what explains household stock holdings abstract this is an empirical study of the determinants of stock holdings using data from the us survey of consumer finances from 1992 to 2001 there is a great heterogeneity in the way households form their portfolios stock ownership is positively correlated with various measures of wealth age retirement savings and having sought financial advice it is negatively correlated with holdings of alternative risky investments such as investments in private businesses and with the willingness to undertake non financial investments in the future while we can predict reasonably well who holds stocks we have less predictive power about the share of stocks owned by those who hold positive amounts

towards a vanishing middle competition in the world garment industry abstract the international garment industry falls broadly into two segments one which may be referred to as the fashion segment is governed by competition based on new product introduction and quality improvements the other segment comprising of mass produced garments is governed by price competition while there is some evidence that the fashion sector is growing in importance our concern in this paper will be the price competitive sector which has been and continues to be predominantly the main arena in which newly industrializing and developing countries participate

intertemporal pricing and price discrimination a semiparametric hedonic analysis of the personal computer market we apply a smooth coefficient semiparametric model to a unique high frequency data set to examine the intertemporal pricing of personal computers furthermore we test whether firms charge differential component prices for their top performance personal computers and whether premium firms charge both a premium for all their computers and a premium for their top performance ones we find nonlinear effects in the pricing of personal computer components we also find that firms in general do not charge differential prices for the components of their top performance computers in addition high quality firms charge higher premia only for their most advanced products copyright 2006 john wiley sons ltd

proper risk aversion on introduit et on etudie une condition comportementale significative sur les fonctions d utilite pour les richesses qui signifie qu une loterie indesirable ne peut jamais etre rendue desirable par la presence d une loterie indesirable independante

standard risk aversion this paper introduces the concept of standard risk aversion a von neumann morgenstern utility function has standard risk aversion if any risk makes a small reduction in wealth more painful in the sense of an increased reduction in expected utility also makes any undesirable independent risk more painful it is shown that given monotonicity and concavity the combination of decreasing absolute risk aversion and decreasing absolute prudence is necessary and sufficient for standard risk aversion standard risk aversion is shown to imply not only pratt and zeckhauser s proper risk aversion individually undesirable independent risks always being jointly undesirable but also that being forced to face an undesirable risk reduces the optimal investment in a risky security with and independent return similar results are established for the effect of broad class of increases in one risk on the desirability of or optimal investment in a second independent risk

portfolio choice and liquidity constraints we study the infinite horizon model of household portfolio choice under liquidity constraints and revisit the portfolio specialization puzzle we show why the puzzle is robust to several model variations and argue that positive correlation between earnings shocks and stock returns is unlikely to provide an empirically plausible resolution we find that relatively small fixed costs for stock market entry are sufficient to deter stockholding because for a plausible range of parameter values households can achieve desired consumption smoothing with small or zero holdings of stocks such costs could arise from informational considerations sign up fees and investor inertia

on the equivalence of import quotas and voluntary export restraint abstract this note re examines the trade effects of a voluntary export restraint and an import quota whether or not they are equivalent in the presence of a dominant monopolist supplier depends fundamentally on the elasticity of a alternative non restricted producers excess supply functions and the market share of the dominant monopolist

evaluation of salesforce size and productivity through efficient frontier benchmarking the efficient operation of a salesforce is a critical element in the profitability of many firms three factors play key roles the salesforce s size its allocation and its productivity this gives rise to the following questions can salesforce performance be improved by 1 hiring more salespeople 2 allocating them more effectively to the various sales districts and or 3 improving salesperson productivity through better calling patterns in terms of consumers and product line items the practice of most firms and the methodology used in most of the academic literature to address salesforce design and productivity questions is a bottom up approach this approach starts with assessments by each salesperson of the sales and effort corresponding to each customer and prospect in their territory these assessments are then aggregated to the territory district and national levels this paper takes an alternative top down approach it is based on an estimated relationship between district level sales and salesforce size effort and other variables this more macro level decision tool can be used by management in parallel to and as an objective check of the more conventional and more subjective bottom up approach we develop an efficient frontier methodology which allows us to estimate how total district sales respond to salesforce size district potential and competitive activity in the firm s best performing districts the methodology utilized is based on data envelopment analysis dea and yields a benchmark measure of each district s efficient frontier sales sales assuming the district s salesforce allocates its effort as done in the best performing districts based on the estimated response function we discuss the three potential sources of increased profitability closing the inefficiency gap of each of the lower performing districts optimally reallocating the current salesforce to the various districts and changing the current size of the salesforce to its optimal level the inefficiency gap issue is addressed through comparison of the parameter estimates for the best districts obtained through our methodology with those of an average district sales response function obtained using regression analysis this comparison points to an important methodological finding the use of multiple estimation results may lead to an improved understanding of the phenomenon being studied in our case the identification of the likely causes of district productivity inefficiencies the latter two sources of increased profitability salesforce reallocation and changes in the current salesforce size are addressed analytically given the district level efficient frontier sales response function the proposed top down procedure using the efficient frontier methodology and the insights it provides are examined by evaluating the operations of two different salesforces one selling manufacturing equipment and the other business equipment in both cases regression based analysis would have resulted in a declaration that the status quo was close to optimal while the frontier based analysis pointed out that strong gains were possible in certain districts in particular for both firms the greatest increases in profit are obtained through improved salesforce efficiency in the lower performing districts not through salesforce size or district allocation adjustments at the more micro level a comparison of the frontier and regression parameters made it possible to identify which specific changes in the daily operations of the salesforces would allow the realization of these potential productivity gains in our two cases this could be obtained through more emphasis on pursuing prospective accounts

