decomposing productivity growth in the u s computer industry in this paper we examine the sources of the productivity growth in the u s computer industry from 1978 to 1999 we estimate a joint production model of output quantity and quality that distinguishes two types of technological changes process and product innovations based on the estimation results we decompose total factor productivity tfp growth rate into the contributions of process and product innova tions and scale economies we find that product innovation associated with better quality accounts for about 30 of the tfp growth in the computer industry furthermore the tfp acceleration in the computer industry in the late 1990s is mainly derived from a rapid increase in product innovation

standard errors for the retransformation problem with heteroscedasticity abstract economists often estimate models with a log transformed dependent variable the results from the log transformed model are often retransformed back to the unlogged scale other studies have shown how to obtain consistent estimates on the original scale but have not provided variance equations for those estimates in this paper we derive the variance for three estimates the conditional mean of y the slope of y and the average slope of y on the retransformed scale we then illustrate our proposed procedures with skewed health expenditure data from a sample of medicaid eligible patients with severe mental illness

information aggregation in common value auctions a key question in information economics and finance is whether prices aggregate information in a competitive environment that is when agents are endowed with private information does competition lead in the limit to prices which would occur if all information were public this paper examines the asymptotic properties of prices in common value auctions when the number of bidders becomes large the main idea in this paper is to separate the issue of information aggregation from the issue of revenue efficiency we also distinguish between the amount of information prices contain and the degree to which prices approximate the asset s value using this approach we get a simple characterization of the limiting distribution of prices we are not only able to answer whether prices converge to the asset s value but also get an explicit form for the limiting distribution prices converge to the expected value of the asset conditional on the information possessed by what we call the pivotal bidder this provides insights on how the auction format and the information structure influence the limiting behavior of prices it shows that the limiting distribution of prices can be derived from the statistical properties of certain order statistics this lets us abstract from the specific equilibrium bidding strategies for example we show that while the first and second price auction have different equilibrium strategies they share a similar limiting distribution of prices these auctions yield different limiting distributions from auctions such as the english auction or kn auction our

on the existence of pure strategy monotone equilibria in asymmetric first price auctions we establish the existence of pure strategy equilibria in monotone bidding functions in first price auctions with asymmetric bidders interdependent values and affiliated one dimensional signals by extending a monotonicity result due to milgrom and weber 1982 we show that single crossing can fail only when ties occur at winning bids or when bids are individually irrational we avoid these problems by considering limits of ever finer finite bid sets such that no two bidders have a common serious bid and by recalling that single crossing is needed only at individually rational bids two examples suggest that our results cannot be extended to multidimensional signals or to second price auctions

a quality adjusted price index for personal computers this study estimates quality adjusted price indexes for personal computers three separate hedonic models are estimated using data from 1 841 personal computers over the period 1984 1991 in addition to the traditional linear model a nonlinear model is developed and estimated the nonlinear model is parsimonious in parameters allows time varying attribute prices and can be estimated using a pooled data set the results indicate that nominal quality adjusted prices of mail order firms declined at an average annual rate of 24 62 quality adjusted prices of major manufacturers declined at a slower rate

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

existence of equilibrium in single and double private value auctions we show existence of equilibria in distributional strategies for a wide class of private value auctions including the first general existence result for double auctions the set of equilibria is invariant to the tie breaking rule the model incorporates multiple unit demands all standard pricing rules reserve prices entry costs and stochastic demand and supply valuations can be correlated and asymmetrically distributed for double auctions we show further that at least one equilibrium involves a positive volume of trade the existence proof establishes new connections among existence techniques for discontinuous bayesian games

a hedonic price analysis of hearing aid technology in this article we study how technological components affect the price of hearing aids the main goals are to determine which functional and technological features have the greatest influence on manufacturer based prices in the hearing aid industry and to analyse the price cost margins at the dispenser level using a unique data set that is compiled from a hearing clinic in west texas the result shows that style and signal processing scheme are the two most important determinants of hearing aid price other characteristics such as directional microphone noise cancellation and a certain shell type are also positively related to price further on average this particular local dispenser has a markup of about 35 per hearing instrument

