Quality and Competition: An Empirical Analysis across Industries, March 2006

This paper empirically explores the link between quality and concentration in a cross-section of manufactured goods. Using concentration data and product quality indicators, an ordered probit estimation explores the impact of concentration on quality that is defined as an index of quality characteristics. The results demonstrate that market concentration and quality are positively correlated across different industries. When industry concentration increases, the likelihood of the product being higher quality increases and the likelihood of observing a lower quality decreases.

Assessment of volumetric bone mineral density of the femoral neck in postmenopausal women with and without vertebral fractures using quantitative multi-slice CT.

OBJECTIVE: To demonstrate the validity and reliability of volumetric quantitative computed tomography (vQCT) with multi-slice computed tomography (MSCT) and dual energy X-ray absorptiometry (DXA) for hip bone mineral density (BMD) measurements, and to compare the differences between the two techniques in discriminating postmenopausal women with osteoporosis-related vertebral fractures from those without. METHODS: Ninety subjects were enrolled and divided into three groups based on the BMD values of the lumbar spine and/or the femoral neck by DXA. Groups 1 and 2 consisted of postmenopausal women with BMD changes <-2SD, with and without radiographically confirmed vertebral fracture (n=11 and 33, respectively). Group 3 comprised normal controls with BMD changes > or =-1SD (n=46). Post-MSCT (GE, LightSpeed16) scan reconstructed images of the abdominal-pelvic region, 1.25 mm thick per slice, were processed by OsteoCAD software to calculate the following parameters: volumetric BMD values of trabecular bone (TRAB), cortical bone (CORT), and integral bone (INTGL) of the left femoral neck, femoral neck axis length (NAL), and minimum cross-section area (mCSA). DXA BMD measurements of the lumbar spine (AP-SPINE) and the left femoral neck (NECK) also were performed for each subject. RESULTS: The values of all seven parameters were significantly lower in subjects of Groups 1 and 2 than in normal postmenopausal women (P<0.05, respectively). Comparing Groups 1 and 2, 3D-TRAB and 3D-INTGL were significantly lower in postmenopausal women with vertebral fracture(s) [(109.8+/-9.61) and (243.3+/-33.0) mg/cm3, respectively] than in those without [(148.9+/-7.47) and (285.4+/-17.8) mg/cm(3), respectively] (P<0.05, respectively), but no significant differences were evident in AP-SPINE or NECK BMD. CONCLUSION: the femoral neck-derived volumetric BMD parameters using vQCT appeared better than the DXA-derived ones in discriminating osteoporotic postmenopausal women with vertebral fractures from those without. vQCT might be useful to evaluate the effect of osteoporotic vertebral fracture status on changes in bone mass in the femoral neck.

Predictable Life-Cycle Shocks, Income Risk and Consumption Inequality

Was the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to decompose idiosyncratic changes in income into predictable life-cycle changes, transitory and permanent shocks and estimate the contribution of each to total inequality. Our model fits the joint evolution of consumption and income inequality well and delivers two main results. First, we find that permanent changes in income explain all of the increase in inequality in the 1980s and 90s. Second, we reconcile this finding with the fact that consumption inequality did not increase much over this period. Our results support the view that many permanent changes in income are predictable for consumers, even if they look unpredictable to the econometrician, consistent with models of heterogeneous income profiles.

Transfers, social safety nets and economic growth

The role of social safety nets in the form of redistributional transfersand wage subsidies is analyzed using a simple model of criminal behavior. Itis argued that public welfare programs act as a crime--preventing ordisruption--preventing devices because they tend to increase the opportunitycost of engaging in crime or disruptive activities. It is shown that, in thepresence of a leisure choice, wage subsidies may be better than pure transfers. Using a simple growth model, it is shown that it is not optimal for the governmentto try to fully eliminate crime. The optimal size of the public welfare programis found and it is argued that public welfare should be financed with income(not lump--sum) taxes, despite the fact that income taxes are distortionary.The intuition for this result is that income taxes act as a user fee oncongested public goods and transfers can be thought of as {\it productive}public goods {\it subject to congestion}. Finally, using a cross-section of 75 countries, the partial correlation betweentransfers and growth is shown to be significantly positive.

Bowling for fascism: Social capital and the rise of the Nazi Party in Weimar Germany, 1919-33

Social capital a dense network of associations facilitating cooperation within a community typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially "dark side" of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party's triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations veteran associations and non-military clubs, "bridging" and "bonding" associations positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany's first democracy.

