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Author: Isidro Soloaga
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
December 2000 One problem when estimating a Cobb-Douglas production function with micro data is how to deal with the observations that show positive output but do not use some of the inputs. As the log of zero is not defined, one standard procedure is to arbitrarily replace those zero values with "sufficiently small" numbers. But can we do better than that? An alternative approach is presented and applied to Mexican farm-level data. The standard approach for fitting a Cobb-Douglas production function to micro data with zero values is to replace those values with "sufficiently small" numbers to facilitate the logarithmic transformation. In general, the estimates obtained are extremely sensitive to the transformation chosen, generating doubts about the use of a specification that assumes that all inputs are essential (as the Cobb-Douglas does) when that is not the case. Soloaga presents an alternative method that allows one to estimate the degree of essentiality of the production inputs while retaining the Cobb-Douglas specification. By using the properties of translatable homothetic functions, he estimates by how much the origin of the input set should be translated to allow the Cobb-Douglas functional form to capture the fact that the data have a positive output even when some of the inputs are not used. To highlight the empirical importance of the approach, he applies it to Mexican farm-level production data that he gathered. Many households did not use family or hired labor in farm production, or had different capital composition (that is, zero value for non-land farm assets). The estimations provide a clear measurement of the degree of essentiality of potentially non-essential inputs. They also indicate the size of the error introduced by the common "trick" of adding a "small" value to zero input values. This paper--a product of Trade, Development Research Group--is part of a larger effort in the group to explore conceptual and practical issues relative to the effects of international trade policy on individual producers. The author may be contacted at
[email protected].
Author: Isidro Soloaga
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
December 2000 One problem when estimating a Cobb-Douglas production function with micro data is how to deal with the observations that show positive output but do not use some of the inputs. As the log of zero is not defined, one standard procedure is to arbitrarily replace those zero values with "sufficiently small" numbers. But can we do better than that? An alternative approach is presented and applied to Mexican farm-level data. The standard approach for fitting a Cobb-Douglas production function to micro data with zero values is to replace those values with "sufficiently small" numbers to facilitate the logarithmic transformation. In general, the estimates obtained are extremely sensitive to the transformation chosen, generating doubts about the use of a specification that assumes that all inputs are essential (as the Cobb-Douglas does) when that is not the case. Soloaga presents an alternative method that allows one to estimate the degree of essentiality of the production inputs while retaining the Cobb-Douglas specification. By using the properties of translatable homothetic functions, he estimates by how much the origin of the input set should be translated to allow the Cobb-Douglas functional form to capture the fact that the data have a positive output even when some of the inputs are not used. To highlight the empirical importance of the approach, he applies it to Mexican farm-level production data that he gathered. Many households did not use family or hired labor in farm production, or had different capital composition (that is, zero value for non-land farm assets). The estimations provide a clear measurement of the degree of essentiality of potentially non-essential inputs. They also indicate the size of the error introduced by the common "trick" of adding a "small" value to zero input values. This paper--a product of Trade, Development Research Group--is part of a larger effort in the group to explore conceptual and practical issues relative to the effects of international trade policy on individual producers. The author may be contacted at
[email protected].
Author: Isidro Soloaga
Publisher:
ISBN:
Category :
Languages : en
Pages : 18
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Book Description
One problem when estimating a Cobb-Douglas production function with micro data is how to deal with the observations that show positive output but do not use some of the inputs. As the log of zero is not defined, one standard procedure is to arbitrarily replace those zero values with quot;sufficiently smallquot; numbers. But can we do better than that? An alternative approach is presented and applied to Mexican farm-level data.The standard approach for fitting a Cobb-Douglas production function to micro data with zero values is to replace those values with quot;sufficiently smallquot; numbers to facilitate the logarithmic transformation. In general, the estimates obtained are extremely sensitive to the transformation chosen, generating doubts about the use of a specification that assumes that all inputs are essential (as the Cobb-Douglas does) when that is not the case.Soloaga presents an alternative method that allows one to estimate the degree of essentiality of the production inputs while retaining the Cobb-Douglas specification. By using the properties of translatable homothetic functions, he estimates by how much the origin of the input set should be translated to allow the Cobb-Douglas functional form to capture the fact that the data have a positive output even when some of the inputs are not used.To highlight the empirical importance of the approach, he applies it to Mexican farm-level production data that he gathered. Many households did not use family or hired labor in farm production, or had different capital composition (that is, zero value for non-land farm assets).The estimations provide a clear measurement of the degree of essentiality of potentially non-essential inputs. They also indicate the size of the error introduced by the common quot;trickquot; of adding a quot;smallquot; value to zero input values.This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to explore conceptual and practical issues relative to the effects of international trade policy on individual producers. The author may be contacted at
[email protected].
