substitution elasticities between ghg polluting and nonpolluting inputs in agricultural production a meta regression abstract this paper reports meta regressions of substitution elasticities between greenhouse gas ghg polluting and nonpolluting inputs in agricultural production which is the main feedstock source for biofuel in the u s we treat energy fertilizer and manure collectively as the polluting input and labor land and capital as nonpolluting inputs we estimate meta regressions for samples of morishima substitution elasticities for labor land and capital vs the polluting input much of the heterogeneity of morishima elasticities can be explained by type of primal or dual function functional form type and observational level of data input categories number of outputs type of output time period and country categories each estimated long run elasticity for the reference case which is most relevant for assessing ghg emissions through life cycle analysis is greater than 1 0 and significantly different from zero most predicted long run elasticities remain significantly different from zero at the data means these findings imply that life cycle analysis based on fixed proportion production functions could provide grossly inaccurate measures of ghg of biofuel

research advances in environmentally and socially sustainable operations abstract consumers and governments are pressuring firms to strike a balance between profitability and sustainability however this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow profit resource flow planet and development flow people for the entire ecosystem comprising poor producers in emerging developing markets global supply chain partners consumers in developed countries and the planet by considering the flows associated with different entities within the ecosystem we classify and summarize recent operations research management science or ms research developments also we identify several gaps for future research in this important area

lifecycle economic analysis of biofuels accounting for economic substitution in policy assessment this paper develops a lifecycle economic analysis lcea model that integrates endogenous input substitution into the standard lifecycle analysis lca of biofuel that typically assumes fixed proportions production we use the lcea model to examine impacts of a pure carbon tax and a revenue neutral tax subsidy policy on lifecycle greenhouse gas emissions from cellulosic ethanol using forest residues as feedstock in washington state in a model allowing for input substitution in the cellulosic ethanol feedstock conversion and transportation process we consider energy source substitution woody biomass for coal in the cellulosic ethanol conversion plant and biodiesel for diesel in feedstock production and feedstock and ethanol transportation as well as substitution of capital and labor for energy in all stages of the lifecycle we find that ignoring endogenous input substitution by using standard lca leads to substantial underestimation of the impact of carbon tax policies on carbon emissions both tax policies can substantially reduce carbon emissions by inducing substitution among inputs the revenue neutral tax subsidy policy reduces emissions more effectively than the carbon tax policy for carbon tax rates currently in place throughout most of the world it stimulates substitution of woody biomass for coal and biodiesel for diesel at much lower tax rates when accompanied by corresponding subsidies for reduced emissions from renewable sources

the use and abuse of meta analysis in environmental and natural resource economics an assessment motivated by the 2006 report of a work group appointed by the environmental protection agency epa this paper examines the present state of meta analysis in environmental economics and offers recommendations for its future use to this end we summarize and assess 140 meta analyses from 125 published and unpublished studies covering 17 topical categories in environmental and resource economics first we provide several generic meta analysis models as reference points and discuss major estimation issues five econometric issues are identified as part of a complete analysis 1 sample selection criteria 2 basic data summary 3 primary data heterogeneity 4 heteroskedasticity and 5 non independence of multiple observations from primary studies second a tabular summary is presented for the 140 meta analyses with respect to estimation methods third a narrative summary is presented for 19 meta analyses including the three value of statistical life studies examined by the epa work group and one analysis from each of 16 other categories fourth we offer a set of best practice guidelines for future meta analyses in this and other areas of economics last the paper comments on the use of meta analytic methods for benefit transfers of environmental values

