618 results for Working or discussion paper, 2000

  • Modern Theories of Entrepreneurial Behavior: An Appraisal

    Endres, Anthony; Woods, Christine (2003)

    Working or discussion paper
    The University of Auckland Library

    This paper compares three principal, contemporary theories of entrepreneurial decision making - neoclassical, Austrian and behavioral. We employ theory appraisal criteria made available in Fritz Machlup's (1967) celebrated article on alternative theories of the firm. The paper considers theories that treat sequences of behavior by which individual entrepreneurs reach decisions on two levels: the discovery of profit opportunities and their exploitation. We also consider how each theory characterizes the entrepreneur's decision making process by contrast with the posited behavior of other economic agents. Austrian theory is suited to explaining novel, adventurous behavior at the discovery stage. The algorithm for opportunity exploitation in both the neoclassical and Austrian approaches is a single-repertoire, optimization rule. Neoclassical theory is situated in frictionless, atomistic Walrasian markets and emphasizes mathematical tractability. Austrian and behavioral theories conceive entrepreneurial acts taking place in market processes understood as complex institutional phenomena. There are strong theoretical complementarities between Austrian and behavioral approaches; both approaches value descriptive accuracy, though the behavioralists place more weight on operational tractability. Austrians and behavioralists share an interest in heuristics; they emphasize the role of prior micro-level knowledge at the discovery stage. Currently there is no possibility of an all-encompassing theory of entrepreneurial behavior emerging in the literature.

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  • School Leaving, Labour Market and Tertiary Education Choices of Young Adults: An Economic Analysis Utilising The 1977-1995 Christchurch Health and Development Surveys

    Maani, Sholeh (2000)

    Working or discussion paper
    The University of Auckland Library

    Utilising evidence from a longitudinal data set of young adults in New Zealand, this study examines the determinants of school leaving and labour supply behaviour of young adults at ages 16 and 18. The data set employed (the Christchurch Health and Development Survey) includes a number of variables, from birth to age 18, not commonly available in economic data sets. The analysis uses binary choice models to examine the effect of ability factors and household economic constraints on the choice to remain at secondary school beyond post-compulsory levels at age 16. The study further uses binary and multinomial choice models to examine the determinants of participation in tertiary education, as opposed to engaging in labour supply, or unemployment at age 18. The study finally examines the determinants of the type of tertiary institution attended.

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  • Auction Beats Posted Prices in a Small Market

    Julien, Benoit; Kennes, John; King, Ian (2002)

    Working or discussion paper
    The University of Auckland Library

    In a model with two buyers and sellers we consider the choice of sales mechanism from three possibilities: posted prices, and auctions with and without reserve prices. With homogenous goods, sellers expected revenues are highest when both sellers auction with reserve prices 33% higher than if posting prices and 100% higher than if auctioning without reserve prices. When sellers can choose their mechanism before choosing prices, both sellers auction with a reserve price in the dominant strategy equilibrium. With heterogenous goods, the equilibrium with posted prices is inefficient (Montgomery (1991)) but the equilibria with both types of auctions are efficient.

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  • Oligopolisic Business-to-Business E-Market and Welfare

    Aoki, Reiko (2001)

    Working or discussion paper
    The University of Auckland Library

    We examine the effect of an oligopolistic upstream electronic market on upstream and downstream prices. The analysis highlights the two sources of competition that a firm that source from an electronic market (e-market firm) face: competition with less efficient firms that source traditionally (t-market firms) and competition among e-market firms. When size of the upstream e-market is small, the first effect dominates and there is higher profits with lower upstream prices in the e-market. When size of the emarket becomes very large, the second effect makes e-market firms less profitable than t-market firms even though e-market price may start to increase (as market size increases). As consequence, e-market will never completely eliminate the upstream t-market and downstream price can increase when e-market grows beyond a certain size.