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

the financial instability hypothesis a stochastic microfoundation framework this paper examines the dynamics of financial distress and in particular the mechanism of transmission of shocks from the financial sector to the real economy the analysis is performed by representing the linkages between microeconomic financial variables and the aggregate performance of the economy by means of a microfounded model with firms that have heterogeneous capital structures the model is solved both numerically and analytically by means of a stochastic approximation that is able to replicate quite well the numerical solution these methodologies by overcoming the restrictions imposed by the traditional microfounded approach enable us to provide some insights into the stabilization policies which may be effective in a financially fragile system

the relevance of a choice of auction format in a competitive environment we examine the relevance of an auction format in a competitive environment by comparing uniform and discriminatory price auctions with many bidders in a private values setting we show that if the number of objects for sale is small relative to the number of bidders then all equilibria of both auctions are approximately efficient and lead to approximately the same revenue when the number of objects for sale is proportional to the number of bidders then the particulars of the auction format matter all equilibria of the uniform auction are efficient while all of the equilibria of the discriminatory auction are inefficient the relative revenue rankings of the auction formats can go in either direction depending on the specifics of the environment these conclusions regarding the efficiency and revenue ranking are in contrast to the previous literature which focused on the case of independent information across agents

technological change in u s jet fighter aircraft this paper quantitatively measures technological change in u s jet fighter aircraft from 1944 to the present day using the hedonic pricing approach the technical and performance characteristics of jet fighters have changed dramatically between the time they were first developed at the beginning of the 1940s and the present parallel to this technological change there has been a sharp escalation in costs regarding the new generations of jet fighter aircraft we estimate a measure of price for the performance and technical characteristics of these aircraft embodied technological change in jet fighter airframes is measured using quality adjusted prices although the flyaway cost of jet fighter aircraft has soared on average by about 12 63 per year the quality adjusted aircraft cost has only risen by about 2 6 per year a figure lower than the average observed general inflation rate for the period around 4 this represents an impressive average technological progress ratio of around 10 per year a revealed preferences argument shows that the characteristic most valued by the government is stealth capability followed by advanced avionics

a monetary minsky model of the great moderation and the great recession abstract steve keen s model of minsky s financial instability hypothesis keen 1995 displayed qualitative characteristics that matched the real macroeconomic and income distributional outcomes of the preceding and subsequent fifteen years a period of economic volatility followed by a period of moderation leading to a rise of instability once more and a serious economic crisis this paper extends that model to build a strictly monetary macroeconomic model which can generate the monetary as well as the real phenomena manifested by both the great recession and the great moderation

the loser s curse and information aggregation in common value auctions we consider an auction in which k identical objects of unknown value are auctioned off to n bidders the k highest bidders get an object and pay the k 1st bid bidders receive a signal that provides information about the value of the object we characterize the unique symmetric equilibrium of this auction we then consider a sequence of auctions a r with n r bidders and k r objects we show that price converges in probability to the true value of the object if and only if both k r and n r k r i e both the number of objects and the number of bidders who do not receive an object go to infinity

revenue ranking of discriminatory and uniform auctions with an unknown number of bidders an important managerial question is the choice of the pricing rule we study whether this choice depends on the uncertainty about the number of participating bidders by comparing expected revenues under discriminatory and uniform pricing within an auction model with affiliated values stochastic number of bidders and linear bidding strategies we show that if uncertainty about the number of bidders is substantial then the discriminatory pricing generates higher expected revenues than the uniform pricing in particular the first price auction might generate higher revenues than the second price auction therefore uncertainty about the number of bidders is an important factor to consider when choosing the pricing rule we also study whether eliminating this uncertainty i e revealing the number of bidders is in the seller s interests and discuss the existence of an increasing symmetric equilibrium

