measuring the impact of research and development on technological change abstract this paper tests the method proposed by basmann et al 1987 for measuring technological change using data for the canadian manufacturing sector it also extends the analysis to show how the same method may be used to measure how expenditures on research and development have affected the production process

the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

long run estimates of technological change and scale economies in a dynamic framework australian permanent building societies 1974 1990 abstract this paper formulates and estimates a dynamic model to investigate the characteristics of the cost function of australian permanent building societies while the results suggest that the societies adjust costs quickly to long run levels the modelling of cost dynamics is shown to have a significant influence on estimates of scale economies and on the identification of the timing of shifts in the cost frontier and changes in the growth of total factor productivity

modeling economies of scale the case of us electric power companies modeling and validating the existence of technical progress within the neoclassical production function specification has been facilitated through the translog functional form however attempts to separate out the effects of technical progress and returns to scale has been limited this study develops and presents a model for testing the existence of these two separate effects using data from a sample of us electric power companies the analysis found that for these electric utilities there existed increasing returns to scale and technical progress that was energy using but capital neutral however scale effects were found to be a dominant factor in lessening the impact of declining average productivity

devaluation expectations and speculative attacks on the currency balance of payments crises are studied in a framework where investors do not know the threshold level of foreign reserves the attainment of which implies that the central bank abandons its fixed exchange target investors are alternatively risk neutral or risk averse it is shown that depending on whether the threshold level is stochastic or fixed but unknown to investors currency speculation reveals itself as respectively a speculative outflow distributed over a longer time period or a sudden speculative attack on the currency

is there an inflation productivity trade off some evidence from the manufacturing sector in greece this paper examines the effect of inflation on total factor productivity growth tfp using time series data for every two digit greek manufacturing industries in order to do the above a translog flexible cost function is estimated and used to decompose tfp growth into scale economies inflation and technical change the advantage of estimating a very general and flexible cost function is that it allows us for the first time to examine empirically a large number of significant relationships between tfp growth and economies of scale inflation and technical change the main conclusion drawn from this analysis is that inflation reduces tfp growth in a way which is sizeable furthermore using standard causality test the direction of causality between inflation and tfp growth was tested at the manufacturing level

a fresh look at the productivity and efficiency changes of uk airlines this article uses the bootstrapped malmquist index methodology to measure and test the extent of efficiency and productivity changes in the uk airline sector the aim of the bootstrap method is to overcome the statistical limitations of the data envelopment analysis dea method generally used to measure the distance functions of the malmquist index in applying the method we use input output data on a sample of major uk airlines for the period 2004 2007 results showed that most airlines have witnessed significant decrease in their productivity efficiency scale and technology measures using a second stage tobit regression this article attributed the sources of productivity and efficiency changes to factors such as stage length load factor and airline size this article also discussed the negative impacts of oil price using illustrations from the uk and other international airlines

inflation and reputation in many macroeconomic models with rational expectations optimal policy is time inconsistent and therefore announced policy may not be credible this paper models the government s credibility explicitly using kreps and wilson s analysis time consistent optimal government policy emerges as a sequential equilibrium in a repeated game this policy is at least as good as the inconsistent optimal policy and dominates the consistent policy when reputational effects are ignored thus the analysis resolves the problem of specifying a credible optimal policy in such models the results show why attempts to disinflate may lead to recession even with perfectly flexible prices this abstract was borrowed from another version of this item

technical change and total factor productivity growth for swedish manufacturing and service industries this paper presents alternative specifications of the production functions of a large panel of swedish firms for the period 1992 2000 the period can be characterized as a transition when long run productivity growth in the swedish economy improved from being among the weakest to one of the strongest within the oecd in order to present a detailed exploration of this dramatic change the time trend and general index models are applied to estimate total factor productivity tfp growth rate of technical change and returns to scale the models are extended to allow for firm specific as well as time varying technical change the parametric tfp measures are also compared with the non parametric solow residual and several hypotheses are tested to explain the growth patterns in the swedish economy it is found that the improved growth rate initially starting in large exporting manufacturing firms after a deep economic crisis at the beginning of the 1990s spilled over to the rest of the economy both manufacturing and services

a quality adjusted price index for personal computers this study estimates quality adjusted price indexes for personal computers three separate hedonic models are estimated using data from 1 841 personal computers over the period 1984 1991 in addition to the traditional linear model a nonlinear model is developed and estimated the nonlinear model is parsimonious in parameters allows time varying attribute prices and can be estimated using a pooled data set the results indicate that nominal quality adjusted prices of mail order firms declined at an average annual rate of 24 62 quality adjusted prices of major manufacturers declined at a slower rate

policy reform and productivity change in chinese agriculture a distance function approach abstract agricultural policy reform has been an important source of change in the chinese agricultural sector the reforms led to productivity growth and helped china to pursue its self sufficiency goal especially in the grain sector in order to analyze whether observable productivity growth stems from technologically induced components or from the market induced parts a multi input multi output model is derived by using an econometric distance function framework a decomposition allows to distinguish allocative effects scale effects technological change and technical efficiency change data on farms in zhejiang from 1986 to 2000 are used to analyze the impact of policy reform

