measuring noise in inventory models this paper has two purposes one is to assess different models of inventory behavior in terms of their ability to approximate the realized data we do this initially for the pure production smoothing model and then for a sequence of generalizations our analysis both performs specification tests as well as measures the deviations of the data from each null model through use of a noise ratio statistic a second purpose is to explore whether observed cost shocks in particular raw materials prices help explain inventory movements we find that the production smoothing model of inventories augmented by buffer stock motives stockout avoidance motives and observed cost shocks well approximates monthly data

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

the wage gap between francophones and anglophones a canadian perspective 1970 2000 the wage gap between francophone and anglophone men from 1970 and 2000 fell by 25 percentage points within quebec but only by 10 points canada wide largely because the wages of quebec anglophones fell by 15 points relative to other canadian anglophones accordingly the canadian measure of the francophone gap better reflects the changing welfare of francophones than the quebec measure over half of the reduction in the canadian francophone wage gap is explained by rising francophone education levels in quebec the declining number and relative wages of anglophone workers is best explained by a falling demand for english speaking labour l ecart de salaires entre les hommes francophones et anglophones est tombe de 25 points de pourcentage au quebec entre 1970 et 2000 mais seulement de 10 points a l echelle canadienne largement parce que les salaires des anglophones au quebec sont tombes de 15 points par rapport aux autres canadiens anglophones en consequence la mesure canadienne de l ecart prend mieux la mesure du changement de bien etre des francophones que la mesure quebecoise plus de la moitie de la reduction dans l ecart au niveau canadien s explique par l accroissement des niveaux d education des francophones au quebec le nombre en declin des travailleurs anglophones et la chute de leurs salaires relatifs s expliquent par un declin dans la demande de travailleurs parlant anglais

input and output inventories abstract this paper presents a new stage of fabrication inventory model with delivery usage and stocks of input materials that distinguishes between gross production and value added it extends the linear quadratic model of output inventories by adding the joint determination of input inventories empirically input inventories are more important than output inventories maximum likelihood estimation of the decision rules yields correctly signed and significant parameter estimates using data for nondurable and durable goods industries but the overidentifying restrictions of the model are rejected the value added specification dominates because adjustment costs on materials usage are critical to fitting the data

taking stock a critical assessment of recent research on inventories empirical and theoretical aspects of inventory behavior became hot topics in the 1950s and early 1960s no one seemed to notice the tension that was developing between the emerging macroeconomic and microeconomic views of inventories macroeconomists routinely thought of inventories as a destabilizing factor yet the prevailing micro theory viewed inventories as a stabilizing factor it was a fascinating question that was barely explored instead somewhat inexplicably interest in inventories dried up as if inventories were of minor economic significance and little intrinsic interest by the early 1980s then economists once again knew something they had known in the 1950s that inventory investment is of first order importance in business cycles but they were also beginning to realize that the standard production smoothing buffer stock model of inventories was in deep trouble this paper focuses on developments since that realization

some empirical evidence on the production level and production cost smoothing models of inventory investment the production smoothing model of inventories has long been the basic paradigm within which empirical research on inventories has been conducted the basic hypothesis embedded in this model is that inventories of finished goods serve primarily to smooth production levels in the face of fluctuating demand and convex cost functions however once we allow for shocks to technology and the costs of producing output firms will also use inventories to shift production from periods in which production costs are relatively high to periods in which production costs are relatively low in this sense inventories can serve to smooth production costs rather production levels in this paper we examine the empirical plausibility of the production level and production cost smoothing models of inventories our basic strategy is to derive and contrast a set of unconditional moment restrictions implied by these models in a way that minimizes the role of auxiliary assumptions regarding market structure and industry demand we find overwhelming evidence against the production level smoothing model and very little evidence against the production cost smoothing mode1 we conclude that the variance of production exceeds the variance of sales in most manufacturing industries because the production cost smoothing role of inventories is quantitatively more important than the production level smoothing role of inventories this abstract was borrowed from another version of this item

