securing the containerized supply chain analysis of government incentives for private investment to mitigate the threat that terrorists smuggle weapons of mass destruction into the united states through maritime containers the u s bureau of customs and border protection cbp inspects containers upon entry to domestic ports inspection driven congestion is costly and cbp provides incentives to firms to improve security upstream in the supply chain thereby reducing the inspection burden at u s ports we perform an economic analysis of this incentive program called customs trade partnership against terrorism c tpat modeling in a game theoretic framework the strategic interaction between cbp trading firms and terrorists our equilibrium results highlight the possibility that a properly run program can efficiently shift some of cbp s security burden to private industry these results also suggest that cbp may have the opportunity to use strategic delay as an incentive for firms to join analysis of comparative statics shows that with increasing capacity membership in c tpat systematically declines

some empirical evidence on the effects of shocks to monetary policy on exchange rates this paper investigates the effects of shocks to u s monetary policy on exchange rates we consider three measures of these shocks orthogonalized shocks to the federal funds rate orthogonalized shocks to the ratio of nonborrowed to total reserves and changes in the romer and romer index of monetary policy in sharp contrast to the literature we find substantial evidence of a link between monetary policy and exchange rates specifically according to our results a contractionary shock to u s monetary policy leads to i persistent significant appreciations in u s nominal and real exchange rates and ii significant persistent deviations from uncovered interest rate parity in favor of u s interest rates

when do long run identifying restrictions give reliable results many recent articles have identified behavioral disturbances in vector autoregressions by imposing restrictions on the long run effects of shocks this article demonstrates that this approach will be unreliable unless the underlying economy satisfies three types of strong restrictions although many aspects of these issues have been raised before this article draws out and illustrates the implications for inferences under the long run scheme furthermore it provides strategies for dealing with the problems

measures of technology and the business cycle empirical evidence on the relationship between technology shocks and e g hours worked hinges crucially on the identification of the unobservable technological progress in this paper we study different measures of technology in order to find out i to what extent they capture the same underlying phenomenon and ii whether the implications for macroeconomic theory are robust across the approaches several versions of the productions function approach and structural var models are investigated our main finding is that the different technology measures are highly correlated however the exact formulation of the identifying restrictions seems to matter for the results while we replicate the standard finding of a strongly procyclical solow residual all other measures of technology are either acyclical or countercyclical

fiscal shocks and real exchange rate dynamics some evidence for latin america this paper analyses the effects of fiscal shocks using a two country macroeconomic model for output labour input government spending and relative prices which provides the orthogonality restrictions for obtaining the structural shocks dynamic simulation techniques are then applied in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate in the case of six latin american countries using quarterly data over the period 1980 2006 we find that in a majority of cases fiscal shocks are the main driving force of real exchange rate fluctuations

real wage indices this paper examines real wage measures that include leisure and nonlabor income in consumption decisions with respect to the advantages and disadvantages of partial versus complete welfare orderings and of utility based versus utility free wage indices in addition we argue that the usefulness of a real wage measure beyond welfare comparison has been ignored to test the robustness of utility based indices these real wage measures are calculated for two different utility function specifications the indirect addilog system and the linear expenditure system further comparisons are made against index bounds that are independent of the functional form for preferences

productivity shocks and real exchange rates abstract previous studies have concluded that productivity shocks have negligible effects on real exchange rate fluctuations this paper shows that when long run equilibrium relationships between real exchange rate levels and fundamental variables are taken into account relative productivity shocks account for most of the long run movements in the real exchange rates this can be interpreted as empirical support for the balassa 1964 journal of political economy 72 584 596 and samuelson 1964 review of economics and statistics 46 145 154 model where differences in relative productivity is the main source of long run deviations for purchasing power parity

balancing congestion and security in the presence of strategic applicants with private information concerns on security and congestion appear in security screening which is used to identify and deter potential threats e g attackers terrorists smugglers spies among normal applicants wishing to enter an organization location or facility generally in depth screening reduces the risk of being attacked but creates delays that may deter normal applicants and thus decrease the welfare of the approver authority manager screener in this paper we develop a model to determine the optimal screening policy to maximize the reward from admitting normal applicants net of the penalty from admitting bad applicants we use an m m 1 queueing system to capture the impact of security screening policies on system congestion and use game theory to model strategic behavior in which potential applicants with private information can decide whether to apply based on the observed approver s screening policy and the submission behavior of other potential applicants we provide analytical solutions for the optimal non discriminatory screening policy and numerical illustrations for both the discriminatory and non discriminatory policies in addition we discuss more complex scenarios including imperfect screening abandonment behavior of normal applicants and non zero waiting costs of attackers

