The behavior of trust-region methods in FIML estimation

This paper presents a Monte-Carlo study on the practical reliability of numerical algorithms for FIML-estimation in nonlinear econometric models. The performance of different techniques of Hessian approximation in trust-region algorithms is compared regarding their "robustness" against "bad" starting points and their "global" and "local" convergence speed, i.e. the gain in the objective function, caused by individual iteration steps far off from and near to the optimum. Concerning robustness and global convergence speed the crude GLS-type Hessian approximations performed best, efficiently exploiting the special structure of the likelihood function. But, concerning local speed, general purpose techniques were strongly superior. So, some appropriate mixtures of these two types of approximations turned out to be the only techniques to be recommended

On vector autoregressive modeling in space and time

Despite the fact that it provides a potentially useful analytical tool, allowing for the joint modeling of dynamic interdependencies within a group of connected areas, until lately the VAR approach had received little attention in regional science and spatial economic analysis. This paper aims to contribute in this field by dealing with the issues of parameter identification and estimation and of structural impulse response analysis. In particular, there is a discussion of the adaptation of the recursive identification scheme (which represents one of the more common approaches in the time series VAR literature) to a space-time environment. Parameter estimation is subsequently based on the Full Information Maximum Likelihood (FIML) method, a standard approach in structural VAR analysis. As a convenient tool to summarize the information conveyed by regional dynamic multipliers with a specific emphasis on the scope of spatial spillover effects, a synthetic space-time impulse response function (STIR) is introduced, portraying average effects as a function of displacement in time and space. Asymptotic confidence bands for the STIR estimates are also derived from bootstrap estimates of the standard errors. Finally, to provide a basic illustration of the methodology, the paper presents an application of a simple bivariate fiscal model fitted to data for Italian NUTS 2 regions.structural VAR model, spatial econometrics, identification, space-time impulse response analysis

Local institutions and Natural Resource Management

As researchers and policy-makers confront the challenges of and opportunities for improving natural resource management, increasing attention is being given to the dynamics of coupled natural-human systems. Interdisciplinary study of these coupled systems has generated considerable research and management innovations. Among these are more intensive research of the emergence and behavior of local institutions and consideration of the potential for voluntary and/or collaborative approaches to supplement conventional natural resource policy and management approaches. Front and center in this line of research are studies of local institutional responses to common pool resource management issues. Over time, this productive line of research is encouraging greater integration of insights across social science fields and identification of systematic patterns in research findings. Responding to such encouragement, this research blends insights from collective action theory, institutional rational choice and the institutional analysis and development (IAD) framework to investigate the distribution and success of resource-based organizations. Moreover, our research makes a unique contribution to this literature by considering the spatial aspects of these institutions' formation, behavior and success. Lake associations are an interesting class of resource-based organizations. These local, lake-centered institutions strive to address management issues using informal and voluntary strategies. Lake associations are most common in lake-rich states, including Minnesota, Michigan, Wisconsin, New York, New Hampshire and Maine. The objectives of these groups vary from narrow (private road maintenance) to broad (watershed health). These organizations allow for lake-centered boundaries including multiple jurisdictions, provide a voice to seasonal property owners, and resolve some issues related to coordination, property rights, and transaction costs. The numerous and diverse lake associations of Maine are the focus of our empirical work. The primary research objective of this analysis is to develop an integrated empirical modeling framework of lake association presence and lake management success. To fulfill this objective, we examined the relative performance of empirical econometric models that ignore and address potential sample selection bias. Because we only observe measures of lake association management success on lakes that have a lake association, the sample is non-random. In our empirical work, entry into the lake association management success sample is further complicated by our reliance on survey data to describe management behavior and performance. A broad secondary research objective is to continue exploring the extent to which the Institutional Development Analysis (IAD) framework can be used to explain the distribution and behavior of Maine lake associations. We assembled an extensive spatial database describing natural and human features of 2,602 Maine lakes (Maine's great ponds; > 10 acres in size) to support this analysis. We integrated this extensive database with a smaller survey-based database describing lake association behavior and natural resource management success. Data describing the distribution and success of lake associations were drawn from non-government organization, federal and state agency databases and primary survey data collected to describe social and economic characteristics of Maine lakes. We captured additional lake and association attributes by manipulating various state and federal GIS databases and creating primary spatial databases. Results to date reveal support for the IAD theoretical framework in describing factors influencing the presence of lake associations. These results offer guidance on how to better integrate the informal approaches of local institutions with more formal, regional government-based management approaches. By understanding where local institutions are likely to form and what issues they are best suited to address, state and federal government agencies can better work with local organizations to address the complexities of natural resource management. Results explaining variation in natural resource management success and the potential gains from an integrated model of presence and success are less robust and are constrained by limited available data describing management behavior and success.local institutions, natural resource management, institutional economics, lake associations, Resource /Energy Economics and Policy,

