COMPETITION AND PRODUCTIVITY GROWTH: THE CASE OF THE U.S. TELEPHONE INDUSTRY

The article focuses on the relation of competition to changes in productivity. Specifically, it compares the experience of AT&T Long Lines, operating in an increasingly competitive market, with that of eight local telephone monopolies. Both the estimation of total factor productivity growth and the analysis of shifts in cost functions show a markedly faster change in efficiency in the effectively competitive market than for the local monopolies. The article also examines three channels through which competition produces differential changes in efficiency. The results support, by implication, a policy of permitting entry and increasing competition in local telephone markets. ( JEL L11, L96)     

THE TECHNOLOGY FACTOR AND THE EXPORT PERFORMANCE OF U.S. MANUFACTURING INDUSTRIES

The paper examines two central theories advanced to explain the revealed comparative advantage of U.S. industries. The neo-technological account centers on the process of innovation among industries and is represented in the regression analysis by an R&D intensity variable. The neofactor theory advances both human and "physical" capital as important variables in determining countries' comparative advantage. Foreign protection is postulated to affect the export performance of U.S. industries. Generally the results suggest that U.S. revealed comparative advantage is most pronounced in R&D intensive industries that give the U.S. a temporary technological lead in world markets.     

IT AND PRODUCTIVITY IN U.S. MANUFACTURING: DO COMPUTER NETWORKS MATTER?

The link between information technology and productivity is clear. Yet how computers affect productivity is not well understood. Ours is the first study using data for approximately 30,000 U.S. manufacturing plants to examine the effect of computer networks on productivity. We find a positive and significant relationship between computer networks and plant labor productivity. Plants with lower productivity in earlier periods are also more likely to have a computer network, supporting the hypothesis that plants use networks to catch up. The positive network effect remains significant when we account for endogenous computer networks. (JEL L6, O3)     

STABILITY AND CHANGE IN THE U.S. PUBLIC'S KNOWLEDGE OF POLITICS

The U.S. public's current knowledge about politics is comparedwith levels of knowlege in the 1940s and 1950s. Fourteen questionsasked by Gallup on various surveys from 1945 to 1957 were includedon a larger survey of political knowledge conducted by telephonein 1989 with a randomly selected sample of 610 adult U.S. residents.On 8 of the 14 items, the percentage answering correctly in1989 was higher than in the earlier surveys (by 4–15 points).One item showed an increase of 1 percent, two were down 1 percent,and three others declined by 5 percent, 9 percent, and 10 percent.When level of education is controlled, however, levels of knowledgeappear to have declined for most of the items. A reanalysisof some of the original Gallup data is used to estimate theeffectiveness of schools in transmitting political informationin 1989 compared with the earlier years.     

THE SWINGS OF U.S. INFLATION AND THE GIBSON PARADOX

In recent business cycles, U.S. inflation has experienced a reduction of volatility and a severe weakening in the correlation to the nominal interest rate (Gibson paradox). We examine these facts in an estimated dynamic stochastic general equilibrium model with money. Our findings point at a flatter New Keynesian Phillips Curve (higher price stickiness) and a lower persistence of markup shocks as the main explanatory factors. In addition, a higher interest‐rate elasticity of money demand, an increasing role of demand‐side shocks, and a less systematic behavior of Fed's monetary policy also account for the recent patterns of U.S. inflation dynamics. (JEL E32, E47)     

TRADE PROTECTION AND THE ROLE OF CAMPAIGN CONTRIBUTIONS IN U.S. FOOD AND TOBACCO INDUSTRIES

This article examines the determinants of both trade protection and campaign contributions for a sample of U.S. food and tobacco industries. Empirical findings indicate that while market structure variables are significant, campaign contributions are the key factor in explaining the inter-industry levels of trade barriers in those industries studied. Thus, regardless of industry characteristics, campaign contributions have a strong persuasive role, rather than the facilitative role that most previous studies suggest.     

THE IMPACT OF FINANCIAL RESTRUCTURING AND CHANGES IN CORPORATE CONTROL ON INVESTMENT AND EMPLOYMENT IN THE U.S. PETROLEUM INDUSTRY

This article investigates the effects of changes in market conditions and the financial structure of domestic petroleum firms on employment and investment in offshore oil leases. Important theoretical issues include the extent to which managerial power in firms has been challenged by intervention from financial markets and institutional investors and the effects of changes in financial control on employment and inventory investment. A pooled cross-section time series data set was assembled for forty large oil companies for 1978–1989. A dynamic analysis of company employment levels and investment in offshore oil leases in the Central Gulf of Mexico reveals that falling oil prices and lower domestic oil consumption reduced spending on offshore leases. Some support was found for the agency theory's claim that lower free cash flow reduced spending on offshore leases in the late eighties. Support was also found for an executive defense strategy (Useem 1993), where petroleum company managers reduced lease spending and employment as an adaptation to changes in market fundamentals and external threats from capital markets and institutional investors.     

