fighting with one hand tied behind the back political budget cycles in the west german states theories of political budget cycles have been contested because scholars find that incumbents can manipulate deficits in the pre election period only if fiscal transparency is low i argue that these findings do not generally rule out the possibility of fiscal electioneering governments may increase spending on highly visible policies the composition of the budget serves as a second best strategy it increases political support without straining the budget balance an empirical analysis of the west german states reveals alternative electoral budget strategies and ultimately point to the importance of analyzing how governments choose between alternative fiscal instruments

realizing the gains from trade export crops marketing costs and poverty this paper explores the role of export costs in the process of poverty reduction in rural africa the authors claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and thus to higher poverty they test the model using data from the uganda national household survey the findings show that i farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in marketendowed villages ii market availability leads to increased household participation in export cropping coffee tea cotton fruits and iii households engaged in export cropping are less likely to be poor than subsistence based households the authors conclude that the availability of markets for agricultural export crops helps realize the gains from trade this result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor

nonparametric estimation of sample selection models sample selection models provide an important way of accounting for economic decisions that combine discrete and continuous choices and of correcting for nonrandom sampling nonparametric estimators for these models are developed in this paper these can be used for estimating shapes and important economic quantities as in standard nonparametnc regression endogeneity of regressors of interest is allowed for series estimators for these models are developed which are useful for imposing additivity restnctions that arise from selection corrections convergence rates and asymptotic normality results are derived an application to returns to schooling among australian young females is given

employer matching and 401 k saving evidence from the health and retirement study abstract employer matching of employee 401 k contributions is often touted as a powerful incentive to save for retirement and is a key component in pension plan design in the united states using detailed administrative contribution earnings and pension plan data from the health and retirement study this analysis formulates a life cycle consistent econometric specification of 401 k saving and estimates the determinants of saving accounting for non linearities in the household budget set induced by matching the participation estimates indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401 k participation by 5 percentage points the parametric and semi parametric estimates for saving indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401 k saving by 365 in 1991 dollars overall the analysis reveals that the 401 k saving response to matching is quite inelastic and hence matching is a rather poor policy instrument with which to raise retirement saving

confronting price endogeneity in a duration model of residential subdivision development summary spatial equilibrium implies that distant factors are correlated with local prices through market mechanisms using this logic we develop a novel approach for handling price endogeneity in land use models we combine a control function approach with a duration model to identify the impact of prices in influencing land conversion we find that failure to control for endogeneity results in large differences in elasticities specifically we find an elasticity of 2 06 compared to 0 67 in a model without instrumentation this difference is significant as it suggests that price based policies such as green taxes are likely more effective in altering development patterns than would be expected from a naive estimation that ignores price endogeneity copyright 2016 john wiley sons ltd

rhetoric on the economy have european parties changed their economic messages abstractthis study analyses the determinants of dispersion of economic issue mentions in european party manifestos we examined three main economic domains governmental control of the economy free market capitalism and support for the welfare state as consequences of globalization forces economic conditions partisanship and electoral turnout employing aggregate level comparative manifesto project cmp data from legislative elections in 15 european countries from 1970 to 2010 we confirm that parties hold a common view of the salience of economic control of the state as a consequence of globalization pressure and economic growth levels partisanship of the cabinets regardless of the political orientation counteracted issue salience concentration in the welfare domain government size favoured dispersion in the free market realm our results do not indicate clear homogenization of parties economic messages in elections over the last 40 years

partisan governments the international economy and macroeconomic policies in advanced nations 1960 93 this article examines the impact of parties domestic institutions and the international economy on the conduct of monetary and fiscal policies using time series cross section data from nineteen oecd countries for the years between 1960 and the mid 1990s the results are as follows partisan governments have affected alone and in interaction with the organization of labor markets the pattern of macroeconomic management still their impact has varied over time partly as a function of economic conditions but fundamentally as a function of the degree of financial liberalization and the exchange rate system in place after following broadly similar macroeconomic policies in the 1960s oecd governments pursued divergent monetary and fiscal policies in response to the economic slowdown of the 1970s even when they initially adopted countercyclical measures conservative governments quickly favored tight monetary policies and strove to achieve fiscal discipline by contrast taking advantage of generalized capital controls and floating exchange rates socialist cabinets embraced demand management policies in a systematic fashion mostly through budget deficits in corporatist countries and through both loose monetary and loose fiscal measures in noncorporatist settings as financial liberalization progressed in the early 1980s partisan and institution led differences in macroeconomic policies waned across countries

