OFFSHORING AND THE POLARIZATION OF THE DEMAND FOR CAPITAL

In the past decades, the importance of different capital goods has gradually changed, which has led to a structural shift in the composition of the demand for capital at the expense of more traditional capital inputs such as machinery and equipment. In this paper, we focus on a novel driver of this development by analyzing the effect of offshoring on the demand for capital by asset class using a rich country-sector panel dataset. Estimating a system of factor demand equations, we document that offshoring reduces the relative demand for non-ICT capital, thereby polarizing the demand for capital. (JEL F14, F62, E22)     

UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY

In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output.     

INFLATION, HEDGING AND THE DEMAND FOR MONEY: SOME EMPIRICAL EVIDENCE

This paper explores the role of nominal rate of return uncertainty and inflation hedging as potentially important factors explaining the pattern of money demand. Using U.S. quarterly data over the period 1952.2–1982.4, it is shown that in conformity with theoretical considerations the nominal rate of return uncertainty variable tends to have a significantly positive effect and the inflation hedging variable (the covariance between nominal rate of return and inflation rate) a significantly negative effect on the demand for money. These findings seem to be reasonably robust in terms of various definitions of income, interest rates, inflation rate and money variables as well as in terms of different estimation methods.     

MALE-FEMALE DIFFERENCES IN OCCUPATIONAL CHOICE AND THE DEMAND FOR GENERAL AND OCCUPATION-SPECIFIC HUMAN CAPITAL

A human capital model of occupational choice as demand for general and occupation-specific human capital is developed to show how women's occupational choices vary with their lifetime labor force participation patterns. The model is tested using data from the National Longitudinal Survey of Mature Women. The major empirical finding is that women who take less home time choose occupations which require more human capital, especially specific human capital. Women's occupations and wages are quite responsive to changes in their labor force participation patterns. If women worked continuously, their occupations and wages would be much closer to those of men.     

HEDONICS AND DEMAND ANALYSIS: THE IMPLICIT DEMAND FOR PLAYER ATTRIBUTES

Although a significant econometric literature is concerned with the implicit demand for the attributes of differentiated goods in hedonic pricing models, the literature has developed independently of modern econometric demand analysis. This study estimates factor demand systems using data on player characteristics employed by Major League Baseball teams, and associated estimated hedonic prices. It is found that the implicit demand for player attributes by teams is largely consistent with the predictions of the neoclassical theory of the firm, in contrast to the results often obtained by empirical demand studies using conventional data sets. (JEL D21)     

INTERNATIONAL PRICE BEHAVIOR AND THE DEMAND FOR MONEY

Oil prices, commodity prices and American monetary policy, the last operating through a variety of channels, have all figured prominently in explanations of the international inflation process in the late 1960s and early 70s. OUT major purpose in this paper is to test these various hypotheses. We do so in the context of a reduced-form rational-expectations price equation which we estimate for the United States and seven other industrial countries using quarterly data for the period 1955 through 1976.
The principal conclusion that emerges from this exercise is that movements in domestic money in these countries served as the key link in the inflation process. The factors that produced these monetary changes, however, differed among countries. Price shocks of various sorts were clearly of secondary importance.
The other important set of conclusions concerns the demand for money. In place of a traditional stock adjustment model, we used GLS with a second-order correction for autocorrelation. We believe this produced more plausible estimates of the parameters of the long-run demand function and of the adjustment process itself.     

THE DEMAND FOR HIGHER EDUCATION AND INSTITUTIONAL ENROLLMENT FORECASTING

This paper presents a university enrollment forecasting model and evaluates the model's performance in a case application. The model includes (1) enrollment demand equations with both tuition and labor market variables; (2) equations to forecast values of the labor market variables which influence demand; and (3) procedures to calculate the statistical confidence interval in an enrollment forecast .     