input demand elasticities for heterogeneous labor firm level estimates and an investigation into the effects of aggregation labor economists have paid increasing attention to the estimation of demand elasticities for heterogeneous labor the majority of these studies investigate the effect on wage rates resulting from exogenous changes in factor quantities i e the measurement of elasticities of complementarity examples of these studies abound borjas for example investigates the impact of differences in labor market representation on the earnings of racial groups 8 in another paper borjas defines immigrants as a separate labor group and is able to determine the impact of immigration on the wages earned by natives 9 berger defines labor inputs along education and gender lines thereby allowing for the investigation of changes in the age education composition of the work force on wage rates 5 and grant and hamermesh study the effect of increasing female labor force participation on the wages earned by youth and adults 17 less attention has been paid to the study of the responsiveness of employment to exogenous changes in wage rates i e the measurement of elasticities of substitution less attention has been focused on this issue because the data requirements are more stringent since in order to presume that wage rates are exogenously determined the unit of observation must be small ideally establishmentor firm level data would be used the relative inaccessibility of these type of data has led researchers to use more aggregated figures such as smsa level or industry level data to address microissues as long as wage rates are determined exogenously the unit of observation chosen is appropriate there are real concerns however about the adequacy of more aggregated units to describe the behavior of firms 2 this study addresses the issue of whether micro level data are in fact needed to accurately measure elasticities of substitution among labor groups a firm level data set that includes input

the cost and technological structure of aluminium smelters worldwide a cost model is developed for the estimation of several technological parameters describing the production process of aluminium smelters worldwide the model is similar to baltagi and griffin s 1988 but instead of estimating technological change using a panel data set of firms we estimate among other things the vintage effect using a cross section of aluminium smelters in operation throughout 1994 the vintage effect is defined as the variable cost differential that may be attributed to the utilization of a specific technical vintage in the production of aluminium in relation to another other technological measurements are also discussed the scale effect or returns to scale and technological characteristic effects i e the variable cost elasticities with respect to pot size and current intensity the results show that considerable cost reductions may be expected from the change of old technical vintages to more recent ones also results show that for a majority of smelters in the sample returns to scale seem to be exhausted finally variable costs are very sensitive to pot size in the sense that large cost reductions can be expected from the increase in pot size an important characteristic of the technology used by smelters copyright 2000 john wiley sons ltd

agricultural productivity of the spanish regions a non parametric malmquist analysis productivity growth for the agricultural sectors of the 17 spanish regions over the period 1977 88 is studied using non parametric programming techniques productivity changes based on conventional inputs are linked to other economic geographic and institutional issues average technical change in the spanish regions grew at an annual rate of 2 9 but with great regional variation this paper presents a clear characterization of areas with greater technical progress and the regions with technical regress

parametric efficiency tests economies of scale and input demand in u s electric power generation duality theory has been applied increasingly in recent years to study the structure of production a major advantage of using duality theory is that systems of input demand equations can be derived by simple differentiation facilitating the use of flexible functional forms also use of duality theory makes it possible to choose a representation of the technology which has desirable properties for estimation such as exogeneity of the regressors however the use of a dual representation of production structure is appropriate only if the corresponding maintained hypothesis concerning economic behavior e g cost minimization or profit maximization is valid the perceived advantages of the dual approach to studying production structure have led to some applications in which the maintained hypothesis concerning economic behavior is unlikely to be appropriate for example neoclassical cost functions have been used to study the characteristics of production in regulated industries despite an extensive theoretical literature indicating that a profit maximizing regulated firm would not minimize costs subject to market prices 2 in this paper we propose a generalized cost function that retains the principal advantages of the neoclassical cost function but does not require that cost minimization subject to market prices be imposed as a maintained hypothesis in our model firms are assumed to base their production decisions on unobservable shadow prices which reflect the effects of regulation on the effective prices of inputs parametric tests for cost minimization are obtained by expressing shadow prices as functions of market prices the generalized cost function is estimated with data for regulated electric utilities the parametric restrictions corresponding to cost minimizing behavior subject to market prices are rejected implying that the use of a neoclassical cost function is not appropriate in this application 3

cost structure and productivity growth in european railway systems the purpose of this paper is threefold first to empirically investigate the coststructure of the railway systems in ten european countries belgium denmark france germany greece italy luxembourg the netherlands portugal and the united kingdom of the european union second to provide measures of economies diseconomies of scale and fully investigate the manner by which economies of scale have affected the cost structure of the system and have been affected by the growth in input prices and technology and third to measure economic efficiency and identify its sources in achieving this purpose the translog technology has been used and the translog model was estimated using time series data covering the period 1969 1993 zellner s iterative method was used in estimating the translog model

