testing an alternative habit persistence model marshall long ago noted the phenomenon of past consumption being highly correlated with current consumption if habit was indeed a major determinant of current consumption behavior then the neoclassical theory of utility maximization should take it into account a rigorous incorporation of habit formation into consumer theory began with gorman 12 pollak 21 22 23 laid out the theoretical conditions that needed to be satisfied in order for habit persistence to be consistent with the utility maximizing model of consumer behavior competent empirical work in this area was done initially by houthakker and taylor 14 with subsequent studies by manser 16 phlips 18 19 pollak and wales 24 anderson and blundell 2 and blanciforti and green 8 these papers have focused on examining the impact of measured past consumption on current consumption blundell 9 provides a comprehensive review of this literature

measuring the impact of research and development on technological change abstract this paper tests the method proposed by basmann et al 1987 for measuring technological change using data for the canadian manufacturing sector it also extends the analysis to show how the same method may be used to measure how expenditures on research and development have affected the production process

wind energy in malaysia past present and future in recent years the malaysian government has attempted to develop renewable energy re through newly introduced regulatory supports after 30 years of failure to achieve a greater than one percent non hydroelectric re share in the total power mix the government is currently assessing the onshore wind energy potential in malaysia to determine the possibility of including wind energy in its fit scheme however wind energy development in this low energy location is not as straightforward as it would seem many previous wind studies in malaysia have relied on poor data and simplistic or inadequate methodologies resulting in grossly inaccurate estimates of wind potential moreover two wind turbine generator demonstration projects executed by the government have failed however above all the greatest factor impairing the progress of re development in malaysia is the weak and uncertain political support of these efforts this lack of robust support is particularly true where fossil fuels are still heavily subsidised amid the subsidy reform in 2013 a review of global wind energy development shows that successful projects depend heavily on a sound and robust regulatory framework supported by strong and consistent political will this dependence is not observed in malaysia where the government continues to subsidise private independent fossil fuel power producers but levies taxes on electricity consumers to fund re development these levies do not effectively support re development given the magnitude of the re fund compared to fossil fuel subsidies in the absence of strong and sincere political will the progress of re development in malaysia has been notably slow as a result the prospect of wind energy development in malaysia currently remains vague this paper discusses the above issues in detail and recommends selected regulatory mechanisms based on the global experience of supporting re development in malaysia

testing for preference change in consumer demand an indirectly separable semiparametric model this article considers the hypothesis that preference changes may partly explain observed consumption patterns a model is developed based on indirect weak separability the kernel estimator of the regression function models the unknown shape of demand functions and a parametric structure models seasonality dynamics and preference change this semiparametric specification is applied to u s meat demand the results support the notion that changes in consumer preferences due to consumers awareness of the health hazards of cholesterol and saturated fat intake may explain an increased consumption of white meat and a decreased consumption of red meat

on measuring uncertainty and its impact on investment cross country evidence from the euro area abstract investment fell sharply in the euro area after the financial crisis and has not yet returned to pre crisis levels in many core economies focusing on the four largest euro area countries this paper investigates the role of uncertainty for investment dynamics by doing so we compare five prominent uncertainty proxies put forward in the recent literature the implied stock market volatility a survey derived measure of expectations dispersion a newspaper based indicator of policy uncertainty and two indicators taking up the concept of econometric unpredictability although all uncertainty measures show countercyclical behavior we find uncertainty as measured by the conditional volatility of the unforecastable components of a broad set of time series to exhibit noticeable robust effects across different model specifications and countries based on this type of uncertainty proxy we document pronounced negative investment responses to uncertainty shocks we further show that these effects can explain a relevant portion of the decrease in investment in the course of the great recession

investment uncertainty and liquidity we analyze the dynamic investment decision of a firm subject to an endogenous financing constraint the threat of future funding shortfalls lowers the value of the firm s timing options and encourages acceleration of investment beyond the first best optimal level as well as highlighting another way by which capital market frictions can distort investment behavior this result implies that 1 the sensitivity of investment to cash flow can be greatest for high liquidity firms and 2 greater uncertainty has an ambiguous effect on investment

