the case for divisia monetary statistics a bayesian time varying approach abstract the zero lower bound and quantitative easing policies have rekindled interest in the link between monetary aggregates and the business cycle this paper argues on the basis of bayesian time varying coefficient var models that use divisia indexes that money is more closely linked to the business cycle as well as forecasting economic activity more accurately than existing literature claims moreover the relationship between money and economic activity is considerably more pronounced during periods of economic distress such as in the great recession

deregulation consolidation and efficiency evidence from the spanish insurance industry this paper provides new information on the effects of deregulation and consolidation in financial services markets by analyzing the spanish insurance industry the sample period 1989 98 spans the introduction of the european union s eu third generation insurance directives which deregulated the eu insurance market deregulation has led to dramatic changes in the spanish insurance market the number of firms declined by 35 average firm size increased by 275 and unit prices declined significantly in both life and non life insurance we analyze the causes and effects of consolidation using modern frontier efficiency analysis to estimate cost technical and allocative efficiency as well as using malmquist analysis to measure total factor productivity tfp change the results show that many small inefficient and financially underperforming firms were eliminated from the market due to insolvency or liquidation as a result the market experienced significant growth in tfp over the sample period consolidation not only reduced the number of firms operating with increasing returns to scale but also increased the number operating with decreasing returns to scale hence many large firms should focus on improving efficiency by adopting best practices rather than on further growth

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

structure and performance the task of economic history jhe cliometric revolution in ecoknomic history wedded neoclassical economics and quantitative methods in order to describe and explain the performance of economies in the past economic history gained in rigor and scientific pretension but at the expense of exploring a much more fundamental set of questions about the evolving structure of economies that underlies performance 2 cliometricians have turned their backs on a long tradition stretching back from joseph schumpeter to karl marx to adam smith these scholars regarded economic history as essential because it added a dimension to economics its purpose was to analyze the parameters held constant by the economist if economics is a theory of choice subject to specified constraints a task of economic history was to theorize about those evolving constraints the failure of economic historians to provide their colleagues with a historical dimension to their perspective has reduced the effectiveness of economists in dealing with contemporary problems failure of economists to appreciate the transitory character of the assumed constraints and to understand the source and direction of these changing constraints is a fundamental handicap to further development of economic theory the challenge to the economic historian which has equally compelling implications for the economic theorist is to explain the transformation of the structure of the american economy in the past century 3 in the rest of this essay i shall explore this issue in order to specify some of the dimensions of the economic historian s task

money and the natural rate of interest structural estimates for the united states and the euro area abstract we examine the role of money in three environments the new keynesian model with separable utility and static money demand a nonseparable utility variant with habit formation and a version with adjustment costs for holding real balances the last two variants imply forward looking behavior of real money balances with forecasts of future interest rates entering current portfolio decisions we conduct a structural econometric analysis of the u s and euro area economies fiml estimates confirm the forward looking character of money demand a consequence is that real money balances are valuable in anticipating future variations in the natural interest rate

theoretical analysis regarding a zero lower bound on nominal interest rates this paper explores several issues concerning a possible zero lower bound zlb including its theoretical rationale the magnitude of effects of low sustained inflation on real interest rates the validity of analyzing monetary policy in models with no monetary variables and the dynamic stabilizing properties of taylor rules in a zlb context the most important argument however is that if the short nominal rate is immobilized at zero there nevertheless exists a route for monetary stabilization policy to be effective via the foreign exchange market its quantitative importance is examined in a calibrated optimizing open economy model

does money matter in shaping domestic business cycles an international investigation we study the contribution of money to business cycle uctuations in the us the uk japan and the euro area using a small scale structural monetary business cycle model constrained likelihood based estimates of the parameters are provided and time instabilities analyzed real balances are statistically important for output and in ation uctuations their contribution changes over time models giving money no role provide a distorted representation of the sources of cyclical uctuations of the transmission of shocks and of the events of the last 40 years

effects of farm size education and off farm income on productive efficiency of dairy farmers in utah a stochasitc frontier approach this study is primarily concerned with investigating the technical allocative and scale inefficiency of owner operators of dairy farms in utah a stochastic production frontier has been applied to analyze these inefficiencies the results indicate that there is positive association between years of education and productivity of labor and capital productivity is also found to be negatively related to off farm income regarding the effects of farm size on efficiency it is found that large farms are the most efficient of all sizes considered separate estimates of technical allocative and scale inefficiencies indicate that large and medium sized farms are technically more efficient than small farms large farms on average are found to be performing much better than medium sized and small farms so far as allocative and scale inefficiency are concerned copyright 1989 by mit press