what do saving investment relationships tell us about capital mobility abstract this paper re examines the tests of international capital mobility based on saving investment regressions originated by feldstein while analyses of various measures of capital controls provide some support for the feldstein hypothesis it is shown that the existence of nontraded goods can independently lead to a saving investment correlation this theoretical critique is supported empirically an analysis of the stability of the coefficients resolves the oft reported puzzle in the literature that economies appear to have become increasingly closed financially over time

subjective health assessments and active labor market participation of older men evidence from a semiparametric binary choice model with nonadditive correlated individual specific effects we use panel data from the us health and retirement study 1992 2002 to estimate the effect of self assessed health limitations on active labor market participation of men around retirement age self assessments of health and functioning typically introduce an endogeneity bias when studying the effects of health on labor market participation this results from justification bias reflecting an individual s tendency to provide answers which justify his labor market activity and individual specific heterogeneity in providing subjective evaluations we address both concerns we propose a semiparametric binary choice procedure which incorporates potentially nonadditive correlated individual specific effects our estimation strategy identifies and estimates the average partial effects of health and functioning on labor market participation the results indicate that poor health and functioning play a major role in the labor market exit decisions of older men

rating politics partisan discrimination in credit ratings in developed economies how does government partisanship influence sovereign credit ratings of developed countries given the convergence of fiscal and monetary outcomes between left and right governments in the past deca

u s deficits since world war i the tax smoothing theory suggests that deficits would respond particularly to recession temporarily high government spending and anticipated inflation my empirical estimates indicate that a relation of this type is reasonably stable in the u s since at least 1916 in particular the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions further the deficits for 1982 3 and popular projections formed in 1984 for 1984 5 are consistent with the previous structure the high values of these deficits reflect the customary response to substantial recession interacting with big government and to expected inflation

labour tax reform the good jobs and the bad jobs we analyse recent proposals to shift the tax burden away from low paid labour assuming a dual labour market where the good high paying jobs are rationed a shift in the tax burden from low paid to high paid workers has an ambiguous effect on the level of aggregate employment while the allocation of aggregate employment is further distorted even if the tax reform raises total employment economic efficiency may be reduced because labour is reallocated from high productive to low productive jobs we also find that opportunities for on the job search have important implications for the policy effects

endogenous regressor binary choice models without instruments with an application to migration abstract this paper shows identification of a semiparametric binary choice model containing an endogenous regressor when no outside instrumental variable is available a simple estimator an easy test for endogeneity and an empirical application to us migration data are provided

identification in differentiated products markets using market level data we present new identification results for nonparametric models of differentiated products markets using only market level observables we specify a nonparametric random utility discrete choice model of demand allowing rich preference heterogeneity product market unobservables and endogenous prices our supply model posits nonparametric cost functions allows latent cost shocks and nests a range of standard oligopoly models we consider identification of demand identification of changes in aggregate consumer welfare identification of marginal costs identification of firms marginal cost functions and discrimination between alternative models of firm conduct we explore two complementary approaches the first demonstrates identification under the same nonparametric instrumental variables conditions required for identification of regression models the second treats demand and supply in a system of nonparametric simultaneous equations leading to constructive proofs exploiting exogenous variation in demand shifters and cost shifters we also derive testable restrictions that provide the first general formalization of bresnahan s 1982 intuition for empirically distinguishing between alternative models of oligopoly competition from a practical perspective our results clarify the types of instrumental variables needed with market level data including tradeoffs between functional form and exclusion restrictions

