integration of spatial markets studies of spatial market integration draw their implications from a theory which assumes that there are no intraregional transport costs an alternative theory is offered based on the assumptions that buyers and sellers are spatially dispersed and intraregional transport costs are significant this implies that the market is a linked oligopoly or oligopsony and that market integration tests are tests of alternative oligopoly price formation processes for example collusive basing point pricing produces results typically assumed to imply efficiently integrated markets while competitive fob pricing does not the theoretical implications are illustrated with an analysis of hog prices in canada

the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

spatial competition and vertical integration cement and concrete revisited reply in this review 1983 mark mcbride reconsiders the federal trade commission s ftc enforcement policy toward vertical mergers between cement and ready mix concrete firms in response to a significant increase in acquisitions of ready mix concrete firms by cement manufacturers during the 1960 s the ftc undertook a series of legal actions to block or dissolve the mergers the actions of the ftc constituted one of the most intensive efforts undertaken to date to challenge vertical mergers in a single industry mcbride p 1012 notes that the actions of the ftc provoked considerable debate concerning the motivation for the mergers both in the industry and in academe a significant number of articles were published advancing various reasons for the mergers in addition to the ftc s main contention that the mergers were motivated by a desire for captive markets it has been suggested that there were economies of integration or that the mergers were the outcome of an erroneous view of the potential benefits to foreclosure held by executives in the beleaguered cement industry 2 mcbride s 1983 paper offers another explanation for the mergers his argument is that vertical integration was undertaken to avoid rigid oligopolistic pricing in the cement industry 3 the empirical results presented by mcbride suggest that vertical integration was a significant factor in the decline of cement prices in the 1960 s the purpose of this comment is to point out some of the problems with mcbride s analysis in particular we show that the experimental design of his testing equation is faulty and does not offer a test of his hypothesis as a result mcbride s analysis does not provide convincing evidence on whether cement firms vertically integrated to avoid rigid oligopolistic pricing or if cement firms were merely reacting to prices that had already begun to decline our intent however is not to challenge mcbride s contention that vertical integration can provide lower prices to consumers rather we would argue that the evidence presented at the ftc hearings involving cement and ready mix concrete firms as well as mcbride s and others analyses illustrate the problems in discerning the motives for mergers 4

macroeconomic forecasting in the euro area country specific versus area wide information abstract this paper compares several time series methods for short run forecasting of euro wide inflation and real activity using data from 1982 to 1997 forecasts are constructed from univariate autoregressions vector autoregressions single equation models that include euro wide and us aggregates and large model methods in which forecasts are based on estimates of common dynamic factors aggregate euro wide forecasts are constructed from models that utilize only aggregate euro wide variables and by aggregating country specific models the results suggest that forecasts constructed by aggregating the country specific models are more accurate than forecasts constructed using the aggregate data

where is the plus in credit plus the case of chiapas mexico abstractit has become common to try and increase the effectiveness of microfinance programmes by adding supplementary services to the financial product however the added value accruing from this credit plus approach has been little analysed we hypothesise that the extent of added value from credit plus depends on the ability of the credit supplier to cultivate trust or social capital amongst clients applying difference in difference estimation we exploit a natural experiment of two credit plus programmes in mexico the findings suggest that credit plus is not universally effective but that it is at its most effective especially with low income groups where bonding within group social capital exists

nutrition alternative definitions and policy implications a growing body of literature has examined the interaction between nutrient intake household income and nutritional status in ldcs and has made policy recommendations on how to improve nutrition based on empirical studies of food expenditure systems at the household level recent studies include those by d f mccarthy k n murty and r radhakrishna j strauss m m pitt and j r behrman and a b deolalikar the recommendations derived from their analysis depend critically on the definition of nutrition used in those studies in this article we suggest that the definitions used in the above studies are unsatisfactory and in section ii we propose an alternative definition this is followed by a comparison of the implications of the different definitions for the income elasticity of nutrition in section iii for nutrition standards and malnutrition in section iv and for policies designed to improve nutrition in section v we intend hereby to further elucidate the nature of the relationship between nutrition nutrient intake income and other variables discussed below the policy implications are found to differ significantly for urban and rural areas section vi is the conclusion

a survey of agricultural household models recent findings and policy implications semicommercial farms that produce multiple crops make up a large part of the agricultural sector in developing economies these farms or agricultural households combine two fundamental units of microeconomic analysis the household and the firm traditional economic theory has dealt with these units seperately but in developing economies in which peasant farms dominate their interdependence is of crucial importance researchers have developed models of agricultural households that combine producer and consumer behavior in a theoretically consistent fashion recent empirical applications of these models have extended them and expanded the range of policy issues which can be investigated using this general framework this article reports the results of empirical applications of this model in india indonesia japan the republic of korea malaysia nigeria senegal sierra leone taiwan and thailand it provides a comparative analysis of the policy implications of the approach for such matters as the welfare of farm households the size of marketed surplus the demand for nonagricultural goods and services and for hired labor and the availability of budget revenues and foreign exchange

exploiting the monthly data flow in structural forecasting a quarterly stochastic general equilibrium dsge model is combined with a now casting model designed to read timely monthly information as it becomes available this implies 1 mapping the structural quarterly dsge with a monthly version that maintains the same economic restrictions 2 augmenting the model with a richer data set and 3 updating the estimates of the dsge s structural shocks in real time following the publication calendar of the data our empirical results show that our methodology enhances the predictive accuracy in now casting an analysis of the great recession also shows that our framework would have helped tracing the dsge s structural shocks in real time obtaining for example a more timely account of the 2008 contraction

