internal returns to scale as a source of comparative advantage the evidence during the past 15 years many trade theorists have incorporated scale economies and imperfect competition into their models this abandonment of perfect markets has profoundly changed the way that economists think about the determinants of trade flows and the effect of trade policies on performance below i selectively review the empirical evidence on both issues focusing on the role of increasing internal returns to scale iirs 1 to conserve space i refer the reader to the working paper version of this document tybout 1993 for more extensive references

the who and why of lottery empirical highlights from the seminal economic literature lotteries operate today in many countries around the world this type of gambling is usually run by governments and is sometimes described as regressive lottery is an unfair bet so explaining the purchase of lottery tickets by risk averse consumers has been a challenge for economic theory lotteries can be analysed from either of two economic perspectives as a source of public revenue or as a consumer commodity in this paper the state of economic research on lotteries is reviewed focusing on its main empirical findings

horizontal and vertical intra industry trade an empirical test of the homogeneity hypothesis in this paper we study if and how country specific factors affect intra industry trade iit when heterogeneity among sectors is allowed for the paper is novel in that it is the first that addresses an issue raised by greenaway et al oxford bulletin of economics and statistics 1999 61 365 specifically employing data on a sample of oecd countries over a 10 year period 1997 1998 we build on and take forward a methodology pioneered by balassa and bauwens economic journal 1987 97 923 to study the determinants of horizontal and vertical iit using a multi industry approach in doing this we seek to avoid the more extreme measurement problems by allowing for heterogeneity among sectors when country specific factors are analysed and among countries when industry specific factors are considered the results are compared to those obtained using the traditional method that does not consider intersectoral heterogeneity we find that the two models yield statistically different results moreover the tests regarding the choice of model that is econometric tests designed to compare one model with another when different sets of explanatory variables are used confirm the relevance of intersectoral heterogeneity in affecting iit to the best of our knowledge a similar analysis has not yet appeared in the empirical literature on iit

the emergence of iran in the world car industry an estimation of its export potential in the past 10 years iran has been emerging as a major car producer in the world however due to delays in economic reforms iranian car exports have not increased as much as production this paper presents a first estimation of the iranian export potential in the car industry based on new theoretical developments of the gravity equation an empirical bilateral trade model is proposed it includes sectoral variables car production import tariffs as well as other original variables such as expectations and hysteresis we then develop a dataset which includes the 40 major car exporting countries in the world 34 importing countries a 10 year time period as well as four car production groups the model is then estimated by using alternative panel data estimators such as those of hausman and taylor and dynamic estimators as well as transformed variables estimators export potential is finally calculated from the residuals of the model results show that iranian current car exports are about 100 times less than their fitted values this indicates that there is a significant export potential for iran especially toward india china russia as well as smaller neighbours turkey pakistan central asian countries as a result iran could become the major auto supplier in the middle east however this requires the completion and success of ongoing economic reforms

intra industry trade and protectionism the case of the buy national policy this article examines the factors that lead governments to open up their public procurement markets to international competition with a particular emphasis on the effect of intra industry trade contrary to the conventional notion that intra industry trade entails less political pressure for protectionism than inter industry trade i argue that such notion does not prevail in the case of discriminatory public procurement firms in a market with a high degree of intra industry trade are more likely to resist the removal of discrimination than would firms in a market with a high degree of inter industry trade empirically i find support for the argument both at sub national and cross national settings

an analysis of bilateral intra industry trade in the food processing sector this paper analyses determinants of intra industry trade in food processing for a 30 country sample over the period 1964 85 previous studies have tested the hypothesis that imperfect competition is a major determinant of intra industry trade iit in the durable goods manufacturing sectors this study is distinguised from the earlier studies of iit by the examination of the processed food sector sic 20 the use of a panel data set for 22 years and 30 countries available at the four digit sic level the use of purchasing power parity measures of gdp and the use of a weighted tobit model with fixed effects to account for the censored cross section time series nature of the date the results indicate that iti in food processing is a positive function of a country s gdp per capita and equality if gdp per capita between countries in addition it is also found that such trade is strongly influenced by distance between trading partners membership in customs unions and free trade blocs and also exchange r

