resolving new keynesian anomalies with wealth in the utility function at the zero lower bound the new keynesian model predicts that output and inflation collapse to implausibly low levels and that government spending and forward guidance have implausibly large effects to resolve these anomalies we introduce wealth into the utility function the justification is that wealth is a marker of social status and people value status since people partly save to accrue social status the euler equation is modified as a result when the marginal utility of wealth is sufficiently large the dynamical system representing the zero lower bound equilibrium transforms from a saddle to a source which resolves all the anomalies

agricultural productivity and convergence europe and the united states this article applies the window malmquist index wmi approach to measure changes in agricultural total factor productivity tfp for the united states and a sample of nine european countries for the period 1973 to 1993 the dataset used in this article is obtained from ball et al 2001 the wmi is constructed by combining data envelopment analysis window analysis with the malmquist index approach furthermore the kruskal and wallis rank test is used for testing frontier shifts among observed periods the article also explores the question of convergence in tfp across the countries under consideration by testing for and convergence as well as for stochastic or long run convergence the results show wide variation in the rate of tfp growth across countries with an average trend growth rate of 1 62 the results indicate the presence of convergence but the absence of convergence for the full period under consideration but the presence of both and convergence for the sub period 1983 to

panel tests of stochastic convergence tfp transmission within manufacturing industries abstract this paper examines the international transmission of industry specific productivity shocks we demonstrate the limitations of panel unit root tests of stochastic convergence and propose an alternative method the data reject stochastic convergence displaying considerable heterogeneity in tfp movements within industries

estimating stated preferences with rated pair data environmental health and employment effects of energy programs abstract respondents stated preferences for attributes related to various electricity generation scenarios are analyzed using a series of pairwise ratings multiple observations for each respondent facilitate estimating individual scale parameters scale estimates can identify uninformative rating patterns and make it possible to delete such observations or adjust wtp calculations cross section time series analysis of the data indicates that nonprice attributes increase in salience during the course of the experiment thus later responses may be better indicators of preferences than earlier responses comparisons of polychotomous with dichotomous models indicate that most respondents relative preference ratings are not simply dichotomous but discriminate systematically along the rating scale

convergence in oecd countries technical change efficiency and productivity the aim of this study is to analyse labour productivity convergence in the oecd countries over the period 1975 90 a nonparametric frontier approach is used to calculate the malmquist productivity index by breaking it down the contribution in the growth of labour productivity of technical progress of changes in efficiency and of the accumulation of inputs per worker are quantified unlike other studies the results obtained show that technical change has worked against labour productivity convergence since it has always been greater in the countries with higher labour productivity

how much is too much an investigation of the effect of the number of choice sets context dependence and the choice of bid vectors in choice experiments in a split sample design we examine how the number of choice sets design of the first choice set context dependence and the choice of attribute levels in the cost attribute affect the precision in the elicited preferences in otherwise completely identical choice experiment surveys these issues are investigated for swedish households marginal willingness to pay to reduce power outages our results indicate that neither the number of choice sets nor the design of the first choice set has a significant impact on estimated marginal willingness to pay while the effect was significant for the additive scaling of the cost vector at the end of the article we discuss the implications of our results on future developments and applications of choice experiments

ordering effects and choice set awareness in repeat response stated preference studies we present an experiment designed to investigate the presence and nature of ordering effects within repeat response stated preference sp studies our experiment takes the form of a large sample full factorial discrete choice sp exercise investigating preferences for tap water quality improvements our study simultaneously investigates a variety of different forms of position dependent and precedent dependent ordering effect in preferences for attributes and options and in response randomness we also examine whether advanced disclosure of the choice tasks impacts on the probability of exhibiting ordering effects of those different types we analyze our data both non parametrically and parametrically and find robust evidence for ordering effects we also find that the patterns of order effect in respondents preferences are significantly changed but not eradicated by the advanced disclosure of choice tasks a finding that offers insights into the choice behaviors underpinning order effects

modelling heterogeneity in response behaviour towards a sequence of discrete choice questions a probabilistic decision process model there is a growing body of evidence in the non market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences decision processes or heuristics such as value learning and strategic misrepresentation have been offered as explanations for these results while a few studies have tested these heuristics as competing hypotheses none has investigated the possibility that each explains the response behaviour of a subgroup of the population in this paper we make a contribution towards addressing this research gap by presenting a probabilistic decision process model designed to estimate the proportion of respondents employing defined heuristics we demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour the results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents

farmer education and the weather evidence from taiwan 1976 1992 abstract this paper uses farm household and weather data from 1976 to 1992 in taiwan to measure the role of unusual weather conditions in explaining time and geographical variation of the return to education in farming based on a farm household model we show that the effect of education measured from an income function is both technical and allocative for a set of schooling variables this effect is found to increase with adverse weather it implies that education provides a higher relative advantage and therefore has a higher economic value when the environment is more unstable and more difficult to deal with this gives empirical support to the notion that education improves the capacity to adapt to change and disequilibria on top of its static technical effects

value learning and the willingness to accept willingness to pay disparity the assumption that individual preferences are rational and consistent with standard economic theory is often appropriate but may be optimistic if consumers are uncertain about either their preferences or how the market operates both sources of uncertainty may present themselves in lab experiments exploring the well known disparity between individuals willingness to accept and willingness to pay this paper explores the role of value uncertainty in the observed disparity and finds that providing subjects with a value learning opportunity can reduce the value disparity to insignificance