equilibria and efficiency in bilingual labour markets abstract we consider a labour market where two languages are commonly in use and each individual may make a costly investment to learn the language which is not his or her mother tongue language skills are productive in a human capital sense and can also be used to signal unobservable traits to employers due to the informational asymmetry between workers and employees the equilibrium rate of bilingualism in the economy may exceed the socially efficient level on the other hand the spillovers associated with second language acquisition may imply there is not enough bilingualism relative to the social optimum we consider the circumstances under which either the signalling or the network welfare effects dominate in equilibrium depending on the parameter values of the model policies of either encouraging or discouraging the investment in language skills may be welfare enhancing

recursive factor of production interrelations and endogenous cycling a multivariate linear rational expectations equilibrium version of the lucas prescott investment model is developed to study the behavior of factors of productions with recursive interrelations the connection between these interrelations and endogenous cycling is established in a testable way maximum likelihood estimates using annual postwar aggregate u s manufacturing data provide strong evidence of capital labor interrelations that induce a labor overshooting type of endogenous cycling this raises questions for the methodology of current real business cycle models which rule out the possibility of such interrelations copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a non recursive solution for the linear rational expectations model this paper summarizes two new results on the solution of linear rational expectations models arising from optimizing behavior the first result concerns the development of conditions under which the general solution of the euler equation associated with the linear rational expectations lre model can be obtained by finding the eigenvalues and the eigenvectors of its characteristic matrix polynomial 1 the second result concerns the development of conditions under which the general solution of the euler equation associated with the lre model becomes the globally asymptotically stable particular solution of that equation the conditions of these two results take the form of restrictions on the eigenvalues and the eigenvectors of the characteristic matrix polynomial associated with the euler equation of the lre model the usefulness of these results stems primarily from two facts first these results may be combined with the generaiized wiener kolmogorov prediction formulae to obtain a non recursive as dosed as possible to a closed form solution to the lre model 2 3 second this solution is established under less restrictive conditions than the recursive solution of hansen and sargent

male female earnings differentials and the role of language in canada ontario and quebec 1970 recent studies by robb 1978 and gunderson 1979a have analysed malefemale earnings differentials in ontario and canada respectively both authors first estimated sex specific earnings functions and then employed the estimated coefficients to decompose the observed or gross earnings differential into a portion attributable to differences in mean characteristics or endowments and a portion attributable to discrimination i discrimination is measured both by differential returns to the same productivity generating characteristics the estimated coefficients of the characteristics and by other forms of discrimination which do not appear explicitly in the earnings equation the estimated intercepts the purpose of this note is to report the results obtained from performing a similar decomposition analysis for quebec and to compare our results with those of robb and gunderson given the comparative nature of our study we have chosen to use the same data base sample characteristics model specifications and control variables as did robb and gunderson 2 the major difference between our study and those of robb and gunderson is the treatment of language robb did not include language variables in her earnings functions for ontario while gunderson employed what we term a narrow definition of language for canada in his earnings equations gunderson measured language skills by the ability to communicate in canada s official

rational expectations and the smoothing properties of inventories of finished goods abstract this paper formulates and estimates a dynamic rational expectations equilibrium model of inventories of finished goods and employment of labor the view that the primary role of inventories of finished goods is to act as a buffer stock in the face of fluctuating demand is examined both the model and estimation results indicate that this is the case because of differences in the costs involved for firms in changing their inventory stocks and labor force in addition to providing some new evidence on the behavior of inventories of finished goods and employment the paper illustrates a technology for maximum likelihood estimation of structural parameters under the hypothesis of rational expectations

production smoothing evidence from physical product data we reconsider the paradox that the variance of production often exceeds the variance of shipments a result that casts doubt on the production smoothing model of inventory behavior most studies of production smoothing have analyzed two digit sic dollar value data from commerce department surveys in contrast this paper examines disaggregated physical product data and finds that production is smoother than shipments in about two thirds of the 38 industry or product groupings considered however doubts about the model persist most notably euler equation estimates of the model s cost parameters are usually imprecise and often do not have the signs postulated by production smoothing models

the interest rate learning and inventory investment this paper presents a model that provides an explanation based on regime switching in the real interest rate and learning of why tests based on stock adjustment models euler equations or decision rules which emphasize short run fluctuations in inventories and the interest rate are unlikely to uncover a negative relationship between inventories and the real interest rate the model however predicts that inventories will respond to long run movements that is to regime shifts in the real interest rate tests emphasizing cointegration techniques confirm this prediction and show a significant long run relationship between inventories and the real interest rate