scale economies and the volume of trade in this paper we split the number of actual years of schooling into five components effective years repeated years skipped years inefficient routing years and dropout years estimation of earnings equations using these explanatory variables produces some interesting empirical and theoretical results the main empirical finding is that the concepts of actual and effective years of schooling that are usually used in the estimation of earnings equations are statistically inferior to our classification both concepts pro

intra industry trade in financial services abstract intra industry trade iit has been central to increasing the variety of products available to consumers unlike traditional trade theories the recent trade theories have placed an emphasis on the role of foreign direct investment fdi in generating trade and increasing the volume of iit this study is the first study of intra industry trade in banking services in which the key elements of the new trade theories of iit have been taken into account in measuring the determinants of iit in banking services the empirical results of the determinants of iit in banking services indicate that factor endowments average per capita income fdi in banking economies of scale in the banking sector trade intensity between the us and its partners and market openness make a positive contribution to the volume of iit in banking services furthermore the empirical results indicate that intra trade activities amongst the us multinational corporations reduce the level of iit in banking services for the us

buying a dream alternative models of demand for lotto existing lotto demand models utilize effective price computed as the face value of a ticket minus the expected value of prize money per ticket as their primary explanatory variable by contrast this article proposes a key role for consumption benefit or fun in the demand for gambling in general and lotto demand in particular it develops an alternative model of lotto demand that focuses on the maximum possible prize when this is tested against the traditional model using data from the u k national lottery we find that jackpot considerations exert an influence over and above that of variations in effective price

economic shocks and lottery sales an examination of maine state lottery sales most u s states earn significant amount of revenues from lottery sales however they are also criticized for promoting the lotteries because they have been seen as taking advantage of poor popula

on the incidence of us tariffs this paper provides evidence on the incidence of tariffs on products of export interest to developing countries by investigating the relationship between per capita incomes of us trading partners and tariff rates it constitutes the first attempt to assess the incidence of tariffs imposed by the us on countries that span the entire range of per capita incomes average tariff rates are lower for the poorest and richest countries and higher for countries in the middle of the income distribution this finding is not consistent with the widely held view that tariffs used by industrial nations bear more heavily on products of export interest to poorer developing countries than on imports from industrial nations it is consistent with the tariff escalation pattern reported in earlier studies if advanced countries account for most products at the high end of the fabrication scale results show that poorest countries will find it difficult to escape tariffs by attaining higher levels of economic development

alternative hypotheses and the volume of trade the gravity equation and the extent of specialization we examine why the gravity equation works and the implications for its use first we demonstrate that the gravity equation as a statistical relationship can be generated from a model with incomplete specialization and trade costs second we analyse the predominance of zero bilateral trade values as a puzzle broadly inconsistent with the complete specialization models typically used to derive the gravity equation but consistent with the alternative hypothesis of incomplete specialization third we demonstrate that the explanation for why the gravity equation works has considerable relevance for how the gravity equation is interpreted and used and how we view bilateral trade diverses hypotheses et le volume du commerce l equation de gravite et le degre de specialisation les auteurs examinent comment fonctionne l equation de gravite et les implications de son usage on propose trois contributions d abord on montre que l equation de gravite en tant que relation statistique et non pas en tant que prediction specifique de commerce bilateral peut etre produite a partir d un modele avec specialisation incomplete et couts de transaction ensuite on analyse la predominance de valeurs zero dans les commerces bilateraux en tant qu enigme generalement incompatible avec les modeles de specialisation complete utilises habituellement pour deriver l equation de gravite mais compatible avec l hypothese de rechange de specialisation incomplete enfin on montre que les raisons pour lesquelles l equation de gravite fonctionne ont un impact sur la facon de l interpreter et de l utiliser et sur notre facon de concevoir le commerce bilateral

the peculiar scale economies of lotto the best selling lottery game in the united states is lotto a parimutuel game of long odds and large jackpots unlike in the other popular lottery games numbers and instant there is a strong tendency for per capita lotto sales to increase with the size of the population base the fact that the jackpot also tends to increase with population size is not a complete explanation since the probability of winning tends to be inversely proportional to state population our explanation for why the games are more successful in large states is that players tend to judge the likelihood of winning based on the frequency with which someone wins then a larger state can offer a game at longer odds but the same perceived probability of winning as a smaller state this abstract was borrowed from another version of this item

