agricultural productivity and convergence europe and the united states this article applies the window malmquist index wmi approach to measure changes in agricultural total factor productivity tfp for the united states and a sample of nine european countries for the period 1973 to 1993 the dataset used in this article is obtained from ball et al 2001 the wmi is constructed by combining data envelopment analysis window analysis with the malmquist index approach furthermore the kruskal and wallis rank test is used for testing frontier shifts among observed periods the article also explores the question of convergence in tfp across the countries under consideration by testing for and convergence as well as for stochastic or long run convergence the results show wide variation in the rate of tfp growth across countries with an average trend growth rate of 1 62 the results indicate the presence of convergence but the absence of convergence for the full period under consideration but the presence of both and convergence for the sub period 1983 to

human capital inequality and economic growth some new evidence this paper provides new measures of human capital inequality for a broad panel of countries taking attainment levels from barro and lee 2001 we compute gini coefficients and the distribution of education by quintiles for 108 countries over five year intervals from 1960 to 2000 using this new cross country data on human capital inequality two main conclusions are obtained first most countries in the world have tended to reduce the inequality in human capital distribution second human capital inequality measures provide more robust results than income inequality measures in the estimation of standard growth and investment equations

making inferences about the polarization welfare and poverty of nations a study of 101 countries 1970 1995 stochastic dominance techniques are adapted and employed to study the extent and progress of polarization welfare and poverty of 101 nations over the period 1970 1995 the adaptations provide methods of comparing mass relocation by evaluating various degrees of right and left separation between distributions the results reveal that whilst welfare increased and then diminished and poverty diminished and then increased polarization between rich and poor countries continued unabated throughout the period emphasizing the distinction between polarization and inequality copyright 2004 john wiley sons ltd

educational human capital and levels of income evidence from states in india 1965 92 abstract this paper examines the long run steady state relationship between levels of educational human capital and levels of income for the 15 major states of india between 1965 and 1992 the relationship is estimated using the pooled mean groups pmg technique which produces common long run coefficients but allows heterogeneity of the short run adjustment parameters the results suggest that levels of educational human capital proxied by high school enrollment rates have a robust positive impact on steady state levels of income this is true for male and female education and the regressions also suggest that states which have larger gender gaps in education have lower steady state incomes the estimated relationship is robust to the inclusion of alternative measures added controls and variation in the degree of state coverage

selling to overconfident consumers consumers may overestimate the precision of their demand forecasts this overconfidence creates an incentive for both monopolists and competitive firms to offer tariffs with included quantities at zero marginal cost followed by steep marginal charges this matches observed cellphone service pricing plans in the us and elsewhere an alternative explanation with common priors can be ruled out in favor of overconfidence based on observed customer usage patterns for a major us cellular phone service provider the model can be reinterpreted to explain the use of flat rates and late fees in rental markets and teaser rates on loans nevertheless firms may benefit from consumers losing their overconfidence

estimating demand for local telephone service with asymmetric information and optional calling plans in this paper i study the theoretical and econometric implications of agents uncertainty concerning their future consumption when a monopolist offers them either a unique mandatory nonlinear tariff or a choice in advance from a menu of optional two part tariffs agents uncertainty is resolved through individual and privately known shocks to their types in such a situation the principal may screen agents according to their ex ante or ex post type by offering either a menu of optional tariffs or a standard nonlinear schedule the theoretical implications of the model are used to evaluate a tariff experiment run by south central bell in two cities in kentucky in 1986 the empirical approach explicitly accounts for the existence of informational asymmetries between local telephone users and the monopolist leading to different nested econometric specifications under symmetric and asymmetric information the empirical evidence suggests that there exists a significant asymmetry of information between consumers and the monopolist under both tariff regimes all expected welfare components failed to increase with the introduction of optional tariffs for the estimated value of the parameters copyright 2002 wiley blackwell

institutions infrastructure and economic growth abstract this paper develops a structural model of infrastructure and output growth that takes account of institutional and economic factors that mediate in the infrastructure gdp interactions cross country estimates of the model indicate that the contribution of infrastructure services to gdp is substantial and in general exceeds the cost of provision of those services the results also shed light on the factors that shape a country s response to its infrastructure needs and offer policy implications for facilitating the removal of infrastructure inadequacies

inequality and growth in the united states why physical and human capital matter we investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation using an annual panel of u s state level data our analysis is based upon the unified framework offered by galor and moav 2004 while the empirics account for cross section dependence parameter heterogeneity and endogeneity in nonstationary series we conclude that changes in inequality do not influence growth neither in the short run nor in the long run in the united states as a whole in the 1929 2013 period our findings are robust to the inclusion of overall income inequality measures these findings provide support for the theoretical prediction of the unified theory of inequality and growth according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the united states experiences during our period of investigation therefore future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the united states jel i21 o47 c23

