effective purchasing power in a quantity constrained economy an estimate for the german democratic republic a measure of microeconomic disequilibrium for households facing both budget and quantity constraints is estimated from east german data using a new specification the flexible cobb douglas utility function the parameters of a german direct utility function are estimated from west german family budgets it is estimated that an average east german family in 1977 would have been willing to give up 13 of its total expenditure in order to attain its demands at official prices

a globally flexible almost ideal demand system the almost ideal demand system is combined with the fourier expenditure system subject to the assumption that preferences are of the price independent generalized logarithmic class the resulting demand system has the desirable features of each of its components aggregate demand equations are consistent with preferences of a representative consumer and consistent estimates of elasticities are obtained for all observed prices application of the new demand system to u s consumption of meats and fish reveals that it fits the data well and that the restriction to the usual specification is rejected

financial firm production of monetary services a generalized symmetric baroett variable profit function approach an alternative monetary production model of financial firms is employed to investigate supply side monetary aggregation financial firms are conceived to produce monetary services as outputs through financial intermediation a new method for testing the existence of consistent monetary output aggregates in financial firms production technology is developed in terms of a multiproduct firm s variable profit function and the method does not require homotheticity of the aggregator function we use a generalized symmetric barnett flexible functional form that specification satisfies global curvature conditions and retains its flexibility under the null hypothesis of weak separability neither of those properties is possessed by other flexible functional forms

profit function approximations and duality applications to agriculture monte carlo simulations of profit functions indicate that flexible functional forms may be ranked nearly the same with respect to allen uzawa partial substitution elasticities or price and fixed factor elasticities flexible functional form approximations of output price elasticities are generally worse than approximations of input price or fixed factor elasticities minflex laurent functional forms did not appear to approximate underlying elasticities any better than did their translog and generalized leontief counterparts

deriving a flexible mixed demand system the normalized quadratic model this article deals with the specification of a locally flexible and theory consistent system of mixed demand functions a framework that allows for a rich set of possibilities about what is assumed as exogenous in a demand model a coherent mixed demand system is derived by using the restricted expenditure function typically studied in the related area of rationed demands the method is implemented by a new normalized quadratic nq parameterization of the restricted expenditure function the resulting nq mixed demand system is illustrated with an application to a nine good model of the italian demand for vegetables

indirect addilog translation of indirect utility functions the difficulty of specifying a set of consumer demand equations that can simultaneously display compatibility with rational economic behaviour regularity and have the capacity to represent a comprehensive spectrum of consumer behaviour flexibility is well known a variety of approaches have been investigated in the literature but scope for substantial improvement remains the approach of this paper is to start from indirect utility functions producing globally regular if inflexible systems and to improve flexibility by adding parameters through a device termed indirect addilog translation on connait bien la difficulte de specifier un ensemble d equations de demande du consommateur qui puisse en meme temps etre compatible avec un comportement economique rationnel regularite et avoir la capacite de representer un spectre comprehensif de comportements du consommateur flexibilite la litterature specialisee a propose une variete d approches mais il y a encore place a beaucoup d amelioration l approche suggeree dans ce memoire part des fonctions indirectes d utilite qui produisent des systemes globalement reguliers meme s ils sont inflexibles et en ameliore la flexibilite en ajoutant des parametres via un procede qu on a nomme traduction indirecte addilog

methods for measuring the economic impact of ambient pollutants on the agricultural sector discussion ing from pope models for measuring economic impact should consider the follow ing three principles a it should be flexible enough to describe the underlying environ ment b it should accommodate theory and c it should provide results that directly lead to policy implications in this discussion these principles are employed as a criterion for judg ing the merits of papers by dixon garcia and mjelde dgm hamilton mccarl and adams hma and atkinson adams and crocker aac a discussion of their papers is followed by suggestions for future research methods in measuring impacts of ambient pol lutants

a model of the financial firm with imperfect asset and deposit elasticities abstract the paper develops an intertemporal model to estimate the production technology of financial firms such as banks price taking is testable in each separate market for assets and liabilities and competitive price taking is a nested special case such tests are applied both to outputs and inputs empirical results for a sample of banks in new york and new jersey indicate that price taking applies only in markets for labor and time deposits in markets for loans demand deposits cash and materials the price taking hypothesis is not accepted