new evidence on the structure of production real and austrian business cycle theory and the financial instability hypothesis abstract this article develops the relationships among real business cycle rbc theory austrian business cycle abc theory and minsky s financial instability hypothesis fih in rbc models recessions are caused on the supply side by random technology shocks which are independent of monetary policy however in abc models credit expansion results in negative productivity shocks as the marginal return on investment is lowered and the production structure is extended by commitment to more capital intensive activities thus abc theory helps resolve several problems with rbc theory the fih describes a process of endogenous overleveraging which unsustainably overvalues assets and exposes the financial sector to greater risk this paper argues that the overleveraging described by the fih is compatible with the unsustainable expansion of production described in abc theory and further argues that credit expansion would both provide additional funds to finance overleveraging as well as encourage the process by making it cheaper with lower interest rates

overbidding and inefficiencies in multi unit vickrey auctions for normal goods abstract i examine bid behavior in uniform price auctions and multi unit vickrey auctions without the standard quasilinearity restriction on bidder preferences instead of assuming quasilinearity i assume that bidders have weakly positive wealth effects i e the goods are normal goods my setting nests quasilinearity but also allows for budget constraints financial constraints and risk aversion i show that without the quasilinearity restriction truthful reporting is not a dominant strategy in the vickrey auction instead bidders truthfully demand for their first unit and weakly overreport their demand for later units the incentive to overreport demand means that the vickrey auction is generally inefficient this mirrors the well known demand reduction results in uniform price auctions moreover the efficiency ranking of the two auctions is ambiguous in fact there are cases where the uniform price auction is pareto efficient and the vickrey auction is pareto inefficient even if only one bidder has non quasilinear preferences

heterogeneous preferences and new innovation cycles in mature industries the amateur camera industry 1955 1974 this paper examines the amateur camera industry between 1955 and 1974 the case raises important issues for our understanding of the product lifecycle first an industry can experience more than one round of radical product and process innovation in its history second there is not a strict sequence of product innovation followed by process innovation third the existence of a dominant design depends on there being a relatively homogeneous set of consumers heterogeneous consumer preferences support different camera designs in two distinct market niches in the amateur camera industry fourth new rounds of entry and exit and new industry shake outs can occur with new innovative entrants displacing old firms fifth when the new firms are from developing countries a shift in global production occurs the success of new japanese entrants in this period lay in their being more successful innovators not in their exploiting wage cost advantages

price and quality of desktop and mobile personal computers a quarter century historical overview when introduced in 1976 personal computers pc s had only several kilobytes of randomaccess memory ram and no hard disk processed commands at speeds of less than 1 megahertz mhz yet typically cost several thousand dollars today s pc s have megabytes mb of ram and gigabytes of hard disk memory process commands at speeds exceeding 1 000 mhz and often cost less than 1 000 ever more powerful pc boxes have been transformed into increasingly smaller and lighter notebooks in the context of such rapid technological progress government statistical agencies face the formidable tasks of reliably tracking real output growth in the pc industry and adjusting pc prices for quality changes in 1986 following collaboration with ibm researchers the bureau of economic analysis bea began adjusting mainframe computer prices for quality change using hedonic price methods rosanne cole et al 1986 in 1990 the bureau of labor statistics bls first published an experimental price index for mainframe computers also based on hedonic methods today the bls publishes producer and consumer price indexes for a number of electronic goods including informationprocessing equipment using hedonic price methods dennis fixler et al 1999 the hedonic regression methods employed by researchers and government statisticians to adjust pc prices for quality changes are usually based on pooled cross section and time series data and they typically assume some parameter equality across models as well as some parameter stability over time here we report on results from an examination of the stability of annual pc hedonic price parameters over almost the first quarter century of their history 1976 1999 and on the equality of estimated hedonic price parameters between desktop and mobile models we compute price indexes based on alternative assumptions concerning parameter equality and stability and we assess at what point in time when constructing price indexes mobile and desktop models were appropriately treated as distinct product groups