growth accounting with intermediate inputs and the transmission of technical change abstract the aggregate rate of total factor productivity growth tfpg when there are intermediate inputs can be expressed either as a weighted average or as a weighted sum of the sectoral rates depending on the choice of sectoral rates being weighted the agrument that there is a magnification effect due to the transmission of tfpg through the intersectoral flows among sectors is therefore to be more illusory than real

why has under 5 mortality decreased at such different rates in different countries controlling for socioeconomic and geographic factors under 5 mortality 5q0 in developing countries has been declining at about 2 7 per year a high rate of technical progress this paper adduces theoretical and empirical reasons for rejecting the usual specification of homogeneous technical progress across countries and uses a panel of 95 developing countries for the period 1970 2000 to explore the consequences of heterogeneity allowing country specific rates of technical progress sharply reduces the estimated income elasticity of 5q0 and points to country variation in technical progress as the principal source of the large cross country variation in 5q0 decline education levels and physician coverage also contribute and are less affected than income of allowing country variation in technical progress the paper concludes by decomposing 1970 2000 5q0 decline into its different sources for each country

on the heterogeneous impact of public capital and current spending on growth across nations abstract this paper captures the heterogeneous impact on growth of public capital and current spending for 15 developing countries using the gmm system panel estimator we show that countries with substantial public capital current spending have strong negative positive growth effects

the services sector in india s states a tale of growth convergence and trade india s success story in services is well documented at the national level but similar literature does not exist for india s states we bridge this gap by studying india s services growth at the sub national level contrary to earlier commentary on the unsustainability of india s services growth process our findings suggest that per capita services may be converging across indian states this is not true of per capita income unlike previous studies on india evidence is provided using both traditional sigma and beta convergence measures and advanced panel unit root tests from the recent econometrics literature a disaggregated analysis of services sectors reveals convergence in railways public administration and financial services finally a jensen and kletzer approach to determine tradability and an additional original methodology provide evidence of most services being traded across india s states suggesting the role of such trade in the services growth story even at the sub national level

optimal nonlinear pricing and contingent contracts rationing of output may be required to allocate resources when it is costly to operate a system of spot markets in electric power markets for example interruptible service is the most frequently used form of capacity sensitive allocation after time of use pricing this paper examines the welfare properties and ease of implementation of alternative rationing rules and the pricing of contracts based on rationing rules the model allows for both demand and supply shocks the theoretical analysis is illustrated by application to curtailment rules and pricing in electric power markets rationing rules are a means of sharing risk and joint costs insurance provides a means of sharing the financial costs of random events however there are additional welfare gains to be obtained from pooling physical quantities of goods in the presence of random demand and supply see spulber 1985 by rationing goods the common costs of production or productive capacity can be reduced while also reducing individual risk this explains in part the extensive attention devoted to rationing of electric power electric power is subject to significant randomness in both supply and demand allocation mechanisms based on prices that adjust in real time on complete contingent contracts or on renegotiation of contracts in response to new information can involve prohibitive transaction costs avoidance of the need to ration would require inefficiently high capacity investment electric utilities must therefore employ rationing rules these rules must be

productivity convergence in japan s manufacturing industries abstract this paper studies the question of convergence of labor productivity in 12 manufacturing industries in japan during 1985 to 1997 using the transition matrix for analysis our results indicate that manufacturing industries do not display a pattern of convergence

social capital barriers to production and capital shares implications for the importance of parameter heterogeneity from a nonstationary panel approach recent advances in the growth literature have proposed that difficult to quantify concepts such as social capital may play an important role in explaining the degree of persistent income disparity that is observed among countries other recently explored possibilities include institutional mechanisms which generate barriers to aggregate production an important limitation for empirical work in this area stems from the fact that it is difficult to distinguish sources of heterogeneity when direct observations are not available in this study we show how developments in the analysis of nonstationary panels can aid in this endeavor in contrast to traditional dynamic panel data analysis this approach focuses explicitly on low frequency behavior under relatively mild assumptions the approach can be used to infer properties of aggregate production which are robust to the presence of large classes of unobserved features in this framework we are able to estimate and test the distribution of production function parameters that would be required in order to generate conditional forecast convergence of per capita incomes even when some of the key factors required to explain growth are unobserved the results indicate that in order to fully explain the observed persistence in the disparity of per capita incomes the manner in which unobserved mechanisms influence production must go beyond merely accounting for differences in the trending behavior of aggregate productivity specifically if such mechanisms are to be successful empirically they must also be able to account for cross country heterogeneity in steady state capital shares this adds to a growing literature that provides support for models with multiple production regimes copyright 2007 john wiley sons ltd

