activist monetary policy imperfect capital mobility and the overshooting hypothesis abstract the hypothesis of exchange rate overshooting is investigated in the context of a model that incorporates activist monetary policy variable output imperfect capital mobility and slow price adjustment monetary policy which accommodates prices and or interest rates is shown to increase the probability of undershooting using constrained maximum likelihood methods the model is estimated for germany and japan since the advent of generalized floating in 1973 based on the estimated parameter values the mark exhibits overshooting while the yen is characterized by undershooting the constraints implied by the model cannot be rejected at standard significance levels for either country

deregulation consolidation and efficiency evidence from the spanish insurance industry this paper provides new information on the effects of deregulation and consolidation in financial services markets by analyzing the spanish insurance industry the sample period 1989 98 spans the introduction of the european union s eu third generation insurance directives which deregulated the eu insurance market deregulation has led to dramatic changes in the spanish insurance market the number of firms declined by 35 average firm size increased by 275 and unit prices declined significantly in both life and non life insurance we analyze the causes and effects of consolidation using modern frontier efficiency analysis to estimate cost technical and allocative efficiency as well as using malmquist analysis to measure total factor productivity tfp change the results show that many small inefficient and financially underperforming firms were eliminated from the market due to insolvency or liquidation as a result the market experienced significant growth in tfp over the sample period consolidation not only reduced the number of firms operating with increasing returns to scale but also increased the number operating with decreasing returns to scale hence many large firms should focus on improving efficiency by adopting best practices rather than on further growth

efficiency of the medical care industry evidence from the italian regional system abstract what might be the relation between clinical research and efficiency of medical care suppliers is the hypothesis of a positive relation consistent considering efficiency as the supplier s ability to maximize the number of patients hospitalized in a mobility process among regions i e mobility balance this work aims at highlighting the existence of a positive externality of pharmaceutical clinical research on that kind of efficiency in other words an externality is able to affect the patients perception of good bad quality of outputs supplied by the medical care industry leading their mobility process taking italy and the mobility of patients among regions into account an operational research study will be performed in order to support this assumption the goal of this work is to show an alternative way to increase the efficiency of medical care suppliers on the market of health care that is to say through their competitiveness on the market of human experimentation

the determinants of efficiency and productivity in the swiss insurance industry abstract using state of the art frontier efficiency methodologies we study the efficiency and productivity of swiss insurance companies in the life property casualty and reinsurance sectors from 1997 2013 in this context we provide the first empirical analysis of internationalization strategies of insurance companies a topic of high interest in the business and economics literature but one that has to date not been the focus of efficiency studies in the insurance sector we find that productivity and efficiency have improved with regard to property casualty and reinsurance in the case of life insurance productivity and efficiency diminished however life insurance firms with higher levels of international business exhibit superior efficiency levels we observe that diversification strategies directed to the european market are more beneficial compared to those targeting markets outside of europe

international coordination in the design of macroeconomic policy rules abstract the paper examines international issues that arise in the design and evaluation of macroeconomic policy rules it begins with a theoretical investigation of the effects of fiscal and monetary policy in a two country rational expectations model with staggered wage and price setting and with perfect capital mobility the results indicate that with the appropriate choice of policies and with flexible exchange rates demand shocks need not give rise to international externalities or coordination issues price shocks however do create an externality and this is the focus of the empirical part of the paper using a simple seven country model consisting of canada france germany italy japan the united kingdom and the united states optimal cooperative and non cooperative nash policy rules to minimize the variance of output and inflation in each country are calculated the cooperative policies are computed using standard dynamic stochastic programming techniques and the non cooperative policies are computed using an algorithm developed by finn kydland the central result is that the cooperative policy rules for these countries are more accommodative to inflation than the non cooperative policy rules

activist monetary policy and exchange rate overshooting the deutsche mark dollar rate abstract after a decade of generalized floating it is clear that bilateral exchange rates exhibit more variability than the economic aggregates relative prices incomes and money supplies which generally comprise the fundamentals of theories of exchange rate determination dornbusch s overshooting hypothesis is the best known explanation of this phenomenon this paper shows that accommodative monetary policy with respect to prices has the potential to cause the economy to switch from exchange rate overshooting to undershooting using constrained maximum likelihood methods the model is estimated for germany and the united states the results provide strong evidence in support of the overshooting hypothesis for the deutsche mark dollar exchange rate

economies of scale and scope in the finnish non life insurance industry abstract economies of scale and scope in finnish non life insurance are studied the production process is separated into cost and portfolio management functions firms expand their branch network to either gain market power or informational advantages there are diseconomies of scale at firm and economies of scale at branch level and economies of scope in production large firms in the non life insurance industry pay a substantial premium to gain market power via branch networks the retained premiums curve of portfolio management is u shaped and a positive function of the number of branches