review on malaysia s national energy developments key policies agencies programmes and international involvements this paper aims to present a review on malaysia s national energy developments by looking at various angles in terms of renewable energy and energy efficiency energy demand and consumption by sectors are presented as well as the fuel mix in electricity generation key energy policies implemented from the incorporation of malaysia s national oil company petronas in 1974 until the national green technology policy 2009 and a future policy will be addressed the roles of key players as well as important agencies in energy development are briefly presented key programmes in energy development such as malaysian industrial energy efficiency improvement project small renewable energy power programme and building energy efficiency programme are discussed as well as successful initiatives from the programmes malaysia s international involvements towards reduction of greenhouse gas emissions and carbon emissions especially montreal protocol and kyoto protocol are highlighted as a conclusion malaysia is aware of its role in formulating its national energy development policies sensitive towards the country s development towards the environment and utilization of energy resources as well as conscientious and responsive towards the call for sustainable development in promoting renewable energy and energy efficiency

habit formation interdependent preferences and demographic effects in the almost ideal demand system the authors model myopic habit formation interdependence of preferences among consumers and demographic effects as taste shifters in a micro consumer demand model of the almost ideal demand variety the model is estimated for dutch micro data the authors investigate the dynamic properties of the model and find that it behaves very differently from models without interdependence of preferences the implications for micro macro modeling are discussed copyright 1991 by royal economic society

patterns of technological accumulation the comparative advantage and relative impact of asian emerging economies in low carbon energy technological systems abstract this paper highlights the specificities of the patterns of low carbon energy technological innovations in selected asian emerging economies china and the members of asean 4 thailand malaysia indonesia and the philippines are included in this analysis for their identical structure of developing economy we outline a synthetic framework to cluster together the technologies with similar characteristics and analyse the changes of these characteristics over time this is in order to elucidate the scope of sectoral composition and specialisation of the selected economies and thereby understand the relative impact of science based low carbon energy technologies on the niches of technological excellence the findings show that china was keen to pursue its diversification strategy and develop its capability in low carbon energy technologies since the turn of the millennium however china has been gradually losing its momentum in more traditional areas like biomass hydroelectric power natural gas and fossil fuels the asean 4 economies on the other hand are showing interest in building a number of niches of technological excellence this highlights a contrasting relative technological advantage between larger and smaller economies our findings also indicate that many of the low carbon technologies in selected economies have yet to attain strong scientific grounding for development the findings of this paper are expected to provide some insights into low carbon energy technological development of emerging economies and be useful for other developing economies to establish their strategic moves for energy technology development

budget constraint prices as preference changing parameters of generalized fechner thurstone direct utility functions let v x be any direct utility function characterizing consumer preferences that are reflexive transitive and complete and whose parameters are fixed relative to the usual linear budget constraint p x m here x designates the vector x1 x and is confined to the positive n orthant xi designates quantity of the ith commodity p is the vector p pn of positive commodity prices and m designates total expenditure let x p m designate the system of demand functions derived from v x subject to px m which possess the properties of zero degree homogeneity symmetry and semidefinite negativity let w x 0 designate a direct utility function with a parameter vector 0 dependent on the price vector p that appears in the budget constraint and b that rationalizes the same system of demand functions as v x namely x p m probably many economists who have considered price dependent preferences would conjecture that every such price dependent utility function w x p satisfying a and b is of the rather restricted form