what is the optimal design for lottery linked savings programmes in this article we determine the optimal design of lottery linked savings lls programmes lls vehicles such as lottery bonds are financial instruments that preserve depositors principal but provide randomized variable returns to these depositors through periodic lottery drawings in lieu of the regular coupon payments traditionally received by bondholders this type of asset is very popular in europe we note that the framing of lls instruments is linked to their popularity and we attempt to elucidate that link and thereby determine the optimal structure of payments for lls programmes our goal is to frame lls programmes in a manner that both maximizes their investors satisfaction and preserves their ability to serve as inexpensive sources of capital for their issuers we demonstrate that the optimal pay off structure is characterized by a high level of skewness as investors are willing to accept a decrease in the small and medium prizes of the lottery in exchange for an increase in the grand pri

on lottery sales jackpot sizes and irrationality a cautionary note jackpot size has a greater impact than expected price as a determinant of lottery sales suggesting that agents exhibit irrational lotto mania we demonstrate why this conclusion is problematical by considering the reduced form obtained if agents are described by cumulative prospect theory

intraindustry trade sources and effects on protection this paper provides an empirical analysis of the determinants of intraindustry trade we demonstrate that two way trade flows occur where conditions are favorable to international specialization consistent with the stigler williamson analysis of the division of labor the results are inconsistent with the prevailing product differentiationcum scale economies model of intraindustry trade in addition we show that intraindustry trade has a significant impact on protectionist pressures exports of closely related products have the effect of mitigating the tariff raising effects that imports would otherwise exert

intra industry trade and revealed comparative advantage in the central american common market abstract in this paper intra regional trade among central american countries is analyzed from two perspectives intra industry trade iit and revealed comparative advantage the results show moderate to low levels of iit and the presence of many products with revealed comparative advantage this indirect test of trade theories for intra central american trade favors the heckscher ohlin theorem over the new theories based on increasing returns and product differentiation this suggestion however should not be taken as conclusive since they are not direct tests of the theories of international trade

economies of scale and the volume of intra industry trade abstract using a model of monopolistic competition with traded and non traded goods this paper establishes a positive link between scale economies the volume of intra industry trade and the share of trade in total production these results are consistent with empirical findings

an economist s guide to lottery design this paper outlines the issues relevant to the design of pari mutuel lottery games and makes inferences about game design effects from estimates of how rollovers affect sales lottery tickets sales depend positively on the proportion of revenue returned as prizes positively on the skewness of the prize distribution which depends largely on how much of the prize money goes to the jackpot and negatively on the variance in the prize distribution which depends largely on how much goes on smaller prizes we simulate the effects of envisaged game design changes on sales revenue and find potentially large effects

habit and long memory in uk lottery sales long memory processes can occur as a consequence of aggregation over heterogeneous agents we examine the uk lottery and by estimating the level of fractional differencing find evidence of the long memory property in lottery sales a result that has broader implications on the estimation of demand models for lotteries

economic interests and regional trading arrangements the case of nafta this article examines lobbying in the united states on the north american free trade agreement nafta i argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in north america these sectors were also exposed to free trade more rapidly under the tariff phasing schedule in the nafta treaty however corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for u s workers which created divisions between labor unions and their employers i conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger than national markets to take advantage of economies of scale or to develop production sharing networks

the welfare effects of lotto evidence from the uk abstract this paper estimates the demand for lottery tickets using pooled cross section data that contain individual incomes and extensive information about characteristics one of the cross sections corresponded to a draw which was a double rollover the jackpot was enhanced by adding the two previous draws jackpots which had not been won together these datasets provide sufficient observations facing different prices to allow us to estimate the price elasticity as well as the income elasticity of demand we estimate tobit and other specifications and use the estimates to evaluate the welfare effects arising from the introduction of the lottery

trade barriers multinational involvement and intra industry trade panel data evidence from india the article analyses the effects of trade barriers and multinationals on the intensity of intra industry trade iit in a panel of indian manufacturing industries from 1988 to 1999 we find that the intensity of iit increases with the reduction of trade barriers this is expected as greater competition from imports leads individual plants in the domestic industry to specialize in the manufacturing of unique varieties the analysis suggests that horizontal market seeking multinational activities in the domestic industries exert a negative influence on iit this is consistent with the view that horizontal multinationals displace exports to the host country at the same time our results indicate that iit will be stimulated to the extent that the entry of multinationals induces intra industry specialization we also analyse the role of product differentiation and plant level scale economies in determining iit

