This paper proposes a new approach for analyzing the relationship between macroeconomic factors and the income distribution. The conventional method of analysis is regression of summary inequality indices on variables such as the unemployment and inflation rates. Building on the lessons from recent advances in time-series econometrics, we suggest instead that one should first fit a parametric f...

We estimate Japanese banking inefficiency and the shadow price of problem loans by treating problem loans as a jointly produced undesirable by-product of the loan production process. Our method uses the directional output distance function of Färe et al. [R. Färe, S. Grosskopf, D.-W. Noh, W.L. Weber, Characteristics of a polluting technology: Theory and practice, Journal of Econometrics 126 (20...

This article assesses the role of simulation methods in econometrics pedagogy. Technological advances have increased researchers’ abilities to use simulation methods and have contributed to a greater presence of simulation-based analysis in econometrics research. Simulations can also have an important role as pedagogical tools in econometrics education by providing a data-driven medium for diff...

Econometrics is seen as the dominant method in terms of applicability, accuracy and efficiency in economic science. It is widely used and other methods have been reduced to marginal contributions. Econometricians behave as if their techniques were universal when in fact they are not. If alternative methods are accepted, one can largely eliminate the restrictions and distance to reality of econo...

Instrumental variables are widely used in applied econometrics to achieve identification and carry out estimation and inference in models that contain endogenous explanatory variables. In most applications, the function of interest (e.g., an Engel curve or demand function) is assumed to be known up to finitely many parameters (e.g., a linear model), and instrumental variables are used identify ...

Using the most recently available data, this paper estimates the price and income elasticities of gasoline demand in the United States from a semiparametric smooth coefficient model. The econometric approach provides more flexibility by allowing functional coefficients to accommodate heterogeneity in gasoline demand. Instrumental variables are used to correct for the potential endogeneity of th...