managing expectations instruments vs targets should policymakers offer forward guidance in terms of a path for an instrument such as interest rates or a target for an outcome such as unemployment we study how the optimal approach depends on a departure from rational expectations people have a limited understanding of the behavior of others and of the general equilibrium ge effects of policy the bite of such bounded rationality on implementability and welfare is minimized by target based guidance if and only if ge feedbacks are strong enough this offers a rationale for why central banks should shine the spotlight on unemployment when faced with a prolonged liquidity trap a steep keynesian cross or a large financial accelerator

reliability of individual valuations of public and private goods choice consistency response time and preference refinement we examined the reliability of a large set of paired comparison value judgments involving public goods private goods and sums of money as respondents progressed through a random sequence of paired choices they were each given their response time decreased and they became more consistent apparently fine tuning their responses suggesting that respondents tend to begin a hypothetical value exercise with relatively imprecise preferences and that experience in expressing preference helps reduce that imprecision reliability was greater for private than for public good choices and greater for choices between a good and a monetary amount than for choices between two goods however the reliability for public good choices was only slightly lower than for the private goods published by elsevier b v

towards a fair constructive and consistent criticism of all valuation languages comment on kallis et al 2013 we provide critical notes to the paper by kallis et al 2013 on monetary valuation we evaluate the four criteria they propose for assessing valuation studies we argue that no clear distinction is made between monetary valuation and pricing instruments the selected criteria are more relevant to assessing policy than monetary valuation the examples provided are not representative of the diversity of valuation studies encountered in the literature moreover no clear examples are provided of where valuation and associated cost benefit analysis of environmental policy go wrong we plea for a more fair constructive and consistent criticism of all valuation languages and offer relevant issues for consideration

the services sector in india s states a tale of growth convergence and trade india s success story in services is well documented at the national level but similar literature does not exist for india s states we bridge this gap by studying india s services growth at the sub national level contrary to earlier commentary on the unsustainability of india s services growth process our findings suggest that per capita services may be converging across indian states this is not true of per capita income unlike previous studies on india evidence is provided using both traditional sigma and beta convergence measures and advanced panel unit root tests from the recent econometrics literature a disaggregated analysis of services sectors reveals convergence in railways public administration and financial services finally a jensen and kletzer approach to determine tradability and an additional original methodology provide evidence of most services being traded across india s states suggesting the role of such trade in the services growth story even at the sub national level

ordering anomalies in choice experiments this paper investigates whether responses to choice experiments ces are subject to ordering anomalies while previous research has focussed on the possibility that such anomalies relate to position in the sequence of choice tasks our research reveals that the particular order of tasks matters using a novel experimental design that allows us to test our hypotheses using simple nonparametric statistics we observe ordering anomalies in ce data similar to those recorded in the dichotomous choice contingent valuation literature those ordering effects operate in both price and commodity dimensions and are observed to compound over a series of choice tasks our findings cast serious doubt on the current practice of asking each respondent to undertake several choice tasks in a ce while treating each response as an independent observation on that individual s preferences

the value of familiarity effects of knowledge and objective signals on willingness to pay for a public good we design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their wtp for it we find that the causal effect of objective signals about the accuracy of a subject s knowledge for a public good can dramatically affect their valuation for it treatment caused a significant increase of 85 129 in wtp for well informed individuals we find no such effect for less informed subjects our results imply that wtp estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states

a quantitative easing experiment abstract we experimentally investigate the effect of a central bank buying bonds for cash in a quantitative easing qe operation in our experiment the bonds are perfect substitutes for cash and have a constant fundamental value which is not affected by qe in the rational expectations equilibrium we find that qe raises bond prices above those in the benchmark treatment without qe subjects in the benchmark treatment learned to trade the bonds at their fundamental value but those in treatments with qe became more convinced after repeated exposure to the same treatment that qe boosts bond prices this suggests the possibility of a behavioural channel for the observed effects of actual qe operations on bond yields

delphic and odyssean monetary policy shocks evidence from the euro area abstract what drives the reaction of financial markets to central bank communication on the days of policy decisions we highlight the role of two factors that we identify from high frequency monetary surprises news on future macroeconomic conditions delphic shocks and news on future monetary policy shocks odyssean shocks these two shocks move the yield curve in the same direction but have opposite effects on financial conditions and macroeconomic expectations they also have a different impact on macroeconomic outcomes so that central bankers cannot infer the degree of stimulus they provide by looking at the mere reaction of the yield curve

labour force ageing and productivity performance in canada abstract this paper studies the direct impact of labour force ageing on productivity growth in 10 canadian provinces over the period 1981 2001 with an outlook to 2046 it shows that older workers are on average less productive than younger workers and that labour force ageing has a modest negative direct impact on productivity growth in canada the impact has increased since the middle of the 1990s will peak in 2001 11 and tail off afterwards during the peak period productivity growth in canada will be reduced by 0 13 to 0 23 percentage points per year with newfoundland being hit the hardest jel classification j21 o47

pegging the interest rate on bank reserves a resolution of new keynesian puzzles and paradoxes abstract introducing bank reserves or money into the basic new keynesian nk model offers a resolution of nk puzzles and paradoxes the resulting models deliver local equilibrium determinacy under an exogenous interest rate on reserves and an exogenous nominal stock of reserves even for an arbitrarily small monetary friction this leads to a resolution of the forward guidance puzzle the fiscal multiplier puzzle and the paradox of flexibility as the monetary friction becomes vanishingly small the models converge to the basic nk model and serve to select a particular equilibrium of that model which also offers a resolution of the paradox of toil