the rise of the chicago packers and the origins of meat inspection and antitrust the meat inspection act of 1891 and the sherman act of 1890 are closely tied this link makes clearer congress intent in enacting the legislation both laws were products of economic conditions after 1880 and reflected in part widespread concern about the market power of chicago meat packers the concerns of local slaughterhouses which were being displaced by new low cost refrigerated beef and of farmers who sold livestock to the large chicago packers were echoed elsewhere by other small businesses and farmers who feared for their livelihood during a time of structural change in the economy i introduction in the few years between 1887 and 1891 the legislative basis was established for major intervention by the federal government into the american economy the interstate commerce act of 1887 the sherman act of 1890 and the meat inspection act of 1891 1 with these laws the federal government became directly involved in the regulation of railroad rates antitrust enforcement and the inspection and certification of food quality for consumers representing a significant break from what had previously been considered an appropriate role for the federal government this legislation provided a new and permanent mandate for government regulation in the market economy despite the importance of these laws the link between the economic and political environment in the united states in the late nineteenth century on the one hand and the legislative histories of the laws on the other has not been thoroughly explored as a result the motives of congress for enacting these laws remain both unclear and controversial consider meat inspection and antitrust although most attention in the literature is focused on the 1906 meat inspection act made popular by the publication of upton sinclair s the jungle the initial legislation the meat inspection act of 1891 came fifteen years earlier and it addressed the production and consumption of fresh beef but as reported in this paper there is no evidence of a major health crisis regarding the consumption of beef at the time something else appears to have been on the mind of congress when it passed the legislation in 1891 the objectives of congress in enacting the sherman act are even more controversial because of the prominence of the law debate revolves around whether the sherman act was designed to promote competition and consumer welfare or to limit competition and protect special interests 2 this paper argues that to gain a better understanding of the origins of this important legislation and its early economic effects the laws must be placed into the context of the extraordinary changes taking place in the american economy in the late nineteenth century the linkages among the laws help to identify the underlying political and economic forces behind the legislation three broad characteristics of the economy must be kept in mind in analyzing this period first the post civil war period was a time of general deflation between 1864 and 1900 the consumer price index fell by 47 percent u s department of commerce 1975 211 in general prices for farm products followed the overall pattern but prices for cattle fell in real terms after the mid 1880s fluctuations in farm prices also appear to have coincided with periods of agrarian unrest 3 second as described by higgs 1971 and chandler 1977 the period after 1880 was a time of major structural change in the economy the economy was becoming more industrial and biased technological change economies of scale in production distribution and marketing as well as the lowering of transportation costs were fundamentally altering production methods and products this affected the competitive positions of many firms creating winners and losers james 1983 burns 1983 atack 1985 emerging large firms expanded from local to national and international markets and existing small firms found their local markets threatened by new competitors

economies of scale and scope in the finnish non life insurance industry abstract economies of scale and scope in finnish non life insurance are studied the production process is separated into cost and portfolio management functions firms expand their branch network to either gain market power or informational advantages there are diseconomies of scale at firm and economies of scale at branch level and economies of scope in production large firms in the non life insurance industry pay a substantial premium to gain market power via branch networks the retained premiums curve of portfolio management is u shaped and a positive function of the number of branches

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

direct effects of base money on aggregate demand theory and evidence abstract meltzer the transmission process working paper carnegie mellon university 1999a shows that real monetary base growth is a significant determinant of consumption growth in the us controlling for the short term real interest rate in this paper i show that the same property of base money holds for total output relative to trend or potential in both the us and the uk the standard optimizing is lm model cannot account for this result but i show that it can once the long term nominal interest rate is included in the money demand function because the long term real rate matters for aggregate demand the presence of the long term nominal rate in the money demand function increases the effect of nominal money stock changes on real aggregate demand when prices are sticky

