Accounting for Pairwise Heterogeneity in Bilateral Trade Flows: A Stochastic Varying Coefficient Gravity Model

This paper suggests an alternative way for estimating the gravity equation that takes into consideration country-pair heterogeneity in bilateral trade flows. Specifically, a stochastic varying coefficient gravity model based on Hildreth and Houck’s (1968) random coefficient regression is proposed, that eliminates heterogeneity bias inherent in standard econometric methods. The results indicate that the standard gravity estimates can differ substantially from what is obtained when heterogeneity is accounted for.bilateral trade, gravity equation, stochastic varying coefficient gravity model.

Parameterized (in)approximability of subset problems

We discuss approximability and inapproximability in FPT-time for a large class of subset problems where a feasible solution $S$ is a subset of the input data and the value of $S$ is $|S|$. The class handled encompasses many well-known graph, set, or satisfiability problems such as Dominating Set, Vertex Cover, Set Cover, Independent Set, Feedback Vertex Set, etc. In a first time, we introduce the notion of intersective approximability that generalizes the one of safe approximability and show strong parameterized inapproximability results for many of the subset problems handled. Then, we study approximability of these problems with respect to the dual parameter $n-k$ where $n$ is the size of the instance and $k$ the standard parameter. More precisely, we show that under such a parameterization, many of these problems, while W[$\cdot$]-hard, admit parameterized approximation schemata.Comment: 7 page

Fast reoptimization for the minimum spanning tree problem

AbstractWe study reoptimization versions of the minimum spanning tree problem. The reoptimization setting can generally be formulated as follows: given an instance of the problem for which we already know some optimal solution, and given some “small” perturbations on this instance, is it possible to compute a new (optimal or at least near-optimal) solution for the modified instance without ex nihilo computation? We focus on two kinds of modifications: node-insertions and node-deletions. When k new nodes are inserted together with their incident edges, we mainly propose a fast strategy with complexity O(kn) which provides a max{2,3−(2/(k−1))}-approximation ratio, in complete metric graphs and another one that is optimal with complexity O(nlogn). On the other hand, when k nodes are deleted, we devise a strategy which in O(n) achieves approximation ratio bounded above by 2⌈|Lmax|/2⌉ in complete metric graphs, where Lmax is the longest deleted path and |Lmax| is the number of its edges. For any of the approximation strategies, we also provide lower bounds on their approximation ratios

Parametric Measurement of Time-Varying Technical Inefficiency: Results from Competing Models

This paper provides an empirical comparison of time-varying technical inefficiency measures obtained from the econometric estimation of different specifications of the stochastic production frontier model. Specifically, ten different frontier model specifications, which are most widely used in empirical applications, are estimated using a balanced panel data set from the Greek olive-oil sector, consisting of 100 farms observed during 1987-93 period. The empirical results indicate that both the magnitude and individual ranking of technical efficiency estimates differs considerably across models.Agricultural and Food Policy,

Decomposing Partial Factor Productivity in the Presence of Input-Specific Technical Inefficiency: A Self-Dual Stochastic Production Frontier Approac

The present paper provides a theoretical framework for the decomposition of partial factor productivity in the presence of input-specific technical inefficiency. Based on Kuroda’s dual approach and using the theoretical foundations developed by Kopp, we decompose the growth rate of partial factor productivity into five sources, namely, changes in input-specific technical efficiency, substitution effect, technical change, the effect of scale economies and a homotheticity and input biased technological effect. The empirical model is based on a generalized self-dual Cobb-Douglas stochastic production frontier and on the methodological approach for measuring orthogonal input-specific technical efficiency suggested by Reinhard, Lovell and Thijssen. The model is applied to a panel data set of 723 cereal farms in Greece observed during the 1994-2003 cropping period obtained from FADN. The empirical results suggest that the labor productivity of cereal farms has been increased by 2.89 per cent annually. Technical change was found to be the main source of labor productivity (70.4%), while changes in technical efficiency also contributed significantly over the period analyzed (34.7%). On the other hand, substitution effect was found to affect negatively the rate of labor productivity (-14.2%).labor efficiency and productivity growth, multilateral production frontier

Decomposition of Labor Productivity Growth: A Multilateral Production Frontier Approach

This paper develops a parametric decomposition framework of labor productivity growth relaxing the assumption of labor-specific efficiency. The decomposition analysis is applied to a sample of 52 developed and developing countries from 1965-90. A generalized Cobb-Douglas functional specification is used taking into account differences in technological structures across group of countries to approximate aggregate production technology using Jorgenson and Nishimizu (1978) bilateral model of production. Measurement of labor efficiency is based on Kopp�s (1981) orthogonal non-radial index of factor-specific efficiency modified in a parametric frontier framework. The empirical results indicate that the weighted average annual rate of labor productivity growth was 1.43 per cent over the period analyzed. Technical change was found to be the driving force of labor productivity, while improvements in labor efficiency and human capital account approximately for the 22 per cent of that productivity growth.labor efficiency and productivity growth, multilateral production frontier

On the Growth-Maximizing Allocation of Public Investment

In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long-run equilibrium and we derive the growth-maximizing values of the shares of public investment allocated to the different types of public capital, as well as the growth-maximizing tax rate (amount of total public investment as a share of GDP). The empirical implication of the modelis that both the effects of the shares of public investment and the tax rate on the long-run growth rate are non-linear, following an inverse U-shaped pattern.