comparing features of convenient estimators for binary choice models with endogenous regressors abstract we discuss the relative advantages and disadvantages of four types of convenient estimators of binary choice models when regressors may be endogenous or mismeasured or when errors are likely to be heteroscedastic for example such models arise when treatment is not randomly assigned and outcomes are binary the estimators we compare are the two stage least squares linear probability model maximum likelihood estimation control function estimators and special regressor methods we specifically focus on models and associated estimators that are easy to implement also for calculating choice probabilities and regressor marginal effects we propose the average index function aif which unlike the average structural function asf is always easy to estimate

interpreting aggregate wage growth the role of labor market participation a new and easily implementable framework for the empirical analysis of the relationship between aggregate and individual wages is developed aggregate real wages are shown to contain three important bias terms one associated with the dispersion of individual wages a second deriving from compositional changes in the selected sample of workers and a third reflecting the distribution of working hours their importance for interpreting the path of aggregate wages and of the returns to education for recent experience in britain is highlighted a close correspondence between the estimated biases and the patterns of differences shown by aggregate wages is established

should the personal computer be considered a technological revolution evidence from u s metropolitan areas the introduction and diffusion of personal computers are widely viewed as a technological revolution using u s metropolitan area level panel data this paper asks whether links between pc adoption educational attainment and the return to skill conform to a model of technological revolutions in which the speed and extent of adoption are endogenous the model implies that cities will adjust differently to the arrival of a more skill intensive means of production with the returns to skill increasing most where skill is abundant and its return is low we show that the cross city data fit many of the predictions of the model during the period 1980 2000 the pc diffusion era

the effects of banning advertising in junk food markets we develop a structural model to analyze the eects of banning advertising on market equilibria and welfare in junk food markets we consider the impact on demand and prices and show how to quantify welfare eects when advertising might lead consumers to take decisions that are inconsistent with their underlying preferences we use transaction level data on the potato chips market and nd that banning advertising leads to a direct reduction in demand but also toughens price competition leading to lower prices and increased demand welfare increases as consumers benet from no longer making distorted

government partisanship labor organization and macroeconomic performance governments of the left and right have distinct partisan economic policies and objectives that they would prefer to pursue their propensity to do so however is constrained by their desire for reelection we argue that the ability of governments to further their partisan interests and preside over reelectable macroeconomic outcomes simultaneously is dependent on the organization of the domestic economy particularly the labor movement we hypothesize that there are two different paths to desirable macroeconomic performance in countries with densely and centrally organized labor movements leftist governments can promote economic growth and reduce inflation and unemployment conversely in countries with weak labor movements rightist governments can pursue their partisan preferred macroeconomic strategies and achieve similarly beneficial macroeconomic outcomes performance will be poorer in other cases these hypotheses are supported by analysis of pooled annual time series data for 16 advanced industrial democracies between 1967 and 1984

political determinants of budget deficits coalition effects versus minority effects this paper reexamines some recent empirical evidence on the hypothesis that institutional arrangements in the political process affect budget deficits the results of roubini and sachs 1989b are replicated and sensitivity analysis indicate that their results are robust however the main conclusion of roubini and sachs that coalition governments are less capable of budgetary discipline needs to be modified a reformulation of their variable representing political cohesion reveals that it captures the effects of minority governments rather than majority coalition governments the data support the hypothesis that it is harder to negotiate in parliament than within a government

central banks partisan politics and macroeconomic outcomes what are the implications of the trend toward granting central bank independence for partisan theories of the macroeconomy the conventional view is that parties of the left and right strive to achieve distinctive macroeconomic outcomes when in government however when faced with an independent central bank parties of the left may prove unable to produce their preferred partisan outcomes whereas right parties may be privileged in their ability to pursue their goals moreover granting the central bank independence can be expected to have differing effects depending on whether left or right parties prevail in government these issues are explored with a pooled time series model of inflation and unemployment in 16 organization for economic co operation and development countries from 1961 through 1991 the results support the claim that the effects of partisan government and central bank organization are mutually contingent the pattern of results anticipated by partisan theory only arises where central b

