entrepreneurship and the deregulation of banking abstract this paper presents evidence that banking deregulation led to decreases in entrepreneurship in some us regions and to increases in others this is contrary to recent research that found an unambiguous positive relationship

does opening a stock exchange increase economic growth we examine the connection between the creation of stock exchanges and economic growth with a new set of data on economic growth that spans a longer time period than generally available we find that economic growth increases relative to the rest of the world after a stock exchange opens our evidence indicates that increased growth of productivity is the primary way that a stock exchange increases the growth rate of output rather than an increase in the growth rate of physical capital we also find that financial deepening is rapid before the creation of a stock exchange and slower subsequently

measuring market power in bilateral oligopoly the wholesale market for beef econometric methods for assessing the degree of market power typically rely on a maintained hypothesis of price taking behavior on one side of the market or the other in the analysis of bilateral oligopoly however one would like to leave open the question of whether buyers or sellers or both behave competitively while allowing for the possible exercise of market power on either side in this paper we address the problem of measuring market power in bilateral oligopoly this requires that we first distinguish among three candidate equilibrium concepts bilateral price taking seller price taking and buyer price taking choosing among them comes down to a test of nonnested nonlinear simultaneous equation models our application to the u s wholesale market for beef characterized by high degrees of concentration among both sellers beef packers and buyers primarily retail grocery chains reveals seller price taking among the three candidates to be the most consistent with the data in particular the hypothesis of price taking conduct on both sides of the market can be rejected this is a conclusion that would not have been reached had we considered monopoly conduct by sellers as the only alternative to perfect competition

did state bank branching deregulation produce large growth effects abstract previous research claiming large growth effects of deregulation of state bank branching laws is biased by contemporaneous correlation between the regressors and the error term of the regression model robustness tests indicate that the growth effect of branching reform is much smaller than initially estimated

the finance growth nexus evidence from bank branch deregulation this paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the united states we find that the rates of real per capita growth in income and output increase significantly following intrastate branch reform we also argue that the observed changes in growth are the result of changes in the banking system improvements in the quality of bank lending not increased volume of bank lending appear to be responsible for faster growth

change point analysis of the growth effects of state banking deregulation this article uses recent developments in change point analysis to demonstrate thatstronger income growth rates previously associated with state bank branch deregu lation were in all cases temporary rather than permanent in addition patterns oftemporal ordering across regions suggest that in many states deregulation was a re sponse to economic conditions rather than the reverse jel e44 g28

interactions between monetary and fiscal policy rules the fiscal stability pact for emu implies that constraints on fiscal policy facilitate inflation control in this paper we identify two stable policy regimes when monetary policy seeks to raise real interest rates in response to excess inflation a self stabilising fiscal policy is required to ensure model stability a fiscal policy which does not by itself ensure fiscal solvency constrains monetary policy to be relatively passive however in simulations we conclude that the central bank does not need to seek on this account the degree of debt stabilisation that appears to be implied by the fiscal stability pact

optimal fiscal feedback on debt in an economy with nominal rigidities we examine the impact of different degrees of fiscal feedback on debt in an economy with nominal rigidities where monetary policy is optimal we look at the extent to which different degrees of fiscal feedback enhances or detracts from the ability of the monetary authorities to stabilise output and inflation using an objective function derived from utility we find the optimal level of fiscal feedback to be small there is a clear discontinuity in the behaviour of monetary policy and welfare either side of this optimal level as the extent of fiscal feedback increases optimal monetary policy becomes less active because fiscal feedback tends to deflate inflationary shocks however this fiscal stabilisation is less efficient than monetary policy and so welfare declines in contrast if fiscal feedback falls below some critical value either the model becomes indeterminate or optimal monetary policy becomes strongly passive and this passive monetary policy leads to a sharp deterioration in welfare

