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The Estimation of Technical Efficiency Effects Models with an Example Applied to the Thai Manufacturing Sector
Get PDFThis paper does two things. First, it presents alternative approaches to the standard methods of estimating productive efficiency using a production function. It favours a parametric approach (viz. the stochastic production frontier approach) over a nonparametric approach (e.g. data envelopment analysis); and, further, one that provides a statistical explanation of efficiency, as well as an estimate of its magnitude.
Second, it illustrates the favoured approach (i.e. the ‘single stage procedure’) with
estimates of two models of explained inefficiency, using data from the Thai
manufacturing sector, after the crisis of 1997. Technical efficiency is modelled as
being dependent on capital investment in three major areas (viz. land, machinery and
office appliances) where land is intended to proxy the effects of unproductive,
speculative capital investment; and both machinery and office appliances are
intended to proxy the effects of productive, non-speculative capital investment.
The estimates from these models cast new light on the five-year long, post-1997
crisis period in Thailand, suggesting a structural shift from relatively labour
intensive to relatively capital intensive production in manufactures from 1998 to
2002
Technical Appendix-3-Regime asymmetric STAR modeling and exchange rate reversion
Get PDFThe breakdown of the Bretton Woods system and the adoption of generalized
oating exchange rates ushered in a new era of exchange rate volatility and uncer-
tainty. This increased volatility lead economists to search for economic models able
to describe observed exchange rate behavior. The present is a technical Appendix to
Cerrato et al. (2009) and presents detailed simulations of the proposed methodology
and additional empirical results
It’s Not About the Work Ethic
Get PDFJournal review:Sascha O. Becker and Ludger
Woessmann, “Was Weber Wrong? A Human Capital Theory of Protestant Economic History,”
The Quarterly Journal of
Economics, May 2009
A Model of Near-Rational Exuberance
Get PDFWe study how the use of judgement or “add-factors” in forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena,
which we call exuberance equilibria, can exist in a standard self-referential
environment. Local indeterminacy is not a requirement for existence. We
construct a simple asset pricing example and find that exuberance equilibria, when they exist, can be extremely volatile relative to
fundamental equilibria
Technology shocks and aggregate fluctuations in an estimated hybrid RBC model
Get PDFThis paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of technology shocks in explaining aggregate fluctuations. To this end we estimate the model’s
posterior density using Markov-Chain Monte-Carlo (MCMC) methods.
Within this framework we extend Ireland’s (2001, 2004) hybrid estimation approach to allow for a vector autoregressive moving average (VARMA) process to describe the movements and co-movements
of the model’s errors not explained by the basic RBC model. The results of marginal likelihood ratio tests reveal that the more general model of the errors significantly improves the model’s fit relative to
the VAR and AR alternatives. Moreover, despite setting the RBC model a more difficult task under the VARMA specification, our analysis,
based on forecast error and spectral decompositions, suggests that the RBC model is still capable of explaining a significant fraction of the observed variation in macroeconomic aggregates in the post-war
U.S. economy
Simulating Wages and House Prices Using the NEG
Get PDFThe paper incorporates house prices within an NEG framework leading to the spatial
distributions of wages, prices and income. The model assumes that all expenditure goes to firms under a monopolistic competition market structure, that labour efficiency units are appropriate, and that spatial equilibrium exists. The house price model coefficients are estimated outside the NEG model, allowing an econometric analysis of the significance of relevant covariates. The paper illustrates the methodology by estimating wages, income and prices for small administrative areas in Great Britain, and uses the model to simulate the
effects of an exogenous employment shock
Colonialism, European Descendants and Democracy
Get PDFThis paper advances that the share of European descendants in the population is a major determinant of democracy in former colonial countries. We test this hypothesis using cross-section and panel regressions with 60 developing and developed countries that were once colonies. We find that the share of European descendants can explain
more than half of the difference in measures of democracy between the least and the most democratic countries in our sample. We control for other potential determinants of democracy and test for endogeneity
bias using instrumental variables
Institutions and the Scale Effect
Get PDFGrowth models which imply a scale effect are commonly refuted on the basis of empirical evidence. A focus on the extent of the market as opposed to the scale of the country has led recent studies to reconsider the role that country scale plays when conditioning on other factors. We consider a
variant of a simple learning by doing model to account for the potential role for institutions in determining the strength – and direction – of the scale effect. Using cross-country data, we find a significant interaction between property rights institutions and the effect of scale on long-run growth: In countries with poor property rights institutions, scale is
positively related with income per capita; where property rights institutions
are good, higher scale is associated with lower per capita ncomes. We find
no evidence of such role for contracting institutions
Cohort effects within firms, and their implications for labour market outcomes and the business cycle
Get PDFThe project aims to achieve two
objectives. First, we are analysing
the labour market implications of
the assumption that firms cannot
pay similarly qualified employees
differently according to when they
joined the firm. For example, if
the general situation for workers
improves, a firm that seeks to hire
new workers may feel it has to pay
more to new hires. However, if the
firm must pay the same wage to new
hires and incumbents due to equal
treatment, it would either have to
raise the wage of the incumbents, or
offer new workers a lower wage than
the firm would do otherwise. This
is very different from the standard
assumption in economic analysis that
firms are free to treat newly hired
workers independently of existing
hires.
Second, we will use detailed data
on individual wages to try to gauge
whether (and to what extent) equity
is a feature of actual labour markets.
To investigate this, we are using two
matched employer-employee panel
datasets, one from Portugal and the
other from Brazil. These unique
datasets provide objective records on
millions of workers and their firms
over a long period of time, so that
we can identify which firms employ
which workers at each time. The
datasets also include a large number
of firm and worker variables
New Evidence on Allyn Young’s Style and Influence as a Teacher
Get PDFThis paper publishes the hitherto unpublished correspondence between Allyn Abbott Young’s biographer Charles Blitch and 17 of Young’s former students or associates. Together with related biographical and archival material, the paper shows the way in which this adds to our knowledge of Young’s considerable influence as a teacher upon some of the twentieth century’s greatest economists. The correspondents are as follows: James W Angell, Colin Clark, Arthur H Cole, Lauchlin Currie, Melvin G de Chazeau, Eleanor Lansing Dulles, Howard S Ellis, Frank W Fetter, Earl J Hamilton, Seymour S Harris, Richard S Howey, Nicholas Kaldor, Melvin M Knigh