INTERNATIONAL OUTSOURCING AND THE PRODUCTIVITY OF LOW-SKILLED LABOR IN THE EU

This article presents first insights into the role of international outsourcing on the productivity of low-skilled workers in EU manufacturing. Whereas in the short run international outsourcing exhibits a negative marginal effect on real value added per low-skilled worker, the long-run parameter estimates reveal a positive impact. This may be explained by imperfections in European labor and goods markets, which prohibit an immediate adjustment in the factor employment and the output structure. The change in the outsourcing intensity since 1993 alone acounts for a long-run increase of about 6.0% in the real value added per low-skilled worker. (JEL C33 , F14 , F15 )     

THE U.S. PRODUCTIVITY SLOWDOWN: A PEAK THROUGH THE STRUCTURAL BREAK WINDOW

This paper provides a formal test of the null hypothesis of a unit root in the log-level of labor productivity against the alternative of linear trend stationarity with a one-time structural break in the level and slope of the trend at an a priori unknown date. Using some newly developed time series tests, we show that the log-level of productivity is more accurately modeled as following a deterministic trend with a regime shift rather than as a unit root process. Some implications of the results for detrending and for testing cointegration relationships between productivity and other variables are discussed. ( JEL C22. O40)     

THE SHIFTS IN LEAD-LAG PROPERTIES OF THE U.S. BUSINESS CYCLE

We document shifts in the lead-lag properties of the U.S. business cycle since the mid-1980s. Specifically, (1) the well-known inverted leading indicator property of real interest rates has completely vanished; (2) labor productivity switched from positively leading to negatively lagging output and labor inputs over the cycle; and (3) the unemployment rate shifted from lagging productivity negatively to leading positively. Many contemporary business cycle models produce counterfactual cross-correlations revealing that popular frictions and shocks provide an incomplete account of business cycle comovement. Determining the underlying sources of these shifts in the lead-lag properties and their consequences for macroeconomic forecasts is therefore a promising direction for future research. (JEL E24, E32, E43)     

DEMAND AND SUPPLY OF HOUSING IN THE U.S.: 1929–1978

Annual data for the period 1929–1978 are used to estimate a complete model of demand and supply of housing services and consumption goods in the U.S. by maximum likelihood methods. The demand functions are derived by maximizing a utility function characterized by weak inter-temporal separability. Utility in each period is assumed to be of a generalized CES type with housing services and consumption goods as arguments. The estimating demand relation is transformed into a relatively simple form by focusing on the relative demand of housing to consumption goods. It is found that the intra-temporal elasticity of substitution between housing and consumption goods is unitary. The maximum likelihood estimates of the other parameters of the elementary utility function are also presented. Finally, it is noted that by estimating the structure of individual preferences a basis is established for the calculation of long-run efficiency gains of a change in the tax treatment of housing.     

ESTIMATION OF THE DEPRECIATION RATE OF PHYSICAL AND R&D CAPITAL IN THE U.S. TOTAL MANUFACTURING SECTOR

Numerous studies on production and cost, the sources of productivity, and endogenous growth have recognized the pivotal role played by physical and R&D capital stocks. Analysis of the contributions of these capitals often requires measures of the stocks of physical and R&D capital, which in turn requires measuring their depreciation rates. In this paper we specify a model of factor demand that allows us to estimate the depreciation rates of both physical and R&D capital jointly with other model parameters. The model is estimated for the U.S. total manufacturing sector.     

LOGROLLING IN THE U.S. CONGRESS

Does exchange, i.e., vote trading, occur in legislatures?!f so, is it quantitatively important or optimal? How important are political parties for the organization of logrolling coalitions? To address these questions, this paper investigates a broad range of votes where logrolling has been reported among interests favoring subsidies for urban, labor, and farm interests. The findings suggest that logrolling agreements are widespread, that many Democratic congressmen changed votes because of logrolling agreements, and that the Democratic party served to facilitate logrolling between its members. Furthermore, logrolling coalitions exhibited a strong degree if stability.     

TRADE,GEOGRAPHY AND THE SKILL PREMIUM IN U.S. MANUFACTURING

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period. (JEL F12, F16, L60)     

WITHIN U.S. TRADE AND THE LONG SHADOW OF THE AMERICAN SECESSION

Using data from U.S. commodity flow survey, we show that the historical Union–Confederacy border lowers contemporaneous trade between U.S. states by about 13%. The finding is robust over econometric models, survey waves, or aggregation levels. Including contemporaneous controls, such as network or institutional variables, lowers the estimate only slightly. Historical variables, such as slavery, do not explain the effect. Adding U.S. states unaffected by the Civil War, we argue that the friction is not merely reflecting unmeasured North–South differences. Finally, the border effect is larger for differentiated than for homogeneous goods, stressing the potential role for cultural factors and trust. (JEL F15, N72, N92, Z10)