International business cycles, financial markets and household production

This paper investigates the properties of an international real business cycle model with household production. We show that a model with disturbances to both market and household technologies reproduces the main regularities of the data and improves existing models in matching international consumption, investment and output correlations without irrealistic assumptions on the structure of international financial markets. Sensitivity analysis shows the robustness of the results to alternative specifications of the stochastic processes for the disturbances and to variations of unmeasured parameters within a reasonable range.

Productivity and the welfare of nations

We show that the welfare of a representative consumer can be related to observable aggregatedata. To a first order, the change in welfare is summarized by (the present value of) the Solowproductivity residual and by the growth rate of the capital stock per capita. We also show thatproductivity and the capital stock suffice to calculate differences in welfare across countries, withboth variables computed as log level deviations from a reference country. These results hold forarbitrary production technology, regardless of the degree of product market competition, and applyto open economies as well if TFP is constructed using absorption rather than GDP as the measureof output. They require that TFP be constructed using prices and quantities as perceived byconsumers. Thus, factor shares need to be calculated using after-tax wages and rental rates, andwill typically sum to less than one. We apply these results to calculate welfare gaps and growthrates in a sample of developed countries for which high-quality TFP and capital data are available.We find that under realistic scenarios the United Kingdom and Spain had the highest growth ratesof welfare over our sample period of 1985-2005, but the United States had the highest level ofwelfare.

Spinning welfare: The gains from process innovation in cotton and car production

Economists and economic historians want to know how much better life is today than in the past.Fifty years ago economic historians found surprisingly small gains from 19th century US railroads,while more recently economists have found relatively large gains from electricity, computers and cellphones. In each case the implicit or explicit assumption is that researchers were measuring the valueof a new good to society. In this paper we use the same techniques to find the value to society ofmaking existing goods cheaper. Henry Ford did not invent the car, and the inventors of mechanisedcotton spinning in the industrial revolution invented no new product. But both made existing productsdramatically cheaper, bringing them into the reach of many more consumers. That in turn haspotentially large welfare effects. We find that the consumer surplus of Henry Ford s production linewas around 2% by 1923, 15 years after Ford began to implement the moving assembly line, while themechanisation of cotton spinning was worth around 6% by 1820, 34 years after its initial invention.Both are large: of the same order of magnitude as consumer expenditure on these items, and as largeor larger than the value of the internet to consumers. On the social savings measure traditionally usedby economic historians, these process innovations were worth 15% and 18% respectively, makingthem more important than railroads. Our results remind us that process innovations can be at least asimportant for welfare and productivity as the invention of new products.

Conserving biodiversity in production landscapes.

Alternative land uses make different contributions to the conservation of biodiversity and have different implementation and management costs. Conservation planning analyses to date have generally assumed that land is either protected or unprotected, and that the unprotected portion does not contribute to conservation goals. We develop and apply a new planning approach that explicitly accounts for the contribution of a diverse range of land uses to achieving conservation goals. Using East Kalimantan (Indonesian Borneo) as a case study, we prioritize investments in alternative conservation strategies and account for the relative contribution of land uses ranging from production forest to well-managed protected areas. We employ data on the distribution of mammals and assign species-specific conservation targets to achieve equitable protection by accounting for life history characteristics and home range sizes. The relative sensitivity of each species to forest degradation determines the contribution of each land use to achieving targets. We compare the cost effectiveness of our approach to a plan that considers only the contribution of protected areas to biodiversity conservation, and to a plan that assumes that the cost of conservation is represented by only the opportunity costs of conservation to the timber industry. Our preliminary results will require further development and substantial stakeholder engagement prior to implementation; nonetheless we reveal that, by accounting for the contribution of unprotected land, we can obtain more refined estimates of the costs of conservation. Using traditional planning approaches would overestimate the cost of achieving the conservation targets by an order of magnitude. Our approach reveals not only where to invest, but which strategies to invest in, in order to effectively and efficiently conserve biodiversity.

Human capital, the structure of production and growth

Do high levels of human capital foster economic growth by facilitating technology adoption? If so, countries with more human capital should have adopted more rapidly the skilled-labor augmenting technologies becoming available since the 1970 s. High human capital levels should therefore have translated into fast growth in more compared to less human-capital-intensive industries in the 1980 s. Theories of international specialization point to human capital accumulation as another important determinant of growth in human-capital-intensive industries. Using data for a large sample of countries, we find significant positive effects of human capital levels and human capital accumulation on output and employment growth in human-capital-intensive industries.