group cost of living indexes when households have different consumption patterns whose cost of living should an actual price index represent this issue was first raised by j l nicholson and s j prais in the 1950 s both made essentially the same point official price indexes give each household s consumption pattern an implicit weight proportional to its total expenditures see nicholson p 540 prais calls such an index plutocratic and both nicholson and prais suggest an alternative democratic price index which gives all households equal weight a group cost of living index is an index that measures the impact of price changes on the welfare of a group or population of households to define such an index requires an explicit or implicit concept of the welfare of a group and hence requires interpersonal comparison and distributional judgments since group indexes such as the consumer price index play an important role in our perception of inflation and the formation of macro economic policy and are used to escalate wages and social security benefits they have significant effects on government decisions and economic welfare despite their intellectual interest and practical importance however until recently they have been virtually ignored by index number theorists the theory of the cost of living index cli provides a generally accepted framework for measuring the impact of price changes on the welfare of a particular household this paper extends the cli concept to groups and discusses which questions require group indexes and which do not i begin by introducing some notation and terminology in the context of household clis a household s cli is the ratio of the expenditures required to attain a particular base indifference curve in two price situations suppose there are n goods and s households and denote the preference ordering of the rth household by r r the base indifference curve can be identified by a goods collection xro which lies on it the expenditure function er p xr rr shows the minimum expenditure required to attain the base indifference curve at prices p the cli of the rth household ir pa pb xrorr is the ratio of the minimum expenditure required to attain the base indifference curve at prices pa comparison prices to that required at prices pb reference prices except in very special cases the value of the cli depends on the base indifference curve at which it is evaluated as successively higher base indifference curves are specified one would expect the prices of luxuries to become more important relative to the prices of necessities hence it is convenient to regard the cli as a function of the base indifference curve rather than as a single number corresponding to a particular base thus instead of offering guidance in choosing an appropriate base indifference curve theory suggests that there is no need to choose to construct the exact cli an investigator needs to know the household s preferences lacking this knowledge he rnust fall back on indexes which require less information and which are upper bounds on the exact index the laspeyres index jr papbxrb is the ratio of the cost of purchasing the reference period consumption basket at comparison prices to its cost

cellular telephone new products and the cpi since their introduction in 1983 cellular telephones adoption has grown at 25 35 per year at year end 1997 about 55 million cellular telephones were in use in the united states the bureau of labor statistics bls did not know that cellular telephones existed at least in terms of calculating the consumer price index cpi until 1998 when they were finally included in the cpi omitting cellular telephones from the cpi created a significant bias i estimate a bias in the bls estimate of the telecommunications services index of between 8 1 9 per year because of the omission of the cellular telephone rather than telecommunications service prices increasing at about 1 1 per year the correct calculation has them decreasing at about 8 per year omission of new goods from the cpi for significant periods of time leads to important bias in the calculation of the cpi

the social cost of living index abstract household cost of living indexes reflect household preferences analogous indexes for groups of households require a corresponding concept of group preferences in this paper i investigate the social cost of living index a group index based on the bergson samuelson social welfare function i first define the index and examine its properties under the assumption that the investigator constructing it expresses his distributional judgments in an explicit bergson samuelson social welfare function i then examine the maximizing society and the independent society two cases in which the index can be constructed from the information contained in the market demand functions in these two cases a laspeyres index i e the fixed weight index based on the reference consumption pattern is an upper bound on the exact social cost of living index in general however the assumptions required to place bounds on the social cost of living index are much more likely to be satisfied than those required to place analogous bounds on a household s cost of living index

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

interfuel substitution a meta analysis interfuel substitutability has been of longstanding interest to the energy economics and policy community however no quantitative meta analysis has yet been carried out of this literature this paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector manufacturing industry or subindustries or macro economy of a variety of developed and developing economies publication bias is controlled for by including the primary study sample size in the meta regression results for the shadow elasticities of substitution between coal oil gas and electricity for forty six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas electricity and coal electricity substitution possibilities seem more constrained at the macro level and less constrained in sub industries estimates also vary across countries publication bias does not seem to be present but model and data specification issues very significantly affect the estimates derived by each individual study estimates from cross section regressions are generally largest fixed effects panel estimates intermediate in magnitude and time series estimates are mostly much smaller econometric research suggests that the fixed effects estimates are likely the best among the existing studies though biased downwards

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

scanner data and the measurement of inflation this paper outlines the potential use of bar code scanner data from retailers for the measurement of inflation the source benefits from its extensive coverage in providing data on prices quantities and values of transactions of each model of a good sold relative weights can thus be ascribed to price changes in both base and current months at a highly detailed level which allows us to estimate substitution bias methods of adjusting for quality changes can be considered the dummy variable hedonic approach is compared with a superlative exact hedonic approach and a matching technique akin to that used by statistical offices