nowcasting sales growth of manufacturing companies in india abstractthe performance of private corporate sector is used as an important demand indicator for monetary policy making as these data are received with a lag assessing and monitoring of corporate sales on a real time basis poses a significant challenge to policy makers in india in this context this article attempts to nowcast quarterly sales growth of indian manufacturing companies and gdp growth of india using dynamic factor modelling framework a multiple level framework through turning point analysis and elastic net structure is used to overcome the overfitting problem during variable selection empirical results show improvement in forecast accuracy for one quarter ahead nowcast using 3 factor and 4 factor models over the benchmark model however absolute dominance of 3 factor models over 4 factor models was not established as such the article has proposed a forecast combination technique to nowcast sales growth of manufacturing companies in india

basing point pricing and production concentration basing point pricing is a delivered price system in which the price quoted for delivery of a commodity is the sum of the price quoted at a predetermined basing point plus the cost of transportation from the basing point to the point of delivery whether or not the commodity is actually shipped from the basing point thus a seller who is not located at the base site absorbs freight for shipments toward the base point and charges phantom freight on shipments away from the base point basing point pricing has been widely practiced throughout the world for example testimony of the federal trade commission before the tnec i 94 i p 33 alleged that industries in the united states which then or previously followed basing point pricing included lumber iron and steel pig iron cement lime brick asphalt shingles and roofing window glass white lead metal lath building tile floor tile gypsum plaster bolts nuts and rivets cast iron soil pipe range boilers valves and fittings sewer pipes paper and paper products salt sugar corn derivatives industrial alcohol linseed oil fertilisers chemicals transportation equipment and power cable almost from its inception economists have generally considered basingpoint pricing to reflect a cartel or price leadership arrangement hoover i937 stigler i949 machlup i949 and such practices have been attacked under antitrust statutes for example aetna portland cement co vs ftc i 57 f 2nd 533 i946 triangle conduit cable co vs ftc i68 f 2nd i 75 7th cir i 948 cement institute vs ftc i57 f 2nd 533 i948 nonetheless basing point pricing remains prevalent particularly outside the united states opec has used a gulf based price plus transport costs to determine the delivered prices of crude oil to most places in the world haddock i982 p 290 the pricing of cement in great britain and steel in europe can be characterised as multibase point systems greenhut i987 recent attempts by for example haddock i982 to return to the theme that the basing point system could be competitive and desirable have been challenged by thisse and vives i988 and benson et al i990 on the basis of recent advances in the analysis of pricing policy given then that we assume basing point pricing to be a collusive device adopted by incumbent firms to impose some kind of price discipline on potential entrants the price leadership point referred to above important strategic and locational issues arise in particular a major concern of the early analysis of basing point pricing was the effect such a pricing policy would have on location choice of entrant firms

nowcasting the real time informational content of macroeconomic data abstract a formal method is developed for evaluating the marginal impact that intra monthly data releases have on current quarter forecasts nowcasts of real gross domestic product gdp growth the method can track the real time flow of the type of information monitored by central banks because it can handle large data sets with staggered data release dates each time new data are released the nowcasts are updated on the basis of progressively larger data sets that reflecting the unsynchronized data release dates have a jagged edge across the most recent months

imperfect competition and basing point pricing i introduction basing point pricing occurs when firms that are geographically differentiated use a common location to formulate the transportation costs and thus delivered prices charged to consumers consumers are not generally permitted to purchase the commodity at free on board mill prices since such prices exist only for firms located at the basing point basing point pricing is sometimes associated with other seemingly unusual practices such as cross hauling the systematic transshipment of apparently identical commodities freight absorption the shipment of identical commodities longer distances at delivered prices that do not reflect additional transportation charges and phantom freight the assessment of fictitious transportation charges basing point pricing has a rich history in the united states and more recently was widely practiced by firms in the softwood plywood industry 1 economists have long been interested in the determinants of basing point pricing 2 their inquires have generally led them to conclude that basing point pricing is adopted to facilitate collusion 3 this view is articulated by stigler 1949 who combined two important branches of the literature to formulate a theory of how basing point pricing and more generally any delivered pricing system can solve the problems of cartel instability confronting firms that are geographically differentiated and face stochastic demand 4 examining the case of multiple production centers with limited numbers of firms serving geographically uncertain demand stigler 1949 1148 argued that the unpremeditable flexibility of mill prices would make it extremely difficult to maintain collusion among firms at the production center and even more difficult to maintain collusion between firms at different production centers the systematic freight absorption associated with any delivered pricing system provides a solution to these problems with a delivered pricing system there is a single price at each point in the market if transportation charges are agreed upon so price rivalry is eliminated one production center can sell in the natural territories of other production centers when this is necessary to obtain its share of the industry s sales these distant sales involve freight absorption moreover and are therefore partly self limiting the various prices need not change often so collusion is possible given the unstable geographical pattern of demand and the antitrust laws systematic freight absorption permitted efficient collusion stigler also provided some evidence such as the general magnitude of demand variability in those industries characterized by basing point pricing to support his hypothesis that delivered prices and basing point pricing facilitate collusion building upon stigler s theory mcgee 1954 argued that cross hauling is a symptom of the collusion facilitated by basing point pricing in a recent paper haddock 1982 challenged this view and argued that basing point pricing can arise if a firm at other than the base site takes the delivered price of the basing point product as given when formulating its production decision given this behavior a non base site firm faces a kinked marginal revenue schedule that supports basing point pricing for a wide range of marginal production and transportation cost schedules the non base firm earns a markup on its product in a particular market equal to the difference between the delivered price charged by base site firms and the non base site firm s costs of production and delivery the behavior and markups earned by firms located at the base point are not restricted in haddock s model and presumably can include bertrand behavior and competitive markups the behavior of non base site firms is explicitly monopolistic haddock also provided some non collusive rationales for cross hauling in contrast to the view that basing point pricing is adopted to facilitate collusion among all firms in the industry haddock s argument is that basing point pricing can have little to do with pervasive collusion and may at most be associated with positive markups and phantom freight charges by firms on the periphery of production