productivity development in icelandic norwegian and swedish fisheries this article analyses the total factor productivity tfp performance of fisheries in iceland norway and sweden during the period 1973 to 2003 we measure tfp growth using real gross value added as output and capital input labour input and a stock input index based on the major fish stocks in developed neighbouring countries we expect rapid diffusion of fishing technology innovations contributing to productivity convergence in addition innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period we find that iceland had the highest annual tfp growth accounting for stock changes it amounts to 3 while the corresponding figures for sweden and norway are 2 8 and 0 8 respectively despite best practice fishing technologies being widely available we find no evidence of productivity convergence among the three countries

productivity across industries and countries time series theory and evidence the authors examine whether convergence in aggregate productivity is also occurring at the industry level in fourteen oecd countries from 1970 to 1987 using both cross section and time series methods they find convergence in some sectors such as services however surprisingly the authors find that convergence does not hold for the manufacturing sector decomposing aggregate convergence into industry productivity gains and changing sectoral shares of output they find the service sector to be responsible for the bulk of cross country convergence to the united states the authors develop a new result on the asymptotic normality of panel unit root estimators to formally test within sector convergence copyright 1996 by mit press

choice certainty and consistency in repeated choice experiments the main objective of this study is to examine how repeated choice affects preference learning in stated preference experiments we test different hypotheses related to preference learning by analyzing response patterns and asking respondents in a choice experiment to report their experienced certainty when going through the choice tasks in a split sample test we show that follow up choice certainty questions are procedural invariant the self reported certainty results indicate that learning occurs but econometric testing procedures do not identify any significant impact of learning effects on parameter estimates or variance across choice tasks additional tests of choice consistency suggest that preferences in the choice experiment are stable and coherent

unraveling the choice format effect a context dependent random utility model a few recent studies report that preferences elicited from a two alternative choice format are different from those elicited from a three alternative choice format when both choice set designs contain a status quo option we hypothesize that the choice format effect might disappear when we estimate a random utility model rum that allows for context dependent preferences based on the estimated context dependent rum we find that the choice format effect is likely the result of two offsetting effects a task complexity effect that increases the probability of choosing the status quo option and a preference matching effect which decreases the probability

addressing preference heterogeneity multiple scales and attribute attendance with a correlated finite mixing model of tap water choice unobserved heterogeneity of error scale in choice models is a recent extension of the better investigated issue of heterogeneity of taste intensity it is achieved by fitting choice panel data with specifications that simultaneously handle inter personal variation in scale and taste the aim is to separate differences in preference intensities across respondents from differences in the degree of consistency in choice behaviour or preference discrimination while accounting for correlation between the two another recent substantive issue in choice data analysis is attribute non attendance we develop a finite mixing model to address simultaneously the three issues above we empirically prove the concept on stated preference data related to tap water attributes in a study for industry regulation

multi factor agricultural productivity efficiency and convergence in botswana 1981 1996 abstract this paper applies the sequential malmquist index to calculate multi lateral multi factor productivity mfp indices for agriculture in the 18 districts and the commercial sector of botswana from 1981 to 1996 the mfp index grew at an average rate of 1 7 per annum led by the regions that specialize in livestock which grew at well over 3 per annum this growth was powered by technological change at 4 per year but offset by technical efficiency falling at 2 4 per annum as the commercial sector and the better regions exploited new technologies and infrastructure whereas the less productive areas fell further behind the best practice frontier thus convergence tests show that the gap between the more productive and the poorer regions widened

efficiency and productive specialization an application to spanish regions maudos j pastor j m and serrano l 2000 efficiency and productive specialization an application to the spanish regions reg studies 34 829 842 this paper shows the importance of the composition of production productive specialization and sector inefficiencies when evaluating efficiency in aggregate production for this purpose a new approach is proposed for obtaining efficiency scores which enables two components to be differentiated one associated with the degree of efficiency within each sector intra sector efficiency and another associated with the composition of production composition efficiency the application of this approach and its breakdown for the spanish regions in the period 1964 93 using a non parametric approach data envelopment analysis shows greater gains in composition efficiency as a consequence of the structural changes in productive specialization also the breakdown of labour productivity convergence shows the increasing importance over time of composition eff

estimation of cross country differences in industry production functions abstract international trade economists typically assume that there are no cross country differences in industry total factor productivity tfp in contrast this paper finds large and persistent tfp differences across a group of industrialized countries in the 1980s the paper calculates tfp indices and statistically examines the sources of the observed large tfp differences across countries two hypotheses are examined to account for tfp differences constant returns to scale production with country specific technological differences and industry level scale economies with identical technology in each country the data support the constant returns different technology hypothesis over the increasing returns same technology hypothesis

technological change technological catch up and capital deepening relative contributions to growth and convergence we decompose labor productivity growth into components attributable to 1 technological change shifts in the world production frontier 2 technological catch up movements toward or away from the frontier and 3 capital accumulation movement along the frontier the world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections we analyze the evolution of the cross country distribution of labor productivity in terms of the tripartite decomposition finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening jel o30 o47 d24

