Knowledge that Transforms

Stephen G. Grubaugh, Andrew J. Stollar, G. Rodney Thompson, Socialist Structural Gaps: A Simultaneous Inference Analysis, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 693-698

Hua-Shan Chi, Substitution between Production Labor and Other Inputs in Unionized and Nonunionized Manufacturing: Comment, The Review of Economics and Statistics, Vol. 71, No. 3 (Aug., 1989), pp. 549-552

Badi H. Baltagi, James M. Griffin, Alternative Models of Managerial Behavior: Empirical Tests for the Petroleum Industry, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 579-585

A method for estimating the marginal rate of substitution in the intertemporal capital asset pricing model is presented. The marginal rate of substitution is treated as an unobservable and one-period returns are used to develop a method of moments estimator that is consistent. Consistency depends on both a large number of time observations and a large number of securities. In the last section of the paper, the estimates of the marginal rate of substitution are used to test whether stock prices are unbiased predictors of ex post market fundamentals. Copyright 1989 by MIT Press.

Vittorio Corbo, Paul D. McNelis, The Pricing of Manufactured Goods during Trade Liberalization: Evidence from Chile, Israel, and Korea, The Review of Economics and Statistics, Vol. 71, No. 3 (Aug., 1989), pp. 491-499

A relative direct cost measure of scale economies is developed to examine the hypothesis that market share increases profits through the benefits of scale economies. Minor support is found for the hypothesis. Copyright 1989 by MIT Press.

Ordered-probit analyses of National Federation of Independent Business survey data show that individual firms generally conform to the stock adjustment model of inventory investment, with the predicted response more likely when inventories are perceived as excessive than when deficient. Contrary to inferences about slow adjustment speeds from aggregate data, inventory adjustments by individual firms do not tend to take more than three months to complete. There is no evidence that price is used to achieve desired inventory targets, but prices are sticky in that changes set in motion one quarter tend to continue into the next quarter. Copyright 1989 by MIT Press.

The capital gains and losses on U.S. Treasury securities are calculated and reported on a quarterly basis over the 1942-87 period. These data are then used to calculate an adjusted measure of the federal budget deficit for the years 1975-87. Whereas the rising trend in interest rates over the 1975-81 period substantially reduced the federal deficit, this study shows that the reversal of that trend over the 1981-86 period contributed even more greatly to an increase in the deficit. Also calculated and reported are holding-period rates of return on overall marketable Treasury debt, providing a contrast to existing interest rate series. Copyright 1989 by MIT Press.