the rationale of the mean standard deviation analysis skewness preference and the demand for money publisher summary this chapter discusses the rationale of the mean standard deviation analysis skewness preference and the demand for money in january 1969 issue of the review of economic studies karl borch and martin feldstein separately criticized the widely used mean variance analysis of portfolio selection borch contended that any system of upward sloping mean standard deviation e s indifference curves can be shown to be inconsistent with the basic axiom of choice under uncertainty he pointed out that one can always pick any two points on an upward sloping indifference curve to represent two bernoulli distributions with probability 1 p of gaining the same amount x in both the cases and probability p of gaining y1 in the case of one distribution and y2 in the case of the second distribution with y2 y1 if the second distribution represents the point to the northeast of the other point then by the dominance axiom the second distribution must be preferred to the first which contradicts the basic meaning of indifference curves feldstein by using a log utility function and a lognormal distribution for investment outcome showed that e s indifference curves for a risk averter need not be convex downwards though upward sloping they would change from convex to concave once the standard deviation of the outcome exceeds the mean multiplied by on the face of it this seems to suggest that risk aversion might decrease as risk is increased beyond a certain extent

protectionism labor mobility and immiserizing growth in developing economies abstract in a small tariff ridden developing economy with imperfect labor mobility we show that capital accumulation may not immiserize even with foreign rent repatriation employment creation effects can outweigh losses in tariff revenue with perfect immobility immiserization cannot occur without repatriation

which road leads to stable money demand this paper denies that the demand for money function is any more unstable than other demand functions and maintains that the controversies regarding unstable money demand are produce by poor methodology that is not shared by other areas of the field of economics when investigating demand function properties this abstract was borrowed from another version of this item

estimating functional forms in cost prices abstract klaus conrad 1983 developed the cost price approach based upon the notion of partially fixed factor proportions as an alternative to the traditional neoclassical method of modeling cost and production functions he showed that a simplified version of his model could be used to estimate a cobb douglas cost function in cost prices we have been able to estimate the full form of conrad s proposed model and extend his technique to the ces and generalized leontief cost functions we also illustrate how to model technical change in cost prices and in cost shares

the influence of central planning on the economic slowdown in the soviet union and eastern europe a comparative production function analysis the estimation of various forms of the production function and because of the use of different data sets predictions of future growth based on these calculations have varied significantly but generally have implied continued decreasing growth of the economy the interpretation is that there are system determined technological constraints in the soviet economy causing the slowdown in growth and that these constraints are identifiable through the parameters of an aggregate production function the finding of diminishing returns to capital is linked to the belief that existing and future deployments of capital cannot be improved and the decreasing rate of factor productivity growth is attributed to microeconomic barriers to the introduction and diffusion of new technology and to expectations about future trends in technical and economic inefficiency the validity of these inferences has not been systematically tested although

a quantitative analysis of chinese industrial structure and technological change production functions for aggregate industry sectoral industries and small scale industry in this study we estimate the chinese aggregate sectoral and small scale industrial production functions based of three models the ces 1 ces 2 and cobb douglas production functions testing the estimated results we find that the cobb douglas production function is the appropriate functional form for underlying chinese industrial struture the study indicates some serious structural and technological problems such as decreasing returns to scale unitary substitution between labour and capital slow technical progress and low economic efficienty the findings suggest that an intensive industrial development policy should be pursued in china

exact and superlative welfare change indicators an exact welfare change indicator is defined to be a known function of the price and quantity data for two periods for a utility maximizing consumer which is exactly equal to the hicksian equivalent variation a welfare change indicator is termed superlative if it is exactly equal to the equivalent variation for an expenditure function which has a second order approximation property the paper exhibits a number of superlative welfare change indicators and also reviews the earlier attempts of hicks and weitzman to obtain equivalent variation measures that had a second order approximation property

bootstrapping your fish or fishing for bootstraps precision of welfare loss estimates from a globally concave inverse demand model of commercial fish landings in the u s great lakes we extend holt and bishop s 2002 normalized quadratic inverse demand function by obtaining measures of precision of elasticities and consumer welfare loss estimates due to reductions in commercial landings in the u s great lakes even with curvature constraints imposed confidence intervals are obtained by using the bootstrap subsample bootstrap and subsample jackknife