bonus pools and the informativeness principle abstract previous work on moral hazard problems has shown that under certain conditions bonus contracts create optimal individual incentives for risk neutral workers in our paper we demonstrate that if a firm employs at least two workers it may further benefit from combining worker compensation via a bonus pool contract and relative performance evaluation such combination leads to saved rents under a wide class of luck distributions in addition if the employer is wealth constrained complementing individual bonus contracts by the possibility of pooling bonuses can increase the set of implementable effort levels all our results hold even though workers outputs are technically and stochastically independent so that in view of holmstrom s informativeness principle individual bonus contracts would be expected to dominate bonus pool contracts

productivity across industries and countries time series theory and evidence the authors examine whether convergence in aggregate productivity is also occurring at the industry level in fourteen oecd countries from 1970 to 1987 using both cross section and time series methods they find convergence in some sectors such as services however surprisingly the authors find that convergence does not hold for the manufacturing sector decomposing aggregate convergence into industry productivity gains and changing sectoral shares of output they find the service sector to be responsible for the bulk of cross country convergence to the united states the authors develop a new result on the asymptotic normality of panel unit root estimators to formally test within sector convergence copyright 1996 by mit press

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

growth empirics a panel data approach a reply research on convergence has indeed proceeded through several stages in the first represented by such works as baumol 1986 convergence was studied under the implicit assumption that all countries of the sample had the same steady state levels of income this notion of convergence later came to be known as absolute convergence in the second stage represented by papers such as barro and sala i martin 1992 and mankiw romer and weil 1992 the concept of conditional convergence was put forward and rigorously defined it was now emphasized that the growth theory did not imply identical steady state levels of income for all countries and that in studying convergence these differences needed to be allowed however differences in steady state levels were considered under the assumption of parametric homogeneity of the underlying production function yet the assumption that all countries have identical production functions and differ only in the value of the variables of this function and not in its parameters was neither appealing nor tenable in the third stage represented by such works as islam 1995 this assumption of strict parametric homogeneity was relaxed and through the use of panel data methodology the aggregate production function was allowed to differ across countries with respect to the productivity shift parameter however this introduction of heterogeneity was still within the general framework of allowing only the steady state level of income to differ across countries and it maintained the assumption that countries shared the same steady state growth rate it is in this latter respect that lee pesaran and smith 1995 and their current comment 1998 on the basis of that work represent a significant change they have extended the use of the panel data method to allow the countries to differ not only with regard to the steady state level but also with respect to the steady state growth rate g when this is done the rate of convergence a according to their maximum likelihood estimation jumps to 0 23 clearly a different estimation method is not the main reason for this substantial increase because when g is

drifting together or falling apart the empirics of regional economic growth in post unification germany the objective of this article is to address the question of convergence across german districts in the first decade after german unification by drawing out and emphasizing some stylized facts of regional per capita income dynamics we achieve this by employing nonparametric techniques which focus on the evolution of the entire cross sectional income distribution in particular we follow a distributional approach to convergence based on kernel density estimation and implement a number of tests to establish the statistical significance of our findings this article finds that the relative income distribution appears to be stratifying into a trimodal bimodal distribution

the welfare performance of sequential pricing mechanisms consumers are commonly required to subscribe to particular tariff options before uncertainty regarding their future purchases gets resolved since the general comparison of welfare performance of different pricing mechanisms is ambiguous this article empirically evaluates the expected welfare associated with standard nonlinear pricing and optional tariffs by using information directly linked to the type of individual consumers results show that tariffs composed of nonlinear options do not necessarily outperform simpler pricing strategies in terms of expected profits furthermore evidence suggests that a menu of optional two part tariffs dominates any other pricing strategy from an expected welfare perspective

noisy observation in adverse selection models we consider a principal agent contracting problem under incomplete information where some of the agent s actions are imperfectly observable contracts take the form of reward schedules based on the noisy observation of the agent s action we first review situations where the principal can reach the same utility as in the absence of noise then we focus on the use of linear reward schedules which allow universal implementation i e implementation of a given mechanism for any unbiased noise of observation and on quadratic reward schedules which only require the knowledge of the variance of the noise we exhibit sufficient conditions under which linear reward schedules implement a given mechanism finally we characterize necessary conditions for a mechanism to be implementable under noisy observation by a linear schedule and by quadratic schedules we give the geometric intuition behind all results