measuring the welfare gain from personal computers i introduction what is the welfare gain to consumers from the development of and improvements in personal computers pcs this is the question addressed here the answer offered is that welfare increased by somewhere between 2 and 3 measured in terms of total personal consumption expenditure due to the introduction of the pc and its subsequent price decline this finding is obtained by employing a model of consumer behavior based upon more or less standard preferences which is fit to aggregate national income and product account data using a direct and simple calibration estimation strategy to estimate the welfare gain from the introduction of a new product one must know what utility is in the absence of the good a conventional isoelastic utility function has two problems first at zero consumption the utility function returns a value of minus infinity whenever the elasticity of substitution is less than one in this case the welfare gain from the introduction of the new good is infinitely large second marginal utility at zero consumption is infinite so long as the elasticity of substitution is finite therefore consumers will always purchase some of the good in question no matter how high the price is albeit perhaps in infinitesimal quantities to avoid these problems a form for preferences will be adopted that gives a finite level for marginal utility and hence one for total utility at zero consumption with this utility function high prices may result in the consumer optimally choosing to buy none of the new good in addition the consumer s surplus associated with the introduction of a new good is generally finite this paper contributes to the growing literature on measuring the welfare gains from new goods a classic example is the work by hausman 1999 who studies the introduction of cellular telephones he finds that their tardy inclusion in the consumer price index cpi some 15 years after their debut results in a bias of up to 2 per year in the telecommunications services price index to obtain this estimate hausman 1999 effectively integrates back the estimated demand curve for cellular telephones to recover the indirect utility function for consumers this function can be inverted to obtain the expenditure function from which welfare measures can be calculated the procedure was developed earlier in work by hausman 1981 analytical solutions for the expenditure function can be obtained when the demand equation is ln linear when the demand equation is not linear the indirect utility function may have to be recovered by numerically solving a differential equation this procedure is dual to the one presented here which focuses on the consumer maximization problem some utility functions such as the one employed in the current work may not lead to a linear demand equation of the form that is conventionally estimated hausman 1999 also suggests an approximate measure of welfare based on a linear demand curve while he states explicitly that this measure of welfare is a lower bound this caveat is often forgotten in applied work it may work well in the cell phone example that he studies as illustrated in the pc example studied here however this approximate demand curve method can lead to a serious underestimate of the welfare gains arising from the introduction of a new product similarly the use of conventional price indices such as the fisher ideal and tornqvist price indices may lead to inaccurate estimates of the consumer surplus that arises from the introduction of a new good and or the good s subsequent price decline the accuracy of such methods will depend on how fast the marginal utility for a new good rises as the quantity consumed goes to zero figuring this out is part and parcel of the new goods problem that is what utility function or demand equation should be used for estimating the welfare associated with the introduction of a new good

efficiency of large private value auctions we consider discriminatory and uniform price auctions for multiple identical units of a good players have private values possibly asymmetrically distributed and for multiple units our setting allows for aggregate uncertainty about demand and supply in this setting equlibria generally will be inefficient despite this we show that such auctions become arbitrarily close to efficient if they are large and use this to derive an asymptotic characterization of revenue and bidding behavior

computers skills and wages computer technology is most prominently used by skilled high wage workers this suggests that computer use requires skills to take full advantage of the possibilities which are particularly present among relatively skilled workers this article develops a simple technology adoption model showing that the decision to adopt computer technology depends on i the tasks to be performed ii the level of skill or education and iii the level of wages applying this model to british data it is shown that the effect of wages and particular tasks on computer adoption is larger than the effect of skills on adoption the estimates suggest that in britain computer use is likely to be a matter of cost efficiency and not so much of workers skills

reconsidering hedonic art price indexes art price indexes typically rely on heavily biased samples for several reasons a refined hedonic index is developed which explicitly addresses such concerns an empirical illustration is then provided for symbolist paintings appearing at auctions between 1990 and 2001