a novel approach for analyzing the effectiveness of the r d capital for resource conservation comparative study on germany and uk electricity sectors abstract limited access to energy resources and increasing demand for mitigation of the environmental impacts have necessitated higher production efficiencies therefore the promotion of r d activities has been one of the main parts of national energy policies in this research work two methods are used for assessing the effectiveness of the r d capital on resource conservation first by developing the resource included knowledge production function of the energy sector and second through direct assessment of the functionality of resource productivity from r d capital based on official data provided by national statistical centers a comparative analysis has been conducted to examine the effectiveness of r d in the electricity generation sectors in the united kingdom and germany in these analyses non renewable exergy cost is used as an index of resource depletion and environmental burden it is shown that due to non economic energy transition policies the inclusion of the r d investment does not result in statistically meaningful elasticity of production for the r d capital however according to the second method it is shown that the r d investment in the united kingdom has been more effective in resource conservation than in germany possible reasons for such differences are discussed and recommendations for further investigations are presented

partner selection and venturing success the case of joint ventures with firms in the people s republic of china it has been hypothesized in the international joint venture ijv literature that partner selection affects interpartner fit which in turn influences a synergistic effect on ijv performance this study investigates the relationship between ijv success and the strategic and organizational traits of local partners we address this issue in the context of an emerging economy p r china newly emerging economies have in recent years become major hosts of direct investment by multinational corporations mncs because these rapidly expanding economies characterized by an exploding demand previously stifled by ideologically based government intervention provide tremendous opportunities which mncs can preempt mncs in such economies however face the challenges of structural reform weak market structure poorly specified property rights and institutional uncertainty right local partners can help mncs boost market expansion obtain insightful information mitigate operational risks and provide country specific knowledge the analysis of the data obtained from china suggests that both strategic and organizational traits of local partners are significantly associated with some individual dimensions of ijv performance among strategic traits absorptive capacity product relatedness and market power are favorable to ijvs market and financial outcomes market power and experience significantly reduce ijvs operational uncertainties of organizational traits international experience and organizational collaboration are important for ijvs not only profitability and stability but also local market expansion and export growth organizational form and size influence ijvs local market performance the findings provided by this study can help mncs determine what criteria they should use in opting for local partners and what criteria are vital to their goal accomplishment those investors seeking local market expansion should select those local partners that have rich market experience superior market position high absorptive capacity and related product diversification with the ijvs those seeking profitability and stability should select local firms that have superior international experience longer organizational collaboration and greater market power while mncs should use appropriate strategic and organizational criteria to select local partners the host government or local firms can try to make these traits available to attract more stable and profitable foreign direct investment

on the flexibility of the rotterdam model abstract the rotterdam model is a discrete approximation to a continuous time model and the approximation errors are known to be small unlike other approximations with fixed parameters at the point of approximation the rotterdam model s coefficients differ at each observation but are treated as constants during estimation this procedure introduces relatively large approximation errors which are a potential source of bias in this paper the performance of the rotterdam model in reproducing the characteristics of four integrable demand systems is assessed as anticipated the model s performance is directly related to the variability of the underlying coefficients and the bias in the parameter estimates is minimal if the coefficients are relatively constant the model can also discriminate well against an invalid alternative hypothesis however in the absence of a computationally feasible varying parameter methodology the conclusion has to be that tests of parameter stability are essential when using the rotterdam model

complementarity between import competition and import promotion abstract growth in the import competing output is usually accompanied by a decline in the volume of imports of the product this result may change when we consider intermediate goods we develop a multi sector general equilibrium model to show that larger local output of an intermediate good may also imply larger imports of the same journal of economic literature classification numbers f1 f11 f13

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

international capital mobility shadow prices and the cost of protection this paper studies the welfare losses from tariff protection in a small open economy when some factors are internationally mobile our principal result is that international fictor mobility must raise the cost of protection more specifically the welfare loss resulting from a uniform increase in tariffs in a competitive small open economy is greater when tariff induced international factor movements take place than when factors are internationally immobile by contrast an exogen1ous inflow of factors in the presence of tariffs may increase or reduce the welfare loss associated with protection depending on whether or not the protected commodities use the foreign owned factors intensively relative to domestically owned factors these results are proven for a very general specification of the economy s technology in particular no restrictions are placed on the degree of vertical integration in production on the sectors into which factors are internationally mobile or on the number of goods and factors our main result holds whether or not an increase in tariff rates leads the economy to specialise in addition we show how our results relate to earlier work on immiserising capital inflows and on negative shadow prices for factors of production thus synthesizing a number of recent results within a common framework the paper is organised as follows in section 2 we explain our framework and derive expressions for the welfare effects of tariffs when all factors are domestically owned and when some factors are foreign owned but not internationally

