Knowledge that Transforms

We hypothesize that the substitution mechanism tends to break down in low income countries. As a result the input-output relationship in low income countries is largely explained by their X-inefficiency, while the same relationship in high income countries generally reflects their factor prices. This hypothesis is consistent with the empirical results calculated from Census data for eighteen countries at various stages of development.

This paper seeks to determine whether the underlying assumption of utility maximization can be empirically validated for the local public sector. In addition, three alternative functional forms of a system of demands are compared on the basis of their theoretical restrictions as well as their predictive performance. Based upon a likelihood ratio test we find that the restrictions implied by utility maximization are too restrictive to be consistent with the unrestricted estimates. Once integrability restrictions are imposed, however, both CES and Cobb-Douglas utility functions are consistent with the data. The unrestricted estimates had the best predictive performance based on information inaccuracy.

It is argued that the estimation techniques used by previous researchers to study rivalry in financial markets are inappropriate. The assumptions of both ordinary least-squares and Tobi analysis are violated when these techniques are used to analyze mobility and turnover data. To overcome the difficulties in the previous studies, we suggest a non-linear model (which is closely related to the Poisson model). This model is designed for describing frequency data and is not subject to the criticisms to which ordinary least-square and Tobut are subject.

Ahstrrct-The distribution of wealth in real estate am?ong people in the United States at the end of the eighteenth centuLry has hcen estimated frornt a samplc of rolls of the censuLs of real estatc in 1798. Mean real wcalth was $1,433 and the (lini coeficieint of incqualitv was 0588 with half the aduLlt male population owning property. A comparison with the distribultion for rcal estate in 1860 shows that wealth grew 1.9% a year pcr person. Relative inequality was a little larger than in 1798 buLt the diflcrcnce can be explained by crrors in mncasurcmcnt.

Recent studies have documented a significant rise in the male black-white earnings ratio since the mid-1960s. The growing difference in nonemployment rates of blacks and whites clouds these optimistic findings. The basic question addressed in this paper is whether selectivity bias, caused by racial differences in employment rates, is a serious problem in the estimation of wage functions for adult males. For males age 21-34 we found no evidence of selectivity bias, but for the older cohort of males age 35-54, the results are quite different. For both whites and blacks, there is strong positive selection bias. It appears that biased estimates of several important coefficients are obtained using simple ordinary least squares procedures. The most interesting of these are the effect of low education for blacks.

Using a procedure that allows selective pooling of certain subsamples of the data, this study examines the determinants of state unemployment rates in the United States. By selectively pooling the data, more reliable parameter estimates result than could otherwise be obtained were the data disaggregated to the state level, and the specification error inherent in a complete pooling of the data is avoided. The models are estimated using two stage least squares, and the empirical results indicate considerable heterogeneity across areas in the ways in which unemployment rates are determined.

Jeong J. Rhee, John A. Miranowski, Determination of Income, Production, and Employment Under Pollution Control: An Input-Output Approach, The Review of Economics and Statistics, Vol. 66, No. 1 (Feb., 1984), pp. 146-150

The efficiency with which coefficients in probit models are estimated is improved by exploiting data on continuous ancillary variates.In this paper the resulting gains in efficiency are examined and illustrative calculations are provided.Extra precision is achieved at the cost of making an extra assumption but this assumption can be tested.It is shown that fully efficient maximum likelihood estimation of the probit model with a continuous ancillary variate can be achieved by a simple two step procedure involving an ordinary least squares and a probit estimation.

A maximum likelihood method for estimating and testing for the proper functional form in first difference regression models is developed. The parametric transformation of the regression variables we propose includes simple first differences and percentage changes as special cases. The method has a simple relationship to the familiar Box-Cox test, and the coefficient estimation and LR testing are easily implemented with standard regression packages. We apply the new method to three published studies: the St. Louis equation, a money demand model, and a model relating poverty to economic growth.

Walter J. Mead, Asbjorn Moseidjord, Philip E. Sorensen, Competitive Bidding Under Asymmetrical Information: Behavior and Performance in Gulf of Mexico Drainage Lease Sales, 1959-1969, The Review of Economics and Statistics, Vol. 66, No. 3 (Aug., 1984), pp. 505-508