the relative forecasting performance of the divisia and simple sum monetary aggregates this paper provides direct evidence on the forecasting performance of the divisia monetary aggregates relative to the traditional simple sum monetary aggregates it is shown that forecasts of u s real gdp from a four variable vector autoregression var are most accurate when a divisia aggregate is used rather than a simple sum aggregate particularly at broad levels of aggregation further the two m1 aggregates relative to the broader aggregates are superior predictors of the gdp deflator with a slight edge going to divisia m1 over simple sum m1

models for referendum data the structure of discrete choice models for contingent valuation abstract in 1979 bishop and heberlein introduced an appealing variant of the contingent valuation method which required only yes or no responses hanemann developed a utility theoretic interpretation of the yes no responses which has helped popularize the approach recently cameron has offered another interpretation also utility theoretic which she argues is more general than the hanemann random utility model this paper compares the deterministic models suggested by hanemann and cameron showing them to be dual to each other it shows that correct specification of either function must exclude endogenous variables such as quantity demanded it also demonstrates that using utility theoretic models allows one to compare travel cost models and contigent valuation models on the basis of their implied behavior not on the unobservable surplus or variation measure

the ex dividend day behavior of canadian stock prices tax changes and clientele effects with some simple assumptions the ex dividend day price drop and the associated dividend can be used to measure the market s marginal tax rate previous research has estimated the implied tax rate for the u s this paper extends the analysis to canada where the tax treatment of dividends and capital gains is completely different from that in the u s the paper also presents estimates from 1970 80 to include four distinct periods when the tax treatment was different hence we include an implied test of market efficiency as well as those for the relevance of taxes and the existence of tax based dividend clienteles

the empirical relationship between money prices and income revisited this article investigates the relationship between sum divisia and monetary velocity money prices and income using the notion of granger 1969 causality this is achieved by evaluating empirically using dickey fuller unit root tests whether the macroeconomic time series under consideration are trend stationary or difference stationary and by conducting tests using three different ad hoc lag lengths 8 6 and 4 quarters as well as a statistically determined using akaike s 1969a b final prediction error criterion lag structure

money demand variability a demand systems approach this article tests the fourier flexible form on quarterly u s monetary data the data have been prescreened for consistency with the general axiom of revealed preference and subindexes are formed using the divisia approach in this article the global fourier model fits well although there is a potential problem of overfitting and certain data points exhibit behavior inconsistent with the model the elasticities are variable over time particularly around business cycle troughs it appears that financial asset demand surfaces are highly nonlinear and the many unsuccessful existing attempts to estimate money demand may not have worked well for this reason

comparative reliability of the dichotomous choice and open ended contingent valuation techniques abstract the comparative reliability of dichotomous choice and open ended contingent valuation methods cvm is evaluated by resurvey of the same households 9 months after their original survey test retest correlations on willingness to pay are statistically significant at the 1 level and range from 0 57 for the dichotomous choice cvm to 0 62 for the open ended cvm the test retest correlations were not statistically different between dichotomous choice and open ended cvm a likelihood ratio test for temporal stability of each method s willingness to pay functions indicates stability half of the time for both methods

sensitivity of willingness to pay estimates to bid design in dichotomous choice contingent valuation models this paper addresses the sensitivity of dichotomous choice contingent valuation method dc cvm based mean willingness to pay wtp estimates to the dc cvm sample design and to alternative measures of wtp this issue is examined both analytically and empirically the analysis of ten different dc cvm data sets revealed a sensitivity in estimated mean wtp to the sample design and to the measure chosen to calculate mean wtp

