Knowledge that Transforms

Using the assumptions of the Capital Asset Pricing Model this paper presents a measure of the effective protection rate which adjusts for the industry's risk. It is shown that if the tariff on the final good is greater (smaller) than the weighted average tariff on the traded inputs, then the effective protection increases (decreases) as one moves from an industry with low risk (low beta) to an industry with high risk (high beta), holding other things constant. The empirical methodology of the new measure is also provided, as well as several illustrations from U.S. industries.

The efficiency with which coefficients in probit models are estimated is improved by exploiting data on continuous ancillary variates.In this paper the resulting gains in efficiency are examined and illustrative calculations are provided.Extra precision is achieved at the cost of making an extra assumption but this assumption can be tested.It is shown that fully efficient maximum likelihood estimation of the probit model with a continuous ancillary variate can be achieved by a simple two step procedure involving an ordinary least squares and a probit estimation.

Richard M. Adams, Thomas D. Crocker, Richard W. Katz, Assessing the Adequacy of Natural Science Information: A Bayesian Approach, The Review of Economics and Statistics, Vol. 66, No. 4 (Nov., 1984), pp. 568-575

This study presents the first evidence on the relation of consumption to lifetime wealth, based on data from the 1973 and 1975 Retirement History Survey that have been linked to Social Security earnings records.