FAMILY BEQUESTS AND THE DERIVED DEMAND FOR HEALTH INPUTS

A family investment model whereby parents allocate resources among their own consumption, health investments and financial bequests to children is specified and used to develop hypotheses which are tested on cross section data. As predicted by the model, the demand for physician visits for young children is found to 1) depend on family income only up to some level ($10,000 in 1969 $ in this case), 2) increase with maternal education, and 3) vary with price measures and family size, There is also evidence that greater health investments in young children pay off in fewer severe illnesses in young adulthood.     

NOMINAL COSTS AND THE DEMAND FOR REAL TRANSACTIONS BALANCES

The standard specification of constant real transactions costs assumes that over the sample period transactions costs move in lock-step with the GNP deflator; our model assumes that transactions costs move negligibly compared to the GNP deflator. That is, nominal transactions costs are assumed constant here rather than real transactions costs as in other estimates of money demand. We find with this nominal-transactions-cost specification that the real money demand function is more stable in terms of the stability of the coefficients and the accuracy of out of sample predictions than indicated by earlier studies.     

COSTLY PORTFOLIO ADJUSTMENT AND THE SHORT RUN DEMAND FOR MONEY

In many empirical studies the short-run demand for money includes a lagged dependent variable; this is usually attributed to some cost of adjusting money balances toward their desired level. This short-run money-demand equation is sometimes used as a structural equation in models in which market clearing is also assumed (in the sense that money supply equals short–run money demand). In this paper, a theoretical counterexample demonstrates that this use of a short-run money demand equation is not generally valid. This finding challenges the usual interpretation of the lagged dependent variable.     

THE DEMAND FOR CIGARETTE SMUGGLING

When taxes raise the full price of a good above that in nearby jurisdictions consumers have an incentive to cross into the lower-price jurisdiction to make purchases. Using a simple microeconomic model of the consumer's border-crossing decision, we derive an econometric model to test the significance of border crossing and estimate the magnitude of the resulting sales. Examining cigarette sales in the continental U.S. over the period 1960 to 1986, we find strong evidence that border crossing is a significant factor in explaining sales differentials between states. Implications for demand estimation and excise tax policy are discussed.     

MENTAL ILLNESS AND THE DEMAND FOR ALCOHOL, COCAINE, AND CIGARETTES

This article estimates the effect of mental illness on demand for addictive substances, allowing for structural endogeneity and simultaneity between mental illness and addictive consumption. Results show that individuals with a history of mental illness are 26% more likely to consume alcohol, 66% more likely to consume cocaine, and 89% more likely to consume cigarettes. This high-participation group is also price-responsive, although their price elasticities differ somewhat from those without mental illness. The results provide added justification for higher taxes and supply reduction activities. Furthermore, subsidizing the treatment of mental illness can reduce addictive consumption.(JEL I1 )     

PERCEIVED GAME UNCERTAINTY,SUSPENSE AND THE DEMAND FOR SPORT

This study tries bridging between different behavioral economic explanations for the lack of support of the uncertainty of outcome hypothesis in spectator sports. We test a measure of perceived game uncertainty that is comparable to objective measures frequently tested in the literature. Econometric results suggest that fans do not perceive closeness of a game differently than how economists have tended to measure it. However, fans' perceptions of suspensefulness are distinct from their perceptions of game uncertainty. Moreover, the finding that fans' preferences for game uncertainty are dominated by loss aversion also emerges—independently of fanship status—in our stated‐preference setting. (JEL L83, D12, Z2)     

CROSS-COUNTRY ESTIMATES OF THE DEMAND FOR MONEY AND ITS COMPONENTS

The demand for money aggregates (M1, M2) and their components (currency, demand deposits, and time deposits) are estimated using a sample of 103 countries at two time periods. Money demand is found to be affected by age, literacy, industrial development, and political structure, as well as income and inflation. This expanded demand function helps to explain the considerable changes in money demand that have occurred over long periods and the large variation in money demand found across countries. The knowledge thus gained is useful for understanding differences in monetary and taxation policies across countries.