tariff effects on mnc decisions to engage in intra firm and arm s length trade using confidential firm level data from the bureau of economic analysis bea on activities of u s multinational corporations mncs and their canadian affiliates we study the dramatic growth of intra firm and arm s length u s canada trade over the 1984 95 period we find that decisions to engage in intra firm and arm s length trade are essentially unrelated to tariff and transport cost reductions over this sample period thus we find that the increase in trade occurred almost entirely on the intensive rather than the extensive margin this is consistent with case study evidence in keane and feinberg 2006 where mnc executives consistently indicate that the modest tariff reductions of the 1984 95 period were not sufficient to justify fixed costs of overhauling international supply chains our results have important implications for recent influential models of international trade that rely on sensitivity of intra firm trade to tariffs at the extensive margin to explain how small tariff declines could have led to the explosion of intra firm trade since the 1980s we also find that initial conditions i e 1983 tariffs are uncorrelated with whether firms engaged in intra firm or arm s length trade activity at the start of the sample period this result is surprising as it implies that firms industries with a greater propensity to engage in trade were not in general successful at lobbying for more favourable tariff treatment a l aide de donnees confidentielles au niveau de la firme du bureau of economic analysis bea a propos des activites des firmes plurinationales fpn americaines et de leurs succursales canadiennes on etudie la croissance dramatique du commerce usa canada tant intra firme qu a bout de bras pour la periode 1984 95 il appert que les decisions de s engager dans l un et l autre commerce sont fondamentalement non reliees aux reductions des couts de transport et des tarifs au cours de cette periode on decouvre que l accroissement du commerce s est produit presqu entierement a la marge intensive plutot qu a la marge extensive c est en ligne avec les resultats de l etude de cas de keane et feinberg 2006 ou les cadres des fpn ont systematiquement indique que les modestes reductions de tarifs entre 1984 et 1995 n etaient pas suffisantes pour justifier les couts fixes impliques par la modification de leurs chaines de production internationales ces resultats ont des implications importantes pour certains modeles influents de commerce international qui sont ancres dans une sensibilite du commerce intra firme aux tarifs a la marge extensive pour expliquer comment de faibles chutes de tarifs ont pu engendrer une explosion du commerce intra firme depuis les annees 80 on montre aussi que les conditions initiales e g les tarifs de 1983 ne sont pas co reliees avec le fait que la firme est engagee ou non dans l un ou l autre commerce en debut de periode le resultat est surprenant parce qu il implique que firmes et industries ayant une plus grande propension a commercer n ont pas eu de succes dans leur lobby pour obtenir un traitement tarifaire plus favorable

when is external debt sustainable the article empirically examines the determinants of debt distress defined as periods in which countries resort to any of three forms of exceptional finance significant arrears on external debt paris club rescheduling and non concessional international monetary fund lending probit regressions show that three factors explain a substantial fraction of the cross country and time series variation in the incidence of debt distress the debt burden the quality of policies and institutions and shocks the relative importance of these factors varies with the level of development these results are robust to a variety of alternative specifications and the core specifications have substantial out of sample predictive power the quantitative implications of these results are examined for the lending strategies of official creditors

understanding innovation an analysis of persistence for spanish manufacturing firms abstract this study focuses on the persistence of innovation in a panel of spanish manufacturing firms for the period 1990 2008 in particular we analyse whether persistence in firms innovation activities over time is the result of previous experience the dynamic capabilities of the firm or industry market related characteristics we find that r d input and innovation output are highly persistent at the firm level after controlling for unobserved heterogeneity and initial conditions and by using a dynamic random effects probit we conclude that there are similar determinants of persistence in r d and innovative activities among external environmental factors market dynamism affects r d and innovation regarding firm specific characteristics size and outsourcing also have a positive impact on both processes past innovative behaviour is clearly more decisive in explaining the current state of r d and innovation activities than external factors or firm level heterogeneity

investment and financing activity following calls of convertible bonds abstract the staged financing hypothesis of mayers mayers d 1998 why firms issue convertible bonds the matching of financial and real investment options journal of financial economics 47 83 102 predicts that investment and financing activity will increase following in the money convertible bond calls the prediction for out of the money convertible calls is different no increase is expected we study the rate of both corporate investment and external financing around forced conversions using benchmarks that are analogous to those recommended by barber and lyon barber b lyon j 1996 detecting abnormal operating performance the empirical power and specification of test statistics journal of financial economics 41 359 400 we also examine the cross section of changes in investment and financing activity conversion forcing firms exhibit an increase in both capital expenditures and debt financing around the year of the convertible bond call however the same result holds for the sample firms that conducted out of the money convertible calls further there is no relation between changes in investment activity and changes in debt issuance at the firm level the evidence is inconsistent with the notion that forced conversions serve as a catalyst for staged financing and investment

currency preferences and the australian dollar abstract we investigate currency substitution and currency complementarity in the case of the australian dollar data spanning 1984 2003 contain evidence of the australian dollar s substitution for the deutschmark and complementarity with the yen and the us dollar consistent with the theory that international variables will in general affect the demand for domestic money atemporally nonseparable preferences also give rise to the possibility of third currency effects our regressions find some evidence of these for example a rise in the us federal funds rate has been associated with rises in the value of the australian dollar against the mark and yen controlling for changes in other interest rates and in money supplies and real outputs

entry into pharmaceutical submarkets a bayesian panel probit analysis summary we study entry into pharmaceutical submarkets by using a dynamic panel probit model we develop a bayesian version of wooldridge s approach to dealing with unobserved heterogeneity we distinguish between greenfield entry entry with first product and undifferentiated entry which may take the form of introducing further products we extend the standard reduced form model to consider company size in the submarket and across all submarkets we find that greenfield and undifferentiated entries have different determinants that global and submarket size measures have different effects and that sunk costs often have positive effects on entry due to a commitment mechanism copyright 2012 john wiley sons ltd