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  • Agency Theory Meets Social Capital: The Failure of the 1984-91 New Zealand Economic Revolution

    Hazledine, Tim (2000)

    Working or discussion paper
    The University of Auckland Library

    The failure of the New Zealand Economic Revolution of 1984-91 to generate improved economic performance is puzzling and important, since the reforms enacted then have often been cited as a 'textbook' example of how to liberalise an economy, and since the preconditions for success (such as good government, secure property rights and stable capitalist institutions) were all in place, in contrast to the economies of the former Soviet bloc. This paper first documents the extent of failure, and then attempts to explain it theoretically. This is the story: The reform program can be seen as a massive application (or mis-application) of Principal/Agent Theory. The Principal is the small group of economic revolutionaries. The Agents are the people of NZ. The Principal_s sole object is economic efficiency. The Agents enjoy the fruits of efficiency, but also emjoy other things ('slack'), which conflict with efficient behaviour. The Principal introduces policies (deregulation, liberalisation, commercialisation) which raise the opportunity cost of non- efficient behaviour in both private and public sectors. Unfortunately, the Principal has the 'wrong model' of how the economy functions. Slack does not just enter Agents' utility functions, it is also an input into production, where it appears as 'Forbearance' _ the flow variable associated with the stock concept known as Social Capital (the ability of agents to achieve mutually beneficial outcomes through trusting and trustworthy behaviour). Thus, the Reforms actually reduced economic efficiency, for two reasons (1) they forced noncooperative behaviour on agents, and (2) they incurred direct costs of monitoring and enforcement to bring agents' behaviour into line with the principal's objectives. And the total welfare costs exceed the loss of economic efficiency (GDP), since disproportionately more utility-enhancing slack, or forbearance is wiped out. The prediction of increased resources devoted to transaction cost activities, in particular management, is tested in a comparison of New Zealand and Australia (which did not go through such a radical reform process). The data do indeed show a substantial increase in the number of managers in NZ, relative to Australia.

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  • How Financial Development Caused Economic Growth in the APEC: Financial Integration with FDI OR Privatisation without FDI

    Bandyopadhyay, Debasis (2004)

    Working or discussion paper
    The University of Auckland Library

    Politicians fashionably argue in favour of financial development to promote economic growth following the seminal study of King and Levine (1993a, 1993b). Financial development, however, could come through alternative channels that are sometimes not compatible in small open economics. A relatively popular channel promotes privatisation of domestic financial intermediaries but with restrictions on foreign ownership. The other competing channel works through foreign direct investment (FDI) requiring foreign ownership of national assets. Until the last decade of globalisation, from sixties through early nineties, in many APEC countries and especially in the East Asia, privatisation of national banks went hand in hand with a regime of financial repressions. Under that regime governments kept the domestic interest rate above the world rate by imposing barriers against FDI. Recent trend in globalisation creates a political tension between those who welcome and the others who oppose FDI. This paper evaluates the relative contribution of those two alternative channels of financial development to economic growth. The model of analysis builds on King and Levine (1993b) but restricts its attention to small open economies of the APEC. Contrary to the previous findings, privatisation of domestic financial sector alone turns out to have a negative impact on the growth of efficiency measured by the growth of total factor productivity. This discrepancy could possibly be rationalised by a special characteristic of the APEC sample where a negative effect on efficiency came from the regimes of financial repression that blocked FDI. Financial integration led by FDI does bring the prospect of lower economic growth due to increased business fluctuations especially for the small open economies. Nevertheless, it is surprising to find that a significant improvement in efficiency and growth came to the APEC nations through the international channel with the flow of FDI. Consequently, barriers to globalisation out of a purely the nationalist concerns may be ill fated even for small open economies.

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  • Open and Closed: Some Historical Dimensions of New Zealand's Participation in the World Economy

    Jackson, Kenneth (2002)

    Working or discussion paper
    The University of Auckland Library

    (Opening paragraph) Openness, along with trade liberalisation, is currently seen as a major factor in producing economic growth and relatively high standards of living as conventionally measured by Gross Domestic Product (GDP) per capita. In the modern literature these two components have been described as: '' believed to have been central to the remarkable growth of industrial countries since the mid-20th century (Winters, 2000, p. 43).