the growth of network computing quality adjusted price changes for network servers in this paper we investigate the evolution of quality adjusted prices for servers motivated by two facts first the productivity acceleration in the us economy since the mid 1990s is closely linked to spread of information technology of which networked computing is a large component second the growth of network computing itself has been fostered by the rapid growth in the quality and quantity of the network server market like pakes 2003 analysis of the pc market we show that our preferred version of the hedonic price index complete hybrid fell much more rapidly than the standard matched model price index the hedonic index fell on average by about 30 per annum compared to 17 p a for the matched model this difference is mainly due to the selection bias in the standard matched model price index due to the exit of obsolete models which would have had the fastest price falls

on the informational inefficiency of discriminatory price auctions we analyze bidding behavior in large discriminatory price auctions where the number of objects is a non trivial proportion of the number of bidders bidders observe private signals that are affiliated with the common value we show that the average price in the auction is biased downward from the expected value of the objects even in the competitive limit in particular we show that conditional on relatively low signals bidders bid the expected value of the objects conditional on their information and winning while bids at higher signals flatten out and are below the expected value conditional on winning

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

on the asymptotic distribution of the transaction price in a clock model of a multi unit oral ascending price auction within the common value paradigm using a clock model of a multi unit oral ascending price auction within the common value paradigm we analyze the behavior of the transaction price as the numbers of bidders and units gets large in a particular way we find that even though the transaction price is determined by a fraction of losing drop out bids that price converges in probability to the true but ex ante unknown value subsequently we demonstrate that the asymptotic distribution of the transaction price is gaussian finally we apply our methods to data from an auction of taxi license plates held in shenzhen china

a reconsideration of hedonic price indexes with an application to pc s this paper compares hedonic to matched model indexes matched model indexes are averages of the price changes of goods that remain on sampled stores shelves since goods that disappear tend to have falling market values matched model indexes select from the right tail of price changes the bls can construct hedonic indexes that correct for this selection and are justified by standard arguments in an empirical study of pc s hedonics produce sharp price declines while matched model indexes are near zero also though there are modifications to hedonics that seem desirable they are not those in current use

mechanism choice and strategic bidding in divisible good auctions an empirical analysis of the turkish treasury auction market we propose an estimation method to bound bidders marginal valuations in discriminatory auctions using individual bid level data and apply the method to data from the turkish treasury auction market using estimated bounds on marginal values we compute an upper bound on the inefficiency of realized allocations as well as bounds on how much additional revenue could have been realized in a counterfactual uniform price or vickrey auction we conclude that switching from a discriminatory auction to a uniform price or vickrey auction would not significantly increase revenue moreover such a switch would increase bidder expected surplus by at most 0 02 percent

the anticipated real interest rate capital utilization and the cyclical pattern of real wages abstract this paper develops a channel through which increases in anticipated real interest rates can be expansionary for current aggregate labor demand and current output supply the key feature of the model is the introduction of a user cost of capital utilization which confronts the firm with the intertemporal problem of the optimal choices of capital utilization and depreciation the resulting variation in capital utilization and capital services in response to fluctuations in the real rate of interest shifts the marginal product of labor and thus the demand for labor at the same time and in the same direction that lucas rapping real interest rate effects operate on labor supply the complete model places no a priori restrictions on the cyclical pattern of real wages thus avoiding the countercyclical real wage prediction made by keynes and various classical writers that is rejected by the data estimates of a labor demand schedule for the annual u s data reveal a significantly positive real interest rate effect

bias and inefficiency in quality adjusted hedonic regression analysis numerous quality adjusted hedonic price trend studies based on computer prices have provided support to widely held suspicions that officially released price indices are not accurately measuring the price declines occurring in many information technology it products if provable then general price inflation is being overestimated and consequently real gdp is being underestimated existing evidence however is inconclusive first empirical findings for it products other than computers are essentially non existent and secondly estimation bias is inherent in the hedonic regression technique most commonly employed this article presents an unbiased method together with an estimated quality adjusted price trend for laser printers 1993 2004