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

a superpopulation theory approach to the design of price index estimators with small sampling biases this article uses simple superpopulation models to examine estimators for long and short term laspeyres price relatives based on pps samples

a class of multiplicative estimators of laspeyres price indexes publication of indexes measuring changes in prices of retail wholesale export and import items is an important part of many governmental statistics programs one form of price index that is often used is the fixed base laspeyres in which a fixed market basket of goods is priced over time this article introduces a new class of multiplicative estimators of laspeyres indexes the optimum within the class is derived for long term price change and compared with two other members of the class when used for estimating both long term and short term change theoretical properties are derived under a model in which long term relative price changes for individual items have common within stratum means and are correlated over time theory for long term and short term change estimators is tested in a simulation study in which a large number of stratified probability samples is selected from a population extracted from items priced for the u s consumer price index

on the impact of volatility on the real exchange rate terms of trade nexus revisiting commodity currencies abstract the aim of this paper is to study the relationship between terms of trade and real exchange rates in commodity producing countries on both the short and the long run we investigate potential non linearity in the real exchange rate terms of trade nexus according to the level of volatility in commodity and financial markets to this end we consider a panel of 68 commodity exporters split in sub samples of advanced intermediate and low income countries we first show that there is a long run relationship between real exchange rates and terms of trade taking also into account productivity and net foreign assets then we run panel smooth transition regressions to estimate the adjustment process of the real effective exchange rate to its equilibrium value depending on different proxies of volatility our results show that only advanced oil exporters currencies are sensitive to changes in terms of trade in the short run especially when volatility is high on commodity markets

the measurement of inflation a stochastic approach the stochastic approach to index number theory views each commodity price change as an independent observation on the underlying rate of inflation so that inflation can be estimated by averaging over all the prices this article extends the approach by a allowing for sustained changes in relative prices b showing the link with divisia index numbers and c deriving standard errors for the inflation estimates the results are illustrated with australian data

population intervals and the true cost of living index with known price distributions abstract this note provides a simple closed form expression for an aggregate cost of living index when prices paid differ across consumers properties of the lognormal distribution are used to construct a population interval around the index so that a given fraction of consumers have a true cost of living index in the interval

security screening queues with impatient applicants a new model with a case study abstract security screening policies are critical in military contexts airports ports and visa issuance processes in order to minimize risks from terrorists smugglers fugitives and others however such screening procedures also increase congestion and inconvenience for normal applicants which may create a trade off for the authorities balancing between risk and congestion in this paper we develop a game theoretical model to investigate optimal screening policies that acknowledges the trade offs between risk congestion and abandonment behavior of the applicants to calculate the average waiting time in the screening queue with heterogeneous impatient applicants we use a two dimensional markov chain model as a case study we tackle the security screening process of us visa applications by conducting an online survey collected data shows some key aspects of applicant preferences such as abandonment behavior we conduct sensitivity analysis for our model we show that if the authorities take the abandonment behavior of the applicants into account beforehand they may achieve higher utility depending on the characteristics of applicants

estimation of laspeyres price indexes using the prediction approach for finite population sampling estimators of chain and fixed base laspeyres price indexes are studied using the prediction approach to finite population sampling the estimators include some that are based on those used in several u s government index programs and others derived from prediction models biases and variances of the estimators are studied for a case in which the reference period index weights are unknown for nonsample items under a model for a one period price change in which items have common within stratum means unbiased estimators can be constructed but under a more general regression model special sample balance conditions are needed for unbiasedness of those estimators the theory for the estimators of fixed base indexes is illustrated in an empirical study using a population of items priced for the u s consumer price index

the common trend and transitory dynamics in real exchange rate fluctuations this study examines the behaviour of both common trend ct and transitory components of real exchange rate rer fluctuations under the current float the ct component is in most cases found to be sizeable albeit its relative importance can vary considerably across major currencies and its estimate can be sensitive to whether or not long run purchasing power parity ppp is imposed on the data further analysis suggests that both ct and transitory innovations are linked much more to interest rate changes than to productivity changes accordingly it is interest rate not productivity disturbances that drive the highly persistent rer

