Inflation expectations and the associated pass-through of oil price shocks depend on demand and supply conditions underlying the global oil market. We establish this result using a structural VAR model of the global oil market that jointly identifies transmissions of oil demand and supply shocks through real oil prices to both expected and actual inflation. We demonstrate that economic activity shocks have a significantly longer-lasting effect on inflation expectations and actual inflation than other types of real oil price shocks, and resolve disagreements around the role of oil prices in explaining the missing deflation puzzle of the Great Recession.

Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions, we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Consistent with spillovers, we estimate a robust and significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. Typical estimates suggest that a 10-percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5%. We also use these estimates to calculate the per-job value of these spillovers at about £2,400 in 2000 prices ($4,300). These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

This study provides new evidence of the importance of financing constraints for explaining the dramatic cycles in inventory investment. We compare the empirical performance of different financial variables (coverage ratio, cash stocks, and cash flow) used in previous research to test for the presence of financing constraints. The comparison is undertaken in a common framework with an identical sample and high-frequency (quarterly) firm panel data. Cash flow is much more successful than cash stocks or coverage in explaining the facts about inventory investment across firm size, different inventory cycles, and different manufacturing sectors.

To what extent has the increased supply by government of certain union-like services reduced the demand for union membership and thereby contributed to the decline in trade union density? The existing empirical evidence is meager and conflicting. The puropse of our paper is to reexamine the government substitution hypothesis, specifically with respect to the relationship between government welfare spending and union density. We test the hypothesis with time-series data using three alternative models of union growth. The advantage of this approach is that it will permit an assessment of how sensitive the results are to both specification and sample period changes. In all, we find the time-series evidence of a negative welfare effect on union density to be mixed.

Varouj A. Aivazian, Jeffrey L. Callen, M. W. Luke Chan, Dean C. Mountain, Economies of Scale Versus Technological Change in the Natural Gas Transmission Industry, The Review of Economics and Statistics, Vol. 69, No. 3 (Aug., 1987), pp. 556-561

IN 1966, the Coleman Report provided compelling evidence of the importance of the home environment in determining children's cognitive skill levels. This evidence, coupled with doubts about the effectiveness of school-based compensatory education programs, has led policymakers to consider programs that aim at improving school achievement by providing additional resources to the families of low achieving children. Efforts to design such programs have been hindered, however, by a lack of knowledge concerning the key resources in the home that influence children's achievement. This paper reports the results of research that attempts to reduce this knowledge gap by examining the roles played by particular resources in the home in influencing children's achievement. This study extends previous work on home investments in children in two significant ways. First, the analysis focuses on black children living in low income, urban families. Most previous research has studied children in middle class families. Second, the stability of the results is examined by estimating the same model for two samples of children. Previous studies have reported results for a single sample. Differences in results across studies have raised questions concerning the stability of relationships between particular home resources and children's achievement. In this study, the stability issue is addressed directly. The central finding of our research is that the skills of the mother, measured by the extent of her formal schooling, are a critical resource in determining children's achievement. Our results demonstrate that these skills affect children through the mechanism of child care, and not simply through genetically transmitted endowments. Another key result is that goods inputs in the home do not appear to have consistent effects on children's learning. Thus, our findings support the results of other recent research that has emphasized the importance of human resources (such as mothers and teachers) rather than material inputs in determining children's achievement. These and other findings are discussed in detail later in the paper. The next section of the paper lists the hypotheses examined in this study. Section III describes the analytical framework within which these hypotheses were tested. Section IV describes the data. Section V describes the problem of interpreting correlations between attributes of the home environment and children's achievement. Section VI presents the results, and section VII discusses their implications.

, Shawna Grosskopf, C. A. Knox Lovell, Suthathip Yaisawarng, Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach, The Review of Economics and Statistics, Vol. 75, No. 2 (May, 1993), pp. 374-380

Rolf Faere, Shawna Grosskopf, C. A. K. Lovell, Carl Pasurka, Multilateral Productivity Comparisons When Some Outputs are Undesirable: A Nonparametric Approach, The Review of Economics and Statistics, Vol. 71, No. 1 (Feb., 1989), pp. 90-98