towards a sustainable electrification in ghana a review of renewable energy deployment policies abstract ghana has been facing perennial power rationing over the years due to fuel supply challenges the country s energy system is likely to suffer additional strain from rising energy demand fueled by population growth rapid urbanization and economic development fortunately there are enormous renewable energy resources which can provide sustainable electrification as backbone to socioeconomic development while curbing global warming ghana s energy strategy targets 100 access to electricity and 10 share of sustainable power in national generation mix by 2020 despite the existence of numerous policies and a renewable energy act current contribution of non conventional renewable energy to electricity generation is less than 1 the right mix of policies to address the unique domestic conditions and achieve its specific development goals remains insufficient this study reviews the regulatory framework financing incentives and other provisions of ghana s renewable energy act it critically examines the policy s strengths weaknesses opportunities and treats based on comparative analysis and lessons drawn from failed and successful implementation of similar policies around the world the study also assesses the impact of policy on project development it was found that the performance of ghana s renewable energy policy on grid connected electricity has been poor compared to its target the fundamental reasons for this unsatisfactory performance may be attributed to partial implementation of policies lack of market driven support schemes lack of pricing policy framework weak grid network limited access to funds and inconsistencies in renewable energy development strategies this study proposes the following countermeasures i ghana should comprehensively harmonize renewable energy regulatory and fiscal policies with domestic electricity pricing regime ii market driven support schemes should be prioritized for cost effectiveness and minimum governmental influence these reforms can help eliminate some of the major barriers to sustainable electrification in ghana while the lessons provide a learning curve for other african countries

renewable energy policies in promoting financing and investment among the east asia summit countries quantitative assessment and policy implications many countries have implemented various policies for renewable energy development ranging from setting power purchase agreements and the legislation of renewable energy requirements to providing incentives and imposing carbon taxes the evaluation of the effectiveness of such policies however is fragmented which raises a need for a comprehensive analysis this paper aims to assess whether and how policies promoting renewable energy investment have achieved the intended goals it employs five broadly defined criteria market uncertainty profitability technology and financial resources to build an index to assess respectively if such policies have helped create a market for renewable energy maximize potential profits reduce risks relating to the investment develop and adopt new technologies and improve the access to financial resources each criterion is reflected by three indicators values of each indicator are converted into ordinal values for analysis the index not only scans comprehensively all relevant renewable energy investment policies in the east asia summit countries but also provides systematic and quantitative measures to compare the effectiveness of policies in these countries with respect to the creation of market the degree of uncertainty the potential of profitability the development and adoption of technology and the accessibility of financial resources

veblen effects and their impact on the new european community and some of their trading partners abstract this paper seeks to examine the impact of the interdependence of consumer markets in the eec countries on consumer behavior we also wish to measure potential taste shifting effects these veblen effects arise from the impact that prices and income have directly on the utility function largely because consumers seek to emulate each others behavior this paper provides estimates of a demand system for seven of the eec countries which takes these veblen effects into account as well as comparable estimates for some non eec european countries

an analysis of substitution bias in measuring inflation 1959 851 we analyze the substitution bias in laspeyres type price indexes such as the cpi using 1959 1985 nipa consumption data for 101 commodities we employ two methodological approaches to calculation of the bias first we construct the tightest theoretical bounds on the col by applying nonparametric methods using algorithms developed by afriat and by varian second following diewert we construct superlative price index formulas namely tomqvist and fisher s ideal indexes under a chain as well as a fixed base specification homothetic preferences are found to be consistent with the data and sensitivity tests indicate that this result is not vacuous if the hypothesis of homotheticity is maintained the col bias has upper and lower limits of 0 22 and 0 14 percent per year respectively using the superlative indexes as the measure of the col the bias is about 0 18 percent per year for the period 1959 85 this estimate is somewhat larger than found in earlier studies our use of more disaggregated data is found to be responsible for part of the difference with the size of the estimated bias directly related to the extent of the aggregation

endogenous regional agricultural production technologies technical relationships between six productive factors for ten agricultural produvction regions in the continental united states are examined the applied methodology provides a departure from conventional production methodologies contained in the literature by allowing aggregate technical relationships to be endogenized within the economic system

the time varying correlation between uncertainty output and inflation evidence from a dcc garch model abstract using a new uncertainty index from baker et al 2012 we evaluate the time varying correlation between macroeconomic uncertainty inflation and output estimation results from a multivariate dcc garch model reveal that the sign of the correlation between macroeconomic uncertainty and inflation changed from negative to positive during the late 1990s whereas the correlation between uncertainty and output is consistently negative