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

under pressure how the business environment affects productivity and efficiency of european life insurance companies deregulation and widespread economic changes have fundamentally affected the business environment of european life insurance companies over the last decades we apply multi stage data envelopment analysis to identify the impact of the changing environment on productivity and efficiency of european life insurance companies considering a sample of 970 life insurance companies from 14 european countries we show that general economic capital market and insurance market conditions are important drivers of efficiency although we find no technical change in the european life insurance sector we nonetheless observe an efficiency increase in 2002 2013 that leads to an increase in total factor productivity these trends can be explained by more challenging business conditions in the 2000s our results emphasize the need to control for the business environment in cross country efficiency studies

measuring the joint impact of governance form and economic regulation on airport efficiency abstract this paper examines the joint impact that governance structure and economic regulation has on airport efficiency the previous literature has focused on one or the other of these factors but not both the empirical investigation uses a semi parametric bayesian distance stochastic frontier model as well as a data envelopment analysis dea model based on a panel of airports in several countries we find that the form of economic regulation is relatively more important than the type of governance in affecting efficiency the article provides measures of changes in expected efficiency when either or both the governance form and price regulation changes

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

the public accounting industry production function abstract a translog function is specified to represent the relation between revenue and human resource inputs in public accounting firms estimation of the model using a balanced panel of annual data for 64 large cpa firms for the period 1995 1999 indicates that increasing returns to scale prevail in the public accounting industry justifying recent merger and acquisition activities among accounting firms average marginal revenue product of partners increased monotonically from 1995 to 1998 decreased slightly in 1999 and was about nine times that of other professionals during 1995 1999 the public accounting industry exhibited continuing improvement in productivity over the 5 years

organizational form and efficiency the coexistence of stock and mutual property liability insurers this article introduces a new approach cross frontier analysis for estimating the relative efficiency of alternative organizational forms in an industry the technique is illustrated by analyzing a sample of stock and mutual property liability insurers using nonparametric frontier efficiency methods cross frontier analysis measures the relative efficiency of each organizational form by computing the efficiency of each stock mutual firm relative to a reference set consisting of all mutual stock firms we test agency theoretic hypotheses about organizational form including the managerial discretion and expense preference hypotheses the results indicate that stocks and mutuals are operating on separate production and cost frontiers and thus represent distinct technologies consistent with the managerial discretion hypothesis the stock technology dominates the mutual technology for producing stock outputs and the mutual technology dominates the stock technology for producing mutual outputs however consistent with the expense preference hypothesis the stock cost frontier dominates the mutual cost frontier our findings thus suggest a richer interpretation of organizational form than provided by previous researchers

the effect of organizational structure on efficiency evidence from the spanish insurance industry this paper provides new information on the effects of organizational structure on efficiency by analyzing spanish stock and mutual insurers over the period 1989 1997 we test the efficient structure hypothesis which predicts that the market will sort organizational forms into market segments where they have comparative advantages and the expense preference hypothesis which predicts that mutuals will be less efficient than stocks technical cost and revenue frontiers are estimated using data envelopment analysis the results indicate that stocks and mutuals are operating on separate production cost and revenue frontiers and thus represent distinct technologies in cost and revenue efficiency stocks of all sizes dominate mutuals in the production of stock output vectors and smaller mutuals dominate stocks in the production of mutual output vectors larger mutuals are neither dominated by nor dominant over stocks in the cost and revenue comparisons thus large mutuals appear to be vulnerable to competition from stock insurers in spain overall the results are consistent with the efficient structure hypothesis but are generally not consistent with the expense preference hypothesis

aid dependence and the quality of governance cross country empirical tests aid dependence can potentially undermine the quality of governance and public sector institutions by weakening accountability encouraging rent seeking and corruption fomenting conflict over control of aid funds siphoning off scarce talent from the bureaucracy and alleviating pressures to reform inefficient policies and institutions analyses of cross country data in this paper provide evidence that higher aid levels erode the quality of governance as measured by indices of bureaucratic quality corruption and the rule of law these findings support the need for donors to develop less costly and less intrusive ways of disseminating state of the art knowledge on public sector reform in developing countries

cost efficiency and scale economies in the turkish insurance industry this article examines the cost efficiency and scale economies of insurance firms in the turkish insurance industry over a 15 year period 1990 2004 using the stochastic cost frontier model cost efficiency scores and scale economies were estimated for each firm in the sample the results show that mean cost inefficiencies range between 18 3 and 36 9 of total costs and they do not tend to decrease over time on average small firms are more cost efficient than large firms economies of scale appear present and significant for any class size the results suggest that there is a substantial difference in scale economies between small and large insurance firms