effects of horizontal consolidation under bilateral imperfect competition between processors and retailers this article considers bilateral imperfect competition between processors and retailers to estimate the trade off between market power and cost efficiency the model is based on pricing rules from a firm s profit maximization and nests both oligopoly and oligopsony models an empirical analysis for us beef processors and retailers suggests that processors tend to exercise oligopsony market power in procuring cattle but they are unlikely to exercise market power on retailers when retailers and processors are considered as one integrated sector efficiency effects from the increased concentration in the us beef packing industry are slightly larger than market power effects when processors market power is considered separately from retailers market power the difference between cost saving and market power effects becomes greater the cost elasticity estimate 0 99 indicates that a further merger would result in little economies of scale in the future therefore although we find that efficiency effect

a study of cartel stability the joint executive committee 1880 1886 this article employs weekly time series data on the joint executive committee railroad cartel from 1880 to 1886 to test empirically the proposition that observed prices reflected switches from collusive to noncooperative behavior an equilibrium model of dynamic oligopoly with asymmetric firms together with explicit functional form assumptions about costs and demand determines the estimating equations and stochastic structure of the econometric model the hypothesis that no switch took place so that price and quantity movements were solely attributable to exogenous shifts in the demand and cost functions is then tested against this alternative and rejected

modelling upstream and downstream market power in bilateral oligopoly abstractthis article develops a general model that estimates market power exertion in a bilateral market relationship for processors and retailers where each may also have market power in their primary input market and output markets respectively monte carlo experiments are used to generate industry data for market structures such as perfect competition monopoly monopsony bilateral imperfect competition with an integrated processor retailer bilateral imperfect competition with separate processor and retailer and bilateral imperfect competition with four adjacent upstream and downstream markets then new empirical industrial organization models are estimated using the data with models that match the market structure under which the data were generated true and with models that reflect alternative market structures alternative the general model is derived using the production function approach without imposing the fixed proportion assumption monte carlo simulation results indicate that the gen

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

rich regions poor regions and bank branch deregulation in spain abstractrich regions poor regions and bank branch deregulation in spain regional studies the links between financial deregulation and economic performance are evaluated in a european context specifically the study analyses the relaxation of bank branching restrictions in spain which triggered a remarkable interregional expansion of savings banks that coincided with an unprecedented period of sustained economic expansion although related questions have been widely investigated for the united states experiences in europe have received far less research attention an additional contribution of the paper lies in its use of quantile regression which enables the investigation of the possibility of economic effects taking into account the degree of regional development the potential endogeneity of some of the regressors is also explicitly considered results do not support the case for a positive effect of bank branch deregulation in spain out of region entry in particular does not seem to have had

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

testing static oligopoly models conduct and cost in the sugar industry 1890 1914 we explore the widespread methodology of using demand information to infer market conduct and unobserved cost components under the hypothesis of static oligopoly behavior direct measures of marginal cost and conduct indicating small market power serve as benchmarks the more competitive models yield better cost estimates the best cost estimates occur when conduct is estimated as a free parameter which in turn only slightly underestimates our direct measure it also tracks the decline in market power accompanying the industry s structural changes the methodology is largely validated although partial cost information can improve its predictive power conclusions are robust to demand function