the transactions demand for money in a two currency economy abstract in this paper the model of the transactions demand for money of baumol 1952 is extended to an economy where transactions are conducted in two currencies the currency substitution hypothesis that the domestic demand for domestic money depends on the expected rate of depreciation as well as the domestic rate of interest and level of income is derived from the model in addition several new insights into the implications of currency substitution are provided

instability of the u s money demand function this paper surveys the two major episodes of instability of the u s money demand function known respectively as the mystery of missing money and the great velocity decline it also assesses the recent literature on open economy money demand models and their usefulness in explaining the puzzling behavior of money demand manifested shortly after the transition to floating exchange rates copyright 1991 by blackwell publishers ltd

is there a global market for convertible bonds prior to 1984 the stock price reaction to announcements of convertible issue in the domestic market was significantly negative while the reaction to issues on the eurobond market was smaller in absolute value and not consistently negative after 1984 this difference in stock price reactions seems to have disappeared the difference in abnormal returns before 1984 cannot be explained by existing signaling models of convertible bond issues it is consistent however with the hypothesis that american firms captured some of the tax advantage of eurobonds relative to domestic bonds before the change in u s withholding taxes in july 1984 copyright 1992 by university of chicago press

is unemployment really scarring effects of unemployment experiences on wages joblessness leaves permanent scars on individuals they not only lose income during periods of joblessness they are also further scarred by these experiences when they find employment a spell of unemployment is found to carry a wage penalty of about 6 on re entry in britain and after three years they are earning 14 less compared to what they would have received in the absence of unemployment the scars are also carried into their second employment spell the first spell of joblessness is found to cause the most damage redundancy seems to be less stigmatising

the british low wage sector and the employment prospects of the unemployed abstractare low wages a way for the unemployed to switch to higher paying jobs using data from the british household panel survey the labour market dynamics of unemployed low paid and higher paid employed men are analysed moreover the respective un employment duration and occupational skill level are accounted for results show that in general low wages significantly reduce the risk of future unemployment and increase the chances of ascending the salary ladder especially in the case of long term unemployment 360 days furthermore the occupational skill level has a substantial influence on the upward mobility of low paid jobs individuals working in the initial period in a low paid and higher skilled occupation have on average an 11 percentage points higher probability of entering higher pay compared to when working in a low paid and low skilled occupation

time aggregation and state dependence in welfare receipt dynamic discrete choice models are an important tool in studies of state dependence in benefit receipt a common assumption of such models is that benefit receipt sequences follow a conditional markov process this property has implications for how estimated period to period benefit transition probabilities should relate when receipt processes are aggregated over time this paper assesses whether the conditional markov property holds in welfare benefit receipt dynamics in norway using high quality monthly data from administrative records we find that the standard conditional markov model is seriously misspecified estimated state dependence is affected substantially by the chosen time unit of analysis with the average treatment effect of past benefit receipt increasing with the level of aggregation the model can be improved considerably by permitting richer types of benefit dynamics we find strong evidence for both duration and occurrence dependence in benefit receipt allowing for heterogeneity in the entry and persistence processes we find important disparities in the effects of observed and persistent unobserved characteristics based on our preferred model the month to month persistence probability in benefit receipt for a first time entrant is 37 percentage points higher than the entry rate of an individual without previous benefit receipt over a 12 month period this corresponds to an average treatment effect of 5 percentage points

state dependence and heterogeneity in health using a bias corrected fixed effects estimator this paper considers the estimation of a dynamic ordered probit of self assessed health status with two fixed effects one in the linear index equation and one in the cut points the two fixed effects allow us to robustly control for heterogeneity in unobserved health status and in reporting behaviour even though we can not separate both sources of heterogeneity the contributions of this paper are twofold first it contributes to the literature that studies the determinants and dynamics of self assessed health measures second this paper contributes to the recent literature on bias correction in nonlinear panel data models with fixed effects by applying and studying the finite sample properties of two of the existing proposals to our model the most direct and easily applicable correction to our model is not the best one and has important biases in our sample sizes

comment sequential moment restrictions in panel data 1992 comment sequential moment restrictions in panel data journal of business economic statistics vol 10 no 1 pp 20 26

measuring state dependence in individual poverty histories when there is feedback to employment status and household composition this paper argues that the assumption of strict exogeneity which is usually invoked in estimating models of state dependence with unobserved heterogeneity is violated in the poverty context as important variables determining contemporaneous poverty status in particular employment status and household composition are likely to be influenced by past poverty outcomes therefore a model of state dependence is developed that explicitly allows for possible feedback effects from past poverty to future employment and household composition outcomes empirical results based on data from the german socio economic panel gsoep suggest that there are indeed such feedback effects and that failure to take them into account may lead to biased estimates of the state dependence effect copyright 2009 john wiley sons ltd

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

persistence of innovation discriminating between types of innovation and sources of state dependence abstract this paper advances current research on the persistence of innovation drawing on a panel data set constructed from three waves of the german part of the community innovation survey covering the time span from 2002 to 2008 i e cis iv cis 2007 and cis 2009 we explore persistence patterns for various types of innovation i e organizational product and process innovation and allowing for the moderating impact of firm level characteristics we use the ascertained patterns of persistence to comparatively evaluate various sources and underlying theoretical accounts of state dependence

the dynamics of health in the british household panel survey this paper considers the dynamics of a categorical indicator of self assessed health using eight waves 1991 1998 of the british household panel survey bhps our analysis has three focal points the relative contributions of state dependence and heterogeneity in explaining the dynamics of health the existence and consequences of health related sample attrition and the investigation of the effects of measures of socioeconomic status with a particular focus on educational attainment and income to investigate these issues we use dynamic panel ordered probit models there is clear evidence of health related attrition in the data but this does not distort the estimates of state dependence and of the socioeconomic gradient in health the models show strong positive state dependence and heterogeneity accounts for around 30 of the unexplained variation in health copyright 2004 john wiley sons ltd