the use of expert opinion quality and reputation indicators by consumers evidence from the french vaulting stallion semen market we build a model inspired by the standard hedonic approach developed by rosen 1974 and completed by landon and smith 1997 1998 to analyse the price of french vaulting stallion semen in 2004 we show that reputation modelled as an endogenous factor plays a less important role than information on true quality for the explanation of price dispersion this result is explained by the fact that information on studhorses is not only available but also reliable insofar as the quality of a stallion is stable over time contrary to nondurable products like wine or cigars this explains also why consumers on this market do not use expert opinions to make their choices

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

faster smaller cheaper an hedonic price analysis of pdas we compute quality adjusted price indexes for personal digital assistants pdas for the period 1999 to 2004 hedonic regressions indicate that prices are related to processor generation and clock speed memory capacity screen size and quality and the presence of a digital camera or wireless capability a particularly salient feature of pdas is portability where we find i purchasers value the energy density of the battery technology e g lithium ion rather than the battery life in hours and ii the physical characteristics of the pda e g weight volume are nonlinearly related to price suggesting that valuation of the physical form of pdas does not bear a simple linear relationship to characteristics either in absolute terms smaller is better or vs an ergonomic sweet spot rather portability characteristics are correlated with other desirable attributes making the relationship between price and portability difficult to disentangle however hedonic price indexes are robust across dif

taste or reputation what drives market prices in the wine industry estimation of a hedonic model for italian premium wines the aim of this article is to provide new evidence on the factors affecting wine prices on both methodological and factual grounds on the methodological ground this study is the first to apply a general box cox transformation within the context of hedonic models which exploit all the variables objective and sensorial characteristics reputation pointed out by previous literature as relevant in driving market prices on the factual ground the article fills the lack of empirical evidence on the issue for italy one of the leading wine producers by using a large data set on two premium quality wines barolo and barbaresco covering the 1995 1998 vintages our results support the evidence obtained using data from other countries showing that sensorial traits the reputation of wines and producers as well as objective variables are all important factors influencing the consumers willingness to pay more importantly by resorting to a nonnested statistical test vuong 1989 we compare two alternative

asymptotic efficiency for discriminatory private value auctions we consider discriminatory auctions for multiple identical units of a good players have private values possibly for multiple units none of the usual assumptions about symmetry of players distributions over values or symmetry of equilibrium play are made because of this equilibria will typically involve inefficient allocations equilibria also become very difficult to solve for using an approach which does not depend on explicit equilibrium calculations we show that such auctions become arbitrarily close to efficient as the number of players and possibly the number of objects grows large and provide a simple characterization of limit equilibria