an empirical comparison of flexible demand system functional forms this paper compares the performance of eight frequently used flexible forms that are either 1 locally flexible 2 effectively globally regular or 3 asymptotically globally flexible results show that the functions with global properties generally perform better particularly those models having asymptotic properties results using us consumption data indicate substitutability among the components of consumption at most data points there is also some interesting substitution volatility around the time of recessions in the usa copyright 2001 john wiley sons ltd

estimating a multiple output generalized box cox cost function cost structure and productivity growth in belgian railroad operations 1950 1986 abstract in this paper we estimate a multiple output generalization of berndt and khaled s box cox cost model to study the cost structure and growth in productivity in belgian railroad operations the estimated model includes several commonly used flexible functional forms as special or limiting cases empirical results indicate approximately constant returns to scale and an average rate of productivity growth of slightly less than 2 over the sample period these findings were robust across cost function specifications casting some doubt on the importance of choosing among flexible functional forms

the deadweight costs of taxation in new zealand when revenue is raised through taxation a number of costs are imposed on the community the most obvious of these is the cost accounted for by the amount of the revenue a cost which is borne by consumers and producers in the particular market in which the tax is imposed looking at the community as a whole this cost is offset to some extent by gains to those who benefit from the expenditure financed by the revenue however important additional costs may arise from changes in behaviour induced by taxation these incentive costs will be incurred if people tum to less preferred substitutes as a result of taxation or employ less satisfactory methods of production losses created in this way are known as deadweight costs or are sometimes referred to as the excess burden of taxation the size of deadweight losses is influenced by a range of factors but they are likely to be largest when the actions of producers and consumers are highly responsive to after tax prices when existing marginal tax rates are high and when savings are highly responsive to after tax returns since the responsiveness of economic activity to changes in after tax prices is the critical determinant of the size of deadweight costs a major part of this study has been concerned with obtaining estimates of the key consumer and producer price elasticities these elasticity estimates are then a key input into a small scale general equilibrium model from which deadweight cost estimates for new zealand are derived making use of duality theory the small scale general equilibrium model equates supplies of goods from producers with the demand for them from consumers and the government consumer and government budget constraints are included and the balance of payments on current account and the budget deficit are specified exogenously producers supplies are specified as producer price derivatives of the profit

elasticity of substitution technical progress and returns to scale in branches of soviet industry a new ces production function approach this study introduces and tests a new ces production function approach using data from five major branches of the soviet industrial sector the estimated equations obtained suggest that the cobb douglas production function is the appropriate production function for all branches under consideration except food processing

the productivity of foreign resource inflow to the soviet economy the recent growth in soviet borrowing from the west resulting in the rise of net soviet debt to 16 billion by 1977 has raised the analytical question of considerable economic and political significance how much are such credits worth to the soviet union several alternative approaches to answering this question are possible broadly speaking they may be grouped into two categories partial equilibrium and general equilibrium in the partial equilibrium analyses we may include i the econometric investigation of whether foreign capital goods have greater productivity in soviet industry and branches than domestic capital goods the relevance of this to the problem at hand being established by the argument that foreign credits may be jointly supplied with the capital goods embodying advanced technology and ii the noneconometric examinations of the role that foreign credits and technology can or do play in specific sectors for example automobiles and oil on the other hand a partial equilibrium approach is not a satisfactory way to approach the question at hand the productivity of foreign credits can be defined meaningfully only in the context of the use of resources generally requiring a general equilibrium approach in turn a general equilibrium approach may be based on the incorporation of foreign credits into one of the large models either of the computable planning type or of the econometric variety as represented by the sovmod exercise of donald green and christopher higgins the productivity of foreign credits being estimated by the required variation in the levels of foreign borrowing therein however these large models tend to be rather cumbersome and the total effects of parametric variations are therefore extremely difficult to disentangle small models by contrast often have the advantage of both elegance and ease of interpretation while not burying the essence of the economic system within a complex structure in this paper i have chosen the small simple decision model approach and elaborated a general equilibrium model of the solow swan variety using a ces production function i have estimated the functional relationships postulated and calculated the productivity of foreign resource inflow of which foreign credits are a component within it in section i the model is set out its structure is justified and the analytical methods to be used to calculate the productivity of foreign resource inflow in it are spelled out in section ii i present the estimates of the model and the productivity of foreign resource inflow that emerges from them section iii offers some concluding observations in light of the estimates