the choice of call provision terms evidence of the existence of agency costs of debt an examination of the provisions of bond issues reveals that most bonds prohibit firms from calling the issue during the initial years after which time the bond can be called at the option of the firm a substantial number of firms however also reserve the right to call the issue during this initial period for purposes other than refinancing at a lower coupon rate the additional flexibility which accompanies the option of early redemption can be used to reduce the agency costs of debt associated with future investment opportunities informational asymmetry and the risk incentive problem using a sample of newly issued bonds statistical tests are performed to show that there are in fact differences between firms which do and do not reserve the right of early redemption this paper shows that these differences provide empirical evidence which is consistent with the hypothesis that firms use the option of early redemption to reduce agency costs one of the decisions which a firm must make when it floats a bond issue concerns the use of a call provision if a call provision is included in the bond then the terms of the call provision must be specified such as the years to the first call the initial call price the call price in subsequent years and the circumstances under which a call provision can be used previous work in the area of call provisions focused on fluctuations in interest rates as the reason for their existence it was shown by krause 12 however that in an efficient capital market any call provision decision based on interest rate uncertainty is irrelevant recent work in agency theory has shown that the existing contractual relationships between bondholders and stockholders may not be a zero sum game under these circumstances such financing decisions as capital structure debt maturity and call provisions may not be irrelevant an examination of the call provisions of currently outstanding bond issues reveals an institutional feature which is often overlooked many bonds have a standard call provision which restricts the firm from calling the issue for a stated number of years followed by a period during which firms have the option to call the bond at a stated call price another group of bond issues however contain a two tiered type of call provision which allows the corporation to call the bond for purposes other than refinancing at a lower coupon rate during the initial years of the life of the bond after this initial period the firm has the option of calling the bond issue for any purpose

simulation estimation of two tiered dynamic panel tobit models with an application to the labour supply of married women a comment summary we find that the empirical results reported in chang journal of applied econometrics 2011 26 5 854 871 are contingent on the specification of the model the use of heckman s initial conditions combined with observed and not latent lagged dependent variables leads to a counter intuitive estimation of the true state dependence the use of wooldridge s initial conditions together with the observed lagged dependent variable and a proper modelling of censoring provides a much more natural estimate of the true state dependence parameters together with a clearer interpretation of the decision to participate in the labour market in the two tiered model copyright 2015 john wiley sons ltd

fertility and female employment dynamics in europe the effect of using alternative econometric modeling assumptions we investigate the direct and long run effects of fertility on employment in europe estimating dynamic models of labor supply under different assumptions regarding the exogeneity of fertility and modeling assumptions related to initial conditions unobserved heterogeneity and serial correlation in the error terms we find overall large direct and long run effects of giving birth on employment probabilities and these effects differ considerably across countries we find that within countries the results are sensitive to the statistical assumption made on initial conditions the inclusion of serial correlation and the assumption of strict exogeneity of children however the pattern across countries is robust to these assumptions we show that such patterns are largely consistent with prevailing institutional differences related to the flexibility of the labor markets and family policies copyright 2009 john wiley sons ltd

state dependence in the incidence of strikes evidence from canadian contract data using heckman s dynamic probit model abstract this paper considers whether there is state dependence in strike incidence using longitudinal contract data from canada i obtain my estimates using heckman s estimator for dynamic probit models and find that there is no state dependence in strike incidence

does residential location matter to the employment of tanf recipients evidence from a dynamic discrete choice model with unobserved effects abstract we study the factors affecting the employment probability of temporary assistance for needy families tanf recipients using recent quarterly panel data from atlanta georgia a central focus of our study is to determine whether the tanf recipient s proximity to job opportunity and the availability of childcare affect her probability of full time employment both static and dynamic models of employment choice are estimated that control for unobserved individual effects we estimate models separately for a sub sample of tanf recipients living in public housing whose residential locations can be considered exogenously determined we find substantial evidence that individual and family characteristics such as the education of the recipient and the number of children and adults in her family are important determinants of the employment probability of welfare recipients on the other hand location related variables are found to be relatively unimportant

callable bonds reinvestment risk and credit rating improvements role of the call premium we identify the call premium in nonconvertible callable bonds as an effective contracting provision to address agency conflict due to reinvestment risk and credit rating improvements we analyze 4 495 bonds issued between 1980 and 2012 when interest rates are high a majority of investment grade issues and almost the entire subset with long maturities 20 years include a call premium when interest rates are low virtually all investment grade issues with long and short maturities are callable at par high yield issues are limited to short maturities by about 4 1 they include a call premium regardless of interest rate levels

crossing the innovation threshold through mergers and acquisitions firms are resorting more and more to mergers and acquisitions m a to bridge the gap between where they are and where they would like to be in relation to innovation and performance this paper investigates whether involvement in m a triggers distinct patterns of innovative behaviour across firms and whether this effect is conditional on firm size the analysis combines data from four waves of the community innovation survey cis and the business register of dutch manufacturing firms we observe that m as influence the probability that firms will begin innovation activities or persist with them and these effects vary at different points in the firm size distribution in particular by using m a firms are able to persist with the innovation efforts and output over time and this effect is especially strong for large firms for small firms m a help them to cross the innovation threshold increasing the probability of the transition from a non innovator to an active innovator however the m a effect does not mitigate the tendency of small firms to be occasional innovators

convertible bond design and capital investment the role of call provisions if firms issue convertible securities to facilitate sequential investment the securities should be engineered to give sufficient flexibility to accommodate timing of follow on investment we examine call provisions in convertible bonds and argue that firms with investment options expected to expire sooner later will offer weaker stronger call protection we find that issues with weak or no call protection are offered by firms that invest greater amounts soon after issuance than those issuing convertibles with strong protection moreover capital expenditure levels during the 5 year period following issuance are inversely related to the length of call protection periods most convertible bonds and notes have call provisions and most provisions have important qualifications or protection broadly speaking convertibles may have absolute protection not callable hard call protection noncallable for a specified period provisional or soft call protection callable if certain conditions on stock price are met or no protection callable anytime in this study we investigate the relations between the strength and length of call protection and firms subsequent investment behavior our hypothesis is a natural implication of the sequential financing motive for convertible debt financing for example in mayers 1998 firms finance their planned multistage investment programs with convertibles besides mayers sequential financing motive other explanations for convertible financing include theories based on post issuance risk shifting jensen and meckling 1976 green 1984 heterogeneous risk assessment brennan and schwartz 1988 and asymmetric information stein 1992 in a recent study lewis rogalski and seward 2001 offer an explanation based on equity market rationing stein s 1992 model has at least an implicit role for callability but we believe mayers explanation has direct implications for the nature of call provisions that we examine here he argues that convertible financing is well suited to