Utilização do target costing na determinação do preço de venda: O caso da Alvo, s.a.

Com a crescente competitividade no mundo empresarial, os preços dos produtos passaram a exercer um papel fundamental na expansão e sobrevivência das empresas. Consequentemente, hoje em dia é o mercado que determina o preço de venda de um produto, devendo a empresa produzir ao menor custo possível para garantir o retorno financeiro desejado. O objectivo do trabalho é verificar se os procedimentos de Target Costing podem ser aplicados nas Pequenas e Médias Empresas industriais, em São Vicente, cuja actividade também se destina à produção de produtos alimentícios. Como produto teste foi selecionado o produto A, confecçionado pela empresa Alvo, SA. Para atingirmos os objectivos foram utilizadas várias técnicas e métodos de pesquisa, tais como: levantamento bibliográfico, entrevista, conversas informais, questionário, levantamento de dados nos documentos financeiros da empresa ALVO, SA. Para entendermos e aplicarmos o processo de Target Costing recorreu-se à literatura do mesmo. Foi aplicado um questionário para ver a percepção dos clientes da empresa objecto de estudo, quanto ao preço que considerariam ideal pagar por cada quilograma do produto A adquirida. A entrevista realizada com o director geral da ALVO, SA acompanhada com os dados obtidos do departamento de contabilidade serviram como um meio de conhecer a empresa e o seu funcionamento, realçando informações sobre a fixação do preço venda dos seus produtos, a gestão de custos, entre outros. Antes de testar, através de um caso prático, a aplicação do Target Costing, verificou-se, primeiramente, sua aplicação em termos teóricos, testando os seus princípios e premissas para o produto A, na Empresa ALVO, SA. Como resultado constactou-se que os procedimentos de Target Costing podem ser aplicados, tanto na teoria como na prática, nas Pequenas e Médias Empresas industriais, em São Vicente, cuja actividade se destina a produção do produto A. With the increasing competition in the business world, the prices of products have come to play a key role in the expansion and survival of businesses. Consequently, today the selling price of a product is determined by the market so companies should produce at the lowest possible cost to ensure the desired financial return. The purpose of this paper work is to verify if the Target Costing’s procedure can be applied in small and medium business enterprises in São Vicente, whose activity is production of food. For that, product A was selected for tests. In order to achieve these objectives, some techniques and research methods like bibliographic analysis, interviews, informal conversations, questionnaires and analysis of the financial documents of ALVO, SA that is the subject of this case study, were utilized. With the intention of understanding and applying the Target Costing process we also resorted to a detailed reading of related bibliography. A questionnaire was applied in order to know the customers’ opinions about the ideal price for each kilogram of product A. The interview with the managing director of ALVO, SA, combined with the data obtained in the accounting department, was also used as a way to know the company, and it ’s functioning, highlight ing items such as: selling price format ion, cost management, among other aspects. Before testing, through a practical case study, the use of the Target Costing, the theoretical application was firstly verified by testing its principles and assumptions. Secondly, the application of the Target Costing’s process was shown step by step concerning product A at ALVO SA company. As a result we came to the conclusion that procedures used with Target Costing can be applied, in theory and in practice, in small or medium-sized industrial enterprises, in São Vicente, where product A is being manufactured.

The effects of uncertainty avoidance on brand performance: Marketing creativity, product innovation and the brand duration

This paper investigates the link between brand performance and cultural primes in high-risk,innovation-based sectors. In theory section, we propose that the level of cultural uncertaintyavoidance embedded in a firm determine its marketing creativity by increasing the complexityand the broadness of a brand. It determines also the rate of firm product innovations.Marketing creativity and product innovation influence finally the firm marketingperformance. Empirically, we study trademarked promotion in the Software Security Industry(SSI). Our sample consists of 87 firms that are active in SSI from 11 countries in the period1993-2000. We use the data coming from SSI-related trademarks registered by these firms,ending up with 2,911 SSI-related trademarks and a panel of 18,213 observations. We estimatea two stage model in which first we predict the complexity and the broadness of a trademarkas a measure of marketing creativity and the rate of product innovations. Among severalcontrol variables, our variable of theoretical interest is the Hofstede s uncertainty avoidancecultural index. Then, we estimate the trademark duration with a hazard model using thepredicted complexity and broadness as well as the rate of product innovations, along with thesame control variables. Our evidence confirms that the cultural avoidance affects the durationof the trademarks through the firm marketing creativity and product innovation.