feed in tariff outlook in malaysia this paper aims to present the feed in tariff fit outlook in malaysia which is in the process of being enacted through a renewable energy re policy by the government of malaysia gom a brief in policies leading towards the re policy and the potential of each re sources under fit mechanism have been discussed the successful utilisation of re source in electricity generation and the fit implementation globally are positive indicators to implement fit in malaysia potentials of fit on biomass biogas and solid waste energy are currently very promising in malaysia but it is solar energy which is predicted to be the main re of the future surpassing all other res

malaysia s renewable energy policies and programs with green aspects malaysia as a developing country and a member of the association of southeast asian nations asean is looking into inexhaustible and repeatable alternative energy sources such as solar wind mini hydro and biomass the estimated gdp at 2010 is 15 385 per capita and the economic and industrial growth of the country implies that energy demand is growing very fast in addition the growing prices of fossil fuels and greenhouse gas ghg emissions make inevitable renewable energy solutions for the country geographically malaysia is located in a region of tropical and humid climate which provides easy access to a variety of renewable energy sources the government of malaysia has initiated renewable energy policies to encourage industries and individuals to employ renewable energy powered systems in power applications this paper first gives a brief overview of the current status of renewable energy in malaysia then it provides the energy policies specifically the renewable energy policies in malaysia in section 2 the renewable energy programs are reviewed in section 3 the building energy efficiency program with green aspect is provided in section 4 lastly the conclusion and forecasts of this paper are

real wage indices this paper examines real wage measures that include leisure and nonlabor income in consumption decisions with respect to the advantages and disadvantages of partial versus complete welfare orderings and of utility based versus utility free wage indices in addition we argue that the usefulness of a real wage measure beyond welfare comparison has been ignored to test the robustness of utility based indices these real wage measures are calculated for two different utility function specifications the indirect addilog system and the linear expenditure system further comparisons are made against index bounds that are independent of the functional form for preferences

the social cost of living index abstract household cost of living indexes reflect household preferences analogous indexes for groups of households require a corresponding concept of group preferences in this paper i investigate the social cost of living index a group index based on the bergson samuelson social welfare function i first define the index and examine its properties under the assumption that the investigator constructing it expresses his distributional judgments in an explicit bergson samuelson social welfare function i then examine the maximizing society and the independent society two cases in which the index can be constructed from the information contained in the market demand functions in these two cases a laspeyres index i e the fixed weight index based on the reference consumption pattern is an upper bound on the exact social cost of living index in general however the assumptions required to place bounds on the social cost of living index are much more likely to be satisfied than those required to place analogous bounds on a household s cost of living index

strategic growth options we provide a strategic rationale for growth options under uncertainty and imperfect competition in a market with strategic competition investment confers a greater capability to take advantage of future growth opportunities this strategic advantage leads to the capture of a greater share of the market either by dissuading entry or by inducing competitors to make room for the stronger competitor as a result of this strategic effect payoffs are in a rough sense more convex than in the case of no investment in a growth option when the strategic advantage is strong increased uncertainty encourages investment in growth options higher uncertainty means more opportunity rather than simply larger risk if the strategic effect is weak the reverse is true on the other hand an increase in systematic risk discourages the acquisition of growth options our results contradict the view that volatility is a strong disincentive for investment

relative price changes and inequality in the size distribution of various components of income this article uses a comprehensive model of economic inequality to examine the impact of relative price changes on inequality in the marginal distributions of various income components in which the marginal distributions are derived from a multidimensional joint distribution the multidimensional joint distribution function is assumed to be a member of the pearson type vi family that is it is assumed to be a beta distribution of the second kind the multidimensional joint distribution is so called because it is a joint distribution of components of income and expenditures on various commodity groups gini measures of inequality are devised from the marginal distributions of the various income components the inequality measures are shown to depend on the parameters of the multidimensional joint distribution it is then shown that the parameters of the multidimensional joint distribution depend on the relative prices of various commodity groups and several other specified exogenous variables thus knowle