international currency substitution and the income velocity of money abstract this paper presents new empirical evidence on the degree to which international currency substitution destabilizes domestic money demand it also provides an explanation of some apparent discrepancies among previous empirical studies of currency substitution this explanation hinges on the distinction between the elasticity of currency substitution and the cross elasticity of money demand a large small value of one elasticity does not imply a large small value of the other a large cross elasticity is required for currency substitution to destabilize domestic money demand the empirical evidence presented here is consistent with the view that these cross elasticities are typically small

the eurobond market and corporate financial policy abstract on average significant positive abnormal returns are associated with eurobond issues during the period 1975 1985 the cross sectional and time series distributions of the abnormal returns are consistent with the hypothesis that impediments to the adjustment of asset supplies to new demand conditions are large enough to create profitable financing opportunities for firms our analysis demonstrates how profitable financing opportunities can persist on the eurobond market and when they are most likely to arise

empirical evidence of risk shifting in financially distressed firms this paper provides evidence of risk shifting behavior in the investment decisions of financially distressed firms using a real options framework i show that shareholders risk shifting incentives can reverse the expected negative relation between volatility and investment i test two hypotheses that are consistent with risk shifting behavior i volatility has a positive effect on distressed firms investment ii investments of distressed firms generate less value during times of high uncertainty empirical evidence using 40 years of data supports both hypotheses i further evaluate the effect of various firm characteristics on risk shifting and estimate the costs of the investment distortion

myopic loss aversion and stock investments an empirical study of private investors abstract myopic loss aversion was suggested by benartzi and thaler 1995 as an explanation for the equity premium puzzle its main prediction is that loss averse investors who evaluate their investment performance too frequently and therefore often observe small losses on their stock portfolios would invest too little in equity we investigate the link between myopic loss aversion and actual investment decisions of individual investors using survey data our results are consistent with the predictions of benartzi and thaler higher myopic loss aversion is associated with lower stock investment as a share of total assets investors tend to evaluate their stock portfolio performance too often which contributes to the prevalence of myopic loss aversion the effect of myopia is most apparent when investors both evaluate their portfolios frequently and trade stocks regularly

gender gaps in unemployment rates in oecd countries in some oecd countries the male and female unemployment rates are very similar but in others notably the mediterranean countries the female unemployment rate is much higher than the male explaining these cross country differences is the subject of this article we show that in countries where there is a large gender gap in unemployment rates there is a gender gap in both flows from employment into unemployment and from unemployment into employment we conclude that differences in human capital accumulation between men and women interacted with labor market institutions is an important part of the explanation

measuring the gender disparities in unemployment dynamics during the recession evidence from portugal abstractthis article researches gender differences in the incidence and persistence of unemployment during the debt crisis and recession in portugal through estimating a dynamic random effects prob

credit booms financial fragility and banking crises using a new country level panel database we explore effect of capital inflow surges credit booms and financial fragility on the probability of banking crises we find that booms increase the probability of a crisis only in relatively fragile financial systems

estimation of fractional dependent variables in dynamic panel data models with an application to firm dividend policy fractional dependent variables and models with state dependence arise in many economic applications however estimating models with fractional dependent variables is complicated by the presence of two corner solution outcomes when coupled with a dynamic panel data setting estimating quantities of interest can be quite complex or computationally difficult this article demonstrates a method for estimating fractional response variables which is easy to implement and presents an application of the technique to the determination of firm dividend policy the estimation demonstrates that neglecting dynamics unobserved heterogeneity or the doubly censored nature of the dependent variable can generate misleading conclusions

the market for elective surgery joint estimation of supply and demand this paper develops models of the demand for and supply of elective non emergency surgery using a panel of quarterly data for 200 english hospitals over the period 1995 2002 unusually distinct measures of supply outpatients seen and inpatient admissions and demand outpatient referrals and decisions to admit are available for each observation these offer the opportunity to estimate separate empirical models of supply and demand using ordinary least squares ols regression methods however the strong correlation between the residuals of these models suggests some merit in the deployment of seemingly unrelated regression sur methods although both static and dynamic sur estimations leave the results largely qualitatively unchanged sur estimation can have a considerable quantitative effect relative to the ols results for example sur estimation generates a lower elasticity of inpatient demand with respect to waiting time than that obtained via ols the results offer an important justification for more careful econometric modelling of hospital behaviour than has traditionally been employed in the health economics literature

dynamics of female labour force participation in france abstractthis article formulates and estimates a structural intertemporal model of labour force participation relying on theoretical characterizations derived from an economic model of lifetime behaviour we estimate a dynamic probit model with correlated random effects using longitudinal data to allow for a dynamic structure the model is applied to a panel of married women drawn from the 1997 2002 french labour force surveys in order to represent their participation behaviour it is estimated by maximum simulated likelihood our results show that women s decisions to go out to work are characterized by significant state dependence unobserved heterogeneity and negative serial correlation in the transitory error component in addition we find that the presence of young children in a woman s household reduces her labour participation but unequally according to their age and number as expected educational level has a positive impact on women s participation last a rise in the husband s wage is found

ghg registries participation and performance under the canadian voluntary climate challenge program between 1994 and 2004 the voluntary challenge and registry vcr played an important role in canadian climate change policy in this paper we examine the decision of firms to participate in the vcr the extent of their involvement and then ask if greenhouse gas emissions are related to past vcr participation as an information provision program we find evidence that firms may participate in vcr to signal their environmental responsibility to regulators and to some extent investors but not to consumers we also find that past involvement in the vcr is a strong and significant determinant of current involvement in the registry greenhouse gas emissions reported to the mandatory greenhouse gas reporting program in 2004 however do not appear to be different between vcr reporters and non reporters ghg emissions are observed to be significantly lower among firms that are smaller emit fewer toxic releases use more renewable energy sources are intermediate good producers and are located in quebec ontario and manitoba