assessing energy price induced improvements in efficiency of capital in oecd manufacturing industries to assess how capital stocks adapt to energy price changes it is necessary to account for the impacts on different vintages of capital and to account separately for price induced and autonomous improvements in the energy efficiency of capital stock the results of econometric analysis for five manufacturing industries in 19 oecd countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input the investment response to energy prices varied considerably across manufacturing industries being more significant in energy intensive sectors the results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy using capital stock

exchange rate policy wage formation and credibility abstract since the collapse of the bretton woods system some european countries have pursued discretionary exchange rate policies in order to maintain or enhance the international competitiveness of the traded goods sector these countries which typically feature centralized wage setting have also tended to experience high nominal wage increases the overall outcome may be described as a devaluation wage spiral this paper applies two models of repeated games to analyze the strategic interaction between an exchange rate setting policy maker and a wage setting trade union it is shown how a devaluation wage spiral may result from a conflict of interest over the real wage it is also shown how reputational forces may provide a way out of the devaluation wage spiral

parametric approaches to productivity measurement a comparison among alternative models this paper deals with modeling total factor productivity tfp growth in a flexible manner using panel data several competing parametric models are used to explore whether there are any similarities in the estimates of tfp growth and technical change among these models using a primal approach we decompose tfp growth into different components the models are then used to measure productivity and technical change in the swedish cement industry in general the results are found to be model dependent and often conflicting although much less so for returns to scale and overall productivity growth

cost efficiency and financial and geographical characteristics of banking sectors in the mena countries abstractwe utilize the translog stochastic frontier model to estimate the cost efficiency levels for conventional and islamic cooperation council gcc and non gcc banks in the middle east and north african mena countries the estimated cost efficiency averages around 77 for those mena banks but with slight changes in this score for the individual countries the results also show that the banks in the gcc countries are the most efficient in the region and the efficiency scores for the conventional and islamic banks are similar finally the recent financial crisis seems to have a slight impact on the observed efficiency scores of those banks

decomposing technical change with panel data an application to the public sector the estimation of technical change in panel data models is considered using two competing models the time trend tt model and the general index gi model our measure of technical change in both models is based on the input requirement function technical

rational expectations and policy credibility following a change in regime we examine the dynamic path of an economy after a change in regime when neither the policy to be followed nor the reactions of the public are known the model is an application of kreps and wilson s reputation model to barro and gordon s macroeconomic policy game equilibrium is defined to be the dynamically consistent solution to a game between the government and the private sector it involves mixed strategies and bayesian learning by both sides until the uncertainty about government and public behaviour is resolved the absence of complete credibility of government policy and intransigence of private sector wage demands increase the output loss of disinflation the analysis also sheds light on the strategic nature of economic policymaking and the role of information in macroeconomics

environmental regulations and productivity growth the case of fossil fueled electric power generation this paper measures and analyzes the effect of sulfur dioxide emission restrictions on the rate of productivity growth in the electric power industry over the 1973 79 business cycle a firm specific measure of regulatory intensity is developed which depends on the severity of the emission standard the extent of enforcement and the unconstrained emission rate relevant to each utility the results indicate that emission regulations result in significantly higher generating costs primarily from the increased use of low sulfur fuels the average rate of productivity growth was reduced by 0 59 percentage points per year for constrained utilities

cost efficiency of the lodging industry in the tourist destination of gran canaria spain abstract this paper analyses whether the expansion of the lodging industry in gran canaria canary islands spain which has occurred during the last 10 years as a result of increases in tourist numbers and the accommodation made available to them has been accompanied by a parallel increase in efficiency over the same period thus the cost efficiency and economic scale of the lodging industry hotels and apartments on the island of gran canaria during the period 1991 2002 are studied assuming that such efficiency is non constant over time the estimation of a stochastic cost frontier model was considered by using a panel data approach a translog cost function was estimated using unbalanced panel data for a sample of 44 companies over the study period the overall results indicate the existence of diseconomies of scale except in the case of small companies with an operating revenue of less than 3 7 million euros these comprised 40 of the companies in the sample the findings on cost inefficiency show that this is time variant that not all lodging companies produce at minimum cost levels and that it decreases over time specifically average cost inefficiency is around 17 and decreases over time

factor demands cost functions and technology measurements for regulated in this paper we provide some missing elements to the theory of the regulated firm and discuss implications for econometric specification particular attention is paid to situations where capital is quasi fixed under rate of return regulation which may lead to serious specification and interpretation errors if the current theoretical basis is not adjusted we also extend the analysis to arbitrary types of regulation and indicate precisely how the differential of factor demands can be specified and what regularity conditions it must satisfy the exact formula for the calculation of marginal products returns to scale and technological change are derived

