Knowledge that Transforms

The presence of potentially binding constraints in rural labor markets is investigated by examining spillover effects on land market participation decisions. Farm and household data from ICRISAT village level surveys are used in a multinominial logit model that accounts for the simultaneous nature of the land and labor market participation decisions. Estimated parameters and likelihood ratio tests indicate that except for the presence of potentially binding constraint on the supply of female labor off the farm no other evidence of binding constraints is present in these villages. Copyright 1990 by MIT Press.

An asymptotic approximation to the variances of Leamer's (1983) extreme bounds is given. It can be implemented using standard regression output. Copyright 1990 by MIT Press.

This paper provides an empirical framework to test three competing theories regarding the behavior of public executives in the local public sector. These alternative theo- ries are the public interest, median-voter and expense preference (or surplus-maximizing Leviathan) models. This study tests these various theories by determining whether aggregate property values, the median-value of housing or administra- tive expenditures is a more significant determinant of the salary of a representative school executive in Connecticut. The empirical results lend some support for the expense preference model (Leviathan model) of public executive be- havior.

Most U.S. firms use straight-line depreciation; some use accelerated depreciation. A series of Monte Carlo experiments were conducted to show how a proposed switch to annuity depreciation would affect accounting estimates of two measures of economic profitability: the rate of return and q, the ratio of a firm's market value to its replacement cost. Annuity depreciation significantly improved the accounting rate of return but had little effect on estimates of q. Some of the improvement in the rate of return and almost all the improvement in q could be obtained if all firms used straightline depreciation.

A method for estimating price and income elasticities from cross section data devised by Deaton (1986, 1987, 1988) makes implicit use of the Hicks' composite commodity theorem. Recognition of this fact allows theoretically rigorous definition of aggregate composite quantities. A comparison of elasticities of Hicks' composite with elasticities of simple physical quantity measures for the Ivory Coast and the United States demonstrates that use of physical quantity measures can be severely misleading when commodity heterogeneity is substantial. Copyright 1990 by MIT Press.

This paper tests two hypotheses regarding the impact of the U.S. Multifiber Arrangement restrictions on developing countries' exports of textiles and clothing to the United States: that the Multifibre Arrangement is a binding constraint on exporters; and that the arrangement encourages the growth of smaller exporters by restricting exports from major sellers. Pooled data on eight small Asian exporters over the period 1975-84 is used. Results strongly support the hypothesis that the Multifibre Arrangement has been a binding constraint. Although the arrangement appears to have diverted demand toward these smaller sellers, this effect is counteracted by slow growth in their own restraints. Copyright 1990 by MIT Press.

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Tests of a representation of the efficient markets model (the dividend-rtaio model of Campbell and Shiller (1988a)) of the stock market can be made by regressing (transformed) ex-post values on (transformed) actual values and testing whether the slope coefficient is one. Such tests are run here with some improvements. The results of the tests are that the efficient markets model is strongly rejected with U.S. data 1901-1987 in favor of an alternative that stock prices should have been much less volatile. Copyright 1990 by MIT Press.

Marzio Galeotti, Specification of the Technology for Neoclassical Investment Theory: Testing the Adjustment Costs Approach, The Review of Economics and Statistics, Vol. 72, No. 3 (Aug., 1990), pp. 471-480