Knowledge that Transforms

Thomas P. Frazier, Matthew S. Goldberg, Thomas R. Gulledge, Jr., Department of Defense Profit Policy and Capital Investment in the Military Aircraft Industry, The Review of Economics and Statistics, Vol. 74, No. 3 (Aug., 1992), pp. 394-403

The ability of planners in Poland and the U.S.S.R. to recognize and act to eliminate market disequilibrium in the markets for grain and meat is tested by means of an econometric model of grain and meat production, consumption, and trade. Planners' perceptions of excess demand for grain, meat, and foreign exchange are shown to influence production and trade decisions in a way that tends to reduce excess demand or supply. Nevertheless, the markets for grain, meat, and foreign exchange are shown to be characterized by excess demand or supply for much of the sample period. Copyright 1992 by MIT Press.

McDonald, James B., and Richard J. Butler, Some Generalized Mixture Distributions with an Application to Unemployment Duration, this REVIEW 69 (May 1987), 232-240. Podgursky, Michael, and Paul Swaim, Duration of Joblessness Following Displacement, Industrial Relations 26 (Fall 1987), 213-226. Prentice, Ross L., A Log Gamma Model and Its Maximum Likelihood Estimation, Biometrika 61 (Dec. 1974), 539-544. Swaim, Paul, and Michael Podgursky, Advance Notice and Job Search: The Value of an Early Start, Journal of Human Resources 25 (Spring 1990), 148-178.

This paper examines money-income causality using band spectral filtering techniques. The paper's central finding is that relatively low frequency movements in outside money are responsible for the relationship between money and economic activity. This result is inconsistent with theoretical models in which unanticipated changes in money are responsible for movements in real activity. Reverse causality is also examined. The results are not supportive of a strong feedback relationship from income to inside money. However, there is evidence of strong feedback from income to outside money.

Persons' expectations regarding their ultimate life span provide a tractable empirical opportunity to test for rational expectations. To the extent people only utilize information from "current life tables, " they underestimate the more relevant ultimate life expectancy that results from on-going improvements in mortality experience not reflected in these tables. The expectations observed in the authors' empirical work are not consistent with rational-expectations models. All available information about life expectancies and their trends were not used by the surveyed households in forming life-span expectations. This deficiency precludes correct estimation of the ultimate life expectancy necessary for informed life-cycle choices. Copyright 1992 by MIT Press.

Pamela H. Moomau, Rebecca B. Morton, Revealed Preferences for Property Taxes: An Empirical Study of Perceived Tax Incidence, The Review of Economics and Statistics, Vol. 74, No. 1 (Feb., 1992), pp. 176-179

Shantayanan Devarajan, Chalongphob Sussangkarn, Effective Rates of Protection when Domestic and Foreign Goods are Imperfect Substitutes: The Case of Thailand, The Review of Economics and Statistics, Vol. 74, No. 4 (Nov., 1992), pp. 701-711

The authors consider the relative bias of the OLS-based estimate s(squared) of the disturbance variance in the linear regression model when disturbances are stationary AR(1). They improve upon previous bounds for the bias and show that E(s[squared]/[sigma squared]) tends to zero as autocorrelation increases whenever there is an intercept in the regression. Copyright 1992 by MIT Press.

This paper addresses the question of dynamic specification of empirical models of factor demand for annual U.S. manufacturing data from 1947 to 1981. Frequently used models that treat a subset of factors as variable are shown to be misspecified. An error-correction model is considered as an alternative specification. This model is shown to dominate several more parsimonious models in several respects. However, like the other models considered, the error-correction model is unable to generate satisfactory estimates of long-run elasticities. The issue of dynamic specification remains unresolved. Copyright 1992 by MIT Press.

This paper explores the relationship between a differentiated brand's market share and its price in the context of a model that recognizes the endogeneity of the brand's advertising behavior and pricing decisions. The empirical analysis suggests that General Foods charged higher prices for its regular-grind Maxwell House coffee in geographic areas where the brand's market share was relatively large. Available cross-sectional, time-series data and company documents suggest that this empirical relationship is attributable to the preference grocery retailers have for putting dominant coffee brands on special, rather than cross-sectional variations in costs, market concentration, or consumer tastes. Copyright 1992 by MIT Press.