the plucking model of business fluctuations revisited the recent surge of renewed interest in business cycles in general and real business cycles in particular brought to mind a plucking model of business fluctuations that i suggested some twenty five years ago but that has since sunk into complete oblivion 1 i was led to the model in the course of investigating the direction of influence between money and income did the common cyclical fluctuations in money and income reflect primarily the influence of money on income or of income on money one of the five kinds of evidence that i examined was the serial correlation of amplitudes of cycle phases 2 as i wrote is the magnitude of an expansion related systematically to the magnitude of the succeeding contraction does a boom tend on the average to be followed by a large contraction p 271 to find out i calculated rank difference correlations between measures of the amplitudes of expansions and successive contractions in three different series for the period 1879 to 1961 the three series were rate of change of the stock of money a physical index of general business and clearing debits as an indicator of dollar value change in general business similarly i asked the same question except starting with a contraction in the given series and correlating its amplitude with the amplitude of the succeeding expansion 3 the results were striking for all three series the correlation was trivial between the amplitude of an expansion and the amplitude of the succeeding contraction on the other hand for both the rate of change of the money stock and the physical index of general business the correlation was high and statistically significant between the amplitude of a contraction and the amplitude of the succeeding expansion for clearing debits this correlation too was low i concluded there appears to be no systematic connection between the size of an expansion and of the succeeding contraction whether size is measured by physical volume or by dollar value pp 272 73 on the other hand a large contraction in output tends to be followed on the average by a large business expansion a mild contraction by a mild expansion p 273 though that is not so for the dollar value of the expansion and contraction i went on this phenomenon if it should be confirmed by a fuller analysis of data for the united states and other countries would have important implications for the analysis of business cycles in general not solely for our monetary studies for one thing it would cast grave doubt on those theories that see as the source of a deep depression the excesses of the prior expansion the mises cycle theory is a clear example 4 for another it would raise serious questions about both the analytical models in terms of which most of us have come to approach the analysis of cycles and the statistical methods we use to analyze them our analytical models generally involve a conception of a self generating cycle in which each phase gives rise to the next and which may be kept going by a sequence of random shocks each giving rise to a series of damped perturbations the corresponding physical analogy is of an electrical network in which responses are described by sine waves the asymmetric serial correlation patter suggests that this analogy may be misleading that a better one is what can be termed a plucking model consider an elastic string stretched taut between two points on the underside of a rigid horizontal board and glued lightly to the board let the string be plucked at a number of points chosen more or less at random with a force that varies at random and then held down at the lowest point reached the result will be to produce a succession of apparent cycles in the string whose amplitudes depend on the force used in plucking the string the cycles are symmetrical about their troughs each contraction is of the same amplitude as the succeeding expansion

quality adjusted price indexes for portable computers constructing an accurate price index requires controlling for changes in quality the potential for bias is especially problemaic for rapidly changing goods such as computers this study extends previous research on quality adjusted or hedonic price indexes for computers by investigating price and quality changes in portable models in particular recent research by nelson et al 1994 and berndt et al 1995 on desktop and portable computers is extended after adjusting for quality changes price indexes in this tudy exhibit average declines of 26 to 33 per year the magnitude of quality adjusted price changes is consistent with these auhors and with the extensive line of research on quality adjusted price indexes for computers of various types the results emphasize the extent of potential bias in estimating price level changes if technological advancement is ignored significant potential for bias implies the need to account properly for changes in quality in consructing indexes for both individual

do traders strategically time their pledges during real world walrasian auctions abstract experimental research suggests the walrasian t tonnement auction encourages traders to under reveal preferences even encouraging initial pledges contrary to true desires because pledges are not binding we analyze the timing and characteristics of individual pledges and trades during 9604 auctions for redbeans conducted by the tokyo grain exchange we find no evidence of contrarian pledging and little evidence of under revelation as many traders over reveal as under reveal most traders pledge seriously from the beginning despite the considerable heterogeneity in pledging behavior across individual traders these differences appear to have no relationship with traders profits nor do they appear to affect the achievement of equilibrium

quality quantity spending and prices abstract one measure of the change in the quality of consumption is the degree to which the consumption basket as a whole moves towards more luxurious goods away from necessities we introduce two related measures based on the luxury necessity distinction one is an index of the extent to which the prices of luxuries change as compared to necessities while the second indexes the change in spending these two measures are interpreted as the price of and spending on quality the volume of quality is then spending deflated by its price using the recent international comparison program data for 100 countries we find that on average quality increases with income but at a slower rate luxuries are relatively more expensive in richer countries necessities cheaper and approximately 75 percent of additional spending on quality flows into a volume component with the remaining 25 percent accounted for by prices

a general index of technical change this paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology specifically when panel data are available for firms in an industry time specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting this approach offers numerous advantages over the traditional time trend representation of technical change for example the general index can serve as the basis for analysis of the determinants of technical change results for a sample of 30 electric utilities over the period 1951 78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak load demands