foreign direct investment spillovers and technical efficiency in the indonesian pharmaceutical sector firm level evidence the spillovers of foreign direct investment fdi on domestic firms performances have been highly debated for many years this article contributes to this debate by analysing spillovers effects on technical efficiency of indonesian pharmaceutical sector using a unique unbalanced panel of highly disaggregated at five digit international standard industrial classification isic 210 firms over the period 1990 1995 1001 observations the stochastic production frontier spf and the data envelopment analysis dea based on malmquist productivity indices mpi have been used to test the spillovers effects of fdi on technical efficiency the empirical results from the spf show that foreign firms are more efficient than domestic competitors and the presence of the former increases the inefficiency of the latter similarly the results from the mpi demonstrate that fdi has a negative and significant impact on technical efficiency changes in domestic competitors but generate positive spillovers to domestic s

habit formation in consumption and its implications for monetary policy models this paper explores a monetary policy model with habit formation for consumers in which consumers utility depends in part on current consumption relative to past consumption the empirical tests developed in the paper show that one can reject the hypothesis of no habit formation with tremendous condence largely because the habit formation model captures the gradual hump shaped response of real spending to various shocks the paper then embeds the habit consumption specication in a monetary policy model and nds that the responses of both spending and inflation to monetary policy actions are signicantly improved by this modication jel d12 e52 e43

the un importance of forward looking behavior in price specifications the seminal work of edmund s phelps 1978 john b taylor 1980 and guillermo a calvo 1983 developed forward looking models of price determination that imparted inertia to the price level these models incorporate expectations of future prices and excess demand by imposing constraints typically lag lead symmetry constraints that force future variables to enter the specification in this paper the author tests the empirical significance of future prices in specifications like those of taylor he finds that expectations of future prices are empirically unimportant in explaining price and inflation behavior however the dynamics of a model that includes a purely backward looking inflation specification differ substantially and not altogether pleasingly from those with a forward looking specification copyright 1997 by ohio state university press

estimating efficiency in the hospital sector a comparison of three statistical cost frontier models this paper reports the results of an empirical comparison of three statistical cost frontier models using data from 49 spanish public hospitals the models estimated include the deterministic cost frontier a cross section stochastic cost frontier scf in which inefficiency is assumed to follow a half normal distribution and a panel data scf in which inefficiency is assumed to remain constant over time a non frontier model is also estimated the paper compares the estimates of average inefficiency obtained from the frontier models and the implied rankings of hospitals in terms of their costliness actual cost as a proportion of expected cost

price floors and technical inefficiency in india s sugar processing industry in india cane is processed into sugar by cooperatives public enterprises and private for profit firms the indian government sets a unique floor price for each processor that is increasing in the firm s effectiveness in converting cane into sugar the floor price binds for public and private firms but not for cooperatives which rebate profits to members we argue that this price floor policy creates a disincentive for private and public firms to be technically efficient in converting cane to sugar in support of this hypothesis an analysis of 593 indian sugar factories from 1992 to 2007 reveals statistically significant differences in technical efficiency with cooperatives being the most efficient and public firms least efficient we estimate welfare losses due to the technical inefficiency attributable to the price floor policy and argue that it can be eliminated by enacting policy to base price floors upon quality of the cane input received by a factory

should a monetary policymaker look at money abstract this paper examines whether monetary indicators are useful in implementing optimal discretionary monetary policy when the policymaker has incomplete information about the environment we find that money does not contain useful information for the policymaker if we calibrate the model to the u s economy if money demand were to be appreciably less variable observations on money could be useful in response to productivity shocks but would be harmful in response to money demand shocks we provide an incomplete information example where equilibrium welfare declines when the money demand volatility decreases

the public accounting industry production function abstract a translog function is specified to represent the relation between revenue and human resource inputs in public accounting firms estimation of the model using a balanced panel of annual data for 64 large cpa firms for the period 1995 1999 indicates that increasing returns to scale prevail in the public accounting industry justifying recent merger and acquisition activities among accounting firms average marginal revenue product of partners increased monotonically from 1995 to 1998 decreased slightly in 1999 and was about nine times that of other professionals during 1995 1999 the public accounting industry exhibited continuing improvement in productivity over the 5 years

