nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒06‒10
six papers chosen by
Philip Yu
Hong Kong University

  1. Plant-Level Nonconvexities and the Monetary Transmission Mechanism By Roman Sustek
  2. Playing Dominoes in Europe: An Empirical Analysis of the Domino Theory for the EU, 1962-2004 By Roland Rieder
  3. Green Cards and the Location Choices of Immigrants in the United States, 1971-2000 By David A. Jaeger
  4. The Accommodation Determinants of Seasonal Patterns By Javier Capó Parrilla; Antoni Riera Font; Jaume Rosselló Nadal
  6. Michael Dummett on social choice and voting By Maurice Salles (CREM-CNRS)

  1. By: Roman Sustek
    Abstract: Micro-level empirical evidence suggests that plant managers adjust production by utilizing capital along nonconvex margins. Existing models of the monetary transmission mechanism (MTM), however, assume that production units adjust output smoothly. The objective of this paper is to determine whether such plant-level nonconvexities affect the MTM in a quantitatively significant way. To this end we replace the smooth production function in a prototypical model of the MTM with heterogeneous plants that adjust output along three nonconvex margins: intermittent production, shiftwork, and weekend work. We calibrate the model such that steady-state utilization of these margins is in line with U.S. data. We find that the nonconvexities dampen the responses of aggregate economic activity and prices to monetary policy shocks by about 50 percent relative to the standard model, thereby significantly reducing the effectiveness of the MTM. Due to heterogeneity and discrete choices at the plant level, monetary policy affects the output decisions of only “marginal†plants – those close to being indifferent between alternative production plans. In equilibrium the measure of such plants is rather small. In addition, contrary to popular belief, the quantitative effects of monetary policy shocks on aggregate output do not significantly change with the degree of capacity utilization over the business cycle. The effects on inflation, however, do change substantially over the business cycle when monetary policy shocks are persistent.
    Keywords: Asymmetries, heterogenous plants, monetary transmission mechanism, nonconvexities, nonlinear approximation.
    JEL: E22 E23 E32 E52
    Date: 2005–12
  2. By: Roland Rieder (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: This paper addresses the question whether the domino theory of regionalism is a reasonable explanation for the growth in EU membership over the past forty years. In essence, this theory states that the conclusion of a new regional trade agreement or the deepening of an existing one will induce non-members to join the trade bloc. The empirical analysis proceeds in two stages. First, a gravity analysis shows that the EU was more attractive than EFTA since it triggered a higher degree of trade diversion. In a second step, a discrete choice model is used to assess the importance of variables reflecting domino effects relative to other possible determinants of EU expansion. The findings provide convincing evidence in support of the domino theory.
    Keywords: Regional trade agreements, Western Europe, gravity equation, panel econometrics, qualitative choice models
    JEL: C23 C25 F15
    Date: 2006–05
  3. By: David A. Jaeger (College of William and Mary and IZA Bonn)
    Abstract: This paper documents where immigrants who enter the U.S. with different types of visas ("green cards") choose to live initially and what determines those location choices. Using population data on immigrants from the Immigration and Naturalization Service from 1971 to 2000, matched to data on state characteristics from the Integrated Public Use Microsamples of the U.S. Census, I estimate conditional logit models with the 48 contiguous U.S. states as the choice set. Like previous researchers, I estimate that immigrants have a higher probability of moving to states where individuals from their region of birth represent a larger share of the state population, with relatives of legal permanent residents responding most to this factor. I also find that, in general, immigrants in all admission categories respond to labor market conditions when choosing where to live, but that these effects were the largest for male employment-based immigrants and, surprisingly, refugees.
    Keywords: admission categories, immigrants, settlement patterns, conditional logit
    JEL: J61 J18 C35
    Date: 2006–05
  4. By: Javier Capó Parrilla; Antoni Riera Font; Jaume Rosselló Nadal
    Abstract: Seasonal demand variations represent a central theme not only in the academic literature on tourism, but also in the domains of policy-making and practical tourism management. The literature review shows that there is a general agreement that certain demand characteristics like weather, school holidays or special events influence the shape of the seasonality. In order to present an alternative vision, this work explores which are the supply determinants of seasonality related to the accommodation services. The Balearic Islands (Spain) are used as a typical Mediterranean destination where seasonality figures are extreme. Results of the study show that those establishments with a high level of services tend to have a larger opening period during the year.
    Keywords: Accommodation, discrete choice models, seasonality
    Date: 2006–01
  5. By: Richard Barrett (LSE); Maurice Salles (CREM-CNRS)
    Date: 2006
  6. By: Maurice Salles (CREM-CNRS)
    Abstract: Michael Dummett worked on the theoretical aspects of aggregation of individual preferences and on the strategic aspects of voting theory. He also extended Black’s analysis of single-peaked preferences for majority rule to the case of voting games (majority games), offering a greater flexibility for the expression of voters’ preferences. He is also with Donald Saari one of the major advocates of the use of Borda’s rule in actual voting. In two books and a paper, he proposed many examples showing the advantages and defects of many voting rules used in the world
    Date: 2006

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