on judging quality by price price dependent expectations not price dependent preferences it has long been observed that some consumers may view product price as an indicator of product quality the rationale for choosing price as an indicator of quality appears to be the belief that markets are essentially efficient and that the higher costs associated with higher quality must be reflected by a higher product price earlier authors 1 4 5 6 7 11 14 have taken note of this phenomenon and have concluded that consumer preferences must be dependent on product price in this case it is argued in this paper that it is rational to judge quality by price only if the consumer is uncertain about product quality this implies that expectations are price dependent since the consumer rarely knows the exact quality of any product prior to its purchase the use of quality indicators may be more prevalent than traditional theory would imply if preferences or expectations are dependent on price the traditional properties of demand equations may not hold for example demand may not be free of money illusion 5 497 pollak has observed that judging the quality of a product by its price is a rational strategy for an uncertain consumer 7 64 he then proceeds to model price dependent preference behavior under certainty in a deterministic environment quality is known with certainty if quality is known with certainty then it is not rational for the consumer to use indirect quality indicators such as the price of the product the principal thesis of this paper is that ex ante uncertainty about product quality can lead to price dependent subjective expectations rather than price dependent preferences hence a change in price may cause a revision of expectations and not a shift in the consumer s preferences in section ii i present a model of subjective expectations where product price is a prior indicator of product quality a specific model of the revision of expectations is set forth 2 two models of consumer behavior with uncertain product quality are contained in section iii in the first model we assume that there is no demand for quality per se and that

the political market for real income redistribution through choice of the weights in colas this paper studies alternative cost of living indexes derived from the generalized fechner thurstone gft utility form their use in contracts for cost of living adjustments colas and the resulting effect of choice of index on the distribution of real income the indexes and their distributional effects are compared to the officially reported consumer price index cpi and a cpi computed from the same data set used to compute the gft indexes it is found that the choice of index used in adjustment clauses in contracts has an impact on the distribution of real income of the group as an example the u s federal government schedule of wages and salaries is adjusted from 1981 through 1984 by all of the indexes reported here use of alternative indexes illuminates the normative assumptions regarding the relative importance of different income strata among other things implicit in any public practice of pegging colas to a single form of price index

a note on aggregation of fechner thurstone direct utility functions abstract this paper demonstrates that exact aggregation of individual to per capita demand functions is achieved when the fechner thurstone functional form is the underlying direct utility function the exact aggregation takes place without the restrictive assumptions that characterize systems of demand functions derived from other functional forms

energy efficiency and carbon trading potential in malaysia abstract the damage inflicted by global warming is happening far faster than any experts have predicted or anticipated since the kyoto protocol was signed in 1997 to fight global warming through reducing global greenhouse gases ghgs emission the world climate pattern has worsened at an accelerated rate beyond expectation while developed countries sanctioned by the protocol are committed to achieve their ghg emission targets developing nations play similar roles on a voluntary basis since almost all of the ghgs emissions come from energy sector it is obvious that energy policy and related regulatory frameworks play imperative roles in realizing the kyoto protocol objectives with carbon dioxide co 2 touted as the main remedy in the ghgs emissions it is only reasonable that carbon trading becomes the essential element in the protocol recently a milestone is marked in the kyoto protocol with the 2009 climate summit in copenhagen denmark with all participating countries further committed themselves in fulfilling the protocol s obligations before the commitment period due in 2012 it is worthwhile to review the various energy efficiency efforts and carbon trading potential in malaysia a country which although does not bear any obligation has ratified and lauded the cause of the protocol malaysia as a developing nation is seen as a direct beneficiary from carbon trading and in this paper how the country energy policies have evolved over the years with concerted efforts from the government to minimize its carbon footprint through numerous energy efficiency implementations are discussed in length the impact from the 2009 climate summit on malaysia is also briefed