the substitution bias of the laspeyres price index an analysis using estimated cost of living indexes the most commonly used measure of the cost of living the consumer price index cpi published by the bureau of labor statistics is essentially a laspeyres price index it is well known however that a laspeyres price index provides an upward biased estimate of the cost of living because in keeping the same base period basket of goods as weights it does not take into account substitution among commodities induced by relative price changes the magnitude of the bias is an empirical question which is the focus of this study an estimate of the substitution bias may be obtained by taking the difference between the laspeyres price index and an estimated true cost of living index the true cost of living index cli is based on the theory of consumer demand it is the ratio of the minimum expenditures under two different price regimes necessary to maintain a constant level of utility as opposed to the constant basket of goods in the laspeyres index the size of the bias depends on two factors 1 the size of consumption substitution elasticities if there is no commodity substitution then the cli and laspeyres index coincide regardless of changes in relative prices and 2 the magnitude of relative price changes if all prices move together then the cli and laspeyres index again coincide regardless of the size of substitution elasticities in order to compute a true cli it is necessary to specify a particular utility function and estimate the parameters of the resulting system of demand equations see for example louis phlips p 135 several estimates of the magnitude of the substitution bias have appeared in the literature but all previous studies suffer from a common weakness they are all based on a very small number of commodities essentially because of econometric problems involved in estimating large systems of demand equations in one group of studies demand models have been estimated using highly aggregated data in which total consumption is grouped into four to nine aggregate commodites such as housing durables or clothing arthur goldberger and theodore gamaletsos for example estimate the linear expenditure system les demand model using data on five aggregate goods for several european countries and compare the resulting cli for one of the countries greece to the corresponding laspeyres price index tran van hoa estimates costof living indexes for six australian provinces using data on nine aggregate goods phlips cites work by r sanz ferrer who computed a cli for belgium from data on eight aggregate commodities in such studies using highly aggregated data the estimate of the substitution bias may be understated because the aggregation obscures substitution in consumption within categories which is perhaps more prevalent than substitution between gross aggregates another shortcoming of these three aggregate studies is the fact that they use only a single demand system and hence do not explore the sensitivity of the cli to a priori u s bureau of labor statistics the groundwork for this study was my dissertation i would like to thank the chairman and members of my committee r robert russell llad phillips and robert deacon for their support and helpful suggestions and jack triplett robert pollak richard j mcdonald and a referee for valuable comments on an earlier version the views expressed are my own and do not necessarily reflect the policies of the bureau of labor statistics for a theoretical discussion of cost of living indexes see robert pollak 1971b and paul samuelson and subramanian swamy

expenditure function estimates of the efficiency and distributive impact of indirect taxes in the united kingdom abstract this paper uses the expenditure function to consider the efficiency and distributional impact of indirect taxes in the united kingdom estimates of the parameters of the linear expenditure system of demand equations are employed to measure the compensating variation and equivalent variation costs of taxes on households in different income groups in addition distributional weights are used to consider the overall impact of different taxes and tax changes on social welfare finally we consider other types of demand system estimates which might be used in this kind of exercise

are supply shocks important for real exchange rates a fresh view from the frequency domain abstract this paper re examines the role of supply shocks for real exchange rate fluctuations and contributes by exploiting insights from the frequency domain perspective in contrast to the existing literature our empirical findings point towards an important role played by supply productivity shocks in driving us real effective exchange rate fluctuations at low frequencies while real demand shocks matter mostly at high and medium frequencies in addition we propose an approach to structurally decompose the persistence of the real exchange rate and find that supply shocks explain up to half of its persistence

historical evolution and benefit cost explanation of periodical fluctuation in coal mine safety supervision an evolutionary game analysis framework abstract the periodical fluctuation phenomenon appears in coal mine and other fields of government safety supervision the paper provides a theoretical explanation by building an evolutionary game model between coal mine industry and governmental supervision institutions moreover the paper provides a numerical example to demonstrate how the initial state and the costs or gains influence the fluctuation amplitude and the equilibrium position we find that the initial state and the payoffs of different strategies are the two main determinants of periodical fluctuation phenomenon the successful experience of coal mine safety supervision in china shows the importance of highly efficient government safety governance in developing countries