Knowledge that Transforms

This paper proposes criteria for classifying time-series forecasts of inflation as weakly, sufficiently, strongly, and strictly rational. Forecasts taken from the ASA-NBER surveys, some well-known one-step-ahead forecasting techniques, and a novel variable length autoregressive moving average model are tested against these criteria. None of the forecasts series meets the criteria for strict rationality nor, even, the less demanding criteria for strong rationality. While agents forecast as best they can, their forecasts are not likely to meet stringent rationality criteria suggested by econometricians. Copyright 1991 by MIT Press.

This paper reports an estimate of the frictional unemployment rate in U.S. manufacturing that is derived from a parametric, statistical method for estimating stochastic frontiers. The steady-state, perfect-foresight solution to an estimated employment growth frontier provides a locus of technically efficient (frictional) rates of unemployment. The mean frictional unemployment rate during the sample period is estimated to be 3.7 percent of the manufacturing labor force. This estimate conforms closely to an estimate of 3.5 percent that is derived from manufacturing-sector data presented by David M. Lilien (1980) for roughly the same time period. Copyright 1991 by MIT Press.

Wayne B. Gray, Carol Adaire Jones, Are Osha Health Inspections Effective? A Longitudinal Study in the Manufacturing Sector, The Review of Economics and Statistics, Vol. 73, No. 3 (Aug., 1991), pp. 504-508

This paper presents a technique of cost-function estimation, based on the theory of finite mixture distributions, which allows for the simultaneous existence of multiple technologies of production when the researcher does not know which observations correspond to which technologies. The finite mixture technique provides estimates of the proportions of firms using the various technologies, facilitates comparisons between technologies, and preserves the traditional interpretations of cost estimation. After describing the mixture procedure, the technique is illustrated on a large sample of savings and loan associations, and it is concluded that this industry exhibits multiple technologies of production. Copyright 1991 by MIT Press.

Michael D. Creel, John B. Loomis, Confidence Intervals for Welfare Measures with Application to a Problem of Truncated Counts, The Review of Economics and Statistics, Vol. 73, No. 2 (May, 1991), pp. 370-373

Thomas F. Cargill, Michael M. Hutchinson, Political Business Cycles with Endogenous Election Timing: Evidence from Japan, The Review of Economics and Statistics, Vol. 73, No. 4 (Nov., 1991), pp. 733-739

There is a large literature investigating the determinants of charitable giving, in particular, price and income elasticities. We find that many of the most often reported results from this literature rely on a model specification that is inappropriate when applied to recent Federal Tax File data. We develop a standard Tobit model with a Box-Cox transformation parameter that nests a number of other specifications. The Box-Cox model yields estimates of price elasticities and expected charitable contributions that differ from those obtained using the typical specification. Additionally, we find that the use of sample weights provides potentially important policy insights. Copyright 1991 by MIT Press.

This analysis develops a model in which, for the first time, households' mobility decisions are separated into intra-urban movements and migrations. These two mobility decisions and the households' tenure (own/rent) choice are estimated as part of a multinomial logit framework and are found to be jointly determined. The literature suggests that the intra-urban mobility and migration decisions are motivated by quite different factors. Consequently, by separating the two choices for the purpose of estimation, each equation can be specified more correctly. In addition, variables which affect migration can be shown to have an impact on intra-urban mobility and tenure choice which would otherwise be ignored. Copyright 1991 by MIT Press.

This study finds that a strong bibliometric regularity exists in the publication pattern in the economics literature; the number of authors publishing n papers is approximately 1/n(superscript "c") of those publishing one paper. The economics literature conforms very well to the model with c = 1.84 if data are taken from a large collection of journals. When applied to individual journals, the result shows that values of c range from 2.04 to 3.11. This paper also reports the degree of author concentration among leading economics journals. Finally, this study finds that the graduates of three graduate programs account for more than half of the top 100 authors, indicates strong institutional dominance in the production of the most prolific authors. Copyright 1991 by MIT Press.

The authors use Census-based data on the state distribution of the undocumented-alien population in analyzing the relationship between that population and unemployment among youth and minority workers. Regression results from their two-equation models do not support commonly expressed fears that undocumented immigration has caused any substantial increases in joblessness among these presumably vulnerable groups, although small amounts of displacement are indicated. A sizable reverse effect is evident: undocumented immigrants tend to concentrate in states where labor markets for these marginal groups are most favorable. Copyright 1991 by MIT Press.