new directions for stochastic open economy models the paper develops a simple stochastic new open economy macroeconomic model based on sticky nominal wages explicit solution of the wage setting problem under uncertainty allows one to analyze the effects of the monetary regime on welfare expected output and the expected terms of trade despite the potential interplay between imperfections due to sticky wages and monopoly the optimal monetary policy rule has a closed form solution to motivate our model we show that observed correlations between terms of trade and exchange rates are more consistent with our traditional assumptions about nominal rigidities than with a popular alternative based on local currency pricing 2000 elsevier science b v all rights reserved

organic farming in scandinavia productivity and market exit abstract this paper attempts to quantitatively measure the change in the productivity of danish organic farming in recent years based on a translog production frontier framework the technical and scale efficiency at farm level is analysed by following a time trends as well as a general index model specification further this study tries to analyse the significance of subsidies for promoting long term growth in organic production by estimating a bootstrapped bivariate probit model with respect to factors influencing the probability of organic market exit the results revealed significant differences in the organic farms technical efficiencies no significant total factor productivity growth and even a slightly negative rate of technical change in the period investigated evidence has been found for a positive relationship between subsidy payments and an increase in farm efficiency technology improvements and a decreasing probability of organic market exit which was also confirmed for off farm income

a parametric estimation of total factor productivity and its components in u s agriculture the present study aims at improving our understanding of the individual contribution of the components of total factor productivity tfp change to u s agricultural productivity a novel sequential primal dual estimation routine to calculate tfp change is proposed using a multi output input distance function in the first stage followed by a cost minimization routine in the second stage tfp change is estimated as the direct sum of the estimates of technical change technical efficiency change allocative efficiency change input price effects changes in output markup and changes in returns to scale in each state the validity of the proposed methodology is supported by the remarkable overlap and high correlation of our annual estimates of tfp change with the usda s measures of change in tfp by state although technical change tends to be the largest contributor to productivity change it bears a low and statistically insignificant correlation with tfp change on an annual basis whereas annual changes in the markup effect and returns to scale are highly and significantly correlated with tfp changes this is the first study to find a slowdown of technical progress in the u s farm sector in the 1990s and 2000s and technical regress during the farm crisis of the 1980s while technical efficiency shows a positive overall trend allocative efficiency shows a negative overall trend and their combined effect i e the overall cost efficiency slows down tfp growth the policy recommendations from previous studies on the drivers of tfp should be revised in light of these findings

fossil fuel producing economies have greater potential for industrial interfuel substitution abstract this study analyzes industrial interfuel substitution in an international context using a large unbalanced panel dataset of 63 countries we find that compared to other countries fossil fuel producing economies have higher short term interfuel substitution elasticities this difference increases further in the long run as fossil fuel producing countries have a considerably longer adjustment of their fuel using capital stock these results imply lower economic cost for policies aimed at climate abatement and more efficient utilization of energy resources in energy intensive economies

airline deregulation the cost pieces of the puzzle this paper analyzes cost changes in the u s airline industry in the pre and postderegulation era using a panel data set of airlines specifically it seeks to disentangle cost changes attributable to technical change economies of scale and density and input prices the authors estimate a purely general index of industry technical change and in turn analyze its determinants despite the slowing of productivity growth in the 1980s deregulation does appear to have stimulated technical change due to more efficient route structures copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

production cost structure of us hospital pharmacies time series cross sectional bed size evidence there are current concerns about potential factor substitutions and their implications for factor employments and cost containment in us hospital pharmacies a translog production cost model is estimated for these pharmacies using 1981 9 times series data consisting of seven cross sectional bed size classes per year zellner s joint gls estimation of three factor cost share equations and the parent translog cost function reveals that pairwise factor substitutions are severely limited production is non homothetic occurring in the range of scale diseconomies biased and pure technical change effects dominate the scale augmenting component implications of findings are rationalized in the context of the emerging biopharmaceutical technologies

neoclassical modeling of nonneutral technological change an experimental appraisal the results of an experimental evaluation of the performance of neoclassical models using alternative indexes of the pace of introduction of innovations to measure the effects of technical change on the patterns of factor input usage are reported the analysis maintains that production processes should be viewed as engineering activities so that neoclassical characterizations of them and of any innovations to them are best treated as approximations two large scale process analysis models provide the description of the true production technology with and without access to six specific process innovations the analysis considered both input aggregation and the index of the extent of technical innovation the results suggest that indexes which are explicitly tied to the technical features of the innovations involved perform better in isolating the direction of the input effects associated with each innovation moreover this conclusion was found to hold with differing levels of input aggregation

technological change and managerial ability evidence from a malaysian artisanal fishery technological progress can improve economic development but its role in the harvest of common resources has received little attention we study the relationship between skill and the use of electronic and mechanical innovations in the productivity of malaysian artisanal fishers surprisingly electronics users do not define the frontier and mechanical winch adopters produced well inside it we show that if technology is a skill substitute rather than a complement then it helps less efficient users catch up to the production frontier policy makers must balance the implications for participation rates and resource depletion against gains for the least skilled participants