organizational form and efficiency the coexistence of stock and mutual property liability insurers this article introduces a new approach cross frontier analysis for estimating the relative efficiency of alternative organizational forms in an industry the technique is illustrated by analyzing a sample of stock and mutual property liability insurers using nonparametric frontier efficiency methods cross frontier analysis measures the relative efficiency of each organizational form by computing the efficiency of each stock mutual firm relative to a reference set consisting of all mutual stock firms we test agency theoretic hypotheses about organizational form including the managerial discretion and expense preference hypotheses the results indicate that stocks and mutuals are operating on separate production and cost frontiers and thus represent distinct technologies consistent with the managerial discretion hypothesis the stock technology dominates the mutual technology for producing stock outputs and the mutual technology dominates the stock technology for producing mutual outputs however consistent with the expense preference hypothesis the stock cost frontier dominates the mutual cost frontier our findings thus suggest a richer interpretation of organizational form than provided by previous researchers

constructing and estimating a realistic optimizing model of monetary policy abstract a dynamic stochastic general equilibrium dsge model with real and nominal both price and wage rigidities succeeds in capturing some key nominal features of u s business cycles additive technology shocks as well as multiplicative shocks are introduced and shown to be crucial monetary policy is specified as an interest rate targeting rule following developments in the structural vector autoregression var literature the interaction between real and nominal rigidities is essential to reproduce the liquidity effect of monetary policy the model is estimated by maximum likelihood on u s data and its fit is comparable to that of an unrestricted first order var besides producing reasonable impulse responses and second moments this model replicates a feature of u s business cycles never captured by previous research with dsge models that an increase in interest rates predicts a decrease in output two to six quarters in the future

the effect of organizational structure on efficiency evidence from the spanish insurance industry this paper provides new information on the effects of organizational structure on efficiency by analyzing spanish stock and mutual insurers over the period 1989 1997 we test the efficient structure hypothesis which predicts that the market will sort organizational forms into market segments where they have comparative advantages and the expense preference hypothesis which predicts that mutuals will be less efficient than stocks technical cost and revenue frontiers are estimated using data envelopment analysis the results indicate that stocks and mutuals are operating on separate production cost and revenue frontiers and thus represent distinct technologies in cost and revenue efficiency stocks of all sizes dominate mutuals in the production of stock output vectors and smaller mutuals dominate stocks in the production of mutual output vectors larger mutuals are neither dominated by nor dominant over stocks in the cost and revenue comparisons thus large mutuals appear to be vulnerable to competition from stock insurers in spain overall the results are consistent with the efficient structure hypothesis but are generally not consistent with the expense preference hypothesis

institutions and economic growth an historical introduction abstract in this essay the interdependence of political and economic institutions is examined against premises in neoclassical theories of economies which maintain that population and savings are the principal determinants of economic growth that institutions matter in the development of economies is the difference in assumptions i examine i look at the institutional frameworks that preceded adoption of the united states constitution and the northwest ordinance in early america i then trace the precedents of these american institutions to the evolution of common law in england where interests unconcerned with the crown coalesced to form competing political units i then contrast england s institutional development with the comparatively centralized enforcement mechanisms of spain to examine the hypothesis that institutional differences produce economic consequences

measuring the natural rate of interest international trends and determinants abstract u s estimates of the natural rate of interest the real short term interest rate that would prevail absent transitory disturbances have declined dramatically since the start of the global financial crisis for example estimates using the laubach williams 2003 model indicate the natural rate in the united states fell to close to zero during the crisis and has remained there into 2016 explanations for this decline include shifts in demographics a slowdown in trend productivity growth and global factors affecting real interest rates this paper applies the laubach williams methodology to the united states and three other advanced economies canada the euro area and the united kingdom we find that large declines in trend gdp growth and natural rates of interest have occurred over the past 25 years in all four economies these country by country estimates are found to display a substantial amount of comovement over time suggesting an important role for global factors in shaping trend growth and natural rates of interest

resource rent taxation and benchmarking a new perspective for the swiss hydropower sector the electricity generation in switzerland is mainly based on hydropower 55 of total production the exploitation of water in the hydropower sector can generate significant so called resource rents these are defined by the surplus return above the value of capital labor materials and energy used to exploit hydropower in switzerland hydropower producers pay to the state a fixed fee per kw gross capacity with this system the substantial differences in costs revenues and in the production characteristics of the hydropower plants are not taken into account in this context the following paper has two main goals 1 to discuss the introduction in the swiss hydropower sector of a new payment system based on a resource rent tax 2 to propose a combination of a rrt system with a benchmarking analysis of the production cost obtained through the estimation of a stochastic frontier variable cost function we estimate a true random effects stochastic frontier variable cost function using panel data in order to overcome the asymmetric information problem in addition using the information on cost efficiency of the single companies we show how to introduce in the rrt scheme a benchmark system which gives incentives to minimize the production costs