lag length selection and tests of granger causality between money and income one of the most widely accepred relationships in macroeconomics is the positive relationship between the rate of growth of the money supply and the rate of growth of income a diversity of opinion arises however with the attempt to identify a causal relationship between these variables while friedman and schwartz 1963 initiated the empirical investigation of money income causality sims 1972 made the most significant contribution to this literature with a practical application of the criterion developed by granger 1969 for identifying a causal relationship since the appearance of sims s approach and an alternative one advanced by sargent 1976 many researchers have applied these techniques to the investigation of the causal relationship between money and income l with two exceptions hsiao 1981 and mcmillin and fackler 1984 these researchers have arbitrarily chosen the lengths of their distributed lags the purpose of this paper is to test for granger causality between money and income this paper differs from previous work in that considerably more attention is focused on the effect of the lag specification on the test results in particular we investigate the extent to which rules of thumb arbitrary lag specifications and

application of sample selection model to double bounded dichotomous choice contingent valuation studies modeling households behavior with the data from a contingentvaluation cv survey is often complicated by samplenon response which can cause non response bias and sampleselection bias leading to inconsistent parameter estimates and adistorted mean willingness to pay estimate this paper reportsthe results of empirical tests for both biases using householdsurvey data in which the double bounded dichotomous choice cvquestion involved the benefit of a tap water quality improvementpolicy in korea no non response bias but sample selection bias is detected in the sample to correct for sample selection bias a sample selection model is employed the authors also discusshow failure to correct for bias may distort aggregate benefitestimates

a bayesian approach to double bounded contingent valuation in this paper we propose a bayesian approach to model double bounded contingent valuation data the double bounded elicitation method is interpreted as a two tier iterated process in which the subject is allowed to have a second thought about his her valuation for the environmental good prior information is modelled from the answers to the first dichotomous choice question the model is quasi bayesian q b in that the prior distribution refers to mean willingness to pay while the likelihood function refers to the proportions of a multinomial distribution this model is applied to empirical data from a contingent valuation survey involving the valuation expressed by european tourists for access to natural areas in the canary islands results show that point estimate of consumer surplus computed with the q b model does not differ substantially from single bounded model estimation in addition double bounded seems to be quite robust to the choice of the prior model of willingness to pay responses comparison with open ended suggests that the q b model might be useful to control for strategic response and starting point biases

non stationarities in macro economic time series further evidence and implications two sources of non stationarities in the mean of macro economic time series are investigated the empirical evidence for several countries clearly implies that differencing is to be preferred to the assumption of a deterministic linear time trend this result is somewhat weaker with respect to the analogous choice between seasonal differencing and seasonal dummy variables it is recommended that the time series properties of the variables considered in empirical work be carefully checked because the estimated relationships may heavily depend on the chosen detrending procedure les non stationarites dans ies chroniques macro economiques resultats supplmentaires et implications l auteur examine deux sources de non stationarite dans la mnoyenne des chroniques macroeconomiques les resultats d analyses de donnees pour plusieurs pays montrent clairement qu on doit preferer l usage d un processus de differences finies a l emploi d une tendance lineaire deterministe ce resultat est un peu moins robuste pour ce qui est du choix analogue entre l utilisation de differences saisonnieres par rapport a

confidence intervals for evaluating benefits estimates from dichotomous choice contingent valuation studies i evaluate the potential usefulness of nonmarket valuation concepts and techniques from environmental economics for improving wildlife conservation the concepts include distinguishing between on site recreation use value and off site passive use or

optimal public goods provision implications of endogenizing the labor leisure choice conventional analysis of public goods provision aggregates individual willinness to pay while treating income as exogenous ignoring the fact that we generate income to allow us to purchase utility generating goods we explore the implications of endogenizing the laborl leisure decision by explicitly considering leisure demand in a model of public goods provision we consider benefit analysis of public goods provision and find that increments of the public good will generally be under valued using conventional analysis while decrements to the public good rare in public good settings will be overvalued

