the uk demand for cigarettes 1954 1986 a double hurdle approach the double hurdle perspective suggests that it is crucial to distinguish between per capita and per smoker consumption when estimating the demand for cigarettes this paper presents a two equation model which identifies consumption and participation as two separate decisions the model is estimated with annual data on u k cigarette expenditure and participation rates highlighting the differing influence of prices income and health scares on the participation rate and on smokers demand for cigarettes

interest rate pass through monetary policy rules and macroeconomic stability abstract in this paper we analyze equilibrium determinacy in a sticky price model in which the pass through from policy rates to retail interest rates is sluggish and potentially incomplete in addition we empirically characterize and compare the interest rate pass through process in the euro area and the u s we find that if the pass through is incomplete in the long run the standard taylor principle is insufficient to guarantee equilibrium determinacy our empirical analysis indicates that this result might be particularly relevant for bank based financial systems as for instance that in the euro area

an empirical analysis of self employment in the u k the paper formulates a self employment paid employment choice problem that draws upon knight s notion that the individual responds to the risk adjusted relative earnings opportunities in each sector based on a development of such choice theoretic considerations an econometric model is developed with the purpose of empirically examining the determinants of self employment the model features simultaneous determination of employment status and earnings which allows for self selectivity the model is estimated using a sample of 4762 individuals from the general household survey for 1978 the estimation of the earnings equation enables a calculation of the self employment paid employment earnings differential and the estimated probit equation for self employment paid employment status facilitates the prediction of the probability of self employment the paper finds that there is positive selection bias in the observed earnings of employees that the probability of self employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self employment

individual heterogeneity and censoring in panel data estimates of tobacco expenditure a panel of households is used to test the rational addiction model of becker et al 1994 these data raise problems of measurement errors censoring and unobservable heterogeneity we use sample separation information to exclude those households who never purchase tobacco to deal with the remaining zeros we compare specifications based on infrequency of purchase and on censoring gmm and system gmm are used to deal with errors in variables and unobservable heterogeneity within groups two step within groups three step gmm and minimum distance methods are used to allow for censoring there is evidence that the rational addiction specification is sensitive to unobservable heterogeneity and censoring copyright 2002 john wiley sons ltd

zero observations and gender differences in cigarette consumption censoring mechanisms and gender differences are investigated for cigarette consumption by individuals in the usa the gaussian single hurdle model is proposed which generalizes the specifications of cragg 1971 and heckman 1979 and allows examination of the empirical relevance of the two censoring mechanisms in the existing double hurdle model the proposed model performs better than cragg s and heckman s models but not as well as the double hurdle model and also produces different elasticity estimates the hypothesis of equal consumption parameters is rejected and demand elasticities found to differ between men and women income does not play a role and age has conflicting effects on the probability and level of cigarette smoking older individuals are less likely to smoke but conditional on smoking consume more cigarettes than their younger counterparts education has negative effects on the probability and level of smoking and can be an effective tool to curtail cigarette smoking

when does the prime rate change abstract we study the frequency of prime rate changes we model the prime rate as a time series variable that can be changed only at some cost this yields a logit model in which the probability of a prime rate change is a function of market variables we test this model using data from a micro data set that gives the dating of prime rate changes the results indicate that adjustment costs are important to the prime rate adjustment process and that changes in exogenous variables have a significantly larger effect on the probability of a prime rate increase than decrease

monetary policy rules macroeconomic stability and inflation a view from the trenches i estimate a forward looking monetary policy reaction function for the federal reserve for the periods before and after paul volcker s appointment as chairman in 1979 using information that was available to the fomc in real time from 1966 to 1995 the results suggest broad similarities in policy and point to a forward looking approach to policy consistent with a strong reaction to inflation forecasts during both periods this contradicts the hypothesis based on analysis with ex post constructed data that the instability of the great inflation was the result of weak fomc policy responses to expected inflation a difference is that prior to volcker s appointment policy was too activist in reacting to perceived output gaps that retrospectively proved overambitious drawing on contemporaneous accounts of fomc policy i discuss the implications of the findings for alternative explanations of the great inflation and the improvement in macroeconomic stability since then

capital income taxation equilibrium determinacy and the taylor principle abstract the taylor principle disregards nominal capital income taxation the paper derives a tax adjusted taylor principle and shows that empirical studies on monetary policy rules tend to reach too strong conclusions concerning the appropriateness of the monetary policy response to inflation