Hybrid consumption paths in the attribute space: A model and application with scanner data

This paper presents and estimates a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products.We run some simulations to analyze the consumption paths out of the steady state. Underthe hybrid utility assumption, the consumer behaves inertially among the unfamiliar brandsfor several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical analysis is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.

Country asymmetries, endogenous product choice and the speed of trade liberalization

In a world with two countries which differ in size, we study theimpact of (the speed of) trade liberalization on firms' profitsand total welfare of the countries involved. Firms correctlyanticipate the pace of trade liberalization and take it intoaccount when deciding on their product choices, which areendogenously determined at the beginning of the game. Competitionin the marketplace then occurs either on quantities or on prices.As long as the autarkic phase continues, local firms are nationalmonopolists. When trade liberalization occurs, firms compete in aninternational duopoly. We analyze trade effects by using twodifferent models of product differentiation. Across all thespecifications adopted (and independently of the price v. quantitycompetition hypothesis), total welfare always unambiguously riseswith the speed of trade liberalization: Possible losses by firmsare always outweighed by consumers' gains, which come under theform of lower prices, enlarged variety of higher average qualitiesavailable. The effect on profits depends on the type of industryanalyzed. Two results in particular seem to be worth of mention.With vertical product differentiation and fixed costs of qualityimprovements, the expected size of the market faced by the firmsdetermines the incentive to invest in quality. The longer the periodof autarky, the lower the possibility that the firm from the smallcountry would be producing the high quality and be the leader in theinternational market when it opens. On the contrary, when trade opensimmediately, national markets do not play any role and firms fromdifferent countries have the same opportunity to become the leader.Hence, immediate trade liberalization might be in the interest ofproducers in the small country. In general, the lower the size of thesmall country, the more likely its firm will gain from tradeliberalization. Losses from the small country firm can arise when itis relegated to low quality good production and the domestic marketsize is not very small. With horizontal product differentiation (thehomogeneous good case being a limit case of it when costs ofdifferentiation tend to infinity), investments in differentiationbenefit both firms in equal manner. Firms from the small country do notrun the risk of being relegated to a lower competitive position undertrade. As a result, they would never lose from it. Instead, firms fromthe large country may still incur losses from the opening of trade whenthe market expansion effect is low (i.e. when the country is very largerelative to the other).

Measuring and explaining farm inefficiency in a panel data set of mixed farms

This paper aims to estimate a translog stochastic frontier production function in the analysis of a panel of 150 mixed Catalan farms in the period 1989-1993, in order to attempt to measure and explain variation in technical inefficiency scores with a one-stage approach. The model uses gross value added as the output aggregate measure. Total employment, fixed capital, current assets, specific costs and overhead costs are introduced into the model as inputs. Stochasticfrontier estimates are compared with those obtained using a linear programming method using a two-stage approach. The specification of the translog stochastic frontier model appears as an appropriate representation of the data, technical change was rejected and the technical inefficiency effects were statistically significant. The mean technical efficiency in the period analyzed was estimated to be 64.0%. Farm inefficiency levels were found significantly at 5%level and positively correlated with the number of economic size units.

Pharmaceutical generics, vertical product differentiation and public policy

This paper studies oligopolistic competition in off-patent pharmaceuticalmarkets using a vertical product differentiation model. This model canexplain the observation that countries with stronger regulations havesmaller generic market shares. It can also explain the differences inobserved regulatory regimes. Stronger regulation may be due to a higherproportion of production that is done by foreign firms. Finally, a closelyrelated model can account for the observed increase in prices by patentowners after entry of generic producers.

Product market deregulation and the U.S. employment miracle

We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matchingmodel with monopolistic competition in the goods market and individual wage bargaining.Product market competition affects unemployment by two channels: the output expansion effect and a countervailing effect due to a hiring externality. Competition is then linked to barriers to entry. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980 s and 1990 s could be attributed to product market deregulation. Our quantitative analysis suggests that under individual bargaining, a decrease of less than two tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount.