on perfect foresight models of a stochastic world long run analysis is often based on perfect foresight equilibrium relationships arbitrarily augmented to incorporate stochastic shocks this paper examines whether perfect foresight models admit interpretations as limits of stochastic economies and reflect long run behavior and policy effects it provides a novel interpretation of such models specifies consistency criteria for long run analysis and proposes metrics for model convergence analytical and calibration exercises are conducted to show that convergence to perfect foresight need not occur and even when it occurs it does not ensure that relationships between long run averages or low frequency components are captured by perfect foresight models copyright 1994 by royal economic society

the economics of voluntary export restraint agreements the three substantive sections of this survey deal with the economic consequences of voluntary export restraint agreements vers e g the multi fibre arrangement and vers on japanese auto exports section 2 focuses on the disposition of quota rents under the assumptions of perfectly competitive markets and the absence of substitute suppliers section 3 considers imperfect competition and the role of vers as cartelization instruments facilitating collusion section 4 analyzes the discriminatory effects of vers when there are third country suppliers a broad conclusion is that the economic consequences of vers are more complex than the standard trade policy analysis based on tariffs because of the issues discussed in sections 3 and 4 copyright 1989 by blackwell publishers ltd

questions on international trade in textiles and clothing questions of importance for the negotiations on the extension of the arrangement regarding international trade in textiles focus on i relative importance of trade in textiles and clothing ii the participants in this trade iii products that succeed for developing countries iv market penetration in developed country markets v overall trends and vi effects of protectionist activities six conclusions are drawn 1 developed countries continue to generate the bulk of the world s exports of textiles 2 industries in developing countries are too small to threaten the developed countries industries 3 developed countries collectively enjoy a large and sustained surplus in textile trade offset by a larger and growing deficit in clothing 4 only hong kong south korea taiwan and india have large trade surpluses among developing countries 5 import penetration by developing countries is modest and 6 because of protection developing countries exports of textiles and clothing have no longer outstripped the growth of all trade in textiles and clothing since 1976

stock market participation and the internet theory indicates that frictions e g information and transaction costs could account for the lower than expected stock market participation rates this paper examines the hypothesis that there has been a fundamental change in participation and links this change to the reduction of these frictions by the advent of the internet using panel data on household participation rates over the past decade the results show computer internet using households raised participation substantially more than non computer using households the increased probability of participation was equivalent to having over 27 000 in additional household income or over two more mean years of education

recovering measures of advertising carryover from aggregate data the role of the firm s decision behavior data interval bias the biased estimation of advertising carryover in aggregate data can be viewed as a misinterpretation of the aggregate advertising sales relationship due to missing micro advertising data this paper argues that if the researcher does not explicitly model the firm s advertising decisions he will incorrectly interpolate the missing data and thereby allow the firm s decision behavior to influence inferences about advertising carryover drawing upon a general model of advertising decision behavior the expected aggregate form of the koyck relationship is developed and compared to existing bias correction methodologies although it is difficult to find any parsimonious procedure which is robust with respect to all types of decision behavior allowing lagged advertising to enter the classical koyck equation emerges as a simple method of obtaining a reasonable estimate of advertising carryover in aggregate data

marketing models and the lucas critique the lucas critique has been largely ignored in the marketing literature we present a number of conditions under which the critique is most likely to also apply in marketing settings next we provide some perspectives on how to diagnose and accommodate the lucas critique and identify various avenues for future research

stockholding behavior of u s households evidence from the 1983 1989 survey of consumer finances most households persistently invest in riskless assets but not stocks and may do so because they perceive information required for market participation to be costly relative to expected benefits in a consumption capital asset pricing model ccapm increased risk aversion income risk and lower resources reduce the information expense sufficient to deter stockholding bivariate probit analysis using the 1983 1989 survey of consumer finances shows that households with lower risk aversion higher education and greater wealth who were nonstockholders in 1983 had an increased conditional probability of entering by 1989 whereas 1983 stockholders with lower resources more limited education and greater risk aversion were more likely to be nonstockholders by 1989