changes in the federal reserve s inflation target causes and consequences this paper estimates a new keynesian model to draw inferences about the behavior of the federal reserve s unobserved inflation target the results indicate that the target rose from 1 1 4 percent in 1959 to over 8 percent in the mid to late 1970s before falling back below 2 1 2 percent in 2004 the results also provide some support for the hypothesis that over the entire postwar period federal reserve policy has systematically translated short run price pressures set off by supply side shocks into more persistent movements in inflation itself although considerable uncertainty remains about the true source of shifts in the inflation target jel e31 e32 e52

the growth of government in the united states an economic historian s perspective abstract this paper first outlines the salient features of the growth of government in american history secondly it offers a neoclassical explanation of that history in which increasing specialization and division of labor brought on by the scientific technological revolution of the nineteenth century drastically altered the demand for and supply of government finally it argues that institutions matter and describes the way the particular structure of governments was important in the timing and pace of its growth

new evidence on inflation persistence and price stickiness in the euro area implications for macro modeling this paper evaluates new evidence on price setting practices and inflation persistence in the euro area with respect to its implications for macro modeling it argues that several of the most commonly used assumptions in micro founded macro models are seriously challenged by the new findings jel e31 e52

cost efficiency and scale economies in the turkish insurance industry this article examines the cost efficiency and scale economies of insurance firms in the turkish insurance industry over a 15 year period 1990 2004 using the stochastic cost frontier model cost efficiency scores and scale economies were estimated for each firm in the sample the results show that mean cost inefficiencies range between 18 3 and 36 9 of total costs and they do not tend to decrease over time on average small firms are more cost efficient than large firms economies of scale appear present and significant for any class size the results suggest that there is a substantial difference in scale economies between small and large insurance firms

do real balance effects invalidate the taylor principle in closed and open economies this paper examines the determinacy implications of forecast based monetary policy rules that set the interest rate in response to expected future inflation in a neo wicksellian model that incorporates real balance effects we show that the presence of such effects in closed economies restricts the ability of the taylor principle to prevent indeterminacy of the rational expectations equilibrium the problem is exacerbated in open economies particularly if the policy rule reacts to consumer price rather than domestic price inflation however determinacy can be restored in both closed and open economies with the addition of monetary policy inertia

cost efficiency of electric grid utilities in china a comparison of estimates from sfa mle sfa bayes and stoned cnls with the purpose of estimating the range of cost efficiency levels of the power grid sector in china we assembled a data set including 23 provincial power grid companies spanning from 2005 to 2009 and conducted an empirical study based on the sfa mle sfa bayes and stoned cnls methodologies empirical results show that the average values of efficiency from different models vary from 0 85 to 0 92 depending especially on the assumptions underlying inefficiency content further results demonstrate that there is exogenous technical progress during the sample period and per capita gdp of the province is negatively related to the costs of the electric grid company located in the corresponding province we hope this empirical study will contribute to the debate on an efficiency based regulation scheme which was introduced to the chinese electric grid sector on a pilot base in 2014

efficiency in the greek insurance industry this paper employs the two stage procedure of simar and wilson 2007 to analyse the effects of deregulation on the efficiency of the greek insurance industry the efficiency is estimated by means of data envelopment analysis dea the companies are ranked according to their crs efficiency score for the period 1994 2003 the first stage results indicate a decline in efficiency over the sample period while the second stage results confirm that the competition for market shares is a major driver of efficiency in the greek insurance industry

