[An econometric problem in estimating models of occupational choice is that the agents' forecasts of future wages and occupational tenure are unobservable. This paper solves the problem by assuming that agents have rational expectations and by considering the effects of arbitrage both within and between cohorts. The solution consists of two time series regressions of the demand and supply functions of entrants into an occupation. From these regressions one obtains estimates of the rate of return to education, the direct cost of education, and other parameters that influence the market. The model was estimated with data from the market for lawyers.]
[Discrete choice models are now used in a variety of situations in applied econometrics. By far the model specification which is used most often is the multinomial logit model. Yet it is widely known that a potentially important drawback of the multinomial logit model is the independence from irrelevant alternatives property. While most analysts recognize the implications of the independence of irrelevant alternatives property, it has remained basically a maintained assumption in applications. In the paper we provide two sets of computationally convenient specification tests for the multinomial logit model. The first test is an application of the Hausman [10] specification test procedure. The basic idea for the test here is to test the reverse implication of the independence from irrelevant alternatives property. The test statistic is easy to compute since it only requires computation of a quadratic form which involves the difference of the parameter estimates and the differences of the estimated covariance matrices. The second set of specification tests that we propose is based on more classical test procedures. We consider a generalization of the multinomial logit model which is called the nested logit model. Since the multinomial logit model is a special case of the more general model when a given parameter equals one, classical test procedures such as the Wald, likelihood ratio, and Lagrange multiplier tests can be used. The two sets of specification test procedures care then compared for an example where exact and approximate comparisons are possible.]
This paper proposes a procedure for implementing efficient egalitarian equivalent allocations in an exchange economy, using the perfect equilibrium concept. This procedure is an extension of the divide and choose method in two ways: it is defined for more than two agents and the divider's advantage is removed by auctioning the role of divider among the agents (as in Crawford [1]).Thus, in contrast with other equilibrium concepts (Nash, dominant), the perfect one solves the efficiency-justice dilemma.
[This paper considers approximations to the distribution of the least squares estimator of α in the model @y"t = @a@y"t"-"1 + @u"t where the @u"t are independently distributed N(0, @s extasciicircum2) and @y"0 is fixed. An Edgeworth approximation for this case is calculated, and compared with results for the stationary case. For extbar@a extbar extgreater 1 and fixed @y"0, the asymptotic distribution is found in closed form; when extbar@a extbar extgreater 1 and @y"0 = 0, an Edgeworth-type approximation is again calculated; this is compared with exact results.]
A NUMBER OF AUTHORS argue that a Bayesian posterior odds criterion is appropriate for model selection.2 This paper considers how to derive this criterion when there is minimal prior information. We propose minimizing measures of prior information relative to the models in question rather than relative to the parameters of the particular models. In so doing, we obtain an expression for the odds that is invariant to the parameterization of the particular models and overcomes certain well known finite sample limiting problems. We illustrate this procedure using two popular measures of information derived from the well known Shannon [26] measure. By minimizing these measures with the sample size held fixed, we obtain the same model selection criterion that Schwarz [25] derived asymptotically for large sample sizes. This expression has a number of desirable properties and is computationally no more
A general linear simultaneous equation system with a multivariate Student t disturbance vector is considered. The normal equations of the corresponding maximum likelihood estimator are used as estimator generating equations to introduce a new class of estimators. Properties of large subclasses of these estimators are determined for disturbance vectors other than the multivariate Student t.
Most studies of commodity price stabilization assume that all agents behave competitively. However, many commodities suitable for stockpiling are produced by countries with a significant share of the world market, and commodity agreements themselves often result in cartelization of the market. The paper explores the consequences of market power for the choice of storage rule and the degree of price stabilization. It finds that with linear demand, dominant producers choose more stable prices than under perfect competition and price stability increases with their market share. With constant elastic demand the competitive degree of price stabilization is achieved.
[When the error covariance matrix in a linear model depends on a few unknown parameters, the regression coefficients can be estimated by a two-step procedure. Consistent estimates of the covariance parameters are first obtained and then used in a generalized least squares regression. Under the assumption that the errors are normal and the covariance parameter estimates are well behaved, an asymptotic expansion is developed for the distribution function of the two-step GLS estimate. the error in treating the estimate as normal is found to be of order n extasciicircum- extasciicircum2 as the sample size n tends to infinity.]
[The implications for efficient allocation of parents' inability to force transfers among siblings are explored. When there are differences in abilities of children within families, such transfers may be necessary to achieve a first-best solution. In the absence of such transfers, a tax on earned income and a subsidy to inheritance are useful second-best tools, whereas subsidies to investments in human capital or physical capital are not desirable.]