Elasticity of substitution between capital and labor: a panel data approach

This paper estimates the elasticity of substitution of an aggregate production function. The estimating equation is derived from the steady state of a neoclassical growth model. The data comes from the PWT in which different countries face different relative prices of the investment good and exhibit different investment-output ratios. Then, using this variation we estimate the elasticity of substitution. The novelty of our approach is that we use dynamic panel data techniques, which allow us to distinguish between the short and the long run elasticity and handle a host of econometric and substantive issues. In particular we accommodate the possibility that different countries have different total factor productivities and other country specific effects and that such effects are correlated with the regressors. We also accommodate the possibility that the regressors are correlated with the error terms and that shocks to regressors are manifested in future periods. Taking all this into account our estimation resuIts suggest that the Iong run eIasticity of substitution is 0.7, which is Iower than the eIasticity that had been used in previous macro-deveIopment exercises. We show that this lower eIasticity reinforces the power of the neoclassical mo deI to expIain income differences across countries as coming from differential distortions.

Elasticity of Substitution in the U.S. Market with Endogenous Transport Costs: a Sectoral Approach.

En este artículo se presentan estimaciones de la elasticidad de sustitución de bienes importados al mercado de los EEUU en el periodo 1990 - 2003, siguiendo a Anderson y Wincoop (2004). Estas estimaciones aprovechan la disponibilidad de la información sobre costos de transporte de bienes publicada por la Oficina del Censo de los Estados Unidos, desagregándola a seis digitos. Se obtienen dos estimaciones diferentes de la elasticidad de sustitución: una a nivel agregado promedio y otra a nivel sectorial. Como puede esperarse, las estimaciones que tienen en cuenta la endogeneidad de los costos de transporte son estadisticamente diferentes en un punto porcentual a los resultados obtenidos cuando no se contempla la estructura de los costos de transporte. Esta diferencia es incluso superior cuando comparamos los resultados obtenidos utilizando la clasificacion sectorial a nivel de dos digitos de la clasificacion ISIC revisión 2.

How can cells sense the elasticity of a substrate? An analysis using a cell tensegrity model

A eukaryotic cell attaches and spreads on substrates, whether it is the extracellular matrix naturally produced by the cell itself, or artificial materials, such as tissue-engineered scaffolds. Attachment and spreading require the cell to apply forces in the nN range to the substrate via adhesion sites, and these forces are balanced by the elastic response of the substrate. This mechanical interaction is one determinant of cell morphology and, ultimately, cell phenotype. In this paper we use a finite element model of a cell, with a tensegrity structure to model the cytoskeleton of actin filaments and microtubules, to explore the way cells sense the stiffness of the substrate and thereby adapt to it. To support the computational results, an analytical 1D model is developed for comparison. We find that (i) the tensegrity hypothesis of the cytoskeleton is sufficient to explain the matrix-elasticity sensing, (ii) cell sensitivity is not constant but has a bell-shaped distribution over the physiological matrix-elasticity range, and (iii) the position of the sensitivity peak over the matrix-elasticity range depends on the cytoskeletal structure and in particular on the F-actin organisation. Our model suggests that F-actin reorganisation observed in mesenchymal stem cells (MSCs) in response to change of matrix elasticity is a structural-remodelling process that shifts the sensitivity peak towards the new value of matrix elasticity. This finding discloses a potential regulatory role of scaffold stiffness for cell differentiation.

The Elasticity of Rehabilitation

This paper contributes to a debate on what constitutes rehabilitation. Current criminal justice practice tends to focus on lowering recidivism by utilising strategies geared towards cognitive behavioural modification and educational/vocational skill development. The paper focuses on the perspectives of custodial educators in a Juvenile Justice Centre in Northern Ireland. Their definition of rehabilitation is less concerned about lowering recidivism and instead focuses more on meeting the needs of the young people entering custody, more so than preparing them for their return to the community. Education staff present a model of rehabilitation that is fundamentally about improving the lives of young people. Despite expecting young people to return to custody Education staff contend that young people’s lives improved because they were exposed to a welcoming, caring and pro‐social environment which has helped the young people transform inttody.