forecasting the world economy in the short term 1433 audrone jakaitiene and stephane dees forecasting the world economy is a difficult task given the complex interrelationships within and across countries this paper proposes a number of approaches to forecast short term changes in selected world economic variables and aims first at ranking various forecasting methods in terms of forecast accuracy and second at checking whether methods forecasting directly aggregate variables direct approaches outperform methods based on the aggregation of country specific forecasts bottom up approaches overall all methods perform better than a simple benchmark for short horizons up to 3 months ahead among the forecasting approaches used factor models appear to perform the best moreover direct approaches outperform bottom up ones for real variables but not for prices finally when country specific forecasts are adjusted to match direct forecasts at the aggregate levels top down approaches the forecast accuracy is neither improved nor deteriorated i e top down and bottom up approaches are broadly equivalent in terms of country specific forecast accuracy

real time macroeconomic monitoring real activity inflation and interactions the authors sketch a framework for monitoring macroeconomic activity in real time and push it in new directions in particular they focus not only on real activity which has received most attention to date but also on inflation and its interaction with real activity as for the recent recession the authors find that 1 it likely ended around july 2009 2 its most extreme aspects concern a real activity decline that was unusually long but less unusually deep and an inflation decline that was unusually deep but brief and 3 its real activity and inflation interactions were strongly positive consistent with an adverse demand shock this abstract was borrowed from another version of this item

an analytic history of delivered price litigation do courts properly distinguish rivalrous from collusive instances the federal judiciary s present cautious approach to delivered pricing is appropriate using court records and recent contributions to the economic literature this article evaluates the antitrust history of those practices delivered pricing can replace mill pricing naturally in some rivalrous settings but under special circumstances could be collusive thus delivered pricing has sometimes been adjudged a sherman act violation but only given other evidence of collusion for a time however the legal system threatened to treat delivered pricing as a per se violation of the clayton and federal trade commission acts that reflected poor economic understanding delivered pricing litigation seems to be a pure statutory phenomena our investigation has unearthed no cases under the common law of restraint of trade 1 since the advent of federal antitrust legislation however plaintiffs have relied on several distinct acts of congress to bring delivered pricing practices before the courts the earliest of those statutes the sherman act of 1890 forbad conspiracies in restraint of trade but courts typically have required explicit evidence before they will find a collusive conspiracy the mere use of a novel and poorly understood delivered pricing technique has not been enough relying on the clayton and federal trade commission acts of 1914 however lawyers formulated various claims that purported to draw an inference of collusion from the mere use of a particular delivered pricing schedule under those arguments no evidence of collusion was to be required several important precedents were set in reliance on such claims that we argue below is a leap of logic inconsistent with present economic understanding because the courts sometimes have accepted such theories but at other times have not the predictability of the law has been eroded to the cost of defendants and ultimately to the cost of consumers i the dawn of delivered pricing as an antitrust problem the history a number of industrial practices that became evident during the decades following the civil war were soon followed by statutory antitrust law which largely supplanted the common law antitrust precedents that had developed over the preceding centuries the speed and distance over which commercial orders could conveniently be placed and deliveries made steadily increased as local and regional transportation and communication networks expanded to form national systems that evolution enabled aggressive entrepreneurs to expand local markets into regional ones regional markets into national ones and national markets into world wide markets 2 in industries where technical scale economies were important the market expansion ultimately led to large scale production centers arising at particularly favorable transport hubs resource nodes or buyer concentrations concomitantly firms at less favorable sites either failed in the face of the stiffening long distance competition or found ways to thread themselves into small niches that had been left poorly served by the large scale production centers in the absence of significant differentiation of the physical product modern economic theory implies that it would be difficult for more than one firm to survive in a single small market away from the advantaged production centers in a predominantly large scale industry 3 so with no local competitors such remote enterprises as did survive would be able to price discriminate among nearby customers in that sense the surviving small remote firms would resemble the norm from an earlier day when markets were more commonly characterized by small dispersed spatial monopolies but the manufacturing costs of firms in the new highly competitive production centers coupled with the transport costs required for them to reach various points in a market determined the delivered prices that were available from the production center

forecasting the gdp of a small open developing economy an application of favar models gdp forecasting remains a challenge for a small open developing economy faced with insufficient and low frequency data central bank forecasters cannot project gdp reliably for the purpose of mone