Inequality over the business cycle: Estimating income risk using micro-data on consumption

We use CEX repeated cross-section data on consumption and income, to evaluate the nature of increased income inequality in the 1980s and 90s. We decompose unexpected changes in family income into transitory and permanent, and idiosyncratic and aggregate components, and estimate the contribution of each component to total inequality. The model we use is a linearized incomplete markets model, enriched to incorporate risk-sharing while maintaining tractability. Our estimates suggest that taking risk sharing into account is important for the model fit; that the increase in inequality in the 1980s was mainly permanent; and that inequality is driven almost entirely by idiosyncratic income risk. In addition we find no evidence for cyclical behavior of consumption risk, casting doubt on Constantinides and Duffie s (1995) explanation for the equity premium puzzle.

Heterogeneous life-cycle profiles, income risk and consumption inequality

Was the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to decompose idiosyncratic changes in income into predictable life-cycle changes, transitory and permanent shocks and estimate the contribution of each to total inequality. Our model fits the joint evolution of consumption and income inequality well and delivers two main results. First, we find that permanent changes in income explain all of the increase in inequality in the 1980s and 90s. Second, we reconcile this finding with the fact that consumption inequality did not increase much over this period. Our results support the view that many permanent changes in income are predictable for consumers, even if they look unpredictable to the econometrician, consistent withmodels of heterogeneous income profiles.

The aftermath of Civil War

Using an event-study methodology, this paper analyzes the aftermath of civil war in a cross-section of countries. It focuses on those experiences where the end of conflict marks the beginning of a relatively lasting peace. The paper considers 41 countries involved in internal wars in the period 1960-2003. In order to provide a comprehensive evaluation of the aftermath of war, the paper considers a host of social areas represented by basic indicators of economic performance, health and education, political development, demographic trends, and conflict and security issues. For each of these indicators, the paper first compares the post- and pre-war situations and then examines their dynamic trends during the post-conflict period. It conducts this analysis both in absolute and relative terms, the latter in relation to control groups of otherwise similar countries. The paper concludes that, even though war has devastating effects and its aftermath can be immensely difficult, when the end of war marks the beginning of lasting peace, recovery and improvement are indeed achieved.

Forecasting and turning point predictions in a Bayesian panel VAR model

We provide methods for forecasting variables and predicting turning points in panel Bayesian VARs. We specify a flexible model which accounts for both interdependencies in the cross section and time variations in the parameters. Posterior distributions for the parameters are obtained for a particular type of diffuse, for Minnesota-type and for hierarchical priors. Formulas for multistep, multiunit point and average forecasts are provided. An application to the problem of forecasting the growth rate of output and of predicting turning points in the G-7 illustrates the approach. A comparison with alternative forecasting methods is also provided.

Credible redistributive policies and migration across US States

Does worker mobility undermine governments ability to redistribute income? Thispaper analyzes the experience of US states in the recent decades. We build a tractablemodel where both migration decisions and redistribution policies are endogenous. Wecalibrate the model to match skill premium and worker productivity at the state level,as well as the size and skill composition of migration flows. The calibrated modelis able to reproduce the large changes in skill composition as well as key qualitativerelationships of labor flows and redistribution policies observed in the data. Our resultssuggest that regional di¤erences in labor productivity are an important determinantof interstate migration. We use the calibrated model to compare the cross-section ofredistributive policies with and without worker mobility. The main result of the paperis that interstate migration has induced substantial convergence in tax rates acrossUS states, but no race to the bottom. Skill-biased in-migration has reduced the skillpremium and the need for tax-based redistribution in the states that would have hadthe highest tax rates in the absence of mobility.

Keeping up with the Joneses: An international asset pricing model

We derive an international asset pricing model that assumes local investorshave preferences of the type "keeping up with the Joneses." In aninternational setting investors compare their current wealth with that oftheir peers who live in the same country. In the process of inferring thecountry's average wealth, investors incorporate information from the domesticmarket portfolio. In equilibrium, this gives rise to a multifactor CAPMwhere, together with the world market price of risk, there existscountry-speciffic prices of risk associated with deviations from thecountry's average wealth level. The model performs signifficantly better, interms of explaining cross-section of returns, than the international CAPM.Moreover, the results are robust, both for conditional and unconditionaltests, to the inclusion of currency risk, macroeconomic sources of risk andthe Fama and French HML factor.

