Knowledge that Transforms

In this paper we use micro data from the Employment Opportunity Pilot Project (EOPP) surveys of firms in 1980 and 1982 to test for labor market rigidities and asymmetries in response to demand shifts.We analyze wage and employment adjustments to positive and negative shifts, as measured by sales growth between 1979 and 1981.The analysis is done for both entire sample of firms and for selected subsamples based on firm size, unionization, industry and skill mix.The results show that wage adjustments appear to be fairly rigid, compared with employment adjustments.They also appear to be quite asymmetric, with significant adjustments in response to positive shifts but little adjustment in response to negative shifts.These asymmetries are not more pronounced in large firms, manufacturing, heavily-waged or highly-skilled industries than in other firms or industries.pattern of asymmetry.

The authors examine ex-dividend day share price behavior in light of the Tax Reform Act of 1986. Data from 1982 through 1991 are examined. The evidence generally supports the traditional view that differential taxation does affect the valuation of dividends and capital gains rather than the tax irrelevance view that it does not. Copyright 1993 by MIT Press.

Six-variable vector autoregressive systems consisting of macroeconomic series are investigated. parallel data series for four european countries are used: austria, germany (federal republic), finland, and the united kingdom. all data series are not seasonally adjusted. the aim of the paper is to show that most of the series are better modeled using stochastic seasonality and seasonal unit roots models than simple deterministic models of seasonal structures. as a second step, seasonal cointegration in the systems is studied. it is shown that all four economies display seasonal cointegration as well as usual cointegration.;

Randall P. Mariger, Kathryn Shaw, Unanticipated Aggregate Disturbances and Tests of the Life-Cycle Consumption Model Using Panel Data, The Review of Economics and Statistics, Vol. 75, No. 1 (Feb., 1993), pp. 48-56

The authors develop a new economic framework for the empirical analysis of retail margins. This framework formalizes the role of distribution services as outputs of retail activities. Their main results are the following: the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins; variables that purport to capture oligopolistic features of market structure play a limited or no role in determining retail margins; quantity setting and price setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data. The data base is information on 49 retail sectors from the 1982 U.S. Census of Retail Trades. Copyright 1993 by MIT Press.

While the divestiture of AT&T was intended to produce benefits in the long-distance market, the evidence suggests it has created an unexpected side benefit in local telephone markets. The authors' results show that local exchange carriers have realized immediate cost savings in responding to competitive pressures since the breakup, with the baby Bells experiencing generally larger gains. Dynamically, these productivity gains have increased over time at a relatively constant rate. Although gains of 3-5 percent of total cost are not that large, the absolutely large costs of telephone companies imply significant cost savings of nearly $72 million for the representative firm. Copyright 1993 by MIT Press.

Hamid Beladi, Munit A. S. Choudhary, Amar K. Parai, Rational and Adaptive Expectations in the Present Value Model of Hyperinflation, The Review of Economics and Statistics, Vol. 75, No. 3 (Aug., 1993), pp. 511-514

This paper analyzes the impact of macroeconomic activity on the level of poverty in the U.S. economy. The authors us e a macroeconometric model of poverty in the United States where the rat e of poverty is presumed to depend upon changes in various indicators of macroeconomic performance and policy. The authors empirically model the relationship between poverty and the macroeconomy with a hybrid mode l that employs a reduced-form model to capture the dynamic interaction s among the data and a structural economic model to describe the contemporaneous relationship between the variables. Copyright 1993 by MIT Press.

The author estimates consumption variability ratios for both durable and nondurable consumption using data for six OECD countries. His methodology, which relies on a long-run restriction implied by the consumer's intertemporal budget constraint, overcomes many of the problems inherent to previous approaches. Some important departures from the permanent income model emerge: (1) nondurable consumption shows mild excess smoothness in the United States and Italy, and mild excess volatility in Japan and France, and (2) durable consumption shows extreme excess smoothness in all countries. Alternative factors capable of generating the differences in volatility across types of goods are discussed. Copyright 1993 by MIT Press.