gdp nowcasting application and constraints in a small open developing economy despite data limitations an attempt is made to find out if a gdp nowcasting model can provide reliable forecasts for a small open economy two competing bayesian vector autoregressive models are tested rigorously to obtain the optimal model by minimizing in sample forecasting errors the main finding of this study is that gdp nowcasting can produce reliable results for a small open economy despite the unavailability of sufficient data sets and the lack of high frequency indicators

are estimates of calorie income fxelasticities too high a recalibration of the plausible range abstract the wide range of calorie income elasticities in the literature results in large part from the particular calorie and income variables used for estimation elasticities across four estimation techniques and four calorie income variable pairs for a sample of philippine farm households ranged from 0 03 to 0 59 estimates associated with calorie availability are biased upwards first because random errors in measuring food purchases are transmitted by construction both to calorie availability and total expenditures and second because the residual difference between family calorie intake and household calorie availability will often increase with income the calorie intake total expenditure variable pair gives the preferred elasticity estimate in the 0 08 0 14 range

spatial differentiation and price discrimination in the cement industry evidence from a structural model we estimate a structural model of the cement industry that incorporates spatial differentiation and price discrimination focusing on the us southwest over 1983 2003 we leverage the structure of the model to obtain consistent estimates of the underlying parameters using data on market outcomes that are substantially aggregated our results indicate that transportation costs around 0 46 per tonne mile rationalize the data this friction enables relatively isolated plants to obtain higher prices from nearby customers we further find that disallowing price discrimination would create 30 million in consumer surplus annually and show how the model can identify suitable divestitures in merger analysis

prices credit markets and child growth in low income rural areas in this paper it is argued that fluctuations in child growth in rural areas of bangladesh during and after severe floods in i988 can provide insight into the structure of credit markets a model of intertemporal resource allocation is developed and euler equations relating growth patterns of children to the cost of borrowing by household are then derived from the model the evidence indicates that although some of the variation in growth patterns over the relevant period may be attributed to variation in illness and the price of rice growth patterns for children in landless households were influenced by credit market imperfections this paper links two prominent strands of research in economic development the first strand examines the extent to which households in poor rural economies are able to protect themselves from the adverse weather and other shocks that importantly influence earnings in underdeveloped areas while it has long been thought that credit market imperfections and other forms of market failure make it difficult for poor individuals in these economies to smooth consumption both within and across years there remains some question about the magnitude and pervasiveness of these imperfections while there is evidence that fluctuations in economic conditions result in inefficient allocation of resources e g morduch 1990 rosenzweig and wolpin i993 some recent papers have emphasised the fact that consumption patterns of households in the same village comove in a manner consistent with the idea that a substantial fraction of idiosyncratic variation in income is effectively

predictability of output growth and inflation a multi horizon survey approach we develop an unobserved components approach to study surveys of forecasts containing multiple forecast horizons under the assumption that forecasters optimally update their beliefs about past current and future state variables as new information arrives we use our model to extract information on the degree of predictability of the state variable and the importance of measurement errors in the observables empirical estimates of the model are obtained using survey forecasts of annual gdp growth and inflation in the united states with forecast horizons ranging from 1 to 24 months and the model is found to closely match the joint realization of forecast errors at different horizons our empirical results suggest that professional forecasters face severe measurement error problems for gdp growth in real time while this is much less of a problem for inflation moreover inflation exhibits greater persistence and thus is predictable at longer horizons than gdp growth and the persistent component of bot

borrowing constraints and progress through school evidence from peru this paper investigates the effect of borrowing constraints on the timing of human capital investment in a developing country by looking at how quickly children with different family backgrounds progress through the primary school system in peru the main findings are that children start withdrawing from school earlier as indicated by repetition of grades in households with lower income and durable good holdings and when children are more closely spaced behavior also differs as predicted between children from households that appear to be borrowing constrained and those that appear unconstrained copyright 1994 by mit press

on the internal contradictions of the law of one price as stated originally the venerable law of one price succinctly describes long run equilibrium in a perfectly competitive market the law was later amended defining a market as the geographic area within which the same thing sells for the same price at the same time allowance being made for transportation costs modified in that way the law has two plausible interpretations by one interpretation every production site is a market by the other prices in fact do not differ by transportation costs the transportation cost amendment thus introduces internal contradictions that render the revised law of one price either useless or wrong jel d40 l10 a market according to the masters is the area within which the price of a commodity tends to uniformity allowance being made for transportation costs that is two places are in the same market for a good if the prices at the two places differ by transportation costs stigler 1987 77 economic terms seem to pass in their historical development through a series of stages which without pretension to rigidness may be described as follows first no definition is given but it is assumed that every one has a sufficiently clear idea of the subject to make a formal definition unnecessary second a definition is attempted and a number of exceptional forms are noted third with the further increase of data the relative importance of the various forms changes confusion in discussion is introduced logomachy takes the place of constructive investigation fourth a complete classification of the forms embraced under the original term is made and problems are investigated with reference to these classes the bewildering vagueness of economic theory is largely due to the fact that the terms used are in all of these stages of development moore 1906 211 i introduction delineating the boundaries of markets engaged economists attention early on many product attributes are important to consumers but price is an objectively measurable margin along which rivalry is sharply engaged market prices transmit information about changing demand and supply conditions to buyers and sellers and widening price cost margins signal profit opportunities to which alert entrepreneurs respond price consequently has held center stage in economists attempts to define markets augustin cournot 1927 51 for instance wrote that a market is the entire territory of which the parts are so united by the relations of unrestricted commerce that prices take the same level throughout with ease and rapidity alfred marshall 1930 325 supplied a similar definition in his celebrated declaration that the more nearly perfect a market is the stronger is the tendency for the same price to be paid for the same thing at the same time in all parts of the market more recently joseph stiglitz 1993 19 summarized what he called the law of the single price stating that under this law there is a uniform price in the market and price differences are quickly eliminated by arbitrage 1 marshall 1930 325 introduced an important qualification however when he observed that but of course if the market is large allowance must be made for the expense of delivering the goods to different purchasers each of whom must be supposed to pay in addition to the market price a special charge on account of delivery that qualification subsequently found its way into stigler s price theory textbook quoted in the epigraph intentionally or not the law of one price was thereby converted into a law of different prices other economists subsequently added transaction costs and information costs to the list of caveats culminating in a multiplicity of prices nevertheless claimed to be consistent with the law of one price economics has few laws

