macroeconomic implications of production bunching factor demand linkages abstract existing empirical evidence suggests that output is more variable than consumption so that production smoothing is not apparently present in this paper we investigate some macroeconomic implications of the proposition that the empirical evidence reflects the presence of some firms in the economy that produce with nonconvex technologies overall when activities are sufficiently complementary and inventory holding is sufficiently costly nonconvexities at the firm level can generate a pattern of output and sales such that the variance of output exceeds that of sales at an aggregate level in this way nonconvexities at the individual firm level may have macroeconomic consequences

the replacement problem abstract a prototypical vintage capital model of economic growth is developed where the decision to replace old technologies with new ones is modeled explicitly technological change is investment specific depreciation in this environment is an economic not a physical concept the vintage capital economy s balanced growth paths and transitional dynamics are analyzed the transitional dynamics are markedly different from the standard neoclassical growth model

adjustment costs inventories and output this paper analyzes the optimal adjustment strategy of an inventory holding firm facing price and quantity adjustment costs in an inflationary environment the model nests both the original menu cost model that allows production to be costlessly adjusted and the later model that includes price and quantity adjustment costs but rules out inventory holdings it is shown that the firm s optimal adjustment strategy may involve stockouts at low inflation rates output is inversely related to the inflation rate and the length of time demand is satisfied increases with the demand elasticity but decreases with the storage cost and the real interest rate

fiscal federalism approach for controlling global environmental pollution this paper finds that optimal international carbon taxes are country specific and we can decompose a tax on a domestically produced carbon intensive commodity into a revenue tax a tax to control local atmospheric pollution and an international carbon tax it shows that an institutional arrangement for the world economy similar to the fiscal federalism in the federal countries can be useful to internalize the global externalities of atmospheric pollution

firm level investment spikes and aggregate investment over the great recession it is widely accepted that firm level investment is characterized by periods of low investment punctuated by spikes but widely debated whether such lumpiness matters for aggregate investment we provide new empirical evidence that variation in uk aggregate investment is driven by variation in the number of firms undertaking investment spikes this pattern holds for all sectors and across the business cycle we set out and estimate a tractable firm level model of the timing of investment spikes that incorporates the effect of specific macroeconomic factors and aggregates to match observed variation in aggregate investment using simulations we establish that low demand growth was the dominant factor inhibiting uk firms investment spikes immediately following the great recession while heightened uncertainty prolonged low investment and prevented a v shaped economic recovery we use the great recession as a source of exogenous variation with which to study heterogeneity in response to aggregate shocks we find that the minority of firms operating with persistently high debt levels and therefore with balance sheets more exposed to the costs of financial distress were significantly less likely to undertake an investment spike following the recession

non convexities in the adjustment of different capital inputs a firm level investigation recent developments in investment research have highlighted the importance of non convexities and irreversibilities in firms adjustment of quasi fixed inputs aggregation across capital goods may smooth out the discontinuities associated with the adjustment of individual assets lack of suitable data is one of the reasons why empirical work has typically relied on the assumption of capital homogeneity in this paper we exploit a data set of 1539 italian firms which allows us to disaggregate capital into equipment and structures and purchases and sales of assets we construct measures of fundamental q to capture investment opportunities associated with each asset we uncover the pattern of dynamic adjustment by using non parametric techniques to relate each individual investment to its own fundamental q

some economics of global warming the greenhouse effect itself is simple enough to understand and is not in any real dispute what is in dispute is its magnitude over the coming century its translation into changes in climates around the globe and the impacts of those climate changes on human welfare and the natural environment these are beyond the professional understanding of any single person the sciences involved are too numerous and diverse demography economics biology and the technology sciences are needed to project emissions atmospheric chemistry oceanography biology and meteorology are needed to translate emissions into climates biology agronomy health sciences economics sociology and glaciology are needed to identify and assess impacts on human societies and natural ecosystems and those are not all there are expert judgments on large pieces of the subject but no single person clothed in this panoply of disciplines has shown up or is likely to this article makes an attempt to forecast the economic and social consequences of global warming due to anthropogenic greenhouse gases and attempting to prevent it