money output granger causality revisited an empirical analysis of eu countries in this paper the evidence collected in the large literature on testing for granger causality from money to output is revisited using a broad data base of 14 eu countries plus canada the us and japan and quarterly data from the mid 1960s to mid 1990s a number of hypotheses from this literature is evaluated it is found that very few general conclusions can be sustained for instance in most countries it is not the case that the use of data in levels creates a bias in favour of finding granger causality effects of money on output compared to using differences neither does the significance of money lags decline when increasing the number of variables included in the model what appears to be robust though is that allowing for asymmetries clearly increases the likelihood of finding significant causality effects based on the granger causality test results a number of country groups are obtained using cluster analysis which are characterized by a similarly behaviour with respect to the money output

trade flows relative prices and effective exchange rates a var on ethiopian data the dynamic response of trade flows to price and effective exchange rate changes is examined via var using quarerly data from ethiopia for the period 1973 i 1985 iv the results show one way granger causality running from prices and exchange rates to imports and exports without significant feedback imports and exports exhibit similar response patterns to unexpected changes in relative prices and exchange rates the responses of imports and exports are larger and the adjustment takes longer when relative prices rather than exchange rates caused a change in international prices in the long run changes in prices account for a larger percentage of the forecast error variances in imports and exports than exchange rate changes it is shown that devaluation may have an initial adverse effect on the trade balance

commercial policy and intra industry trade abstract this paper constructs a model of intra industry trade within a multi product industry whose output range is limited to that obtainable from a particular type of capital intra industry trade is a natural outcome in this structure without requiring increasing returns to scale or imperfectly competitive markets and with its pattern determined along traditional relative factor abundance lines the volume of this trade will vary inversely with the level of trade restrictions as observed empirically other policies are then considered for their influence on the range rather than the level of domestic production since the former is the more likely policy objective under these circumstances

optimal lottery design for public financing this article develops a model of optimal lottery design for public financing on the assumption that economic agents view buying lottery tickets as a form of entertainment given that lotteries are optimally designed it offers two findings 1 the fundraising potential of a lottery is independent of its type specifically of whether it is a fixed prize type or a pari mutuel and 2 the ratio of the optimal winning prize amount in each prize class to total lottery sales is equalised to the elasticity of demand for lottery ticket purchases with respect to the winning prize in each prize class

the environmental bias of trade policy author s shapiro joseph s abstract this paper documents a new fact then analyzes its causes and consequences in most countries import tariffs and non tariff barriers are substantially lower on dirty than on clean industries where an industry s dirtiness is defined as its carbon dioxide co2 emissions per dollar of output this difference in trade policy creates a global implicit subsidy to co2 emissions in internationally traded goods and so contributes to climate change this global implicit subsidy to co2 emissions totals several hundred billion dollars annually the greater protection of downstream industries which are relatively clean substantially accounts for this pattern the downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized a quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods global co2 emissions would decrease and global real income would change little

trade effects of scale economies evidence from four eu countries abstract this paper investigates the empirical relationship between the magnitude of scale economies and trade scale economies are directly estimated from a non linear translog production function system these estimates are then introduced in an original supply demand export model the application of this model to four eu countries indicates that exports unambiguously rise with the degree of scale economies these results support schmitt and yu s econ lett 74 2001 127 theoretical expectations

intra industry trade and protection which way does the causation go abstract this paper analyses the simultaneous determination of intra industry trade iit and tariffs the results demonstrate that which iit is influenced by tariffs reverse relationship does not hold our results indicate the single equation models can suffer from simultaneity bias

exchange rate price and output inter relationships in ghana evidence from vector autoregressions this paper explores the dynamic inter relationships among the currency exchange rate consumer price inflation and real output growth as well as the roles of money and interest rates in output and price determination time series data and vector autoregression models are used results suggest that there are significant inter relationships between the exchange rate and inflation monetary shocks matter only when explaining money itself and the price level and interest rate dependent monetary policies in the absence of financial modernization are ineffective