capabilities as real options strategy research consists of a balance between positive and normative theory normative theories suggest particular heuristics or cognitive representations to find appropriate solutions heuristics permit faster solutions to real time problems they also suffer from the potential of negative transfer to inappropriate applications the theory of real options provides the appropriate heuristic framing of competencies and exploratory search a real options approach marries the theory of financial options to foundational ideas in strategy organizational theory and complex systems we join these approaches to identify three pairs of concepts scarce factor and the underlying asset in option theory inertia and irreversibility and the ruggedness of landscape and option values strategic theories of resources largely define a core competence as unique and nonimmutable in doing so this definition has wrongly forgotten barney s initial insight into scarce factor markets as determining the valuation of a competitive asset financial theory of real options derives its heuristics of investing in exploratory search by inferring future value of today s investments from market prices we apply the three conceptual pairs to the evaluation of capabilities as real options through a formal descriptive model the valuation of core capabilities is derived from observing the price dynamics of correlated strategic factors in the market because of inertia managers cannot easily adjust the wrong set of organizational capabilities to the emergence of market opportunities however firms that have made investments in capabilities appropriate to these opportunities are able to respond from this description we define core competence as the choice of capabilities that permits the firm to make the best response to market opportunities the heuristic framing of capabilities as real options guides the normative evaluation of the balance between exploitation and exploration

investment and cash flow new evidence we study the investment cash flow sensitivities of u s firms from 1971 2009 our tests extend the literature in several key ways and provide strong evidence that cash flow explains investment beyond its correlation with q a dollar of current and prior year cash flow is associated with 0 63 of additional investment for firms that are the most likely to be constrained even after correcting for measurement error in q our results suggest that financing constraints and free cash flow problems are important for investment decisions

measuring preference variation across north america this paper utilizes the generalized fechner thurstone direct utility function to see if relative price changes in neighboring countries affect the preference structure of the host country the authors analyze the case of canada mexico and the united states they utilize the generalized fechner thurstone functional form because it allows them to detect changes in preferences when parameters such as prices change they find evidence of veblen effects for both canada and the united states across almost all goods under consideration in mexico the changes in relative prices in canadian and u s goods appear to be much less significant copyright 1988 by the london school of economics and political science

patent protection market uncertainty and r d investment the real options investment theory shows that greater uncertainty about market revenues reduces current r d investment by increasing the value of waiting this paper presents empirical evidence that patent protection mitigates the effect market uncertainty on r d investment

consumer prices the consumer price index and the cost of living after presenting major findings and recommendations the cpi commission reiterates the estimate of a 1 1 percentage point per annum upward bias it rejects the contention that the bls already makes substantial corrections for quality change that quality improvements and new products accrue only to the rich and that procedures to make more extensive quality adjustments valuations of new products and adjustments for commodity and outlet substitution are impractical the bias in the cpi can be sharply reduced as the authors detail in this paper coauthors are ellen r dulberger robert j gordon zvi griliches and dale w jorgenson

macroeconomic uncertainty cultural traits and entrepreneurship the relationship between macroeconomic uncertainty and entrepreneurial activities has been the subject of intense debate among researchers however existing empirical studies report mixed findings

option exercise games an application to the equilibrium investment strategies of firms under the standard real options approach to investment under uncertainty agents formulate optimal exercise strategies in isolation and ignore competitive interactions however in many real world asset markets exercise strategies cannot be determined separately but must be formed as part of a strategic equilibrium this article provides a tractable approach for deriving equilibrium investment strategies in a continuous time cournot nash framework the impact of competition on exercise strategies is dramatic for example while standard real options models emphasize that a valuable option to wait leads firms to invest only at large positive net present values the impact of competition drastically erodes the value of the option to wait and leads to investment at very near the zero net present value threshold copyright 2002 oxford university press

the economic policy uncertainty and firm investment in australia this paper examines the impact of economic policy uncertainty epu on the australian firm investment activity we find a significant positive relationship between the epu and the firm investment o

the variability of inflation rates across household types it is well known that the consumer price index cpi measures the changing cost of the fixed market basket of an average consumer it is an aggregate economic indicator of changes in retail prices and in the process of averaging across individuals subsumes the variability in consumption patterns inherent in a modetn economy it is thus evident that the use of a single index in adjusting the incomes of broad groups of individuals has an automatic distributional impact individuals whose own price index rises more slowly than the index used to adjust their incomes experience a windfall benefit while those whose price index rises more rapidly experience a relative loss such variability in actual price experience relative to the average measured change in prices is soon to be of great importance to taxpayers throughout the income distribution the economic recovery tax act of 1981 calls for adjustments in tax tables so that inflation will not result in tax increases beginning not later than december 15 1984 12 public law 97 34 calls for using the official consumer price index for all urban con