estimated general equilibrium models for the evaluation of monetary policy in the us and europe a persistent criticism of general equilibrium models of monetary policy which incorporate nominal inertia in the form of the new keynesian phillips curve nkpc is that they fail to capture the extent of inflation inertia in the data in this paper we derive a general equilibrium model based on optimising behaviour but which also implies a data consistent nkpc specifically our model accounts for nominal inertia in both price and wage setting as well for habits in consumption using us and european data from 1970 to 1998 our parameter estimates reveal that i there is relatively more inertia in price setting in europe ii wage contracts last longer in the us iii the extent of backward looking behaviour in price and wage setting is statistically significant but small in both the us and europe and iv significant habits effects are present in european consumption finally we simulate the effects of monetary policy and find that while the magnitude of the impact of monetary policy on the endogenous variables in our estimated models are similar to other econometric studies the dynamic paths for variables display less inertia than is typically found in studies which use output gaps to proxy changes in marginal costs

health risk and the decision to quit smoking this study contributes to the understanding of the decision to quit smoking by taking into account the learning of new risk information the specific hypothesis tested is that smokers learn new risk information and hence create an incentive to quit from their own experience probit models are estimated for the decision to quit smoking based on longitudinal data obtained from taiwan it is shown that health risk measured by the observed change in health status over the period between two surveys has a relatively substantial positive effect on the probability of quitting smoking in addition the results indicate that schooling has a significantly positive effect on the probability of quitting these findings are consistent with the predictions of a bayesian learning framework and suggest that the risk information obtained from individual experience which is the sole source of information available to smokers in most developing countries plays the same role that public information does

the fundamental transformation in macroeconomics when factors enter into joint production they typically develop a degree of specificity with respect to each other it is well known that when combined with contracting difficulties specificity gives rise to a williamsonian fundamental transformation from an ex ante competitive relationship to an ex post bilateral monopoly the macroeconomic consequences of widespread specificity are far reaching specificity results in misallocation underutilization and unemployment of the economy s productive factors it hampers growth by depressing the incentives to replace what is outdated and to fully utilize the economy s resources it disrupts macroeconomic adjustment by inducing a wedge between timid creation and excessive destruction of the old system and it exacerbates downturns by elastifying the cyclical response of inelastic factors this abstract was borrowed from another version of this item

cigarette demand health scares and education in turkey the purpose of this paper is to examine the demand characteristics of cigarettes in turkey aggregate time series date for the 1960 88 period are used in estimation income and price elasticities of cigarette demand are obtained the effect of health warning is estimated to reduce cigarette consumption by about 8 since the inception of warnings in 1982 imports of cigarettes have been allowed since 1984 in addition to advertising of cigarettes in the non electronic media the effect of health warnings are found to be stronger than the opposing effect of advertising the results also suggest that public education about adverse health effects of smoking may be more effective in reducing consumption and less regressive on consumer incomes than raising the price of cigarettes

demand for cigarettes a mixed binary ordered probit approach this study analyses the demand for cigarettes fitting observed zero outcomes with a trivariate model consisting of an equation for the starting smoking decision an equation for the quitting decision and an equation that models the level of cigarettes consumed five competing specifications are considered to explain level with the ordered probit which accommodates pile ups of counts in the dependent variable providing the best fit marginal effects of explanatory variables are calculated providing strong evidence of race and gender differences in consumption patterns the estimated marginal effects are robust to alternative categorizations of the level of cigarettes

government production of investment goods and aggregate labor productivity abstract in this paper i estimate the impact on aggregate labor productivity of having government rather than private industry produce investment goods this policy was pursued to varying degrees by egypt india and turkey among others the policy has a large impact because there is both a direct effect it lowers productivity in the investment sector and a secondary effect it lowers the economy wide capital stock per worker i estimate that this policy alone reduced egypt s aggregate productivity by 30 and accounted for 20 of egypt s aggregate labor productivity gap with the united states during the 1960s

introduction to monetary policy and capital accumulation the papers in this symposium address the issue of multiple equilibria that can be induced by monetary policy in models with capital accumulation in particular they examine how the taylor principle under which interest rates respond more than proportionately to increases in inflation can generate multiple equilibria they also explore the design of policies to avoid the problem of multiple equilibria and indeterminacy