u s monetary policy surprises identification with shifts and rotations in the term structure we develop a model to extract measures of monetary policy surprises from the maturity structure of the yield curve the model endogenously allows for the fact that the yield curve may either shift or rotate in response to monetary policy shocks a latent factor model approach with identification through heteroskedasticity harnesses the term structure to extract monetary policy shocks the approach offers informational advantages over event studies results from the u s term structure from 1994 strongly support the hypothesis that differing term structure responses are reactions to different types of monetary policy shock rather than differing reactions to the same policy shock

estimating time variation in measurement error from data revisions an application to backcasting and forecasting in dynamic models over time economic statistics are refined this implies that data measuring recent economic events are typically less reliable than older data such time variation in measurement error affects optimal forecasts measurement error and its time variation are of course unobserved our contribution is to show how estimates of these can be recovered from the variance of revisions to data using a behavioural model of the statistics agency we illustrate the gains in forecasting performance from exploiting these estimates using a real time dataset on uk aggregate expenditure data copyright 2009 john wiley sons ltd

automated earnings forecasts beat analysts or combine and conquer prior studies attribute analysts forecast superiority over time series forecasting models to their access to a large set of firm industry and macroeconomic information an information advantage which they use to update their forecasts on a daily weekly or monthly basis a timing advantage this study leverages recently developed mixed data sampling midas regression methods to synthesize a broad spectrum of high frequency data to construct forecasts of firm level earnings we compare the accuracy of these forecasts to those of analysts at short horizons of one quarter or less we find that our midas forecasts are more accurate and have forecast errors that are smaller than analysts when forecast dispersion is high and when the firm size is smaller in addition we find that combining our midas forecasts with analysts forecasts systematically outperforms analysts alone which indicates that our midas models provide information orthogonal to analysts our results provide preliminary support for th

forecasting oil prices high frequency financial data are indeed useful abstract the paper examines the importance of combining high frequency financial information along with the oil market fundamentals in order to gain incremental forecasting accuracy for oil prices inspired by french et al 1987 and bollerslev et al 1988 who maintain that future asset returns are also influenced by past volatility we use daily volatilities and returns from financial and commodity markets to generate real out of sample forecasts for the monthly oil futures prices our results convincingly show that although the oil market fundamentals are useful for long run forecasting horizons the combination of the latter with high frequency financial data significantly improve oil price forecasts by reducing the rmse of the no change forecast by approximately 68 results are even more impressive during the oil price collapse period of 2014 15 these findings suggest that we cannot ignore the information extracted from the financial markets when forecasting oil prices our results are both statistically and economically significant as suggested by several robustness tests

a nonresidual estimation of welfare gains from research the case of public r d in a forest product industry ment since the increases in economic welfare measured by this method are presumed to be generated by the shifting of the supply curve due to a new technology this type of study will be referred to as the supply function or sf approach in practice this approach has been applied to particular innovations in particular industries in a residual manner any observable outward shift of the supply curve is attributed to the particular innovation so that the benefit of the r d is calculated residually in a manner to be made clear later the other type of approach involves the estimation of a production function where research effort or expenditures are used in the econometric estimation so that the effects of r d are measured directly for this reason this method may be called a nonresidual approach this approach allows the researcher to estimate the marginal productivity of research and the value of the marginal product of research investment or the marginal internal rate of return on research investment this approach is referred to as the production function or pf approach economists have been critical of the residual sf approach griliches 9 92 3 faults the usual sf approach for its use of historical case studies of particular innovations since they tend to

facts and challenges from the great recession for forecasting and macroeconomic modeling this paper provides a survey of business cycle facts updated to take account of recent data emphasis is given to the great recession which was unlike most other postwar recessions in the united states in being driven by deleveraging and financial market factors we document how recessions with financial market origins are different from those driven by supply or monetary policy shocks this helps explain why economic models and predictors that work well at some times do poorly at other times we discuss challenges for forecasters and empirical researchers in light of the updated business cycle facts

words are the new numbers a newsy coincident index of the business cycle i construct a daily business cycle index based on quarterly gdp growth and textual information contained in a daily business newspaper the newspaper data are decomposed into time series representi