household investment decisions and offspring gender parental accounting numerous behavioural factors have been identified as having an impact on household stockholding decisions given there is both theoretical and empirical evidence to support the premise that offspring gender can influence specific types of parental preferences i test the theory that offspring gender has an effect on parental investment decision making i find that offspring gender does influence household stock market participation specifically i find that having only female offspring can significantly increase the probability of stockholding given stockholding can have large effects on household wealth levels and that family wealth levels affect intergenerational transfers this finding could have important implications for understanding distributional welfare issues

on the proportionality and homogeneity of consumption and income in its certainty equivalence form consumption is proportional to the sum of human and non human wealth with labour income uncertainty the proportionality takes the form of homogeneity of consumption with respect to the components of wealth in this paper we analyse the stochastic properties of labour income that yield the homogeneity property

sh a r p shelf allocation for retailers profit shelf space is the retailer s scarcest resource space management tools are thus badly needed for that purpose commercial computer packages and optimal allocation models have been developed building on the work of corstjens and doyle we elaborate a general theoretical shelf space allocation model which focuses on the demand interdependencies prevailing across and within product groups rules of thumb are compared to the derived optimal allocation the sh a r p model is introduced as a simplified yet realistic variant and validated against data collected in a dutch supermarket chain subsequently the feasibility of its implementation has been experimented in various belgian chains case studies demonstrate the profit potential of sh a r p

modeling response to advertising and pricing changes for v 8 cocktail vegetable juice this paper is based on a series of studies undertaken for v 8 cocktail vegetable juice over a five year period the studies were a consequence of management questions regarding the effectiveness of a new advertising campaign the best media mix for this campaign and the apparent wear out of the advertising copy the studies included controlled experimentation estimation of advertising response functions and exploration of price sensitivity following major price increases by v 8 it was found that the short term response to advertising was s shaped and that the new creative approach rather than expenditure levels alone accounted for by far the largest component of the impact of advertising on sales it was also found that for a short period following the major price increases v 8 became extremely price sensitive however after about six months the marginal impact of price returned to historical levels the application of results at campbell soup company their relationship to the literature and their implications for both researchers and practitioners are discussed

the effects of marital status and children on savings and portfolio choice this paper investigates the impact of demographic shocks on optimal decisions about saving life insurance and most centrally asset allocation we analyze these choices within the framework of a life cycle model that features exogenous changes in family composition heterogeneity in lifetime income and uninsurable fluctuations in earnings and medical costs our analysis indicates that marital status transitions and children can have important effects on optimal household decisions widowhood induces sharp reductions in the portfolio shares in stock and the impact is largest for women and individuals with children divorce causes men and women to reallocate their portfolios in different directions men choose much riskier allocations while women opt for safer ones children play a fundamental role in the optimal portfolio decisions men with children for example increase their shares in response to divorce by less than half as much as men without children comparing our simulation results with panel data evidence on stockholding from the psid and the hrs we conclude that changes in marital status and children matter empirically as well but not always in the ways that the model predicts

an assessment of voluntary restraints on hong kong exports to europe and the usa estimates of import tariff equivalents mtes 1981 84 of european and us voluntary export restraints on hong kong are presented with estimates of rent incomes transferred mte rates varied sharply over time and inversely with european tariffs as predicted by the model making national restrictions pointless as protection for small european countries the model points to and uses a new way of estimating non tariff barriers ntbs through derived estimates in principle once one has measured the restrictiveness of country l s ntbs one can derive an estimate of the restrictiveness of country 2 s ntbs