on the timing and efficiency of creative destruction we analyze the timing pace and efficiency of ongoing job reallocation that results from product and process innovation there are strong reasons why an efficient economy ought to concentrate both job creation and destruction during recessions when the opportunity cost of reallocation is lowest incomplete contracting between labor and capital can disrupt this synchronized pattern and decouple creation and destruction transactional difficulties also lead to technological sclerosis characterized by excessively slow renovation government incentives to production may alleviate high unemployment but exacerbate sclerosis in contrast creation incentives increase the pace of reallocation an optimal combination of both policies restores economic efficiency

a double hurdle model of cigarette consumption this paper shows the importance of the double hurdle approach for modelling individuals cigarette consumption using data from the uk general household survey and argues that participation and consumption should be treated as separate individual choices the likelihood function for the full double hurdle is derived and it is shown how restrictions on the stochastic specification of the model and auxillary information which identifies ex smokers allow it to be decomposed the empirical results highlight the value of the sample separation information and the need to model starting and quitting as separate decisions

smokeless tobacco smoking cessation and harm reduction an economic analysis good estimates place hard core smoking rates in the united states at approximately 25 with little change over the decade of the 1990s this paper examines the possibilities of harm reduction with the use of smokeless tobacco specifically using an econometric model we seek to determine whether an increase in the use of smokeless tobacco would lead to reduced smoking rates in the united states applying our model to the nhanes iii national health and nutrition examination survey we find that the use of smokeless tobacco by an average u s male smoker would increase the average probability of smoke cessation by over 10 approximately 3 million additional quits would result for 26 million smokers our study permits an examination of cessation by age groups and we find that males who use smokeless tobacco between 16 and 65 have a 10 14 probability of quitting but that the probability falls beyond age 66 important implications for life extension and health costs would attend these results with u

monopoly human capital accumulation and development abstract monopoly is an important barrier to development for it restricts the mobility of workers this gives rise to specificity problem and consequently weakens workers incentives to invest in human capital in a two sector general equilibrium model calibrated to the facts about the labor market i find that in the long run gdp can rise by about 2 6 times if these distortions are removed even if the monopoly markup and the degree of specificity are set at modest levels

some evidence on the empirical significance of credit rationing this paper examines the credit rationing debate using detailed contract information on over one million commercial bank loans from 1977 to 1988 while commercial loan rates are sticky consistent with rationing this stickiness varies with loan contract terms in ways that are not predicted by equilibrium credit rationing theory in addition the proportion of new loans issued under commitment does not increase significantly when credit markets are tight despite the fact that borrowers without commitments can be rationed whereas commitment borrowers are contractually insulated from rationing overall the data suggest that equilibrium rationing is not a significant macroeconomic phenomenon

the cleansing effect of recessions the authors investigate industry response to cyclical variations in demand production units that embody the newest process and product innovations are continuously being created and outdated units are being destroyed although outdated units are the most likely to turn unprofitable and be scrapped in a recession they can be insulated from the fall in demand by a reduction in creation the structure of adjustment costs plays a determinant role in the responsiveness of those two margins the calibrated model matches the relative volatilities of the observed manufacturing job creation and destruction series and their asymmetries over the cycle copyright 1994 by american economic association

does trade openness matter for aggregate instability abstract this paper presents a cash in advance model of a small open economy and shows that whether an inflation targeting interest rate rule introduces aggregate instability depends in general on the degree of openness to international trade this result emerges regardless of whether prices are sticky or flexible in a closed economy as the monetary authority responds to movements in inflation the resulting changes in interest rates affect aggregate consumption through an intertemporal substitution effect and an inflation tax effect in a small open economy this policy also induces changes in the terms of trade which depending on the degree of openness can generate counteracting effects on consumption as a consequence the implications of interest rate rules on macroeconomic stability in an open economy differ from those in a closed economy

u s cigarette consumption the case of low income women we use double hurdle or cragg models to test whether decisions about smoking participation and consumption levels are separate endogenous choices we also estimate several dominance models which assume that standard corner solutions are not applicable a complete dominance model with independence between the participation and consumption decisions is the preferred specification for our data the most important variables influencing participation are region number of children education and ethnicity region age race ethnicity and health status most affected consumption levels