The elasticity of demand is about occupancy, not prices: building European demand curves based on occupancy elasticity

The peak congestion of the European grid may create significant impacts on system costs because of the need for higher marginal cost generation, higher cost system balancing and increasing grid reinforcement investment. The use of time of use rates, incentives, real time pricing and other programmes, usually defined as Demand Side Management (DSM), could bring about significant reductions in prices, limit carbon emissions from dirty power plants, and improve the integration of renewable sources of energy. Unlike previous studies on elasticity of residential electricity demand under flat tariffs, the aim of this study is not to investigate the known relatively inelastic relationship between demand and prices. Rather, the aim is to assess how occupancy levels vary in different European countries. This reflects the reality of demand loads, which are predominantly determined by the timing of human activities (e.g. travelling to work, taking children to school) rather than prices. To this end, two types of occupancy elasticity are estimated: baseline occupancy elasticity and peak occupancy elasticity. These represent the intrinsic elasticity associated with human activities of single residential end-users in 15 European countries. This study makes use of occupancy time-series data from the Harmonised European Time Use Survey database to build European occupancy curves; identify peak occupancy periods; draw time use demand curves for video and TV watching activity; and estimate national occupancy elasticity levels of single-occupant households. Findings on occupancy elasticities provide an indication of possible DSM strategies based on occupancy levels and not prices.

Expedient, accurate methods for the determination of the degree of substitution of cellulose carboxylic esters: Application of UV-vis spectroscopy (dye solvatochromism) and FTIR

Two techniques, namely UV-vis- and FTIR spectroscopy, have been employed in order to calculate the degree of substitution (DS) of cellulose carboxylic esters, including acetates, CAs, butyrates, CBs, and hexanoates, CHs. Regarding UV-vis spectroscopy, we have employed a novel approach, based on measuring the dependence of lambda(max) of the intra-molecular charge-transfer bands of polarity probes adsorbed on DS of the ester films (solvatochromism). Additionally, we have revisited the use of FTIR for DS determination. Several methods have been used in order to plot Beer`s law graph, namely: Absorption of KBr pellets, pre-coated with CA: reflectance (DRIFTS) of CAs-KBr solid-solid mixtures with, or without the use of 1.4-dicyanobenzene as an internal reference; reflectance of KBr powder pre-coated with CA. The methods indicated are simple, fast, and accurate, requiring much less ester than the titration method. The probe method is independent of the experimental variables examined. (c) 2010 Published by Elsevier Ltd.

Employing perichromism for probing the properties of carboxymethyl cellulose films: an expedient, accurate method for the determination of the degree of substitution of the biopolymer derivative

The properties of films of carboxymethyl cellulose, CMC, of different degree of substitution, DS, have been examined by the use of perichromic indicators (probes). The film properties that have been determined are: empirical polarity, E-T(33); "acidity", alpha; "basicity", beta; and dipolarity/polarizability, pi*. This has been achieved by employing the following perichromic probes: 4-nitroaniline, 4-nitroanisole, 4-nitro-N,N-dimethylaniline, and 2,6-dichloro-4-(2,4,6-triphenyl-pyridinium-1-yl)phenolate, WB. The correlations between both E-T(33)- or pi* and DS were found to be linear; that between beta and DS is a second order polynomial; no obvious correlation was found between alpha and DS. The polarities of CMC films are in the range of those of butyl alcohols. As models for CMC, we have employed cellulose plus CMC of high DS; oxidized cellulose with degree of oxidation = 0.5; sodium glucuronate. The former model behaved akin to CMC, but the plots of the perichromic properties versus DS showed different slopes/intercepts. FTIR data and molecular dynamics simulations on the solvation of WB have shown that this difference can be traced to more efficient hydrogen bonding between the film of the model and the probe. This affects the intra-molecular charge-transfer energy of the latter, leading to different responses to the variation of DS. Based on the excellent linear correlation between E-T(33) and DS, for CMC from different origins, we suggest that perichromism is a simple, accurate, and expedient alternative for the determination of DS of the biopolymer derivative.

Fishing effort validation and substitution possibilities among components: the case study of the VIII division European anchovy fishery

Command and control regulation programs, particularly input constraints, typically fail to achieve stated objectives, because fishermen may substitute unregulated for regulated inputs. It is, thus, essential to have an understanding of the internal structure of production technology. A primal formulation is used to estimate a translog production function at the vessels level that includes fishing effort and fisherman’s skill. The flexibility of the selected functional permits the analysis of the substitution possibilities among inputs by estimating the elasticity of substitution with no prior constraints. Particular attention is paid to the empirical validation of fishing effort as an aggregate input, which implies either, the acceptation of the joint hypothesis that inputs making up effort are weakly separable from the inputs out of the subgroup or considering that effort is an intermediate input produced by a non-separable two stage technology. Cross sectional data from the Spanish purse seine fleet operating in the VIII Division European anchovy fishery provide evidence of limited input substitution possibilities among the inputs making up the empirically validated fishing effort translog micro-production function.

