Catherine J. Morrison Paul

Adjusting Output and Productivity Indexes for Changes in the Terms of Trade

In this paper we employ index number theory in addressing the problem of adjusting real national income and real domestic product for changes in a countrys terms of trade. More specifically, using recent developments in the theory of production, we address the problems related to measuring: (i) real output produced and real input utilized by the private business sector;(ii) productivity growth or technical change; (iii) the effects on domestic real output of changes in the terms of trade; and (iv) the impact on final sales to domestic purchasers of changes in the balance of payments deficit, in a consistent accounting framework.This treatment of international trade allows us to undertake comparative statics analyses using only production theory, whereas in the traditional paradigm which treats traded goods as perfectly substitutable with a class of domestic goods, a general equilibrium framework is required. We illustrate our suggested solutions using U.S. data for the years 1968-82.

Public Infrastructure Investment, Interstate Spatial Spillovers, and Manufacturing Costs

Effects of public infrastructure investment on the costs and productivity of private enterprises have proven difficult to quantify empirically. One piece of this puzzle that has received little attention is spatial spillovers. We apply a cost-function model to 1982-1996 state-level U.S. manufacturing data, to untangle the private cost-saving effects of inter- and intrastate public infrastructure investment. We implement two spatial adaptations-including a spatial spillover index in the theoretical model, and allowing for spatial autocorrelation in the stochastic structure. Recognizing such spillovers both increases the estimated magnitude and significance of cost savings from intrastate public infrastructure, and augments these productive effects.

Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform

In this study, we consider the impacts of dramatic regulatory reform during the 1980s on the efficiency of farms in New Zealand, using unbalanced panel data. A translog distance function representing the multiple output and input technology and incorporating nonneutral regulatory impacts is used for the analysis. Determinants of technical inefficiency, including a regulatory variable, a time term, and a debt/equity ratio, are also incorporated in a one-step model estimated by maximum-likelihood, stochastic production frontier methods. We find evidence of regulatory-induced changes in output compositiontoward beef and deer, and away from wool, and especially lambbut little associated technical inefficiency. These patterns motivated investment in complementary capital, land, and beef/deer livestock inputs. Firms that were more flexible in their adaptation toward these new mixes adjusted to regulatory changes with less upheaval, so any existing inefficiency appears linked to debt/equity levels.

The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition

Empirical studies of skill-biased technological change are typically based on a simple production or cost function framework and limited information on technology and labor composition. In contrast, we simultaneously assess the impacts of trade, technology, and outsourcing on shifts in labor demand using a dynamic cost function framework and comprehensive measures of workforce composition and investment in technology. Our findings indicate that technological change has had the largest impact on changes in labor composition. However, the indirect impact of trade on shifts in employment augments its direct impact because trade stimulates computerization, which further exacerbates skill-biased technological change. Copyright 2001 by The editors of the Scandinavian Journal of Economics.

Market and Cost Structure in the U.S. Beef Packing Industry: A Plant-Level Analysis

A resurgence of consolidation in the U.S. meat packing industry in the past few decades has stimulated academic and policy debate. Issues raised include the role of cost economies in driving these patterns, and the effects on the agricultural sector (cattle producers) from market power. Here, plant level cost and revenue data for U.S. beef packing plants are used to estimate a cost‐based model incorporating cattle‐ and output‐market pricing behavior. The robust results indicate little market power exploitation in either the cattle input or beef output markets, and that any apparent evidence is counteracted by cost efficiencies such as utilization and scope economies.A resurgence of consolidation in the U.S. meat packing industry in the past few decades has stimulated academic and policy debate. Issues raised include the role of cost economies in driving these patterns, and the effects on the agricultural sector (cattle producers) from market power. Here, plant level cost and revenue data for U.S. beef packing plants are used to estimate a cost-based model incorporating cattle- and output-market pricing behavior. The robust results indicate little market power exploitation in either the cattle input or beef output markets, and that any apparent evidence is counteracted by cost efficiencies such as utilization and scope economies. Copyright 2001, Oxford University Press.

Capacity and Capacity Utilization in Common-pool Resource Industries

Excess capacity poses one of the most pressingproblems that arise when industries exploitcommon-pool natural resources. It entailsover-investment in the capital stock andexcessive use of variable inputs, and placesadditional exploitation pressures on theresource stocks. Confusion persists over theappropriate definition and measurement ofcapacity and capacity utilization for theseindustries. But understanding capacity and itsmeasurement is necessary to properly design acapacity management program. This paperaddresses these issues by overviewing theconceptual and theoretical bases for capacityand capacity utilization measurement,identifying specific problems for common-poolresources, outlining alternative methodologiesfor their measurement, and illustrating the useof these definitions and measurement methods ina fisheries case study.

Cost Economies and Market Power: The Case of the U.S Meat Packing Industry

Increasing size of establishments and resulting concentration in U.S. industries may stem from various types of cost economies. In particular, scale economies arising from technological factors embodied in plant and equipment may be a driving force for such market structure changes. In this case, typical market power measures like Lerner indices can be misleading: if scale (cost) economies prevail, cost efficiencies rather than market deficiencies may actually underlie the observed patterns. In this study, I provide measures of scale economies and market power for the U.S. meat packing industry, whose increased consolidation and concentration have raised great concern in policy circles. The results suggest that this trend has been motivated by cost economies, but that little excess profitability exists, and on the margin the potential for taking further advantage of such economies has become minimal.

External Capital Factors And Increasing Returns In U.S. Manufacturing

Theoretical models of endogenous growth identify capital accumulation and returns as a potential stimulus to economic growth. Existing empirical studies, however, are based on a limited notion of these returns, which follows from the simple production function framework used for estimation. The purpose of this study is to examine growth issues using dynamic cost function estimation. This methodology enables us to broaden the concept of returns to include returns arising from short-run quasi-fixity of private capital, long-run (internal) scale economies, and external knowledge factorsoverall investment in research (R&D), technology (high-tech capital), and education (human capital). Based on detailed industry-level data, we find evidence of increasing returns to scale arising from cost savings on variable inputs, although diminishing returns to capital are prevalent. Our results also show that knowledge factors augment growth. More importantly, they appear to explain a substantial proportion of measured scale economies.

Outsourcing, Productivity, and Input Composition at the Plant Level

We evaluate the productivity and input composition effects of outsourcing (or subcontracting) for Turkish textile and apparel manufacturing plants. We analyze differences in performance indicators for plants that subcontract inputs or outputs, and find that plants that outsource internationally perform better than those that outsource domestically. We evaluate labour productivity gaps and find that more productive plants both initiate outsourcing and subsequently increase their productivity. We then estimate a flexible production function, controlling for simultaneity and selection bias, and find that higher productivity from input subcontracting involves greater skilled labour intensity but the reverse is true for output subcontracting.

Multi-Output, Nonfrontier Primal Measures of Capacity and Capacity Utilization

This article implements an econometric approach for generating primal capacity output and utilization measures for fisheries. In situations where regulatory, environmental, and resource conditions affect catch levels but are not independently identified in the data, frontier-based capacity models may interpret such impacts as production inefficiency. However, if such inefficiencies are unlikely to be eliminated, the implied potential output increases may be unrealistic. We develop a multi-output, multi-input stochastic transformation function framework that permits various assumptions about how output composition may change when operating at full capacity. We apply our model to catcher-processor vessels in the Alaskan pollock fishery.