We assess the empirical validity of the life-cycle model using a time series of cross sections and a novel parametrization of preferences. The main findings are as follows: (i) The excess sensitivity of consumption growth to labor income disappears when we control for demographic variables. (ii) The elasticity of intertemporal substitution (EIS) is a function of several variables, including the level of consumption. The EIS increases with the level of consumption. (iii) The variables that change the EIS are also important in explaining excess sensitivity over the business cycle. We are able to reconcile our results with those in the macro and micro literature.

Abstract Reviews the book "Annual Reports to Stockholders," by N. Loyall McLaren.

This article analyzes the heterogeneous reaction of exporters to real exchange rate changes using a very rich French firm-level data set with destination-specific export values and volumes on the period 1995–2005. We find that high–performance firms react to a depreciation by increasing significantly more their markup and by increasing less their export volume. This heterogeneity in pricing-to-market is robust to different measures of performance, samples, and econometric specifications. It is consistent with models where the demand elasticity decreases with firm performance. Since aggregate exports are concentrated on high-productivity firms, precisely those that absorb more exchange rate movements in their markups, heterogeneous pricing-to-market may partly explain the weak impact of exchange rate movements on aggregate exports.

THE X-inefficiency costs of protection and industrial concentration have been topics of considerable interest in the literature on economic development. Balassa (1975) and Bergsman (1974), for example, have argued that protection, by increasing X-inefficiency, generates a major welfare cost which is not captured by traditional costs of protection calculations, and White (1976) has examined the relationship between inappropriate factor intensities which he associates with Xinefficiency and industrial concentration. The common theme which emerges from each of these studies is that public policy can have a major impact on economic performance not only by influencing factor proportions, but also by influencing the intensity with which a non-measurable input, X-efficiency, is employed. Despite the intuitive appeal of the X-efficiency concept there have been very few empirical tests of this hypothesis. This partly reflects the imprecise nature of the basic concept but also the lack of adequate micro economic data. X-efficiency clearly relates to efficiency within firms so that the most appropriate tests would rely on data on firm-level efficiency. In this paper we propose a direct test of the X-efficiency hypothesis using firm-level data. We build on previous work by Corden (1970, 1974) and Martin (1978) who showed how to model X-efficiency effects using the concept of managerial leisure. We extend these simple models of managerial behavior, emphasizing the role of the external managerial labor market. The model is then used to explore the relationship between changes in public policy, managerial effort and X-inefficiency. Certain predictions of the model are tested using cross-section data from a survey of firms in two subsidized industries in Ghana. Efficiency indices are computed on the basis of a translog frontier production function. Variations in relative efficiency are then correlated with several explanatory variables including the presence or absence of subsidy payments to the firm. Subsidized firms in both industries are found to exhibit higher relative levels of X-inefficiency.