employment dynamics and the structure of labor adjustment costs in this article we document the patterns of employment adjustment at the micro level we find clear evidence of lumpy adjustment consistent with the presence of nonconvexities in the adjustment technology inaction is pervasive action spells are short lived and extreme adjustment episodes are responsible for a nontrivial share of employment adjustment we also find that the probability of employment adjustment increases with the duration of inaction the skill structure of the workforce the type of employment contract and the proportion of low tenure workers which we interpret as proxies for the magnitude of adjustment costs all influence the probability of adjustment

nonconvex factor adjustments in equilibrium business cycle models do nonlinearities matter recent empirical analysis has found nonlinearities to be important in understanding aggregated investment using an equilibrium business cycle model we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs we find that while such costs lead to nontrivial nonlinearities in aggregate investment demand equilibrium investment is effectively unchanged our finding based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity is robust to the introduction of shocks to the relative price of investment goods

exploring links between innovation and diffusion adoption of nox control technologies at us coal fired power plants while many studies have looked at innovation and adoption of technologies separately the two processes are linked advances and expected advances in a single technology should affect both its adoption rate and the adoption of alternative technologies this paper combines plant level data on us coal fired electric power plants with patent data pertaining to nox pollution control techniques to study this link as in other studies of environmental technologies the effect of other explanatory variables is dominated by the effect of environmental regulations demonstrating that the mere presence of environmental technologies is not enough to encourage its usage nonetheless i do find that technological advances are important for the adoption of existing combustion modification technologies however these advances are less important for the adoption of newer post combustion control techniques which are adopted only when needed to comply with the strictest emission limits

investment dynamics with fixed capital adjustment cost and capital market imperfections this paper examines the implications of financing frictions on capital stocks and on capital accumulation in the presence of non convex costs of adjusting the capital stock in this setup finance has an influence on both the level of capital and the timing of investment finance and productivity are complements and finance influences investment the strongest when firms wish to significantly adjust capital for fundamental reasons these theoretical considerations are confronted with uk data while finance is mostly irrelevant for long term capital decision the short run investment function shows a significant impact of finance which is also strongest for strong fundamental investment incentives

intertemporal capital budgeting abstract this paper analyzes the optimal capital budgeting mechanism when divisional managers are privately informed about the arrival of future investment projects consistent with field study evidence an optimal allocation mechanism can include a stipulation that a capital request for discretionary investment will be declined with positive probability in the period after a significant investment was made even though this is ex post suboptimal the model derives a number of empirical predictions regarding capital budgeting and the investment of financially constrained firms

structural identification of high and low investment regimes abstract we propose a structural model to investigate the existence and possible differences between low and high regimes of investment expenditures in equipment at the firm level the existence of such differences is predicted by recent theoretical studies of investment behavior stressing the role of asymmetries and non convexities in the adjustment cost technology the structural spike model is estimated for a balanced panel of dutch firms operating in 13 different industrial sectors the flexibility of the structural approach explains why the proposed method outperforms models applying ad hoc spike definitions often encountered in the empirical literature of lumpy investments

irreversibilities in fixed capital adjustment abstract using two largely novel datasets we examine how colombians and mexicans invest in response to imbalances between actual and desired capital stock levels nonparametric estimates of the average adjustment function support the presence of irreversibilities but not of nonconvexities

economic theory and the world of practice a celebration of the s s model it was the question of how best to balance the costs of ordering and of running out of stock against the costs of holding excess inventory that inspired kenneth arrow theodore harris and jacob marschak to introduce the s s model in 1951 in this celebratory article we show how this model not only answered important practical questions but also opened the door to a quite startling range of important and challenging follow up questions many of great practical importance and analytic depth the s s model has become one of the touchstone models of economics opening new vistas of applied economic theory to all who internalize its structure today it is universally applied to solve questions faced in inventory control the core model elements uncertainty and fixed costs of adjustment are ubiquitous which has resulted in its becoming the general purpose economic model of discrete adjustment the s s model has also become a profound source of inspiration for macroeconomists seeking to understand the role that discrete microeconomic adjustments play in macroeconomic fluctuations looking forward we foresee rapid growth in the use of s s modeling to aid households making complex and costly financial decisions such as when and how to terminate a mortgage in the projected era of household operations research new modeling challenges will arise due to enriched feedback from the world of practice