retailers strategies and food price dynamics evidence from dairy scanner data abstract we investigate the relationship between retailers strategies and dairy price dynamics using high frequency italian scanner data for different dairy products we compute a weekly drift free price index specific for product category chain and type of store exploiting the unbalanced panel data structure to control for unobservable strategies by chain time and type of store we test if unobservables are statistically significant in influencing the price dynamics of each of the products covered by our analysis in general chain and type of store specific unobservables play a significant role moreover we identify the role of some observable strategic variables in controlling or in stimulating price inflation rates we obtain mixed results on the relationship between private label pl market shares and price trend while we find price promotions to be more effective if applied to national brands nbs rather than pls we conclude with some implications for the potential role of public policies in controlling food inflation

integrated optimization of procurement processing and trade of commodities we consider the integrated optimization problem of procurement processing and trade of commodities in a multiperiod setting motivated by the operations of a prominent commodity processing firm we model a firm that procures an input commodity and has processing capacity to convert the input into a processed commodity the processed commodity is sold using forward contracts while the input itself can be traded at the end of the horizon we solve this problem optimally and derive closed form expressions for the marginal value of input and output inventory we find that the optimal procurement and processing decisions are governed by price dependent inventory thresholds we use commodity markets data for the soybean complex to conduct numerical studies and find that approximating the joint price processes of multiple output commodities using a single composite output product and using the approximate price process to determine procurement and processing decisions is near optimal compared to a myopic spread option based heuristic the optimization based dynamic programming policy provides significant benefits under conditions of tight processing capacities and high price volatilities finally we propose an approximation procedure to compute heuristic policies and an upper bound to compare the heuristic against when commodity prices follow multifactor processes

chained exact and superlative hedonic price changes estimates from microdata scanner data are used to calculate chained exact and superlative hedonic price indexes for television sets the data source is available for a wide range of goods the application providing an example of how this method can be more widely applied the indexes correspond to constant utility hedonic cost of living indexes the approach improves on the existing direct method which takes its estimates directly from the coefficients on time dummies in a hedonic regression it also improves on the matched model method used by statistical agencies the differences between actual price changes and exact hedonic quality adjusted price changes are found to be substantial base period and current period weighted exact hedonic indexes are similar thus providing good approximations to a superlative index estimates from the direct dummy variable approach were compared to the superlative indexes the disparities between the results argue for caution in the use of the direct dummy variable approach to estimating

meta regression analysis a quantitative method of literature surveys abstract pedagogically literature reviews are instrumental they summarize the large literature written on a particular topic give coherence to the complex often disparate views expressed about an issue and serve as a springboard for new ideas however literature surveys rarely establish anything approximating unanimous consensus ironically this is just as true for the empirical economic literature to harmonize this dissonance we offer a quantitative methodology for reviewing the empirical economic literature meta regression analysis mra is the regression analysis of regression analyses mra tends to objectify the review process it studies the processes that produce empirical economic results as though they were any other social scientific phenomenon mra provides a framework for replication and offers a sensitivity analysis for model specification in this brief essay we propose a new method of reviewing economic literature mra and discuss its potential

trade liberalization and agricultural chemical use united states and mexico to anticipate the likely effects of recent trade agreements with mexico on the environment and food safety this paper examines changes in agricultural chemical use econometric estimation and simulation suggest that the combined effects of the north american free trade agreement nafta economic growth research investment and farm policy are expected to increase chemical usage substantially in the united states and undoubtedly lead to greater groundwater contamination in mexico the expected effects are a substantial increase in fertilizer use but a decrease in pesticide use increases in private research investment are expected to increase the use of both types of chemicals but increases in public research investment in the united states are not

the real real price of nonrenewable resources copper 1870 2000 over the past 40 years economists have devoted considerable effort to estimating long run trends in real commodity prices the results indicate that the real prices for many commodities have fallen suggesting to the surprise of many that resource scarcity is declining over time almost all of this work however uses the u s producer price index or other standard price deflators which recent research shows overestimate inflation for several reasons this article examines copper prices with adjusted deflators designed to eliminate this bias it finds that the trend over time which is significantly downward when no adjustment is made to the deflator displays no tendency in either direction or is significantly upward depending on the magnitude of the deflator adjustment employed these findings suggest that real resources prices provide less support than widely assumed for the hypothesis that resources are becoming more available or less scarce over time

consumer prices the consumer price index and the cost of living after presenting major findings and recommendations the cpi commission reiterates the estimate of a 1 1 percentage point per annum upward bias it rejects the contention that the bls already makes substantial corrections for quality change that quality improvements and new products accrue only to the rich and that procedures to make more extensive quality adjustments valuations of new products and adjustments for commodity and outlet substitution are impractical the bias in the cpi can be sharply reduced as the authors detail in this paper coauthors are ellen r dulberger robert j gordon zvi griliches and dale w jorgenson