the demand for gasoline evidence from household survey data summary in this paper we investigate the demand for gasoline in canada using recent annual expenditure data from the canadian survey of household spending over a 13 year period from 1997 to 2009 on three expenditure categories in the transportation sector gasoline local transportation and intercity transportation in doing so we use three of the most widely used locally flexible functional forms the almost ideal demand system aids of deaton and muellbauer 1980 the quadratic aids quaids of banks et al 1997 an extension of the simple aids model that can generate quadratic engel curves and the minflex laurent model of barnett 1983 which can also generate quadratic engel curves we pay explicit attention to economic regularity argue that unless regularity is attained by luck flexible functional forms should always be estimated subject to regularity as suggested by barnett 2002 and impose local curvature to produce inference consistent with neoclassical microeconomic theory our findings indicate that the curvature constrained minflex laurent model is the only model that is able to provide theoretically consistent estimates of the canadian demand for gasoline our estimates show that the own price elasticity for gasoline demand in canada is between 0 738 and 0 570 less elastic than previously reported in the literature copyright 2013 john wiley sons ltd

technical change and factor bias in polish industry 1962 1983 this paper provides improved estimates of technological change and the first estimates of factor bias in polish industry the analysis uses newly generated data on western capital the factor assumed responsible for technical change adjusts capital for capacity utilization and tests for more complex specifications of the production function the major findings are 1 the trend in technical change was nonincreasing over the period and technological change was western capital using in only two industries suggesting the government misallocated resources and 2 technical change was nonneutral in six of the eight industries suggesting the existing literature suffers from misspecification copyright 1993 by mit press

a system of demand equations satisfying effectively global regularity conditions a parametric specification of an indirect utility function in terms oaf expenditure and two unit cost functions is proposed specification of these unit cost functions in terms of regular functions leads to the notion of an effectively globally regular system of demand equations that is a system of demand equations that is regular over a cone in expenditure price space and for which the regular region includes all points in any given sample and all values of nominal expenditure and prices generating higher values of real expenditure than the sample minimum this general model nests a number of popular demand systems such as the linear expenditure system as special cases an empirical application illustrates some of these ideas copyright 1996 by mit press

foreign capital and protectionism in terms of a simple model it is shown that the growth in the export processing zone through an influx of foreign owned capital reduces welfare for an economy importing capital intensive goods and following a protectionary policy similarly it follows that growth in the export processing zone should benefit economies importing labor intensive goods

the new monetary aggregates comment in a recent paper published in this journal berkman 10 disputed the usefulness of the new chained tornquist theil divisia quantity indexes of the economy s flow of monetary services which just have begun to become available within the federal reserve system l while a few of his comments have some merit his criticisms are largely based upon a faulty understanding of aggregation theory and he thereby fails to see the forest for the trees

normalized quadratic systems of consumer demand functions empirically estimated demand systems frequently fail to satisfy the appropriate theoretical curvature conditions we propose and estimate two demand systems for which these conditions can be imposed globally the first is derived from a normalized quadratic reciprocal indirect utility function and the second is derived from a normalized quadratic expenditure function the former is flexible if there are no restrictions on its free parameters but loses flexibility if the curvature conditions need to be imposed the latter is flexible in the class of functions satisfying local money metric scaling even if the curvature conditions need to be imposed

the role of theoretical restrictions in forecasting with inverse demand models in recent years the theoretical restrictions of consumer demand have been examined in post sample forecasting exercises however this work has uniformly ignored the concavity restrictions of consumer demand in this paper we evaluate a series of normalized quadratic inverse demand system nqids specifications using rolling windows and generating one to four step ahead forecasts to estimate the models eleven categories of south atlantic fish are used from 1980 through 2001 in addition to the nqids we also examine the forecasting performance of a purely time series model we find that the best predictions are achieved using a composite forecast