state dependence individual heterogeneity and the choice of employment status evidence from korea abstractfocusing on the individual heterogeneity this article examines the causes of an individual s employment status choice and the extent of state dependence in the korean labour market we estimate a dynamic multinomial logit model using the panel data drawn from the first to fifteenth wave of the korean labour and income panel study the results suggest the presence of state dependence individual characteristics and growth background have a significant effect on the choice of employment status gender is still an important employment factor males are more likely to be employed and this gender effect is highest for regular employment re one s educational attainment and age operate in opposite directions that is educational attainment age has a positive negative impact on the choice of a regular job and a negative positive impact on the choice of a non regular job contrary to our expectations a wealthy family background reduces the probability of individuals being wage workers and rais

testing for choice dynamics in panel data this article applies different approaches to distinguish state dependence from unobserved heterogeneity and serial correlation and hence test for state dependence in consumer brand choices first we apply a simple method proposed by chamberlain which involves lagged exogenous variables only second we also estimate a lagged dependent variable specification proposed by wooldridge third we use the estimation approach suggested by wooldridge to estimate a model with both lagged dependent and exogenous variables to distinguish between the two different sources of choice dynamics state dependence and lagged effects of the exogenous variables our analysis reveals that the best approach is to use models with both lagged dependent and exogenous variables our findings include strong evidence for state dependence in five out of the six product categories studied in this article

persistence of innovation in dutch manufacturing is it spurious this paper studies the persistence of innovation and the dynamics of innovation output in dutch manufacturing using firm data from three waves of the community innovation surveys cis pertaining to the periods 1994 1996 1996 1998 and 1998 2000 we estimate by maximum likelihood a dynamic panel data type 2 tobit model accounting for individual effects and handling the initial conditions problem we find that there is no evidence of true persistence in achieving technological product or process innovations while past shares of innovative sales condition albeit to a small extent current shares of innovative sales

the dynamics of aid and political rights using cross country panel data we explore the extent to which the variation over time in measures of democracy and political rights can be explained by changes in aid inflows thus providing direct evidence on the impact of innovations in donor policy on the quality of recipient governance we distinguish between the short run and long run effects of changes in aid our results are very different from those based on cross country variation in aid inflows we find evidence of large differences between the effect of aid for political reform and the effect of other types of aid in aggregate these effects also depend on the recipient country s initial level of political development there is no evidence that aid intended for political reform has achieved its objective and in some countries it may be counterproductive however aggregate aid can have a beneficial effect on political rights

no money no honey financial versus knowledge and demand constraints on innovation the paper adds to the literature on the barriers to innovation in two ways first we assess comparatively what mostly constrains firms ability to translate investment in innovation activity into new products and processes whether it is mainly finance as most of the literature would suggest or whether it is mostly knowledge and market related aspects second we suggest a method to correct for the sample selection bias that often affects empirical contributions to this scholarship by filtering out firms that are not interested in innovation from those that struggle to engage in it we obtain a relevant sample of potential innovators which allows us to analyse the comparative effect of financial and non financial barriers on innovation success we find that demand side factors particularly concentrated market structure and lack of demand are as important as financial constraints in determining firms innovation failures this evidence redirects attention from financial to non financial barriers by considering traditional demand market structure and regulation factors involved in reduced firm innovation performance the empirical analysis is based on an unbalanced panel of firm level data from four waves of the uk community innovation survey cis between 2002 and 2010 merged with data from the uk business structure database

short term labour migration from the republic of armenia to the russian federation we explore the determinants of short term labour migration from armenia to russia based on a unique panel dataset a dynamic switching regression model with endogenous switching is applied our evidence pinpoints migration experience the expected individual income gap from migration low job opportunities in armenia and the possibility of diversifying income risks as the most important determinants family ties turn out to be insignificant the hypothetical income gap is about 280 per cent several explanations are provided for the fact that some individuals do not migrate in spite of a large income gap

the great divide in scientific productivity why the average scientist does not exist we use a quantile regression approach to estimate the eects of age gender research funding teaching load and other observed characteristics of academic researchers on the full distribution of research performance both in its quantity publications and quality citations dimension exploiting the panel nature of our dataset we estimate a correlated random eects quantile regression model accounting for unobserved heterogeneity of researchers we employ recent advances in quantile regression that allow its application to count data estimation of the model for a panel of biomedical and exact scientists at the ku leuven in the period 1992 2001 shows strong support for our quantile regression approach revealing the dierential impact of almost all regressors along the distribution we also nd that variables like funding teaching load and cohort have a dierent impact on research quantity than on research quality jel classi cation c14 c23 l31 o31 o32

whose wages do unions raise a dynamic model of unionism and wage rate determination for young men we estimate the union premium for young men over a period of declining unionization 1980 87 through a procedure which identifies the alternative sources of the endogeneity of union status while we estimate the average increase in wages resulting from union employment to be in excess of 20 we find that the return to unobserved heterogeneity operating through union status is substantial and that the union premium is highly variable we also find that the premium is sensitive to the form of sorting allowed in estimation moreover the data are consistent with comparative advantage sorting our results suggest that the unobserved heterogeneity which positively contributes to the likelihood of union membership is associated with higher wages we are unable however to determine whether this is due to the ability of these workers to extract monopoly rents or whether it reflects the more demanding hiring standards of employers faced by union wages 1998 john wiley sons ltd

the interrelated dynamics of unemployment and low wage employment this paper examines the extent of state dependence in unemployment and the role played in this by intervening low wage employment a range of dynamic random and fixed effects estimators are compared low wage employment is found to have almost as large an adverse effect as unemployment on future prospects and the difference in their effects is found to be insignificant evidence is presented that low wage jobs act as the main conduit for repeat unemployment and considerably increases its probability obtaining a higher wage job reduces the increased risk of repeat unemployment to insignificance