an analysis of partially guaranteed price contracts between farmers and agri food companies global agri food companies such as barilla and sabmiller are purchasing agricultural products directly from farmers using different types of contracts to ensure stable supply we examine one such contract with partially guaranteed prices pgp under a pgp contract around sowing time the buying firm agrees to purchase the crop when harvested by the farmer offering a guaranteed unit price for any fraction of the produce and offering the commodity market price prevailing at the time of delivery for the remainder the farmer then chooses the fraction by analyzing a stackelberg game we show 1 how the pgp contract creates mutual benefits when the firm s purchase quantity is taken as being exogenous we also analyze how the pgp contract is robust in creating value for both the firm and the farmer 2 when the firm s purchase quantity is endogenously determined 3 when the firm provides advisory services to the farmer and 4 when the firm offers a price premium as an incentive for farmers to exert efforts to comply with sustainable agricultural practices

estimating consumer preferences using market data an application to us automobile demand this paper explores the possibility of using market data to identify consumer preferences a utility function composed of homogeneous characteristics and goods specific effects is used as a basic link between the goods space and the characteristics space the functional form for the hedonic price equation the data requirements and issues of measurement errors for estimating demand and supply of characteristics are discussed we illustrate the methodology by considering the us automobile demand using 1969 86 data compiled from consumer reports and ward s automotiveyearbook

bias and inefficiency in quality adjusted hedonic regression analysis numerous quality adjusted hedonic price trend studies based on computer prices have provided support to widely held suspicions that officially released price indices are not accurately measuring the price declines occurring in many information technology it products if provable then general price inflation is being overestimated and consequently real gdp is being underestimated existing evidence however is inconclusive first empirical findings for it products other than computers are essentially non existent and secondly estimation bias is inherent in the hedonic regression technique most commonly employed this article presents an unbiased method together with an estimated quality adjusted price trend for laser printers 1993 2004

on the choice offunctional forms in agricultural production analysis empirical results obtained by an analyst may depend on prior choice of functional form three alternative parametric specifications of the cost function are considered these are generalized leontief translog and normalized quadratic functions performance of these functional forms is evaluated by allen elasticities of substitution biases in technical change and some theory based hypotheses all three parametric specifications yielded mixed results together empirical results reinforce the need for model specification searches

sources of bias and solutions to bias in the consumer price index four sources of bias in the consumer prices index cpi have been identified the most discussed is substitution bias which creates a second order bias in the cpi three other changes besides prices changes create first order effects on a correctly measured cost of living index coli i explain in this paper that a pure price based approach of surveying prices to estimate a coli cannot succeed in solving the 3 problems of first order bias i discuss economic and econometric approaches to measuring the first order bias effects as well as the availability of scanner data that would permit implementation of the techniques

estimating substitution and expansion effects using a profit function framework this study reports a first attempt to derive all the relevant information with respect to the structure of production of an industry using knowledge of only a profit function using estimates of a profit function for canadian agriculture a procedure to separate substitution and expansion effects for both inputs and outputs was implemented information concerning net input and output substitution and complementarity possibilities were obtained the most important empirical results suggest that the hypothesis of nonjoint production of crop and animal outputs in canadian agriculture cannot be rejected and that hired and operator labor are complements rather than substitutes

should the cost of living index provide the conceptual framework for a consumer price index in some countries the cost of living col index serves as the conceptual framework for the cpi but it has been rejected in others this paper reviews issues that have arisen in the statistical agency debate and in the economics literature on the col index including rhetorical matters which have influenced the debate i contend that col theoiy is useful as a decision making framework in estimating components of the cpi and that col index theory provides appropriate guidance for measuring consumer inflation contrary to the view that has been adopted for the european hicp and expressed by an advisory committee for the rpi in several countries the united states netherlands sweden the theory of the cost of living col index provides the conceptual framework for the country s consumer price index cpi see united states department of labor 1997 balk 1994 and dalen 1999 others reject the cost of living index framework an example is the australian bureau of statistics 1997 rejection of the col index is also explicit in an rpi advisory committee recommendation in the united kingdom in still other countries canada being an example official documents for the cpi are ambiguous about the role of the col index statistics canada 1995 the international guideline for consumer price indexes the ilo manual turvey 1989 does not even mention the col index the question has taken on heightened interest recently part of the stimulus comes from the european union s relatively new harmonised indexes of consumer prices hicp for the hicps eurostat has rejected the col