choice consistency and preference stability in test retests of discrete choice experiment and open ended willingness to pay elicitation formats this study tests the temporal stability of preferences choices and willingness to pay wtp values using both discrete choice experiment dce and open ended oe wtp elicitation formats the same sample is surveyed three times over the course of two years using each time the same choice sets choice consistency is positively correlated with choice certainty and choice complexity the impact of choice complexity fades away in time most likely as a result of learning and preference refinement although the oe wtp values remain stable over a time period of 2 years as in previous stated preference studies dce based wtp measures differ significantly suggesting their use in benefits transfer may be limited

oecd convergence a sectoral decomposition exercise abstract this paper decomposes oecd convergence into contributions from sectoral productivity growth and contributions from employment shift across sectors while productivity growth in services and agriculture contributed significantly to convergence the contributions from employment shift and productivity growth in manufacturing are statistically insignificant

adding asymmetrically dominated alternatives violations of regularity and the similarity hypothesis an asymmetrically dominated alternative is dominated by one item in the set but not by another adding such an alternative to a choice set can increase the probability of choosing the item that dominates it this result points to the inadequacy of many current choice models and suggests product line strategies that might not otherwise be intuitively plausible

productivity growth in indian agriculture is there evidence of convergence across states this paper explores the question of convergence in total factor productivity tfp in agriculture across fourteen major agricultural states of india using a tornqvist theil index for tfp growth for the period 1973 1993 we find no evidence to support convergence to a single tfp level convergence after grouping the various states on the basis of their productivity performance we find that the high performing states show a gradual movement towards the trend whereas the low performing states generally show more volatility testing for long run convergence in levels of agricultural productivity we find evidence of conditional beta convergence after controlling for state specific factors and idiosyncratic year specific volatility the results are robust to alternative specifications of tests of unit root in panel data developed recently

transitional dynamics in an r d based growth model with imitation comparing its predictions to the data abstract employing cross country data this paper evaluates the transitional dynamics predictions of a non scale growth model of endogenous technology innovation and imitation we show that unlike the neoclassical growth framework the transitional dynamics of the rd 1995 quartely journal of economics 110 641 680 with the importance of technology transfer

sources of productivity growth an empirical analysis with german sectoral data many theoretical analyses of the sources of economic growth focus on knowledge spillovers and scale economies to explain growth endogenously the contribution of this paper is to shed some light on these arguments by an empirical investigation based on a production function framework sectoral production functions are estimated with annual german data of 51 sectors from 1960 90 the estimates reveal that both a pure solow growth model and a solow model augmented with human capital cannot account for the observed productivity increases the model should be extended by allowing for inter industry spillovers and scale economies at the aggregate level as well as for scale economies associated with human capital at the sectoral level the business cycle affects observed productivity changes in the short run and in the long run

if you have the flu symptoms your asymptomatic spouse may better answer the willingness to pay question evidence from a double bounded dichotomous choice model with heterogeneous anchoring the small sample size of contingent valuation cv surveys conducted in patients may have limited the use of the single bounded sb dichotomous choice format which is recommended in environmental economics in this paper we explore two ways to increase the statistical efficiency of the sb format 1 by the inclusion of proxies in addition to patients 2 by the addition of a follow up dichotomous question i e the double bounded db dichotomous choice format we found that patients n 223 and spouses n 64 answering on behalf of the patient had on average a similar willingness to pay for earlier alleviation of flu symptoms however a patient was significantly more likely to anchor his her answer on the first bid as compared to a spouse finally our original db model with shift effect and heterogeneous anchoring reconciled the discrepancies found in willingness to pay statistics between sb and db models in keeping with increased statistical efficiency

agriculture s terms of trade issues and implications the article addresses 1 the issue of what agricultural commodity prices should be compared to if we are concerned with the welfare of agriculturalists 2 the general absence of product quality adjustment when analysis is undertaken comparing agricultural to manufactured goods prices 3 the extent to which energy prices are or will be the driver of both manufactured and agricultural prices and 4 the importance of considering agriculture s terms of trade tot against the service sector since the service sector is typically the largest in the economy it reflects on the basic question of whether the widespread perception that agriculture s tot secularly decline is correct

response strategies and learning in discrete choice experiments this study explores ordering effects and response strategies in repeated binary discrete choice experiments mechanism design theory and empirical evidence suggest that repeated choice tasks per respondent induce strategic behaviour we find evidence that strategic opportunities provided by the order in which choice sets are presented to respondents affect choice decisions strategic response the results suggest however that respondents may solely respond to high cost rather than low cost inconsistencies that is respondents are more cost sensitive and thus have a lower willingness to pay wtp if the same or a similar level of provision was offered in a previous choice set at a lower cost than if it was not yet the cost sensitivity and thus wtp remains unaffected if the same or a similar level of provision was offered in a previous choice set at a higher cost our findings further indicate that cost sensitivity increases and thus wtp decreases when respondents progress through the choice task with this increase decrease lessening as more choice questions are answered possible explanations are value learning and strategic learning

productivity convergence in oecd manufacturing industries the extent of and convergence of average labor productivity across manufacturing industries in 18 oecd countries over the period 1972 1992 shows large inter industry differences one reason for these differences is knowledge and capital barriers preventing the occurrence of catch up we find the level of average labor productivity as a proxy for these barriers is correlated with the extent of convergence

resource use and technological progress in agriculture a dynamic general equilibrium analysis we analyze the global effects of economic and population growth and the impact of a slowdown in agricultural total factor productivity tfp on agriculture and forest resources using a dynamic multi region computable general equilibrium model with land use and cover detail given the current consensus about the growth of the world economy our results suggest that food security will not be threatened and agricultural activities will not encroach on forest resources over the next decade a slowdown in agricultural tfp growth might lead to higher crop prices in all regions with south east asia facing the steepest increases a slowdown in agricultural tfp growth also might be accompanied by higher conversion rates of forestland to farmland as well as by greater environmental or ecological damages on the remaining forestland