some evidence on the continuity of the growth process among the g7 countries david h papell the stability of the growth process whether growth rates are rising falling or constant is one of the central questions of economic growth theory we use recently developed techniques for identifying structural change in economic time series and find evidence of multiple breaks in per capita real gdp of the g7 countries over the past 120 years once determined these breaks are used to delineate time periods although there is some evidence of individual periods of slowdowns the overall tendency appears to be one of increasing steady state growth over the long run jel 05 01 c22 i introduction this article examines the growth process of each of the group of seven g7 countries between 1870 and 1989 the question that lies at the heart of the analysis that follows centers on the stability of the growth process specifically a are there distinct periods of development for each country b in the event that there are distinct periods when did one period of development end and the next begin c what evidence do we have regarding growth rates over the long run are these steady as solow 1956 and kaldor 119611 proposed are they falling as malthus believed that they eventually would or are they increasing as romer 19861 and others have recently suggested one of the interesting and related questions that this analysis raises is the issue of the postwar slowdowns among the g7 how prevalent and how severe were these slowdowns when did they begin and how do the postslowdown growth rates compare to earlier periods when examined from the longrun perspective of 120 years one of the goals of this article is to provide a precise characterization of takeoffs and slowdowns this is done by sequentially determining the timing of breaks in the trend process for per capita real gdp and estimating changes in the coefficients once a break has been identified and determined to be statistically significant takeoffs and slowdowns are defined by changes in the slope coefficient of the trend function the trend breaks are determined in the next section we find evidence of two breaks for canada japan the united kingdom and the united states three breaks for germany four breaks for italy and five breaks for france a number of the breaks associated with the world wars and the great depression follow a pattern of an initial drop in the level of output followed by an increase in the growth rate only two countries france and japan display evidence of a postwar growth slowdown the third section examines the growth implications of these results although no two countries are identical the estimated break dates partition the past 120 years into eight distinct time periods for the g7 countries as a whole the long run tendency is one of increasing steady state growth comparing the first to the last period steady state growth rates increased for all seven countries and on average almost doubled the major events of the last century had both common and idiosyncratic effects on the countries world war ii affected the continental european countries much differently than the others and the great depression was significant only for canada and the united states section iv concludes ii trend breaks it is possible to think of log per capita output y sub t as being the sum of a deterministic component td sub t and a stochastic component z sub t 1 y sub t td sub t z sub t where the deterministic component td sub t is linear in time t 2 td sub t mu beta t as shown below a takeoff is associated with an increase in beta whereas a slowdown is associated with a decrease in beta we define takeoffs and slowdowns as changes in beta associated with statistically significant breaks in the deterministic component td sub t of per capita output

the new econometrics of structural change dating breaks in u s labor productivity we have seen the emergence of three major innovations in the econometrics of structural change in the past fifteen years 1 tests for a structural break of unknown timing 2 estimation of the timing of a structural break and 3 tests to distinguish unit roots from broken time trends these three innovations have dramatically altered the face of applied time series econometrics in this paper we review these three innovations and illustrate their application through an empirical assessment of u s labor productivity in the manufacturing durables sector

the general equilibrium effects of fiscal policy estimates for the euro area abstract this paper describes a dynamic stochastic general equilibrium model featuring a fraction of non ricardian agents in order to estimate the effects of fiscal policy in the euro area the model takes into account distortionary taxation on labor and capital income and on consumption while expenditures are broken down into purchases of goods and services compensation of public employees and transfers to households a newly computed quarterly data set of fiscal variables is used our results point to the prevalence of mild keynesian effects of public expenditures in particular although innovations in fiscal policy variables tend to be rather persistent government purchases of goods and services and compensations for public employees have small and short lived expansionary effects on private consumption while innovations in transfers to households show a slightly more sizeable and lasting effect the effects are more significant on the revenue side decreases in labor income and consumption tax rates have sizeable effects on consumption and output while a reduction in capital income tax favors investment and output in the medium run finally our estimates suggest that fiscal policy variables contribute little to the cyclical variability of the main macro variables

de jure interstate banking why only now this paper tackles three tasks it reviews the history of restrictions on interstate banking it summarizes the provisions of the interstate banking and branching efficiency act of 1994 underscoring the opt in and opt out lobbying pressure this act assigns to state legislatures finally the paper develops a lobbying pressure model designed to explain statutory changes in the framework of financial regulation the model implies that de facto liberalization of a regulatory regime precedes its de jure liberalization once adopted statutory restrictions on banks remain in place until technology and competitive regulatory enforcement have fashioned loopholes wide enough to reverse the statute sponsoring balance of lobbying pressure copyright 1996 by ohio state university press

