Fixed Effects Bias in Panel Data Estimators

Since little is known about the degree of bias in estimated fixed effects in panel data models, we run Monte Carlo simulations on a range of different estimators. We find that Anderson-Hsiao IV, Kivietâs bias-corrected LSDV and GMM estimators all perform well in both short and long panels. However, OLS outperforms the other estimators when the following holds: the cross-section is small (N = 20), the time dimension is short (T = 5) and the coefficient on the lagged dependent variable is large (γ = 0.8).fixed effects, panel data, LSDV, dynamic model

Growing & Marketing Low Linolenic Soybeans - A Value Added Oppportunity

The Food and Drug Administration\u27s statement that trans-fatty acids are undesirable for human health and the requirement that food processors list trans fats on food nutrition labels beginning in 2006 has poised l% low linolenic soybean oil as part of the solution to the trans fat problem. Unhydrogenated soybean oil does not contain trans fat, but most soybean oil is hydrogenated to increase the shelf life of products that use soybean oil as an ingredient. Low linolenic soybean oil is stable enough without requiring hydrogenation, eliminating trans fat and not increasing saturated fat. According to the United Soybean Board, the low linolenic soybean oil could add an estimated $100 million per year to the value of soybean commodities

Traceability in Food Systems: An Economic Analysis of LGMA and the 2006 Spinach Outbreak

This case study presents an in-depth review of network structures and costs associated with the implementation of traceability systems in California leafy green production, distribution, and retailing. The 2006 spinach outbreak is used to assess the economic impact of trace back/forward response time of the LGMA system, an example of a tightly coupled, linear supply network. Results suggest that the benefits of traceability systems may far outweigh the costs and that costs vary significantly by technology used and by grower size. Implications are derived for cost-effectiveness of rapid response, targeted trace back/forward systems in other types of supply networks.traceability, produce, supply networks, cost-effectiveness, Food Consumption/Nutrition/Food Safety, Production Economics, Q18, I18, L51,

Innovation and the determinants of firm survival

While many firms compete through the development of new technologies and products, it is well known that new-to-the-world innovation is inherently risky and therefore may increase the probability of firm death. However, many existing studies consistently find a negative association between innovative activity and firm death. We argue that this may occur because authors fail to distinguish between innovation investments and innovation capital. Using an unbalanced panel of over 290,000 Australian companies, we estimate a piecewise-constant exponential hazard rate model to examine the relationship between innovation and survival and find that current innovation investments increase the probability of death while innovation capital lowers it

The impact of incentives, uncertainty and transaction costs on the efficiency of public sector outsourcing contracts

Since the late 1970s, the world has experienced a wave of microeconomic reform that has resulted in the privatisation of many previously State-owned assets, as well as other reforms directed at improving the efficiency of government business enterprises. This dissertation focuses on one important instrument of reform: outsourcing of public-sector service provision. Despite the prevalence of outsourcing, there has been relatively little empirical work analysing the effects of outsourcing at the contract level. This dissertation addresses three important empirical issues related to outsourcing. First, analysis of the magnitude and sources of cost savings associated with outsourcing was undertaken using a present value costing framework. Unlike other studies, this study includes transaction costs and considers how costs change over the life of the contract. The results indicate that savings of 37 per cent were achieved in the first year of contract operation, savings that were achieved through a combination of reductions in pay and conditions, labour-saving technological change and reductions in inefficiency. Secondly, the dissertation considered why the level of savings achieved fell to 24 per cent following contract variations at the end of year 1. Some evidence indicated that this may have been due to opportunistic behaviour or hold-up: that the contract service provider may have taken advantage of contractual incompleteness and increased its price during the course of contract renegotiations. Although hold-up is an important theme in the literature on contracts, little empirical work has been undertaken in verifying its existence. Thirdly, the impact of contract design on the efficiency of outsourcing arrangements was analysed. It is well known that contract theory predicts a trade-off between incentives and risk. Using the standard principal-agent framework, a simple model is developed to analyse the effects of demand uncertainty on the risk-incentive trade-off. This model is then tested using data from maintenance services contracts at two corporatised water retailers in Melbourne: an environment that is characterised by high levels of both cost and demand uncertainty. Using a general linear regression model, the results obtained indicate that the moral hazard effect dominated the risk premium effect

Fixed effects bias in panel data estimators

Since little is known about the degree of bias in estimated fixed effects in panel data models, we run Monte Carlo simulations on a range of different estimators. We find that Anderson-Hsiao IV, Kiviet's bias-corrected LSDV and GMM estimators all perform well in both short and long panels. However, OLS outperforms the other estimators when the following holds: the cross-section is small (N = 20), the time dimension is short (T = 5) and the coefficient on the lagged dependent variable is large (? = 0.8)

The effect of financial incentives on quality of care: the case of diabetes

Australia introduced an incentive payment scheme for general practitioners to ensure systematic and high quality care in chronic disease management. There is little empirical evidence and ambiguous theoretical guidance on which effects to expect on the quality of care. This paper evaluates the impact of the payment incentives on quality of care in diabetes, as measured by the probability of ordering an HbA1c test. The empirical analysis is conducted with a unique data set and a multivariate probit model to control for the simultaneous self-selection process of practices into the payment scheme and larger practices. The study finds that the incentive reform had a positive effect on quality of care in diabetes management and that participation in the scheme is facilitated by the support of Divisions of General Practice. This report was written by Anthony Scott, Stefanie Schurer, Paul H. Jensen and Peter Sivey