wheat from chaff meta analysis as quantitative literature review abstract this paper presents and develops a quantitative method of literature reviewing and evaluating empirical research meta regression analysis or mra economics is theory driven yet we must learn empirically if economics is to advance mra offers a more objective statistical method to summarize our empirical knowledge and to explain the wide study to study variation in economic research mra is used to assess the evidence for ricardian equivalence and its findings are contrasted to those of conventional narrative review furthermore mra establishes a platform from which to distinguish genuine empirical effect from the exploitable specification error that infests applied econometrics

armington elasticities for energy policy modeling evidence from four european countries elasticities of substitution among imports and competing domestic production armington elasticities play an important role in computable general equilibrium cge assessments of energy and climate policy this paper provides estimates of armington elasticities for 15 commodity groups in four european countries since armington elasticities are found to be rather low on average researchers may want to reconsider the device of using high values of armington elasticities in cge models to avoid unrealistic competitiveness effects or emission leakage rates associated with energy or carbon taxes or other forms of energy related regulation estimated elasticities tend to be higher in the case of machinery and other investment goods than in the case of primary products ores and chemicals as well as consumer goods

armington models and terms of trade effects some econometric evidence for north america elasticities of substitution among u s imports from mexico canada the rest of the world and competing domestic production are estimated for twenty two mining and manufacturing sectors based on quarterly data for 1980 88 these elasticities will provide a benchmark for computable general equilibrium models of north american trade liberalization the authors also find that estimated armington elasticities are low and therefore researchers may want to reconsider the device of using high values of armington elasticities in multicountry computable general equilibrium models to avoid large terms of trade losses associated with preferential trade liberalization

relaxing intertemporal separability a rational habits model of labor supply estimated from panel data this article relaxes the assumption of separability of preferences over time that although implausible is usually maintained in life cycle labor supply models an empirically tractable rational habits model is specified and estimated on the basis of a 10 year sample of men from the michigan panel of income dynamics the effect of past hours of work in determining current hours decisions is found to be very important and well determined having allowed for permanent individual differences and for time effects

explaining the border effect the role of exchange rate variability shipping costs and geography this paper exploits a three dimensional panel data set of prices on 27 traded goods over 88 quarters across 96 cities in the us and japan we show that a simple average of good level real exchange rates tracks the nominal exchange rate well suggesting strong evidence of sticky prices focusing on dispersion in prices between city pairs we find that crossing the us japan border is equivalent to adding as much as 43 000 trillion miles to the cross country volatility of relative prices we turn next to economic explanations for this so called border effect and to its dynamics distance unit shipping costs and exchange rate variability collectively explain a substantial portion of the observed international market segmentation relative wage variability on the other hand has little independent impact on segmentation 2001 elsevier science b v all rights reserved

what type of finance matters for growth bayesian model averaging evidence this paper examines the effect of finance on long term economic growth using bayesian model averaging to address model uncertainty in cross country growth regressions the literature largely focuses on financial indicators that assess the financial depth of banks and stock markets these indicators are examined jointly with newly developed indicators that assess the stability and efficiency of financial markets once the finance growth regressions are subjected to model uncertainty the results suggest that commonly used indicators of financial development are not robustly related to long term growth however the findings from the global sample indicate that one newly developed indicator the efficiency of financial intermediaries is robustly related to long term growth

financial development and economic growth a meta analysis we analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth taken together the studies imply a positive and statistically significant effect but the individual estimates vary widely we find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results studies that do not address endogeneity tend to overstate the effect of finance on growth while the effect seems to be weaker in less developed countries the effect decreases worldwide after the 1980s our results also suggest that stock markets support faster economic growth than other financial intermediaries

model averaging and its use in economics the method of model averaging has become an important tool to deal with model uncertainty for example in situations where a large amount of different theories exist as are common in economics model averaging is a natural and formal response to model uncertainty in a bayesian framework and most of the paper deals with bayesian model averaging the important role of the prior assumptions in these bayesian procedures is highlighted in addition frequentist model averaging methods are also discussed numerical methods to implement these methods are explained and i point the reader to some freely available computational resources the main focus is on uncertainty regarding the choice of covariates in normal linear regression models but the paper also covers other more challenging settings with particular emphasis on sampling models commonly used in economics applications of model averaging in economics are reviewed and discussed in a wide range of areas among which growth economics production modelling finance and forecasting macroeconomic quantities