starting point bias in dichotomous choice valuation with follow up questioning abstract follow up questions are frequently used to improve the efficiency of dichotomous choice contingent valuation questionnaires however a number of authors e g 12 16 have noted a significant difference between the wtp distributions implied by initial and follow up question responses this paper investigates starting point bias as one explanation for the phenomenon we develop a model of starting point bias in the context of dichotomous choice questioning with follow up using a monte carlo simulation to illustrate the potential bias imparted to wtp estimates an application is provided based on data from a cv study in northcentral iowa

context dependent preferences the standard theory of choice based on value maximization associates with each option a real value such that given an offered set the decision maker chooses the option with the highest value despite its simplicity and intuitive appeal there is a growing body of data that is inconsistent with this theory in particular the relative attractiveness of x compared to y often depends on the presence or absence of a third option z and the market share of an option can actually be increased by enlarging the offered set we review recent empirical findings that are inconsistent with value maximization and present a context dependent model that expresses the value of each option as an additive combination of two components a contingent weighting process that captures the effect of the background context and a binary comparison process that describes the effect of the local context the model accounts for observed violations of the standard theory and provides a framework for analyzing context dependent p

designing transactions without framing effects in iterative question formats abstract several studies document that iterative question formats used in contingent valuation studies produce anomalies in respondent behavior that appear to threaten the validity of welfare estimates by decomposing iterative question formats into their ascending and descending sequences we show that these anomalies occur only in ascending sequences we describe the conditions under which comparable patterns of behavior are likely to be found in other iterative question formats that begin with a discrete willingness to pay question we then develop a unified explanation of these anomalies using our model of framing based on prospect theory we provide the first head to head test of rival explanations of these behavioral patterns by developing refutable hypotheses for the strategic behavior yea saying anchoring and cost expectations models finally based on our own statistically robust model we show how these anomalies can be eliminated without loss of the statistical efficiency of most iterative question formats

causes and consequences of lexicographic choices in stated choice studies abstract stated choice sc methods and other choice experiments are now becoming increasingly popular for the valuation of environmental goods this paper shows that lexicographic choices lcs in an sc task or other types of choice experiments do not imply that the respondent has lexicographic preferences lcs may be a result of i study designs where differences between the alternatives are too great and ii simplification of the choice task a traditional approach that investigates motives for lexicographic choices mainly as a result of lexicographic preferences may therefore fail to reveal the whole motive range study designs that cause lcs whether such choices actually are based on non compensatory choices i e genuine lexicographic preferences or strategic behaviour or compensatory choices provide less information about preferences however providing they are not totally dominant such choices are not normally a serious modeling problem it is argued that simplification is a consequence of respondents differing abilities to choose such lcs contribute to the larger variances of sc data relative to less cognitively demanding valuation methods and might therefore have a significant impact on the implied valuation of non market goods if they are not handled in the analysis in data collection we should use survey designs that collect more signals and less noise and in data analysis we should use models that can separate signals from noise however there is obviously a limit to the amount of noise which can be separated from signals in a model and therefore how much noise such models can tolerate and still produce useful valuation estimates for the goods under consideration for further investigation of such limits a direct test procedure that can investigate whether each respondent has completed the task in a compensatory manner like the one presented in the current study is valuable

estimation of the public benefits of urban water supply improvements in ethiopia a choice experiment improving existing drinking water supply services in developing countries depends crucially on available financial resources cost recovery rates of these services are typically low while demand for more reliable services is high and rapidly growing most stated preference based demand studies in the developing world apply the contingent valuation method and focus on rural areas this study examines household willingness to pay wtp for improved water supply services in a choice experiment in an urban area in ethiopia a country with the lowest water supply coverage in sub saharan africa the design of the choice experiment allows estimation of the value of both drinking water supply reliability and safety the estimated economic values can be used in policy appraisals of improved supply investment decisions despite significant income constraints households are willing to pay up to 80 extra for improved levels of water supply over and above their current water bill women and households living in the

sectoral regularities of productivity growth in developing countries a kaldorian interpretation this paper provides a kaldorian interpretation for empirical regularities of product ivity growth at the sectoral level of the economy the statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries based on novel non linear statistical techniques the findings show i a regular pattern of positive sectoral employment elasticities with respect to output growth ii robust differences across sectors in the magnitude of the employment elasticities and iii employment elasticities for all sectors that are signifi cantly less than unity suggesting strong evidence for increasing returns at the sector level of the economy

convergent validity of attribute based choice questions in stated preference studies the application of attribute based choice questions is well established in the marketing literature but there are unique aspects of the design that warrant investigation to assess their validity for economic welfare estimation three design issues are investigated in this paper 1 the placement of the monetary stimulus policy cost to respondents in the sequence of attributes 2 the number of policy alternatives respondents are asked to consider in choice questions two versus three and 3 the inclusion versus exclusion of a status quo alternative in choice questions the data used to implement these investigations are from a survey designed to estimate the value maine residents place on a farmland conservation easement program tests of convergent validity indicate that the placement of the monetary stimulus first versus last in the list of attributes did not affect estimates of preference parameters significant differences between questions with three versus two alternatives did occur and the inclusion exclusion of a status quo alternative did not affect preference parameters