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

employment changes the structure of adjustment costs and plant size abstract in this paper we analyze the pattern of employment adjustment using a rich panel of norwegian plants the data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size we develop and estimate a simple q model of labor demand allowing for the presence of fixed linear and quadratic components of adjustment costs the econometric evidence supports the existence of purely fixed components unrelated to plant size as a result the range of inaction is wider for smaller plants the quadratic component of costs is also always important in most specifications fixed costs are higher for employment contractions the quadratic component is higher during employment contractions compared to expansions for small plants while this is not true for larger plants

investment dynamics with information costs investment in physical capital at the micro level is infrequent and large or lumpy the most common explanation for this is that firms face non convex physical adjustment costs the model developed in this paper shows that information costs make investment lumpy at the micro level even in the absence of non convex adjustment costs when collecting and processing information is costly the firm optimally chooses to do it sporadically and to be inactive most of the time this behavior results in infrequent and possibly large capital adjustments the model fits plant level investment rate moments well and it also matches some higher order moments of aggregate investment rates keywords investment dynamics information costs inattentiveness lumpy investment jel classification d21 d83 d92 e22

monetary fiscal interactions with endogenous liquidity frictions i develop a tractable macro model with endogenous asset liquidity to understand monetary fiscal interactions with liquidity frictions agents face idiosyncratic investment risks and meet financial intermediaries in competitive search markets asset liquidity is determined by the search friction and the cost of operating the financial intermediaries and it drives the financing constraints of entrepreneurs those who have investment projects and their ability to invest in contrast to private assets government bonds are fully liquid and can be accumulated in anticipation of future opportunities to invest a higher level of real government debt enhances the liquidity of entrepreneurs portfolios and raises investment however the issuance of debt also raises the cost of financing government expenditures a higher level of distortionary taxation and or a higher real interest rate a long run optimal supply of government debt emerges i also show that a proper mix of monetary and fiscal policies can avoid a deep financial recession

firm growth and laplace distribution the importance of large jumps abstract recent empirical studies have shown that firm growth rate distribution is not gaussian but closely follows a laplace distribution this robust feature of the growth rate distribution challenges existing models based on gibrat s model because it predicts a gaussian distribution first we analyze more than 100 000 japanese firms and empirically show that the laplace shape can be observed for the japanese firms then by using the theory of stochastic processes we theoretically show that the absence of jumps causes the discrepancy between gibrat s model and the laplace shape in particular based on the laplace shape and the law of proportionate effect we show that the firm growth process is a jump process in other words firm growth cannot be explained by the consequence of many small shocks but is determined by a few large jumps the widely observed laplace distribution reflects this jump property of firm growth dynamics

the effects of expected and unexpected volatility on long run growth evidence from 18 developed economies 1 introductionalthough there is disagreement about the magnitude many economists agree that business cycles have negative consequences for welfare in the short run by causing output to deviate from potential as a result most policymakers regard reducing volatility as a desirable goal however there is disagreement about the long run consequences of business cycles some models suggest that business cycle volatility should reduce long run growth in these models increased volatility increases risk reduces investment and slows the growth rate of output in addition volatility may reduce the diffusion rate of new technology which might reduce the long run growth rate hence business cycles have negative short run consequences by causing output to deviate from the trend and negative long run consequences by slowing the long run growth rate if these models are accurate then the welfare consequences of business cycles are more severe than previously thought an alternative view of the growth volatility relationship suggests that there may be a long run benefit to business cycles in these models increased volatility stimulates inventive activity which increases the long run growth rate reduced volatility will be beneficial in the short run but if reduced volatility decreases the long run growth rate then there are costs to stabilization as a result policymakers would face a trade off between business cycle volatility and long run growth in addition it is possible that the long run costs of stabilization policy might exceed the short run benefits this article sheds new light on the growth volatility relationship first this article focuses on two types of volatility expected volatility and unexpected volatility this allows a more thorough test of the two general hypotheses linking growth to volatility second this article empirically examines the relationship between growth and volatility for 18 industrialized nations over a 110 year period therefore the analysis avoids the problem of short time span of data this article proceeds as follows section 2 clarifies the relationship between the competing hypotheses as well as between expected and unexpected volatility section 3 analyzes the growth volatility relationship without making the distinction between expected and unexpected volatility section 4 uses generalized method of moments gmm and ordinary least squares ols along with panel data to estimate the effects of expected and unexpected volatility on growth section 5 concludes with suggestions for further research 2 the growth volatility relationshipthe view that business cycle volatility reduces the long run growth rate focuses on risk bernanke 1983 ramey and ramey 1991 and pindyck 1991 argue that volatility creates risk about future demand and that firms are unlikely to invest in new plants and equipment if they are unsure about the demand for their product the greater the volatility in output the more uncertain future demand becomes the greater the risk and the less likely firms are to invest this negative relationship between volatility and investment might lead to a negative relationship between growth and volatility increased volatility decreases investment which then slows the growth rates of the capital stock and output the effect would be especially pronounced if new technology is embodied in new capital goods ramey and ramey 1995 and macri and sinha 2000 have found results consistent with this view of the growth volatility relationship using aggregate data this view emphasizes the risks associated with unexpected changes in output when firms cannot accurately forecast the demand for their goods they reduce capital expenditures which reduces growth the view that business cycles might increase long run growth focuses on the opportunity cost of productivity enhancing activities peas bean 1990 and saint paul 1993 view firms as solving an intertemporal profit maximizing problem in which producing goods provides profits today but engaging in peas produces profits only in the distant future