can global de carbonization inhibit developing country industrialization most economic analyses of climate change have focused on the aggregate impact on countries of mitigation actions the authors depart first in disaggregating the impact by sector focusing particularly on manufacturing output and exports because of the potential growth consequences second they decompose the impact of an agreement on emissions reductions into three components the change in the price of carbon due to each country s emission cuts per se the further change in this price due to emissions tradability and the changes due to any international transfers private and public manufacturing output and exports in low carbon intensity countries such as brazil are not adversely affected in contrast in high carbon intensity countries such as china and india even a modest agreement depresses manufacturing output by 6 7 percent and manufacturing exports by 9 11 percent the increase in the carbon price induced by emissions tradability hurts manufacturing output most while the dutch disease effects of transfers hurt exports most if the growth costs of these structural changes are judged to be substantial the current policy consensus which favors emissions tradability on efficiency grounds supplemented with financial transfers on equity grounds needs re consideration

efficiency in the greek insurance industry this paper employs the two stage procedure of simar and wilson 2007 to analyse the effects of deregulation on the efficiency of the greek insurance industry the efficiency is estimated by means of data envelopment analysis dea the companies are ranked according to their crs efficiency score for the period 1994 2003 the first stage results indicate a decline in efficiency over the sample period while the second stage results confirm that the competition for market shares is a major driver of efficiency in the greek insurance industry

the measurement of efficiency in life insurance estimates of a mixed normal gamma error model abstract this paper make three contributions to the literature on efficiency in financial services first it presents estimates of a mixed error cost frontier in which the variances of both the normal and gamma distributions can vary with firm size second it extends the literature on life insurance scale and product mix economies by incorporating and measuring x inefficiency estimates of x inefficiency range from 35 to 50 ray scale economies exist up to 15 billion in assets third comparisons of normal gamma estimates with other methods 3 thick frontier weighted least squares half normal distributions 3 demonstrate some of their pitfalls

whence exchange rate overshooting money stock or flow abstract money stock innovations have two principal impact effects on the exchange rate one is the direct effect as captured by the overshooting hypothesis the second is the result of the change in money growth rate expectations induced by the stock innovation simulations using a stylized monetary process verify that the front end loading of the growth rate effect is potentially much more important that the direct effect additional simulations using a calibrated monetary process demonstrate that growth rate effects are on average about twice the magnitude of stock innovation effects

organization and efficiency in the international insurance industry a cross frontier analysis abstract this paper employs cross frontier analysis an innovative tool based on data envelopment analysis to provide new insight into the relationship between organization and efficiency in international insurance markets we are the first to empirically test the expense preference hypothesis and the efficient structure hypothesis in a large cross country study for this purpose we consider 23 807 firm years for 21 countries from northern america and the european union a dataset not previously analyzed in this context we find evidence for the efficient structure hypothesis in selected market segments but we find no evidence for the expense preference hypothesis our results provide insight into the competitiveness of stock and mutual insurers from different countries at the country level the results can be used to compare different insurance markets our findings are especially interesting for the strategic management of insurance companies as well as for regulators and boards of national insurance associations

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

the demise of the mutual organizational form an investigation of the life insurance industry we investigate the role of organizational structure in financial services markets by examining the u s life insurance industry traditionally stock and mutual life insurers were equally represented but now the industry is mainly composed of stock firms we find operational efficiency access to capital and tax savings are important determinants for this shift the incentive to demutualize differs by the type of conversion full demutualization is chosen for efficiency and access to capital reasons and partial conversion using a mutual holding company is chosen for tax savings firm operational efficiency improves after conversion we also find the efficiency of the stock organizational form dominates that of the mutual structure during our sample period 1995 to 2004

an efficiency comparison of the non life insurance industry in the bric countries abstract we analyze the efficiency of non life insurance companies in four of the fastest growing markets in the world the bric brazil russia india china countries an innovative feature of this paper is its incorporation of uncontrollable variables in the efficiency analysis using multi stage data envelopment analysis dea this approach captures cross country differences such as the political and economic environment and allows distinguishing between managerial inefficiency and inefficiency due to environmental conditions we find that the environment affects the efficiency of non life insurers operating in the bric countries furthermore in a regression of firm characteristics on efficiency scores we identify four drives of efficiency size profitability solvency and ownership form the results further our understanding of the insurance industry in the bric countries in regard to its efficiency and the environment in which it operates

