aggregate employment and intertemporal substitution in the uk in this paper the author sets up estimates and tests an explicit model of aggregate labor supply based on the intertemporal substitution hypothesis the model is derived as the optimal decision rule of an infinitely living household maximizing an intertemporal ces utility function over consumption and leisure the evidence suggests that for aggregate employee hours the model is rejected but that for the total number of employees in employment the estimates are broadly consistent with the theory the assumed constant elasticity of substitution is estimated at around 0 2 and this estimate implies a short run real wage and real interest rate elasticity of labor supply of the same order copyright 1987 by royal economic society

modelling long run scenarios this paper intends to draw overall lessons from a long term study on co2 emission in france a country with a rather low energy gdp ration and in which transition to non fossil based production of electricity has been achieved more generally it points out the importance of possible bifurcation effects and draws methodological and policy implications from these statements it discusses modelling approaches to the linkages between energy and the rest of economy and addresses the issue of difficulties in cost assessment analysis in the presence of several baseline scenarios finally it proposes a more encompassing definition of no regrets policies

estimating a model of strategic network choice the convenience store industry in okinawa this paper investigates a determinant of location choice for multistore retailing firms the trade off between the business stealing effect and the cost saving effect from clustering their own stores i present an empirical model of network choice by two multistore firms i use lattice theoretical results to address the computational burden of solving for an equilibrium in store networks the framework integrates the static entry game of complete information with post entry outcome data while using simulations to correct for the selection of entrants i present an application of the model to the case of the convenience store industry in okinawa island japan using unique cross sectional data on store networks and revenues i use parameter estimates to examine the impact of a hypothetical horizontal merger on store configurations costs and profits results suggest a retailer s trade off between cost savings and lost revenues from clustering its stores is positive across markets and negative within a market i find an acquirer of a hypothetical merger of two multistore firms would decrease its number of stores in suburbs but increase its number in the city center

building new plants or entering by acquisition firm heterogeneity and entry barriers in the u s cement industry i estimate a model of entry for the cement industry that considers two options of expansion building a plant or acquiring an incumbent the model takes into account that there is a transfer of the buyer firm level characteristics to the acquired plants which affects profits from the acquisition estimates show that a less permissive reagan bush administration s merger policy would decrease the number of acquired plants by 71 greenfield entry would increase by 9 2 and consumer surplus would decrease by 23 5 results suggest that regulators should be concerned about policies that negatively affect the efficient reallocation of assets between incumbents and entrants

the role of energy in productivity growth the objective of this paper is to analyze the role of energy in the growth of productivity the special significance of energy in economic growth was first established in the classic study energy and the american economy 1850 1975 by sam schurr and his associates 1960 at resources for the future for the period from 1920 to 1955 schurr noted that energy intensity of production had fallen while both labor and total factor productivity were rising the simultaneous decline in energy intensity and labor intensity of production ruled out the possibility of explaining the growth of productivity solely on the basis of substitution of less expensive energy for more expensive labor since the quantity of both energy and labor inputs required for a given level of output had been reduced technical change is also a critical explanatory factor an alternative explanation for growth of output with declining energy and labor intensity required an examination of the character of technical change this examination was motivated by the fact that from 1920 to 1955 the utilization of electricity had expanded by a factor of more than ten while consumption of all other forms of energy only doubled the two key features of technical change during this period were that the thermal efficiency of conversion of fuels into electricity increased by a factor of three and that the unusual characteristics of electricity had made it possible to perform tasks in altogether different ways than if the fuels had to be used directly schurr 1983 p 3 schurr 1982 has recently extended the analysis of energy and the american economy through 1981 for the period through 1969 his conclusions are as follows although the inverse relationship between total factor productivity and energy intensity virtually disappeared during the 1953 1969 period it is still noteworthy that high rates of improvement in total factor productivity were essentially not associated with increases in energy intensity 1982 p 6 schurr 1982 has analyzed the experience of the u s economy in the aftermath of the oil embargo of 1973 he points out that energy intensity of production has fallen steadily since 1973 and that the rate of decline accelerated sharply after the second oil price shock in 1979 following the iranian revolution he goes on to point out that

measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries following a tradition established by cassels klein and hickman we employ the economic theory of cost and production and define economic capacity output as that output at which short and long run average total cost curves are tangent to one another capacity utilization cu rates are then computed as the ratio of actual to capacity output we implement this framework empirically by specifying and estimating a translog variable cost function for the manufacturing sectors of nine oecd countries we find that by the end of the historical sample the early 1980s pervasive and chronic excess capacity exists while the average cost consequence of excess capacity was relatively modest in the 1960s the burden increased considerably after opec i and after opec ii the premium was as large as 15 of average total costs we also find that electricity and fuel price increases had small impacts on capacity output relative to that from labor or capital finally we adjust conventional measures of multifactor productivity growth for changes in cu and find that the adjusted growth is larger after 1973 than that based on traditional procedures

growth accounting with intermediate inputs and the transmission of technical change abstract the aggregate rate of total factor productivity growth tfpg when there are intermediate inputs can be expressed either as a weighted average or as a weighted sum of the sectoral rates depending on the choice of sectoral rates being weighted the agrument that there is a magnification effect due to the transmission of tfpg through the intersectoral flows among sectors is therefore to be more illusory than real

do overarching mitigation objectives dominate transport specific targets in the eu this research investigates if the stringent 2020 and 2050 overarching co2 mitigation objectives set out by the european union dominate its 2010 to 2020 targets specific to the transportation arena specifically its biofuel penetration objectives and gram co2per kilometre emission caps using a dynamic recursive general equilibrium model imaclim r we demonstrate that these overarching targets do not dominate the interim transportation targets when the carbon policy triggering compliance with the mitigation objectives boils down to the theoretical least cost option of uniform carbon pricing ground transportation is confirmed as quite insensitive to high carbon prices even when such prices are applied over a long term it is tempting to conclude that pursuing the mitigation objectives specific to transportation will impose unnecessary costs however because of the second best conditions prevailing in actual economies and of the risk of lock in in carbon intensive trajectories we conclude with the urgent need for some ambitious transport specific policy design research agenda

the impact of electric power on productivity according to the historical record the increased use of energy in general and electric power in particular stands as one of the key factors in productivity growth growth accountants however find little support for this view rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in us manufacturing in this study an attempt at reconciling the historical record with the empirical facts is made specifically the commonly used factor income shares in the relevant divisia input growth index are replaced by the estimated output input elasticities the latter attribute a considerably larger role to electric power than previous studies indicated these are then used to reevaluate the sources of growth in us manufacturing

review of economic growth and energy consumption a panel cointegration analysis for eu countries abstract this paper examines the long run relationship between energy consumption and real gdp including fixed capital and total employment for 18 eu countries from 1995 to 2012 the analysis was based on the panel unit root tests panel cointegration test and fully modified ordinary least squares fmols estimator and dynamic ordinary least squares dols estimator data were analyzed in three groups all sample visegrad countries v4 and old 14 eu countries indeed the results demonstrate that economic growth and the variables energy consumption gross fixed capital are cointegrated for the whole panel of countries as well as for the two selected groups of countries furthermore the panel fmols and dols estimators reveal that the relationship between energy consumption gross fixed capital and economic growth is positive

spatial differentiation and price discrimination in the cement industry evidence from a structural model we estimate a structural model of the cement industry that incorporates spatial differentiation and price discrimination focusing on the us southwest over 1983 2003 we leverage the structure of the model to obtain consistent estimates of the underlying parameters using data on market outcomes that are substantially aggregated our results indicate that transportation costs around 0 46 per tonne mile rationalize the data this friction enables relatively isolated plants to obtain higher prices from nearby customers we further find that disallowing price discrimination would create 30 million in consumer surplus annually and show how the model can identify suitable divestitures in merger analysis

entry by takeover auctions vs bilateral negotiations firms often enter new markets by taking over an incumbent we analyze a potential entrant s choice of target under two exogenously given takeover mechanisms i auctions where other incumbents can bid for the target against the entrant and ii bilateral negotiations between the entrant and the target the entrant s choice of target depends on the mechanism and it may not maximize its ex post profit nor consumer welfare in an auction the entrant pays a higher price to take over a target with higher synergies because these impose stronger negative externalities on incumbents and increase their willingness to pay for preventing entry auctions increase the price obtained by the target but reduce welfare compared to negotiations because they may discourage the entrant from acquiring a target with higher synergies

the efficiency of capital allocation in this paper we present an intertemporal general equilibrium model of the u s economy the purpose of this model is to analyze the efficiency of capital allocation we have implemented our model econometrically for annual data covering the period 1955 80 the model encompasses the critical features of u s tax laws applicable to income from capital equilibrium is determined by market clearing conditions for consumption and investment goods and for capital and labor services in each time period under perfect foresight there exists a unique balanced growth equilibrium corresponding to any stationary tax policy an intertemporal general equilibrium model of the u s economy is presented in this paper the purpose of this model is to analyze the efficiency of capital allocation the model is kindred in spirit to the model of the swedish economy developed by ragnar bentzel 1978