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  • Quality Versus Quantity: Rankings of Economics Departments in New Zealand

    King, Ian (2000)

    Working or discussion paper
    The University of Auckland Library

    I compare the research records of the 7 major economics departments in New Zealand, from 1990 onwards. The information, taken from the Econlit database, covers more than 500 economics journals, as of November 2000. Quality weights for the journals were taken from the study by Laband and Piette (1994). Four different departmental ranking measures were computed. The resulting ranking of departments is common to all the measures used. Auckland comes in first, followed by Victoria University of Wellington, Canterbury, Otago, Lincoln, Waikato, and Massey.

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  • The Elusive Empirical Shadow of Growth Convergence

    Phillips, Peter; Sul, Donggyu (2003)

    Working or discussion paper
    The University of Auckland Library

    Two groups of applied econometricians have figured prominently in empirical studies of growth convergence. In terms of a popular caricature, one group believes it has found a black hat of convergence (evidence for growth convergence) in the dark room of economic growth, even though the hat may not exist (the task may be futile). A second group believes it has found a black coat of divergence (evidence against growth convergence) even though this object also may not exist (empirical reality, including the nature of growth divergence, is ever more complex than the models used to characterize it). The present paper seeks to light a candle to see whether there is a hat, a coat or another object of identifiable clothing in the room of regional and multi-country economic growth. After our examination, we find that the candle power of applied econometrics is too low to clearly distinguish a black hat in the huge dark room of economic growth. However, in our theory model, we find an important new role for heterogeneity over time and across economies in the transitional dynamics of economic growth; and, in our empirical work, these transitional dynamics reveal an elusive shadow of the conditional convergence hat in both US regional and inter-country OECD growth patterns.

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  • Compulsory Licensing of Technology and the Essential Facilities Doctrine

    Aoki, Reiko; Small, John (2002)

    Working or discussion paper
    The University of Auckland Library

    We look at compulsory licensing of intellectual property as remedy for anti-competitive practice. We identify aspects of intellectual property that warrants a different remedy from those using general definitions and remedies for essential facility. Based on the analysis, we present a characterisation of optimal compulsory licensing for a simple market.

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  • Directed Search without Price Directions

    Julien, Benoit; Kennes, John; King, Ian (2003)

    Working or discussion paper
    The University of Auckland Library

    This paper presents a very simple directed search model of the labour market in which no wage announcements are made. Wages, instead, are determined by an ex post bidding mechanism: an auction without a reserve price. We characterize the properties of the equilibrium of the model, and examine its implied Beveridge curve. We show that this wage determination mechanism induces efficient job entry in equilibrium. A dynamic version of the model is calibrated to the US labour market. The model can account for observed vacancy rates, given parameters that are chosen to match the average wages and the natural rate of unemployment. In the limit, as the time between offer rounds in the model approaches zero, the equilibrium approaches the Walrasian competitive equilibrium.

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  • Matching Foundations

    Julien, Benoit; Kennes, John; King, Ian (2000)

    Working or discussion paper
    The University of Auckland Library

    We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions. Sellers' expected payoffs are higher when all sellers auction, but the difference in the payoffs decreases rapidly with market size and vanishes in the limit "large" economy. In this large economy, buyer and seller payoffs are different, but entry of both buyers and sellers is constrainedefficient. When sellers can choose whether to post prices or auction in the 2-buyer 2- seller case, then the equilibrium choice depends on whether or not sellers can commit. If both sellers can commit, then the dominant strategy equilibrium has both sellers auctioning. If neither seller can commit, then all possible combinations are equilibria.