semiparametric bayesian inference for dynamic tobit panel data models with unobserved heterogeneity summary this paper develops semiparametric bayesian methods for inference of dynamic tobit panel data models our approach requires that the conditional mean dependence of the unobserved heterogeneity on the initial conditions and the strictly exogenous variables be specified important quantities of economic interest such as the average partial effect and average transition probabilities can be readily obtained as a by product of the markov chain monte carlo run we apply our method to study female labor supply using a panel data set from the national longitudinal survey of youth 1979 copyright 2008 john wiley sons ltd

currency substitution and instability in the world dollar standard comment myron ross correctly points out in his comment that u s price inflation is better predicted by the american money supply mlus than by the broader ten country world money supply mlw over the whole statistical time series from 1960 to 1980 provided in mckinnon s 1982 article specifically he showed that american price inflation is more highly correlated with mlus lagged one or two years than with mlw similarly lagged however mckinnon s present tense assertion that in general growth in the world money supply is a better predictor of american price inflation than is american money growth applies only to the weak dollar standard of the 1970 s and early 1980 s as his preceding discussion intended but failed to indicate clearly only in this later period of volatile exchange rates and price level instability in the united states do alternative hard currencies such as the yen and deutsche mark become competitive as international stores of value and units of account hence international currency substitution associated with the ebb and flow of speculation against or for the dollar significantly destabilized the demand for mlus in the 1970 s and 1980 s and only in this later period might one expect the sum of these internationally substitutable monies ml to predict world and perhaps even american price inflation better than does mlus in contrast during the strong dollar standard of the 1950 s and 1960 s the dollar was unchallenged as international money exchange rates were by and large convincingly fixed speculation for or against the dollar was incapable of substantially altering u s interest rates or of directly affecting the demand for mlus because cyclical international influences did not then destabilize the demand for dollars mlus was by itself a fairly efficient predictor of american prices thus ross s statistical results for the period 1960 to 1980 show somewhat greater predictive strength in mlus compared to ml because the 1960 s data outweigh the dissimilar data of the 1970 s let us instead partition the sample of imf data around the year 1970 whence began the transition from fixed to fluctuating exchange rates and the maturation of alternative monetary systems in europe and japan after applying similar statistical correlation procedures to those used by ross we show a striking structural shift in the world s monetary system the explanatory power of mlw increases sharply as that of mlus declines moderately tan 1982 for the early period of 1960 to 1970 table 1 shows simple correlation coefficients between annual percentage changes in money supplies and changes in american and world wholesale price indices the mlus provides a good explanation of u s prices and of world prices one to two years hence whereas the broader definition of mlw in which mlus enters with a 50 percent weight does surprisingly poorly being insignificantly correlated with american or world prices apparently money growth in industrial countries other than the united states was not then an independent source of worldwide inflationary pressure during the strong dollar standard table 2 shows the same simple correlations between percentage changes in prices and money for the weak dollar standard of stanford university please note that a typographical error giving the last word in the original title as market appeared on the cover of the june 1982 issue of this review the title was correct in the table of contents and on the article

gender segregation in employment contracts this paper presents evidence on gender segregation in employment contracts in 15 e u countries using microdata from the echps women are overrepresented in part time jobs in all countries considered but while in northern europe such allocation roughly reflects women s preferences and their need to combine work with child care in southern europe part time jobs are often involuntary and provide significantly lower job satisfaction than full time ones women are also overrepresented in fixed term contracts in southern europe and again this job allocation cannot be explained by preferences or productivity differentials between the two genders there is thus a largely unexplained residual in the gender job allocation which may be consistent with some degree of discrimination in a few of the labor markets considered especially in southern europe jel j22 j28 j71

decomposing two values of a binary variable application to the unemployment differential in hungary this paper presents a study of the individual determinants of unemployment in hungary it seeks to understand the reasons why hungarian women were in 1992 less likely to be unemployed than their male counterparts it estimates first the probability of being in the stock of unemployment and secondly one particular inflow into unemployment adapting standard discrimination analysis to the case of binary variables the paper decomposes the differential in average unemployment rates by gender the paper shows that differences in individual endowments account for very little of the gender gap in the stock of unemployment on the other hand slightly less than half the unemployment gap could come from differences in one digit occupations and sectors of employment between male and female employees

third party intervention and the preservation of bargaining relationships this article uses longitudinal bargaining contract data to examine whether third party dispute resolution procedures improve the health of bargaining relationships and contribute to their preservat

does government funding complement or substitute private research funding to universities abstract there is growing political pressure on universities to intensify their interaction with industry and to enlarge their own research funding options in a context characterised by increasing constraints on public spending however whether the successful achievement of such a political desired outcome is consistent with a restriction of government funding is not clear and requires further investigation as a matter of fact there is scant empirical evidence on whether and to what extent government funding affects the external funding options available to universities in particular those related to research and consulting activities by using a set of probit and tobit panel data models estimated on financial data for the whole population of italian university departments engaged in research in the engineering and physical sciences this paper provides evidence that government funding to universities complements funding from research contracts and consulting contributing to increasing universities collaboration with industry and activating knowledge transfer processes

evidence on the dynamics of unemployment by gender we present empirical evidence regarding unemployment dynamics for women and men in eight oecd countries unit root tests are used to examine the unemployment dynamics of women and men failure to reject the unit root hypothesis is consistent with unemployment hysteresis rejection of the unit root hypothesis indicates that unemployment dynamics are best explained by the natural rate of unemployment or the structuralist view we find evidence of gender differences in unemployment dynamics in canada germany and the us but not in other countries while there are some differences in the extent of persistence across gender and across countries the degree of persistence for both female and male unemployment rates is fairly low in all countries our results therefore contrast with substantial empirical evidence of high levels of unemployment persistence in european countries

poverty and social exclusion two sides of the same coin or dynamically interrelated processes there is growing interest in the analysis and measurement of social exclusion to complement the static and dynamic literature on income poverty on theoretical grounds social exclusion and income poverty are seen as different processes but with closely interrelated dynamics however our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited to shed some light on the issue we use a dynamic bivariate probit model controlling for unobserved heterogeneity and wooldridge 2005 type initial conditions both the first and second order markov dynamics are examined we estimate the model using the italian sample of the european community household panel echp waves 1 8 and find a sizable extent of state dependence in both poverty and social exclusion moreover there are dynamic cross effects implying that poverty and social exclusion are mutually reinforcing social policies aimed at eradicating poverty and avoiding individuals social