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

multi factor agricultural productivity efficiency and convergence in botswana 1981 1996 abstract this paper applies the sequential malmquist index to calculate multi lateral multi factor productivity mfp indices for agriculture in the 18 districts and the commercial sector of botswana from 1981 to 1996 the mfp index grew at an average rate of 1 7 per annum led by the regions that specialize in livestock which grew at well over 3 per annum this growth was powered by technological change at 4 per year but offset by technical efficiency falling at 2 4 per annum as the commercial sector and the better regions exploited new technologies and infrastructure whereas the less productive areas fell further behind the best practice frontier thus convergence tests show that the gap between the more productive and the poorer regions widened

the simple economics of extortion evidence from trucking in aceh this paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory we designed a study in which surveyors accompanied indonesian truck drivers on 304 trips during which they observed over 6 000 illegal payments to police soldiers and weigh station attendants using plausibly exogenous changes in the number of checkpoints we show that market structure affects the level of illegal payments we further show that corrupt officials use complex pricing schemes including third degree price discrimination and a menu of two part tariffs our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy

solow 1956 as a model of cross country growth dynamics despite the widespread popularity of the solow growth model much of the recent empirical work based on the classic framework misrepresents a crucial feature of the model namely the growth rate of technological progress assumed to be exogenous in the solow model is often identied as being constant across countries this simplication of the behavior of technological progess runs counter to the evidence and has had a number of signican t implications for the interpretation of the solow model one implication has been an overemphasis on the role of factor accumulation in explaining cross country income dieren tials in addition the commonly cited empirical result that the speed of conditional convergence is slower than predicted by the solow model is a function of this inaccurate assumption about technology rather than due to a failure of the model itself

technological change technological catch up and capital deepening relative contributions to growth and convergence we decompose labor productivity growth into components attributable to 1 technological change shifts in the world production frontier 2 technological catch up movements toward or away from the frontier and 3 capital accumulation movement along the frontier the world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections we analyze the evolution of the cross country distribution of labor productivity in terms of the tripartite decomposition finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening jel o30 o47 d24

economic information versus quality variation in cross country data data quality in the penn world tables varies systematically across countries that have different growth rates and are at different stages of economic development thus intro ducing measurement error correlated with variables of economic interest we explore this problem with three examples from the literature showing that the problem appears to be minor in growth convergence regressions but serious in estimating the effect of income volatility on growth and in a cross country lest of the permanent income hypothesis the results suggest at the least a need for performing appropriate sensitivity tests before draw

determinants and costs of current account reversals under heterogeneity and serial correlation using large panel data sets for analysis of determinants and costs of reversals asks for controls of latent heterogeneity among countries this article performs a bayesian analysis which allows for a parsimonious yet flexible handling of country specific heterogeneity via random coefficients and serially correlated errors consideration of persistence within the employed macroeconomic data is important to gauge the impact of explaining variables suggested by theory correctly bayesian specification tests provide evidence in favour of models incorporating heterogeneity and serial correlation the results suggest that costs of reversals are overestimated when country specific heterogeneity is neglected and stress the importance of external variables in explaining current account reversals results are checked for robustness against the underlying reversal definition

transitional dynamics in an r d based growth model with imitation comparing its predictions to the data abstract employing cross country data this paper evaluates the transitional dynamics predictions of a non scale growth model of endogenous technology innovation and imitation we show that unlike the neoclassical growth framework the transitional dynamics of the rd 1995 quartely journal of economics 110 641 680 with the importance of technology transfer

fiscal equalization and composition of subnational government spending implications for regional convergence this study examines the impact of fiscal equalization payments on the composition of government spending under endogenous growth theory analytical conjectures stemming from the model are tested em

price elasticities for local telephone calls price elasticities are estimated for local telephone calls and minutes of conversation using data from a pricing experiment in central illinois conducted by general telephone and electronics the experiment charges separately for calls and for minutes using a model that is consistent with the theory of telephone demand the authors estimate the effects of both prices the nonlinear generalized least squares estimates of the elasticities are fairly small about 0 1 or less in absolute value at experimental price levels but they are estimated with high precision the report briefly considers the application of these results to predict the effects of introducing measured service telephone rates in other cities residential telephone subscribers in the united states typically pay a flat monthly rate for local service with no extra charge for calls within the local area the alternative of explicitly charging for local calls commonly referred to as usage sensitive pricing or local measured service is of increasing interest to u s telephone companies and regulatory commissions cosgrove and linhart 5 garfinkel and linhart 8 baude ed 2 3 charging for calls that are now free clearly holds promise of increasing economic efficiency alleman 1 mitch

economic transition and growth some extensions of neoclassical growth models are discussed that allow for cross section heterogeneity among economies and evolution in rates of technological progress over time the models oer a spectrum of transitional behavior among economies that includes con vergence to a common steady state path as well as various forms of transitional divergence and convergence mechanisms for modeling such transitions and measuring them econo metrically are developed in the paper a new regression test of convergence is proposed its asymptotic properties are derived and some simulations of its nite sample properties are reported transition curves for individual economies and subgroups of economies are estimated in a series of empirical applications of the methods to regional us data oecd data and penn world table data

sources of productivity growth an empirical analysis with german sectoral data many theoretical analyses of the sources of economic growth focus on knowledge spillovers and scale economies to explain growth endogenously the contribution of this paper is to shed some light on these arguments by an empirical investigation based on a production function framework sectoral production functions are estimated with annual german data of 51 sectors from 1960 90 the estimates reveal that both a pure solow growth model and a solow model augmented with human capital cannot account for the observed productivity increases the model should be extended by allowing for inter industry spillovers and scale economies at the aggregate level as well as for scale economies associated with human capital at the sectoral level the business cycle affects observed productivity changes in the short run and in the long run