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

the demand for capital labor and energy in european manufacturing industry before and after the oil price shocks the price and substitution elasticities for factor inputs capital labor fuels and electricity are estimated for total manufacturing industry on the basis of a pooled crosscountry time series analysis for nine west european countries the impact of the economic disturbances in the 1970s on the price sensitivity of demand is analyzed by estimating a translog cost function for two separate periods 1960 72 and 1973 80 hicks neutral technical change is rejected for both periods the results indicate some quite significant changes in the elasticities over the two periods

the role of labor and marriage markets preference heterogeneity and the welfare system in the life cycle decisions of black hispanic and white women using data from the nlsy79 we structurally estimate a dynamic model of the life cycle decisions of young women the women make sequential joint decisions about school attendance work marriage fertility and welfare participation we use the model to perform counterfactual simulations designed to shed light on three questions 1 how much of observed minority majority differences in behavior can be attributed to differences in labor market opportunities marriage market opportunities and preference heterogeneity 2 how does the welfare system interact with these factors to augment those differences 3 how can new cohorts that grow up under the new welfare system temporary aid for needy families be expected to behave compared to older cohorts

government expenditure and economic growth in the developed countries 1952 76 in the past decade or more the pace of economic growth has slowed considerably and the share of government expenditure in national product has increased considerably the average annual growth rate of per capita gdp for the 16 most important developed market economies was 6 3 from 1955 73 and 2 0 from 1973 79 the average share of government in gdp went from 27 in 1955 to 34 in 1970 to 43 in 1979 2 the simple correlation proves nothing but it suggests the growth of government might be one of the causes of the slowdown many economists have theorized that government production is staticly less efficient than private sector production with competitive markets see

wage inflation in the united kingdom in britain there is little agreement on what determines the growth of wages or indeed on whether a stable wage equation exists in this paper i try to clarify matters in two ways first i aim to represent the data generation process as faithfully and accurately as possible while using with a few modifications the criteria for model selection advanced in davidson et al 1978 second i use five different measures of the pressure of demand rather than just picking on one particular measure 2 it may be helpful at this stage to summarize very crudely the argument and results in section ii having first set out the framework for the rest of the analysis which relates to the period 1961 i 1980 iv i modify the standard real wage model by proxying the desired level of real wages by a moving average of the past level of real wages it is found that the coefficient on the prevailing real wage is equal but of opposite sign to that on the desired wage thus in the long run inflation is independent of the level of real wages the pressure of demand and incomes policy dummies are both found to be significant one would have expected that in the long run the rate of growth of earnings at given price inflation and pressure of demand would respond to differences in the rate of growth of productivity but over the sample period there was no evidence of this once we allowed for incomes policy which implies considerable rigidity in the target rate of growth of wages the analysis so far includes no specifically expectational variables in section iii i use some survey data on wage expectations which have the advantage of being based on quantitative responses one rationale for having wage expectations in a wage equation might be that in a world of staggered contracts where workers care about relative wages they will take into account what they expect to happen to the wages of other workers when settling now a two equation model for wages and wage expectations is presented in the subsequent section and in most respects the results confirm our conclusions from the previous sections however the preferred specification obtained here which encompasses much of the earlier work and probably constitutes progress is one that we have some doubts about and will it is hoped form the basis for future research in this area

estimation of a model of entry in the airline industry this paper considers the effect of an airline s scale of operation at an airport on the profitability of routes flown out of that airport the empirical methodology uses the entry decisions of airlines as indicators of underlying profitability the results extend the empirical literature on airport presence by providing a new set of estimates of the determinants of city pair profitability these estimates imply that city pair profits increase in airport presence and decrease rapidly in the number of entering firms the literature on empirical models of oligopoly entry is also extended via a focus on the role of differences between firms

the impact of disaggregated energy on productivity abstract the issue of the productivity slowdown of the 1970s and 1980s has received considerable analysis in the literature however the issue of the impact of energy on productivity is still debated this study contributes to the debate with the hope that some sight could be provided through disaggregating the factor input energy into two components a petroleum component and a non petroleum component by analysing labour productivity growth total factor productivity growth and labour intensity ratios the disaggregated energy component can be viewed as a major influence in explaining the productivity decline