zeros and lumps in investment empirical evidence on irreversibilities and nonconvexities the objective of this paper is to investigate if and how capital adjustment departs from the smooth pattern implied by standard model based on convex adjustment costs using norwegian micro data we start by documenting the intermittent and lumpy nature of investment rates we then present two pieces of econometric evidence on these issues first we estimate a discrete hazard model to determine the probability of having an episode of high investment conditional on the length of the interval from the last high investment episode second we estimate a switching regression model that allows for the response of the investment rate to fundamentals to differ across regimes in both cases we investigate the aggregate implications of our results

current account adjustment in developing countries the role of exchange rate regimes i introduction an important question in open economy macroeconomics is whether exchange rate rigidity hinders current account adjustment also known as the friedman hypothesis according to friedman 1953 a flexible exchange rate regime facilitates current account adjustment while a fixed exchange rate regime delays the adjustment process this hypothesis has stimulated extensive research on the relationship between exchange rate regimes and current account reversals e g adalat and eichengreen 2007 de haan schokker and tcherneva 2008 milesi feretti and razin 2000 pancaro and rueffer 2009 while existing studies have made significant contributions to the literature they largely focus on the determinants of current account reversals rather than the duration of current account deficit spells emphasized in the friedman hypothesis does a country s exchange rate regime really matter to how long it stays in a high current account deficit state and if so to what extent does the fixed exchange rate regime delay the adjustment process this article addresses the above important questions by empirically evaluating the role of exchange rate regimes on the duration of high current account deficit spells in developing countries given the prevalence of large and persistent current account deficits across countries over the last few decades understanding the impact of exchange rate regimes on the duration of high deficit spells is particularly important and pertinent specifically we identify high current account deficit spells and employ hazard models to examine whether a fixed exchange rate regime increases the duration of high deficit spells and thus delays current account adjustment 1 a novelty of this approach is that by estimating hazard models we can explicitly test for the effect of exchange rate regimes on the duration of high current account deficit spells which is more in the spirit of the friedman hypothesis on the basis of a large dataset with annual observations for 95 developing countries over the period 1971 2004 we find strong evidence that in developing countries fixed exchange rate regimes are associated with longer duration of high deficit spells and hence significant delays in the adjustment to high current account deficits this finding is robust to alternative exchange rate regime classifications and different model specifications furthermore we show that fixed exchange rate regimes delay current account adjustment only in the hard peg case but not in the soft peg case from a policy perspective this suggests that only the corner solution of a very rigid exchange rate regime delays the current account adjustment but not if the regime allows for some flexibility in the exchange rate adjustment our findings thus lend strong support to the friedman hypothesis the remainder of the article proceeds as follows after a brief review of the relevant literature in section ii section iii provides a description of our dataset and defines high deficit spells in section iv we discuss the methodological issues involved in the duration analysis the empirical results are presented in section v and section vi concludes ii the literature on exchange rate regimes and current account adjustment the discussion on the relationship between exchange rate regimes and current account adjustment goes back to friedman s seminal work in the 1950s friedman 1953 argues that nominal exchange rate flexibility expedites current account adjustment while nominal exchange rate rigidity delays the adjustment under a flexible exchange rate system where the exchange rate is allowed to vary freely a rising current account deficit would induce the depreciation of domestic currency which in turn leads to an increase in exports a decrease in imports and a rapid convergence to a balanced current account in the case of fixed exchange rate regimes where exchange rates are not allowed to vary countries have to rely solely on internal price adjustment mechanisms to produce corrective movements in their current accounts