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  • Prewhitening Bias in HAC Estimation

    Sul, Donggyu; Phillips, Peter; Choi, Chi-Young (2003)

    Working or discussion paper
    The University of Auckland Library

    Later version now published as a Journal Article: Oxford Bulletin of Economics & Statistics 67 (4), 517-546. doi: 10.1111/j.1468-0084.2005.00130.x HAC estimation commonly involves the use of prewhitening filters based on simple autoregressive models. In such applications, small sample bias in the estimation of autoregressive coefficients is transmitted to the recoloring filter, leading to HAC variance estimates that can be badly biased. The present paper provides an analysis of these issues using asymptotic expansions and simulations. The approach we recommend involves the use of recursive demeaning procedures that mitigate the effects of small sample autoregressive bias. Moreover, a commonly-used restriction rule on the prewhitening estimates (that first order autoregressive coefficient estimates, or largest eigenvalues, greater than 0.97 be replaced by 0.97) adversely interferes with the power of unit root and KPSS tests. We provide a new boundary condition rule that improves the size and power properties of these tests. Some illustrations are given of the effects of these adjustments on the size and power of KPSS testing. Using prewhitened HAC estimates and the new boundary condition rule, the KPSS test is consistent, in contrast to KPSS testing that uses conventional prewhitened HAC estimates (Lee, 1996).

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  • Cournot and Bertrand Competition with Vertical Quality Differentiation

    Aoki, Reiko (2001)

    Working or discussion paper
    The University of Auckland Library

    We consider a model of vertical quality differentiation. We show that in Coumot (quality setting) competition firm's profit is increasing in its own quality and decreasing in its rival's quality. This differs from the results for Bertrand (price setting) competition and conforms to some previously made assumptions concerning profit functions in a setting of vertical quality differentiation. However, even in this case, when an initial stage in which firms make as costly investment in quality is added, an asymmetric equilibrium results. This follows from the fact that in both types of competition, it is possible to improve profit by moving away (either by choosing higher or lower quality) from rival's quality. This paper is the same as manuscript dated 1988 of the same name.

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  • Two-way Interconnection with Partial Consumer Participation

    Schiff, Aaron (2001)

    Working or discussion paper
    The University of Auckland Library

    This paper incorporates partial consumer participation in a model of competition between telecommunications networks with two-way interconnection. It is shown, in contrast to the results of similar models with full participation, that the firms' equilibrium profits depend on the level of a reciprocal access charge under two-part retail pricing. Under some simplifying assumptions, it is shown that firms prefer the access charge be set equal to the marginal cost of termination, which coincides with the social optimum. Without these additional assumptions the model is analytically complex and simulation results are presented that suggest firms prefer the access charge to be less than marginal cost, while the socially optimal access charge may be above or below cost depending on the differentiation of the firms.

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  • Parental Income and the Choice of Participation in University, Polytechnic or

    Maani, Sholeh (2005)

    Working or discussion paper
    The University of Auckland Library

    This paper examines the link between parental income during adolescent years and higher education choices of the offspring at age 18. This study is the first to use a recent longitudinal data set from New Zealand (Christchurch health and development Surveys, CHDS), in the higher education context. The paper examines the impact of family income and other resources throughout adolescent years on later decisions to participate in higher education and the choice of type of tertiary education at age 18. A binary choice model of participation in education, and a multinomial choice model of the broader set of choices faced at age 18, of employment, university, or polytechnic participation are estimated. Among the features of the study are that it incorporates a number of variables, from birth to age 18, which allow us to control further than most earlier studies for ability heterogeneity, academic performance in secondary school, in addition to parental resources (e.g., childhood IQ, nationally comparable high school academic performance, peer effects, family size and family financial information over time). The results highlight useful features of intergenerational participation in higher education, and the effect of parental income on university education, in particular.

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  • Private and Public Returns to Investments in Secondary and Higher Education in NZ over time: 1981- 1996

    Maani, Sholeh (2000)

    Working or discussion paper
    The University of Auckland Library

    Utilising evidence from a longitudinal data set of young adults in New Zealand, this study examines the determinants of school leaving and labour supply behaviour of young adults at ages 16 and 18. The data set employed (the Christchurch Health and Development Survey) includes a number of variables, from birth to age 18, not commonly available in economic data sets. The analysis uses binary choice models to examine the effect of ability factors and household economic constraints on the choice to remain at secondary school beyond post-compulsory levels at age 16. The study further uses binary and multinomial choice models to examine the determinants of participation in tertiary education, as opposed to engaging in labour supply, or unemployment at age 18. The study finally examines the determinants of the type of tertiary institution attended. tertiary education in the 1981-1991 period, and a stabilisation of results for males and a relative decline in the returns for females since 1991.