the regulation of privatized monopolies in the united kingdom this article examines the experience in the united kingdom with the regulation of privatized monopolies its conclusions are 1 that there are significant differences between rpi x or price cap and u s rate of return regulation which provides greater scope for bargaining in the former system 2 that u k regulators have taken seriously their duty to promote competition but that the existing economic literature is of limited help in this task 3 that price regulation is likely to be more effective where technology is changing slowly and or where technology is changing rapidly and 4 that the case for rpi x price cap rather than rate of return regulation is strongest in telecommunications gas supply and electricity supply and least strong in gas and electricity transmission grids

aid policies and growth comment in an extraordinarily influential paper craig burnside and david dollar 2000 p 847 find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies but has little effect in the presence of poor policies this finding has enormous policy implications the burnside and dollar 2000 henceforth bd result provides a role and strategy for foreign aid if aid stimulates growth only in countries with good policies this suggests that 1 aid can promote economic growth and 2 it is crucial that foreign aid be distributed selectively to countries that have adopted sound policies international aid agencies public policy makers and the press quickly recognized the importance of the bd findings this paper reassesses the links between aid policy and growth using more data the bd data end in 1993 we reconstruct the bd database from original sources and thus 1 add additional countries and observations to the bd data set because new information has become available since they conducted their analyses and 2 extend the data through 1997 thus using the bd methodology we reexamine whether aid influences growth in the presence of good policies given our focus on retesting bd we do not summarize the vast pre bd literature on aid and growth we just note that there was a long and inconclusive literature that was hampered by limited data availability debates about the mechanisms through which aid would affect growth and disagreements over econometric specification see gustav f papanek 1972 robert cassen 1986 paul mosley et al 1987 peter boone 1994 1996 and henrik hansen and finn tarp s 2000 review since bd found that aid boosts growth in good policy environments there have been a number of other papers reacting to their results including paul collier and jan dehn 2001 carljohan dalgaard and hansen 2001 patrick guillaumont and lisa chauvet 2001 hansen and tarp 2001 robert lensink and howard white 2001 and collier and dollar 2002 these papers conduct useful variations and extensions some of which had already figured in the pre bd literature such as introducing additional control variables using nonlinear specifications etc some of these papers confirm the message that aid only works in a good policy environment while others drive out the aid policy interaction term with other variables this literature has the usual limitations of choosing a specification without clear guidance from theory which often means there are more plausible specifications than there are data points in the sample we differentiate our paper from these others by not deviating from the bd specification thus we do not test the robustness of the results to an unlimited number of variations but instead maintain the bd methodology this paper conducts a very simple robustness check by adding new data that were unavailable to bd thus we expand the sample used over their time period and extend the data from 1993 to 1997 easterly department of economics new york university 269 mercer street new york ny 10003 center for global development and national bureau of economic research e mail william easterly nyu edu levine department of finance carlson school of management university of minnesota 321 19th avenue south minneapolis mn 55455 and national bureau of economic research e mail rlevine csom umn edu roodman center for global development 1776 massachusetts avenue nw washington dc 20036 e mail droodman cgdev org we are grateful to craig burnside for supplying data and assisting in the reconstruction of previous results without holding him responsible in any way for the work in this paper thanks also to francis ng and prarthna dayal for generous assistance with updating the sachs warner openness variable and to three anonymous referees craig burnside and henrik hansen for helpful comments 1 see for instance the world bank 1994 2001 2002 the u k department for international development 2000 president george w bush s speech march 16 2002 the announcement by the white house on creating the millennium challenge corporation white house 2002 as well as a washington post editorial february 9 2002 a financial times column by alan beattie march 11 2002 and the economist march 16 2002

fire insurance in germany a comparison of price performance between state monopolies and competitive regions abstract up until 1994 there were two different forms of organizing the fire insurance market in germany while a state monopoly applied in 13 regions a competitive market system combined with government regulation existed in the rest of the country this study identifies the effects of market forms on the price performance of insurance companies it is based on annual company data including premium revenues damage payments and general expenses for the period 1980 1994 the estimation results indicate that monopolies had a 22 percent lower markup on damage payments compared to companies in competitive regions with an average markup of 42 percent the difference may be explained by higher selling costs for companies in competitive markets indicated by a high share of commissions in total expenses

expectations and exchange rate dynamics after a decade of floating abstract dornbusch s model of expectations and exchange rate dynamics has been a theoretical success and an empirical failure the premise underlying this paper is that the price and exchange rate dynamics inherent in his model cannot be captured by single equation methods to capture these dynamics we estimate dornbusch s model using constrained maximum likelihood methods which incorporate cross equation restrictions derived from the structural equations and assumption of rational expectations our central result is that the estimation of dornbusch s model is much more successful than single equation methods have led us to believe

