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Publication Metadata only Are technology shocks nonlinear?(Cambridge University Press (CUP), 1999) Ashley, Richard A.; Patterson, Douglas M.; Department of Economics; Altuğ, Sumru; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; N/AThe behavior of postwar real U.S. GNP, the inputs to an aggregate production function, and several formulations of the associated Solow residuals for the presence of nonlinearities in their generating mechanisms are examined. Three different statistical tests for nonlinearity are implemented: the McLeod-Li test, the BDS test, and the Hinich bicovariance test. We find substantial evidence for nonlinearity in the generating mechanism of real CNP growth but no evidence for nonlinearity in the Solow residuals. We further find that the generating mechanism of the labor input series is nonlinear, whereas that of the capital services input appears to be linear. We therefore conclude that the observed nonlinearity in real output arises from nonlinearities in the labor markets, not from nonlinearities in the technical shocks driving the system. Finally, we investigate the source of the nonlinearities in the labor markets by examining simulated data from a model of the Dutch economy with asymmetric adjustment costs.Publication Metadata only Can pre-arranged matches be avoided in two-sided matching markets?(Academic Press Inc, 1999) Department of Economics; Sönmez, Tayfun; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; N/AWe study manipulation via pre-arranged matches in the context of centralized two-sided matching markets. We show that the solution that is used to match the hospitals and medical residents in the United States, namely the hospital-optimal stable rule, is manipulable in this way. Unfortunately this is a general problem: We show that there is no solution that is both stable and non-manipulable.Publication Metadata only Cost uncertainty, taxation, and irreversible investment(Springer-Verlag Berlin, 1999) Demers, FS; Demers, M; Department of Economics; Altuğ, Sumru; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; N/AWe examine the impact of learning about the unknown costs of investment on irreversible investment decisions, and show that the presence of:learning increases the endogenous cost of adjustment and depresses investment. We demonstrate convergence of the state of information and capital stock to the ergodic set. Once learning is complete, in-contrast to the exogenous cost-of-adjustment model, a mean-preserving increase in risk raises the endogenous marginal adjustment cost, reducing investment and the steady-state capital stock. We use data on the U.S. economy to study the impact of uncertainty and risk in the determinants of the costs of investing. Among our Salient findings is that increases in uncertainty have a much larger impact quantitatively on investment than increases in risk. Thus, if firms are unsure about various aspects of the stochastic environment that they face, the reduction in investment is much larger compared to the case in which there are increases in the riskiness in the price of capital or Other determinants of the costs of investing.Publication Metadata only Cox regression with alternative concepts of waiting time: the new orleans yellow fever epidemic of 1853(John Wiley & Sons Ltd, 1997) Pritchett, JB; Department of Economics; Tunalı, Fehmi İnsan; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 105635Event data can often be analysed using different concepts of waiting time. Our application offers three choices: calendar-time, age, and duration of residence in New Orleans. We exploit the semi-parametric features of Cox regression and estimate parallel specifications in which mortality risk is treated as an arbitrary function of one of the three alternative time measures, while the remaining two enter the hazard parametrically. Comparisons of the parameter estimates with the corresponding estimates of the baseline hazards form the crux of a simple specification checking procedure. In our formal treatment we rely on Aalen's Multiplicative Intensity formulation and tackle complications such as left-truncation, functional form specification, and choice-based sampling.Publication Metadata only House allocation with existing tenants(Academic Press Inc, 1999) Abdülkadiroğlu, Atila; Department of Economics; Sönmez, Tayfun; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; N/AIn many real-life applications of house allocation problems, whenever an existing tenant wants to move, he needs to give up his current house before getting another one. This practice discourages existing tenants from such attempts and results in loss of potentially large gains from trade. Motivated by this observation, we propose a simple mechanism that is Pareto efficient, individually rational, and strategy-proof. Our approach is constructive and we provide two algorithms, each of which can be used to find the outcome of this mechanism. One additional merit of this mechanism is that it can accommodate any hierarchy of seniorities.Publication Metadata only Is there persistence in the growth of manufactured exports? evidence from newly industrializing countries(Elsevier, 1997) Mody, Ashoka; Department of Economics; Yılmaz, Kamil; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 6111Applying cointegration techniques in a panel data setting, we document persistent growth of manufactured exports from certain developing countries. To complement the investigation of persistence (measured by the country 'fixed-effects'), we analyze asymmetries in income elasticities: for all developing countries, the decline in exports with world income contraction is sharper than is the rise on the upswing; the decline is, however, especially pronounced for countries with low or negative persistence. The results are consistent with long-term buyer-supplier relationships that create 'insiders' and 'outsiders' in manufactured goods trading. Exports are also influenced by the transactional infrastructure (proxied by telecommunications penetration).Publication Open Access Labor market implications of the demographic window of opportunity(1996) Pritchett, Jonathan B.; Department of Economics; Tunalı, Fehmi İnsan; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 105635Publication Open Access Migration and remigration of male household heads in Turkey, 1963-1973(University of Chicago Press, 1996) Department of Economics; Tunalı, Fehmi İnsan; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 105635Publication Metadata only Optimal export taxes in a multicountry framework(Elsevier Science Bv, 1999) Department of Economics; Yılmaz, Kamil; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 6111This paper extends the optimum export tax analysis to multicountry partial (PE) and general equilibrium (GE) frameworks, using a computable general equilibrium (CGE) model of the global cocoa market. Analyzing myopic optimum, Nash optimum and Nash revenue maximizing taxes, we show that optimum and revenue maximizing taxes obtained in the GE framework differ from their PE counterparts, as they are determined not only by the elasticity of the residual demand curve facing the country, but by domestic supply conditions as well. Second, not only are Nash revenue maximizing taxes higher than Nash optimum taxes in the GE, but, paradoxically, the society attains a higher level of welfare under Nash revenue maximizing taxes than under Nash optimum taxes. Finally, we show that the frequent use of Lerner symmetry [Lerner, A.P., 1936. The symmetry between import and export taxes. Economica 11, 306-313.] in the policy-oriented analysis of optimum export taxes is not warranted.Publication Metadata only Privatisation and stock market efficiency: the British experience(Wiley, 1997) Hayri, A; Department of Economics; Yılmaz, Kamil; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 6111We present evidence that with its emphasis on wide-share-ownership the British privatisation program created heavy involvement of small investors in privatised stocks. Using standard market efficiency tests and maximum likelihood estimates of stationary fractional ARIMA models, we show that the pricing of privatised stocks in the London Stock Exchange was indeed inefficient, unlike the rest of the market. Together, these two pieces of evidence suggest that small investors, behaving like noise-traders, may be generating this inefficiency. Yet, we cannot rule out alternative explanations.