Trade Coefficients and the Role of Elasticity in a Spatial CGE Model Based on the Armington Assumption

The Armington Assumption in the context of multi-regional CGE models is commonly interpreted as follows: Same commodities with different origins are imperfect substitutes for each other. In this paper, a static spatial CGE model that is compatible with this assumption and explicitly considers the transport sector and regional price differentials is formulated. Trade coefficients, which are derived endogenously from the optimization behaviors of firms and households, are shown to take the form of a potential function. To investigate how the elasticity of substitutions affects equilibrium solutions, a simpler version of the model that incorporates three regions and two sectors (besides the transport sector) is introduced. Results indicate: (1) if commodities produced in different regions are perfect substitutes, regional economies will be either autarkic or completely symmetric and (2) if they are imperfect substitutes, the impact of elasticity on the price equilibrium system as well as trade coefficients will be nonlinear and sometimes very sensitive.

Studies on the international effects of real shocks

This doctoral thesis addresses the macroeconomic effects of real shocks in open economies in flexible exchange rate regimes. The first study of this thesis analyses the welfare effects of fiscal policy in a small open economy, where private and government consumption are substitutes in terms of private utility. The main findings are as follows: fiscal policy raises output, bringing it closer to its efficient level, but is not welfare-improving even though government spending directly affects private utility. The main reason for this is that the introduction of useful government spending implies a larger crowding-out effect on private consumption, when compared with the `pure waste' case. Utility decreases since one unit of government consumption yields less utility than one unit of private consumption. The second study of this thesis analyses the question of how the macroeconomic effects of fiscal policy in a small open economy depend on optimal intertemporal behaviour. The key result is that the effects of fiscal policy depend on the size of the elasticity of substitution between traded and nontraded goods. In particular, the sign of the current account response to fiscal policy depends on the interplay between the intertemporal elasticity of aggregate consumption and the elasticity of substitution between traded and nontraded goods. The third study analyses the consequences of productive government spending on the international transmission of fiscal policy. A standard result in the New Open Economy Macroeconomics literature is that a fiscal shock depreciates the exchange rate. I demonstrate that the response of the exchange rate depends on the productivity of government spending. If productivity is sufficiently high, a fiscal shock appreciates the exchange rate. It is also shown that the introduction of productive government spending increases both domestic and foreign welfare, when compared with the case where government spending is wasted. The fourth study analyses the question of how the international transmission of technology shocks depends on the specification of nominal rigidities. A growing body of empirical evidence suggests that a positive technology shock leads to a temporary decline in employment. In this study, I demonstrate that the open economy dimension can enhance the ability of sticky price models to account for the evidence. The reasoning is as follows. An improvement in technology appreciates the nominal exchange rate. Under producer-currency pricing, the exchange rate appreciation shifts global demand toward foreign goods away from domestic goods. This causes a temporary decline in domestic employment.

The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

On the water-induced critical double point in a polymer solution: the role of isotopic substitution

This paper examines the effect of substitution of water by heavy water in a polymer solution of polystyrene (molecular weight = 13000) and acetone. A critical double point (CDP), at which the upper and the lower partially-miscible regions merge, occurs at nearly the same coordinates as for the system [polystyrene + acetone + water]. The shape of the critical line for [polystyrene + acetone + heavy water] is highly asymmetric. An explanation for the occurrence of the water-induced CDP in [polystyrene + acetone] is advanced in terms of the interplay between contact energy dissimilarity and free-volume disparity of the polymer and the solvent. The question of the possible existence of a one-phase hole in an hourglass phase diagram is addressed in [polystyrene + acetone + water]. Our data exclude such a possibility.

Elasticity of DNA and the effect of dendrimer binding

Negatively charged DNA can be compacted by positively charged dendrimers and the degree of compaction is a delicate balance between the strength of the electrostatic interaction and the elasticity of DNA. We report various elastic properties of short double-stranded DNA (dsDNA) and the effect of dendrimer binding using fully atomistic molecular dynamics and numerical simulations. In equilibrium at room temperature, the contour length distribution P(L) and the end-to-end distance distribution P(R) are nearly Gaussian, the former gives an estimate of the stretch modulus gamma(1) of dsDNA in quantitative agreement with the literature value. The bend angle distribution P(.) of the dsDNA also has a Gaussian form and allows to extract a persistence length, L-p of 43 nm. When the dsDNA is compacted by positively charged dendrimer, the stretch modulus stays invariant but the effective bending rigidity estimated from the end-to-end distance distribution decreases dramatically due to backbone charge neutralization of dsDNA by dendrimer. We support our observations with numerical solutions of the worm-like-chain (WLC) model as well as using non-equilibrium dsDNA stretching simulations. These results are helpful in understanding the dsDNA elasticity at short length scales as well as how the elasticity is modulated when dsDNA binds to a charged object such as a dendrimer or protein.