money and economic activity inventories and business cycles abstract incomplete information is a necessary condition for any real effects produced by monetary impulses an alternative to the local global inference problem is explored in this paper agents are confronted with permanent and transitory shocks even with full knowledge about the stochastic structure their best perception at any particular time will usually be erroneous prices for each period are set at the beginning of the period on the basis of market conditions the realization of the shock process thus creates a short run disequilibrium absorbed by inventory adjustments this adjustment translates perceived transitory monetary shocks into serially correlated output movements the analysis proceeds within the context of rational expectations it offers a generalization of equilibrium analysis in two respects prices are always in equilibrium relative to perceived conditions but they do not reflect all ongoing shocks quantity adjustments reflect the perceived transitory shocks the framework used involves moreover a stock flow interaction operated by inventory adjustments the stock flow interaction imposes at any time a future expected adjustment path for price level and quantities to the system s unique stock equilibrium a major implication of the analysis resolves a puzzle experienced in a recent paper by robert hall it reconciles intertemporal substitution with lagged effects of monetary impulses it also reconciles small and inconclusive cyclic movements in real wages with the occurrence of production function and large variations in unemployment lastly the nature of the inference problem determined by the pattern of incomplete information produces serially correlated movements conditioned on large permanent shocks

inventory behaviour and market power an empirical investigation abstract this paper examines the empirical relation between the market power of a firm and the level and variability of its inventories we suggest that firms with greater market power hold more inventories and that their inventories are more volatile these hypotheses were tested on a large sample of industrial firms using two different measures of market power and applying a number of estimation techniques the results strongly support our hypotheses

habit formation in consumer preferences evidence from panel data this paper tests for the presence of habit formation using household data a simple model of habit formation implies a condition relating the strength of habits to the evolution of consumption over time when the condition is estimated with food consumption data from the panel study on income dynamics the results yield no evidence of habit formation at the annual frequency this finding is robust to a number of changes in the specification it also holds for several proxies for nondurables and services consumption created by combining psid variables with weights estimated from consumer expenditure survey data

oligopoly and cost sharing in economies with public goods we study economies that involve both small and large traders as well as the choice of a public project within this framework we establish two sufficient conditions under which the set of competitive allocations coincides with the core our first core equivalence result holds under the assumption that there is a countably infinite set of large traders similar to each other the second result independent of the number of large traders requires the existence of a coalition of small traders with the same characteristics of the large traders finally we show how the generalized aubin approach to cooperation may dispense with both conditions

relative price dispersion and economic shocks an inventory adjustment approach the issue of relative price dispersion rpd has gained prominence in recent years as the economy was subject to economic shocks and to high and variable levels of inflation the concern about the increased rpd was due to its potentially harmful effect on the economy recently blejer and leiderman 4 evaluated empirically the effect of rpd on economic activity in the postwar united states and found that increased rpd leads to a decrease in the level of output and to an increase in the rate of unemployment israelsen and mcdonald 13 showed in a partial equilibrium context that when wage changes are firmly linked to the general price level and labor mobility between markets or industries is limited an increase in rpd may lead to increasing unemployment pischer 10 suggested that rpd is not necessarily harmful but when coupled with unexpected inflation it may be associated with information confusion leading to a loss through the misallocation of resources these concerns have raised the interest in understanding the factors causing and affecting rpd both theoretically and empirlcally the prevailing theoretical explanations of the factors affecting rpd are based on two main approaches c ne approach is based on misinformation type models inspired by lucas s work 14 where individuals are confused between aggregate shocks and relative marketspecific ones barro 3 and cukierman and wachtel 9 have proposed that the greater the vanance of the aggregate shocks the greater the rpd barro 3 pp

