Volume XXIV, No. 1, 1998
Audie Brewton and Lewis Freiberg
The Civil Rights Act of 1964 was passed and employment discrimination cases were filed. In the early 1970s attention turned to compensation. Has the differential changed in the past two decades in the academic labor market? This paper uses econometrics to see if legal wage discrimination, at a Midwest state university, has diminished over time. The past twenty years are important because of the effort to eliminate illegal differentials. Research from the Office of Employment and Unemployment Statistics shows that between 1979 and 1987 the male-female earnings gap narrowed significantly. (J3, J7)
GENDER DIFFERENCES IN EARNINGS EXPECTATIONS: THE CASE OF UW-RIVER FALLS
John R. Walker
This study uses expectations data collected on college seniors in business and education to test the human capital hypothesis that women planning labor force withdrawal choose occupations with lower returns to experience. These results suggest significant and anomalous effects for labor force plans in early salary estimates. The significant coefficients in those estimates suggest student uncertainty regarding future wages may be impacting the analysis. The anomalous signs of the coefficients suggest job selection involves informal processes that go beyond the human capital explanation. The results also find no evidence that choice between Elementary and Secondary Education is based on human capital assumptions. (J16, J24)
THE PHENOMENON OF THE SUPERSTAR: AN EMPIRICAL STUDY OF GOLF
Raymond A.K. Cox and Gregory A. Falls
In this study we view the superstar phenomenon as an implication for the probabilistic mechanism by which golf tournaments are won. Specifically, we test whether the Yule distribution can explain the relative frequency of golf tournament victories by successful golfers. Our findings show the Yule distribution is not an accurate explanation of the number of tournament victories by profession golfers. (C10)
A NEURAL NETWORK FORECAST OF ECONOMIC GROWTH AND RECESSION
Jiarong Fu
This paper develops artificial neural network models to forecast quarterly real GDP. It is shown that neural networks generally perform better than linear regression models in GDP forecasting. When the use of newly arrived monthly data and the learning capability of neural networks are incorporated, forecasting performance of neural networks can be significantly improved. (E17, C45)
ECONOMIES OF SCALE AND SCOPE IN THE TURKISH BANKING INDUSTRY: THE EFFECT OF THE FINANCIAL LIBERALIZATION PROGRAM
E. N. Ozkan-Gunay
The cost structure of the Turkish Banking Industry is investigated by using classical and hybrid translog functional forms. Cost functions are estimated for two different periods, 1981-1985 and 1989-1993 in order to compare the cost structure of the industry before the implementation of the Financial Liberalization Program and a decade after. The findings from the classical translog function indicate that the banking industry experienced significant increasing returns to scale for both periods. On the contrary, the regression results from the hybrid translog function suggest that the industry is characterized by economies of scale for smaller banks and diseconomies of scale for medium and larger banks. The hybrid translog function seems to reflect the characteristics of the banking industry better for the existing samples. There is also evidence of economies of scope in short-term and other type of loans (long-term and specialized loans). (L11, G21)
TRADE POLICY, ASSET MARKETS AND THE ROLE OF TARIFF STRUCTURE FOR TIME CONSISTENCY
Mahua Barari
In a world of endowment uncertainty with asset markets where the policy active governement has the discretionary power to revise previously announced tariff policy once asset positions are taken by the representative agents, we show that the tariff structure (i.e. the ratio in which export and import tariffs are combined) will matter for time consistent tariff policy ex post. This marks a departure from the standard deterministic framework and entails interesting policy implications. As we demonstrate, there will exist multiple time consistent solutions, one for each tariff structure. Our simulation results indicate that for some specific tariff structure and endowment structure, the introduction of asset markets may be welfare reducing if the government is unable to precommit, although there exists potential gains from trading in these markets. (F1, F13)
THE DETERMINANTS OF INTEREST RATES IN TAIWAN: AN APPLICATION OF THE AUGMENTED ISLM MODEL
Yu Hsing
Interest rates for Taiwan are modeled and examined by applying an augmented ISLM model incorporating the exchange rate, the Fisher hypothesis, the world interest rate, and the partial adjustment model. The nonlinearity test shows that the linear form instead of the logarithmic form is appropriate for the function of the equilibrium interest rate. The estimated regression indicates that the nominal interest rate in Taiwan is positively correlated with government spending, expected inflation rates, U.S. interest rates, and negatively associated with government tax revenues, real M2 money, and the real exchange rate. (E1, F4, O1)
IDENTIFYING CRUCIAL OIL-PRICE SHOCKS
Ali T. Akarca and Dimitri Andrianacos
This study shows that of the numerous oil price shocks that occurred during the 1974-1994 period only a few had a permanent impact on the level of the real price of crude oil. Two such crucial shocks are identified, one in March 1979 and another in January 1986. The methodology used goes beyond testing the existence of unit roots. While the latter involves determining whether all or none of the shocks had permanent effects, our study searches for particular shocks which had a permanent impact on the oil price. (C22, Q43)
ECONOMIC EFFECTS OF ELIMINATING THE SALES TAX EXEMPTION FOR FOOD: AN APPLIED GENERAL EQUILIBRIUM ANALYSIS
Donald N. Baum
An applied general equilibrium model is employed to simulate the incidence and the efficiency impact of eliminating the sales tax exemption for food. The incidence result--eliminating the sales tax exemption for food is regressive because the burden is shifted almost entirely forward to consumers--support the incidence assumptions typically used in previous studies. The efficiency results--increasing the sales tax rate on food from zero to the current rate yields efficiency gains but increasing the rate further results in an efficiency loss--may be an artifact of the model's utility function. (H22, H71, D58)
THE BEHAVIOR OF BLACK MARKET AND OFFICIAL EXCHANGE RATES IN LATIN AMERICA-A COINTEGRATION ANALYSIS
Cuddalore Sundar and Oscar Varela
The behavior of black market and official exchange rates is examined for ten Latin American countries using cointegration analysis. Only three of fifteen possible pairs of black market currencies are cointegrated. Adjustment for cross-country black market rates for Paraguay, Venezuela, Mexico, and El Salvador takes place at significant lags according to an error correction model (ECM). The potential for permanent misalignment between the black market and official exchange rates of Costa Rica and El Salvador are apparently tied together in a long-run cointegrating relationship. (F31)