discriminatory versus uniform treasury auctions evidence from when issued transactions abstract we use when issued transactions data to assess the treasury s current experiment with uniform auctions when issued volume is higher under uniform as compared to discriminatory auctions suggesting a higher information release which should reduce pre auction uncertainty and the winner s curse under uniform auctions when issued volatility falls after the auction and again after the outcome announcement the pattern is the opposite for discriminatory auctions this is further evidence that uniform auctions increase pre auction information and lower the short squeeze a direct comparison of markups in uniform and discriminatory auctions yields mixed results

sampling frequency and the comparison between matched model and hedonic regression price indexes matched model price indexes generally overestimate quality adjusted prices because the price performance ratio of models sold in consecutive periods is worse than that of new models this unrepresentativeness of the sample potentially might be reduced by obtaining higher frequency data thus increasing the fraction of models that are matched we propose a set of comformable indexes to test this hypothesis using computer prices from the buy direct press we find contrary to initial expectations that the bias in the matched model price index increases with the sampling frequency the bias is reduced if the high frequency index is constructed using only long lived models these results suggest that models that last for only a brief time are models for which the price performance ratio has deteriorated very rapidly thus increasing the sampling frequency without purging short lived models actually increases the selection bias

a simplified stock flow consistent dynamic model of the systemic financial fragility in the new capitalism in the last few years many financial analysts and heterodox economists but even some dissenters among orthodox economists have referred to the contribution of hyman p minsky as fundamental to understanding the current crisis however it is well known that the traditional formulation of minsky s financial instability hypothesis shows serious internal logical problems furthermore minsky s analysis of capitalism must be updated on the basis of the deep changes which during the last three decades have concerned the world economy in order to overcome these theoretical and empirical troubles this paper first introduces the reader to the mechanics of the financial instability theory according to the formulation of the traditional minskian literature section 2 second it shows why minsky s theory cannot be regarded as a general theory of the business cycle section 3 third the paper attempts to supply a simplified but consistent re formulation of minsky s theory by inter breeding it with inputs coming from the new cambridge theories and the current formal minskian literature the aim of this is to analyze the impact of both capital asset inflation and consumer credit on the financial soundness of the non financial business sector sections 4 7 some concluding remarks are provided in the last part of the paper section 8

auctions versus negotiations which is the more profitable way to sell a company an auction with no reserve price or an optimally structured negotiation with one less bidder we show under reasonable assumptions that the auction is always preferable when bidders signals are independent for affiliated signals the result holds under certain restrictions on the seller s choice of negotiating mechanism the result suggests that the value of negotiating skill is small relative to the value of additional competition the paper also shows how the analogies between monopoly theory and auction theory can help derive new results in auction theory jel d44 g34 there are close analogies between standard price theory and the theory of auctions in an absolute english auction in which the price rises continuously until only one bidder remains and the seller is required to accept the final bid the sale price equals the lowest competitive price at which supply equals demand in the theory of optimal auctions the seller is treated as a monopolist who can choose any

what to show on the wine labels a hedonic analysis of price drivers of sicilian wines unlike previous literature we construct a hedonic model of wine price that incorporates all the main categories of variables simultaneously to enable a better evaluation of their importance on wine price formation a comprehensive model has the advantage of providing more reliable estimates of the attributes implicit prices thereby facilitating firms pricing and improving effectiveness of wine production and marketing decisions we utilize two different datasets of sicilian wines collecting data from influential wine guides our results suggest that wine price strongly depends on objective features such as vintage alcoholic content geographical origin grape variety producer size and cellaring potential in addition use of containers like tonneaux and barrique positively affects prices whereas use of concrete containers has a negative influence no univocal indications emerge with regard to the effect of the type of company type of viticulture and firm age as for sensorial characteristics our a

asymptotic revenue equivalence in auctions abstract we study the revenue in auctions of a single object when the number of bidders becomes large we show that all sequences of auctions belonging to a class of mechanisms have limiting expected revenue equal to the expected best use value of the object an important special case that is covered is common value auctions but more generally not even affiliation of values is assumed this provides an asymptotic revenue equivalence result for settings beyond that of private values journal of economic literature classification numbers d44 c72