System Of Equations Approach Research Articles

Fueling the US Economy: Energy as a Production Factor from the Great Depression Until Today

We analyze the relationship between factor augmenting technical change and factor substitution through a nested CES function using capital, labor, and energy inputs. We use US aggregate data on output, factor use, and factor prices for the years 1929–2015 to show the interdependence and coevolution of the different input factors. We demonstrate the robustness of the system of equations approach for estimating such a production function. We find that the input factors are gross complements, and that in the time period considered, technical change was mostly labor saving, while the linear time trend of energy augmenting technical change was zero.

Investor recognition and liquidity: evidence from dual listing on the NYSE and NASDAQ

ABSTRACTThis article examines the impact of the NYSE firms’ decision to dual list on NASDAQ and the resultant trading liquidity, after controlling for the endogeneity of the decision. Using a simultaneous system of equations approach, we find evidence that dual listing lowers transaction costs, but does not lead to any significant improvement in investor recognition. Further, the improvement in market quality due to dual listing on NASDAQ does generate, albeit somewhat weak, positive cumulative abnormal returns surrounding the dual listing.

A Smooth System of Equations Approach to Complementarity Problems for Frictionless Contacts

Frictionless contact problems are the simplest and classical contact problems, and the contact conditions of sticking, slipping, and separation mode all can be ascribed to complementary problems. Consequently, a smooth system of equations approach for the design and analysis of complementarity problems for frictionless contacts is presented. A compute program based on boundary element technique is given and applied to two practical contact examples. The validity and accuracy of the proposed method are demonstrated.

English

The main objective of this study is to analyze the impact of sustainable forest management (SFM) practices on the timber market in Peninsular Malaysia. A partial equilibrium model was applied in this study covering domestic timber market namely supply and domestic demand of timber. It was analyzed by using a system of equations approach. All data were compiled from published sources of Malaysian Government publications namely from the Department of Statistics and Annual Report of the Forestry Department of Peninsular Malaysia. All of the data are annual time series basis from 1970 to 2008. Impact analysis was conducted based on three scenarios that arise from SFM practices (that is (1) reduced by 24% in harvested area, (2) increased by 74% in external cost of timber harvesting and (3) increased by 47% in the cost of internalization the externalities). These scenarios will be incorporated in the timber market model. Results show that changing from the conventional logging (CL) practices to SFM practices reduce the equilibrium quantity of timber and increase the price level. The welfare economic impacts of SFM provide empirical evidence that there is a loss in welfare economic impacts on the timber industry in Peninsular Malaysia. However, an increase in the domestic price of timber would help to compensate for the loss volume of timber. The state government and any related agencies should be able to use these results as a reference to come out with good mechanisms in strengthening the effectiveness of SFM policy. Hence, they should be able to assist domestic timber industry by supporting them to fetch various potential incentives such as price premium, carbon credit and market access for timber produced from sustainably managed forest.   Key words: Consumer surplus, producer surplus, equilibrium price, equilibrium quantity.

A crown profile model for Pinus radiata D. Don in northwestern Spain

A crown profile model was developed for radiata pine ( Pinus radiata D. Don) in Galicia (northwestern Spain). Data from 443 trees located in 56 permanent plots, established by the Unidade de Xestión Forestal Sostible (UXFS) of the University of Santiago de Compostela in plantations of this species in the region, were used. The crowns of the trees were measured by a visual method based on similar triangles. Both simple geometric shapes and mathematical equations were used to describe the crown profiles. As crown profile models usually require variables that are expensive to measure, equations to estimate the maximum crown radius and the height to the maximum crown radius were also developed, using other easily measured tree and stand variables. Several models were fitted using a system of equations approach and accounting for an autocorrelated, heteroscedastic error structure. The selected crown profile model consists of a system of two allometric equations for the crown below (primarily shade needles) and above (primarily sun needles) maximum crown radius. The model explained 88% of the variability in crown radius with a mean error of 0.24 m.