partisanship and the path to financial openness the effect of traditional left right economic preferences on countries international financial openness is more subtle than existing studies have recognized the authors investigate the role that partisan politics played in the liberalization of international financial markets within 12 western european democracies from 1960 to 1986 the authors find that right governments tended to be active liberalizers of the capital account they were more likely than left governments to enact liberalizations and liberalizations were especially likely when new right governments entered office left governments typically acquiesced to these changes although less likely to enact liberalizations they were no more likely to impose new restrictions the authors findings are consistent with studies that show how financial integration does not undermine welfare states but is still subject to partisan contention

unobserved preference heterogeneity in demand using generalized random coefficients we model unobserved preference heterogeneity in demand systems via random barten scales in utility functions these barten scales appear as random coefficients multiplying prices in demand functions consumer demands are nonlinear in prices and may have unknown functional structure we therefore prove identification of generalized random coefficients models defined as nonparametric regressions where each regressor is multiplied by an unobserved random coefficient having an unknown distribution using canadian data we estimate energy demand functions with and without random coefficient barten scales we find that not accounting for this unobserved preference heterogeneity substantially biases estimated consumer surplus costs of an energy tax jel codes c14 d12 d13 c21 keywords unobserved heterogeneity nonseparable errors random utility parameters random coefficients equivalence scales consumer surplus welfare calculations the authors wish to thank jinyong hahn richard blundell stefan hoderlein rosa matzkin and anonymous referees for helpful discussions and suggestions earlier versions of this paper were circulated under the

explaining capital account liberalization in latin america a transitional cost approach in the past three decades governments around the world have lowered barriers to international capital flows this movement is widely attributed to the forces of globalization as developed nations moved toward relative convergence on international financial openness yet developing nations with much to gain from openness to foreign investment moved only hesitantly and inconsistently in this direction analysis of two decades of capital account liberalization in latin america and the oecd reveals that nations in latin america with weaker domestic financial sectors face higher risks of transitional dislocations following liberalization and move less aggressively toward openness in the oecd by contrast financial weakness is associated with greater movements toward capital account opening as transitional costs are lower and governments are better equipped to ameliorate them examination of the transitional costs of liberalization thus helps to explain how market pressures may impede rather than promote market oriented reform in latin america

globalization party positions and the median voter the authors argue that the effects of economic globalization on social democratic parties in western europe are conditional on the position of the median voter if the median is far enough to the right such parties will adopt business friendly policies because they are required to win office only when the median is relatively far to the left will globalization constrain social democratic parties forcing them to adopt policies further to the right in order to retain credibility it is on this basis the authors argue that empirical studies are misspecified unless they include an interaction between measures of globalization and the position of the median in addition to presenting formal theoretical arguments the article reports empirical findings from fifteen countries in the period from 1973 to 2002 that support the conclusion that the effects of globalization are indeed contingent on the median the authors find that the effects of globalization are significant for social democratic parties only in circumstances in which the median is relatively far to the left

the international allocation of savings with quadratic transaction or risk costs abstract quadratic transaction costs are used to explain to what extent the savings of a country are invested in the same country and to what extent they give rise to international capital flows more specifically it is shown that the high across countries correlation between saving and investment observed by feldstein and horioka could at least in part result from differences in transaction costs between internal and external investments this remains true even in the presence of an international asset without such differences in the particular model used transaction costs cannot be distinguished from risk jel f21

government partisanship labor organization and macroeconomic performance a corrigendum alvarez garrett and lange 1991 used cross national data panel data on the organization for economic coordination and development nations to show that countries with left governments and encompassing labor movements enjoyed superior economic performance here we show that the standard errors reported in that article are incorrect reestimation of the model using ordinary least squares and robust standard errors upholds the major finding of alvarez garrett and lange regarding the political and institutional causes of economic growth but leaves the findings for unemployment and inflation open to question we show that the model used by alvarez garrett and lange feasible generalized least squares cannot produce standard errors when the number of countries analyzed exceeds the length of the time period under analysis also we argue that ordinary least squares with robust standard errors is superior to feasible generalized least square for typical cross national panel studies