monetary policy bounded rationality and incomplete markets this paper extends the benchmark new keynesian model by introducing two frictions i agent heterogeneity with incomplete markets uninsurable idiosyncratic risk and occasionally binding borrowing constraints and ii bounded rationality in the form of level k thinking compared to the benchmark model we show that the interaction of these two frictions leads to a powerful mitigation of the effects of monetary policy which is more pronounced at long horizons and offers a potential rationalization of the forward guidance puzzle each of these frictions in isolation would lead to no or much smaller departures from the benchmark model

are patient regarding preferences stable evidence from a laboratory experiment with physicians and medical students from different countries abstract we quantify patient regarding preferences by fitting a bounded rationality model to data from an incentivized laboratory experiment where chinese medical doctors german medical students and chinese medical students decide under different payment schemes we find a remarkable stability in patient regarding preferences when comparing subject pools and we cannot reject the hypothesis of equal patient regarding preferences in the three groups the results suggest that a health economic experiment can provide knowledge that reach beyond the student subject pool and that the preferences of decision makers in one cultural context can be of relevance in a very different cultural context

learning and fatigue effects revisited investigating the effects of accounting for unobservable preference and scale heterogeneity using multiple choice tasks per respondent in discrete choice experiment studies increases the amount of available information however respondents learning and fatigue may lead to changes in observed utility function preference taste parameters as well as the variance in its error term scale they need to be controlled to avoid potential bias a sizable body of empirical research offers mixed evidence in terms of whether these ordering effects are observed we point to a significant component in explaining these differences we show how accounting for unobservable preference and scale heterogeneity can influence the magnitude of observed ordering effects

internal consistency of choice internal consistency of choice has been a central concept in economics decision theory and social choice this idea is essentially confused we cannot determine whether a choice function is consistent without referring to something external to choice e g objectives values the standard results have to be reexamined in this light kenneth j arrow s general possibility theorem is extended in this paper without demanding any internal consistency of social choice or any notion of social rationality copyright 1993 by the econometric society

growth in transition what we know what we don t and what we should abstract this essay surveys macroeconomic issues that marked the transition from planned to market economy in central and eastern european and former soviet union countries we first establish stylized facts of the transition so far we then critically survey the theoretical literature on transition discussing explanations for the initial output fall and mediumterm issues such as optimal speed of transition disorganization institutions and sectoral reallocation as source of output dynamics we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts we conclude with suggestions for future research

dynamic learning and context dependence in sequential attribute based stated preference valuation questions a hybrid stated preference model is presented that combines the referendum contingent valuation response format with an experimentally designed set of attributes a sequence of valuation questions is asked to a random sample in a mailout mail back format econometric analysis shows greater discrimination between alternatives in the final choice in the sequence and the vector of preference parameters shifts lead and lag choice sets have a structural influence on current choices and unobserved factors induce positive correlation across the responses these results indicate that people learn about their preferences for attributebased environmental goods by comparing attribute levels across choice sets

preferences for site and environmental functions when selecting forthcoming national parks abstract a political decision to establish the first ever national parks in denmark allowed us to examine if people hold preferences regarding which site to be designated as national park separate from the preferences for its environmental functions to this end we designed a choice experiment representing the national park alternatives by the possible site and the possible improvements in environmental functions results revealed that respondents have strong preferences for the establishment of a national park per se furthermore there are significant differences in taste parameters for the different sites which cannot be explained by respondents valuing the different functions differently across sites instead we explain the results with differences in regional and cultural preferences we also performed a balanced split sample test of anchoring effects and found clear evidence of this we included a zero bidder screening question prior to the choice set part of the survey instrument to improve wtp estimation

are differences in firm size transitory or permanent an erratum for this article has been published in journal of applied econometrics 18 2 2003 249 previous empirical work on corporate growth rates using cross section or short panel econometric techniques suggests that growth rates are random but that some degree of mean reversion exists this means that size differences between firms are transitory another more natural way to explore the long run distribution of firm sizes is to examine data on the growth of particular firms over long periods of time using a sample of 147 uk firms observed continually for more than 30 years our conclusions are that growth rates are highly variable over time and that differences in growth rates between firms do not persist for very long further firms show no tendency to converge to either a common size or to a pattern of stable size differences over time these results are compared and contrasted with standard approaches that suggest that firms reach and maintain stable positions in a skewed size distribution copyright 2002 john wiley sons ltd

the influence of task complexity on consumer choice a latent class model of decision strategy switching the literature indicating that person context and task specific factors cause consumers to utilize different decision strategies has generally failed to affect the specification of choice models used by practitioners and academics alike who still tend to assume an utility maximizing omniscient indefatigable consumer this article 1 introduces decision strategy selection within a maintained compensatory framework into aggregate choice models via latent classes which arise because of task complexity 2 it demonstrates that within an experimental choice task the model reflects changing aggregate preferences as choice complexity changes and as the task progresses the import of these findings for current practice model interpretation and future research needs is examined

test retest reliability of choice experiments in environmental valuation the paper presents the results of the first test retest study on choice experiments in environmental valuation in a survey concerning landscape externalities of onshore wind power in central germany respondents answered the same five choice sets at two different points in time each choice set comprised three alternatives described by five attributes and the time interval between the test and the retest was eleven months the analysis takes place at three different levels investigating choice consistency at the choice task level and repeatability of the latent construct utility at the level of parametric models as well as at the level of willingness to pay estimates at the choice task level we observed 59 identical choices the parametric analysis shows that the test and retest estimates are not equal even when we control for scale that is differences in the error variance however comparing the marginal willingness to pay estimates among test and retest reveals only a statistically significant difference for one of the attributes overall this indicates a moderate test retest reliability taking into account that consistency at the choice task level overlooks the stochastic nature of the process underlying discrete choice experiments

