Applied Economics Letters

Mialon*, Hugo M.; Mialon, Sue H.

doi: 10.1080/13504850500193034pmid: N/A

For several harmful goods (e.g., junk food and cigarettes), less-harmful substitutes are available (e.g., light cigarettes and reduced-fat junk food). A simple individual-decision model is developed to analyse the effects of less-harmful substitutes on consumption and health outcomes.

Gerasimou, George

doi: 10.1080/13504850500191723pmid: N/A

This note provides evidence that the equilibrium between supply and demand in higher education in Greece is determined by what is argued to be the substitute for the non-existing market prices: the academic departments’ entrance grades. This leads to the investigation of some implications of a policy change in Greek higher education.

Isik, Murat

doi: 10.1080/13504850500192523pmid: N/A

This study develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility. It aims at modifying the theory of investment under uncertainty by incorporating decision makers’ risk preferences and allows explicitly analysing the impacts of risk aversion, uncertainty and irreversibility on decisions such as investment and resource allocations. It addresses the shortcomings of the commonly used expected utility and investment under uncertainty models by generalizing the theory of irreversible investment to allow for risk-averse investors. It was found that uncertainty, irreversibility and risk aversion are important determinants of the optimal timing of irreversible decisions. Ignoring risk preferences in real options models would lead to overestimation or underestimation of the magnitude of investments.

Cahan, Jared; Malone, Christopher B.; Powell, John G.; Choti, Udomsak Wong

doi: 10.1080/13504850500192895pmid: N/A

Real stock market returns in New Zealand are lower when the left-leaning Labour party is in power than under National party governments, in contrast to the USA where returns are higher under Democratic presidents than under right-leaning Republicans. The difference in real stock market returns between National and Labour is not reversed even when account is taken of the effect of the US political cycle and returns on New Zealand. The results of the study therefore suggest that the presidential puzzle does not transfer directly to other countries with two similar party democracies.

Hu, Wuyang

doi: 10.1080/13504850500192457pmid: N/A

The general term ‘type I extreme value distribution’ underlying the logit model is not fully precise. Through a case study, this study compares two models based on the distribution – one with the smallest specification and one with the largest. Results show these two models are different.

Martin, David; Kumar, Vikram

doi: 10.1080/13504850500192994pmid: N/A

Heteroscedasticity-correction masks signals from standardized residuals, so analysts should examine the residuals to identify outliers and should use likelihood dispersion to identify influential observations. These points are demonstrated with a model that examines the effect of exchange rate volatility on intra-industry trade.

Ishiyama, Ken-ichi; Saiki, Yoshitaka

doi: 10.1080/13504850500120318pmid: N/A

We numerically find unstable periodic solutions embedded in a chaotic attractor in a generalized Goodwin model with an interaction between two countries and focus on a class of simple periodic orbits extracted from them. We confirm that chaotic behaviour represented by the model is qualitatively and quantitatively related to the unstable periodic solutions. The viewpoint in this article is based on recent work in physics. The result implies significance and usefulness of unstable periodic solutions embedded in chaotic economic dynamics.

Haghiri, Morteza; Simchi, Alireza

doi: 10.1080/13504850500192424pmid: N/A

Using the analysis of residual deviance, the separability of input in the Quebec dairy industry between 1990 and 1998 is examined. A nonparametric production regression function based on the theory of generalized additive models is estimated by using the spline smoothing approach. Results support that all additive inputs are separable.

Duro, Juan Antonio

doi: 10.1080/13504850500184298pmid: N/A

International income polarization is mainly analysed through the use of EGR (Esteban et al., 1999). The main empirical results can be summarized as follows: first, polarization followed a curvilinear trajectory over time, with a slight increase up until the mid-1970s followed by a significant decrease; secondly, the evidence indicates that distributive inequality followed a similar pattern; and finally, the data suggest that the best simplified description of international income distribution, based on this approach, would be one structured around three income groups.

Ezcurra, Roberto; Pascual, Pedro

doi: 10.1080/13504850500245669pmid: N/A

The regional distribution of income inequality in the European Union between 1993 and 1998 is examined. The results obtained reveal the existence of a process of convergence in regional inequality levels over the period analysed. This was due basically to the reduction in income dispersion that took place in regions registering relatively high levels of inequality in 1993. Polarization in the distribution under study is also found to decrease, irrespective of the number of groups considered. Nevertheless, since the observed level of intradistributional mobility is low, the European regions tend, over time, to maintain their relative positions in terms of inequality. Finally, the analysis carried out highlights the relevance of the national component in explaining the dynamics of regional inequality distribution.