preferences in a communal economic system a voluntary communal economic system differs from most types of economic organizations in that its members prefer to carry out certain activities collecti vely and significant production and consumption activities take plac e within it communal systems are analytically modeled in the article as household production units or centrally planned economies the mo del is employed to evaluate the source of changes in consumption of i sraeli kibbutzim between 1955 and 1965 by focusing on changes in pric es technologies resources and preferences evaluating the stability of preferences hypothesis raised by g stigler and g becker 1977 copyright 1987 by the review of economic studies limited

policy uncertainty and mergers and acquisitions this research examines the relationship between policy uncertainty and mergers and acquisitions m as we find that policy uncertainty is negatively related to firm acquisitiveness and positively related to the time it takes to complete m a deals in addition policy uncertainty motivates acquirers to use stock for payment and to pay lower bid premiums acquirers on average create larger shareholder value from m a deals undertaken during periods of high policy uncertainty which is attributable to their prudence as well as the wealth transfer from the financially constrained targets to acquirers

problems in the measurement of consumer cost of living indexes three empirical issues in the use of cost of living indexes are examined a substitution bias b differences across demographic groups and c the importance of the reference indifference curve for true indexes when preferences are nonhomothetic using the estimated parameters of a demand system for food commodities from two microdata cross sections both true parametric and laspeyres price indexes for food are compared across both demographic groups and cross sectional cohorts

agricultural production technologies with systematic and stochastic technical change a production system modeling tool is developed that implements recent work on autoregressive and endogenous stochastic production technologies associated with generalized fechner thurstone gft optimizing functions a gft class production system is used to evaluate the empirical support for technology specifications inherent in the neoclassical theoretic structure of an agricultural production region little likelihood support is found for zero serial correlation elimination of systematic technology changers from the production system strict neoclassical production technologies hicks neutral technical change or zero homogenous factor demand functions

cost of living indexes and demographic change the consumer price index cpi although not without problems is the most often used mechanism for adjusting contracts for cost of living changes in the us the us bureau of labor statistics lists several problems associated with using the cpi as a cost of living index where the proportion of 2 worker families is increasing population is shifting and work week hours are changing this study shows how to compute cost of living indexes which are inexpensive to update use less restrictive assumptions about consumer preferences do not require statistical estimation and handle the problem of increasing numbers of families where both the husband and wife work this study attempts to how widely in fact the cpi varies with alternative true cost of living varies with alternative true cost of living indexes although in the end this de facto cost of living measure holds up quite well in times of severe price inflation people change their preferences by substitution necessitating a flexible cost of living index that accounts for this fundamental economic behavior

the substitution bias of the laspeyres price index an analysis using estimated cost of living indexes the most commonly used measure of the cost of living the consumer price index cpi published by the bureau of labor statistics is essentially a laspeyres price index it is well known however that a laspeyres price index provides an upward biased estimate of the cost of living because in keeping the same base period basket of goods as weights it does not take into account substitution among commodities induced by relative price changes the magnitude of the bias is an empirical question which is the focus of this study an estimate of the substitution bias may be obtained by taking the difference between the laspeyres price index and an estimated true cost of living index the true cost of living index cli is based on the theory of consumer demand it is the ratio of the minimum expenditures under two different price regimes necessary to maintain a constant level of utility as opposed to the constant basket of goods in the laspeyres index the size of the bias depends on two factors 1 the size of consumption substitution elasticities if there is no commodity substitution then the cli and laspeyres index coincide regardless of changes in relative prices and 2 the magnitude of relative price changes if all prices move together then the cli and laspeyres index again coincide regardless of the size of substitution elasticities in order to compute a true cli it is necessary to specify a particular utility function and estimate the parameters of the resulting system of demand equations see for example louis phlips p 135 several estimates of the magnitude of the substitution bias have appeared in the literature but all previous studies suffer from a common weakness they are all based on a very small number of commodities essentially because of econometric problems involved in estimating large systems of demand equations in one group of studies demand models have been estimated using highly aggregated data in which total consumption is grouped into four to nine aggregate commodites such as housing durables or clothing arthur goldberger and theodore gamaletsos for example estimate the linear expenditure system les demand model using data on five aggregate goods for several european countries and compare the resulting cli for one of the countries greece to the corresponding laspeyres price index tran van hoa estimates costof living indexes for six australian provinces using data on nine aggregate goods phlips cites work by r sanz ferrer who computed a cli for belgium from data on eight aggregate commodities in such studies using highly aggregated data the estimate of the substitution bias may be understated because the aggregation obscures substitution in consumption within categories which is perhaps more prevalent than substitution between gross aggregates another shortcoming of these three aggregate studies is the fact that they use only a single demand system and hence do not explore the sensitivity of the cli to a priori u s bureau of labor statistics the groundwork for this study was my dissertation i would like to thank the chairman and members of my committee r robert russell llad phillips and robert deacon for their support and helpful suggestions and jack triplett robert pollak richard j mcdonald and a referee for valuable comments on an earlier version the views expressed are my own and do not necessarily reflect the policies of the bureau of labor statistics for a theoretical discussion of cost of living indexes see robert pollak 1971b and paul samuelson and subramanian swamy