earnings by language group in quebec in 1980 and emigration from quebec between 1976 and 1981 between 1976 and 1981 many pople moved out of quebec especially anglophones to the extent that a persons decision to stay or to move may be related to earnings prospects earnings comparisons with individuals who lived in quebec in 1981 may suffer from a selection bias this paper analyses emigration from quebec and earnings with a two equation model using a sample of men drawn from the from the 1981 canadian census it is found that a selection bias is indeed present for anglophones and that the returns to learning french may be underestimated when that bias is ignored excerpt

a language theory of discrimination any advanced industrial society is composed of a number of speech communities with different verbal and nonverbal languages in particular in the united states blacks and whites and men and women have sharply differing methods of speaking and listening this paper develops a model in which people can only work together if they speak the same language and in which it is costly to learn a second language the competitive market will tend to minimize communication through segregation but if interaction is required the cost will be borne by the minority a number of nontrivial predictions are derived from the model

the sources of fluctuations in aggregate inventories and gnp a simple real linear quadratic inventory model is used to determine how cost and demand shocks interacted to cause fluctuations in aggregate inventories and gnp in the united states 1947 1986 cost shocks appear to be the predominant source of fluctuations in inventories and are largely though not exclusively responsible for the fact that gnp is more variable than final sales cost and demand shocks are of roughly equal importance for gnp these estimates however are imprecise with different but plausible values for a certain target inventory sales ratio cost shocks are less important than demand shocks for gnp fluctuations

a generalized variance bounds test with an application to the holt et al inventory model abstract this paper derives a variance bounds test for a broad class of linear rational expectations equilibrium models according to this test if observed data accord with the model then a weighted sum of autocovariances of the covariance stationary components of the endogenous state variables should be nonnegative the new test reinterprets west s 1986 variance bounds test and extends its applicability by not excluding unobservable exogenous state variables nonstationary exogenous and endogenous state variables and nonzero initial values for the endogenous state variables the new test is computed together with west s test for the holt et al inventory model using nondurable industry data while west s test almost always rejects the model the latter almost always passes the new test this and other evidence provide strong support for the importance of supply shocks in explaining aggregate inventory behavior via the holt et al model

inventories employment and hours abstract this paper develops a model that integrates inventory and labor decisions we extend a model of inventory behavior to include a detailed specification of the role of labor input in the production process distinguishing between employment hours and effort per worker we estimate jointly the euler equations for inventories and employment a labor compensation schedule and an hours requirement function with the cross equation restrictions imposed the econometric results shed light on several important topics including the shape of the marginal cost of output the role of labor hoarding as an explanation of pro cyclical productivity and the persistence of inventory stocks

theoretical and experimental investigations of the performance of keyword auction mechanisms two keyword auction mechanisms the generalized second price auction gsp and the vickrey clarke groves mechanism vcg were compared theoretically and experimentally the former is widely used in practice the latter is not but it has a dominant strategy equilibrium where all participants bid their true values in the theoretical investigation by applying the locally envy free nash equilibrium to the vcg we found that the allocations are efficient and that upper and lower bounds of the auctioneer s revenue coincide in the two mechanisms a laboratory experiment in which the revenues and efficiencies were similar in both mechanisms supported this result

a test of the linear rational expectations equilibrium inventory model in the eec abstract in this paper i test an extension of the familiar holt modigliani muth and simon 1960 inventory model using annual data from the eec countries the two step two stage least squares estimation technique of cumby et al 1983 is used the model is tested using the generalized variance bounds test developed by kollintzas 1988 and the variance bounds test of west 1986 in the majority of the cases the empirical evidence gives support to the traditional inventory model when allowing for stochastic cost shocks and stock out avoidance motives

can the production smoothing model of inventory behavior be saved the production smoothing model of inventory behavior has a long and venerable history and theoretical foundations that seem very strong yet certain overwhelming facts seem not only to defy explanation within the production smoothing framework but actually to argue that the basic idea of production smoothing is all wrong most prominent among these is the fact that the variance of detrended production exceeds the variance of detrended sales this paper first documents the stylized facts then it derives the production smoothing model rigorously and explains how the model can be amended to make it consistent with the facts finally it reviews the theoretical and empirical evidence and tries to draw some tentative conclusions