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

the structure of a contract and the theory of a non exclusive resource the process of arriving at a useful concept of analysis is not only slow and painful but also may go astray and attain nothing useful someone begins with one example or observation followed by a theory which is intuitively plausible a theoretical term associated with a vague concept is coined examples of a seemingly different type emerge which call for another theory the process goes on as examples and theories continue to accumulate the different categories under the same heading of analysis serve only to confuse and each associated theory becomes ad hoc such has been the fate of the concept of externality a more useful approach i think is via contractual conditions the example chosen for illustration is marine fisheries where the fishing right is taken

money and information in a new neoclassical synthesis framework we consider an otherwise standard new neoclassical synthesis theoretical framework that allows a role for money money in our model has an informational role which facilitates the estimation of the unobserved shocks that drive potential output and thus the state of the economy for this purpose we estimate a small scale sticky price model using bayesian techniques our findings support the view that money has information value this is reflected in higher precision in terms of unobserved model concepts such as the natural rate of output moreover our results highlight how modelling money demand can provide insights about structural features of the economy that may be important for the design of interest rate rules focusing on money also allows for a step towards resolving the price puzzle money demand shocks can confound monetary policy shocks to generate a perverse price response in vector autoregressions var

technical efficiency market share and profitability of manufacturing firms in cote d ivoire the technology trap this paper investigates the sources of inefficiency of firms in cote d ivoire and exam ines to what extent these effects translate into poor performance a large majority of firms is technically inefficient producing far below the maximum attainable output level major cost savings can also be realised through enlarging the scale of activities of firms efficiency gains and scale advantages translate into a better competitive position and via their impact on market share into higher profitability however severe growth barriers and imperfect markets keep firms from realising these gains and prevent firms from catching up in technology with respect to their larger older and often foreign owned competitors

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

peltzman on regulation and politics there is no question that self interest matters not only in private markets but in the political arena as well see goldberg 1974 1976 1977 peltzman s paper is an extremely clever effort to pose the political problem so that the tools and reasoning from the standard model could be extended to the new area with minimal modification the approach directs attention to technical questions e g the signs of second derivatives peltzman 1976 220 221 of a familiar sort however the environment in the new area is so different from the more mundane environments in which the theory normally thrives that a major adaptive effort will be necessary for the theory to survive if it does survive it will be in a form that is almost unrecognizable

money s role in the monetary business cycle a small structural model of the monetary business cycle implies that real money balances enter into a correctly specified forward looking is curve if and only if they enter into a correctly specified forward looking phillips curve the model also implies that empirical measures of real balances must be adjusted for shifts in money demand to accurately isolate and quantify the dynamic effects of money on output and inflation maximum likelihood estimates of the modelos parameters take both these considerations into account but still suggest that money plays a minimal role in the monetary business cycle

technical efficiency of finnish brewing plants a production frontier approach in recent years there has been a substantial change in the common approach to estimating production functions this is primarily the result of the stochastic frontier production model developed by aigner et al 1977 and meeusen and van den broeck 1977 their approach accords with the textbook definition of the production function which is a locus of maximum output levels from given input sets thus a one sided error term is introduced into the frontier production model since all the firms in an industry are not able to produce the frontier output this one sided error is interpreted as technical inefficiency which represents the amount by which a firm s output falls short of the maximum possible output earlier studies that applied this new approach involved estimation of the mean level of efficiency for the industry the subsequent literature has developed techniques to estimate technical inefficiency for each firm in the industry for example jondrow et al 1982 developed techniques to estimate technical inefficiency for each production unit when technical inefficiency is distributed as either half normal or exponential and is independent of the inputs used this last assumption is relaxed in kumbhakar 1987a and the estimation technique is extended to cover panel data the primary motivation for applications of frontier estimation techniques is the measurement of inefficiency this exercise thus has some direct policy relevance see schmidt 1985 86 in this paper we estimate the technical efficiency of 17 finnish brewing plants using panel data 1955 84 the distinguishing features of this study are that the data is of high quality and the observation period is long

european inflation dynamics abstract we provide evidence on the fit of the new phillips curve npc for the euro area over the period 1970 1998 and use it as a tool to compare the characteristics of european inflation dynamics with those observed in the u s we also analyze the factors underlying inflation inertia by examining the cyclical behavior of marginal costs as well as that of its two main components namely labor productivity and real wages some of the findings can be summarized as follows a the npc fits euro area data very well possibly better than u s data b the degree of price stickiness implied by the estimates is substantial but in line with survey evidence and u s estimates c inflation dynamics in the euro area appear to have a stronger forward looking component i e less inertia than in the u s d labor market frictions as manifested in the behavior of the wage markup appear to have played a key role in shaping the behavior of marginal costs and consequently inflation in europe