Rapid prototyping of compliant human aortic roots for assessment of valved stents.

Adequate in-vitro training in valved stents deployment as well as testing of the latter devices requires compliant real-size models of the human aortic root. The casting methods utilized up to now are multi-step, time consuming and complicated. We pursued a goal of building a flexible 3D model in a single-step procedure. We created a precise 3D CAD model of a human aortic root using previously published anatomical and geometrical data and printed it using a novel rapid prototyping system developed by the Fab@Home project. As a material for 3D fabrication we used common house-hold silicone and afterwards dip-coated several models with dispersion silicone one or two times. To assess the production precision we compared the size of the final product with the CAD model. Compliance of the models was measured and compared with native porcine aortic root. Total fabrication time was 3 h and 20 min. Dip-coating one or two times with dispersion silicone if applied took one or two extra days, respectively. The error in dimensions of non-coated aortic root model compared to the CAD design was <3.0% along X, Y-axes and 4.1% along Z-axis. Compliance of a non-coated model as judged by the changes of radius values in the radial direction by 16.39% is significantly different (P<0.001) from native aortic tissue--23.54% at the pressure of 80-100 mmHg. Rapid prototyping of compliant, life-size anatomical models with the Fab@Home 3D printer is feasible--it is very quick compared to previous casting methods.

The alternatively spliced domain TnFnIII A1A2 of the extracellular matrix protein tenascin-C suppresses activation-induced T lymphocyte proliferation and cytokine production.

Several lines of evidences have suggested that T cell activation could be impaired in the tumor environment, a condition referred to as tumor-induced immunosuppression. We have previously shown that tenascin-C, an extracellular matrix protein highly expressed in the tumor stroma, inhibits T lymphocyte activation in vitro, raising the possibility that this molecule might contribute to tumor-induced immunosuppression in vivo. However, the region of the protein mediating this effect has remained elusive. Here we report the identification of the minimal region of tenascin-C that can inhibit T cell activation. Recombinant fragments corresponding to defined regions of the molecule were tested for their ability to inhibit in vitro activation of human peripheral blood T cells induced by anti-CD3 mAbs in combination with fibronectin or IL-2. A recombinant protein encompassing the alternatively spliced fibronectin type III domains of tenascin-C (TnFnIII A-D) vigorously inhibited both early and late lymphocyte activation events including activation-induced TCR/CD8 down-modulation, cytokine production, and DNA synthesis. In agreement with this, full length recombinant tenascin-C containing the alternatively spliced region suppressed T cell activation, whereas tenascin-C lacking this region did not. Using a series of smaller fragments and deletion mutants issued from this region, we have identified the TnFnIII A1A2 domain as the minimal region suppressing T cell activation. Single TnFnIII A1 or A2 domains were no longer inhibitory, while maximal inhibition required the presence of the TnFnIII A3 domain. Altogether, these data demonstrate that the TnFnIII A1A2 domain mediate the ability of tenascin-C to inhibit in vitro T cell activation and provide insights into the immunosuppressive activity of tenascin-C in vivo.

Reduced development of CD4-8-B220+ T cells but normal autoantibody production in lpr/lpr mice lacking major histocompatibility complex class I molecules.

The lpr gene has recently been shown to encode a functional mutation in the Fas receptor, a molecule involved in transducing apoptotic signals. Mice homozygous for the lpr gene develop an autoimmune syndrome accompanied by massive accumulation of double-negative (DN) CD4-8-B220+ T cell receptor-alpha/beta+ cells. In order to investigate the origin of these DN T cells, we derived lpr/lpr mice lacking major histocompatibility complex (MHC) class I molecules by intercrossing them with beta 2-microglobulin (beta 2m)-deficient mice. Interestingly, these lpr beta 2m-/- mice develop 13-fold fewer DNT cells in lymph nodes as compared to lpr/lpr wild-type (lprWT) mice. Analysis of anti-DNA antibodies and rheumatoid factor in serum demonstrates that lpr beta 2m-/- mice produce comparable levels of autoantibodies to lprWT mice. Collectively our data indicate that MHC class I molecules control the development of DN T cells but not autoantibody production in lpr/lpr mice and support the hypothesis that the majority of DN T cells may be derived from cells of the CD8 lineage.