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  • The Shaping of Research Agendas in International Economic Organizations: Illustrations from the World Bank, IMF and OECD

    Endres, Anthony; Fleming, G.A. (2002)

    Working or discussion paper
    The University of Auckland Library

    We investigate the determinants, development, character and distinctiveness of research programmes in international economic organisations (IEOs). In the twentieth century, IEOs emerged as another domain - in addition to government, business and academia - in which economists demonstrated the value of their intellectual constructs. What were the forces shaping economic thought in IEOs? How does the incorporation of new ideas in IEO research affect policy prescriptions emanating from IEOs? We offer illustrations from the IMF, OECD, and World Bank drawn from work in the late 1960s to the early 1980s. We view the subject matter as a variant of Schumpeterian 'political economy' rather than pure analytical economics. Economic research in IEOs enabled economists to assume positions as critical intellectual actors in IEO policy formation. Key determinants of economic thought in IEOs included the rationale for the existence of a particular organisation as expressed in formal charters or constitutions; contemporary ideas disseminated from academic economic analysis, and pressures applied by member governments to research and advise on specific policy questions either as events or operational functions demanded. We consider the World Bank as a purveyor of development strategies, in particular the concept of 'structural adjustment' in the 1980s; the self-styled monetary approach to the balance of payments prosecuted at the IMF from the 1960s to the 1980s, and the OECD policy line on economic policy reform in developed industrialised countries in the late 1970s. IEO research agendas were predominantly aimed at problems resulting from international economic interdependencies. We conclude that, for an IEO, international political economy was more likely to sway national policymakers if it employed a discourse - together with carefully chosen metaphors - turning on operational imperatives and articulating ruling policy concepts framed as part of eclectic, applicable models. We find little support for the public choice view of IEO research (and researchers) as involving bureaucratic and research budget maximization and strict research independence. Economic thought in IEOs is demand -driven though not completely demand- determined.

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  • Jacknifing Bond Option Prices

    Yu, Jun; Phillips, Peter (2002)

    Working or discussion paper
    The University of Auckland Library

    In continuous time specifications, the prices of interest rate derivative securities depend crucially on the mean reversion parameter of the associated interest rate diffusion equation. This parameter is well known to be subject to estimation bias when standard methods like maximum likelihood (ML) are used. The estimation bias can be substantial even in very large samples and it translates into a bias in pricing bond options and other derivative securities that is important in practical work. The present paper proposes a very general method of bias reduction for pricing bond options that is based on Quenouille's (1956) jackknife. We show how the method can be applied directly to the options price itself as well as the coefficients in continuous time models. The method is implemented and evaluated here in the Cox, Ingersoll and Ross (1985) model, although it has much wider applicability. A Monte Carlo study shows that the proposed procedure achieves substantial bias reductions in pricing bond options with only mild increases in variance that do not compromise the overall gains in mean squared error. Our findings indicate that bias correction in estimation of the drift can be more important in pricing bond options than correct specification of the diffusion. Thus, even if ML or approximate ML can be used to estimate more complicated models, it still appears to be of equal or greater importance to correct for the effects on pricing bond options of bias in the estimation of the drift. An empirical application to U.S. interest rates highlights the differences between bond and option prices implied by the jackknife procedure and those implied by the standard approach. These differences are large and suggest that bias reduction in pricing options is important in practical applications.

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  • Gender Differences in Trust and Reciprocity

    Chaudhuri, Ananish; Gangadharan, Lata (2003)

    Working or discussion paper
    The University of Auckland Library

    We use the investment game introduced by Berg, Dickhaut and McCabe (1995) to explore gender differences in trust and reciprocity. In doing so we replicate and extend the results first reported by Croson and Buchan (1999). We find that men exhibit greater trust than women do while women show higher levels of reciprocity. Trusting behavior is driven strongly by expectations of reciprocation. We posit that the lower levels of trust exhibited by women may be attributed to a higher degree of risk aversion.

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