wealth inequality and asset pricing in an arrow debreu exchange economy with identical agents except for their initial endowment we examine how wealth inequality affects the equilibrium level of the equity premium and the risk free rate we first show that wealth inequality raises the equity premium if and only if the inverse of absolute risk aversion is concave in wealth we then show that the equilibrium risk free rate is reduced by wealth inequality if the inverse of the coefficient of absolute prudence is concave we also prove that the combination of a small uninsurable background risk with wealth inequality biases asset pricing towards a larger equity premium and a smaller risk free rate the model of the representative consumer a la lucas 1978 failed to explain observed security prices more specifically as first stated by mehra and prescott 1985 the model predicts an equity premium that is too low and a risk free rate that is too high given the observed low variability of consumption growth a recent strand of the literature with papers by constantinides and duffie 1996 heaton and lucas 1996 and krusell and smith 1997 for example explores whether incomplete asset markets and heterogeneity among consumers can explain these puzzles constantinides and duffie 1996 in particular conclude that it is at least in principle possible to generate larger equity premia when such ingredients are introduced the aim of this paper is not to provide another explanation of the puzzles but rather to better understand the relationship between asset prices the heterogeneity of consumers wealth and the market incompleteness when markets are complete heterogeneous consumers are able to equalize their marginal rates of substitution across states and across time as shown by constantinides 1982 this implies that the equilibrium of the heterogeneous consumer economy can be duplicated by the equilibrium in a lucas economy with a representative agent this means that taking account of the heterogeneity in the population alone cannot explain why the representative agent model is rejected hansen and singleton 1982 this does not mean however that the distribution of wealth in the population for example has no effect on asset prices in general in order to understand this consider the departure from an egalitarian distribution of wealth by introducing a mean preserving transfer of endowment under decreasing absolute risk aversion poorer agents will be more risk averse whereas wealthier people will be less risk averse there is no reason a priori for that the group s attitude towards risk be unaffected by this transfer we first show that if absolute risk tolerance i e the inverse of the arrow pratt coefficient of absolute risk aversion is concave then the risk aversion of the agent with the mean wealth will be smaller than the risk aversion of the representative agent thus if an outside observer overlooks wealth inequality he consequently underestimates the aversion to risk of society this leads to

a theory of the consumption function with and without liquidity constraints fifteen years ago milton friedman s 1957 treatise a theory of the consumption function seemed badly dated dynamic optimization theory had not been employed much in economics when friedman wrote and utility theory was still comparatively primitive so his statement of the permanent income hypothesis never actually specified a formal mathematical model of behavior derived explicitly from utility maximization instead friedman relied at crucial points on intuition and verbal descriptions of behavior although these descriptions sounded plausible when other economists subsequently found multiperiod maximizing models that could be solved explicitly the implications of those models differed sharply from friedman s intuitive description of his model furthermore empirical tests in the 1970s and 1980s often rejected these rigorous versions of the permanent income hypothesis in favor of an alternative hypothesis that many households simply spent all of their current income today with the benefit of a further round of mathematical and computational advances friedman s 1957 original analysis looks more prescient than primitive it turns out that when there is meaningful uncertainty in future labor income the optimal behavior of moderately impatient consumers is much better described by friedman s original statement of the permanent income hypothesis than by the later explicit maximizing versions furthermore in a remarkable irony much of the empirical evidence that rejected the permanent income hypothesis as specified in tests of the 1970s and 1980s is actually consistent both with friedman s original description of the model and with the new version with serious uncertainty there are four key differences between the explicit maximizing models

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

social security and individual welfare precautionary saving borrowing constraints and the payroll tax this paper examines the impact of social security on national saving and individual welfare in the presence of realistic capital market imperfections market failure in the private provision of annuities and restrictions on borrowing against anticipated future wages the introduction of social security increases lifetime welfare and reduces national saving if borrowing restrictions are absent however the increase in individual welfare is reduced and in some cases eliminated when borrowing constraints are taken into consideration the substantial difference suggests the importance of reexamining the proportional payroll tax finance of social security copyright 1987 by american economic association

household asset allocation offspring education and the sandwich generation abstract this paper finds households with children and elderly dependents the sandwich generation significantly reduce both college savings and stockholding having any elderly dependents decreases the probability of both stockholding and college savings by twice as much as poor personal health hence these results have critical implications as they demonstrate the importance and magnitude of links between the pension system college financial aid and wealth accumulation elderly dependents limiting parental funds for offspring education can decrease offspring long term earnings potential via decreased human capital accumulation furthermore decreased stock holdings can decrease long term wealth accumulation and thus intergenerational wealth transfers

completing the european internal market some notes on trade policy this paper examines international trade policy within a completed european internal market the ethier horn argument for internal tariffs in a customs union is shown to be inapplicable to most of the ec s existing cost increasing barriers to trade the implications of abolishing both article 115 which prevents trade deflection and monetary compensatory amounts on agricultural trade are examined national production subsidies are examined in the context of the free intra ec mobility of capital and skilled labour subsidies are doubly harmful to a small open economy in the presence of factor mobility moreover even where rent snatching subsidies may be profitable for the ec as a whole subsidy wars could erupt between member states as they compete for rent generating industries

theoretical implications of imperfect competition on quota license prices and auctions this article looks at the implications for trade policy of recent work on quota auctions recent work has considered a variety of market structures in addition to the standard one of monopoly in the product market it has also emphasized details of the implementation process as well as the timing of decisions and dynamic factors such considerations are shown to be important because they can greatly affect the outcome of trade policies

