Patrik T. Hultberg
A modified Solow growth model is introduced. The dynamic model considers the
possibility of technology adoption and potential inefficiency caused by
institutional rigidities. Countries are assumed to catch-up to the
technological leader, but the potential to catch up may be compromised by their
level of inefficiency. The inclusion of technology adoption, with and without
institutional rigidities, slightly modifies the standard results for nations'
steady states and rates of convergence (catch-up), and allows for different
convergence paths. The model is estimated using both within estimation and
Generalized Method of Moments technique on panel data. The data span 94
countries from 1960 to 1985 (Summers and Heston, PWT 5.6). The results show
high rates of catch-up, which differ across groups of countries. It is argued
that the estimated country inefficiency levels are consistent with common
beliefs. The results are compared to a previous empirical growth study. (O30,
O47)
Lowell R. Jacobsen
The Czech Republic (CR) is regarded as one of the "first wave" countries likely
to join the European Union (EU) as early as 2004. Since the fall of the Berlin
Wall in 1989 several Eastern and Central European countries have swiftly moved
away from the visible hand of state-controlled economies and towards the
“invisible hand” of market-driven economies. As a result, by 1998 six
countries including the CR were invited to join the EU in accession
negotiations, a major achievement as well as testimony to the EU's commitment
to enlargement. Hence, membership for the CR and others is simply a matter of
time. This paper argues to the extent the CR can successfully meet the
convergence criteria as identified in the Maastrictht Treaty, the more
compelling the case for early, rather than later, entry. (O52,P21,P52)
David Merrell, Kevin M. Simmons and Daniel Sutter
We examine applications to the Oklahoma Saferoom Initiative, which offered
rebates to residents for construction of an in-home tornado shelter. Markets
for risk mitigation are prone to market failure because consumers treat low
probability, high consequence events as zero probability events. Tornado and
tornado casualty rates vary across Oklahoma counties, and according to expected
utility theory the application rate should vary accordingly. We confirm this
prediction. Recent tornadoes and casualties, not surprisingly, predict
application rates better than fifty year totals. (D81, I18)
Yi Jin and Zhixiong Zeng
This paper studies cross-sector comovement, one of the defining characteristics
of the business cycle, in a monetary framework. We argue that monetary factors
might be important for understanding this phenomenon through a working capital
channel. We show that in a sticky portfolio adjustment model where firms borrow
to finance working capital, a positive money supply shock drives the nominal
interest rate down, thereby stimulating firms' borrowing and causing employment
to rise in different sectors. A positive aggregate technology shock can also
drive the nominal interest rate down upon impact and induce comovement when the
elasticity of labor supply is large. (E32, E40)
Raymond J. Ballard and Dale R. Funderburk
For several years a battle has been waged between trial lawyers and American
business regarding the issue of punitive damage awards. Given the staggering
magnitude of the monetary penalties that modern juries often impose against
defendant firms, as well as the potential damage to the reputation of the
company, how far should a supplier go in terms of efforts to improve product
performance and reduce safety risks? We present a simple model that may be
used as a framework for determining the optimal level of product safety/failure
(D21, K13).