expenditure function estimates of the efficiency and distributive impact of indirect taxes in the united kingdom abstract this paper uses the expenditure function to consider the efficiency and distributional impact of indirect taxes in the united kingdom estimates of the parameters of the linear expenditure system of demand equations are employed to measure the compensating variation and equivalent variation costs of taxes on households in different income groups in addition distributional weights are used to consider the overall impact of different taxes and tax changes on social welfare finally we consider other types of demand system estimates which might be used in this kind of exercise

strategies for renewable energy applications in the organization of islamic conference oic countries abstract presently the demand of energy is met by fossil fuels combustion of fossil fuels has caused negative impacts to the environment globally the most significant ones are acid precipitation stratospheric ozone depletion and global climate change to overcome it sustainable clean and safe energy policies that would satisfy the energy demand of the 21st century have to be implemented renewable energy resources appear to be the one of the most efficient and effective solutions therefore be key energy sources for the future there is an intimate connection between renewable energy and sustainable development current status of renewable energy applications its implementation strategies and their obstacles for some of the selected islamic countries has been presented several strategies for enhancing of widespread application of renewable energy technology are described the strategies include establishing education and capacity building programs creating renewable energy market and financing mechanism improving appropriate energy policies and establishing database and international collaboration to promote renewable energy technologies

a survey of measurement biases in price indexes abstract this paper reviews the literature on measurement error in the major us price indexes the consumer price index cpi the producer price index rpi and the gross domestic product gdp deflators we take as our point of departure triplett s 1975 survey and focus on the studies of measurement error that have appeared since then we review the problems of substitution bias quality bias new goods bias and outlet substitution bias that are generally considered to be the main sources of error in price indexes the bulk of the paper is devoted to problems in the cpi and ppi as the gdp deflators tend to be based mainly on the components of these series we find that there has been surprisingly little work on the problem of overall measurement error in any of these price indexes and we conclude that there is very little scientific basis for the commonly accepted notion that measured inflation at 2 to 3 percent a year is consistent with price stability

the sensitivity of the true cost of living to price induced and income induced changes in aggregate consumers tastes this article examines the sensitivity of the cost of living to some aspects of price changes and income changes that cannot be detected by laspeyres indexes like the cpi u or cpi w effects of price induced and income induced changes in consumers tastes on the cost of living in the united states from 1947 to 1981 are estimated and found to be generally substantial

policy uncertainty and long run investment and output across countries i present a model economy where policy uncertainty creates short term bias in investment and leads to a higher capital price and lower long run investment and output i conduct a calibration exercise using a set of industry level investment data across countries between the lowest income and the highest income countries policy uncertainty can account for capital price and investment level differences by a factor of about 3 and for the output level difference by a factor of about 2 copyright economics department of the university of pennsylvania and the osaka university institute of social and economic research association