the impact of vintage and survival on productivity evidence from cohorts of u s manufacturing plants this paper examines the evolution of productivity in u s manufacturing plants from 1963 to 1992 we define a vintage effect as the change in productivity of recent cohorts of new plants relative to earlier cohorts of new plants and a survival effect as the change in productivity of a particular cohort of surviving plants as it ages both factors contribute to industry productivity growth but play offsetting roles in determining a cohort s relative position in the productivity distribution recent cohorts enter with higher productivity than earlier entrants did whereas surviving cohorts show productivity increases as they age these two effects roughly offset each other however so there is a rough convergence in productivity across cohorts in 1992 and 1987

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

microeconomic adjustment hazards and aggregate dynamics the basic premise of this paper is that understanding aggregate dynamics requires considering that agents are heterogeneous and that they do not adjust continuously to the shocks they perceive we provide a general characterization of lumpy behavior at the microeconomic level in terms of an adjustment hazard function which relates the probability that a unit adjusts to the deviation of its state variable from its moving target we characterize rich cross sectionally dependent aggregate dynamics generated by nonconstant hazards we present an example based on u s manufacturing employment and job flows and find that increasinghazard models outperform constant hazard partial adjustment models in describing aggregate employment dynamics

the role of non convex costs in firms investment and financial dynamics abstract this paper shows that non convex costs of financial adjustment are quantitatively relevant for explaining firm dynamics first empirically financial activity is lumpy more than investment activity second non convex costs are necessary in the context of a dynamic investment and financing model to rationalize this lumpiness two versions of the model with and without non convex costs are compared only the non convex costs version replicates the dynamics in the data generating financial lumpiness higher than investment lumpiness other predictions of the model with respect to investment and finance are discussed

investment and operating choice oil and natural gas futures prices and drilling activity abstract we present evidence that changes in oil and natural gas field investment measured by drilling rig use respond positively to changes in the futures prices of oil and natural gas consistent with predictions based upon value maximizing behavior these results hold for world regions dominated by private independent oil companies but not national oil companies in those cases where futures price changes are identified as drivers the role of spot prices is either absent or weak the results are robust to several alternative specifications including controls for changes in rig productivity

openness government size and the terms of trade this paper investigates the relationship between trade openness and the size ofngovernments both theoretically and empirically we argue that openness can increase the size of governments through two channels 1 a terms of trade externality whereby trade lowers the domestic cost of taxation and 2 the demand for insurance whereby trade raises risk and public transfers we provide a unified framework for studying and testing these two mechanisms our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter namely the elasticity of substitution between domestic and foreign goods moreover while the first mechanism is inefficient from the standpoint of world welfare the second is instead optimal in the empirical part of the paper we provide new evidence on the positive association between openness and government size and we explore its determinants consistently with the terms of trade externality channel we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods our findings raise warnings that globalization may have led to inefficiently large governments

liquidity shocks business cycles and asset prices abstract in the aftermath of the great recession macro models that feature financing constraints have attracted increasing attention among these kiyotaki et al 2012 is a prominent example in this paper we investigate whether the liquidity shocks and financial frictions proposed by kiyotaki et al 2012 can improve the asset pricing predictions of the frictionless rbc model we study the quantitative business cycle and asset pricing properties in an economy in which agents feature recursive preferences are subject to a liquidity constraint and suffer liquidity shocks we find that the model predicts highly nonlinear time variation and levels of risk premia which are driven by endogenous fluctuations in equity prices however the model fails to account for a basic fact periods of scarce liquidity are associated with high asset prices and low expected returns

idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics we examine a model of lumpy investment wherein establishments face persistent shocks to common and plant specific productivity and nonconvex adjustment costs lead them to pursue generalized s s investment rules we allow persistent heterogeneity in both capital and total factor productivity alongside low level investments exempt from adjustment costs to develop the first model consistent with available evidence on establishment level investment rates reassessing the implications of lumpy investment for aggregate dynamics in this setting we find that they remain substantial when factor supply considerations are ignored but are quantitatively irrelevant in general equilibrium the substantial implications of general equilibrium extend beyond the dynamics of aggregate series while the presence of idiosyncratic shocks makes the time averaged distribution of plant level investment rates largely invariant to market clearing movements in real wages and interest rates we show that the dynamics of plants investments differ sharply in their presence thus model based estimations of capital adjustment costs involving panel data may be quite sensitive to the assumption about equilibrium our analysis also offers new insights about how nonconvex adjustment costs influence investment at the plant when establishments face large and weakly persistent idiosyncratic productivity shocks consistent with existing estimates we find that nonconvex costs do not cause lumpy investments but act to eliminate them

the market for motion pictures rank revenue and survival i introduction on any given day in every major city there may from 50 to 100 motion pictures playing on theater screens each is unique and its producer hopes it will catch that bit of magic that lights up the screen and the box office yet few achieve this feat and most lead brief unpredictable lives each film competes for screens and audiences during its brief life against a changing array of imperfect and equally unique substitutes how is one to understand this market is there any sense in which this market could be called competitive and how is it organized what institutions and contracts are adapted to this market environment and how do they shape the results we seek to answer some of these questions by examining the relationship between contractual practices and motion picture hazard and survival distributions our modeling is based on a large sample of motion picture revenues and theater bookings during their theatrical runs our detailed sample of motion picture lifetimes is a rare look at this fascinating industry whose unusual and complex features challenge economic theory in interesting ways as smith and smith 1986 506 observe given the interesting characteristics of movies as ideal examples of differentiated products and of the institutional arrangements governing their production and distribution such increased data availability would make this an exceptionally attractive area for applied micro economic research much of the empirical work on the motion picture industry has focused on the attributes of successful movies smith and smith 1986 examined the impact of oscar awards on the cumulative rentals of movies released from the 1950s through the 1970s in more recent work nelson et al undated have quantified the value of an oscar award on movie revenues using a large panel of data and an event study methodology in a somewhat broader empirical study prag and cassavant 1994 examined the determinants of movie revenues and marketing expenditures they found that marketing expenditures and quality are important determinants of a film s success and that production cost star actors and awards are positively related to marketing expenses in the present paper we attempt to account for the dynamic patterns in the data because each film is unique and plays in its own way its life as a commercial product in the theatrical market is hazardous indeed most motion pictures have short and unpredictable lives because audiences must discover what they like and films compete against an ever changing cast of competitors for these reasons it is productive to use evolutionary models of survival and death to model the data 1 we model competition among films in the theatrical market as an evolving rank tournament of survival 2 motion pictures live and die in the box office tournament as they are challenged during their run by a randomly evolving cast of new competitors the challengers come from films previously released and from newly released films the contending films are ranked by film goers and those with high rank survive and are carried over to the next week low ranked films fail and are replaced by new contenders these attributes of the motion picture market contribute to increasing returns and give the box office revenue distribution the distinctive convex shape of a tournament prize distribution 3 the leading products command a disproportionate share of the market and they have longer runs even then a film s rank in the tournament is ephemeral and its life unpredictable in fact of any 10 major theatrical films produced on the average 6 or 7 are unprofitable and 1 will break even vogel 1990 29 ii the motion picture exhibition market once a film is produced it is distributed to theaters who exhibit it for audiences the distributor chooses a release pattern the number and location of theaters in which the film is booked or licensed to play

leaving teaching in the uk a duration analysis in this paper the authors analyze the decision by teachers to leave the profession their results affirm the importance of relative earnings in the tenure and turnover decisions of teachers the econometric modeling approach used yields important insights into the appropriateness of adopting a flexible semiparametric specification of the duration dependence structure and of the unobserved heterogeneity distribution in duration models copyright 1995 by royal economic society