Mark E. Wohar and Robert Sollis
A number of recent studies have found evidence of a nonlinear term structure relationship in the U.S. This paper extends earlier work and develops tests of the null hypothesis of no cointegration that allow for linear or asymmetric (or symmetric) threshold cointegration under the alternative hypothesis. Applied to the residuals from regressions of long-term interest rates on short-term interest rates for eleven countries, our tests reject the no cointegration hypothesis for eight of the countries in our sample. We find that for a majority of the countries, the adjustment of the long-term rate to disequilibrium is fastest when the equilibrium error is above the upper threshold, and the adjustment of the short-term rate to disequilibrium is fastest when the equilibrium error is below the lower threshold. (C22; E43)
Jannett Highfill and Robert Scott
The Advanced Technology Program (ATP) of the National Institute for Standards and Technology (NIST) subsidizes the R&D expenditure of large single firms at a maximum rate of 40%. The theoretical analysis herein of a monopoly innovator suggests that this subsidy rate is about socially optimal when spillovers to other industries are small and only incremental R&D expenditure is subsidized. The optimal subsidy when these two conditions are not met is also discussed.
Lee C. Adkins and Ronald L. Moomaw
The parameters of a stochastic production frontier and the determinants of X inefficiency are estimated simultaneously using a maximum likelihood estimator proposed by Battese and Coelli (1995). Our results indicate that additional instructional and noninstruction expenditures improve student performance, but only by a small amount. In addition, we find that school district size, teacher education and experience, and teacher salary affect the technical efficiency of schools (F33, F41).
Andrew L. H. Parkes
Innovative rolling, recursive and sequential regression procedures are employed to examine the evidence concerning purchasing power parity. Two data sets are examined: monthly U.S.-based real exchange rates from 1957-1998 and annual U.K.-based real exchange rates from 1900-1998. Empirical evidence is found for purchasing power parity when structural breaks are included in the annual bilateral exchange rates. Evidence of purchasing power parity and structural breaks is weaker using the monthly data (F3).
Thomas R. Sadler
The Pigouvian prescription for pollution damage requires a per-unit tax equal to the monetary value of marginal external cost (MEC). However, in this tradition, few economists have proposed a damage-based mechanism to regulate hazardous waste. Using damage scores from the Waste Minimization Chemical List of the United States Environmental Protection Agency (EPA), this paper develops such an approach. Marginal tax rates correspond to environmental damage. Efficiency increases in the presence of reliable EPA damage scores, linear marginal damage, and accurate monetary values assigned to MEC (H23).