new concepts of aggregated money the federal reserve board s recent redefinition of its monetary aggregates followed three years of intensive board staff research on monetary aggregation while the new aggregates ultimately were selected along conventional lines some of the staff s research was oriented towards more fundamental changes in monetary aggregation methods this paper reviews such proposals which are based upon the rigorous application of index number and aggregation theory and of principal components analysis in the construction of economic monetary aggregates the usefulness of aggregation and index number theory in acquiring price indices is widely known the theory of the true cost of living index is an application of aggregation theory examples of applied index number theory include the commerce department s implicit price deflator which is a paasche index and the labor department s consumer price index which is a laspeyres index somewhat less well known is the fact that dual to the theory of economic price aggregates and indices is a theory of economic quantity aggregates and indices an example of a highly reputable quantity index is the divisia quantity index the monetary aggregates traditionally are thought to measure the supplied quantity of an economic good called money whenever monetary aggregates are used in the context of economic theory rather than as simple accounting identities the theory of economic quantity aggregation is specifically applicable however published monetary aggregates in all countries have always been computed as simple sums but as fisher 1922 p 29 observed in the conclusion to his classic treatise on index number theory the simple arithmetic average produces one of the very worst of index numbers and if this book has no other effect than to lead to the total abandonment of the simple arithmetic type of index number it will have served a useful purpose with an example of the simple sum index fisher 1922 p 363 found that the bias alone reaches 36 percent although index number theory has not yet found its way into the monetary theory literature all of the literature on index number theory and aggregation theory for the past half century supports the result long ago deduced by fisher 1922 p 361 that the simple arithmetic index should not be used the views expressed herein are solely those of the authors and do not necessarily represent the views of the board of governors of the federal reserve system this research was partially supported by national science foundation grant soc 76 84459 we are deeply indebted to the conference session s discussant of this paper w erwin diewert for volunteering to cede his allocated journal space to us so that the paper could take its current extended form federal reserve board washington d c

use of dichotomous choice nonmarket methods to value the whooping crane resource market prices for endangered wildlife species rarely exist when prices do exist they arc not likely to reflect accurately individual preferences both consumptive uses such as hunting fishing and trapping boyle and bishop 1985 stou and johnson brookshire eubanks and randall and more esoteric benefits such as viewing and existence values must be considered this article is addressed to the valuation of whooping cranes grus americana a prominent endangered species the purpose of this article is to present a methodology for estimating nonconsumptive benefits associated with the existence of an endangered species a dichotomous choice form of contingent valuation is applied to quantify individuals economic surplus associated with preservation of the whooping crane resource specific issues and limitations of the empirical approach are discussed some of which have been previously examined by bishop and heberlein 1979 and hanemann the present paper expands upon earlier work in several ways fit in addition to discussing the above issues a unique application of the approach to an endangered species is presented second three model specifications are examined two of which arc consistent with utility theory and one which is not hanemann ti again following hanemann economic surplus is estimated at the sample median as well as the mean the dii cussion of the last two issues sheds sit on their implications for estimation of economic surplus throughout the article the suitability of alternative estimation techniques for dichom mous choice or referendum style data is examined the methodological and empirical results are relevant to a number of cumnt issues regarding model specification choice of binary response model and choice of estimator for equivalent surplus hanemann boyle and bishop 1984 sellar chavas and stoll

what do income tests tell us about the gap between wta and wtp for public goods abstract theory relates the gap between wta willingness to accept compensation and wtp willingness to pay to the income elasticity of wtp it has been suggested that empirical estimates of the income elasticity of wtp can therefore be used to test whether an observed gap between wta and wtp is consistent with rational behavior we examine this issue for the case of non market public goods we identify the theoretically appropriate tests of income sensitivity and examine conditions for valid income sensitivity tests we show that income tests may provide false signals in common settings indicating an inconsistency where none exists