firms adoption of international standards evidence from the ethiopian floriculture sector global trade in agriculture and food products is increasingly governed by an array of standards a survey conducted in 2010 covering all operational firms in the nascent floriculture industry in ethiopia revealed that only 36 per cent have managed to acquire certification for international private standards this study uses a census based panel dataset from ethiopian floriculture to empirically examine the determinants of firms adoption of international private standards it also analyses overall industry level efforts and public private partnership to launch and implement a national scheme for good agricultural practice and build firms capacity to comply with the standards key words standards certification floriculture exports estate farms ethiopia africa

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

alternative approaches to evaluation in empirical microeconomics four alternative but related approaches to empirical evaluation of policy interventions are studied social experiments natural experiments matching methods and instrumental variables in each case the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest these key parameters include the average treatment effect the treatment on the treated and the local average treatment effect some issues of implementation and interpretation are discussed drawing on the labour market programme evaluation literature

tax design in the alcohol market abstract alcohol consumption generates negative externalities that are non linear in the total amount of alcohol consumed if tastes for products are heterogeneous and correlated with marginal externalities then varying tax rates on different products can lead to welfare gains we study this problem in an optimal tax framework and empirically for the uk market we find that heavy drinkers have systematically different patterns of alcohol demands and welfare gains from optimally varying rates are higher the more concentrated externalities are among heavy drinkers

pairwise difference estimation with nonparametric control variables this paper extends the pairwise difference estimators for various semilinear limited dependent variable models proposed by honore and powell 2005 to permit the regressor appearing in the nonparametric component to itself depend upon a conditional expectation that is nonparametrically estimated this permits the estimation approach to be applied to nonlinear models with sample selectivity and or endogeneity in which a control variable for selectivity or endogeneity is nonparametrically estimated we develop the relevant asymptotic theory for the proposed estimators and we illustrate the theory to derive the asymptotic distribution of the estimator for the partially linear logit model

beyond the endogeneity bias the effect of unmeasured brand characteristics on household level brand choice models we investigate the role of potential weekly brand specific characteristics that influence consumer choices but are unobserved or unmeasurable by the researcher we use an empirical approach based on the estimation methods used for standard random coefficients logit models to account for the presence of such unobserved attributes using household scanner panel data we find evidence that ignoring such time varying latent to the researcher characteristics can lead to two types of problems first consistent with previous literature we find that these unobserved characteristics may lead to biased estimates of the mean price response parameters this argument is based on a form of price endogeneity if marketing managers set prices based on consumer willingness to pay then the observed prices will likely be correlated with the latent to the researcher brand characteristics we resolve this problem by using an instrumental variables procedure our findings suggest that simply ignoring these attributes may also lead to larger estimates of the variance in the heterogeneity distribution of preferences and price sensitivities across households this could overstate the benefits from marketing activities such as household level targeting we resolve the problem by using weekly brand intercepts embedded in a random coefficients brand choice model to control for weekly brand specific characteristics while accounting for household heterogeneity overall our results extend the finding on the endogeneity bias from the mean of the heterogeneity distribution i e the price effect to include the variance of that distribution

did globalization restrict partisan politics an empirical evaluation of social expenditures in a panel of oecd countries this paper evaluates empirically how in the course of globalization partisan politics affected social expenditures in a panel of oecd countries i introduce an updated indicator of government ideology and investigate its interaction with the kof index of globalization two basic results emerge first at times when globalization proceeded at an average pace partisan politics had no effect on social expenditures but leftist governments increased social expenditures when globalization was proceeding rapidly second policies differed in the 1980s and 1990s leftist governments pursued expansionary policies in the 1980s yet partisan politics disappeared in the 1990s but not because of globalization