armington elasticities in intermediate inputs trade a problem in using multilateral trade data in this paper we find that the estimates of armington elasticities the elasticity of substitution between groups of products identified by country of origin obtained from multilateral trade data can differ from those obtained from bilateral trade data in particular the former tends to be higher than the latter when trade consists largely of intermediate inputs given that the variety of intermediate inputs traded across borders is increasing rapidly and that the effect of this increase is not adequately captured in multilateral trade data the evidence shows that the employment of multilateral trade data to estimate armington elasticities needs caution jel classification f14 c51 elasticites d armington dans le commerce des intrants intermediaires un probleme dans l utilisation des donnees sur le commerce international multilateral ce texte montre que les estimations des elasticites d armington c est a dire les elasticites de substitution entre groupes de biens d origines differentes basees sur les donnees de commerce multilateral peuvent etre differentes de celles obtenues en utilisant des donnees de commerce bilateral en particulier les premieres sont en general superieures aux secondes lorsque les echanges concernent surtout des biens intermediaires comme la variete des biens intermediaires echanges augmente rapidement et que les effets de cette augmentation ne sont pas captures de facon adequate dans les donnees de commerce multilateral notre resultat suggere la prudence lors de l estimation des elasticites d armington a partir de donnees de commerce multilateral

estimating the armington elasticity the importance of study design and publication bias abstract a key parameter in international economics is the elasticity of substitution between domestic and foreign goods also called the armington elasticity yet estimates vary widely we collect 3524 reported estimates of the elasticity construct 32 variables that reflect the context in which researchers obtain their estimates and examine what drives the heterogeneity in the results to account for model uncertainty we employ bayesian and frequentist model averaging to correct for publication bias we use newly developed non linear techniques our main results are threefold first there is publication bias against small and statistically insignificant elasticities second differences in results are best explained by differences in data aggregation frequency size and dimension third the elasticity implied by the literature after accounting for both publication bias and study quality lies in the range 2 5 5 1 with a median of 3 8

general equilibria in large economies with endogenous structure of division of labor abstract we study a general equilibrium model with specialization and division of labor the market coordinates all individuals decisions in choosing their patterns of specialization in order to utilize positive network effects of division of labor net of transaction costs we establish the equilibrium existence theorem the first and second welfare theorems and the core equivalence for a family of general equilibrium models with both possible increasing returns and transaction costs using an analytical framework with consumer producers economies of specialization and transaction costs we resurrect the spirit of the classical economics of the division of labor in a modern body of mathematical formalism

beyond publication bias abstract this review considers several meta regression and graphical methods that can differentiate genuine empirical effect from publication bias publication selection exists when editors reviewers or researchers have a preference for statistically significant results because all areas of empirical research are susceptible to publication selection any average or tally of significant insignificant studies is likely to be biased and potentially misleading meta regression analysis can see through the murk of random sampling error and selected misspecification bias to identify the underlying statistical structures that characterize genuine empirical effect meta significance testing and precision effect testing pet are offered as a means to identify empirical effect beyond publication bias and are applied to four areas of empirical economics research minimum wage effects union productivity effects price elasticities and tests of the natural rate hypothesis

economies with public projects efficiency and decentralization the article deals with the two fundamental theorems of welfare economics for production economies with a finite set of agents infinitely many private goods and a set of public projects the problem of efficiency and decentralization is addressed under the following very general assumptions a the commodity price duality is endowed with a consistent locally convex topology b the set of public projects is without any mathematical structure moreover any agent is characterized by a nonordered preference relation depending on consumption goods and public projects approximate and exact welfare theorems are discussed throughout the article

what works a meta analysis of recent active labor market program evaluations we summarize the estimates from over 200 recent studies of active labor market programs we classify the estimates by type of program and participant group and distinguish between three different post program time horizons using regression models for the estimated program effect for studies that model the probability of employment and for the sign and significance of the estimated effect for all the studies in our sample we conclude that 1 average impacts are close to zero in the short run but become more positive 2 3 years after completion of the program 2 the time profile of impacts varies by type of program with larger average gains for programs that emphasize human capital accumulation 3 there is systematic heterogeneity across participant groups with larger impacts for females and participants who enter from long term unemployment 4 active labor market programs are more likely to show positive impacts in a recession