endogenous money or sticky prices abstract what explains the correlations between nominal and real variables in the postwar us data are these correlations indicative of significant nominal rigidity or do they simply reflect the particular way that monetary policymakers react to developments in the real economy to answer these questions this paper uses maximum likelihood to estimate a model of endogenous money this model allows but does not require nominal prices to be sticky the results show that nominal price rigidity over and above endogenous money plays a role in accounting for key features of the data

transaction costs risk aversion and the choice of contractual arrangements publisher summary this chapter discusses transaction costs risk aversion and the choice of contractual arrangements every transaction involves a contract and the transactions conducted in the marketplace entail outright or partial transfers of property rights among individual contracting parties the contractual arrangements through which these transfers are negotiated are several and varied the chapter presents a theory that states that economic efficiency is the same under various land tenure arrangements subject to the constraint of private property rights although transaction costs exist in the real world the theory enables the understanding of much of the farming behavior however the presence of a variety of contractual arrangements under the same constraint of competition poses the question of the choice of these arrangements if a firm can increase efficiency in production by employing productive resources of more than one resource owner a contract to combine the resources will be obtained the formation of the contract involves partial transfers of property rights in one form or another such as leasing hiring or mortgaging

measuring the natural yield curve we generalize the concept of the natural rate of interest laubach and williams 2003 woodford 2003 by defining and estimating the natural yield curve nyc the term structure of natural interest rates our motivation stems i a from the observation that at times when central banks attempt to directly affect long term interest rates e g via quantitative easing the gap between the short term real and natural rate is no more a good indicator of the monetary policy stance we estimate the nyc on us data document its main properties and show i a that in the period 2008 to 2011 the nyc allows to better capture the us monetary policy stance than the short term natural rate

estimating the evolution of money s role in the u s monetary business cycle we assess money s role in the post wwii u s business cycle by employing both fixed coefficient and rolling window bayesian estimations of a structural model of the business cycle with money our empirical evidence favors a specification with drifting parameters for money consumption nonseparability and the federal reserve s reaction to nominal money growth the role of money is estimated to have been important during the 1970s and declined afterward the omission of money produces severely distorted impulse response functions relative to the model with money money is found to be important in replicating the u s output volatility during the great inflation

productivity and efficiency analysis software an exploratory bibliographical survey of the options the software available to implement and carry out efficiency analysis is crucial for the diffusion of efficiency frontier techniques among applied researchers and policy makers the implementation of up to date productivity and efficiency analysis is indeed important to advance our knowledge in many fields ranging from the public and regulated sectors to the private ones this contribution fills a gap in the existing literature and surveys the currently available options to estimate a variety of frontier methodologies using either general or dedicated programs we outline directions for future research

fire insurance in germany a comparison of price performance between state monopolies and competitive regions abstract up until 1994 there were two different forms of organizing the fire insurance market in germany while a state monopoly applied in 13 regions a competitive market system combined with government regulation existed in the rest of the country this study identifies the effects of market forms on the price performance of insurance companies it is based on annual company data including premium revenues damage payments and general expenses for the period 1980 1994 the estimation results indicate that monopolies had a 22 percent lower markup on damage payments compared to companies in competitive regions with an average markup of 42 percent the difference may be explained by higher selling costs for companies in competitive markets indicated by a high share of commissions in total expenses

when does the cost channel pose a challenge to inflation targeting central banks abstract in a sticky price model where firms finance their production inputs there is both a lower and an upper bound on the central bank s inflation response necessary to rule out the possibility of self fulfilling inflation expectations this paper shows that real wage rigidities decrease this upper bound but coefficients in the range of those on the taylor rule place the economy well within the determinacy region however when there is time variation in the share of firms who finance their inputs i e markov switching then inflation targeting interest rate rules frequently result in indeterminacy even if the central bank also targets output adding a nominal growth target to the policy rule can often alleviate this indeterminacy and therefore anchor inflation expectations

a theory of price control price or rent control is but one of many forms of legislative action which interfere with private contracting in the market place to delimit the scope of my analysis i shall use the term price control to refer only to any set of regulations which satisfies the following three conditions first the control must fix the price or income terms of private contracts this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis 2 second the control must involve no appropriation of proceeds to or from the government taxation and subsidization are thus excluded finally the fixing of price must not be associated with direct government sales purchases or manipulation of resources so as to maintain the regulated price 3 by this stipulation price support is also excluded even on such terms legal regulations to control price are still many and varied to evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts by this criterion the available body of economic theory pertaining to price control is deficient indeed the massive literature on the subject offers few such implications 4 an alternative approach to analyzing the observable effects of price control is presented here