agriculture s terms of trade issues and implications the article addresses 1 the issue of what agricultural commodity prices should be compared to if we are concerned with the welfare of agriculturalists 2 the general absence of product quality adjustment when analysis is undertaken comparing agricultural to manufactured goods prices 3 the extent to which energy prices are or will be the driver of both manufactured and agricultural prices and 4 the importance of considering agriculture s terms of trade tot against the service sector since the service sector is typically the largest in the economy it reflects on the basic question of whether the widespread perception that agriculture s tot secularly decline is correct

supplying information to facilitate price discrimination the authors examine the incentive of a seller to allow potential buyers to acquire private information about their tastes for the seller s product improved private information for buyers enables the seller to segment the market and charge higher prices to high value buyers however improved information can also provide rents to buyers in a variety of settings this tradeoff is optimally resolved at one of two extremes either buyers are supplied with the best available knowledge of their tastes or no information is supplied by the seller copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

productivity convergence in oecd manufacturing industries the extent of and convergence of average labor productivity across manufacturing industries in 18 oecd countries over the period 1972 1992 shows large inter industry differences one reason for these differences is knowledge and capital barriers preventing the occurrence of catch up we find the level of average labor productivity as a proxy for these barriers is correlated with the extent of convergence

growth empirics a panel data approach a comment this paper comments on recent developments in the literature on the econometric analysis of international growth and convergence it notes that panel estimates of the neoclassical model accommodating level effects for individual countries through heterogeneous intercepts deal with some of the econometric difficulties arising in some of the earlier cross sectional studies but it notes that in dynamic panels heterogeneity in growth effects and in speeds of convergence renders this estimator inconsistent also the pervasiveness of such heterogeneity is demonstrated in three samples of countries and the effects of incorrectly imposing homogeneity on estimated parameters are illustrated and discussed

capital accumulation and growth a new look at the empirical evidence using annual data for 75 countries in the period 1960 2000 we present evidence of a positive relationship between investment as a share of gross domestic product gdp and the long run growth rate of gdp per worker this result is robust for our full sample and for the subsample of non oecd countries but not for the subsample of oecd countries our analysis controls for time invariant country specific heterogeneity in growth rates and for a range of time varying control variables we also address endogeneity issues and allow for heterogeneity across countries in model parameters and for cross section dependence

resource use and technological progress in agriculture a dynamic general equilibrium analysis we analyze the global effects of economic and population growth and the impact of a slowdown in agricultural total factor productivity tfp on agriculture and forest resources using a dynamic multi region computable general equilibrium model with land use and cover detail given the current consensus about the growth of the world economy our results suggest that food security will not be threatened and agricultural activities will not encroach on forest resources over the next decade a slowdown in agricultural tfp growth might lead to higher crop prices in all regions with south east asia facing the steepest increases a slowdown in agricultural tfp growth also might be accompanied by higher conversion rates of forestland to farmland as well as by greater environmental or ecological damages on the remaining forestland

sectoral regularities of productivity growth in developing countries a kaldorian interpretation this paper provides a kaldorian interpretation for empirical regularities of product ivity growth at the sectoral level of the economy the statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries based on novel non linear statistical techniques the findings show i a regular pattern of positive sectoral employment elasticities with respect to output growth ii robust differences across sectors in the magnitude of the employment elasticities and iii employment elasticities for all sectors that are signifi cantly less than unity suggesting strong evidence for increasing returns at the sector level of the economy