interest rate policy with expectations of devaluation the problem of recurrent devaluations in the nordic countries is dealt with using a simple rational expec tations model given imperfect international asset substitutability a nd sufficient foreign exchange reserves a small open economy can use interest rate policies geared to competitiveness to put an end to re current devaluations if this policy is known and credible no intere st rate adjustments are called for except shortly before and during the expected devaluation phase in contrast a completely unanticipat ed interest rate policy requires that the rate of interest be raised continuously as the expected devaluation date is approached copyright 1988 by the editors of the scandinavian journal of economics

european vs u s airlines performance comparison in a dynamic market abstract this study measures and compares the efficiency and productivity of european and u s airlines over the period from 2001 to 2008 we measure efficiency by estimating a bayesian distance frontier model subject to regularity constraints productivity estimates are also derived parametrically based on the estimates of the distance frontier model we estimate both a constrained i e subject to regularity conditions and an unconstrained model and we show the importance of imposing the monotonicity and curvature conditions on the distance function the efficiency and productivity results based on the constrained model indicate that european airlines have slightly higher efficiency and productivity growth than u s airlines a comparison based on the type of airlines indicates that low cost airlines are on average more productive and efficient than full service airlines the decomposition of productivity growth and related market discussions are also provided

competition and innovation evidence from financial services abstract this paper presents new evidence on the relationship between competition and innovation by extending previous literature from manufacturing to financial services we introduce a new measure of overall innovation by estimating and enveloping annual minimum cost frontiers to create a global frontier the distance to the global frontier constitutes each bank s technology gap which decreases if the bank manages to innovate our innovation measure enables us to derive and estimate the model of aghion et al 2005b at the firm level for the us banking industry based on individual bank call report data for the period 1984 2004 consistent with theoretical and empirical work by aghion et al we find evidence of an inverted u relationship between competition and innovation that is robust over several different specifications further evidence on major structural changes in the us banking industry indicates that banks moved beyond their optimal innovation level and that interstate banking deregulation resulted in lower bank innovation policy implications to financial reform and prudential regulation are discussed also

conceptual developments in the economics of transportation an interpretive survey the objective in this paper is to survey the literature in transportation economics exploring two basic themes first the conceptual developments in the analysis of supply and demand which recognizes noteworthy aggregation biases in the empirical work on aggregate data and indicate that a correct analysis of the issues should take place at a highly disaggregated level second the use of these conceptual developments to evaluate efficiency aspects of transportation pricing investment and the impact of government regulation on resource allocation and distribution in the transportation sector it is important to acknowledge that the survey is based on research throughout the world but our institutional perspective and to some extent the topics that are covered is based largely on the u s experience author

economic development and the escape from high mortality summary this paper studies the characteristic features of the escape from high mortality as recorded from the historical experience of northwestern europe and from the current experience of less developed countries the paper documents stylized facts of mortality change and measures the contribution of economic development represented by income per capita to the mortality decline during the second half of the 20th century the paper argues that improvements in economic conditions since the 18th century are an important factor behind the decline in death rates in developed countries and in the subsequent reduction of death rates in less developed countries we show that economic development lowers mortality through differential effects in infectious disease mortality and that quantitatively income growth is able to account for between one third and one half of the recent mortality decline

welfare and macroeconomic interdependence we develop a baseline model of monetary and fiscal transmission in interdependent economies the welfare effects of expansionary policies are related to monopolistic supply in production and monopoly power of a country in trade an unanticipated exchange rate depreciation can be beggar thyself rather than beggar thy neighbor as gains in domestic output are offset by deteriorating terms of trade smaller and more open economies are more prone to suffer from inflationary shocks larger economies benefit from moderate demand led expansions but may be worse off if policy makers attempt to close the output gap fiscal shocks are generally beggar thy neighbor in the long run in the short run they raise domestic demand at given terms of trade thus reducing the welfare benefits from monetary expansions analytical tractability makes our model uniquely suitable as a starting point to approach the recent new open economy macroeconomic literature

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

the price of innovation an analysis of the marginal cost of green buildings abstract energy efficiency plays an important role in reducing the carbon externality from buildings but economic analyses of more efficient green building have thus far ignored input costs this paper finds that the average marginal cost of green labeled construction projects is smaller than the value premiums documented in the literature however design fees representing just a fraction of development costs but paid largely up front are significantly higher for green construction projects these projects also take longer to complete the results provide some insight into the market barriers and market failures that may explain the relatively slow adoption of otherwise economically rational green construction practices

innovation and total factor productivity in organic farming this article measures the contribution of innovations to total factor productivity tfp of organic olive farmers by constructing an innovation variable instead of using a time trend technical change is replaced by technical difference and tfp growth becomes tfp difference primary cross section data on organic olive enterprises from a greek region is used in the application of the stochastic frontier profit function farmers are classified into groups according to their innovative profile tfp difference among consecutive innovation groups is decomposed into technical difference and adjustment in innovativeness effects results indicate that more innovative farmers perform better than less innovative ones regarding tfp scores the rate of technical difference is always positive to the formation of tfp difference whereas the adjustment in innovativeness effects varies among the innovation groups nevertheless high tech capital is to a different extent under utilized regardless of the innovation group