pulsation in a competitive model of advertising firm s cost interaction the literature reveals contradiction between theoretical results superiority of uniform policy under a concave advertising response function and empirical results concavity of the advertising response function and the superiority of a pulsation policy to reconcile the above difference this paper offers a resolution based on 1 the concavity of the advertising response function 2 the convexity of the firm s cost function and 3 over advertising the resolution is reached upon maximizing the net profit per unit time over the infinite planning horizon subject to an exogenous advertising budget constraint theoretical results for monopolistic markets are found mostly generalized to competitive markets a numerical example is introduced to gain more insight into the theoretical findings and an approach is introduced and implemented to empirically assess the shape of a firm s cost function and the advertising policy to be employed

a note on multi regional marketing this paper examines the profit maximizing behavior of a vertically integrated firm that operates in n geographically distinct regions a pair of alternative managerial decision scenarios are considered in one scenario all marketing mix variables are manipulated at the regional level so that each region may choose different levels of each marketing variable in the second scenario one marketing variable is manipulated globally so that its level is identical in all regions the first scenario generates an n region version of the dorfman steiner first order conditions for profit maximization however under some cost structures the profits associated with this dorfman steiner scenario are dominated by those associated with the second global regional scenario this second scenario yields an optimal solution in which the global marketing variable may have a negative marginal impact on sales in some regions as a result some managerial implications of the second scenario differ strikingly from those of the dorfman steiner scenario

advertising effects in presidential elections presidential elections provide both an important context in which to study advertising and a setting that mitigates the challenges of dynamics and endogeneity we use the 2000 and 2004 general elections to analyze the effect of market level advertising on county level vote shares the results indicate significant positive effects of advertising exposures both instrumental variables and fixed effects alter the ad coefficient advertising elasticities are smaller than are typical for branded goods yet significant enough to shift election outcomes for example if advertising were set to zero and all other factors held constant three states electoral votes would have changed parties in 2000 given the narrow margin of victory in 2000 this shift would have resulted in a different president

measuring the efficiency of trade shows a spanish case study abstract trade shows are an important industry in the spanish economy which contribute positively to regional development however the cost of attending a trade show is very high for exhibiting firms and so knowledge of trade shows efficiency is necessary in order to define the decision making process for the exhibiting firm with the aim of evaluating the efficiency indexes of operating trade shows this study applies a multi stage methodology for oriented dea models and a nonparametric test to analyze the differences in efficiency levels driven by specific variables and organizational forms the sample is made up of 45 trade shows at ifema madrid s fair institution the results show significant differences in efficiency across ifema the nonparametric tests reveal differences in efficiency levels driven by the sector and the type of trade show moreover the evidence allows provide managerial implications and future developments

the efficiency gains from dynamic tax reform this paper presents a new simulation methodology for determining the pure efficiency gains from tax reform along the general equilibrium rational expectations growth path of life cycle economies the principal findings concern the effects of switching from a proportional income tax with rates similar to those in the u s to either a proportional tax on consumption or a proportional tax on labor income a switch to consumption taxation generates a sustainable welfare gain of almost 2 percent of lifetime resources in contrast a transition to wage taxation generates a loss of greater than percent of lifetime re sources a second general result is that even a mild degree of progressivity in the income tax system imposes a very large efficiency cost this abstract was borrowed from another version of this item

analytical models of competition with implications for marketing issues findings and outlook the authors review a representative cross section of analytical models of competition using a framework for competitive analysis developed from a marketing perspective models are classified by the

flexible specialization and small size the case of caribbean tourism abstract if export industrialization was fashionable in the 1960s and 1970s today flexible specialization is definitely in appealing to the very heart of the developing world traditional small scale and craft production flexible specialization has become the new passport to development this article cautions that the prescription of small scale flexible specialization piore and sable 1984 leads to a very dangerous kind of optimism in the developing world the danger lies in equating flexibility with small size this is because small size may not be necessary and certainly is not a sufficient condition for flexible specialization the keys to flexible specialization lie elsewhere in information technology applications networks synergies systems gains scope economies production and organizational flexibility not in small size this argument is developed with reference to the caribbean tourist industry a comparative analysis of jamaica s superclub hotel chain and italy s benetton textile company is undertaken this is done with a view to determining the factors in the success of their flexible specialization strategies implications for policy are drawn out

asset returns with transactions costs and uninsured individual risk abstract we explore whether incorporating an explicit motive for holding liquid assets within an equilibrium asset pricing model helps explain the following features of asset returns and turnover in the post war u s economy i the low risk free real interest rate ii the large spread between returns on liquid assets and stocks and iii the greater transaction velocity of liquid assets relative to stocks we introduce a demand for liquid assets by adding uninsured individual risk together with differential costs of trading securities numerical simulations attempting to match the return data generate a ratio of liquid assets to income considerably below observed levels