measuring market integration and estimating policy impacts on the swiss electricity market abstract we investigate market integration in central western european electricity markets with a focus on switzerland we propose a structural microeconometric approach to measuring the degree of market integration taking advantage of unilateral demand and supply shocks such as the generation from volatile renewable resources the unavailability of generation units and national holidays these exogenous events affect electricity prices in switzerland and allow estimating the level of market integration by disentangling their effects in congested and non congested situations exploiting information on congested and non congested situations in parametric instrumental variable estimation permits simulating hypothetical non congested swiss electricity prices in historically congested situations our approach allows considering the non linear nature of level shifts of congestion and disentangling it from the structurally different interplay of demand and supply in respective situations using data on hourly electricity prices and its determinants regarding switzerland and neighboring countries from 2015 and 2016 we find that an expansion of interconnector capacity at the german austrian swiss border could decrease swiss electricity prices substantially in a more attenuated way the same holds true for the french swiss and the italian swiss border for switzerland as a whole prices in congested situations are about 17 higher than hypothetical non congested prices

politics and society political diversity and uniformity in households as a theoretical puzzle the authors resolve a theoretical puzzle that characterizes the political preferences of members of social groups by a demonstrating that political homogeneity is a variable to be explained b

the economic consequences of president mitterrand france under mitterrand jeffrey sachs and charles wyplosz while french economic performance has not conformed to the enthusiastic promises of early 1981 this paper argues that the widely held view that it has been an unmitigated failure is unwarranted first the general deterioration can largely be dated back to the early seventies second the early and unfortunate attempt at a demand led expansion was both moderate in size and quickly reversed finally the post 1983 anti inflationary policies have been successful so that overall the disappointing french performance has been on a par with and in some ways better than the rest of europe but the main theme of the paper is the emphasis on the supply side the analysis is organized around the nairu the threshold rate of unemployment below which inflation rises in an attempt to explain the factors which have led to a continuous rise of the nairu since 1973 the paper focuses on labour costs particularly on the wedge between the costs borne by employers and net take home pay to achieve and sustain a significantly lower level of unemployment labour taxes must be cut thus reducing the wedge and the nairu and there must be a corresponding demand stimulus so that actual unemployment can fall to this level

does government ideology matter in monetary policy a panel data analysis for oecd countries this paper examines whether government ideology has influenced monetary policy in oecd countries we use quarterly data in the 1980 1 2005 4 period and exclude emu countries our taylor rule specification focuses on the interactions of a new time variant index of central bank independence with government ideology the results show that leftist governments have somewhat lower short term nominal interest rates than rightwing governments when central bank independence is low in contrast short term nominal interest rates are higher under leftist governments when central bank independence is high the effect is more pronounced when exchange rates are flexible our findings are compatible with the view that leftist governments in an attempt to deflect blame of their traditional constituencies have pushed market oriented policies by delegating monetary policy to conservative central bankers

international and domestic constraints on political business cycles in oecd economies the effect of increased capital mobility on the national control of macroeconomic policy continues to be a topic of debate empirical contributions to this debate share the assumption that domestic macroeconomic policy is driven by either partisan or countercyclical motivations and that the effects of international financial flows have roughly similar effects in all countries this article reevaluates the integration hypothesis in a framework in which manipulations of the macroeconomy derive from opportunistic motivations the article emphasizes the ways in which prior institutional choices effect the way these motivations are translated into actions evidence from individual country and pooled time series tests suggests that opportunistic cycles are less likely to occur when 1 a government maintains a fixed exchange rate in the presence of highly mobile capital or 2 when the central bank enjoys above average independence

technology diffusion outcome variability and social learning evidence from a field experiment in kenya this article explores the mechanisms through which social learning mediates technology diffusion we exploit an experiment on the dissemination of biochar a soil amendment that can improve fertility on weathered and or degraded soils we find that social networks transmit information about the average benefits of adoption but also its risk and that observed variability inhibits uptake to a greater degree than positive average results engender it paradoxically this relationship is stronger among networks that do not discuss farming but disappears among farmer networks that do this is resolved with a simple model of social learning about conditional rather than unconditional benefit distributions as farmers observe factors associated with outcomes in their networks they constrain the distribution of their own potential outcomes this conditional distribution diverges from the unconditional distribution that the econometrician observes we conclude that social learning is characterized by implicit model building by sophisticated decision makers rather than simple herding towards observed good results