Risk Involved in International Debt Investment in Emerging Markets

The purpose of this research paper is to find how much risk is involved in investing emerging market debt. Emerging markets are becoming a hub for foreign investors either that is an equity or debt investment. The risk is the important element for investors. As for emerging markets the most important risk that investor can face is exchange rate and political risk. I used Augmented Dickey-Fuller to carry out unit roots and johansen cointegration analysis of exchange rates and political risk in emerging markets. My result shows that individual variables are integrated order one, means unit root exist. This shows that political risk tends to follow a random walk. My finding suggests that there is a long run relationship between political risk and exchange rate. As the political risk increase exchange rate also fluctuate with relation to political situation. Abstract: Using survey data on debt management strategies, this paper studies whether the probability that a country has a debt management strategy, publishes its debt strategy, and uses a benchmark-based strategy is affected by democratic accountability, institutional quality, past debt crises/defaults, IFIs development assistance, and participation in debt management programs. We find that countries located in Latin America and Caribbean are less likely to have developed a debt management strategy and, if they have, they are less likely to publish it. In contrast, countries located in Middle East and North Africa is less likely to use quantitative benchmarks in formulation of their debt management strategy. A country is more likely to have developed a debt management strategy if it has an experience of a past debt crisis, but not of repeated debt crises. Institutional quality and democratic accountability could significantly contribute to emergence of more transparent and accountable debt management strategies in developing countries. IFIs' technical assistance on public debt management could be enhanced Abstract: This paper examines the pricing of public debt in a quantitative macroeconomic model with government default risk. Default may occur due to a fiscal policy that does not preclude a Ponzi game. When a build-up of public debt makes this outcome inevitable, households stop lending such that the government has to default. Interest rates on government bonds reflect expectations of this event. There may exist multiple bond prices compatible with a rational expectations equilibrium. We analyze the conditions under which expected default risk premia can quantitatively rationalize sizeable spreads on public bonds. Sovereign default risk premia turn out to emerge at either very high debt to output ratios, or if the variance of productivity shocks is large. Abstract: Using a system of equations approach, this paper empirically tests the impact of credit quality, asset maturity, and other issuer and issue characteristics on the maturity of municipal bonds. The authors find that under conditions of lower information asymmetry that prevails in the municipal sector, higher-rated bonds have longer maturities than low-rated bonds. This result differs from that observed in the corporate sector. Overall, our results support the asset maturity hypothesis. In addittion, our analysis finds that fundamentals matter. Issue features that provide additional protection or convenience to the investor tend to increase debt maturity.

Neighborhood Dynamics and the Housing Price Effects of Spatially Targeted Economic Development Policy

Neighborhoods are the result of a complicated interplay between residential choice, housing supply and the influences of the larger metropolitan system on its constituent parts. We model this interplay as a system of reduced-form equations in order to examine the effects of a generous spatially targeted economic development program (the federal Empowerment Zone program) on neighborhood characteristics, especially housing values. This system of equations approach allows us to compute direct effects of the policy intervention as well as the effects mediated through non-price channels such as changes in the housing stock or neighborhood demographics. In the process, we are able to shed light on the rich simultaneity among neighborhood characteristics, including housing prices.

Complementarity and sequencing of innovations: new varieties and mechanized processing for cassava in West Africa

Complementarity among inter-related innovations may help explain the location and timing of productivity growth, and may be particularly important in the transformation of semi-subsistence agrarian economies. We study the case of cassava in West Africa, where both mechanized processors and new varieties are more widespread in Nigeria than in neighboring countries. One explanation involves complementarity: mechanization may have induced new variety adoption, or vice-versa. We test the magnitude and significance of these linkages using a system of equations approach. Controlling for other factors, we find that new variety adoption consistently increases the likelihood of subsequent mechanization by an average of 75 percent. Mechanization is less consistently associated with subsequent new variety adoption. Historically, mechanization came first – but the later development of new varieties made mechanization much more profitable, and the two then spread together.

A SIMULTANEOUS EQUATIONS MODEL OF THE CAUSE-EFFECT RELATIONSHIPS AMONG BIOLOGICAL VARIABLES: AN ANALYSIS USING POSTPARTUM BEEF COWS

A path diagram, as the basic model of a biological system, was used to explore the possible relationships generating observed correlations among physiological and body-trait responses in beef cows. The implications for statistical model specification and estimation were discussed. The model specified was a simultaneous system of equations with the physiological and body-trait responses constituting the set of endogenous variables; length of postpartum anestrous interval (PPI) was chosen as the physiological response of primary interest. The set of predetermined variables representing basic determinants of the biological system included plane of nutrition and obstetrical assistance experiments. From the generalized least-squares parameter estimates it was concluded that basic determinants in common explained much of the correlation among observed values of the physiological and body-trait responses. The cause-effect relationships included a recursive dependency of PPI upon postpartum body condition score and parturition date. In addition, it was concluded from the results that management decisions and events before the experimental period were more important in explaining variation in PPI than were the experimental treatments. Leading to the further conclusion that ignoring or attempting to randomize over such influences in the experimental design may jeopardize experimental results. The system of equations approach to analysis of biological data makes clear the importance of completely thinking through the problem before the experiment, the limitations of ordinary least-squares procedures and should have applications in other biological systems. Key words: Simultaneous equations analysis, anestrus, beef cows, body condition, return interval