the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy grisorio m j and prota f the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy regional studies this paper is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition it studies the effects of the ongoing decentralization process in italy on the share of different categories of public spending in total expenditure of the italian regional administrations over the period 1996 2008 the data used allow one to go beyond the usual distinction between current and capital expenditures and to present a functional classification of public expenditures through a panel data analysis the paper shows that the level of decentralization influences the composition of expenditure

job search requirements for unemployed at the end of working life effects on unemployment dynamics and self employment probabilities this paper investigates the extent to which job search requirements in unemployment insurance u i increase the probability of self employment as a retirement route for causal identification we apply a difference in differences approach using a dutch 2004 policy reform that introduced job search requirements in u i for persons aged 57 5 and older unemployment dynamics and self employment probabilities are studied using a dynamic multinomial logit model with unobserved heterogeneity the results suggest that job search requirements stimulated people to exit unemployment and discouraged older workers to enter unemployment the probability of self employment as an exit route to retirement increased relative to u i but not relative to paid employment

waiting to invest investment and uncertainty the textbook analysis that accepts all projections with positive net present values as positive is quite generally wrong the ability to delay a project means that almost every project competes with itself postponed with uncertain interest rates even the simplest of projects has an option value the effect of interest rate uncertainty on the optimal delay of investment is sizable this implies that the rate of aggregate investment will depend on both the level of the real interest rate and the degree of interest rate uncertainty furthermore it is not necessarily true that investment rises with a fall in interest rates copyright 1992 by university of chicago press

poverty transition and persistence in ethiopia 1994 2004 summary this study analyzes the persistence of poverty in both rural and urban areas in ethiopia during 1994 2004 the key finding is that households move frequently in and out of poverty but the difficulty of exiting from poverty like the chance of avoiding slipping back increases with the time spent in that state and varies considerably between male and female headed households our results imply that it is important to design anti poverty policies both to hinder households from slipping into extreme poverty and to minimize the length of the poverty spell for households once they have fallen into it

currency substitution capital mobility and money demand abstract this paper re examines the currency substitution cs issue by specifying a general portfolio balance pb model where domestic residents demand for foreign money is distinguished from their demands for foreign non monetary assets the latter possibility which reflects international capital mobility as opposed to cs per se is already a key feature in the open economy macro literature the inclusion of foreign money leaves the usual asset demand functions unchanged in the pb model that ignores cs at least as far as the appropriate rate of return arguments and their signs are concerned although this suggests that cs is of limited importance in macro modelling it implication for the estimation of money demand functions is pursued an initial attempt is made to empirically isolate the separate efects of high capital mobility and currency substitution for canada germany the united kingdom and the united states the results while not conclusive due to high multicollinearity problems bring into question the empirical as well as the theoretical relevance of currency substitution

the predictive performance of the time series model and the regression model of the income velocity of money this paper provides a comparative study of the relative performance of two models of the income velocity of money a time series model and a regression model using quarterly data from five eec countries our empirical results show that the regression model provides more accurate in sample prediction than the time series model out of sample however the regression model does not consistently outperform the time series model instead a linear composite perdiction combining the predictions from the time series and the regression models appears to perform the best two other results of this paper are 1 the stochastic structure of the income velocity of money can be adequately represented by a random walk with drift model after seasonality is properly accounted for 2 the regression model is temporally unstable for four of the five eec countries

split panel jackknife estimation of fixed effect models we propose a jackknife for reducing the order of the bias of maximum likelihood estimates of nonlinear dynamic fixed effect panel models in its simplest form the half panel jackknife the estimator is just 2 hat theta bar theta 1 2 where hat theta is the mle from the full panel and bar theta 1 2 is the average of the two half panel mles each using t 2 time periods and all n cross sectional units this estimator eliminates the first order bias of hat theta the order of the bias is further reduced if two partitions of the panel are used for example two half panels and three 1 3 panels and the corresponding mles on further partitioning the panel any order of bias reduction can be achieved the split panel jackknife estimators are asymptotically normal centered at the true value with variance equal to that of the mle under asymptotics where t is allowed to grow slowly with n in analogous fashion the split panel jackknife reduces the bias of the profile likelihood and the bias of marginal effect estimates simulations in fixed effect dynamic discrete choice models with small t show that the split panel jackknife effectively reduces the bias and mean squared error of the mle and yields confidence intervals with much better coverage

asset based poverty transition and persistence in rural china this article tests empirically for transition and persistence of poverty in rural china based on the theory of asset based poverty traps it proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state dependence of poverty specifically a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households unobserved characteristics and observed regime differentiated accumulation strategies into account the static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption furthermore allowing for endogenous initial poverty status the dynamic analysis finds strong true state dependence in poverty households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime assets below the dynamic threshold serve as a conduit through which poverty propagates itself factors that help to break this vicious circle are identified

interactions between cap agricultural and agri environmental subsidies and their effects on the uptake of organic farming we analyze the effects of the interactions that the two pillars of the european union common agricultural policy market support and rural development have on farmers uptake of organic farming practices special attention is given to the 2003 reform which substantially altered the relative importance of the two types of support by decoupling direct agricultural payments from the production of a specific crop in our empirical analysis we study the case of sweden making use of the variation in the timing of farmers decisions regarding participation in support programs we estimate a dynamic non linear unobserved effects probit model to account for unobserved individual heterogeneity and state dependence our results indicate the existence of a negative effect of the market support system in place when organic farming techniques were adopted before the 2003 reform however this effect is reversed by the introduction of decoupling furthermore the effects of support differ between certified and non certified organic production both pillars have significant effects on non certified organic farming whereas certified organic farming is exclusively driven by agro environmental subsidies