endogeneity in semiparametric binary response models this paper develops and implements semiparametric methods for estimating binary response binary choice models with continuous endogenous regressors it extends existing results on semiparametric estimation in single index binary response models to the case of endogenous regressors it develops a control function approach to account for endogeneity in triangular and fully simulataneous binary response models the proposed estimation method is applied to estimate the income effect in a labor market participation problem using a large micro data set from the british fes the semiparametric estimator is found to perform well detecting a significant attenuation bias the proposed estimator is contrasted to the corresponding probit and linear probability specifications jel c14 c25 c35 j22

estimation in a class of simultaneous equation limited dependent variable models estimation in a class of simultaneous equation limited dependent variable models is considered the minimum chi squared method is used to compare the asymptotic relative efficiency of marginal and new conditional maximum likelihood estimators for this class of models efficient minimum chi squared estimation procedures are described a two step algorithm based on a conditional maximum likelihood estimator provides a natural framework for both computing a linearized and locating the joint maximum likelihood estimator the unimodality of the simultaneous equation tobit likelihood function is proved and this model is used to illustrate the empirical application of some of the estimators considered in the paper the relative efficiency of these estimators in the simultaneous equation tobit model is examined in a set of monte carlo experiments many applications of microeconomic theory to individual data face the joint problems of censoring and simultaneity in particular the dependent variable under investigation may not be continuously observed and some of the conditioning variables representing the outcome of other decisions by the individual may be simultaneously determined smith and blundell 1986 developed an asymptotically efficient test for exogeneity or simultaneity in the simultaneous equation tobit model as a byproduct a conditional maximum likelihood estimator was obtained which is consistent under the alternative hypothesis of simultaneity nelson and olsen 1978 amemiya 1978 1979 and heckman 1978 consider a number of consistent marginal maximum likelihood estimators based on marginal maximum likelihood estimators of the reduced form parameters for the probit and tobit models in contrast the estimator derived from smith and blundell 1986 is based on the corresponding conditional maximum likelihood estimators this paper is concerned with estimation in a class of simultaneous limited dependent variable regression models which includes the simultaneous probit and tobit models as special cases analogous marginal and conditional maximum likelihood estimators to those of nelson and olsen 1978 amemiya 1978 1979 heckman 1978 and smith and blundell 1986 are derived and other new estimators are suggested the minimum chi squared approach discussed by ferguson 1958 malinvaud 1970 and rothenberg 1973 is used to compare the asymptotic relative efficiency of various estimators considered a simple two step algorithm based on the conditional maximum likelihood

the integration of child tax credits and welfare evidence from the national child benefit program abstract in 1998 the canadian government introduced a new child tax credit the innovation in the program was its integration with social assistance welfare some provinces agreed to subtract the new federally paid benefits from provincially paid social assistance partially lowering the welfare wall other provinces did not integrate benefits providing a quasi experimental framework for estimation we find large changes in social assistance take up and employment in provinces that provided the labour market incentives to do so in our sample the integration of benefits can account for between 19 and 27 of the decline in social assistance receipt between 1997 and 2000

a control function approach to endogeneity in consumer choice models abstract endogeneity arises for numerous reasons in models of consumer choice it leads to inconsistency with standard estimation methods that maintain independence between the model s error and the included variables the authors describe a control function approach for handling endogeneity in choice models observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error the theory points to the relationships that contain information on the unobserved demand factor such as the pricing equation and the advertising equation the authors approach is an alternative to berry levinsohn and pakes s 1995 product market controls for unobserved quality the authors apply both methods to examine households choices among television options including basic and premium cable packages in which unobserved attributes such as quality of programming are expected to be correlated with price without correcting for endogeneity aggregate d