the impact of liberalization on the productive efficiency of indian commercial banks abstract we examine the productive efficiency of 70 indian commercial banks during the early stages 1986 1991 of the ongoing period of liberalization we use data envelopment analysis to calculate radial technical efficiency scores we then use stochastic frontier analysis to attribute variation in the calculated efficiency scores to three sources a temporal component an ownership component and a random noise component we find publicly owned indian banks to have been the most efficient followed by foreign owned banks and privately owned indian banks we also find a temporal improvement in the performance of foreign owned banks virtually no trend in the performance of privately owned indian banks and a temporal decline in the performance of publicly owned indian banks we attempt to explain these patterns in terms of the government s evolving regulatory policies

excess capacity a permanent characteristic of us airlines this paper examines the permanence of excess capacity in the us airline industry to avoid the problems with the standard engineering measure of capacity utilization load factor we define and measure capacity as an economic concept two measures of economic capacity utilization are then computed one a demand based measure and the other an output based measure of capacity utilization both measures share little in common with the standard engineering measure load factor and reveal some interesting attributes of airline travel demand this paper also provides interesting new insights into the role of deregulation and the costs of excess capacity during regulation specifically it is found that deregulation with the concomitant rationalization of route structures enabled airlines to move closer to their optimal levels of capacity and facilitated substantial improvements in capacity utilization and cost reductions over the period considered 1998 john wiley sons ltd

asymmetries in an open economy model abstract this paper revisits interdependence in a noem framework introducing two asymmetries in a two country general equilibrium model of the world economy with imperfect competition and nominal rigidities a world with asymmetric nominal rigidities where one country has flexible prices and the other sticky prices and a world with asymmetric behavior from monetary policymakers where one country non optimally sets a constant nominal exchange rate we show that the welfare loss is not dependent on the variance of the productivity shock in the first asymmetric world as regards the second asymmetry we show that welfare gains arise under discretionary policy if the shock is higher than expected by agents at the cost of a welfare loss to the other country whereas under monetary policy with rules a welfare loss happens in both countries we also call into question the zero lower bound constraint in an open economy endorsing expectations of price increases as an escape from a liquidity trap

measuring and decomposing productivity change measuring productivity change with malmquist indices has become common practice because they are easily computed using nonparametric programming techniques and can be readily decomposed into technical and efficiency change however this approach is nonstochastic and requires a constant returns to scale assumption to construct the reference technology we propose estimating productivity change using a stochastic input distance frontier imposing no restrictions on returns to scale we derive the analogous decomposition of productivity change and develop a generalized method of moments strategy in which outputs or inputs may be endogenous we compare two methods in an application to electric utilities

the need for international policy coordination what s old what s new what s yet to come the first generation of policy coordination models was introduced some 25 years ago it provided a rationale for policy coordination but the gains from coordination were generally thought to be small now a new generation of policy coordination models is emerging incorporating monopolistic competition and nominal inertia here we examine macroeconomic interdependence and the scope for policy coordination in a tractable second generation model with two countries and multiple sectors initial calibration of the model suggests that second generation models may have more scope for policy coordination than did the first d 2004 elsevier b v all rights reserved

a note on joint estimation of scale economies and productivity growth parameters abstract in applied research it is common to estimate complete production models obtain measures of scale economies and total factor productivity growth and then regress such measures on exogenous variables such procedures result in inconsistent estimates of technological as well as regression parameters estimation of total factor productivity and scale economies in the first step does not take into account that these measures depend on exogenous variables in the second step therefore their dependence on exogenous variables is not properly taken into account in the first step the study proposes to estimate jointly the cost function the share equations as well as total factor productivity and scale economies measures using full system estimation to account for all the restrictions implied by their endogeneity the approach is illustrated using data from british french and german railways

effects of heterogeneity on bank efficiency scores bank efficiency estimates often serve as a proxy of managerial skill since they quantify sub optimal production choices but such deviations can also be due to omitted systematic differences among banks in this study we examine the effects of heterogeneity on bank efficiency scores we compare different specifications of a stochastic cost and alternative profit frontier model with a baseline specification after conducting a specification test we discuss heterogeneity effects on efficiency levels ranks and the tails of the efficiency distribution we find that heterogeneity controls influence both banks optimal costs and profits and their ability to be efficient differences in efficiency scores are important for more than only methodological reasons first different ways of accounting for heterogeneity result in estimates of foregone profits and additional costs that are significantly different from what we infer from our general specification second banks are significantly re ranked when their efficiency is estimated with a specification other than the preferred general specification third the general specification gives the most reliable estimates of the probability of distress although differences to the other specifications are low