income risk borrowing constraints and portfolio choice economic theory suggests that uninsurable income risk and the expectation of future borrowing constraints can reduce the share of risky assets in a household s portfolio if the utility function exhibits decreasing absolute risk aversion and decreasing prudence an individual will reduce his exposure to rate of return risks when confronted with other independent risks if there are transaction costs the expectation of future borrowing constraints should induce individuals to keep a lower proportion of their wealth in the form of illiquid and risky assets the authors find support for these propositions in a cross section of italian households copyright 1996 by american economic association

caricom countries and appropriate technology abstract caricom governments believe that the growth and development of regional economies depend upon export oriented production moreover they are liberalizing their trade regimes in this environment some writers are urging them to adopt a more appropriate namely labor intensive technology this paper contends that the commitment to export oriented production the liberalization of trade regimes the shortage of financial resources and the poverty of regional infrastructure preclude the adoption of a labor intensive technology it therefore concludes that within the context of caricom the most appropriate technology is the most recent which is also the most capital intensive

the uruguay round agreements impact on developing countries abstract implementation of the results of uruguay round will bring about significant increases in trade investment income and welfare for developing countries this derives from increased market access to developed countries markets and from enhanced efficiency originating from their own liberalization commitments although the distribution of benefits will be uneven developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules and greater exposure to global competition within a more predictable secure and credible international trading environment to maximize the benefits however developing countries will need to continue with recent unilateral reforms to improve their supply response

the role of intergenerational transfers in aggregate capital accumulation this paper uses historical u s data to directly estimate the contribution of intergenerational transfers to aggregate capital accumulation the evidence presented indicates that intergenerational transfers account for the vast majority of aggregate u s capital formation only a negligible fraction of actual capital accumulation can be traced to life cycle or hump savings a major difference between this study and previous investigations of this issue is the use of more accurate longitudinal age earnings and age consumption profiles these profiles are simply too flat to generate substantial life cycle savings this paper suggests the importance of and need for substantially greater research and data collection on intergenerational transfers life cycle models of savings that emphasize savings for retirement as the dominant form of capital accumulation should give way to models that illuminate the determinants of intergenerational transfers

precautionary saving and portfolio allocation dp by gmm abstract there is much research on consumption savings problems with risky labor income and a constant interest rate and also on portfolio allocation with risky returns but non stochastic labor income less is known quantitatively about the interaction between the two forms of risk under crra utility undiversifiable income risk should be reflected in both savings rates and portfolio allocations to quantify these effects in a model of consumption and portfolio choice we adopt a semi parametric projection method for solving dynamic programmes based on generalized method of moments estimation of the parameters of approximate decision rules we find that background income risk does affect optimal portfolios but that this effect may be difficult to detect empirically

can caricom countries replicate the singapore experience this article tries to ascertain whether caricom countries1 can replicate the economic success of singapore based on export oriented industrialisation whereas it is possible for caricom countries to increase exports of some manufactures to industrial countries the article contends that export oriented policies currently urged upon caricom countries will not effect a replication of the singapore experience in an age of growing protectionism rapid technological change an inadequate indigenous social infrastructure and existing labour relations in the region

a three stage model of industrial trade show performance trade shows are an important but under researched component of the promotion mix for most industrial products in this paper we develop a three stage model of trade show performance relying on different indices of performance at each stage attraction contact and conversion efficiency we model the impact of preshow promotion booth space use of attention getting techniques competition number and training of booth salespeople on the extent of attraction contact and conversion the results from an empirical application using data from 85 firms that participated in a major trade show in 1991 suggest significant and different impact of these variables in addition we illustrate how the model can be used to evaluate trade offs among different decision variables finally we develop some general results implied by our model concerning the optimal allocation of trade show resources

global effects of developed country trade restrictions on textiles and apparel this paper uses an applied general equilibrium model to analyze the impacts of quota and tariff restrictions used by developed countries against textile and clothing imports from developing countries in the model countries are represented by their actual size in terms of gdp weakening rent transfer effects compared to partial equilibrium analysis results based on 1986 data suggest annual global gains from elimination of quotas and tariffs of around 23 billion in aggregate developing countries gain around 8 billion suggesting that gains to developing countries from improved access more than offset losses from foregone rent transfers as quotas and tariffs are abolished copyright 1990 by royal economic society

european community external protection and 1992 voluntary export restraints applied to pacific asia european community external protection and 1992 voluntary export restraints applied to pacific asia

why do so few hold stocks the authors investigate why 75 percent of u s households do not hold stocks despite the equity premium and predictions of expected utility models the question is relevant for privatization asset pricing and tax progressivity issues they show that risk aversion per se heterogeneity of beliefs habit persistence time nonseparability and quantity constraints on borrowing do not account for the phenomenon a wedge between borrowing and lending rates and minimum investment requirements are plausible but empirically weak factors more promising explanations are inertia and departures from expected utility maximization there is also qualified support for nondiversifiable income risk as a contributing factor copyright 1995 by royal economic society