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

foreign aid poverty reduction and democracy eradication of poverty is the most pervasive goal of donors foreign aid programmes as a result there has been much research on the degree of correlation between aid and poverty reduction however this work to date has shed little light on the direction of causation between the two variables using the method of granger causality and conditioning aid and poverty on the state of democracy in developing countries this study asks whether aid flows impact poverty whether poverty influences aid flows or whether causality proceeds in both directions simultaneously while the results identify no causal relationships in some of the sub samples they point to the existence of a multitude of relationships across others

valuing health care using willingness to pay a comparison of the payment card and dichotomous choice methods this paper compares willingness to pay wtp estimates generated from the dichotomous choice dc and payment card pc approaches in a split sample wtp experiment concerned with allocating scarce health care resources across three health care interventions the dc approach is shown consistently to generate larger welfare estimates than the pc observed difference between pc and dc experiments cannot be explained by the inclusion of non demanders or methods of statistical analysis but may be partly explained by yea saying no evidence of range bias or mid point bias was found with pc responses data were also collected on respondents ordinal rankings of the three interventions and person trade offs ptos neither of these approaches converged with wtp future work must address the decision heuristics individuals employ when responding to valuation experiments

the effects of monetary targeting on business activity and financial market stability in the united kingdom abstract this paper utilizes a vector autoregressive modelling technique to test which of the uk monetary aggregates m0 m1 or m3 is more appropriate as an intermediate target for the bank of england the empirical results suggest that m0 is the most suitable choice and that m3 is not as to m1 the results are less straightforward and imply that m1 may be useful for addressing policy concerns over the external balance other implications of the results are distilled and analyzed in the paper

causality between exports and economic growth abstract this paper utilizes granger causality tests in investigating the relationship between exports and national income from a consistent data set for 47 developing countries in africa new empirical results as well as suggestions for future research are presented

contingent valuation a new perspective after several decades of academic research on the contingent valuation cv method a consistent behavioral explanation of hypothetical bias is still lacking based on evidence from economics economic psychology and the political sciences i propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys the first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable informative cues that can be rationally exploited in simplified heuristics the second hypothesis is that the probability and impact of strategic responses in dichotomous choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs the literature on hypothetical bias is revisited in the light of these behavioral hypotheses i find that the hypotheses are generally supported by the empirical data moreover the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain in particular they solve the puzzle that pre election polls but not cv surveys are able to predict actual referendum outcomes and they explain why income effects on willingness to pay are lower in cv responses than in actual votes if confirmed by further studies the hypotheses will have important implications for future research and practice first the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents this can be achieved by specifying the costs as a percentage rather than absolute change in taxes second the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods

the optimal level of monetary aggregation in this paper i have three objectives 1 to describe the aggregation theoretic procedure for selecting the optimal monetary aggregates 2 to survey the available empirical evidence for information on the optimal aggregates and 3 to describe the procedures that should be followed to complete a redefinition of the monetary aggregates although all of the federal reserve board s current official aggregates are rejected as targets some newer aggregates are found to be substantially preferable to the official aggregates the board s staff recently completed the official redefinition of its monetary aggregates in a manner largely unrelated to aggregation and index number theory my own research in recent years has sought to remedy that shortcoming except for monetary aggregates most of the data provided by governmental agencies are constructed in accordance with aggregation and index number theory since aggregation theory can be applied to monetary aggregation 1 i constructed new monetary aggregates that are consistent with the economic theory 2 recently the empiri

microfoundations and the demand for money the reader should note that i write this piece in a style that aims to be accessible to that much neglected representative agent the woman on the eurostar train hence unlike the man on the clapham omnibus i assume my intrepid traveller has reasonable knowledge of monetary economics and econometrics but not of the details of the demand for money space constraints force me to indulge in a certain amount of poetic licence but i hope this results in poetic justice there have been many wars fought on this particular battlefield some with almost religious zeal on the theoretical side of the debate we sometimes have the equivalent of religious fundamentalists be they muslims jews christians etc who would dismiss almost any evidence unless it were associated with a strong microtheoretic basis as laid down in the koran talmud or bible the empirical side encompasses agnostics atheists as well as born again econometricians pure theorists inhabit the sunlit uplands while applied economists and policymakers flounder in the muddy plain below occasionally gaining solace from their copy of zen and the art of motorcycle maintenance in general in economics we do not have the luxury of controlled experiments as is the case in the natural sciences what distinguishes good microfoundations from bad and how to weight priors and statistical evidence is subject to much dispute leamer i983 hendry et al i990 as in religion sometimes there is the occasional miracle proclaimed after a suitable interval a new saint may be declared and disciples flock to the new shrine later doubts may arise as to whether a miracle really did occur human behaviour is difficult to explain let alone predict so the search for the equivalent of the holy grail ark of the covenant etc is bound to be arduous in scholarly journals we generally read of the success of the demand for money like diplomats who are sent abroad to lie for the good of their country publication may require applied economists to be somewhat economical with the actualite lovell i983 leamer i983 in this article i want to be as honest as possible about our success and failures in this area the prior information an armchair economist would consider when thinking about the demand for money over the past 40 years in western industrialised countries which have experienced moderate inflation might

