Knowledge that Transforms

Review of Economic Studies European Meetings: May 1989 Get access The Review of Economic Studies, Volume 56, Issue 4, October 1989, Page 643, https://doi.org/10.1093/restud/56.4.643 Published: 01 October 1989

Journal Article Announcements Get access Charles Bean, Charles Bean Search for other works by this author on: Oxford Academic Google Scholar John Moore John Moore Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 56, Issue 4, October 1989, Page 475, https://doi.org/10.1093/restud/56.4.475 Published: 01 October 1989

Journal Article Review of Economic Studies Travel Fund Get access The Review of Economic Studies, Volume 56, Issue 4, October 1989, Page 475, https://doi.org/10.2307/restud/56.4.475-a Published: 01 October 1989

Estimation in a class of simultaneous equation limited dependent variable models is considered. The minimum Chi-squared method is used to compare the asymptotic relative efficiency of marginal and new conditional maximum likelihood estimators for this class of models. Efficient minimum Chi-squared estimation procedures are described. A two-step algorithm based on a conditional maximum likelihood estimator provides a natural framework for both computing a linearized and locating the joint maximum likelihood estimator. The unimodality of the simultaneous equation tobit likelihood function is proved and this model is used to illustrate the empirical application of some of the estimators considered in the paper. The relative efficiency of these estimators in the simultaneous equation tobit model is examined in a set of Monte-Carlo experiments.

The author presents an optimization model of a nursing home that incorporates the following characteristics: proprietary profit maximization, the distinction between private and Medicaid patients, nonessential expenditure aimed at market identification, and cost-based government reimbursement. The model is used to analyze the effect of changes in government reimbursement. The theoretical analysis indicates that increases in government reimbursement need not lead to increases in nonessential cost expenditures and private patient charges; in fact, the contrary may result. The econometric analysis suggests empirical support for the latter. Higher reimbursement factors are associated with lower charges. Copyright 1989 by The Review of Economic Studies Limited.

This paper proposes nonparametric tests of additive constraints on the first and second derivatives of a model E(y|x) = g(x), where the true function g is unknown. Such constraints are illustrated by the economic restrictions of homogeneity and symmetry, and the functional form restrictions of additivity and linearity. The proposed tests are based on estimates of regression coefficients, that statistically characterize the departures from the constraint exhibited by the data. The coefficients are based on weighted-average derivatives, that are reformulated in terms of derivatives of the density of x. Coefficient estimators are proposed that use nonparametric kernel estimators of the density and its derivatives. These statistics are shown to be √N consistent and asymptotically normal, and thus are comparable to estimators based on a (correctly specified) parametric model of g(x).

With dual exchange rates, where a managed official exchange rate co-exists with a floating black market rate, a given budget deficit may be consistent with many different inflation rates rather than two, which is the normal result in closed economy systems. Further, all these inflation equilibria are saddle-point stable. A policy of adjusting the official exchange rate towards the black market rate may cause the economy to converge to a high-inflation, saddle-point stable equilibrium where money inflation elasticity exceeds unity. The analytics are motivated and illustrated by the Bolivian hyperinflation of 1984–1985.

It is commonly believed that a workforce of identical workers will be better-off organized in a single union rather than separate unions that bargain independently with an employer, for this will prevent the employer playing off one union against another. In this paper, the author shows that there are circumstances where this need not be the case. If it is impossible for the firm and workers to sign long-term binding contracts on wages and employment, then the firm will wish to invest in a capital stock below the efficient level; by organizing in separate unions, the firm will be induced to raise its level of investment to ensure it has enough capacity with each union to make a threat to switch production to another union credible. The effect on workers' payoffs from a higher capital stock can outweigh the loss of bargaining power as a result of the workforce being in separate unions. There will also be circumstances where the firm will invest in a capital stock that exceeds the efficient level. Copyright 1989 by The Review of Economic Studies Limited.

This paper shows that most methods of incorporating demographic variation into separable models can be represented in a form that is identical to Barten equivalence scales, except that the scales themselves depend on the exact mix of goods that comprise each group, as well as on demographic variables. This generalization of Barten scales is shown to be more plausible than ordinary scales; can be used to increase the efficiency of demand system estimation; and can overcome J. Muellbauer's underidentification result for cross-sectional estimation of equivalence scales. Copyright 1989 by The Review of Economic Studies Limited.

The paper investigates the problem of tariff reform in a small open multi-household economy that only has tariffs and domestic commodity taxes as policy instruments. The concept of a productivity improvement in tariffs and taxes is introduced and conditions for its existence are established. We prove that a Pareto-improving change in tariffs and domestic taxes exists if a productivity-improving change in tariffs exists and if the Weymark condition on the matrix of household demands holds. Conditions are established for particular tariff reforms, such as proportional reductions and reductions of extreme rates, to yield Pareto improvements in welfare.