economic growth and kaldor s law the case of turkey 1925 78 in this paper kaldor s enine of growth hypothesis is examined and its validity is tested forr the turkish economy the results obtained regardless of the specification and estimation techniques used consistently support the hypothesis

translog flexible functional forms and substitutability of monetary assets this article attempts to establish the nature of the relationship between monetary assets by estimating a sequence of four nested demand systems the generalized translog the basic translog the linear translog and the homothetic translog the principal attraction of the empirical work is that i am able to test separately for both homothetic and quasi homothetic preferences over monetary assets the tests reject both homotheticity and quasi homotheticity and thus consistency of the strotz gorman two stage optimization i also perform tests on economic theory to establish whether the parameter estimates are consistent with the utility maximizing hypothesis underlying the models these tests indicate that the generalized translog is the preferred model

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

soviet postwar industrial growth and capital labour substitution an empirical note abstract this note tests an aggregate transcendental production function for soviet industry the estimated equation shows the elasticity of substitution in aggregate soviet industry in less than unity and it is decreasing quite rapidly

curvature restrictions on flexible functional forms an application of the minflex laurent almost ideal demand system to the pattern of spanish demand 1954 1987 this article introduces a new demand model labeled minflex laurent almost ideal demand system which has been achieved by combining the flexible functional minflex laurent form with the price independent generalized logarithm expenditures structure introduced by muellbauer the model has been applied to analyze the aggregate demand behavior of final consumer goods in the spanish economy from 1954 to 1987 when the flexible functional form has been empirically tested the curvature requirements imposed by economic theory have been studied

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

functional form and new production functions some comments and a new ves function this paper discusses new production function forms which are devised to generalise two restrictive features of the maintained hypotheses concerning homogeneity and the substitution effect of the original acms function

welfare consequence of capital inflow for a small tariff protected economy abstract capital inflow is generally immiserizing when the capital intensive import competing sector is tariff protected and profits are repatriated in full in this paper we construct a model with increasing returns embedded in a monopolistically competitive market to show that capital inflow might lead to higher factor income and interestingly enough growth of import competing sector might lead to still higher imports thus two distinct possible channels are identified through which welfare might improve

a box cox consumer demand system nesting the almost ideal model this article proposes a consumer demand system that has a generalized functional form characterized by the box cox transformation the new model offers a wider range of responses to both price and expenditure changes than the existing price independent generalized linear models including the almost ideal demand system even with these features its functional form is relatively simple and easy to interpret and implement an empirical illustration is given for japanese demand for nondurable goods and services the results show that the new model is preferable to the nested models in terms of relative explanatory power and producing reasonable elasticities

tariffs foreign capital and national welfare with sector specific factors abstract this paper examines the effect on national welfare of an endogenously determined inflow of foreign capital in the context of a well known model with sector specific inputs both for the case of unrestricted international trade and investment and in the presence of a tariff the second best problem of the optimal tax on foreign investment for a given tariff level is also investigated by application of the concept of shadow prices for primary factors in distorted open economies the results obtained are then related to analogous propositions derived previously for the standard heckscher ohlin model

linear and quadratic spline models for consumer demand functions this paper combines flexible functional form techniques which provide local approximations to indirect preferenc es with respect to prices and incomes with spline techniques that provide global approximations with respect to real income the main technical problem is that real income or utility is an unobserved variable starting with the normalized quadratic expenditure functio n linear and quadratic spline models are introduced theoretically and are empirically estimated using japanese consumer data for four goods fo r the years 1970 87 the semi nonparametric literature initiated by a r gallant is reviewed and a limited semi nonparametric property is claimed to hold for the spline models presented in the paper

the soviet economic decline soviet growth from 1960 to 1989 was the worst in the world after we control for investment and human capital the relative performance worsens over time there is some evidence that the burden of defense spending modestly contributed to the soviet debacle the declining soviet growth rate from 1950 to 1987 can be accounted for by a declining marginal product of capital with a constant rate of growth of total factor productivity the soviet reliance on extensive growth rising capital to output ratios was no greater than that of market economies such as japan and the republic of korea but a low elasticity of substitution between capital and labor implied especially acute diminishing returns to capital compared with the case in market economies copyright 1995 by oxford university press