optimal monetary policy optimal monetary policy maximizes the welfare of a representative agent given frictions in the economic environment constructing a model with two sets of frictions costly price adjustment by imperfectly competitive firms and costly exchange of wealth for goods we find optimal monetary policy is governed by two familiar principles first the average level of the nominal interest rate should be sufficiently low as suggested by milton friedman that there should be deflation on average yet the keynesian frictions imply that the optimal nominal interest rate is positive second as various shocks occur to the real and monetary sectors the price level should be largely stabilized as suggested by irving fisher albeit around a deflationary trend path since expected inflation is roughly constant through time the nominal interest rate must therefore vary with the fisherian determinants of the real interest rate although the monetary authority has substantial leverage over real activity in our model economy it chooses real allocations that closely resemble those which would occur if prices were flexible in our benchmark model there is some tendency for the monetary authority to smooth nominal and real interest rates

money in the production function a new keynesian dsge perspective this article checks whether money is an omitted variable in the production process by proposing a microfounded new keynesian dynamic stochastic general equilibrium model in this framework real money balances enter the production function and money demanded by households is differentiated from that demanded by firms using a bayesian analysis our model weakens the hypothesis that money is a factor of production however the demand of money by firms appears to have a significant impact on the economy even if this demand has a low weight in the production process

money in an estimated business cycle model of the euro area this article examines the role of money in a small scale dynamic general equilibrium model of the euro zone estimated by maximum likelihood the model allows for both intertemporal and intratemporal non separability in preferences we find first that real balances do not affect the marginal utility of consumption second money demand shocks mainly help to forecast real balances while real shocks explain the bulk of price output and interest rates fluctuations third the calculation of the natural rate of interest reveals that the evolution of the interest rate is mostly accounted for by the real sources of fluctuations

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

habit formation in consumption a meta analysis abstract we examine 597 estimates of habit formation reported in 81 published studies the mean reported strength of habit formation equals 0 4 but the estimates vary widely both within and across studies we use bayesian and frequentist model averaging to assign a pattern to this variance while taking into account model uncertainty studies employing macro data report consistently larger estimates than micro studies 0 6 vs 0 1 on average the difference remains 0 5 when we control for 30 factors that reflect the context in which researchers obtain their estimates such as data frequency geographical coverage variable definition estimation approach and publication characteristics we also find that evidence for habits strengthens when researchers use lower data frequencies employ log linear approximation of the euler equation and utilize open economy dsge models moreover estimates of habits differ systematically across countries

insurance companies in mozambique a two stage dea and neural networks on efficiency and capacity slacks this article analyses the efficiency of mozambique insurance companies using a dea model two dea models are used and a bootstrap approach adopted furthermore the efficiency scores are predicted based on neural networks the results reveal that mozambique insurance companies output increasing potentials are severely constrained particularly in terms of the ceded reinsurance increasing potentials policy implications are derived

measuring cost efficiency in the property liability insurance industry abstract escalating prices and periodic availability problems in property liability insurance markets are often attributed to insurance company inefficiency and lax claims settlement practices this paper investigates these issues by estimating stochastic cost frontiers for three size stratified samples of property liability insurers over the period 1980 1988 a translog cost function and input share equations are estimated using maximum likelihood techniques the results show that large insurers operate in a narrow range around an average efficiency level of about 90 percent relative to their cost frontier efficiency levels for medium and small insurers are about 80 and 88 percent in relation to their respective frontiers wider variations in efficiency are present for these two groups in comparison with large insurers large insurers slightly over produce loss settlement services while small and medium size insurers under produce this output the small and intermediate size groups are characterized by economies of scale suggesting the potential for cost reductions from consolidations in the industry

putting the new open economy macroeconomics to a test abstract this paper explores one way to extend the new open economy macroeconomics in an empirical direction adapting maximum likelihood procedures it estimates and tests an intertemporal small open economy model with monetary shocks and nominal rigidities results offer mixed support for a benchmark model where prices are assumed to be sticky in the currency of the buyer price stickiness seems to be an important element as overall results are poorer for versions of the model in which prices either are flexible or are sticky in the currency of the producer the benchmark model does a better job explaining some variables than others in particular it does a poor job explaining exchange rate movements