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

long run economic performance and the labor market 1 introductionthis article studies growth when the economy is not using all its productive resources to establish a bridge among two subdisciplines in economics growth theory and unemployment theory the former is dynamic and considers the impact on output of the growth in inputs under the assumption that unemployment is nonexistent the latter is static and considers the determination of the rate of unemployment under the assumption that the growth of capital is nonexistent our goal herein is twofold on one hand we want to modify slightly the growth models to include the effects of persistent unemployment on long run growth on the other we want to analyze the role played by the accumulation of capital in determining the unemployment rate the underlying assumption in the neoclassical growth model is that even if we admit sticky wages in the short run in the long run the labor market should have time to clear and the economy should return to full employment understood as the level of employment compatible with frictional unemployment therefore what is relevant when talking about growth is the growth of the labor force not the growth of the employed labor force however if the equilibrium employment level in the labor market persistently differs from the more desirable frictional level it is conceivable that this persistent deviation will have an impact on long run growth the average u s unemployment rate during the 1990s was 5 8 while countries such as france and spain maintained double digit unemployment rates in the 1980s and 1990s it seems intuitive that double digit unemployment during two decades should have long lasting effects on standards of living the disparate experiences of some european countries as opposed to the united states in terms of employment rates are due to very different institutional factors in the corresponding labor markets this article studies the impact of labor market institutional variables on long run growth despite a very large literature on both growth and unemployment few papers have jointly studied these two phenomena the exceptions are furuya 1998 and daveri and tabellini 2000 daveri and tabellini study the implications of an increase in labor taxes on both unemployment and economic growth the models in these two papers are of the overlapping generation class but whereas in furuya s the labor market does not clear because of the existence of efficiency wages in daveri and tabellini s the labor market does not clear because of the existence of a union our model is a simple variation of the standard solow model suitable for a first approximation to an empirical investigation of the interrelationship between economic growth and the labor market we use a variation of blanchflower and oswald s 1995 wage curve which is more suitable for integration with a growth model the wage curve shows an empirical inverse relation between unemployment and wage levels this inverse relation is consistent with models of noncompetitive wage determination basically we use a reduced form of the open trade union layard nickell layard and nickell 1985 1986 model of wage determination to explain why the equilibrium unemployment level differs from the frictional level a weakness of relying on trade union behavior to explain unemployment is that in most countries not all workers are unionized union membership varies greatly across countries but in most countries a large part of the labor force is nonunionized however blanchard and summers 1986 argue that the trade union model can be interpreted as describing the behavior of a group of workers that acts as a group even if there is no formal trade union the fact that both capital intensity and productivity affect the equilibrium unemployment rate is implicit in the layard nickell model we emphasize the importance of capital intensity in the determination of unemployment and incorporate unemployment into a growth model

linking fdi motivation and host economy productivity effects conceptual and empirical analysis we develop a taxonomy that relates foreign direct investment fdi motivation technology and cost based to its anticipated effects on host countries domestic productivity we then empirically examine the effects of fdi into the united kingdom on domestic productivity and find that different types of fdi have markedly different productivity spillover effects which are consistent with the conceptual analysis the uk gains substantially only from inward fdi motivated by a strong technology based ownership advantage as theory predicts inward fdi motivated by technology sourcing considerations leads to no productivity spillovers

cellular service demand biased beliefs learning and bill shock by april 2013 the fcc s recent bill shock agreement with cellular carriers requires consumers be notied when exceeding usage allowances will the agreement help or hurt consumers to answer this question we estimate a model of consumer plan choice usage and learning using a panel of cellular bills our model predicts that the agreement will lower average consumer welfare by 2 per year because rms will respond by raising monthly fees our approach is based on novel evidence that consumers are inattentive to past usage meaning that bill shock alerts are informative and advances structural modeling of demand in situations where multipart taris induce marginal price uncertainty additionally our model estimates show that an

informing consumers about their own preferences we analyze a model of monopolistic price discrimination where only some consumers are originally sufficiently informed about their preferences e g about their future demand for a utility such as electricity or telecommunication when more consumers become informed we show that this benefits also those consumers who remain uninformed as it reduces the firm s incentives to extract information rent by reducing the costs of information acquisition or forcing firms to supply consumers with the respective information about past usage policy can further improve welfare as contracts become more efficient the last observation stands in contrast to earlier findings by cremer and khalil american economic review 1992 where all consumers are uninformed

the effect of satellite entry on cable television prices and product quality how has the entry of satellite television affected the pricing and product quality of incumbent cable firms programming packages i estimate a model in which firms compete over both price and product quality as determined by what channels are offered satellite entry typically causes cable firms to raise quality and lower price however in some markets cable optimally responds by raising both price and quality or by lowering both price and quality a counterfactual scenario that eliminates quality competition results in on average softer price competition and lower aggregate consumer surplus but greater surplus for consumers with weaker preferences for quality