cross country heterogeneity in intertemporal substitution abstract we collect 2735 estimates of the elasticity of intertemporal substitution in consumption from 169 published studies that cover 104 countries during different time periods the estimates vary substantially from country to country even after controlling for 30 aspects of study design our results suggest that income and asset market participation are the most effective factors in explaining the heterogeneity households in rich countries and countries with high stock market participation substitute a larger fraction of consumption intertemporally in response to changes in expected asset returns micro level studies that focus on sub samples of rich households or asset holders also find systematically larger values of the elasticity

the provision of collective goods through a social division of labour abstract we develop a general equilibrium framework in which a wide range of collective economic configurations are provided through specialised professionals as part of an endogenously emerging social division of labour we extend the theory of value to this setting bringing together a model of an economy with collective goods with the model of a private goods market economy with an endogenously emerging social division of labour natural applications are the presence of non tradables in production the effects of education on productive abilities and the market system itself as an implementation of the price mechanism for an appropriately generalised notion of valuation equilibrium we prove the two fundamental theorems of welfare economics under very general conditions notably allowing for incomplete non monotonic and non transitive preferences we also incorporate adam smith s principle of increasing returns to specialisation and establish that there emerge well structured social divisions of labour in equilibrium

are all economic facts greatly exaggerated theory competition and selectivity there is growing concern and mounting evidence of selectivity in empirical economics most empirical economic literatures have a truncated distribution of results the aim of this paper is to explore the link between publication selectivity and theory contests this link is confirmed through the analysis of 87 distinct empirical economics literatures involving more than three and a half thousand separate empirical studies using objective measures of both selectivity and contests our meta meta analysis shows that publication selection is widespread but not universal it distorts scientific inference with potentially adverse effects on policy making but competition and debate between rival theories reduces this selectivity and thereby improves economic inference

natural resources and economic growth a meta analysis summary an important question in development studies is how natural resources richness affects long term economic growth no consensus answer however has yet emerged with approximately 40 of empirical papers finding a negative effect 40 finding no effect and 20 finding a positive effect does the literature taken together imply the existence of the so called natural resource curse in a quantitative survey of 605 estimates reported in 43 studies we find that overall support for the resource curse hypothesis is weak when potential publication bias and method heterogeneity are taken into account our results also suggest that four aspects of study design are especially effective in explaining the differences in results across studies 1 controlling for institutional quality 2 controlling for the level of investment activity 3 distinguishing between different types of natural resources and 4 differentiating between resource dependence and abundance

the pure theory of public goods efficiency decentralization and the core the authors extend the findings of mas colell on valuation equilibria and the relationship of cost share equilibria with the core they allow for any finite number of private goods and a set of public projects without any structure the authors show the two welfare theorems for valuation equilibrium the inclusion of the set of cost share equilibria in the core and the nonequivalence of these two sets for an economy with a finite number of agents copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

bank competition and financial stability much ado about nothing the theoretical literature gives conflicting predictions on how bank competition should affect financial stability and dozens of researchers have attempted to evaluate the relationship empirically we collect 598 estimates of the competition stability nexus reported in 31 studies and analyze the literature using meta analysis methods we control for 35 aspects of study design and employ bayesian model averaging to tackle the resulting model uncertainty our findings suggest that the definition of financial stability and bank competition used by researchers influences their results in a systematic way the choice of data estimation methodology and control variables also affects the reported coefficient we find evidence for moderate publication bias taken together the estimates reported in the literature suggest little interplay between competition and stability even when corrected for publication bias and potential misspecifications this abstract was borrowed from another version of this item

refinements on macroeconomic modeling the role of non separability and heterogeneous labor supply abstract this paper proposes a dynamic stochastic general equilibrium model characterized by heterogenous labor schedules and non separability between consumption and labor in the utility function the model successfully describes output consumption investment and interest rates after a monetary expansion the proposed formulation improves on standard models by using preferences favored by the data and by requiring investment adjustment costs and habit formation parameters more in line with the micro based evidence

dynamics of the trade balance and the terms of trade the j curve the authors provide a theoretical interpretation of two features of international data the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in terms of trade but positively correlated with past movements they document the same properties in a two country stochastic growth model in which trade fluctuations reflect in large part the dynamics of capital formation the authors find that their general equilibrium perspective is essential the relation between the trade balance and the terms of trade depends critically on the source of fluctuations copyright 1994 by american economic association

