Knowledge that Transforms

Using data from the National Longitudinal Survey youth cohort, a model is developed to analyze transition probabilities from nonemployment to employment. The key factors examined include personal characteristics, unemployment income, local demand conditions, and duration dependence. There are significant differences between the labor-market experience of whites and nonwhites, and males and females. Local demand conditions and human capital investments are important determinants of the duration of spells of nonemployment. There appears to be strong evidence of negative duration dependence in reemployment probabilities for both young males and females. Copyright 1989 by MIT Press.

The authors describe and apply methods for empirically investigating the relation between consumption and tariff choice. These methods allow (1) testing of alternative specifications for the relations of tariff choice and consumption patterns, (2) estimation of parameters that provide information on the response of customers to marginal prices and fixed fees, and (3) a determination of the extent to which the assumptions embodied in welfare results on self-selecting tariffs are valid in a particular setting. They apply the procedures to residential demand for local telephone service in an area where households are offered a choice among tariffs. Copyright 1989 by MIT Press.

A linear-quadratic dynamic oligopoly model is used to estimate the competitiveness of the rice export market. The model nests various market structures using either open-loop or feedback strategies. The estimated feedback model implies a less competitive market structure than the estimated open-loop model. The rice export market is oligopolistic, but it is closer to competitive than collusive. Copyright 1989 by MIT Press.

This paper draws on the fields of international economics and industrial organization to model and empirically examine the relationship between currency-value fluctuations and domestic producer prices. The major focus is the issue of whether (and why) domestic industries differ systematically in their response to exchange rate changes. The major findings are that changes in the external value of the U.S. dollar between 1974 and 1987 passed most fully into domestic prices of industries heavily reliant on imported inports and producing goods highly substitutable for imports; highly capital-intensive and concentrated industries and those protected by extensive barriers to entry, both from domestic and foreign sources, have exhibited less domestic price change from the exchange rate movements. Copyright 1989 by MIT Press.

Barry J. Seldon, Khosrow Doroodian, A Simultaneous Model of Cigarette Advertising: Effects on Demand and Industry Response to Public Policy, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 673-677

For many years, economists and actuaries have studied multiperiod insurance contracts independently and differently. The aim of this article is to reduce the gap between empirical studies on the determination of insurance premiums and theoretical studies on moral hazard and experience rating. The first objective is to verify empirically the proposition that past experience is a good predictor of risk by using data from a random sample consisting of 19, 013 car drivers in Quebec. The second objective is to construct a multivariate, multiperiod pricing formula for automobile insurance in order to reduce the ill effects of moral hazard. Copyright 1989 by MIT Press.

A bstract-Interrelationships between economics and politics have long been recognized by scholars in the field of international relations. This paper attempts to identify and quantify the factors aflecting bilateral trade flows between the United States and other countries by developing a gravity type model. The model includes economic and political variables and is tested using data for sixty-six U.S. trading partners. Results indicate that pure economic variables which reflect market forces are not the only factors affecting U.S. bilateral trade. Semi-cconomic and international political factors are also important.

John A. Bishop, S. Chakraborti, Paul D. Thistle, Asymptotically Distribution-Free Statistical Inference for Generalized Lorenz Curves, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 725-727