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

convergence in the oecd transitional dynamics or narrowing steady state differences i introduction research on growth and convergence has proceeded through several stages that can be described as a process of accommodating cross country heterogeneity into the convergence equation in the first stage the world could be described as countries approaching to equal absolute convergence or to different conditional convergence steady states in both cases see baumol 1986 barro and sala i martin 1992 or mankiw et al 1992 the assumption of parameter homogeneity of the underlying production function was assumed and not tested later some researchers knight et al 1993 islam 1995 durlauf and johnson 1995 or caselli et al 1996 among others began to challenge the view that the productivity shift parameter of the underlying production function is homogeneous across countries from an econometric point of view the transition from the first to the second stage made researchers resort to panel data methods that exploit the time dimension of data sets a natural extension to accommodate heterogeneity was developed in lee et al 1997 in this third stage the authors extended the use of panel data methods to allow for differences not only in the initial conditions the constant term but also in other coefficients of the production function and in the rate of technological progress itself if there is widespread heterogeneity there are substantial econometric difficulties in obtaining precise estimates of the speed of convergence in particular the estimated rate of convergence is biased downward in cross section regressions see lee et al 1997 or caselli et al 1996 suggesting a slower convergence rate than is actually the case 1 the pooled fixed effect estimator would partially solve the problem of accommodating level effects across countries through heterogeneous intercepts but in dynamic panels heterogeneity in speeds of convergence renders this estimator inconsistent too pesaran and smith 0995 show that the mean group estimator i e estimating the convergence equation separately for each country using annual data and averaging the coefficients is appropriate in this case nevertheless as recognized by these authors this procedure may also be subject to a small sample bias that can be important even for time dimensions as large as 30 years in this article we do not discuss further the advantages or shortcomings of these different econometric methods to estimate convergence equations 2 our aim is not presenting an alternative econometric method to estimate consistently the parameters in growth regressions rather we focus on some implications of the different econometric techniques that so far have been extensively used in the convergence literature and that have been largely unexplored to this end we present three well established estimation approaches as a benchmark of the way the literature has estimated convergence equations in some fundamental contributions and we explore the implications of parameter heterogeneity within the standard mankiw romer and weil theoretical framework cross section and fixed effects models lead us to conclude that the observed reduction in the dispersion of per capita incomes that has taken place among organisation for economic co operation and development oecd countries since the 1960s is mostly a process of transitional dynamics according to this interpretation the dispersion of the long run steady state features of oecd economies has remained fairly stable during the past 40 years if the dispersion of incomes has narrowed it is because these countries started from very different initial conditions and have been approaching their own steady state this is in accordance with the predictions of the standard exogenous growth model mean group estimates tell us a different story namely that the process of transitional dynamics has been negligible oecd countries have never been too far from their steady states and the reduction of dispersion is mostly explained in terms of convergence in steady states themselves that is in the long run determinants of per capita income savings rates human capital accumulation etc

choosing the wrong calling plan ignorance and learning when a firm offers several tariff options to its customers the possibility arises that they will make an ex post mistake in tariff choice this occurs since consumers cannot commit to a certain purchase level at the time they subscribe to the service option and thus they might find out later that a different choice of tariff could have resulted in a lower payment for their actual level of consumption this is a common feature of increasingly important subscriptions markets in which buyers and sellers maintain long term nonanonymous relations and where learning induces interesting dynamics on the one hand buyers may learn their taste over time thus making the right choice as times goes by on the other hand the seller may design options to identify the type of each buyer and if possible to extract a higher proportion of their consumer surplus by offering tariff options that are better tailored to the profile of the consumer this paper focuses on the first type of learning in turn i document buyer behavior in a subscriptions market using data from a tariff experiment run by south central bell scb in kentucky during the second half of 1986 the most frequently studied case of subscriptions markets is the choice among optional calling plans ocps in the telephone industry this paper shows that contrary to the conven

interaction between knowledge and technology a contribution to the theory of development this article attempts to explain the large and persistent disparities in levels of output per worker across countries it is argued that an explanation for these disparities requires an understanding of the relationship between knowledge and technology the model that is constructed can be summarized as an open economy version of the solow swan growth model in which technological change is investment specific and knowledge about new technologies is embodied in labour in the model income differences arise because poor countries lack the knowledge to implement foreign technologies productively furthermore these disparities persist when countries differ in their ability to learn jel

do all countries grow alike abstract this paper investigates the driving forces of output change in 77 countries during the period 1970 2000 a flexible modeling strategy is adopted that accounts for i the inefficient use of resources and ii different production technologies across countries the proposed model can identify technical efficiency and input change for each of three endogenously determined regimes membership in these regimes is estimated rather than determined ex ante this framework enables explorations into the determinants of output growth and convergence issues in each regime

consumer inertia choice dependence and learning from experience in a repeated decision problem abstract understanding when and how individuals think about real life problems is a central question in economics this paper studies the role of inertia inattention state dependence and learning the empirical setting is a tariff experiment when optional measured tariffs for local telephone calls were introduced unanticipatedly we find that consumers tend to align their choices of tariff and telephone use levels correctly despite low potential savings mistakes are not permanent as individuals actively engage in tariff switching in order to reduce the monthly cost of telephone service ignoring unobservable heterogeneity and the endogeneity of past choices would have reversed these results

the evolving role of agriculture in poverty reduction an empirical perspective abstract the role of agriculture in development remains much debated this paper takes an empirical perspective and focuses on poverty as opposed to growth alone the contribution of a sector to poverty reduction is shown to depend on its own growth performance its indirect impact on growth in other sectors the extent to which poor people participate in the sector and the size of the sector in the overall economy bringing together these different effects using cross country econometric evidence indicates that agriculture is significantly more effective in reducing poverty among the poorest of the poor as reflected in the 1 day squared poverty gap it is also up to 3 2 times better at reducing 1 day headcount poverty in low income and resource rich countries including those in sub saharan africa at least when societies are not fundamentally unequal however when it comes to the better off poor reflected in the 2 day measure non agriculture has the edge these results are driven by the much larger participation of poorer households in growth from agriculture and the lower poverty reducing effect of non agriculture in the presence of extractive industries