protection and the gainful effects of foreign capital abstract an increased foreign capital inflow into a protected sector is generally immiserizing we show that if the protected sector produces an intermediate input positive welfare effects may emerge a striking result is that it might lead to an increased import demand for the intermediate input which is a substitute for the product of the import competing sector

foreign capital inflows and welfare in an economy with imperfect competition abstract this paper examines the resource allocational and welfare effects of exogenous inflows of foreign capital in a general equilibrium model with oligopolistic competition and unemployment although the welfare impact for the short run is ambiguous and dependent upon the strength of excess profits and scale economies relative to unemployment in manufacturing in the long run additional inflows of foreign capital always improve national welfare with capital mobility hence attracting foreign capital remains a sound policy for economies characterized by imperfect competition scale economies and regional unemployment

an empirically oriented demand system with improved regularity properties while the almost ideal demand system has received increasing attention in empirical studies of consumer demand the fact that the underlying piglog cost function is not globally regular has often led to violation of negative semidefiniteness in the estimated slutsky matrix this paper suggests a modification to the piglog class of preferences termed mpiglog which preserves regularity in a wider region of expenditure price space in an empirical section the almost ideal demand system special case of piglog is compared with the analogous special case of mpiglog which the authors term maids the comparison demonstrates the improved regularity features of maids

a divisia system approach to modelling monetary aggregates abstract a complete system of divisia partial adjustment asset equations based on the augmented price expectations baumol tobin inventory and transactions postulates is used to study the dynamic behaviour of monetary aggregates and their components in australia during 1969 iii to 1983 iv the system provides a new and useful approach to modelling demand for money functions for effective monetary policy controls and targetting

separability and capital aggregation in sectoral models of us production separability plays a fundamental role in applied studies of production inasmuch as it provides for consistent aggregation and allows multi stage estimation of models with many inputs this paper examines whether two types of capital structures and equipment are weakly separable from labour and energy and materials in sectoral models of us production and provides an assessment of the effects of maintaining capital separability the study focuses on the elasticity of substitution as a measure of input association and associated standard errors and confidence intervals based on bootstrapping elasticity estimates and tests indicate that capital separability is generally inconsistent with data representing sectoral us production elasticity sign however appears robust to capital aggregation and performs especially well as an indicator of input association

a trigonometric flexible consumer demand system this paper proposes the first ever empirical specification of a trigonometric demand system the new model is potentially useful because of some attractive features it is flexible amenable to exact aggregation over consumers possessed of trigonometric engel curves which can oscillate and able to have an unusually large regular region with comparisons between the new model and two other popular models an illustration is given for japanese demand for non durables and services the new model shows relatively gentle engel curves with an inflection point on each of them which seem reasonable given that aggregate expenditure is used in parameter estimation jel classification c51 d12 un systeme trigonometrique flexible de demande des consommateurs ce memoire propose une premiere specification empirique d un systeme de demande trigonometrique le nouveau modele est potentiellement utile a cause de certaines caracteristiques interessantes il est flexible se prete a l agregation exacte des consommateurs donne lieu a des courbes d engels trigonometriques qui peuvent osciller et couvrir une region reguliere singulierement vaste a partir de comparaisons entre le nouveau modele et deux autres modeles populaires on illustre ces avantages dans le cas de la demande japonaise pour les biens non durables et les services le nouveau modele revele des courbes d engels relativement douces avec un point d inflexion en chacune d elle ce qui semble raisonnable compte tenu du fait que la depense agregee est utilisee dans la calibration des parametres

new indices of money supply and the flexible laurent demand system the article begins by surveying the existing results on the new divisia monetary aggregates charts display the differences in behavior between the divisia aggregates and the federal reserve s official simple sum monetary aggregates the article then compares system wide fit for the simple sum and divisia monetary aggregates when used as data in the joint estimation of a system of demand equations the demand system is derived from a new laurent expansion approximation to the reciprocal indirect utility function the laurent expansion provides a better behaved remainder term than that of the more commonly used taylor series the results favor the divisia aggregates

the sensitivity of the true cost of living to price induced and income induced changes in aggregate consumers tastes this article examines the sensitivity of the cost of living to some aspects of price changes and income changes that cannot be detected by laspeyres indexes like the cpi u or cpi w effects of price induced and income induced changes in consumers tastes on the cost of living in the united states from 1947 to 1981 are estimated and found to be generally substantial