Asset pricing implications of benchmarking: A two-factor CAPM

In this paper we consider the equilibrium effects of an institutionalinvestor whose performance is benchmarked to an index. In a partialequilibrium setting, the objective of the institutional investor is modeledas the maximization of expected utility (an increasing and concave function,in order to accommodate risk aversion) of final wealth minus a benchmark.In equilibrium this optimal strategy gives rise to the two-beta CAPM inBrennan (1993): together with the market beta a new risk-factor (that wecall active management risk) is brought into the analysis. This new betais deffined as the normalized (to the benchmark's variance) covariancebetween the asset excess return and the excess return of the market overthe benchmark index. Different to Brennan, the empirical test supports themodel's predictions. The cross-section return on the active management riskis positive and signifficant especially after 1990, when institutionalinvestors have become the representative agent of the market.

Rostrum length, mandible serration, and food and salivary canals areas of selected species of stink bugs (Heteroptera, Pentatomidae)

Laboratory studies were conducted to compare rostrum length morphology of mandible serration and area of food and salivary canals of Dichelops melacanthus (Dallas) (Dm), Euschistus heros (F.) (Eh), Nezara viridula (L.) (Nv), and Piezodorus guildinii (Westwood) (Pg) (Heteroptera: Pentatomidae). Nv showed the longest (5.9 mm) and Pg the shortest (3.5 mm) rostrum length; Dm and Eh were intermediate. Length and width of mandible tip areas holding serration was bigger for Nv (106.0 and 30.2 µm, respectively) and smaller for Pg (71.1 and 23.7 µm), with all species having four central teeth and three pairs of lateral teeth. The inner mandible surface showed squamous texture. Cross-section of food and salivary canals (Fc and Sc) indicated greater area for Nv and Dm compared to Eh and Pg; however, the ratio Fc/Sc, yielded the highest relative area for Pg.

Shield morphology of curly overhair in 22 genera of Soricidae (Insectivora, Mammalia)

The structure of the shield of curly overhairs was studied in 22 genera of shrews, using scanning electron microscopy. The cross section of the shield is quadriconcave with two sides showing particular scale patterns or a relief which can be grouped into 4 morphological types: 1) a smooth type with, at most, shallow U-shaped notches; 2) a type with uniserial, V-shaped tiled notches; 3) a type with a groove and irregular notches; 4) a type with a deep ridged groove. Myosorex, which occupies a basal phyletic position, shows type 3. This type is therefore interpreted as an ancestral character state. It is found also in Feroculus and in some Sylvisorex. In the Crocidurinae, this type evolved into type 2 (Scutisorex and some Indomalayan Crocidura), and finally into type 1 (Suncus and most Crocidura). In the Soricinae, it evolved into type 4, which is common to all genera except Megasorex and Notiosorex. These two genera possess type 1 which is interpreted as being a synapomorphous character of these genera. The regression of the complex structure under dry climatic conditions supports the hypothesis that the function of the grooved form of hair is water repulsion.

Emplacement of Jurassic - Lower Cretaceous radiolarites of the Nicoya Complex (Costa Rica)

We present a new model to explain the origin, emplacement and stratigraphy of the Nicoya Complex in the NW part of the Nicoya Peninsula (Costa Rica) based on twenty-five years of field work, accompanied with the evolution of geochemical, vulcanological, petrological, sedimentological and paleontological paradigms. The igneous-sedimentary relation, together with radiolarian biochronology of the NW-Nicoya Peninsula is re-examined. We interpret the Nicoya Complex as a cross-section of a fragment of the Late Cretaceous Caribbean Plateau, in which the deepest levels are exposed in the NW-Nicoya Peninsula. Over 50% of the igneous rocks are intrusive (gabbros and in less proportion plagiogranites) which have a single mantle source; the remainder are basalts with a similar geochemical signature. Ar39/Ar40 radioisotopic whole rock and plagioclase ages range throughout the area from 84 to 83 Ma (Santonian) for the intrusives, and from 139 to 88 Ma (Berriasian-Turonian) for the basalts. In contrast, Mn-radiolarites that crop out in the area are older in age, Bajocian (Middle Jurassic) to Albian (middle Cretaceous). These Mn-radiolaritic blocks are set in a "matrix" of multiple gabbros and diabases intrusions. Chilled margins of magmatites, and hydrothermal baking and leaching of the radiolarites confirm the Ar39/Ar40 dating of igneous rocks being consistently younger than most of the radiolarian cherts. No Jurassic magmatic basement has been identified on the Nicoya Peninsula. We interpret the Jurassic-Cretaceous chert sediment pile to have been disrupted and detached from its original basement by multiple magmatic events that occurred during the formation of the Caribbean Plateau. Coniacian-Santonian (Late Cretaceous), Fe-rich radiolarites are largely synchronous and associated with late phases of the Plateau.