convergence in u s productivity growth for agriculture implications of interstate research spillovers for funding agricultural research state crop livestock and aggregate agricultural total factor productivity tfp data 1950 82 are examined for evidence of convergence to a single tfp level convergence or to a steady state rate of growth or conditional convergence our empirical results do not support convergence but do support convergence the rate of convergence is variable and depends on research and development r d spillins from other states private r d and farmers schooling the finding of strong positive interstate spillover effects implies that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency

the demand for local telephone service a fully discrete model of residential calling patterns and service choices we present an empirical model of households choices among local telephone service options for example between flat rate and measured service and the interrelation of these choices with the number and average duration of local calls households make at each time of day to each geographical zone using a nested logit model with estimation performed on a randomly selected subset of the households calling patterns we calculate elasticities of demand for each local service option number of calls average duration and revenues with respect to the fixed monthly charges and the usage charges for calling under each option we find moderate price elasticities of number of calls with respect to usage charges for households subscribing to measured service nevertheless raising usage charges has a negligible effect on revenues since a sufficient number of households either originally subscribe to flat rate service or convert to flat rate service in response to higher usage charges we find a high elasticity of demandfor each service option with respect to itsfixed monthlyfee this indicates high substitutability among service options the shift among service options induces new calling patterns which wefind to be a small but not negligible indirect effect e most telephone operating companies offer residential customers several options for local service there are two general categories of service flat rate service under which a household can for a fixed monthly charge make an unlimited number of calls within a specified geographical area and measured service for which the household pays a lower fixed monthly fee but can make only a specified number or dollar value of calls at no extra charge after which charges are incurred for additional calls various flat rate services differ in the size of the geographical area in which calling is at no extra charge with higher monthly fees for larger areas measured services differ with respect to the threshold number or dollar value of calls beyond which the customer is charged

a long run structural macroeconometric model of the uk a new modelling strategy that provides a practical approach to incorporating long run structural relationships suggested by economic theory in an otherwise unrestricted var model is applied to construct a small quarterly macroeconometric model of the uk estimated over 1965q1 1999q4 in nine variables domestic and foreign outputs prices and interest rates oil prices the nominal effective exchange rate and real money balances the aim is to develop a model with a transparent and theoretically coherent foundation tests of restrictions on the long run relations of the model are presented the dynamic properties of the model are discussed and monetary policy shocks identified

us regional income convergence a spatial econometric perspective rey s j and montouri b d 1999 us regional income convergence a spatial econometric perspective reg studies 33 143 156 this study reconsiders the question of us regional economic income convergence from a spatial econometric perspective recently developed methods of exploratory spatial data analysis provide new insights on the geographical dynamics of us regional income growth patterns over the 1929 94 period strong patterns of both global and local spatial autocorrelation are found throughout the study period and the magnitude of global spatial autocorrelation is also found to exhibit strong temporal co movement with regional income dispersion a spatial econometric analysis of the familiar baumol specification reveals strong evidence of misspecification due to ignored spatial error dependence because of this dependence shocks originating in one state can spillover into surrounding states potentially complicating the transitional dynamics of the convergence process rey s j et montouri

regional growth and convergence evidence from the united states tsionas e g 2000 regional growth and convergence evidence from the united states reg studies 34 231 238 the paper considers regional convergence in the us both g and convergence tests indicate that in the period 1977 96 regional incomes do not converge yet kernel density estimates of the distribution show some variation in the tail characteristics of the distribution using finite normal mixtures to examine time invariance of the distribution in a more formal way the paper concludes that the distribution of the logarithms of regional income has indeed shown very little time variation the distribution of income percentages shows some mobility there is a structural break in mixing probabilities mixing means and variances but the mobility is not strong enough to imply a radical change in the co movement patterns of regional means tsionas e g 2000 la croissance et la convergence regionales des preuves provenant des etats unis reg studies 34 231 238 cet article cherche a etudie

productivity development in icelandic norwegian and swedish fisheries this article analyses the total factor productivity tfp performance of fisheries in iceland norway and sweden during the period 1973 to 2003 we measure tfp growth using real gross value added as output and capital input labour input and a stock input index based on the major fish stocks in developed neighbouring countries we expect rapid diffusion of fishing technology innovations contributing to productivity convergence in addition innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period we find that iceland had the highest annual tfp growth accounting for stock changes it amounts to 3 while the corresponding figures for sweden and norway are 2 8 and 0 8 respectively despite best practice fishing technologies being widely available we find no evidence of productivity convergence among the three countries