Michael P. Murray

A Drunk and Her Dog: An Illustration of Cointegration and Error Correction

Abstract If there exists a stationary linear combination of nonstationary random variables, the variables combined are said to be cointegrated. A humorous example of a drunk and her dog illustrates...

Subsidized and Unsubsidized Housing Stocks 1935 to 1987: Crowding out and Cointegration

Crowding out arises in many economic contexts, from the macro concern that deficit spending might crowd out investment to the micro concern that increased employment of women might result in fewer jobs for men. Here I ask whether subsidized housing crowds out unsubsidized housing in the United States, applying the econometric tools of cointegration analysis. Such crowding out proves to require stringent restrictions on the coefficients of the cointegrating relationships that link housing stocks with one another and with other economic variables. These restrictions also apply to testing for other crowding out phenomena.I find that public housing has steadily added to the total stock of housing since its inception in 1935. In contrast, I find that moderate-income, conventionally financed, subsidized housing, such as the Section 235 and 236 programs that accounted for more than 1.5 million new units between 1960 and 1987, most likely adds little or nothing to the total housing stock. These findings speak against recent proposals to provide subsidies to developers who build dwellings for moderate income Americans but offer qualified encouragement to those who advocate expansion of the conventional public housing program.

The Demand for Electricity in Virginia

A demand study of the Virginia Electric Power Co. is described as covering all sectors and customer classes and including many of the factors omitted in previous empirical studies, such as declining block price structure, seasonal variations, less aggregated data, and an integrated analysis of average demand with peak demand. Four conclusions are drawn: (1) when real incomes and real electric power prices are rising, load factor deteriorates; (2) there are variations in demand elasticity within a service area; (3) future demand forecasts should include an accounting of alternative fuel costs; and (4) there is a significant difference between modeled and unmodeled forecasts. 13 references.

When is the Standard Analysis of Common Property Extraction under Free Access Correct? A Game‐Theoretic justification for Non‐Game‐Theoretic Analyses

Analyses of common property extraction under free access follow two distinct paths, traditional and game‐theoretic, giving rise to two standard methodologies. One methodology avoids game‐theoretic analysis by assuming that aggregate extraction in each period induces fel rent dissipation. The second methodology solves for the Marko‐perfect equilibrium of an n‐player extraction game investigating aggregate behavior over time as n → ∞. We show by example that these coexisting standard methodologies can yield conflicting predictions. We then provide conditions, relatively easy to satisfy, sufficient for the two approaches to yield the same predictions.

Hedonic prices and composite commodities

Abstract In this paper we conjecture and, to an extent, prove that recently noted restrictions required for the logical coherence and empirical relevance of hedonic price models make these models no more general than traditional housing services models. In particular, intra-urban variation in hedonic prices may not be substantively related to market equilibration at all, and therefore is not evidence for the existence of housing sub-markets. Moreover, in the case of jointly produced housing characteristics, the hedonic price models are found to be less general than the traditional homogeneous housing services models.

Census adjustment and the distribution of federal spending

In 1989, programs that use population counts to determine the distribution of their funds transferred

Why Manufacturing Firms Produce Some Electricity Internally

236 per capita to state and local governments. If the 1990 census were adjusted to reflect undercounting, about 40% of state and local governments would receive increased grants averaging

A potential hazard of housing allowances for public housing

56 per miscounted person; other jurisdictions would lose an almost equal amount of grant money. The surprisingly small reallocations arise because 1) total funds allocated by population are essentially fixed; 2) allocations depend on other factors in addition to population; and 3) programs vary as to whether they allocate funds in direct or inverse proportion to population.

Groundwater arsenic and education attainment in Bangladesh

Many manufacturers in developing countries produce their own electricity because the public supply is unavailable or unreliable. The authors develop a model of the firm in which electricity is produced internally, with scale economies. The model explains the observed behavior (prevalent in Nigeria, common in Indonesia, and rare in Thailand) that firms supplement their purchases of publicly produced electricity with electricity produced internally. To prepare an econometric estimate, they specify a translog model. In Nigeria, where firms exhibit excess capacity, generators are treated as a fixed input, whereas in Indonesia, where firms are expanding, they are variable. They confirm strong scale economies in internal power production in both Nigeria and Indonesia. Shadow price analysis for both countries shows that smaller firms would pay much more for public power than larger firms would. Instead of giving quantity discounts, public monopolies should charge the larger firms more and the smaller firms less than they presently charge. In Nigeria, the large firms would make intensive use of their idle generating capacity, while in Indonesia their would expand their facilities. In both countries, small users would realize savings by having to rely less on expensive endogenous power.

Avoiding the Pitfalls of Instrumental Variables Estimation with Few or Many Instruments

Abstract Benefit estimates indicate a large number of small households would emigrate from public housing if faced with an either-or choice between public housing and a housing allowance. Moreover, waiting lists are not sufficiently long to replace the emigres, so vacancy rates for small apartments might run as high as 55% under such a scheme. Raising public housing rents and making public housing tenants eligible for housing allowances seems a viable way to reduce emigration, although the scheme tried here, which sets rents equal to operating costs, does not eliminate emigration or vacancies entirely.