Author: Kaveh Sheibani
Publisher: ORLAB Analytics
ISBN:
Category : Business & Economics
Languages : en
Pages : 67
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Book Description
We are pleased to welcome readers to this issue of the Journal of Applied Operational Research (JAOR), Volume 4, Number 3. The journal reports on developments in all aspects of operational research, including the latest advances and applications. It is a primarily goal of the journal to focus on and publish practical case studies which illustrate real-life applications.
Author: Kaveh Sheibani
Publisher: ORLAB Analytics
ISBN:
Category : Business & Economics
Languages : en
Pages : 582
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Book Description
These proceedings gather contributions presented at the 3rd International Conference on Applied Operational Research (ICAOR 2011) in Istanbul, Turkey, August 24-26, 2011, published in the series Lecture Notes in Management Science (LNMS). The conference covers all aspects of Operational Research and Management Science (OR/MS) with a particular emphasis on applications.
Author:
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 56
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Book Description
Author: Masahiro Kawai
Publisher: World Bank Publications
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 52
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Book Description
A coordinated action by East Asian countries to stabilize their currencies against a common basket of major currencies (broadly representative of their average structure of trade and foreign direct investment) would help stabilize both intraregional exchange rates and effective exchange rates, in a way consistent with the medium-term objective of promoting trade investment and growth in the region.
Author: Canice Prendergast
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 44
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Book Description
Why incentive contracts and independent investigations may not be the perfect solution to the problem of bureaucratic corruption.
Author: Gunnar S. Eskeland
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
Pigou's conjecture was that under costly taxation public expenditures should not reach the point where marginal benefits equal marginal costs. In the treatment here, public expenditures (and environmental protection) may provide public goods for consumption but also collective inputs for production. When the benefits are in production, the cost of funds is irrelevant. Why? Collective inputs benefit goods that are taxed, while for public goods the shadow price of funds reduces provision as if they were.
Author: Pierre-Richard Agénor
Publisher: World Bank Publications
ISBN:
Category : Economic stabilization
Languages : en
Pages : 100
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Book Description
In the past few years, a number of central banks have adopted inflation targeting for monetary policy. The author provides an introduction to inflation targeting, with an emphasis on analytical issues, and the recent experience of middle- and high-income developing countries (which have relatively low inflation to begin with, and reasonably well-functioning financial markets). After presenting a formal analytical framework, the author discusses the basic requirements for inflation targeting, and how such a regime differs from money, and exchange rate targeting regimes. After discussing the operational framework for inflation targeting (including the price index to monitor the time horizon, the forecasting procedures, and the role of asset prices), he examines recent experiences with inflation targets, providing new evidence on the convexity of the Phillips curve for six developing countries. His conclusions: Inflation targeting is a flexible policy framework that allows a country's central bank to exercise some degree of discretion, without putting in jeopardy its main objective of maintaining stable prices. In middle- and high-income developing economies that can refrain from implicit exchange rate targeting, it can improve the design, and performance of monetary policy, compared with other policy approaches that central banks may follow. Not all countries may be able to satisfy the technical requirements (such as adequate price data, adequate understanding of the links between instruments, and targets of monetary policy, and adequate forecasting capabilities), but such requirements should not be overstated. Forecasting capability can never be perfect, and sensible projections always involve qualitative judgment. More important, and often more difficult, is the task of designing, or improving an institutional framework that would allow the central bank to pursue the goal of low, stable inflation, while maintaining the ability to stabilize fluctuations in output.
Author: Andres Solimano
Publisher: World Bank Publications
ISBN:
Category : Globalizacion
Languages : en
Pages : 36
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Book Description
