreed upon its interpretation is not some macroeconomists view money as purely passive with a positive response to varying levels of economic activity producing the positive correlation others view changes in the quantity of money as an important perhaps dominant source of economic fluctua tions frequently the real effects of monetary changes are suggested to arise from frictions in commodity labor or financial markets in economic theories that describe the influence of these frictions the transmission mechanism from monetary changes to real activity is typically viewed as involving interest rates and the price level the primary goal of this paper is to evaluate three models that explain the link between money prices interest rates and the business cycle we do this in three steps first we docu ment the cyclical behavior of these variables in the united states over the postwar period second we construct three quantitative rational expectations models of macroeconomic activity i a real business cycle model with endogenous money ii a model of commodity market frictions with mon etary non neutralities arising from gradual adjustment of goods prices and iii a model of financial market frictions with monetary non neutralities arising from gradual adjust ments of portfolios finally we compare the models predic tion for the business cycle behavior of money prices and interest rates with the data in exploring the predictions of these models we take the stock of money to be one of several exogenous variables in the system all of our models are capable of generating a forecasting role for money relative to real economic activity similar to that found in the u s data in the real business model monetary changes can forecast real activity because productivity is related to many underlying sources of shocks and because these real shocks also affect the money stock in the models with sticky prices and liquidity effects short hand names for the models with frictions in the com modity and financial markets monetary changes have an additional direct positive effect on aggregate output the outline of the paper is as follows section ii describes the data and documents its business cycle characteristics section iii outlines the three macroeconomic models and develops the particular quantitative versions of the models used in our analysis our main empirical results are pre sented in section iv and section v summarizes our results and concludes

does religion matter in corporate decision making in america abstract we examine how corporate culture influences firm behavior prior research suggests a link between individual religiosity and risk aversion we find that this relationship also influences organizational behavior firms located in counties with higher levels of religiosity display lower degrees of risk exposure as measured by variances in equity returns or returns on assets they exhibit a lower investment rate and less growth but generate a more positive market reaction when they announce new investments finally chief executive officers are more likely to join a firm with a similar religious environment as in their previous firm when they switch employers

the impact of the export enhancement programme on the soybean market in the united states this study endeavours to understand the nature and extent of the market interrelationships between the price of soybeans the price of soybean meal and oil and the crushing margin in order to assess how processors benefit relative to farmers with regard to the export enhancement programme as it applies to soybean oil the results suggest that while both farmers and processors do benefit from the programme processors benefit porportionately more than farmers receiving nearly three times the relative return of farmers from the effects of the programme this observed outcome is a function of the joint nature of the products being produced soybean meal and oil by processors and the relative less importance afforded to soybean oil in the production process in an absolute sense however the returns to soybean farmers are substantially greater than those to processors being a function of the magnitude of the price of soybeans relative to the crushing margin

occupational structure wages and migration in late nineteenth century england and wales the relationships among occupational structure wages and internal migration in england and wales in the second half of the nineteenth century are analyzed the author concludes that socioeconomic inequalities among districts provide the major explanation for migration annotation

liability and large scale long term hazards this paper analyzes the application of liability to large scale long term hazards the key features distinguishing such hazards are the long temporal separation between exposure to a hazard and disease and the large damages when injuries finally emerge the large scale of damages creates a strong incentive to avoid liability payments and the long temporal separation creates numerous avenues through which parties can avoid paying possible damage awards the analysis focuses on the incentive to avoid paying damages by vertically divesting production tasks associated with serious occupational risks such divestiture can lower liability costs if the small firm operating the risky stage goes out of business before latent injuries emerge or has insufficient assets to pay damages and declares bankruptcy when suits are filed the paper then presents an empirical regression analysis of small firm entry into the u s economy between 1967 and 1980 the period in which liability laws were changing the point estima

estimating the degree of market power in the beef packing industry a technique for assessing the degree of monopoly power developed by appelbaum 1979 1982 is extended here to permit measurement of monopsony power as well data from the u s beef packing industry are examined the results reveal small but statistically significant monopoly monopsony price distortions in slaughter cattle and wholesale beef markets but in spite of a recent trend toward heightened concentration in the industry give no indication that performance has become appreciably less competitive of late this abstract was borrowed from another version of this item