aid dutch disease and manufacturing growth abstract we examine the effects of aid on the growth of manufacturing using a methodology that exploits the variation within countries and across manufacturing sectors and corrects for possible reverse causality we find that aid inflows have systematic adverse effects on a country s competitiveness as reflected in the lower relative growth rate of exportable industries we provide some evidence suggesting that the channel for these effects is the real exchange rate appreciation caused by aid inflows we conjecture that this may explain in part why it is hard to find robust evidence that foreign aid helps countries grow

technical efficiency of european railways a distance function approach this study has two principal objectives the first objective is to measure and compare the performance of european railways the second objective is to illustrate the usefulness of econometric distance functions in the analysis of production in multioutput industries where behavioural assumptions such as cost minimization or profit maximization are unlikely to be applicable using annual data on 17 railways companies during 1988 1993 multioutput distance functions are estimated using corrected ordinary least squares cols the resulting technical efficiency estimates range from 0 980 for the netherlands to 0 784 for italy with a mean of 0 863 the distance function results are also compared with those obtained from single output production functions where aggregate output measures are formed using either total revenue or a tornqvist index the results obtained indicate substantial differences in parameter estimates and technical efficiency rankings casting significant doubt upon the reliability of

x efficiency in the us life insurance industry abstract using six years of data 1985 1990 we estimate hybrid translog cost functions for 561 life insurers we examine the resulting residuals to determine the relative efficiency of insurers in the sample we then test the residuals to see if they are related to so called x efficiencies because of internal and external monitoring or to other factors related to rent seeking results show a large degree of persistent inefficiency seems to exist among sample firms the inefficiencies relate to some internal or external monitoring and rent seeking may be occurring

a model of exchange rate dynamics this model treats the exchange rate as an asset price that depends on expectations concerning exogenous real and monetary factors that will affect relative prices and absolute price levels in future periods changes in exchange rates reflect both expected changes in these exogenous factors and changes in expectations occasioned by new information the model explains the random component in exchange rate behavior the source of divergences from purchasing power parity the anticipatory response of exchange rates to future expected disturbances and the causes of exchange rate overshooting

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

insurance companies in mozambique a two stage dea and neural networks on efficiency and capacity slacks this article analyses the efficiency of mozambique insurance companies using a dea model two dea models are used and a bootstrap approach adopted furthermore the efficiency scores are predicted based on neural networks the results reveal that mozambique insurance companies output increasing potentials are severely constrained particularly in terms of the ceded reinsurance increasing potentials policy implications are derived

aid and growth what does the cross country evidence really show abstract we examine the effects of aid on growth in cross sectional and panel data after correcting for the possible bias that poorer or stronger growth may draw aid contributions to recipient co

monetary policy in the united states under flexible exchange rates this paper estimates and evaluates monetary policy rules within the context of a structural open economy macroeconomic model of the united states under flexible exchange rates the major result is that a monetary policy rule which stabilizes the rate of growth of nominal gnp receives considerable empirical support the rule provides a better fit than a number of alternatives including strict inflation stability strict output stability and real exchange rate stabilization copyright 1989 by american economic association

ownership structure institutional organization and measured x efficiency efficiency measurement has become a very popular field in applied economics in recent years and with this interest there has been a large intellectual investment in refining the empirical methods available to researchers in the area in this paper we relate these developments to harvey leibenstein s original 1966 insight into the psychological ideas underlying the notion that economic agents may not achieve maximal efficiency in their productive decisions and behavior of course it is always possible to argue that apparent inefficiency only arises from a failure of the observer to realize what it is that is being maximized however we shall evade this easy escape route into nonfalsifiable hypothesizing and instead shall take at face value the fact that too many empirical studies have come up with substantial measures of inefficiency for us to ignore its importance for normative economics

measuring cost efficiency in the property liability insurance industry abstract escalating prices and periodic availability problems in property liability insurance markets are often attributed to insurance company inefficiency and lax claims settlement practices this paper investigates these issues by estimating stochastic cost frontiers for three size stratified samples of property liability insurers over the period 1980 1988 a translog cost function and input share equations are estimated using maximum likelihood techniques the results show that large insurers operate in a narrow range around an average efficiency level of about 90 percent relative to their cost frontier efficiency levels for medium and small insurers are about 80 and 88 percent in relation to their respective frontiers wider variations in efficiency are present for these two groups in comparison with large insurers large insurers slightly over produce loss settlement services while small and medium size insurers under produce this output the small and intermediate size groups are characterized by economies of scale suggesting the potential for cost reductions from consolidations in the industry