searching for a break in gnp it has been suggested that existing estimates of the long run impact of a surprise move in income may have a substantial upward bias due to the presence of a trend break in postwar u s gross national product data this article shows that the statistical evidence does not warrant abandoning the no trend break null hypothesis a key part of the argument is that conventionally computed p values overstate the likelihood of the trend break alternative hypothesis this is because they do not take into account that in practice the date is chosen based on pretest examination of the data

should central banks target consumer prices or the exchange rate in this article we consider two arguments suggesting that monetary authorities in an open economy should target output price inflation and not consumer price inflation the first suggests that output price inflation corresponds to the distortions caused by price rigidity the second shows how policy rules involving consumer price inflation can induce instability because of the feedback from interest rates to consumer price inflation via the exchange rate we examine both arguments in the context of an open economy which is subject to a range of shocks we show that both arguments remain robust but that there is a case for including a terms of trade or real exchange rate gap term in the authorities welfare function alongside the output gap and output price inflation

testing oligopolistic behavior abstract this paper develops an empirical model of short run pricing behavior for firms in a homogeneous product oligopoly it is based on the variable profit function and related output supply and factor demand equations and is used to analyze the behavior of firms in the coffee roasting industry a parametric test of the dominant firm model is developed and applied the hypothesis of dominant firm behavior and cournot behavior are rejected the hypothesis of price taking behavior is rejected for the largest two firms in the industry but is not rejected for all other firms using the estimated pattern of firm behavior an index of overall industry performance is constructed

the impact of banking and fiscal policies on state level economic growth this paper investigates the hypothesis that economic growth is affected by banking structure and fiscal policies we use data from the 48 contiguous states for the period 1950 1980 aggregated into six five year time periods primarily to test the effect of the following factors on growth of state per capita income i restrictions over branch banking ii restrictions over multibank holding companies iii the depth of financial assets in a state iv the financialintermediary mix v the size of state government and vi the methods of financing state government we find no support for the hypotheses that branch banking or multibank holding company restrictions affect growth however financial depth and the mix of financial intermediaries are strongly correlated with economic growth finally the state fiscal policy variables had no significant effect on income growth

a pedagogical treatment of bilateral monopoly most economists are familiar with the concept of bilateral monopoly an upstream monopolist sells its output to a single downstream buyer that may also be a monopolist in its output market the theory of bilateral monopoly has a rich history that can be traced to the writings of cournot 10 and menger 31 over the 150 or so years that the problem has been under consideration however economists have offered a variety of solutions ranging from a completely determinate intermediate good price and output to a completely indeterminate solution within a specified range interestingly this historical divergence of opinion concerning the correct outcome under bilateral monopoly still persists a clear consensus has not yet emerged surprisingly this lack of unanimity exists despite the fact that bowley 5 provided the theoretically correct solution in 1928 2 even more surprising however is the apparent popularity of the incorrect solution a recent survey of the population of intermediate microeconomic texts on the authors bookshelves revealed that over 80 percent of the current treatments of this topic are in error 3 table i presents the results of that survey those authors who present a correct analysis of bilateral monopoly recognize that optimality requires joint profit maximization this leads them to the correct conclusion regarding the determinate quantity of the intermediate product exchanged of the five treatments we have classified

bank office outreach structure and performance in regional banking markets burgstaller j bank office outreach structure and performance in regional banking markets regional studies this paper studies bank penetration market structure and banking conduct across austrian districts neither differences in market concentration nor in the activity of out of market banks can explain the regional dispersion of interest rates bank profitability and efficiency a higher bank density is connected to more competition and lower mark ups and indicates more efficient banking markets as well as efficiency is the main determinant of bank profits and competition seems to be mildly indicative of stronger regional growth the preservation of a fair regional bank outreach appears to be an important policy target burgstaller j burgstaller j le rayon d action des guichets ban