Most econometric methods for testing the proposition of long-run monetary neutrality rely on the assumption that money and real output do not cointegrate. This paper argues that these results can be attributed in part to the low power of univariate tests, and that a violation of the noncointegration assumption is likely to result in a nonrejection of the neutrality proposition. To alleviate thi...

In this article we analyze the determinants of the functional distribution of government expenditure using for this purpose the models of the median voter's demand common in public choice literature. First of all, we review the economic literature on the factors affecting each component of government expenditure. Then, secondly, we develop a demand model of expenditure structure and we estimate...

Using company account data for the US and four European countries this paper analyses the impact of ICT spillovers on companies’ performance. We use different definitions of spillovers to account for inter and intra-industry spillover effects, as well as assessing the presence of spillovers from the US to Europe. We also look at the possibility that spillovers might take some time to materialis...

We develop a hierarchical Bayesian approach for inference in random coefficient dynamic panel data models. Our approach allows for the initial values of each unit’s process to be correlated with the unit-specific coefficients. We impose a stationarity assumption for each unit’s process by assuming that the unit-specific autoregressive coefficient is drawn from a logitnormal distribution. Our me...

Crime, Prosecutors, and the Certainty of Conviction This paper tests predictions of a structural, augmented supply-of-offenders model regarding the relative effects of police, public prosecution and courts, respectively, on crime. Using detailed data on the different stages of the criminal prosecution process in Germany, empirical evidence suggests that public prosecutors and their influence on...

The stochastic frontier model used for continuous dependent variables is extended to accommodate output measured as a discrete ordinal outcome variable. Conditional on the inefficiency error, the assumptions of the ordered probit model are adopted for the log of output. Bayesian estimation utilizing a Gibbs sampler with data augmentation is applied to a convenient re-parameterisation of the mod...

Estimation of the dynamic error components model is considered using two alternative linear estimators that are designed to improve the properties of the standard firstdifferenced GMM estimator. Both estimators require restrictions on the initial conditions process. Asymptotic efficiency comparisons and Monte Carlo simulations for the simple AR(1) model demonstrate the dramatic improvement in p...

The consensus of the aid effectiveness literature is that foreign aid is effective at spurring economic growth in recipient countries. However, economic growth is heterogeneous in nature, driven by a number of different activities within an economy. This paper contributes to the literature by disaggregating the Gross Domestic Product of recipients in order to investigate the type of economic gr...

This paper argues that the Phillips curve–wage curve controversy cannot be settled within the conventional testing frameworks and suggests an alternative test, which builds on the model of Blanchard and Katz (1997). Using long macro data for the OECD countries, the evidence gives very strong support for the Phillips curve and indicates that wage behaviour is no different among the OECD countrie...

In panel stochastic frontier models, the Fixed Effects (FE) approach produces biased technical efficiency scores when time-invariant variables are important in the production process, and the Random Effects (RE) approach imposes distributional assumptions about the inefficiency. Moreover, technical efficiency scores obtained from these models are biased when the sample contains a large number o...