microfinance and child mortality microfinance institutions mfis offer targeted opportunities for the poor to generate additional income with a range of financial services including credit insurance savings accounts and money t

village banking and maternal and child health evidence from ecuador and honduras abstract many microcredit institutions bundle credit with health education or other programs this paper reviews arguments on such tie ins and concludes that net benefits are possible but requires empirical testing quasi experimental data from project hope s health banks and credit only village banks are then examined the paper presents evidence that health practices do not improve automatically with greater wealth in honduras results show that health bank participation is robustly associated with reduced subsequent conditional child diarrhea probability but in no specification does credit only bank participation have this effect in ecuador results suggest a larger effect of credit only banks in both countries health bank participation significantly raises subsequent healthcare over credit only participation and at least reduces the tendency to switch from breast feeding to bottle feeding as income rises effects on expenditures are ambiguous there is no clear link between tie ins and bank performance

have standard vars remained stable since the crisis small or medium scale vars are commonly used in applied macroeconomics for forecasting and evaluating the shock transmission mechanism this requires the var parameters to be stable over the evaluation and forecast sample or to explicitly consider parameter time variation the earlier literature focused on whether there were sizable parameter changes in the early 1980s in either the conditional mean or variance parameters and in the subsequent period till the beginning of the new century in this paper we conduct a similar analysis but focus on the effects of the recent crisis using a range of techniques we provide substantial evidence against parameter stability the evolution of the unemployment rate seems particularly different relative to its past behavior we then discuss and evaluate alternative methods to handle parameter instability in a forecasting context while none of the methods clearly emerges as best some techniques turn out to be useful to improve the forecasting performance

on the basing point system comment in on the basing point system bruce benson melvin greenhut and george norman 1990 1 properly correct a misunderstanding by jacques thisse and xavier vives 1988 2 concerning my 1982 paper on basing point prices but bgn then take exception with several of the conclusions i had reached or that they thought i had reached although i have insufficient space to deal with all the points they raise i will address the most important ones in 1981 most economists believed that a model of profit maximizing basing point pricing would have to assume collusion my model as bgn seem to agree showed that it need not atomistic competition at one production site accompanied by local monpolies elsewhere may lead to basing point pricing and freight absorption without collusion 3 conversely tv showed that the practice as observed empirically will not arise if all production sites contain noncooperative local monopolies bgn establish yet another important theoretical result noncooperative oligopoly at one site could generate the f o b prices or f o b plus transport that in my model led local monopolies elsewhere to adopt freight absorbing basing point prices the three models would seem to be complements i a paradox

the yield spread puzzle and the information content of spf forecasts while the yield spread has long been recognized as a good predictor of recessions it seems to have been largely overlooked by professional forecasters we examine this puzzle established by rudebusch and williams 2009 in a data rich environment including not just the yield spread but many other predictors as well we confirm the puzzle in this context by examining the contributions of both the spf forecasts and the yield spread in predicting recessions and by examining the information content of spf forecasts directly furthermore we take the first step towards a possible resolution of this puzzle by recognizing the heterogeneity across professional forecasters

the optimal level of monetary aggregation in this paper i have three objectives 1 to describe the aggregation theoretic procedure for selecting the optimal monetary aggregates 2 to survey the available empirical evidence for information on the optimal aggregates and 3 to describe the procedures that should be followed to complete a redefinition of the monetary aggregates although all of the federal reserve board s current official aggregates are rejected as targets some newer aggregates are found to be substantially preferable to the official aggregates the board s staff recently completed the official redefinition of its monetary aggregates in a manner largely unrelated to aggregation and index number theory my own research in recent years has sought to remedy that shortcoming except for monetary aggregates most of the data provided by governmental agencies are constructed in accordance with aggregation and index number theory since aggregation theory can be applied to monetary aggregation 1 i constructed new monetary aggregates that are consistent with the economic theory 2 recently the empiri

a discrete long term location price problem under the assumption of discriminatory pricing formulations and parametric analysis we consider a competitive location problem in which a new firm has to make decisions on the locations of several new facilities as well as on its price setting in order to maximise profit under the assumption of discriminatory prices competing firms set a specific price for each market area the customers buy one unit of a single homogeneous price inelastic product from the facility that offers the lowest price in the area the consumers belong to three customer choice rules are considered in order to break ties in the offered prices we prove that considering long term competition on price this problem can be reduced to a problem with decisions on location only for each one of the choice rules the location problem is formulated as an integer programming model and a parametric analysis of these models is given to conclude an application with real data is presented

combining judgment and models this paper proposes a parsimonious and model consistent method for combining forecasts generated by structural microfounded models and judgmental forecasts the method delivers along several dimensions first it improves the forecasting performance of the model second it allows interpreting the judgmental forecasts through the lens of the model finally it provides a framework to assess the informational content of the judgmental forecasters i illustrate the proposed methodology with a real time forecasting exercise using a simple neo keynesian dynamic stochastic general equilibrium model and the survey of professional forecasters 2010 the ohio state university