State Anti-Smoking Legislation and the Demand for Cigarettes

This paper evaluates the effects of anti-smoking legislation on cigarette sales across the fifty states for the years 1975 through 1990. The relevance of this issue can be entertained from several perspectives as it pertains to both smokers and non-smokers contrasting the right to smoke with the right to breathe clean air. Anti-smoking legislation was initiated from early on in our country\u27s legal history, not as a method of protecting non-smokers from the externalities imposed upon them by smokers with respect to their right to clean air, but rather in light of smoking\u27s inherent fire hazards. The most significant development in the campaign of anti-smokers to promote the right to clean air came with the publishing of the 1964 Surgeon General\u27s Report which reviewed more than 11,000 studies and concluded that cigarette smoking was causally related to lung cancer. The impact of this report which was released on January 11, led to 2% decline in total cigarette consumption for that year. It was not until the release of the 1986 Surgeon General\u27s Report that the hazardous effects of cigarette smoke on non-smokers was affirmed. It asserted that not only did involuntary smoking cause disease in healthy nonsmokers, but also that the mere separation of smokers from non-smokers within the same workspace was not sufficient to eliminate the risk to which they were exposed. These findings have ultimately led to a significant increase in the enactment of Clean Indoor Air Laws, and a growing intolerance of smokers everywhere

State Anti-Smoking Legislation and the Demand for Cigarettes

This paper evaluates the effects of anti-smoking legislation on cigarette sales across the fifty states for the years 1975 through 1990. The relevance of this issue can be entertained from several perspectives as it pertains to both smokers and non-smokers contrasting the right to smoke with the right to breathe clean air. Anti-smoking legislation was initiated from early on in our country\u27s legal history, not as a method of protecting non-smokers from the externalities imposed upon them by smokers with respect to their right to clean air, but rather in light of smoking\u27s inherent fire hazards. The most significant development in the campaign of anti-smokers to promote the right to clean air came with the publishing of the 1964 Surgeon General\u27s Report which reviewed more than 11,000 studies and concluded that cigarette smoking was causally related to lung cancer. The impact of this report which was released on January 11, led to 2% decline in total cigarette consumption for that year. It was not until the release of the 1986 Surgeon General\u27s Report that the hazardous effects of cigarette smoke on non-smokers was affirmed. It asserted that not only did involuntary smoking cause disease in healthy nonsmokers, but also that the mere separation of smokers from non-smokers within the same workspace was not sufficient to eliminate the risk to which they were exposed. These findings have ultimately led to a significant increase in the enactment of Clean Indoor Air Laws, and a growing intolerance of smokers everywhere

Diagnosing the Productivity Effect of Public Capital in the Private Sector

Does public capital contribute to the productivity in the private sector? If so, which part of the private sector benefits most? Is public capital a substitute for or a complement of labor and private capital? This paper addresses these questions with both cost and profit function models estimated on U.S. time series data of the private sector and two of its subsectors. It pays special attention to nonstationarity in the data, to endogeneity in the price variables, and to the statistical and economic significance of the public capital effect.

Rosca Participation in Benin: a Commitment Issue

In the light of first-hand data from a Beninese urban household survey in Cotonou, we investigate several motives aiming to explain participation in Rotating Savings and Credit ASsociations. We provide anecdotal pieces of evidence, descriptive statistics, FIML regressions and matching estimates which tend to indicate that most individuals use their participation in a rosca as a device to commit themselves to save money and to deal with self-control problems.ROSCA, self-control, commitment device, Benin

ON THE ROLE OF THE BROKERAGE INSTITUTION IN THE DEVELOPMENT OF ETHIOPIAN AGRICULTURAL MARKETS

The recognition that policies aimed at “getting prices right” in less developed countries were failing due to incomplete markets has spurred a new wave of reforms, directed instead at “getting markets and institutions right”. Although previous studies have documented the potentially crucial role of the brokerage institution in crop commercialisation, few have investigated what determines wholesalers’ decisions to use brokers. Using data collected in 2006/07 by Gabre-Madhin, IFPRI and EDRI, we examine Ethiopian traders’ decisions regarding whether or not they should use brokers, and how much. Independent variables are human, financial and social asset availability, implemented trading practices, access to infrastructure and institutions, location, travelled distance and traded crops. Results show that brokerage services are particularly valuable for wholesalers lacking social capital and storage capacity, who are based in areas with low population density, and who trade at a distance especially when roads are not asphalted. Buyers in drought-prone domains rely on brokers more for their long-distance purchases, while sellers in moisture-reliable domains employ brokers more for their long-distance sales. These results provide useful indications regarding where and how the recent formalisation of brokerage functions through the ECX could be most beneficial for the functioning of Ethiopian agricultural markets.Agribusiness, O12, O13, O18,

Confidence in public institutions is critical in containing the COVID-19 pandemic

This paper investigates the relative importance of confidence in public institutions to explain cross-country differences in the severity of the coronavirus disease 2019 (COVID-19) pandemic. We find that a 1 SD increase (e.g., the actual difference between the United States and Finland) in confidence is associated with 56.3% fewer predicted deaths per million inhabitants. Confidence in public institutions is one of the most important predictors of deaths attributed to COVID-19, compared to country-level measures of health risks, the health system, demographics, economic and political development, and social capital. We show for the first time that confidence in public institutions encompasses more than just the unobserved quality of health or public services in general. If confidence only included the perceived quality, it would be associated with other health and social outcomes such as breast cancer recovery rates or imprisonment as well, but this is not the case. Moreover, our results indicate that fighting a pandemic requires citizens to cooperate with their governments, and willingness to cooperate relies on confidence in public institutions