impact of sms based agricultural information on indian farmers this study estimates the benefits that indian farmers derive from market and weather information delivered to their mobile phones by a commercial service called reuters market light rml we conduct a controlled randomized experiment in 100 villages of maharashtra treated farmers associate rml information with a number of decisions they have made and we find some evidence that treatment affected spatial arbitrage and crop grading but the magnitude of these effects is small we find no statistically significant average effect of treatment on the price received by farmers crop value added crop losses resulting from rainstorms or the likelihood of changing crop varieties and cultivation practices although disappointing these results are in line with the market take up rate of the rml service in the study districts which shows small numbers of clients in aggregate and a relative stagnation in take up over the study period jel codes o13 q11 q13 the purpose of this study is to ascertain whether agricultural information distributed through mobile phones generates economic benefits to farmers we implement a randomized controlled trial of a commercial service entitled reuters market light rml offered by the largest and best established private provider of agricultural price information in india at the time of the experiment operating in maharashtra and other indian states rml distributes price weather and crop advisory information through sms messages we offered a one year free subscription to rml to a random sample of farmers to test whether they obtain higher prices for their agricultural output

measurement bias in the hicp what do we know and what do we need to know the harmonized index of consumer prices hicp is the primary measure of inflation in the euro area and plays a central role in the policy deliberations of the european central bank ecb the ecb defines its treaty mandate of price stability as a year on year increase in the harmonised index of consumer prices hicp for the euro area of below 2 to be maintained over the medium term among the rationales given for defining price stability as prevailing at some positive measured inflation rate is the possibility that the hicp as published incorporates measurement errors of one sort or another that may cause it to systematically overstate the true rate of inflation in the euro area this paper reviews what currently is known about the scope of measurement error in the hicp we conclude that given the vague conceptual framework of the hicp the scant research on price measurement issues in the eu and the ongoing improvements in the hicp there is very little scientific basis at this time for a point or even an interval estimate of a positive bias in the hicp copyright blackwell publishers ltd 2004

price elasticity dynamics over the adoption life cycle little empirical research has been conducted to test the dynamic behavior of elasticities over the product life cycle competing specifications of price elasticity dynamics are examined to test the

impacts of technological change on factor substitution between energy and other inputs within us agriculture 1950 79 abstract past efforts to estimate elasticities of substitution between inputs both in and out of agriculture have usually made use of a single data set to provide the elasticities between the input pairs and have led to highly conflicting results particularly with respect to the substitution between capital or machinery and energy this study reveals that the elasticity of substitution between a number of input pairs in agriculture can vary by substantial amounts depending on the time period used for the estimation energy in agriculture which was a complement for machinery in the 1950s was a substitute by the 1970s

publication bias in the economic freedom and economic growth literature abstract the impact of institutions on economic performance has attracted significant attention from researchers as well as from policy reformers a rapidly growing area in this literature is the impact of economic freedom on economic growth the aim of this paper was to explore publication bias in this literature by means of traditional funnel plots meta significance testing as well as by bootstrapping these meta significance tests when all the available estimates are combined and averaged there seems to be evidence of a genuine and positive economic freedom economic growth effect however it is also shown that the economic freedom economic growth literature is tainted strongly with publication bias the existence of publication bias makes it difficult to identify the magnitude of the genuine effect of economic freedom on economic growth the paper explores the differences between aggregate and disaggregate measures of economic freedom and shows that selection effects are stronger when aggregate measures are used

how a dominant retailer might design a purchase contract for a newsvendor type product with price sensitive demand abstract a dominant retailer will purchase a newsvendor type product from a manufacturer who incurs a unit manufacturing cost k the expected retail demand is a function of the unit retail price p how should the retailer design her purchase contract for this increasingly prevalent but inadequately studied scenario we propose plausible adaptations of several contract formats that have been widely studied in the dominant manufacturer context for both symmetric k and a symmetric k knowledge situations we present performance results of these contracts our results then reveal that the performance of these contract formats under our scenario differs considerably from what one would surmise from the well known results published for closely related scenarios for example the widely studied buyback and revenue sharing formats turn out to be largely ineffective when implemented by a dominant retailer in contrast the two part tariff format performs well relative to the theoretically optimal menu of contracts our results highlight the need to study purchase contract formats designed specifically for dominant retailer newsvendor product channels

