Knowledge that Transforms

The theory of the competitive firm under price uncertainty is used to develop a money metric of a producer's willingness to pay for additional information. This concept is extended to the market by formulating ex-ante and ex-post measures of the value of a rational expectations forecast. The empirical feasibility of these measures are demonstrated by application to a simple two equation model of an agricultural market.

A bstract-The standard disequilibrium model is supplemented with outside information on the extent of market excess demand. Estimation of this supplemented model is considerably less involved than that of the standard model, and certain desirable structural features, such as improved dynamics, are obtained. In addition, a simple nested test of the hypothesis of market equilibrium is available. The model is estimated with aggregate U.S. post-war labor market data, and the econometric test rejects the hypothesis of labor market equilibrium.

Jouke van Dijk, Hendrik Folmer, The Consequences of Interregional Labor Migration for the Regional Labor Market: Theory, Methodology and Dutch Experience, The Review of Economics and Statistics, Vol. 68, No. 1 (Feb., 1986), pp. 74-83

Alan L. Gustman, Thomas L. Steinmeier, A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health, The Review of Economics and Statistics, Vol. 68, No. 3 (Aug., 1986), pp. 509-513

Dennis M. Bushe, Irving B. Kravis, Robert E. Lipsey, Prices, Activity, and Machinery Exports: An Analysis Based on New Price Data, The Review of Economics and Statistics, Vol. 68, No. 2 (May, 1986), pp. 248-255

A hstract-This research investigates innovative behavior in the U.S. steel industry under the assumption that basic oxygen and large electric furnaces are competing technologies. The empirical model of innovation is based on recent theoretical research. The coefficients are estimated by a seemingly unrelated Tobit approach. The research finds innovation is strongly influenced by a demonstration effect. Adoption is also influenced by potential cost savings and technical progress. There is no evidence that large U.S. steel producers modernized more slowly than their smaller rivals. The large electric furnace becomes sufficiently attractive by 1980 that firms choose not to adopt basic oxygen.