endogeneity and individual consumer choice abstract in many markets there is likely to be correlation both across periods in terms of the choices of one consumer and across consumers in terms of their choices in each period the former is caused by consumer heterogeneity and the latter may be the result of demand common shocks across consumers furthermore if firms partially observe these common shocks their market decisions may end up being endogenous and correlated with the common shocks because researchers cannot typically fully observe consumer heterogeneity and the common shocks the estimation method must account for the endogeneity of firms decisions in this article the authors present a test for endogeneity under unobserved consumer heterogeneity and common shocks which is based on a quasi likelihood estimation method to estimate the model parameters consistently when endogenous firm behavior unobserved heterogeneity and common shocks are present the test examines the differences in general method of moments coefficient estima

the political economy of the german lander deficits weak governments meet strong finance ministers we analyse the deficits of the german lander regional states for the period 1960 to 2005 and test a number of hypotheses derived from the literature on the political economy of public deficits we find evidence for the weak government hypothesis that is coalition governments issue significantly more debt than single party governments a result that is typically explained by the common pool problem as our data suggest this result crucially hinges on the position or strength of the finance minister within coalition governments we find that coalition governments with a strong finance minister are in terms of borrowing not significantly different from single party governments in addition we find weak evidence for an opportunistic political business cycle as borrowing is significantly lower in pre election years it appears that german voters favour fiscal discipline there is no evidence for partisan behaviour so party ideology seems to play a negligible role

nonparametric continuous discrete choice models modeling choices that are both discrete and continuous is important in several settings the purpose of this article is to explore formulation and identification of such models when indirect utility functions are specified nonparametrically here we consider general nonseparable disturbances we give identification results for nonseparable sample selection models and use these to analyze identification of discrete continuous choice models

politics and business cycles in industrial democracies politics alberto alesina influences from political competition on macroeconomic policy are often thought to be a source of economic fluctuations politicians are described as being driven by two not mutually exclusive main motivations they want to be reelected and they harbour political or ideological biases when such theories are confronted with actual cycles in a number of industrial countries the pattern of inflation unemployment output and budget deficits indicates that partisan policy making is a fairly widespread phenomenon with more limited evidence that electoral preoccupations result in major fluctuations the combination of partisanship and electoral cycles may easily result in socially undesirable outcomes in particular the degree of politico institutional stability and the independence of the central bank have a bearing on macroeconomic outcomes these observations raise a number of important questions about the design of political institutions

political responses to interdependence what s left for the left heightened economic interdependence in recent years is commonly argued to have generated great pressures for convergence in economic policies across the advanced industrial democracies interdependence has clearly had a great impact on the types of economic policies that governments can pursue they have been unable to pursue independent fiscal and monetary policies since the mid 1970s furthermore all governments have been forced to attempt to promote the competitiveness of national goods and services in world markets and to increase the speed and efficiency with which national producers adjust to changes in global markets there are however different policies consistent with these goals statistical analyses of economic policies since the mid 1970s show that governments of the left and the right continue to be able to enact distinctive supply side policies that promote competitiveness and flexible adjustment and simultaneously further their partisan objectives

the effects of price risk on housing demand empirical evidence from u s markets this article examines how price risk affects housing demand it identifies two relevant channels a financial risk effect that reduces demand and a hedging effect that increases demand since current homes may hedge future housing costs the latter dominates when hedging incentives are strong namely when the likelihood of moving up the housing ladder is high and the tendency to move across markets is low for households with weak hedging incentives the article finds negative effects of price risk on the timing and size of home purchases but positive effects for households with strong hedging incentives

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

invested interests the politics of national economic policies in a world of global finance capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history this article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking it begins by emphasizing that while financial markets are highly integrated within the developed world many investments are still quite specific with respect to firm sector or location it then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups over the long run increased capital mobility tends to favor owners of capital over other groups in the shorter run owners and workers in specific sectors in capital exporting countries bear much of the burden of adjusting to increased capital mobility these patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration the article then demonstrates that capital mobility also affects the politics of other economic policies most centrally it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument in this context it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability similarly it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one these divisions have important implications for such economic policies as european monetary and currency union the dollar yen exchange rate and international macroeconomic policy coordination