Knowledge that Transforms

James B. McDonald, Richard J. Butler, Some Generalized Mixture Distributions with an Application to Unemployment Duration, The Review of Economics and Statistics, Vol. 69, No. 2 (May, 1987), pp. 232-240

W. Kip Viscusi, Michael J. Moore, Workers' Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses, The Review of Economics and Statistics, Vol. 69, No. 2 (May, 1987), pp. 249-261

Socialist enterprises in Yugoslav agriculture show higher levels of productivity than private producers. The author examines the sources of these differences with total factor productivity estimates based on sectoral aggregate Cobb-Douglas production functions which permit separation of environmental, policy, and organizational effects. The results support the following conclusions: cooperative socialist enterprises are not inherently inefficient and can even outperform private producers; both types of producers were responding to their environment and their differential rates of technological change reflect the different constraints they faced; and socialist enterprises exhibited technology adoption behavior similar to nonsocialist enterprises elsewhere.

Monte Carlo evidence is presented which supports the conclusion that when a block grants variable in an ordinary least squares (OLS) model is endogenously constructed due to the closed-ended nature of matching aid, estimates of the propensity to spend lump-sum aid are biased upward. The findings suggest that OLS estimates lead to erroneous conclusions regarding the existence of a flypaper effect and support the use of maximum likelihood models in situations where budget constraints are piecewise-linear.

Raymond S. Hartman, Product Quality and Market Efficiency: The Effect of Product Recalls on Resale Prices and Firm Valuation, The Review of Economics and Statistics, Vol. 69, No. 2 (May, 1987), pp. 367-372

Hope Corman, Theodore Joyce, Norman Lovitch, Crime, Deterrence and the Business Cycle in New York City: A VAR Approach, The Review of Economics and Statistics, Vol. 69, No. 4 (Nov., 1987), pp. 695-700

Because of the interdependent nature of family labor supply decisions, the nonnegativity constrai nt on women's hours of work will spill over into other consumption an d labor supply decisions of the family. Here the author develops an e conometric model of family labor supply that captures this "spillove r, " while addressing the usual censoring issues as well. The model i s based on a flexible direct utility function and permits unobservabl e differences in tastes. The model is estimated by the maximum likeli hood method on a sample of about 1, 200 families from the Panel Study of Income Dynamics.

An econometric mod el is used to impute the value of time in the demand for medical care for member s of a prepaid group practice medical care program. Separate estimates are obtai ned for: (1) individuals who were employed full time, (2) housewives, and (3) ti me associated with taking children to a doctor. For individuals who were employe d full time, the estimate was close to the median wage rate. Sick leave was esti mated to substantially reduce the value of time. It was concluded that ignoring the time price of medical care may result in misleading statistical analysis and mistaken policy recommendations.

The forecast performances of three groups of models of the inflation process are evalu-ated in this paper: ra tional expectations models with instantaneous market clearing, monetarist models , and expectations-augmented Phillips curves. The dynamic simulations performed for the intervals between 1977 and 1984 are somewhat discouraging for all three theories. The variation in forecasting performance within model groups often exc eeded the variation in performance across model groups. Nevertheless, the Philli ps curve formulation rarely performed worse than the other two models, and in th e 1981 to 1984 period it performed substantially better than the alternative mod els of inflation.