Knowledge that Transforms

Elizabeth S. Cooperman, Winson B. Lee, James. P. Lesage, Geographical Integration and the Retail CD-Pricing Decisions of Large Depository Institutions, The Review of Economics and Statistics, Vol. 73, No. 3 (Aug., 1991), pp. 546-552

This analysis tests the free-rider hypothesis as it applies to the Sealy mattress licensing system, one of the oldest and most prominent examples of vertical and horizontal distribution restraints. The results reported here focus on the period following the elimination of Sealy's territorial restraints in 1980. Using alternative samples, units of measurement, and estimating techniques, the analyses yield consistent results supporting the market power hypothesis: the Sealy territorial restraints on distribution decreased output and increased prices. Copyright 1991 by MIT Press.

Using industry data, this paper investigates the determinants of the response of real output to aggregate demand shocks across industries of the U.S. economy. The purpose of this investigation is to verify the empirical validity of two competing explanations for this response: a new classical explanation and a new Keynesian explanation. The author finds that the impact of aggregate demand shocks on industrial real output is negatively related to the mean inflation of industrial output price and positively related to the variability of the demand for this output. In addition, some industry-specific factors are important in differentiating the cyclical behavior of real output across industries. This evidence does not provide a clear support for any of the competing explanations considered in this paper. The evidence, however, sheds some light on important factors that differentiate the response of real output to aggregate demand shocks across industries of the economy. Copyright 1991 by MIT Press.

Tim R. Sass, J. Paul Leigh, The Market for Safety Regulation and the Effect of Regulation on Fatalities: The Case of Motorcycle Helmet Laws, The Review of Economics and Statistics, Vol. 73, No. 1 (Feb., 1991), pp. 167-172

The effects of tax policy on agricultural investment are investigated by estimating a dynamic interrelated input demand system. Net investment is specified to give rise to increasing internal costs of adjustment, resulting in capital inputs being quasi-fixed. The system of demand equations is derived by incorporating a quadratic normalized restricted cost function into a long-run dynamic optimization framework. Copyright 1991 by MIT Press.

This paper analyzes changes in child-care arrangements of a sample of children from the Youth Cohort of the National Longitudinal Surveys over the first three years of life. The analysis indicates that turnover in child-care arrangements is surprisingly low among this sample and is more common among families of higher socioeconomic status. Child-care turnover is positively correlated with mothers' employment turnover, but is not correlated with changes in mothers' marital status or additional births. Turnover in child-care arrangements is highly correlated over time, due mainly to the effects of observed variables and unobserved characteristics of the mothers. Copyright 1991 by MIT Press.

The conclusions of policy-oriented market studies often hinge upon the size of an estimated demand elasticity. Few of the researchers who have estimated such elasticities have utilized a variable designed to measure the subjective concept of "quality." If quality both significantly affects the demand for a heterogeneous good and is positively correlated with price, omitting quality from a demand regression will lead to a downward bias in the estimated price elasticity. Using Levinsohn's (1988) model of the automobile market as a framework, this note shows that including quality variables can increase the model's estimated price elasticity by more than 80 percent. Copyright 1991 by MIT Press.

Steven G. Craig, Janet E. Kohlhase, David H. Papell, Chaos Theory and Microeconomics: An Application to Model Specification and Hedonic Estimation, The Review of Economics and Statistics, Vol. 73, No. 2 (May, 1991), pp. 208-215

The relation of several incentive schemes to productivity is studied, with a particular emphasis on the effects and determinants of dismissals. Dismissals turn out to be positively, but in a nonlinear way, associated with productivity. Similarly, profit-sharing raises productivity. Wages and piece-rates are insignificant. Profit-sharing decreases the number of dismissals made by firms. Copyright 1991 by MIT Press.

Price V. Fishback, John H. Baskin, Narrowing the Black-White Gap in Child Literacy in 1910: The Roles of School Inputs and Family Inputs, The Review of Economics and Statistics, Vol. 73, No. 4 (Nov., 1991), pp. 725-728