The Relationship between Large Fiscal Adjustments and Short-Term Output Growth Under Alternative Fiscal Policy Regimes

A small, but growing, body of literature searches for evidence of non-Keynesian effects of fiscal contractions. That is, some evidence exists that large fiscal contractions stimulate short-run economic activity. Our paper continues this research effort by systematically examining the effects, if any, of unusual fiscal events - either non-Keynesian results within a Keynesian model or Keynesian results within a neoclassical model -- on short-run economic activity. We examine this issue within three separate models -- a St. Louis equation, a Hall-type consumption equation, and a growth accounting equation. Our empirical findings are mixed, and do not provide strong systematic support for the view that unusually large fiscal contractions/expansions reverse the effects of normal fiscal events. Moreover, we find only limited evidence that trigger points are empirically important.

Input Aggregation in Models of Data Envelopment Analysis: A Statistical Test with an Application to Indian Manufacturing

A problem frequently encountered in Data Envelopment Analysis (DEA) is that the total number of inputs and outputs included tend to be too many relative to the sample size. One way to counter this problem is to combine several inputs (or outputs) into (meaningful) aggregate variables reducing thereby the dimension of the input (or output) vector. A direct effect of input aggregation is to reduce the number of constraints. This, in its turn, alters the optimal value of the objective function. In this paper, we show how a statistical test proposed by Banker (1993) may be applied to test the validity of a specific way of aggregating several inputs. An empirical application using data from Indian manufacturing for the year 2002-03 is included as an example of the proposed test.

Measuring Potential Output and Output Gap and Macroeconomic Policy: The Case of Kenya

Measuring the level of an economy.s potential output and output gap are essential in identifying a sustainable non-inflationary growth and assessing appropriate macroeconomic policies. The estimation of potential output helps to determine the pace of sustainable growth while output gap estimates provide a key benchmark against which to assess inflationary or disinflationary pressures suggesting when to tighten or ease monetary policies. These measures also help to provide a gauge in the determining the structural fiscal position of the government. This paper attempts to measure Kenya.s potential output and output gap using alternative statistical techniques and structural methods. Estimation of potential output and output gap using these techniques shows varied results. The estimated potential output growth using different methods gave a range of .2.9 to 2.4 percent for 2000 and a range of .0.8 to 4.6 for 2001. Although various methods produce varied results, they however provided a broad consensus on the over-all trend and performance of the Kenyan economy. This study found that firstly, potential output growth is declining over the recent time and secondly, the Kenyan economy is contracting in the recent years.

The Aggregate Demand for Private Health Insurance Coverage in the U.S.

This paper estimates the aggregate demand for private health insurance coverage in the U.S. using an error-correction model and by recognizing that people are without private health insurance for voluntary, structural, frictional, and cyclical reasons and because of public alternatives. Insurance coverage is measured both by the percentage of the population enrolled in private health insurance plans and the completeness of the insurance coverage. Annual data for the period 1966-1999 are used and both short and long run price and income elasticities of demand are estimated. The empirical findings indicate that both private insurance enrollment and completeness are relatively inelastic with respect to changes in price and income in the short and long run. Moreover, private health insurance enrollment is found to be inversely related to the poverty rate, particularly in the short-run. Finally, our results suggest that an increase in the number cyclically uninsured generates less of a welfare loss than an increase in the structurally uninsured.

Cross-Country Evidence on Output Growth Volatility: Nonstationary Variance and GARCH Models

This paper revisits the issue of conditional volatility in real GDP growth rates for Canada, Japan, the United Kingdom, and the United States. Previous studies find high persistence in the volatility. This paper shows that this finding largely reflects a nonstationary variance. Output growth in the four countries became noticeably less volatile over the past few decades. In this paper, we employ the modified ICSS algorithm to detect structural change in the unconditional variance of output growth. One structural break exists in each of the four countries. We then use generalized autoregressive conditional heteroskedasticity (GARCH) specifications modeling output growth and its volatility with and without the break in volatility. The evidence shows that the time-varying variance falls sharply in Canada, Japan, and the U.K. and disappears in the U.S., excess kurtosis vanishes in Canada, Japan, and the U.S. and drops substantially in the U.K., once we incorporate the break in the variance equation of output for the four countries. That is, the integrated GARCH (IGARCH) effect proves spurious and the GARCH model demonstrates misspecification, if researchers neglect a nonstationary unconditional variance.

Macroeconomic Rationality and Lucas' Misperceptions Model: Further Evidence from Forty-One Countries

Several researchers have examined Lucas's misperceptions model as well as various propositions derived from it within a cross-section empirical framework. The cross-section approach imposes a single monetary policy regime for the entire period. Our paper innovates on existing tests of those rational expectations propositions by allowing the simultaneous effect of monetary and short run aggregate supply (oil price) shocks on output behavior and the employment of advanced panel econometric techniques. Our empirical findings, for a sample of 41 countries over 1949 to 1999, provide evidence in favor of the majority of rational expectations propositions.

