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Working papers, 2006

0601
Kenneth V. Greene and Phillip J. Nelson
Status and the Argument for Greater Public Investment

0602
Kenneth V. Greene and Phillip J. Nelson
Is Relative Income of Overriding Importance for Individuals?

0603
Daniel J. Henderson and Daniel L. Millimet
Is Gravity Linear?

0604
Ozkan Eren and Daniel J. Henderson
The Impact of Homework on Student Achievement

0605
0605 Daniel J. Henderson, Raymond J. Carroll, and Qi Li
Nonparametric Estimation and Testing of Fixed Effects Panel Data Models

0606
Nicolaus Tideman and Florenz Plassmann
Marginal Cost Pricing and Efficient Taking under Uncertainty

0607
Florenz Plassmann and Nicolaus Tideman
Efficient Urban Renewal Without Takings: A Solution to the Problem of Land Assembly

0608
Nicolaus Tideman and Florenz Plassmann
An algorithm for sequential solutions of dynamic CGE models with perfect foresight over an infinite numbers of periods

0609
Daniel J. Henderson, Kiril Tochkov, Oleg Badunenko
A Drive up the Capital Coast? Contributions to Post-Reform Growth Across Chinese Provinces


Number: 0601

Authors: Kenneth V. Greene and Phillip J. Nelson

Title: Status and the Argument for Greater Public Investment

Abstract:

No abstract.

File: Working Paper 0601


Number: 0602

Authors: Kenneth V. Greene and Phillip J. Nelson

Title: Is Relative Income of Overriding Importance for Individuals?

Abstract:

No abstract.

File: Working paper 0602


Number: 0603

Authors: Daniel J. Henderson and Daniel L. Millimet

Title: Is Gravity Linear?

Abstract:

Despite the solid theoretical foundation on which the gravity model of bilateral trade is based, empirical implementation requires several assumptions which do not follow directly from the underlying theory. First, unobserved trade costs are assumed to be a (log-) linear function of observables. Second, the ad-valorem tax equivalents of trade costs are predominantly assumed to be constant across space, and to a lesser extent time. Maintaining consistency with the underlying theory, but relaxing these assumptions, we estimate gravity models — in levels and logs — using two data sets via nonparametric methods. The results are striking. Despite the added flexibility of the nonparametric models, parametric models based on these assumptions offer equally or more reliable in-sample forecasts (sometimes) and out-of-sample forecasts (always), particularly in the levels model. Moreover, formal statistical tests fail to reject the theoretically consistent parametric functional form. Thus, concerns in the gravity literature over functional form appear unwarranted, and estimation of the gravity model in levels is recommended.

File: Working Paper 0603


Number: 0604

Authors: Ozkan Eren and Daniel J. Henderson

Title: The Impact of Homework on Student Achievement

Abstract:

Utilizing parametric and nonparametric techniques, we assess the role of a heretofore relatively unexplored input. in the educational process, homework, on academic achievement. Our results indicate that homework is an important determinant of student test scores. Relative to more standard spending related measures, extra homework has a larger and more signi.cant impact on test scores. However, the aspects are not uniform across di¤erent subpopulations. Specifically, we .nd additional homework to be most e¤ective for high and low achievers, which is further confirmed by the stochastic dominance analysis. Moreover, the parametric estimates of the educational production function overstate the impact of schooling related inputs. In all estimates, the homework coefficient from the parametric model maps to the upper deciles of the nonparametric coefficient distribution and as a by-product the parametric model understates the percentage of students with negative responses to additional homework.

File:Working paper 0604


Number: 0605

Authors: Daniel J. Henderson, Raymond J. Carroll, and Qi Li

Title: Nonparametric Estimation and Testing of Fixed Effects Panel Data Models

Abstract:

In this paper we consider the problem of estimating nonparametric panel data models with fixed effects. We derive the rate of convergence and asymptotic distribution of an iterative nonparametric kernel estimator. We also extend the estimation method to the case of a semiparametric partially linear fixed effects model. To determine whether a parametric, semiparametric or nonparametric model is appropriate, we propose test statistics to test between the three alternatives in practice. We further propose a test statistic for testing the null hypothesis of random effects against fixed effects in a nonparametric panel data regression model. Simulations are used to examine the finite sample performance of the proposed estimators and the test statistics.

File: Working Paper 0605


Number: 0606

Authors: Nicolaus Tideman and Florenz Plassmann

Title: Marginal Cost Pricing and Efficient Taking under Uncertainty

Abstract:

We describe a mechanism for government taking under uncertainty that provides incentives for governments to make efficient taking decisions and for property owners to use their properties efficiently. We argue that efficiency in takings requires that governments not only pay the value of property when it is taken but also pay the reduction in property value that they cause when identifying properties as potential targets of takings. This is a straightforward application of the general principle of marginal cost pricing. Unlike existing proposals to improve the efficiency of takings, our mechanism requires governments to pay amounts that are sufficient to fully compensate property owners for their losses.

File: Working paper 0606


Number: 0607

Authors: Florenz Plassmann and Nicolaus Tideman

Title: Efficient Urban Renewal Without Takings: A Solution to the Problem of Land Assembly

Abstract:

In Kelo v. City of New London, the US Supreme Court ruled that communities could use their power of Eminent Domain to take properties and sell them to private developers as part of their urban renewal plans. Such takings are currently the only policy instrument that local governments can use to overcome the problem of owners holding out in land assembly projects. However, many people consider it inappropriate for governments to use their taking power to facilitate private urban redevelopment. We describe a self-assessment mechanism that solves the holdout problem and leads to efficiency in land assembly without resorting to governmental takings.

File: Working Paper 0607


Number: 0608

Authors: Nicolaus Tideman and Florenz Plassmann

Title: An algorithm for sequential solutions of dynamic CGE models with perfect foresight over an infinite numbers of periods

Abstract:

We describe a simple algorithm that permits the sequential (period-by-period) solution of large-scale dynamic CGE models with agents who have perfect foresight over an infinite number of periods. The algorithm requires neither any assumptions about behavior in a "final" period nor that the base case economy be currently in steady state. We briefly illustrate the algorithm with an analysis of substituting a flat tax for all income taxes in the United States.

File: Working paper 0608


Number: 0609

Authors: Daniel J. Henderson, Kiril Tochkov, Oleg Badunenko

Title: A Drive up the Capital Coast? Contributions to Post-Reform Growth Across Chinese Provinces

Abstract:

We use nonparametric production-frontier methods to decompose the growth of labor productivity of Chinese provinces in the post-reform period. These techniques, combined with kernel density estimates, allow us to decompose the shift in the distribution of labor productivity without the need for many assumptions common in the empirical growth literature. We find that (1) the distribution of output per worker across Chinese provinces is multimodal, (2) technology change is decidedly nonneutral, (3) physical capital accumulation has been the major driving force behind the growth performance of Chinese provinces and (4) it attempts to drive convergence between provinces, but (5) minimal technological progress and human capital accumulation are key factors responsible for the regional disparities in China.

File: Working Paper 0609


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Last Updated: 6/16/09