cross country comparisons of efficiency evidence from the uk and italian investment firms abstract this paper compares and reconciles two new methods for cross country comparisons of the cost efficiency of uk and italian investment firms over the period 1995 1998 it employs four different specifications of the stochastic frontier methodology using a translog cost function in order to measure x efficiency the traditional common frontier reveals that italian investment firms are nearly as efficient as uk firms to overcome traditional limitations two methods are used in this paper they provide consistent results the first method shows differences between the efficiency of the two countries by incorporating environmental variables into the cross country common frontier the second method shows differences in the efficiency of the domestic versus foreign investment firms in the two countries by testing the ability to monitor and control on a cross border basis finally to identify investment firms that are both cost and profit efficient we undertake a profitability test

technological change and the tragedy of the commons the lofoten fishery over 130 years we analyze the effect of technological change on labor and total factor productivity in the lofoten fishery using detailed data for 130 years our findings support the important role of natural resources in productivity and improvements in welfare in natural resource based industries the total factor productivity has risen faster than labor productivity in the fishery indicating that the considerable technological progress in this industry has to some extent been neutralized by the decline in the fish stock open access to the fish resource most probably led to this situation

productivity with general indices of management and technical change abstract we propose a model of production where technical change is both time and management induced we define a general management index in addition to the general time index of baltagi and griffin 1988 and use them as arguments in the translog production function time and management induced technical change are then defined in terms of these general indices for comparison we also consider models in which time and management are specified as continuous variables we report empirical results for a sample of manufacturing firms in the us uk germany and france

parametric decomposition of output growth using a stochastic input distance function midmore peter karagiannis g tzouvelekas v parametric decomposition of output growth using a stochastic input distance function american journal of agricultural economics 2004 86 4 pp 1044 1057

international dimensions of optimal monetary policy abstract this paper provides a baseline general equilibrium model of optimal monetary policy among interdependent economies with monopolistic firms and nominal rigidities an inward looking policy of domestic price stabilization is not optimal when firms markups are exposed to currency fluctuations such a policy raises exchange rate volatility leading foreign exporters to charge higher prices vis a vis increased uncertainty in the export market as higher import prices reduce the purchasing power of domestic consumers optimal monetary rules trade off a larger domestic output gap against lower consumer prices optimal rules in a world nash equilibrium lead to less exchange rate volatility relative to both inward looking rules and discretionary policies even when the latter do not suffer from any inflationary or deflationary bias gains from international monetary cooperation are related in a non monotonic way to the degree of exchange rate pass through

does more medical care improve population health new evidence for an old controversy this article investigates the aggregate relationship between medical care and health for the us population i use annual state level panel data for the period 1983 to 2000 to estimate static and dynamic health production function models i find no compelling evidence that greater aggregate utilization of medical care from application of existing technology improves population health by lowering mortality in the short run or long run my results suggest that development of new medical technologies that diffuse rapidly throughout the nation and at different rates across states may well explain much of the decline in the age adjusted death rate over the past several decades as well as persistent differences in mortality across geographic regions overall my findings suggest that the us may be experiencing flat of the curve medicine with future improvements in mortality from medical care coming from new and better technologies rather than greater intensity of services

the effects of devaluation and foreign price disturbances under rational expectations abstract this paper analyzes the effects of changes in the exchange rate and the foreign price level in a stochastic model in which domestic agents form expectations about possible changes in these variables the general conclusion to emerge is that the impact of such changes on the domestic economy depend critically upon a the extent to which such changes are predicted and b in some cases the permanency with which they are expected to prevail the short run and dynamic effects of a number of specific changes are examined in detail and it is shown how a variety of transitional paths may arise depending upon the accuracy of expectations with respect to both timing and magnitude

a general index of technical change this paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology specifically when panel data are available for firms in an industry time specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting this approach offers numerous advantages over the traditional time trend representation of technical change for example the general index can serve as the basis for analysis of the determinants of technical change results for a sample of 30 electric utilities over the period 1951 78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak load demands

the sensitivity of productivity growth measures to alternative structural and behavioral assumptions an application to electric utilities 1951 1984 this article examines the sensitivity of three alternative multifactor productivity growth estimates for the electric utility industry during the 1951 1984 period the results indicate that multifactor productivity growth estimates are quite sensitive to the relaxation of various structural and behavioral assumptions first a benchmark measure is constructed along the lines suggested by solow 1957 this residual approach produces estimates that suggest a substantial decline in firm level productivity growth after the mid 1960s prior to obtaining the second and third estimates empirical tests of the structural and behavioral assumptions underlying a firm s operation are conducted first the structural assumption of constant returns to scale is rejected and the resulting long run scale adjusted multifactor productivity growth estimates are found to be consistently less than the residual estimates second the behavioral assumption of long run equilibrium is rejected comparing the long run scale ad