regionalism and conflict peace creation and peace diversion abstract we investigate the implications of preferential trade agreements ptas for interstate conflict we set up a two stage game with three competing importers where first two of the countries decide on whether to initiate war against each other and subsequently all three countries select their import tariffs we show that ptas produce both a peace creation effect and a peace diversion effect whereby they reduce the likelihood of conflict between member countries peace creation but render the eruption of war between member and non member countries more likely peace diversion this paper is the first to identify and explicitly model the peace diversion effect of ptas and is also the only one in this literature to endogenize countries terms of trade we use data from the correlates of war project to empirically test these predictions and after controlling for endogeneity we find robust evidence of both peace creation and peace diversion in relation to pta establishment

investment incentives debt and warrants abstract this paper models and characterizes investment incentive problems associated with debt financing the decision problem of residual claimants is explicity formulated and their investment policies are characterized the paper also analyzes the use of conversion features and warrants to control distortionary incentives these claims reverse the convex shape of levered equity over the upper range of the firm s earnings and this mitigates the incentive to take risk it is shown that under certain conditions such claims can be constructed to restore net present value maximizing incentives and simultaneously meet the financing requirements of the firm

borrowing from pui to pay pom multiple borrowing and over indebtedness in rural thailand summary rural financial markets have grown rapidly in asian emerging market economies thus contributing to economic development and the reduction of poverty at the same time however the level of indebtedness of rural households has increased making households more vulnerable to shocks one of the reasons for rising household debt is the ease of borrowing simultaneously from a growing number of lending institutions this paper addresses two major questions first does borrowing from multiple sources increase rural households risk of over indebtedness second do over indebted rural households refinance their outstanding loans through multiple borrowing running the risk of becoming trapped in a debt cycle employing a dynamic random effects bivariate probit model for a unique set of longitudinal household panel data from northeast thailand this study examines the bidirectional relationship between over indebtedness and multiple borrowing to determine to what extent rural households become trapped in debt cycles on the one hand the results indicate that households in northeast thailand take on multiple loans which further increases their risk of becoming over indebted on the other hand our model results do not confirm the widespread notion that over indebted rural households use multiple loans to refinance unpayable debts

crude oil price uncertainty and corporate investment new global evidence abstract using a comprehensive dataset of more than 33 000 firms from 54 countries in the period 1984 2015 we show that crude oil price uncertainty negatively influences corporate investment more importantly the effect is dependent on the market and stock characteristics of the firms in addition we discover that the effect is stronger in the crude oil producers group than for crude consumers our analysis reveals that the global financial crisis and market volatility phases significantly affect this relationship our results survive a range of robustness tests

environmental regulation and foreign direct investment evidence from south korea abstract this paper studies how environmental regulation shapes the pattern of foreign direct investment fdi and thereby assesses the pollution haven hypothesis conflicting results exist in the case studies examining the most advanced countries partly due to the deterrent effect of clean technology adoptions on industry migration to minimize the clean technology effect we examine the pattern of south korean fdi over 2000 2007 the period that korean firms relied on old production technologies despite facing rapidly strengthened environmental standards a difference in differences type identification strategy circumvents other potential confounders we find strong evidence that polluting industries tend to invest more in countries with laxer environmental regulations in terms of both the amount of investment intensive margin and the number of new foreign affiliates extensive margin a similar finding is obtained when imports are analyzed

selection staging and sequencing in the recent chinese privatization selection in privatization is a decision making process of choosing state owned enterprises soes prioritizing and sequencing privatizing events and determining the extent of private ownership in partial privatization we investigate this process in an important but rarely studied case of china based on the soe population over 1998 2008 we track 49 456 wholly soes and identify 9 359 privatization cases over time our econometric analysis concludes i the privatization selection is a complex decision making process in which local governments balance between various economic financial and political objectives ii in the recent chinese privatization firm performance relates to the selection staging and sequencing in privatization in an inverted u fashion the worse and the best performing soes are more likely to remain state owned maintain higher state holding when privatized and are less likely to be privatized later in time these patterns suggest the privatization reform slowdown and the underlying changes in the privatization policy

a framework for estimating dynamic unobserved effects panel data models with possible feedback to future explanatory variables abstract i show how to construct the likelihood function for the conditional maximum likelihood estimator in dynamic unobserved effects models where not all conditioning variables are strictly exogenous the method for handling the initial conditions problem appears to be novel and offers a flexible relatively simple alternative to existing methods

currency substitution and the precautionary demand for money abstract although the implications of currency substitution have received considerable attention recently the microeconomic foundations of this phenomenon seem largely to have been taken for granted the present paper considers the precautionary motive for holding cash balances as one possible motivation for the currency substitution hypothesis a three asset model is presented in which transaction costs are explicit and an agent is faced with uncertain cash requirements in two different currencies the role played by the expected rate of depreciation in the optimal portfolio allocation is found to conform with prior beliefs

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women

portfolio theory and currency substitution one of the major reasons friedman 1953 and johnson 1972 advocated flexible exchange rates was to eliminate supply side monetary substitutability which can incapacitate domestic monetary policy however contributors to the currency substitution literature including miles 1978 girton and roper 1981 and mckinnon 1982 have argued that when economic agents hold both domestic and foreign monies variations in foreign interest rates or expected future exchange rates can make domestic money demand functions unstable as economic agents shift resources in response to changes in prospective relative returns as a result they and others have claimed that flexible exchange rates may not secure domestic monetary autonomy l the major purpose of this paper is to demonstrate the conditions under which foreign and domestic monies are substitutes in demand when economic agents have motives to hold both and to contrast the determinants of currency substitutability with those of the more general concept of asset substitutability importantly it is demonstrated that the usual portfolio theoretic justification for including opportunity cost variables such as foreign interest rates foreign inflation rates or expected

exchange rate volatility and currency substitution abstract this paper employs a conventional small open economy portfolio balance macromodel to unveil new implications of currency substitution increased substitutability between foreign and domestic currency is found to affect the response of the exchange rate of both asset market and commodity market shocks in particular the extent of exchange rate overshooting and undershooting depends on the degree of currency substitution