an empirical model of firm entry with endogenous product type choices i describe a model of entry with endogenous product type choices these choices are formalized as the outcomes of a game of incomplete information in which rivals differentiated products have nonuniform competitive effects on profits i estimate the model for location choices in the video retail industry using a nested fixed point algorithm solution the results imply significant returns to product differentiation simulations illustrate the tradeoff between demand and intensified competition and the extent to which markets with more scope for differentiation support greater entry

international technological knowledge differences and economic growth comparisons usa versus west germany and sweden versus norway 1963 1988 the main interest in this paper is governed by the methodology for making evolutive growth comparisons in the international context the paper analysis differences in levels and changes of these levels of aggregate output between the above mentioned countries in terms of differences in factors input and levels of technological knowledge for the period 1963 1988 sources of economic growth in each country are also examined on an annual and average annual basis th conclusion is that technological knowledge differences between countries hold a central role in explaining output differences between them a slight overtake of the technological lead is observed in comparing sweden and norway between 1977 and 1985 when a recovery by sweden begining in 1986 is detected a certain part of the output differences between the us and west germany is explaining by the differences in technology between these two countries however capital intensity in the us is found to be almost double in 1988 and this accounts fo

does renewable and or non renewable energy consumption matter for total factor productivity tfp growth evidence from the brics abstract studies proved that output growth is mainly associated with the total factor productivity tfp growth and variables that affect the tfp have an important explanatory power on output in this regards the aim of this study is to examine the causal relationship between different types of energy consumption and tfp growth in the brics from 1992 to 2012 a panel bootstrap granger causality test by konya 2006 68 was employed to investigate the direction of possible connection between energy consumption and tfp growth results show that no remarkable causal link exists between renewable energy consumption and tfp growth in the brics however in the case of non renewables energy consumption creates a positive externality that contributes economic development in brazil and south africa by the growth of tfp as well as energy use itself in this respect policies that promote coal and non renewable electricity consumption in south africa and natural gas consumption in brazil may be beneficial for their economic development

searching for a will o the wisp an empirical study of the nairu in canada abstract this paper demonstrates the uncertainty surrounding estimates of the non accelerating inflation rate of unemployment nairu a reduced form phillips curve is used to develop a generic model of the nairu which nests competing hypotheses about the specific form of the inflation unemployment relationship empirical results for the canadian economy show that the range of prime age male nairu s generated by statistically satisfactory and economically reasonable estimating equations covers almost the entire range of canadian post war prime age male unemployment experience estimates of the nairu depend heavily on the form of the estimating equation the operational definition of key variables and the data sample period

the determination of wages employment and work hours in an economy with centralised wage setting sweden 1950 83 a key component of recent explanations for the growth in unemployme nt in western europe is a negative relation between wage rates and employment this paper examines the evidence for such a relationship for swedish manufacturing industry and also investigates the corresponding movements of hours of work the findings form the ingredients of a structural model of the labor market which is estimated using time series observations from 1951 t o 1983 the greater volatility of employment relative to earnings is measured by a specific parameter which in this model relates to the objectives of trade unions copyright 1988 by royal economic society

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

a micro econometric model of capital utilization and retirement the case of the u s cement industry the paper presents a micro econometric model of capital utilization and retirement estimates of a firm s discrete decision problem with regard to an existing piece of capital whether to operate hold idle or retire it are obtained in the context of the u s cement industry by solving a discrete choice stochastic dynamic programming model the estimates are then used to simulate the effects of product and input price changes and changes in the size and age of a cement kiln on a firm s propensity to operate hold idle and retire a kiln

specifying a structural matching game of trading networks with transferable utility structural estimation of matching games with transferable utility including matching games of trading networks and many to many matching is increasingly popular in empirical work i explore several modeling decisions that need to be made when specifying a structural model for a matching game one decision is the choice of a game theoretic solution concept to impose in the structural model i discuss pairwise stability competitive equilibrium and noncooperative games such as auctions another decision is whether to work with a continuum of agents or a finite number of agents i explore other issues as well