asset pricing with limited risk sharing and heterogeneous agents we develop a model with incomplete markets and heterogeneous agents that generates a large equity premium while simultaneously matching stock market participation and individual asset holdings the high risk premium is driven by incomplete risk sharing among stockholders which results from the combination of aggregate uncertainty borrowing constraints and a realistically calibrated life cycle earnings profile subject to idiosyncratic shocks we show that it is challenging to simultaneously match asset pricing moments and individual portfolio decisions while limited participation has a negligible impact on the risk premium contrary to the results of models where it is imposed exogenously

bonds versus stocks investors age and risk taking abstract it has become increasingly popular to advise investors to relocate their funds from a primarily stock portfolio to a primarily bond portfolio as they get older however the well known decision rules such as mean variance or stochastic dominance rules are unable to explain this common practice almost stochastic dominance asd and almost mean variance amv approaches are used to examine the dominance of stock and bond portfolios asd and amv rules unambiguously support the popular practice of advising higher stock to bond ratio for long investment horizons hence we provide an explanation to the practitioners recommendation within the expected utility paradigm

a cross country input output analysis of intersectoral relationships between manufacturing and services and their employment implications abstract the paper examines the nature and the evolution of intersectoral relationships between manufacturing and services at different stages of industrialization as revealed by a cross country comparative analysis of input output tables of 26 countries at different income levels this paper suggests among many other findings that the intersectoral relationships between manufacturing and services generally characterize asymmetrical dependence namely service activities tend to depend on the manufacturing sector as a source of inputs to a far greater extent than vice versa moreover the employment absorptive capacity of the manufacturing sector is seriously underestimated when one only measures the direct employment effect of the manufacturing sector and ignores the intersectoral demand of the manufacturing sector for service inputs and its income induced demand for various types of services in effect the capability of the service sector to generate and sustain a high level of employment critically hinges upon its vital linkages with the manufacturing sector

income risk and portfolio choice an empirical study this paper investigates the relationship between portfolio choice and labor income risk in the national longitudinal survey of youth 1979 cohort permanent income risk variability of shocks to income that have permanent effect significantly reduces the share of risky assets in the household s portfolio while transitory income risk variability of shocks with no lasting effect does not this result provides strong evidence that households portfolio choices respond to labor income risks in a manner consistent with economic theory theoretical work has shown that uninsurable labor income risk is likely to reduce the share of risky assets in an investor s portfolio pratt and zeckhauser 1987 kimball 1993 bertaut and haliassos 1997 koo 1998 1999 elmendorf and kimball 2000 in a dynamic context when labor in come consists of components of different persistence the magnitude of this effect should depend on the persistence associated with the risk the risk to a persistent component should have a larger effect than the risk to a transi tory component surprisingly however empirical work has not examined this interesting implication of the theory this paper uses the rich information con tained in the national longitudinal survey of youth 1979 cohort nlsy79 to examine this implication we assume that labor income has two components permanent and transitory we then measure the risks of the components for a sample of households in the survey and estimate their effects on the risky asset share previous empirical

the textile and clothing industries under the fifth kondratieff wave some insights from the case of hong kong abstract this paper proposes that the world s textile and clothing industries have become increasing vertically disintegrated with a few flexible production regions the cream portion engaging in creative innovative dynamic and high value added activities and an expanding number and spatial extent of regions the cake portion taking part in low value added activities in between is an artificial layer protected by the international regulatory framework this layer has characteristics of both the cream and cake layers on the one hand the labor force in this layer suffers from low job mobility and low paid blue collar work of the cake portion and is dominated by female semi skilled workers on the other hand industrialists and governments in this layer enjoy the profits and high export values of the cream portion under the fifth kondratieff wave the textile and clothing industries have become increasingly coordinated and controlled by a thinner cream layer over time regions in the cake portion will find it increasingly difficult to transform themselves into cream because of deep seated structural and geographic differences

on continuous time optimal advertising under s shaped response continuous time monopolistic models of advertising expenditure that rely on strict response concavity have been shown to prescribe eventual spending at a constant rate however analyses of discrete analogs have suggested thats shaped response convexity for low expenditure levels may allow for the periodic optima encountered in actual practice casting the dynamic between advertising and sales in a common format an autonomous first order relationship the present paper explores extensions along three dimensions an s shaped response function the value of the discount rate and the possibility of diffusion like response supplementing the treatment by mahajan and muller 1986 a flexible class of s shaped response models is formulated for which it is demonstrated that in contrast to findings in the literature on discretized advertising models continuous periodic optima cannot be supported further a set of conditions on the advertising response function are derived that contains and extends that suggested by sasieni 1971 collectively these results both suggest a set of baseline properties that reasonable models should possess and cast doubt on the ability of first order models to capture effects of known managerial relevance

