This paper examines the short-run dynamics of manufacturing costs by detailing how plants in the U. S. automobile industry change output. Weekly data show a variety of margins on which firms adjust production. These margins, which are distinct from the usual factor demand choices, differ in their lumpiness, their adjustment costs, and their variable costs. The existence of these margins explains several empirical puzzles of output fluctuations. Using a theory of the short-run dynamic cost function, we are able to infer some of the characteristics of the underlying cost function from the dynamic behavior of the different margins.

Keith R. Ihlanfeldt, Madelyn V. Young, Intrametropolitan Variation in Wage Rates: The Case of Atlanta Fast-Food Restaurant Workers, The Review of Economics and Statistics, Vol. 76, No. 3 (Aug., 1994), pp. 425-433

This paper proposes a method for measuring the effects of substitutions in the timing of recreational use on people's willingness to pay for nonmarketed resources. Using the three markets (peak, pre-peak, and post-peak) for weekly rentals of vacation properties along the Outer Banks of North Carolina, we are able to control for changes in the mix of site characteristics selected at different times and estimate the effects of temporal substitution on tradeoffs between other characteristics. Proximity to the ocean was found to be a significant determinant of temporal substitution between the peak and pre-peak seasons with ocean front properties having 1.9 percent to 4.7 percent smaller discounts for preseason rentals relative to other properties.

This paper analyses a new estimator for the structural parameters of dynamic models of discrete choice. Based on an inversion theorem due to Hotz and Miller (1993), which establishes the existence of a one-to-one mapping between the conditional valuation functions for the dynamic problem and their associated conditional choice probabilities, we exploit simulation techniques to estimate models which do not possess terminal states. In this way our Conditional Choice Simulation (CCS) estimator complements the Conditional Choice Probability (CCP) estimator of Hotz and Miller (1993). Drawing on work in empirical process theory by Pakes and Pollard (1989), we establish its large sample properties, and then conduct a Monte Carlo study of Rust's (1987) model of bus engine replacement to compare its small sample properties with those of Maximum Likelihood (ML).

This paper develops the quantitative implications of optimal fiscal policy in a business cycle model. In a stationary equilibrium, the ex ante tax rate on capital income is approximately zero. The tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks; thus there is no presumption that optimal labor tax rates follow a random walk. Most of the welfare gains realized by switching from a tax system like that of the United States to the Ramsey system come from an initial period of high taxation on capital income.

Analyzes the design of an unconditional monitoring system in agencies. Value of monitoring; Characterization of monitoring system in terms of error associated with the obedient and disobedient actions; Optimal design of the costly unconditional monitoring system.

Economists now appreciate that resource allocation in less economically developed economies is profoundly influenced by nonfirm economic institutions. However, our theories of nonfirm institutions often suggest different answers to many questions including those of policy. This paper illustrates a method for discriminating between alternative theories using data from German credit cooperatives from nineteenth and early twentieth century Germany. We build a model of credit cooperatives designed to provide monitoring incentives and test this using nineteenth century data.