export restrictions urban unemployment and the location of processing activities abstract in a general equilibrium model with processing and urban unemployment we demonstrate that export restrictions enhance welfare only when processing is labor intensive and located rurally when processing is capital intensive or located in the urban region welfare necessarily falls

functional monetary aggregates monetary policy and business cycles abstract in this paper we take the economic approach to monetary aggregation in the context of highly disaggregated demand systems encompassing the full range of monetary assets in the united states we estimate the effectively globally regular minflex laurent ml and normalized quadratic nq flexible functional forms we produce the ml and nq functional monetary aggregates consistent with neoclassical microeconomic theory also addressing the issue of optimal monetary aggregation we highlight the influence of measurement on statistical inference by investigating whether the ml and nq functional monetary aggregates are of importance in resolving paradoxes associated with the measurement of money in doing so we also provide a comparison between the functional monetary aggregates and the fed s broad sum m2 aggregate and the center for financial stability broad divisia m3 and divisia m4 aggregates our detailed statistical analysis favors the functional monetary aggregates

the translog utility function and the demand for money in the united states in recent years considerable effort has been directed towards establishing the nature of the relationship between money and nearmonies but with mixed success the approaches vary from multi interest rate single equation studies to the careful simultaneous equations studies summarized and amended by feige and pearce 1977 and extended recently by donovan 1978 offenbacher 1979 and barnett 1980 the empirical results also vary with numerous studies favoring only one interest rate see the surveys in fisher 1978 1983 some claiming that a variety of entities are close substitutes for money e g chetty 1969 and others showing that weak substitution or even complementarity may be the result of the measurement of elasticities of substitution between money and a number of other assets e g feige and pearce 1977 offenbacher 1979 and barnett 1980 the debate seems to have overshadowed a second and equally intriguing issue which centers on the establishment of an acceptable definition of money the basic idea of this study is to take an approach that takes account of the different degrees of moneyness possessed by the various monetary assets this paper produces quantitative estimates of the degree of substitutability of other monetary assets for money in the context of a flexible functional form model with a

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

technological progress and factor utilization in eastern european economic growth frontier production functions are estimated for the industrial sector of four east european countries czechoslovakia the german democratic republic hungary and poland the estimates reveal that the slowdown in industrial growth in these countries is due to a decline in the efficiency or intensity of factor utilization rather than to declining rates of growth of technological progress in all countries changes in the efficiency of resource utilization are found to be more responsive to changes in macroeconomic policies than to economic reforms finally the amount of labor that could be displaced during cyclical downturns is estimated and found to imply potentially high levels of disguised unemployment copyright 1989 by the london school of economics and political science

estimating elasticities of substitution by the cde production function an application to japanese manufacturing industries using time series data from japanese manufacturing industries the capital skill complementarity hypothesis is tested by estimating eslasticities from a cde production function the first component

on the choice of production functions the case of us manufacturing industries a new ces bairam 1989 1991 production function that has the cobb douglas and leontief functions as special cases is considered and estimated for the nondurable goods and durable goods sectors in us manufacturing the translog and ces functions cannot be estimated properly due to multicollinearity whereas the cobb douglas and new ces functions yield coefficients that have the correct sign and are significant at the 1 or 5 level both sectors exhibited increasing returns to scale though the nondurable goods sector is more efficient than the other sector although the cobb douglas function cannot be rejected the new ces functions has the maximized value of the log likelihood function and the advantage that the variable output elasticity with respect to inputs can be tested

revisiting the demand for money model money and loans in selected manufacturing industries using a dynamic infinite horizon optimizing model it is shown that the empirical demand for money equation employed by a generation of applied monetary researchers is a reduced form model of the dynamic euler equations for real money balances the euler equations derived in this paper focus on the finance capital for the firm and consist of real money balances m1 and real business loans f1 for selected manufacturing industries by employing explicit structural dynamic specification and sectoral disaggregation the question of how firms close the gap between desired real money balances and actual real money balances is examined model consistent desired levels of money balances and business loans are found to depend not only upon the usual transactions variable and interest rate but also upon relative prices and a technology index moreover the speed in closing the gap between desired and actual money balances loan balances is estimated using annual two digit standard industrial code data for dur