designing choice sets for stated preference methods the effects of complexity on choice consistency abstract we vary the complexity of choice sets used in stated preference methods to evaluate the impact on choice consistency we define five measures of complexity that capture either the amount of information or the correlational structure of information in a choice set using these measures as randomly assigned treatments in a large experiment we analyze the consistency of respondents choices using a heteroskedastic multinomial logit model we find that i all of our measures of choice set complexity affect choice consistency ii changes in the correlational structure of information have the largest impact on choice consistency and iii choice complexity significantly distorts welfare estimates our results confirm economists initial worry that moving from contingent valuation to conjoint methods will increase complexity induced choice inconsistency however our analysis also shows that these negative impacts may be mitigated if precautions are taken at the design and estimation stages of stated preference methods

do all countries grow alike abstract this paper investigates the driving forces of output change in 77 countries during the period 1970 2000 a flexible modeling strategy is adopted that accounts for i the inefficient use of resources and ii different production technologies across countries the proposed model can identify technical efficiency and input change for each of three endogenously determined regimes membership in these regimes is estimated rather than determined ex ante this framework enables explorations into the determinants of output growth and convergence issues in each regime

position dependent order effects on the prediction of consumer preferences in repeated choice experiments abstractusing stated choice data collected by experimental design with repeated choice tasks this study developed an approach to quantify the position dependent order effects on the prediction of

the evolving role of agriculture in poverty reduction an empirical perspective abstract the role of agriculture in development remains much debated this paper takes an empirical perspective and focuses on poverty as opposed to growth alone the contribution of a sector to poverty reduction is shown to depend on its own growth performance its indirect impact on growth in other sectors the extent to which poor people participate in the sector and the size of the sector in the overall economy bringing together these different effects using cross country econometric evidence indicates that agriculture is significantly more effective in reducing poverty among the poorest of the poor as reflected in the 1 day squared poverty gap it is also up to 3 2 times better at reducing 1 day headcount poverty in low income and resource rich countries including those in sub saharan africa at least when societies are not fundamentally unequal however when it comes to the better off poor reflected in the 2 day measure non agriculture has the edge these results are driven by the much larger participation of poorer households in growth from agriculture and the lower poverty reducing effect of non agriculture in the presence of extractive industries

can more public information raise uncertainty the international evidence on forward guidance abstract central banks have used different types of forward guidance this paper reports cross country evidence showing that in general forward guidance mutes the response of government bond yields to macroeconomic news however calendar based guidance with a short horizon counter intuitively raises it using a stylized model where agents learn from market signals it shows that the public release of more precise information about future rates lowers the informativeness of market signals and as a consequence may increase uncertainty and amplify the reaction of expectations to macroeconomic news

changing with the tide semiparametric estimation of preference dynamics we contrast the discovered preference hypothesis against the theory of coherent arbitrariness in a split sample stated choice experiment on flood risk exposure a semiparametric local multinomial logit model is developed as an alternative to the swait and louviere 1993 test procedure controlling for preference dynamics within and between samples the proposed model supports the discovered preference hypothesis by means of a decaying starting point bias the swait and louviere 1993 test procedure reaches a different conclusion it rejects the assumption of stable preferences but most preference dynamics tend to be smoothed out causing a more erratic pattern of preference dynamics

exploring group dynamics in deliberative choice experiments abstract deliberative monetary valuation has emerged as a promising alternative to conventional stated preference studies of ecosystem services it promises to give respondents a better basis for decision making by exposing them to a more diverse set of knowledge arguments and opinions through group discussion however under certain conditions small groups may fail to effectively pool the individual knowledge of their members this paper examines the impact of the initial distribution of individual preferences in discussion groups on the outcome of deliberative choice experiments drawing on a deliberative monetary valuation study of forest ecosystem services in west saxony germany it is shown that the initial preference distribution in groups influences both the diversity of arguments exchanged during group discussions and respondents consideration of the costs of environmental policies furthermore results indicate that respondents post discussion willingness to pay is affected by the initial preference distribution in groups though these changes were not statistically significant the choice certainty of respondents was found to remain largely unaffected overall the empirical findings of this study provide preliminary evidence about the need to conduct future deliberative monetary valuation studies with groups with heterogeneous initial preferences as this may provide respondents with a more complete set of decision relevant information

convergence in u s productivity growth for agriculture implications of interstate research spillovers for funding agricultural research state crop livestock and aggregate agricultural total factor productivity tfp data 1950 82 are examined for evidence of convergence to a single tfp level convergence or to a steady state rate of growth or conditional convergence our empirical results do not support convergence but do support convergence the rate of convergence is variable and depends on research and development r d spillins from other states private r d and farmers schooling the finding of strong positive interstate spillover effects implies that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency

monitoring choice task attribute attendance in nonmarket valuation of multiple park management services does it matter land management in alpine parks provides multifunctional services to separate groups of users choice experiments can be used to derive estimates of value for different management attri butes however little research has been conducted on how frequently respondents ignore attributes used to describe policy management scenarios we fill this gap using an approach that identifies and compares both serial and choice task attribute nonattendance addressing five different visitor types our results indicate that accounting for choice task nonatten dance significantly improves model fit and yield estimates of marginal willingness to pay with a more plausible pattern of signs and greater efficiency jel q24 q51 i introduction the effects of park management policies on outdoor recreation are increasingly coming under public scrutiny alpine park land is among the most valuable land in terms of outdoor recreation park manage ment decisions are often controversial be cause of differences between objectives pursued by conservationists and the tourist industry parkland management agencies find it increasingly difficult to fund all the services needed to facilitate the ever broad ening variety of outdoor recreation activi ties this is further exacerbated by the increasing expectations for high quality recreational experiences by a population of recreationists with a heightened sensitivity to environmental and conservation issues such a situation widens the scope for multiattribute nonmarket valuation meth ods especially for those methods capable of capturing and modeling the preferences of heterogeneous visitors who seek to pursue a variety of activities in the land under study our research reports the results of a study designed to address attribute nonattendance henceforth abbreviated as an a which despite being quite a common decision heuristic has only recently begun to be explored by analysts with this decision heuristic respondents ignore some of the described attributes in their evaluation of alternatives within a given choice task they hence act as if a zero weight were assigned to the ignored attributes in the utility of the respective alternatives we study this issue by using a well known statistical model of discrete choice the multinomial logit mnl model this random utility model is often used for the purpose of multi attribute nonmarket valuation but the effects of accounting for an a are still rela tively unexplored information on an a is commonly collected by questioning each respondent at the end of the sequence of choice tasks respondents are asked to list those attributes that they feel they have

us regional income convergence a spatial econometric perspective rey s j and montouri b d 1999 us regional income convergence a spatial econometric perspective reg studies 33 143 156 this study reconsiders the question of us regional economic income convergence from a spatial econometric perspective recently developed methods of exploratory spatial data analysis provide new insights on the geographical dynamics of us regional income growth patterns over the 1929 94 period strong patterns of both global and local spatial autocorrelation are found throughout the study period and the magnitude of global spatial autocorrelation is also found to exhibit strong temporal co movement with regional income dispersion a spatial econometric analysis of the familiar baumol specification reveals strong evidence of misspecification due to ignored spatial error dependence because of this dependence shocks originating in one state can spillover into surrounding states potentially complicating the transitional dynamics of the convergence process rey s j et montouri

preference refinement in deliberative choice experiments for ecosystem service valuation choice experiments have gained considerable popularity in ecosystem service valuation in a one shot survey respondents are faced with a strenuous task asking them to discover and monetize their preferences for often unfamiliar ecosystem services in a previously unknown hypothetical market situation we present a deliberative choice experiment that aims to generate well rationalized value estimates for policy advice two aspects of deliberation discussion and time to reflect are examined in terms of their effect on preference refinement we find more comprehensive choice motives after deliberation as well as indications for preference adjustment and a slight increase in choice certainty jel q51 q57

uncovered interest parity forward guidance and the exchange rate under uncovered interest parity uip the size of the effect on the real exchange rate of an anticipated change in real interest rate differentials is invariant to the horizon at which the change is expected empirical evidence using us euro area and uk data points to a substantial deviation from that invariance prediction expectations of interest rate differentials in the near distant future are shown to have much larger smaller effects on the real exchange rate than is implied by uip some possible explanations are discussed

real convergence in europe how robust are econometric inferences the paper examines the convergence properties of productivity in fifteen european countries over the period 1960 1997 european productivity is estimated using modified translog production systems with a completely general intertemporal structure to capture the notion that trade may have an influence on aggregate convergence imports are included in the production function stationarity tests are used to test for convergence around a common long run trend including unit root tests the kpss and bayesian tests as well as testing based on fractional differencing parameter estimation for long memory models it is found that convergence inferences are sensitive to the type of test employed

ambiguous policy announcements we study the effects of an announcement of a future shift in monetary policy when agents face knightian uncertainty about the commitment capacity of the monetary authority households are ambiguity averse and are differentially exposed to inflation due to differences in wealth in response to the announcement of a future loosening in monetary policy only wealthy households creditors will act as if the announcement will be fully implemented due to the potential loss of wealth from the prospective policy easing and when creditors believe the announcement more than debtors their expected wealth losses are larger than the wealth gains that debtors expect hence the economy responds as if aggregate net wealth falls which attenuates the effects of the announcement we study the quantitative properties of the model in a liquidity trap after allowing for a realistic characterization of households wealth portfolio

productivity growth and convergence in crop ruminant and non ruminant production measurement and forecasts there is considerable interest in projections of future productivity growth in agriculture whether one is interested in the outlook for global commodity markets future patterns of international trade or the interactions between land use deforestation and ecological diversity the rate of productivity growth in agriculture is an essential input yet solid projections for this variable have proven elusive particularly on a global basis this is due in no small part to the difficulty in measuring historical productivity growth the purpose of this paper is to report the latest time series evidence on total factor productivity growth for crops ruminants and non ruminant livestock on a global basis we then follow with tests for convergence amongst regions providing forecasts for farm productivity growth to the year 2040 the results suggest that most regions in the sample are likely to experience larger productivity gains in livestock than in crops within livestock the non ruminant sector is expected to continue to be more dynamic than the ruminant sector given the rapid rates of productivity growth observed recently non ruminant and crop productivity in developing countries may be converging to the productivity levels of developed countries for ruminants the results show that productivity levels may be diverging between developed and developing countries