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

are daily financial data useful for forecasting gdp evidence from mexico this article evaluates the use of financial data sampled at high frequencies to improve short term forecasts of quarterly gdp for mexico the model uses both quarterly and daily sampling frequencies while remaining parsimonious in particular the mixed data sampling midas regression model is employed to deal with the multi frequency problem to preserve parsimony factor analysis and forecast combination techniques are used to summarize the information contained in a data set containing 392 daily financial series our findings suggest that the midas model incorporating daily financial data leads to improvements in quarterly forecasts of gdp growth over traditional models that either rely only on quarterly macroeconomic data or average daily frequency data the evidence suggests that this methodology improves the forecasts for the mexican gdp notwithstanding its higher volatility relative to that of developed countries furthermore we explore the ability of the midas model to provide forecast updates for gdp growth nowcasting

does better nutrition raise farm productivity household level data from sierra leone are used to test whether higher caloric intake enhances family farm labor productivity this is the notion behind the efficiency wages hypothesis which has found only weak empirical support a farm production function is estimated accounting for the simultaneity in input and calorie choice instruments include prices household demographic characteristics and farm assets the latter two sets of instruments are later dropped to explore the robustness of the results to different specifications of exogeneity the exercise shows a highly significant effect of caloric intake on labor productivity providing solid support for the nutrition productivity hypothesis the marginal effect on productivity falls drastically as calorie consumption rises but remains positive at moderately high levels of intake one result is a fall in the effective price of food a decline that is larger for households that consumer fewer calories

the impact of group based credit programs on poor households in bangladesh does the gender of participants matter this paper estimates the impact of participation by gender in the grameen bank and two other group based micro credit programs in bangladesh on labor supply schooling household expenditure and assets the empirical method uses a quasi experimental survey design to correct for the bias from unobserved individual and village level heterogeneity we find that program credit has a larger effect on the behavior of poor households in bangladesh when women are the program participants for example annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs compared with 11 taka for men

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

non grant microfinance incentives and efficiency abstracti show that charging interest on funds provided by donors or investors to microfinance institutions mfis can increase efficiency the total number of loans and borrower welfare compared to grant or concessionary funding in a setting in which mfis supply costly non contractible effort putting a price or raising the price of loanable funds strengthens the mfis incentives to put effort in credit administration or monitoring to extend more loans and or reduce overhead costs this theoretical result is robust to several variations of the benchmark model allowing for an endogenous lending rate motivated mfis and endogenous overhead costs

monetary policy in a data rich environment abstract most empirical analyses of monetary policy have been confined to frameworks in which the federal reserve is implicitly assumed to exploit only a limited amount of information despite the fact that the fed actively monitors literally thousands of economic time series this article explores the feasibility of incorporating richer information sets into the analysis both positive and normative of fed policymaking we employ a factor model approach developed by stock j h watson m w diffusion indices journal of business economic statistics 2002 20 2 147 forecasting inflation 1999 journal of monetary economics 44 2 293 that permits the systematic information in large data sets to be summarized by relatively few estimated factors with this framework we reconfirm stock and watson s result that the use of large data sets can improve forecast accuracy and we show that this result does not seem to depend on the use of finally revised as opposed to real time data we estimate policy reaction functions for the fed that take into account its data rich environment and provide a test of the hypothesis that fed actions are explained solely by its forecasts of inflation and real activity finally we explore the possibility of developing an expert system that could aggregate diverse information and provide benchmark policy settings

do microfinance institutions benefit from integrating financial and nonfinancial services this article examines the impact of microfinance plus i e coordinated combination of financial and nonfinancial services on the performance of microfinance institutions mfis using a global data set of mfis in 77 countries we find that the provision of nonfinancial services does not harm nor improve mfis financial sustainability and efficiency the results however suggest that the provision of social services is associated with improved loan quality and greater depth of outreach

real time forecasting with a mixed frequency var this article develops a vector autoregression var for time series which are observed at mixed frequencies quarterly and monthly the model is cast in state space form and estimated with bayesian methods under a minnesota style prior we show how to evaluate the marginal data density to implement a data driven hyperparameter selection using a real time dataset we evaluate forecasts from the mixed frequency var and compare them to standard quarterly frequency var and to forecasts from midas regressions we document the extent to which information that becomes available within the quarter improves the forecasts in real time this article has online supplementary materials

the demand for food and calories we investigate nutrition and expenditure in rural maharashtra in india we estimate that the elasticity of calorie consumption with respect to total expenditure is 0 3 0 5 a range that is in accord with conventional wisdom the elasticity declines only slowly with levels of living and is far from the value of zero suggested by a recent revisionist literature in these indian data the calories necessary for a day s activity cost less than 5 percent of the daily wage which makes it implausible that income is constrained by nutrition rather than the other way around

on the basing point system reply david d haddock s 1990 contention is really that the jacques f thisse and xavier vives 1988 and the bruce l benson melvin l greenhut and george norman 1990 papers do not provide a collusive model that yields base point pricing bpp he apparently believes his paper 1982 established competitive bpp and suggests in 1990 that the collusive model and hard empirical work alone remain however no collusive model is required since it has already been well demonstrated in the literature on plant location and spatial price theory that firms at feasible distance locations from a production center would accept bpp only because they fear that to do otherwise would subject them to retaliatory actions by the larger more powerful firms at the production center moreover the paper by thisse vives 1988 henceforth tv and benson greenhut norman 1990 henceforth bgn indicated sufficiently that other systems would arise than haddock s competitive bpp especially since the restrictive conditions necessary for the latter militate against its use haddock in fact appears to accept these conditions in his references to arthur r burns proposals 1936 of nearbase point pricing nbpp hard empirical analysis would indeed be in order in determining the extent of nbpp not competitive bpp this paper responds to the above noted issues in three main sections section i briefly provides some historical data on the collusive uses of bpp for any future researcher who seeks empirically to uncover a

