Estimating Intertemporal Allocation Parameters using Synthetic Residual Estimation

We present a novel structural estimation procedure for models of intertemporal allocation. This is based on modelling expectation errors directly; we refer to it as Synthetic Residual Estimation (SRE). The flexibility of SRE allows us to account for measurement error in consumption and for heterogeneity in discount factors and coefficients of relative risk aversion. An investigation of the small sample properties of the SRE estimator indicates that it dominates GMM estimation of both exact and approximate Euler equations in the case when we have short panels with noisy consumption data. We apply SRE to two panels drawn from the PSID and estimate the joint distribution of the discount factor and the coefficient of relative risk aversion. We reject strongly homogeneity of the discount factors and the coefficient of relative risk aversion. We find that, on average, the more educated are more patient and more risk averse than the less educated. Within education strata, patience and risk aversion are negatively correlated

Dynamic binary outcome models with maximal heterogeneity

Most econometric schemes to allow for heterogeneity in micro behaviour have two drawbacks: they do not fit the data and they rule out interesting economic models. In this paper we consider the time homogeneous first order Markov (HFOM) model that allows for maximal heterogeneity. That is, the modelling of the heterogeneity does not impose anything on the data (except the HFOM assumption for each agent) and it allows for any theory model (that gives a HFOM process for an individual observable variable). `Maximal' means that the joint distribution of initial values and the transition probabilities is unrestricted. We establish necessary and sufficient conditions for the point identification of our heterogeneity structure and show how it depends on the length of the panel. A feasible ML estimation procedure is developed. Tests for a variety of subsidiary hypotheses such as the assumption that marginal dynamic effects are homogeneous are developed. We apply our techniques to a long panel of Danish workers who are very homogeneous in terms of observables. We show that individual unemployment dynamics are very heterogeneous, even for such a homogeneous group. We also show that the impact of cyclical variables on individual unemployment probabilities differs widely across workers. Some workers have unemployment dynamics that are independent of the cycle whereas others are highly sensitive to macro shocks

Nonparametric methods for the characteristic model

Characteristics models have been found to be useful in many areas of economics. However, their empirical implementation tends to rely heavily on functional form assumptions. In this paper we develop a revealed preference-based nonparametric approach to characteristics models. We derive the minimal necessary and sufficient empirical conditions under which data on the market behaviour of individual, heterogeneous, pricetaking consumers are nonparametrically consistent with the consumer characteristics model. Where these conditions hold, we show how information may be recovered on individual consumer’s marginal valuations of product attributes. In some cases marginal valuations are point identified and in other cases we can only recover bounds. Where the conditions fail we highlight the role which the introduction of unobserved product attributes can play in rationalising the data. We implement these ideas using consumer panel data on the Danish milk market

Evaluation of Selected Chemical Processes for Production of Low-cost Silicon, Phase 3

Refinements of the design of the 50 MT/year Experimental Process System Development Unit were made and competitive bids were received from mechanical, electrical, and structural contractors. Bids on most of the equipment were received and cataloged. Emergency procedures were defined to counter a variety of contingencies disclosed in operations and safety reviews. Experimental work with an electrolytic cell for zinc chloride disclosed no significant increase in power efficiency by steps taken to increase electrolyte circulation. On the basis of materials compatibility and permeability tests, 310 stainless steel was chosen for the shell of the fluidized-bed reactor and SiC-coated graphite for the liner

Evaluation of selected chemical processes for production of low-cost silicon, phases 1 and 2

A miniplant, consisting of a 5 cm-diameter fluidized-bed reactor and associated equipment was used to study the deposition parameters, temperature, reactant composition, seed particle size, bed depth, reactant throughput, and methods of reactant introduction. It was confirmed that the permissible range of fluidized-bed temperature was limited at the lower end by zinc condensation (918 C) and at higher temperatures by rapidly decreasing conversion efficiency. Use of a graded bed temperature was shown to increase the conversion efficiency over that obtained in an isothermal bed. Other aspects of the process such as the condensation and fused-salt electrolysis of the ZnCl2 by-product for recycle of zinc and chlorine were studied to provide information required for design of a 50 MT/year experimental facility. In view of the favorable technical and economic indications obtained, it was recommended that construction and operation of the 50 MT/year experimental facility be implemented

HABITS AND HETEROGENEITY IN DEMANDS: A PANEL DATA ANALYSIS

We examine demand behaviour for intertemporal dependencies, using Spanishpanel data. We present evidence that there is both state dependence and correlatedheterogeneity in demand behaviour. Our specific findings are that food outside thehome, alcohol and tobacco are habit forming whereas clothing and small durablesexhibit durability. We conclude that demand analyses using cross-section data thatignore these effects may be seriously biased. On the other hand, the degree ofintertemporal dependence is not sufficiently strong to make composite `consumption'significantly habit forming, as has been suggested in some recent analyses.Habits, State dependence, correlated heterogeneity.

Dynamic binary outcome models with maximal heterogeneity

Most econometric schemes to allow for heterogeneity in micro behaviour have two drawbacks: they do not fit the data and they rule out interesting economic models. In this paper we consider the time homogeneous first order Markov (HFOM) model that allows for maximal heterogeneity. That is, the modelling of the heterogeneity does not impose anything on the data (except the HFOM assumption for each agent) and it allows for any theory model (that gives a HFOM process for an individual observable variable). `Maximal' means that the joint distribution of initial values and the transition probabilities is unrestricted. We establish necessary and sufficient conditions for the point identification of our heterogeneity structure and show how it depends on the length of the panel. A feasible ML estimation procedure is developed. Tests for a variety of subsidiary hypotheses such as the assumption that marginal dynamic effects are homogeneous are developed. We apply our techniques to a long panel of Danish workers who are very homogeneous in terms of observables. We show that individual unemployment dynamics are very heterogeneous, even for such a homogeneous group. We also show that the impact of cyclical variables on individual unemployment probabilities differs widely across workers. Some workers have unemployment dynamics that are independent of the cycle whereas others are highly sensitive to macro shocks.Discrete choice, Markov processes, Nonparametric identification, Unemployment dynamics

The identification of a mixture of first order binary Markov Chains

Let S be the number of components in a finite discrete mixing distribution. We prove that the number of waves of panel being greater than or equal to 2S is a sufficient condition for global identification of a dynamic binary choice model in which all the parameters are heterogeneous. This model results in a mixture of S binary first order Markov ChainsDiscrete choice, Markov processes, Global identification