on calculating cost of living index numbers for arbitrary income levels we present a method for calculating cost of living index numbers for arbitrary base period income levels without using heavy econometric estimation methods the second order approximation formulas contain parameters which can easily be estimated by a differential demand system using a suitable specification it is possible to work at a low level of commodity aggregation the method is demonstrated on netherlands data for the period 1952 1981 cost of living index numbers for individual households can be expected to differ substantially there are various reasons for this expectation prices paid for the same commodity can vary between households in principle each household has its own preference structure implying its own substitution behavior in the presence of changing prices income differences between households imply dif ferences in consumption patterns which in the presence of changing relative prices imply diverging cost of living index numbers especially the variation of cost of living index numbers with the reference income levels attracts a lot of attention in the public discussion there is some empirical evidence about the magnitude of this variation because most statistical offices publish more than one consumer price index the netherlands cbs for instance has three cpi s namely for all households for households of wage earners with an income below a certain limit and for households of wage earners above that limit more detailed are the results of michael 1979 hagemann 1982 and balk 1984 using consumption patterns of individual households obtained from a consumer expenditure survey they compiled price index numbers for individual households and studied the differ ences under various viewpoints the drawback of these studies is that they are based on laspeyres type price index numbers thus what in essence is compared are upper limits of household specific cost of living index numbers the substitu tion behavior is ignored this is acceptable only for relatively short periods or more generally for periods with relatively small price changes a useful feature of working with laspeyres type index numbers is that one can use highly 1 the views expressed in this paper are those of the author and do not necessarily reflect the policies of the netherlands central bureau of statistics the author gratefully acknowledges the computational assistance of h a van der grient and a j hundepool mike baye is thanked for his comments on a previous version a previous version entitled a simple method for calculating

price and income elasticities of residential water demand a meta analysis this article presents a meta analysis of variations in price and income elasticities of residential water demand meta analysis constitutes an adequate tool to synthesize research results by means of an analysis of the variation in empirical estimates reported in the literature we link the variation in estimated elasticities to differences in theoretical microeconomic choice approaches differences in spatial and temporal dynamics as well as differences in research design of the underlying studies the occurrence of increasing or decreasing block rate systems turns out to be important with respect to price elasticities the use of the discrete continuous choice approach is relevant in explaining observed differences

microeconomic estimates of housing depreciation measuring economic depreciation in residential real estate is important for deepening our understanding of housing market behavior and for assessing a variety of public policies independent estimates of depreciation rates for many metropolitan areas provide a rich data base for analyzing the interaction between structure depreciation and for example suburbanization also public policies such as rent control and tax incentives for construction could be better evaluated and designed with improved estimates of depreciation for example in an attempt to stimulate construction in 1981 congress cut allowable depreciation for tax purposes from something like 30 years to 15 years then in 1986 in response to apparent over building congress raised the depreciation rate back to 27 5 years better estimates of depreciation rates could have contributed to better targeting of incentives a literature survey indicates significant variation in estimates of depreciation rates for residential real estate the variation in reported results seems to be due to differences in the definition of depreciation employed in the models and data used to estimate depreciation rates and in some cases the condition of the real estate market examined at the time of the study a primary objective of this paper is to establish that rates of economic depreciation vary spatially by using the same hedonic model and representative data from each of 59 metropolitan areas we are able to eliminate differences in models and data as the only source of variation in estimated depreciation rates and attribute some of the observed variation to differences in housing markets this paper reports estimates of metropolitan area specific rates of economic depreciation for residential real estate obtained using the hedonic pricing methodology separate h donic equations were estimated for owneroc upied and renter occupied properties for each of 59 metropolitan areas with the exception of variables that identified particular locations within the urban area the same hedonic equation was used to estimate tenure spec f c depreciation rates that is the same hedonic specification was used for each of the 59 metropolitan areas to estimate depreciation rates for owner occupied and for renteroccupied housing we define economic depreciation to be the decline in asset price or shadow price due to aging hulten and wykoff 1981 85 our hedonic equation for renter occupied housing therefore examines how the current market price of the flow of rental housing services varies with dwelling age rents might be expected to change as the flow of housing services decreases as the unit deteriorates the market value of owner occupied residential real estate on the other hand reflects the present value of future housing services as well as current services hence changes in any of the determinants of present value will have a significant impact on the current market value of owner occupied housing