the origins of inequality insiders outsiders elites and commoners hereditary economic inequality is unknown among mobile foragers but hereditary class distinctions between elites and commoners exist in some sedentary foraging societies with agriculture such stratification tends to become more pronounced we develop a model to explain the associations among productivity population property rights and inequality using malthusian dynamics we show that regional productivity growth leads to enclosure of the best sites first creating inequality between insiders and outsiders hereditary elite and commoner classes subsequently arise at the best sites food consumption becomes more unequal and commoners become poorer these predictions are consistent with a wide range of archaeological evidence

the us gains from trade valuation using the demand for foreign factor services about 8 cents out of every dollar spent in the united states is spent on imports what if because of a wall or some other extreme policy intervention imports were to remain on the other side of the us border how much would us consumers be willing to pay to prevent this hypothetical policy change from taking place the answer to this question represents the welfare cost from autarky or equivalently the welfare gains from trade in this article we discuss how to evaluate these gains using the demand for foreign factor services the estimates of gains from trade for the us economy that we review range from 2 to 8 percent of gdp

measuring intertemporal substitution the importance of method choices and selective reporting i examine 2 735 estimates of the elasticity of intertemporal substitution in consumption eis reported in 169 published studies the literature shows strong selective reporting researchers discard negative and insignicant estimates too often which pulls the mean estimate up by about 0 5 the reporting bias dwarfs the effects of methods with the exception of the choice between micro and macro data when i correct the mean for the bias for macro estimates i get zero even though the reported t statistics are on average two the corrected mean of micro estimates of the eis for asset holders is around 0 3 0 4 calibrations greater than 0 8 are inconsistent with the bulk of the empirical evidence jel e21 c83

how well can the new open economy macroeconomics explain the exchange rate and current account abstract this paper advances the new open economy macroeconomic literature in an empirical direction estimating and testing a two country model fit to u s and g7 data the model performs moderately well for the exchange rate and current account results offer guidance for future theoretical work parameter estimates lend support to the assumption of local currency pricing estimates are found for key parameters commonly calibrated in the theoretical literature such as the elasticity of substitution between home and foreign composite goods and the response of a country s risk premium to the net foreign asset position results also indicate that deviations from interest rate parity are not closely related to monetary policy shocks as recently hypothesized but that these deviations are strongly related to shifts in the current account

international pricing in a generalized model of ideal variety we examine international markups and pricing in a generalized version of lancaster s ideal variety model in this model entry causes crowding in variety space so that the marginal utility of new varieties falls as market size grows crowding is partially offset by income effects as richer consumers will pay more for varieties closer matched to their ideal types we show theoretically and confirm empirically that declining marginal utility of new varieties results in a higher own price elasticity of demand and lower prices in large countries and a lower own price elasticity of demand and higher prices in rich countries the model is also useful for generating facts from the literature regarding cross country differences in the rate of variety expansion

explaining armington what determines substitutability between home and foreign goods for decades trade economists have modeled imperfect substitution between home and foreign goods in consumption often called the armington assumption with little analysis of what explains the wide variation in these substitution elasticities across sectors using a varying coefficients model the authors estimate armington elasticities between u s domestic and foreign goods across over one hundred industrial sectors from 1980 to 1988 and examine the role of product industry political and home bias factors as determinants they find strong support that the presence of foreign owned affiliates affects armington elasticities in important ways and some support that entry barriers and union presence have an effect

determinants of horizontal spillovers from fdi evidence from a large meta analysis summary the voluminous empirical research on horizontal productivity spillovers from foreign investors to domestic firms has yielded mixed results in this paper we collect 1 205 estimates of spillovers and examine which factors influence spillover magnitude our results suggest that horizontal spillovers are on average zero but that their sign and magnitude depend systematically on the characteristics of the domestic economy and foreign investors foreign investors who form joint ventures with domestic firms and who come from countries with a modest technology edge create the largest benefits for the domestic economy