clothing chips and competitive advantage the impact of microelectronics on trade and production in the garment industry abstract this paper presents the results of a research project which examined the impact of microelectronics on the nature of production and the patterns of international trade in the clothing industry empirical evidence is given on the effects of microelectronics related innovations currently being used by clothing manufacturers in the developed countries radical innovations have been introduced in the pre assembly stage which have revolutionized this phase of production in contrast the introduction of microelectronics into assembly technology is still limited as a result the clothing industry remains reliant on labor intensive techniques that place it at a competitive disadvantage compared to low wage developing countries hence the determinants of international competitive advantage in the industry remain largely unaltered however due to increasing concentration and major new r d efforts in the public and private sector it is argued that the preconditions are being laid for a fundamental structural and technological transformation of the industry in the north which could have very important implications for the competitive position of third world clothing exporters emphasis is also placed upon the continued restraining effects of protectionist barriers imposed by the main importing nations and on the differential impact of this on the ability of newer entrants to achieve rapid and sustained export growth

shocks and asset dynamics in ethiopia abstractthis article uses household survey panel data of 416 rural households to study asset dynamics in the northern highlands of ethiopia and the response of assets to shocks the period under examination 1996 2003 was marked by severe environmental shocks including a series of droughts the article empirically studies the nature of household asset paths over time using as the point of departure the theory on precautionary savings behavior results indicate that the response of assets to weather shocks the differential effect of these shocks on liquid and less liquid forms of wealth holdings and the nature of asset dynamics are all consistent with the implications of a precautionary motive for holding wealth

chapter 9 econometric and time series market response models publisher summary marketing has seen a rapid expansion in the widespread use of quantitative methods correlation and regression analysis were among the first techniques used as marketing research emerged as a discipline after world war ii in the early 1970s regression analysis became econometrics simultaneous equation systems could be estimated almost as easily as single regression equations while econometrics as a whole continues to flourish as new and more sophisticated estimation techniques and associated computer software have become available simultaneous equation systems have not become widely prevalent the dynamic structure of marketing variables themselves is addressed in the chapter followed by discussions of leads and lags among marketing variables and the assessment of the direction of causality dynamic properties of sales response functions have been discussed in more detail marketing generalizations that have been uncovered as well as empirical evidence on the shape of the sales response function is reported

hedging familiarity and portfolio choice we exploit the restrictions of intertemporal portfolio choice in the presence of non nancial income risk to design and implement tests of hedging that use the information contained in the actual portfolio of the investor we use a unique dataset of swedish investors with information broken down at the investor level and into various components of wealth investor income tax positions and investor demographic characteristics portfolio holdings are identi ed at the stock level we show that investors do not engage in hedging but invest in stocks closely related to their non nancial income we explain this with familiarity that is the tendency to concentrate holdings in stocks with which the investor is familiar in terms of geographical or professional proximity or that he has held for a long period we show that familiarity is not a behavioral bias but is information driven familiarity based investment allows investors to earn higher returns than they would have otherwise earned if they had hedged

precautionary portfolio behavior from a life cycle perspective abstract the literature on household asset accumulation draws a sharp distinction between short run precautionary motives to buffer consumption from annual income shocks and long run life cycle considerations under income certainty however estimates of shock persistence imply considerable career uncertainty we study long run precautionary motives for life cycle wealth accumulation and portfolios allowing for uncertain returns incomes and lifespan we separate the effects of various factors on mean and median asset holdings including education risk aversion household heterogeneity bequests impatience variance and serial correlation of income shocks numerical solutions are compared with data from the 1992 survey of consumer finances

testing the rank of engel curves with endogenous expenditure abstract we find that the endogeneity of consumer expenditure tends to increase the estimated rank of engel curves this result based on nonparametric procedure is in line with previous results obtained in the context of parametric specifications

on the generalizability of advertising pulsation monopoly results to an oligopoly this paper introduces for the first time an analytical framework for modeling and analyzing sales response to advertising pulsation for competitive markets of mature products in continuous time for discrete piecewise policies that allow unequal cycle lengths employing a nash equilibrium solution concept this study supported with numerical analysis demonstrates that there is an oligopolistic as opposed to a monopolistic justification for advertising at a constant rate in the presence of concave response functions or advertising according to a pulsing policy in the presence of s shaped response functions the article employs a modeling framework whereby each of a set of competitors responses to advertising spending is governed mainly by lanchester type response is used to analyze the game resulting from cyclical advertising policies that are strictly adhered to by all players a non discounted averaged performance is used to assess the purported optimality of different variants of piecewise constant policies

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society