The Effects of Trade Orientation and Human Capital on Total Factor Productivity

We study the effects of trade orientation and human capital on total factor productivity for a pooled cross-section, time-series sample of developed and developing countries. We first estimate total factor productivity from a parsimonious specification of the aggregate production function involving output per worker, capital per worker, and the labor force, both with and without the stock of human capital. Then we consider a number of potential determinants of total factor productivity growth including several measures of trade orientation as well as a measure of human capital. We find that a high degree of openness benefits total factor productivity and that human capital contributes to total factor productivity only after our measure of openness passes some threshold level. Before that threshold, increases in human capital actually depress total factor productivity. Finally, we also consider the issue of convergence of real GDP per worker and total factor productivity, finding more evidence of convergence for the latter than for the former.

STUDYING AGGREGATE FORMATION BY AMYOTROPHIC LATERAL SCLEROSIS-ASSOCIATED MUTANT SOD1 PROTEIN IN DROSOPHILA MODEL

A common pathological hallmark of most neurodegenerative disorders is the presence of protein aggregates in the brain. Understanding the regulation of aggregate formation is thus important for elucidating disease pathogenic mechanisms and finding effective preventive avenues and cures. Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig’s disease, is a selective neurodegenerative disorder predominantly affecting motor neurons. The majority of ALS cases are sporadic, however, mutations in superoxide dismutase 1 (SOD1) are responsible for about 20% of familial ALS (fALS). Mutated SOD1 proteins are prone to misfold and form protein aggregates, thus representing a good candidate for studying aggregate formation. The long-term goal of this project is to identify regulators of aggregate formation by mutant SOD1 and other ALS-associated disease proteins. The specific aim of this thesis project is to assess the possibility of using the well-established Drosophila model system to study aggregation by human SOD1 (hSOD1) mutants. To this end, using wild type and the three mutant hSOD1 (A4V, G85R and G93A) most commonly found among fALS, I have generated 16 different SOD1 constructs containing either eGFP or mCherry in-frame fluorescent reporters, established and tested both cell- and animal-based Drosophila hSOD1 models. The experimental strategy allows for clear visualization of ectopic hSOD1 expression as well as versatile co-expression schemes to fully investigate protein aggregation specifically by mutant hSOD1. I have performed pilot cell-transfection experiments and verified induced expression of hSOD1 proteins. Using several tissue- or cell type-specific Gal4 lines, I have confirmed the proper expression of hSOD1 from established transgenic fly lines. Interestingly, in both Drosophila S2 cells and different fly tissues including the eye and motor neurons, robust aggregate formation by either wild type or mutant hSOD1 proteins was not observed. These preliminary observations suggest that Drosophila might not be a good experimental organism to study aggregation and toxicity of mutant hSOD1 protein. Nevertheless this preliminary conclusion implies the potential existence of a potent protective mechanism against mutant hSOD1 aggregation and toxicity in Drosophila. Thus, results from my SOD1-ALS project in Drosophila will help future studies on how to best employ this classic model organism to study ALS and other human brain degenerative diseases.

Lagrangian back-tracing results for Kohnen station; output of time dependent numerical experiment with a 3D nested Antarctic ice sheet model

A nested ice flow model was developed for eastern Dronning Maud Land to assist with the dating and interpretation of the EDML deep ice core. The model consists of a high-resolution higher-order ice dynamic flow model that was nested into a comprehensive 3-D thermomechanical model of the whole Antarctic ice sheet. As the drill site is on a flank position the calculations specifically take into account the effects of horizontal advection as deeper ice in the core originated from higher inland. First the regional velocity field and ice sheet geometry is obtained from a forward experiment over the last 8 glacial cycles. The result is subsequently employed in a Lagrangian backtracing algorithm to provide particle paths back to their time and place of deposition. The procedure directly yields the depth-age distribution, surface conditions at particle origin, and a suite of relevant parameters such as initial annual layer thickness. This paper discusses the method and the main results of the experiment, including the ice core chronology, the non-climatic corrections needed to extract the climatic part of the signal, and the thinning function. The focus is on the upper 89% of the ice core (appr. 170 kyears) as the dating below that is increasingly less robust owing to the unknown value of the geothermal heat flux. It is found that the temperature biases resulting from variations of surface elevation are up to half of the magnitude of the climatic changes themselves.

Barnacle recurit density, biomass, and reproductive output measured in rocky intertidal habitats in Glasgow Head, on the Atlantic coast of Nova Scotia, Canada

Through a field experiment, we show that a predator has negative nonconsumptive effects (NCEs) on different life-history stages of the same prey species. Shortly before the recruitment season of the barnacle Semibalanus balanoides (May-June), we established experimental cages in rocky intertidal habitats in Nova Scotia, Canada. The cages were used to manipulate the presence and absence of dogwhelks, Nucella lapillus, the main predators of barnacles. At the centre of each cage, we installed a tile where barnacle pelagic larvae could settle and the resulting recruits grow. Mesh prevented caged dogwhelks from accessing the tiles, but allowed waterborne dogwhelk cues to reach the tiles. Results in May indicated that barnacle larvae settled preferentially on tiles from cages without dogwhelks. In November, at the end of the dogwhelk activity period and once the barnacle recruits had grown to adult size, barnacle body mass was lower in the presence of dogwhelks. This limitation may have resulted from a lower barnacle feeding activity with nearby dogwhelks, as found by a previous study. The observed larval and adult responses in barnacles are consistent with attempts to decrease predation risk. November data also indicated that dogwhelk cues limited barnacle reproductive output, a possible consequence of the limited growth of barnacles. Overall, this study suggests that a predator species might influence trait evolution in a prey species through NCEs on different life-history stages.