comparative statics for oligopoly demand shift effects when demand rises in an imperfectly competitive industry price output profits consumer surplus and welfare may individually rise or fall the possibilities are thus broader than with either a demand shift under competition or a cost shift in either typ e of industry systematic relationships are established showing howe ver that the pattern of effects cannot be arbitrary imperfect compe tition is necessary for profits to fall when demand rises profits alw ays rise with either perfect competition or perfect collusion this a gain contrasts with the cost shift case where imperfect competition is not necessary for perverse profit effects copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

transitory variation in investment and output abstract although the permanent income model is a cornerstone of macreoconomics the evidence for its assumption that output has a transitory component is mixed this paper documents transitory variation in gnp the story centers on the variation in investment relative to consumption consumption behaves like a random walk in the long term investment moves one for one with consumption in the near term however investment takes strong transitory swings away from the random walk it shares with consumption these surges in investment relative to consumption are not offset by government expenditures transitory variation in investment thus becomes transitory variation in gnp

hedonic estimation of quality factors affecting the farm retail margin a model of the farm retail marketing margin is tested using producer and retail prices of a perishable product in which time during season and quality characteristics are variable empirical analysis verifies that the marketing margin of california fresh peaches decreases during the season and increases with improved quality results identify potential producer gains from improving product quality early in the season and from price signals compensating producers for quality characteristics other than weight

demand for farm output in a complete system of demand functions demand interrelationships for farm outputs that are theoretically consistent with consumer demand and marketing group behavior provide important linkages between retail and farm prices a conceptual model based on reduced form specifications for retail and farm prices is formulated and applied empirically to a set of eight disaggregated food commodities this approach circumvents the need for retail quantities which are frequently unavailable for disaggregated food commodities the results are consistent with theory and generally indicate significant substitution between farm and marketing inputs except for poultry derived demand elasticities are at least 40 larger compared to those derived assuming fixed proportions

information constrained insurance the revelation principle extended abstract private information induced incentive constraints can cause allocations to diverge from full information optimal allocations often in the direction of limited insurance but can bring unanticipated anomalies related plausible contract exclusion restrictions can be damaging in welfare terms more generally private information optimal allocations can be sensitive to the information structure suggesting that the latter be specified with an eye toward realism as well as tractability in an effort to make tractability less of a constraint the paper shows how two apparently difficult information structures a costly state verification environment and a multiperiod multilateral private information environment can be handled theoretically by revelation principle methods the paper also shows how solutions can be generated numerically

indivisible toxic torts the economics of joint and several liability cost effective or efficient pollution control has traditionally devoted most of its attention to analyzing the effects of legislative or regulatory policy instruments such as emission taxes or marketable emission permits recent contributions have expanded this focus to include the effects of monitoring and enforcement policies 2 with a few noteworthy exceptions 3 however the role of the court system in general and liability law in particular have not received analytical attention among environmental economists in proportion to their importance in resource allocation

competition in the us meatpacking industry is it history the us meatpacking industry has become concentrated to a degree not experienced since the days of the beef trust a century ago a number of mainstream studies have investigated if such concentration has been detrimental to competition just as earlier studies may have helped shape competition policy towards meatpacking a century ago contemporary studies have made their way into current discussions and may shape competition policy at the turn of this century this paper asks whether or not contemporary studies are useful in informing competition policy after comparing how competition looks from the econometric vantage point with how it looks from the vantage point of the industry s 300 yr history this article concludes that mainstream studies are more useful for a competition policy targeting conduct rather than structure

an explanation for accounting income smoothing it is widely believed that corporate managers often engage in income smoothing taking actions to dampen fluctuations in their firms publicly reported net income one reason given for this is that managers think that investors pay more for a firm with a smoother income stream see ronen and sadan 1981 while there have been many empirical studies attempting to document whether or not income smoothing actually occurs there has been little exploration of why a manager might rationally want to smooth his firm s income explaining why smoothing might be observed and how it can result in an increased stock price is the focus of this paper in two recent studies lambert 1984 and dye 1988 demonstrate in agency settings that a risk averse manager who is precluded from borrowing and lending in the capital markets has an incentive to smooth his firm s reported income in this paper in contrast it is shown that within a market setting an incentive exists for a manager to smooth income that is independent of either risk aversion or restricted access to capital markets the market setting is also useful in that it allows for the analysis of the effect of income smoothing on stock prices it is shown here that if a manager can choose which of two periods to recognize certain income he may prefer the choice that is expected to