divisia monetary aggregates and us gdp nowcasting this article nowcasts us quarterly real gdp growth rate with dynamic factor model dfm using divisia monetary aggregate index divisia m1 m2 m3 and exploits information from a large unbalanced

financial conditions indexes for the united states and euro area abstract financial conditions indexes are developed for the united states and euro area using a wide range of financial indicators and a dynamic factor model the financial conditions indexes are shown to be useful for forecasting economic activity and have good revision properties variants of the indexes that allow for cross economy effects reveal very strong financial linkages across the united states and euro area

mill pricing versus spatial price discrimination under bertrand and cournot spatial competition this paper asks two questions about spatial competition first does spatial price discrimination lead to lower prices and higher welfare than mill pricing if firms hold the bertrand conjecture the answer is yes for most values of fixed cost but for the cournot conjecture the opposite is true second does the introduction of space into the oligopoly models of bertrand and cournot change their results the answer is generally no however spatial bertrand prices exceed marginal cost unlike their spaceless counterparts these answers are obtained using models of spatial competition of which the cournot mill pricing models are new in spatial competition significant transport costs and economies of scale bestow market power upon firms this paper addresses two questions about spatial competition first does spatial price discrimination yield lower prices and higher social welfare producer plus consumer surplus than fo b mill pricing under spatial price discrimination differences in the delivered prices charged by a firm bear no necessary relationship to differences in transport costs in contrast a mill pricing firm sets a single price at its plant and customers bear the cost of transport this paper answers this question for the cases in which firms adopt the bertrand or cournot conjectures concerning how rivals will react to price and output changes this question is important because of the superficial appeal of mill pricing which stems from its imitation of the spatial structure of marginal costs the presence of spatial price discrimination by contrast is often considered to be evidence of the presence of market power at least in part for these reasons the us robinson patman antitrust act and great britain s price commission favor mill pricing nevertheless spatial price discrimination remains ubiquitous in the us europe and japan greenhut 1981 the second question is how does the introduction of space into the original oligopoly models of cournot and bertrand change their results cournot

competition of firms discriminatory pricing and location1 two costlessly mobile firms are to be located in a market region a subset of the plane the firms compete by setting locations and delivered price schedules to study this competitive stiuation an appropriate extensive form game is defined along with an appropri ate noncooperative solution concept existence and general properties of the equilibrium are demonstrated among the results are each firm increases its profit by locating so as to decrease total cost to both firms of serving the market firms will never locate coinciden tally if they have identical production costs and transport cost rates or if these are different and the firms are located in a circular market region having a uniform demand distribution this paper studies competition between two profit maximizing firms in space who are costlessly mobile and may discriminate in price we will allow the firms to set locations and delivered price schedules and we will be concerned with the existence and properties of equilibria in location and price starting with hotelling 9 the spatial competition literature has focused on location on bounded linear markets by two or more firms hotelling assumed identical firms that produced a single good with constant cost of production and considered consumers to be uniformly distributed and to have inelastic demand he also assumed that the consumers pay transport cost and purchase the good from the cheapest source hotelling claimed that a nash equilibrium in locations for the two firm market existed and yielded back to back locations at the center of the market many authors most recently d aspremont gabszewicz and thisse 2 have noted that an equilbrium in prices and location does not exist for hotelling s model however if the firms employ identical exogeneously specified prices hotelling s conclusions hold subsequent work by smithies 14 hartwick and hartwick 7 and eaton 3 claimed to show that a nash equi librium in f o b prices and locations can exist in markets with a uniform distribu tion of consumers each of whom have identical elastic demand functions for the two and three firm problems the work of d aspremont et al casts doubt on these conclusions without the adoption of restrictive conditions our work contrasts with these works and related research which has dealt with linear markets with uniform distributions of customers and with identical firms our work will involve markets that are subsets of the plane having nonuniform distributions of customers our firms will be allowed to be different that is have differences in production and transport costs however the fundamental difference in our approach is that our firms will set discriminatory prices and not price f o b in many ways our work will represent the discriminatory pricing

macroeconomic forecasting using diffusion indexes this article studies forecasting a macroeconomic time series variable using a large number of predictors the predictors are summarized using a small number of indexes constructed by principal component analysis an approximate dynamic factor model serves as the statistical framework for the estimation of the indexes and construction of the forecasts the method is used to construct 6 12 and 24 monthahead forecasts for eight monthly u s macroeconomic time series using 215 predictors in simulated real time from 1970 through 1998 during this sample period these new forecasts outperformed univariate autoregressions small vector autoregressions and leading indicator models

imperfect competition and basing point pricing evidence from the softwood plywood industry the federal trade commission s action to eliminate basing point pricing in the soft plywood industry during the mid 1970s created a natural experiment the author finds that the ftc s action had no effect on the delivered price of the base site product douglas fir plywood but decreased the delivered price of the non base site product pine plywood for many consumers the evidence suggests that the detrimental effects of basing point pricing for economic welfare were reflected entirely in the behavior of non base site firms copyright 1992 by american economic association