remittances and economic growth a meta analysis abstract expatriate workers remittances represent an important source of financing for low and middle income countries no consensus however has yet emerged regarding the effect of remittances on economic growth in a quantitative survey of 538 estimates reported in 95 studies we find that approximately 40 of the studies report a positive effect 40 report no effect and 20 report a negative effect our results indicate publication bias in favor of positive effects correcting for the bias using recently developed techniques we find that the mean effect of remittances on growth is still positive but economically small nevertheless our results uncover noticeable regional differences remittances are growth enhancing in asia but not in africa studies that do not control for alternative sources of external finance such as foreign aid and foreign direct investment mismeasure the effect of remittances finally time series studies and studies ignoring endogeneity issues report systematically larger effects of remittances on growth

the impact of data revisions on the robustness of growth determinants a note on determinants of economic growth will data tell summary ciccone and jarocinski american economic journal macroeconomics 2010 2 222 246 show that inference in bayesian model averaging bma can be highly sensitive to small data perturbations in particular they demonstrate that the importance attributed to potential growth determinants varies tremendously over different revisions of international income data they conclude that agnostic priors appear too sensitive for this strand of growth empirics in response we show that the found instability owes much to a specific bma set up first comparing the same countries over data revisions improves robustness second much of the remaining variation can be reduced by applying an evenly agnostic but flexible prior copyright 2012 john wiley sons ltd

habit formation and intertemporal substitution in individual food consumption individual food consumption data are used to examine three issues first is food consumption linked intertemporally at the individual level second does the association between current and past consumption reflect habit or heterogeneity third what do the estimates imply about the intertemporal elasticity of substitution the authors find that habit matters that controlling for heterogeneity reduces estimated habit effects and that the product of the estimated intertemporal elasticity of substitution and the risk aversion parameter is less than one these results all lead to rejection of time separable specifications of intertemporal consumption behavior copyright 1996 by mit press

does inflation increase after a monetary policy tightening answers based on an estimated dsge model abstract this paper estimates the importance of the cost channel of monetary policy in a new keynesian model of the business cycle a model with nominal and real rigidities is extended by assuming that a fraction of firms need to borrow money to pay their wage bill hence a monetary policy tightening increases effective unit labor costs of production and might imply an increase in inflation the paper examines the conditions under which the model can generate a positive response of inflation to a monetary contraction and estimates the model s parameters using bayesian methods the paper shows that the estimated demand side effects of monetary policy dominate the estimated supply side effect even if restrictions are imposed that make occurrence of a positive inflation response to a monetary contraction more likely

model averaging in economics an overview standard practice in empirical research is based on two steps first researchers select a model from the space of all possible models second they proceed as if the selected model had generated the data therefore uncertainty in the model selection step is typically ignored alternatively model averaging accounts for this model uncertainty in this paper i review the literature on model averaging with special emphasis on its applications to economics finally as an empirical illustration i consider model averaging to examine the deterrent effect of capital punishment across states in the usa

the power of bias in economics research we investigate two critical dimensions of the credibility of empirical economics research statistical power and bias we survey 159 empirical economics literatures that draw upon 64 076 estimates of economic parameters reported in more than 6 700 empirical studies half of the research areas have nearly 90 of their results under powered the median statistical power is 18 or less a simple weighted average of those reported results that are adequately powered power 80 reveals that nearly 80 of the reported effects in these empirical economics literatures are exaggerated typically by a factor of two and with one third inflated by a factor of four or more

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

reporting guidelines for meta analysis in economics meta analysis has become the conventional approach to synthesizing the results of empirical economics research to further improve the transparency and replicability of the reported results and to raise the quality of meta analyses the meta analysis of economics research network has updated the reporting guidelines that were published by this journal in 2013 future meta analyses in economics will be expected to follow these updated guidelines or give valid reasons why a meta analysis should deviate from them

an ex ante model for estimating the impact on trade flows of a country s accession to a customs union this paper presents a structural ex ante model to study the trade creation and trade diversion effects associated with a country s accession to a customs union the model extends previous studies by introducing explicitly product differentiation and exports in the determination of trade creation and trade diversion unlike the traditional vinerian analysis where the role of exports is neglected the model handles the effects of the elimination of the common external tariff facing home exports the model is then applied to portugal s accession to the european community and estimates of trade substitution elasticities are presented for 26 sectors finally these elasticities are used along with other parameter estimates to classify sectors according to whether they would give rise to trade creation or trade diversion

