Journal Article The Role of Promotion in Inducing Specific Human Capital Acquisition Get access Canice Prendergast Canice Prendergast Graduate School of Business, University of Chicago Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 108, Issue 2, May 1993, Pages 523–534, https://doi.org/10.2307/2118343 Published: 01 May 1993

Abstract. Issues surrounding the allocation of sunk capacity costs to products are among the oldest in managerial accounting. On the one hand, such costs are generally deemed to be irrelevant, but on the other hand, actual accounting systems commonly make these allocations. This paper examines a decision maker who incurs costs to acquire capacity and then uses an opportunity cost to allocate that capacity among a sequence of product proposals. Under specified circumstances, the sunk cost of capacity is shown to approximate the optimal opportunity cost of capacity. As the number of product proposals grows, the expected opportunity loss from using a simple sunk cost based capacity allocation rule goes to zero. The model is extended to consider different types of products and a multiperiod setting. Résumé. Les questions qui entourent la répartition des coûts irrécupérables relatifs à la capacité entre les différents produits comptent parmi les plus vieux problèmes en comptabilité de gestion. D'une part, ces coûts sont généralement réputés n'être pas pertinents, tandis que d'autre part, en réalité, les systèmes de comptabilité assurent couramment ces répartitions. Les auteurs examinent le cas d'un décideur qui engage des frais pour acquérir une certaine capacité et utilise ensuite un coût d'option pour répartir cette capacité entre une série de projets de fabrication de produits. Dans des circonstances données, les auteurs démontrent que les coûts irrécupérables de la capacité acquise se rapprochent du coût d'option optimal de cette capacité. À mesure que croît le nombre de projets de fabrication de produits, la perte d'option prévue, si l'on utilise une règle de répartition simple de la capacité fondée sur les coûts irrécupérables, se rapproche de zéro. Le modèle est élargi de façon à englober différents types de produits et plusieurs périodes.

I examine the anomalous behavior of the taxable and tax-exempt yield curves. Long municipal yields appear too high relative to the equivalent after-tax yield that can be earned in Treasury or corporate bonds. I discuss existing explanations of the problem and propose a simple model that relates the yields of taxable bonds to the yield curve for par tax exempts. The ratio of the tax-exempt yield to the taxable yield increases with maturity in the model, so it is consistent with observed phenomena such as inverted yield curves for taxables and contemporaneous rising yield curves for tax exempts. Statistical and descriptive comparisons between the yields predicted.by the model and observed yields on par bonds that the model has some promise in explaining the apparent anomalies in the behaviors of the two yield curves. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.

[I examine the anomalous behavior of the taxable and tax-exempt yield curves. Long municipal yields appear too high relative to the equivalent after-tax yield that can be earned in Treasury or corporate bonds. I discuss existing explanations of the problem and propose a simple model that relates the yields of taxable bonds to the yield curve for par tax exempts. The ratio of the tax-exempt yield to the taxable yield increases with maturity in the model, so it is consistent with observed phenomena such as inverted yield curves for taxables and contemporaneous rising yield curves for tax exempts. Statistical and descriptive comparisons between the yields predicted by the model and observed yields on par bonds show that the model has some promise in explaining the apparent anomalies in the behaviors of the two yield curves.]

First, production functions are estimated for China's aggregate economy and for the five sectors—agriculture, industry, construction, transportation, and commerce—using annual data (some constructed by the author) from 1952 to 1980. Then, this paper measures the contribution of capital formation to the growth of these sectors, the effects of the Great Leap Forward of 1958–1962 and of the Cultural Revolution of 1966–1976 on outputs, the impact of economic reforms since 1979 on growth, the rates of return to capital, and the effects of sectorial growths on relative prices.

A two-step procedure for estimating linear simultaneous structural equations with unit roots is presented. It generalizes the procedure of differencing for univariate time series via G. Box and J. M. Jenkins (1970). First, one finds the number of unit roots and the canonical variables that are stationary. Second, one retains only the stationary canonical variables and estimates a stationary model by standard methods. The procedure is easy to use. It is robus t against the difficult testing problem of finding the correct number of unit roots. A multiplier-accelerator model is estimated with interesting conclusions. Copyright 1993 by MIT Press.