efficient tests of long run causation in trivariate var processes with a rolling window study of the money income relationship this paper develops a simple sequential multiple horizon non causation test strategy for trivariate var models with one auxiliary variable we apply the test strategy to a rolling window study of money supply and real income with the price of oil the unemployment rate and the spread between the treasury bill and commercial paper rates as auxiliary processes ours is the first study to control simultaneously for common stochastic trends sensi tivity of causality tests to chosen sample period null hypothesis over rejection sequential test size bounds and the possibility of causal delays evidence sug gests highly significant direct or indirect causality from m1 to real income in particular through the unemployment rate and m2 once we control for cointe gration

income inequality and choice of free trade in a model of intraindustry trade pablo serra acknowledges the support of fondecyt project no 92 0883 this paper was partly written while fischer was at the university of virginia the suggestions of an anonymous referee have greatly improved the presentation of our paper

monetary policy and long run systemic risk taking as an extension to the literature on the risk taking channel of monetary policy this paper studies the existence of a systemic risk taking channel srtc in the eurozone through an original macroeconomic perspective based on causality measures because the srtc is effective after an incubation period we make a distinction between short and long term causality following the methodology proposed by dufour and taamouti 2010 we find that causality from monetary policy to systemic risk while not significant in the very short term robustly represents 75 to 100 of the total dependence between the two variables in the long run reverse causality is rejected systemic risk did not influence the policy of the european central bank before the global financial crisis however central banks must be aware that a too loose monetary policy stance may be conducive to a build up of systemic risk

intra industry specialization in a multi country and multi industry framework the paper tests alternative hypotheses as to the factors determining the extent of intra industry trade defined as the share of this trade in total trade in a multi country and multi industry framework the empirical results show that the extent of intra industry trade in a particular industry between any two countries depends on the characteristics of the industry and the countries concerned the explanatory power of the regressions for the entire group of countries exporting manufactured goods as well as for trade among the developed countries is relatively high and practically all the hypotheses concerning the impact of industry trade are supported by the empirical results lower coefficients of determination have been obtained for trade between developed and developing countries and for trade among developing countries but the estimates generally support the hypotheses put forward in the paper in these cases also

import competition from developed and developing countries separate demand equations for imports from less developed countries ldcs and imports from developed countries dcs were estimated for each of eleven representative product groups imports were found to compete quite readily with domestically produced goods with plausible own price and cross price elasticities whereas the quantity of each type of import was found to be quite responsive to changes in the price of us home goods each appears to be less sensitive to the price of the alternative import an explanation that is consistent with this observation and that finds support from detailed industry information is that dcs and ldcs supply goods that are at different stages in the product or technology cycle whereas us producers compete in all submarkets this suggests that trade creation rather than trade diversion provides the predominant inroad for ldcs into the us market 25 references 3 tables

on the relationship between impulse response analysis innovation accounting and granger causality we derive a general characterization of granger non causality between two vectors x and x in terms of impulse responses when a third vector of auxiliary variables x is also used to forecast it is observed that the usual characterizations of non causality in terms of impulse responses or variance decompositions can be misleading in such situations a numerical illustration is also provided

money growth volatility and the macroeconomy this study analyzes the effects of variability in money growth on the macroeconomy for the period 1961 1 1984 4 within the context of a vector autoregressive model that contains variables typically included in a small macro model variance decompositions and historical decompositions are used to assess the impact of money growth variability the variance decompositions suggest substantial effects of money growth variability on the long term interest rate output and the price level historical decompositions for 1979 4 1984 4 suggest substantial effects of money growth variability on the interest rate and output but smaller effects on the price level are found copyright 1988 by ohio state university press

lottery markets design micro structure and macro behavior an ace approach abstract an agent based computational modeling of the lottery market is established in this paper to study the design issue in terms of the lottery tax rate as well as the emerging market behavior by using genetic algorithms and fuzzy logic lottery participants are modeled as autonomous agents who may endogenously adapt to exhibit behavioral properties consistent with well noticed behavior of lottery markets three major findings are presented first as anticipated a laffer curve is found in this model nonetheless the laffer curve has a flat top which indicates the non uniqueness of the optimal lottery tax rate second conscious selection behavior is also observed but it becomes weaker as time goes on third for the halo effect we observe exactly the opposite each of these three findings are then compared with available empirical results and the mechanism of genetic algorithms is further examined in light of the anti halo effect