contingent valuation and social choice the contingent valuation method for estimating the existence value of natural resources is examined for psychophysical robustness statistical reliability and economic sensibility extensions of standard models for willingness to pay and suitable econometric techniques for analyzing these models are developed the analysis is applied to a series of experiments on the value of preserving wilderness areas in the western united states the results call into question the reliability of the cv method for estimating existence values

learning design contingent valuation ldcv noaa guidelines preference learning and coherent arbitrariness we extend the contingent valuation cv method to test three differing conceptions of individuals preferences as either i a priori well formed or readily divined and revealed through a single dichotomous choice question as per the noaa cv guidelines k arrow r solow p r portney e e leamer r radner h schuman report of the noaa panel on contingent valuation fed reg 58 1993 4601 4614 ii learned or discovered through a process of repetition and experience j a list does market experience eliminate market anomalies q j econ 2003 41 72 c r plott rational individual behaviour in markets and social choice processes the discovered preference hypothesis in k arrow e colombatto m perleman c schmidt eds rational foundations of economic behaviour macmillan london st martin s new york 1996 pp 225 250 iii internally coherent but strongly influenced by some initial arbitrary anchor d ariely g loewenstein d prelec coherent arbitrariness stable demand curves without stable preferences q j econ 118 1 2003 73 105 findings reject both the first and last of these conceptions in favour of a model in which preferences converge towards standard expectations through a process of repetition and learning in doing so we show that such a learning design cv method overturns the stylised facts of bias and anchoring within the double bound dichotomous choice elicitation format

velocity effects of anticipated and unanticipated money growth and its variability the purpose of this paper is to empirically test the relationship between velocity growth and anticipated and unanticipated money growth and its variability in particular by decomposing actual monetary growth into anticipated and unanticipated components the study investigates whether knowledge of past variability of anticipated and unanticipated monetary growth improves the prediction of future velocity growth beyond predictions that are based on past velocity growth alone this is the empirical definition of granger causality comparasions are made in all tests among simple sum and divisia aggregates of m1 m2 m3 and l and with spindt s monetary velocity mq aggregate

inference and optimal design for a welfare measure in dichotomous choice contingent valuation this paper considers the use of contingent valuation to estimate non market benefits from separately valued nested goods survey respondents were asked referendum wtp questions regarding either a scheme to protect the whole area of a wetland or a

consumer theory and the demand for money the following sections are included introductionthe definition of moneythe microeconomic theory of a monetary economythe aggregation theoretic approach to money demandindex number theorythe links between aggregation theory index number theory and monetary theoryunderstanding the new divisia aggregatesthe optimal level of monetary subaggregationeconometric considerationsapproximating the monetary services subutility functionan exampleempirical dimensionsempirical comparisons of index numbersempirical results for the demand system approachextensionsconclusions this abstract was borrowed from another version of this item

money is what money does monetary aggregation and the equation of exchange this paper develops a method for distilling the transactions role of the array of monetary assets available to the public into a single aggregate measure of effective transactions balances the result is a monetary quantity index number designated mq which corresponds closely with the monetary aggregate contemplated in the equation of exchange mv pq in general mq and the conventional aggregate m 1 exhibit strikingly similar behavior however during episodes when the behavior of m1 is abnormal relative to income and interest rates mq behaves differently from m 1 during these periods anomalies in the behavior of mq are not detectable