measuring the income elasticity of water demand the importance of publication and endogeneity biases we present the first study that examines the effects of publication selection in the literature estimating the income elasticity of water demand paradoxically more affected by publication selection are the otherwise preferable estimates that control for endogeneity attempting to correct simultaneously for publication and endogeneity biases we find that the mean underlying elasticity is approximately 0 15 or less the result is robust to controlling for more than 30 characteristics of the estimates and accounting for model uncertainty the differences in the reported estimates are systematically driven by differences in the tariff structure regional coverage data granularity and control for temperature

aggregate demand shifts income distribution and the linder hypothesis the intraindustry trade literature emphasizes nonhomothetic preferences and incomes as important determinants of aggregate demand and trade patterns the authors provide evidence for such preferences particularly that the structure of income driven demand shifts is related to indices of linder type product characteristics and that income distribution is a significant factor in determining aggregate expenditures these results imply that as general income levels rise the relative volume of trade in manufactured consumer goods should rise and the total volume of trade should rise independent of changes in the intercountry difference between income levels copyright 1996 by mit press

income elasticity of gasoline demand a meta analysis abstract in this paper we quantitatively synthesize empirical estimates of the income elasticity of gasoline demand reported in previous studies the studies cover many countries and report a mean elasticity of 0 28 for the short run and 0 66 for the long run we show however that these mean estimates are biased upwards because of publication bias the tendency to suppress negative and insignificant estimates of the elasticity we employ mixed effects multilevel meta regression to filter out publication bias from the literature our results suggest that the income elasticity of gasoline demand is on average much smaller than reported in previous surveys the mean corrected for publication bias is 0 1 for the short run and 0 23 for the long run

on the fit of new keynesian models this article provides new tools for the evaluation of dynamic stochastic general equilibrium dsge models and applies them to a large scale new keynesian model we approximate the dsge model by a vector autoregression and then systematically relax the implied cross equation restrictions and document how the model fit changes we also compare the dsge model s impulse responses to structural shocks with those obtained after relaxing its restrictions we find that the degree of misspecification in this large scale dsge model is no longer so large as to prevent its use in day to day policy analysis yet is not small enough to be ignored

habit formation in consumption a meta analysis abstract we examine 597 estimates of habit formation reported in 81 published studies the mean reported strength of habit formation equals 0 4 but the estimates vary widely both within and across studies we use bayesian and frequentist model averaging to assign a pattern to this variance while taking into account model uncertainty studies employing macro data report consistently larger estimates than micro studies 0 6 vs 0 1 on average the difference remains 0 5 when we control for 30 factors that reflect the context in which researchers obtain their estimates such as data frequency geographical coverage variable definition estimation approach and publication characteristics we also find that evidence for habits strengthens when researchers use lower data frequencies employ log linear approximation of the euler equation and utilize open economy dsge models moreover estimates of habits differ systematically across countries

to trade or not to trade economies with a variable number of tradeables we present a general equilibrium model that encompasses the endogenous selection and shadow pricing of a set of tradeable commodities with home based and social production activities in the model a market system is a set of costly social institutions which embody the trade and production technologies available in the economy our equilibrium concept describes the pricing of market institutions thus pricing the tradeability of a commodity we obtain the existence and the decentralization of pareto efficient allocations we discuss an example regarding the transition of a guild based economy into a market based economy

on the microeconomics of specialization abstract we consider individual consumer producers who operate within a perfectly competitive market economy with transaction costs presenting several propositions that characterize the optimal production and consumption plans of such a consumer producer first we show that under rather sparse conditions on production technologies and consumer preferences there exists a solution to the consumer producer optimization problem if transaction costs are asymptotically high second under strengthened properties on consumer preferences there exists such a solution even in the absence of transaction costs third we discuss the conditions under which a consumer producer specializes to different degrees these results generalize the existing results in the literature

the division of labor coordination costs and knowledge this paper considers specialization and the division of labor a more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills the traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market we claim that the degree of specialization is more often determined by other considerations especially emphasized are various costs of coordinating specialized workers who perform complementary tasks and the amount of general knowledge available