Economic overview: Queens and the region
Remarks at Queens Chamber of Commerce and Queens Economic Development Corporation, Flushing, New York City.
Housing and the economic recovery
Remarks at the New Jersey Bankers Association Economic Forum, Iselin, New Jersey.
The credit slowdown of 1989-1991: the role of supply and demand
The multiple unit auction with variable supply
The theory of multiple unit auctions traditionally assumes that the offered quantity is fixed. I argue that this assumption is not appropriate for many applications because the seller may be able and willing to adjust the supply to the bidding. In this paper I address this shortcoming by analyzing a multi-unit auction game between a monopolistic seller who can produce arbitrary quantities at constant unit cost, and oligopolistic bidders. I establish the existence of a subgame-perfect equilibrium for price discriminating and for uniform price auctions. I also show that bidders have an ...
Likelihood-preserving normalization in multiple equation models
Causal analysis in multiple equation models often revolves around the evaluation of the effects of an exogenous shift in a structural equation. When taking into account the uncertainty implied by the shape of the likelihood, we argue that how normalization is implemented matters for inferential conclusions around the maximum likelihood (ML) estimates of such effects. We develop a general method that eliminates the distortion of finite-sample inferences about these ML estimates after normalization. We show that our likelihood-preserving normalization always maintains coherent economic ...
Why small businesses were hit harder by the recent recession
Although both large and small businesses felt the sting of job losses during the 2007-09 downturn, small firms experienced disproportionate declines. A study of the recession?s employment effect on small firms suggests that poor sales and economic uncertainty were the main reasons for their weak performance and sluggish recovery?problems that affected large firms too, but to a lesser degree. Although a tightened credit supply constrained some small firms, weak consumer demand for the firms? products and services was a more pressing factor, reducing revenues and dampening new investment ...
Bad debt rising
Charge-offs on credit card loans are rising sharply. While many analysts blame this trend on an expanding supply of credit cards, a closer look reveals the importance of two demand factors--wealth and the share of the population at peak borrowing age--in explaining the increase in bad debt.
Estimating demand elasticities in a differentiated product industry: the personal computer market
Supply and demand functions are typically estimated using uniform prices and quantities across products, but where products are heterogeneous, it is important to consider quality differences explicitly. This paper demonstrates a new approach to doing this by employing hedonic coefficients to estimate price elasticities for differentiated products in the market for personal computers. Differences among products are modeled as distances in a linear quality space derived from a multi-dimensional attribute space. Heterogeneous quality allows for the estimation of varying demand elasticities among ...
The effect of satellite entry on product quality for cable television
In vertically differentiated markets, the effects of firm entry are contingent upon whether incumbent firms can respond to entry by adjusting product quality in addition to simply lowering prices. Using market-level data, I estimate a structural model of supply and demand for subscription television that takes into account the endogeneity of quality choice. Using counterfactual analysis, I decompose the effect of satellite entry on existing cable into two components: the conventional price response and the effect of endogenous quality adjustments (measured by changes in programming content). ...
Happy hour economics, or how an increase in demand can produce a decrease in price
The standard supply-and-demand model is typically an economist?s most important analytical tool, but in some situations it does not capture the features of interest. For example, during ?happy hour,? bars near workplaces sell a higher-than-usual quantity of alcoholic beverages at a lower-than-usual price. This practice makes little sense using the standard competitive model, but an alternative model?the model of monopolistic competition?provides the needed analytic framework. ; This article provides a step-by-step construction of a monopolistic competition model in which many firms each ...