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

modeling production for general equilibrium analysis the purpose of this paper is to present econometric models of producer behavior suitable for incorporation into a general equilibrium model implementation of these models requires a time series of inter industry transactions tables second implementation requires methods for estimation of parameters in systems of nonlinear simultaneous equations finally the economic theory of producer behavior implies equality and inequality restrictions on the parameters that must be incorporated into the estimation we discuss an empirical application to modeling producer behavior in thirty six industrial sectors of the u s economy

bidder discounts and target premia in takeovers on news of a takeover the sum of the stock market values of the firms involved often falls and the value of the acquirer almost always does does this mean that takeovers do not raise the values of the firms involved not necessarily we set up a model in which the equilibrium number of takeovers is constrained efficient yet upon news of a takeover a target s price rises the bidder s price falls and most of the time the joint value of the target and acquirer also falls

wage rigidity and unemployment in oecd countries real wage rigidity is often blamed for causing unemployment in the wake of adverse real shocks like changes in productivity or the terms of trade likewise nominal wage rigidity is blamed for causing unemployment in the wake of adverse nominal shocks like falls in nominal demand 1 however there has been relatively little systematic discussion of how these concepts should be defined some authors e g sachs 1979 have defined real wage rigidity as the opposite of nominal wage rigidity with the us nominally rigid and europe really rigid 2 the rigidity of european real wages has then been used to explain why europe has experienced a greater increase in unemployment since 1973 than the us but in this discussion real wage rigidity has not been measured in a way which would in fact predict how much unemployment would result from a given real shock the discussion has focused on the degree of nominal inertia in the system but the unemployment cost of real shocks does not depend primarily on the degree of nominal inertia but rather on the effect of unemployment in the phillips curve

market structure and multiple equilibria in airline markets we provide a practical method to estimate the payoff functions of players in complete information static discrete games with respect to the empirical literature on entry games originated by bresnahan and reiss 1990 and berry 1992 the main novelty of our framework is to allow for general forms of heterogeneity across players without making equilibrium selection assumptions we allow the effects that the entry of each individual airline has on the profits of its competitors its competitive effects to differ across airlines the identified features of the model are sets of parameters partial identification such that the choice probabilities predicted by the econometric model are consistent with the empirical choice probabilities estimated from the data we apply this methodology to investigate the empirical importance of firm heterogeneity as a determinant of market structure in the u s airline industry we find evidence of heterogeneity across airlines in their profit functions the competitive effects of large airlines american delta united are different from those of low cost carriers and southwest also the competitive effect of an airline is increasing in its airport presence which is an important measure of observable heterogeneity in the airline industry then we develop a policy experiment to estimate the effect of repealing the wright amendment on competition in markets out of the dallas airports we find that repealing thewright amendment would increase the number of markets served out of dallas love

optimal taxation and human capital policies over the life cycle this paper derives optimal income tax and human capital policies in a life cycle model with risky human capital the government faces asymmetric information regarding agents ability its evolution and labor supply when the wage elasticity with respect to ability is increasing in human capital the optimal subsidy involves less than full deductibility of human capital expenses on the tax base and falls with age income contingent loans or a deferred deductibility scheme can implement the optimum numerical results suggest that full deductibility of expenses is close to optimal and that simple linear age dependent policies perform very well

a comment on the optimal provision of social insurance progressive taxation versus education subsidies in general equilibrium by dirk krueger and alexander ludwig abstract kruger and ludwig present an analysis of optimal taxation and educational subsidies in an intergenerational framework they consider how optimal policy might change when transition costs are taken into account we present some questions about the analysis including the potential of defining an optimal path for policy taking into account transition costs

income variance dynamics and heterogeneity recent theoretical work has shown the importance of measuring microeconomic uncertainty for models of both general and partial equilibrium under imperfect insurance in this paper the assumption of i i d income innovations used in previous empirical studies is removed and the focus of the analysis is placed on models for the conditional variance of income shocks which is related to the measure of risk emphasized by the theory we first discriminate amongst various models of earnings determination that separate income shocks into idiosyncratic transitory and permanent components we allow for education and time specific differences in the stochastic process for earnings and for measurement error the conditional variance of the income shocks is modelled as a parsimonious arch process with both observable and unobserved heterogeneity the empirical analysis is conducted on data drawn from the 1967 1992 panel study of income dynamics we find strong evidence of sizeable arch effects as well as evidence of unobserved heterogeneity in the variances

productivity and cost gaps in manufacturing industries in u s japan and germany abstract the objective of this paper is to measure and explain the development of differences in productivity for five manufacturing industries of the u s japan and germany changes in total factor productivities and differences in technologies and the sources of those changes will be analyzed we extend the framework developed by jorgenson and nishimizu 1978 to the dual cost approach to reflect the efficiency aspect of productivity gaps in terms of cost disadvantages we employ translog cost functions for a description of productivity and cost efficiency gaps and for an econometric analysis of sources of catching up processes