It is shown that an incumbent seller who faces a threat of entry into his or her market will sign long-tern contracts that prevent the entry of some lower-cost producers even though they do not preclude entry completely. Moreover, when a seller possesses superior information about the likelihood of entry, it is shown that the length of the contract may act as a signal of the true probability of entry.
We estimate labor demand equations derived from a (restricted variable) cost function in which "experience" on a technology (proxied by the mean age of the capital stock) enters "non-neutrally." Our specification of the underlying cost function is based on the hypothesis that highly educated workers have a comparative advantage with respect to the adjustment to and implementation of new technologies.
An analysis of the environments of leading manufacturing firms operating in the United States and in Australia produced a series of hypothesized differences in the strategies, organization structures, and market environments of firms in the two countries. Parallel hypotheses about differences between domestic Australian firms and subsidiaries of foreign multinationals operating in Australia were also developed. The hypotheses were by and large supported when tested on data obtained from leading corporations in the two countries.
Written for graduate students, researchers and professionals in international finance and academia, this book provides a useful foundation for future research in developing quantitative measures of risk and expected return in international finance. After a discussion of a general rational expectations asset pricing model, Hodrick considers the development and implementation of econometric tests of various hypotheses that have been offered as candidate characterizations of efficiency in foreign exchange markets.
Evidence of excess volatilities of asset prices compared with those of market fundamentals is often attributed to speculative bubbles. This study demonstrates that bubbles could in theory lead to excess volatility, but it shows that certain variance bounds tests preclude bubbles as an explanation. The evidence ought to be attributed to model misspecification or inappropriate statistical tests. One important misspecification occurs if a researcher incorrectly specifies the time series properties of market fundamentals.
An extended series of economic studies has failed to find any statistically significant impact on national injury rates due to the OSHA. Two distinct explanations for this apparent failure of OSHA have been put forward in these studies. For the purposes of this study, the first of these explanations will be called the "noncompliance hypothesis" and the second will be labeled the "inefficiency hypothesis." The first of these hypotheses leads immediately to two dilemmas, which can only be resolved by expanding the range of issues considered in an analysis of OSHA.
This paper presents a macroeconomic model containing optimizing, inventory-holding firms that is consistent with a number of prominent empirical regularities concerning fluctuations in output, exchange rates, relative prices, and money. Prices are sticky, but they are not predetermined. Still, our model is consistent with exchange rate overshooting in the sense of Dornbusch. Typical sticky-price models allow a divergence between current production and current demand, but this divergence is never allowed to feed back into the model.