The Pure Expectations Hypothesis (PEH) serves as the benchmark model for the relationship between yields on bonds of different maturities. When coupled with rational expectations, however, empirical renderings of the model fail miserably. I explore the possibility that failure to account for changes in monetary policy regime explains much of the failure of the PEH. Estimating changing monetary regimes in conjunction with the PEH significantly improves its performance. The predicted spread between the long and short rates is highly correlated with the actual spread. The standard deviation of the theoretical spread is nearly identical to that of the actual spread.

This paper presents a simple model of trade in the housing market. The crucial feature is that a minimum down payment is required for the purchase of a new home. The model has direct implications for the volatility of house prices, as well as for the correlation between prices and trading volume. The model can also be extended to address the correlation between prices and time-to-sale, as well as certain aspects of the cyclical behavior of housing starts.

According to endogenous growth theory, permanent changes in certain policy variables have permanent effects on the rate of economic growth. Empirically, however, U. S. growth rates exhibit no large persistent changes. Therefore, the determinants of long-run growth highlighted by a specific growth model must similarly exhibit no large persistent changes, or the persistent movement in these variables must be offsetting. Otherwise, the growth model is inconsistent with time series evidence. This paper argues that many AK-style models and R&D-based models of endogenous growth are rejected by this criterion. The rejection of the R&D-based models is particularly strong.

First, production functions are estimated for China's aggregate economy and for the five sectors—agriculture, industry, construction, transportation, and commerce—using annual data (some constructed by the author) from 1952 to 1980. Then, this paper measures the contribution of capital formation to the growth of these sectors, the effects of the Great Leap Forward of 1958–1962 and of the Cultural Revolution of 1966–1976 on outputs, the impact of economic reforms since 1979 on growth, the rates of return to capital, and the effects of sectorial growths on relative prices.

Journal Article Sequential Vertical Integration Get access Herman C. Quirmbach Herman C. Quirmbach Iowa State University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 107, Issue 3, August 1992, Pages 1101–1111, https://doi.org/10.2307/2118377 Published: 01 August 1992

The paper presents empirical tests of the (S, s) model of inventory behavior using aggregate retail trade data. Estimation and testing are based on the probability distributions of inventories derived by Caplin [1985]. The excess volatility of retailers' demand over their consumers' demand, and the "forgetfulness" of inventories under (S, s) are emphasized. Test results indicate that the time series properties of deliveries and sales are consistent with (S, s) and not a quadratic cost model. Finally, when autoregressions of inventories are given an (S, s) rather than a stock adjustment interpretation, traditional empirical problems such as low speeds of adjustment are explained.

This paper develops a model of inefficient managerial behavior in the face of a rational stock market In an effort to mislead the market about their firms' worth, managers forsake good investments so as to boost current earnings. In equilibrium the market is efficient and is not fooled: it correctly conjectures that there will be earnings inflation, and adjusts for this in making inferences. Nonetheless, managers, who take the market's conjectures as fixed, continue to behave myopically. The model is useful in assessing evidence that has been presented in che “myopia” debate. It also yields some novel implications regarding firm structure and the limits of intergation.

Two new features are introduced in a standard model of forward vertical integration by an intermediate good monopolist into a contestable downstream industry. First, U-shaped average costs replace constant returns in the downstream industry. Second, the effect of subjecting the monopolist to the pressure of upstream entry is explored. It is found that monopoly pricing of the intermediate good can distort the scale as well as the input proportions of the downstream firms. Either distortion leads to integration, but here integration may be partial rather than full. Prices rise with partial integration when there is no upstream entry, but prices fall when upstream entry is free.

The Cotton South has always lagged behind the rest of American agriculture in the use and development of large-scale machinery. This paper formalizes an idea often found in the historical literature in loosely specified form which argues that the institutional structure of the southern plantation economy caused this technological inertia. In particular, the Institutional Hypothesis argues that the annual labor contracts used to secure plantation labor discouraged partial mechanization and inventive activity by redirecting the impact of higher labor costs away from the development and adoption of labor saving machinery and toward the adoption of small unmechanizable tenancies. This hypothesis is modeled, and supporting evidence is presented. Its larger implications are also discussed.

In the 1970s there has been a noticeable labor productivity slowdown in Canada. In addition to contributions of such traditional variables as changes in capital intensity and quality of labor, this study quantifies contributions of higher energy and changing import prices to productivity changes. A Taylor series approximation to a restricted profit function representing the Canadian economy helps reveal that rising energy prices have reduced labor productivity by 0.53 percent per year after 1970 and that the underlying modified rates of technical progress in the 1960s and 1970s, having netted out price of energy—and import—effects, are not dissimilar.