holiday price rigidity and cost of price adjustment the thanksgiving christmas holiday period is a major sales period for us retailers due to higher store traffic tasks such as restocking shelves handling customers questions and inquiries running cash registers cleaning and bagging become more urgent during holidays as a result the holiday period opportunity cost of price adjustment may increase dramatically for retail stores which should lead to greater price rigidity during holidays we test this prediction using weekly retail scanner price data from a major midwestern supermarket chain we find that indeed prices are more rigid during holiday periods than non holiday periods for example the econometric model we estimate suggests that the probability of a price change is lower during holiday periods even after accounting for cost changes moreover we find that the probability of a price change increases with the size of the cost change during both the holiday as well as non holiday periods we argue that these findings are best explained by higher price adjustment costs menu cost the retailers face during the holiday periods our data provides a natural experiment for studying variation in price rigidity because most aspects of market environment such as market structure industry concentration the nature of long term relationships contractual arrangements etc do not vary between holiday and nonholiday periods we therefore are able to rule out these commonly used alternative explanations for the price rigidity and conclude that the menu cost theory offers the best explanation for the holiday period price rigidity

dynamic input demand an application to agriculture a theoretically consistent analytical framework for examining dynamic agricultural input demand is developed and applied results from duality theory on restricted variable profit functions are incorporated into a long run dynamic optimization framework input use is affected by external adjustment costs which permits sluggish factor adjustment

empirical studies of depreciation this paper surveys empirical research on depreciation based on an econometric model of asset prices introduced by hall in 1971 and shows how hall s model provides a vehicle for unifying research on constant quality price indices and depreciation an additional objective of the paper is to illustrate the use of this research in constructing an integrated system of income product and wealth accounts a system of vintage accounts like that originated by christensen and jorgenson in 1973 is the key to successful integration

estimation of a hedonic price equation for bordeaux wine does quality matter in this paper the hedonic price technique is applied to bordeaux wine in the hedonic price function we include not only the objective characteristics appearing on the label of the bottle but also the sensory characteristics of the wine our data come from an experimental study in which juries have evaluated and graded a sample of bordeaux wines the estimation of the hedonic price equation shows that the market price is essentially determined by the objective characteristics the estimation of a jury grade equation shows that quality unlike the market price is essentially determined by the sensory characteristics

getting prices right what should be done much of the profession accepts that the cpi likely overstates the rate of increase of the cost of living it is less clear that there are sound and feasible steps that the bls can adopt to improve matters in the short run there are unresolved conceptual and identification problems in the measurement of quality superlative price indexes are not feasible and feasible approximations are not superlative and may not even be better the need for a single index that aggregates over heterogeneous consumers with different incomes tastes and needs casts serious doubt on the cost of living approach

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

international business and trade in the next decade report from a delphi study the globalization of business causes major changes in the business environment and in business practices forecasting such changes is crucial for the preparation of responses to them this article reports on a delphi study conducted with a global set of experts drawn from the policy business and academic communities over three rounds of mailings these experts analyzed and debated the likelihood of changes in the international business environment over the next decade and the impact of these changes on corporate practices the findings identify key geographic areas of business growth major sectoral transformations shifts in the trade framework and its institution and strategies for corporate adjustment

working to improve the consumer price index he recent report of the advisory commission appointed by the u s senatefinance committee begins with one overarching recommendation thebls should establish a cost of living index coli as its objective in mea suring consumer prices u s senate 1996 p 2 this seems basically right to us indeed the bls has long said that the cost of living framework guides operationaldecisions about the construction of the index gillingham 1974 u s bureau oflabor statistics 1984 1988 1992 1997a putting things slightly differently if thebls staff or other technical experts knew how to produce a true cost of living indexon a monthly production schedule that would be what we would produce althoughwe have no fundamental disagreement with the commission about what the objec tive of the cpi program ought to be we may disagree to some extent about theapproaches and methods that are appropriate and feasible in working toward thatobjective this is a point to which we will return below our rst purpose in the present paper is to comment on the advisory com mission s report and the recommendations it contains