do all countries grow alike abstract this paper investigates the driving forces of output change in 77 countries during the period 1970 2000 a flexible modeling strategy is adopted that accounts for i the inefficient use of resources and ii different production technologies across countries the proposed model can identify technical efficiency and input change for each of three endogenously determined regimes membership in these regimes is estimated rather than determined ex ante this framework enables explorations into the determinants of output growth and convergence issues in each regime

politics and productivity i introduction economic studies of long run performance are focusing increasingly on political legal financial and social factors development is no longer regarded as a gradual inevitable transformation from self sufficiency to specialization and participation in the division of labor instead progress follows the creation and evolution of institutions that support social and commercial relationships the new institutional economics explains that growth requires that the potential hazards of trade shirking opportunism risk and so on be controlled by institutions like secure property rights reliable procedures for resolving disputes and means of enforcing contracts in the absence of close social ties these institutions reduce information costs encourage capital formation and capital mobility allow risks to be priced and shared and otherwise facilitate cooperation north and thomas 1973 north 1990 drobak and nye 1997 levine 1997 in particular political authorities must make credible commitments not to expropriate private resources once investments have been made 1 despite widespread agreement that institutions matter there is no consensus on how they should be incorporated into the analysis even the best empirical studies of productivity and growth treat institutional characteristics in an eclectic way barro s 1991 influential article for example uses the numbers of assassinations and revolutions per capita as proxies for political instability finding these measures negatively correlated with growth and investment scully 1988 regresses growth rates on dummy variables derived from gastil s 1982 ordinal rankings of political and economic liberty king and levine 1993a 1993b 1993c derive various measures of the quality of financial intermediaries and show that these measures are good predictors of growth this article presents a different approach to analyzing the relationship between institutions and aggregate economic performance following the modem productivity literature see for example fried et al 1993 we model economic performance with a stochastic production frontier frontier analysis is a form of benchmarking it analyzes a group of branches firms nations or other units by identifying best practices and evaluating each member s performance relative to the best practice frontier the results produce not only qualitative rankings of the group members but also numerical efficiency scores that can be used to assess the effects of various policies and characteristics for this reason frontier analysis is well suited for studying the effects of legal and political institutions on the economic performance of nations to capture institutional factors we use two comprehensive indexes of legal regulatory and political conditions working with a broad sample of countries from 1975 to 1990 we incorporate a widely used measure of economic freedom along with a new measure of policy stability to represent a country s institutional environment the new institutional economics suggests that countries with high levels of economic freedom protection of private property rights respect for the rule of law an unhampered price system and so on and policy stability commitment not to change the rules of the game ex post will be closer to the best practice frontier in our model economic freedom and policy stability affect economic performance by enhancing technical efficiency in other words these institutions do not alter the state of technology but they allow producers to squeeze more out of current technology for instance countries with more stable policies attract more foreign investment than countries with less stable policies ceteris paribus this leads to increased competition among producers which in turn brings efficiency gains similarly countries with lower taxes milder regulatory burdens lower inflation fewer restrictions on foreign ownership and so on are likely to produce output more efficiently than countries with policies that restrict production inhibit capital formation and reduce competition

are u s airlines really in crisis this study reflects on the technical efficiency of u s airlines using a bayesian random stochastic frontier model inferences from the bayesian estimation indicate that the random model fits the data well and outperforms the traditional stochastic frontier model the technical efficiency results indicate that u s airlines are operating at a declining efficiency rate with an average of 69 02 in 2007 results from returns to scale are also in line with the efficiency results more specific discussions on the current industry trends and other contributions of this study are presented and discussed

estimating and decomposing the rate of technical change in the swedish pulp and paper industry a general index approach abstract the purpose of this paper is to analyse the rate and the impacts of technical change in the swedish pulp and paper industry in contrast to earlier research on this industry we replace the standard time trend with time specific dummy variables enabling the estimation and decomposing of a general index of technical change the analysis is made within a translog cost function model which is estimated using a panel data set with observations across individual paper and board mills over the time period 1974 1994 our results indicate that the highest rates of technical change have generally occurred during the latter part of this period pure technical change is the primary component that has directed technical change over the entire time period we also find evidence of non neutral technical change energy use has been stimulated by technical improvements while labour use has been discouraged also technical change has had wastepaper and woodpulp using impacts however the magnitudes of these latter impacts are relatively small implying that the increase in wastepaper use during the last decades has mainly been stimulated by relative price changes

regulation capital vintage and technical change in the electric utility industry this paper presents estimates of the rate of technical change in the electric power industry over the period 1951 78 the estimated model directly incorporates the effects of rate of return regulation and uses both a time trend and a vintage index to represent disembodied and embodied technical change respectively the results indicate that disembodied technical change was the primary source of cost reduction during 1951 70 and that tighter regulation as represented by a one point reduction in the rate of return would have reduced the rate of technical change by an average of 1 2 during 1951 78 34 references 18 footnotes 3 tables