Microeconomic Theory in Canada

 
 

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A website containing information about micro theory in Canada. This contains a working paper repository, linked to RePEc. Also links to the Canadian Economic Theory Conference.

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Recent Papers

  • Ambiguous Correlation
    Epstein, Larry G. , , lepstein@bu.edu
    Halevy, Yoram, , yoram.halevy@ubc.ca
    Many decisions are made in environments where outcomes are determined by the realization of multiple random events. A decision maker may be uncertain how these events are related. We identify and experimentally substantiate behavior that intuitively reflects a lack of confidence in their joint distribution. Our findings suggest a dimension of ambiguity which is different from that in the classical distinction between risk and "Knightian uncertainty."
    Creation Date: 2017-02-15   Revision Date: 2017-02-15
  • Productivity Measurement in the Public Sector: Theory and Practice
    Diewert, W. Erwin, , erwin.diewert@ubc.ca
    In many sectors of the economy, governments either provide various goods and services at no cost or at highly subsidized prices. It is usually possible to measure the quantities of these government sector outputs and inputs as well as input prices but the problem is how to estimate the corresponding output prices. Once meaningful output prices have been estimated, the measurement of productivity growth using index numbers can proceed in the usual manner. This chapter suggests three possible general methods for measuring public sector output prices and quantities. If little or no information on the quantity of nonmarket outputs produced is available, then the method recommended in the System of National Accounts 1993 must be used, where aggregate output growth is set equal to aggregate input growth. If information on nonmarket public sector outputs is available then the second general method sets the missing output prices equal to the unit costs of producing each output while the third general method uses purchaser’s valuations to determine the missing output prices. Specific measurement issues in the health and education sectors are discussed. Similar output and productivity measurement issues arise in the regulated sectors of an economy since regulated producers are forced to provide services at prices that are not equal to marginal or average unit costs. Finally, the problems associated with measuring capital services are discussed. The focus of the chapter is on the use of index number methods to measure the Total Factor Productivity of production units in the public and regulated sectors.
    Creation Date: 2017-02-02   Revision Date: 2017-02-02
  • Investment and Uncertainty With Time to Build: Evidence from U.S. Copper Mining
    Marmer, Vadim, , vadim.marmer@ubc.ca
    Slade, Margaret, , mslade@mail.ubc.ca
    The standard real-options model predicts that increased uncertainty discourages investment. When projects are large and take time to build, however, this prediction can be reversed. We investigate the investment/uncertainty relationship empirically using historical data on opening dates of new U.S. copper mines - large, irreversible projects with substantial construction lags. Both the timing of the decision to go forward and the price thresholds that trigger that decision are assessed. We find that, in this market, greater uncertainty encourages investment and lowers the price thresholds for many mines.
    Creation Date: 2016-12-22   Revision Date: 2016-12-22
  • Productivity Measurement in the Public Sector
    In many sectors of the economy, governments either provide various goods and services at no cost or at highly subsidized prices. It is usually possible to measure the quantities of these government sector outputs and inputs as well as input prices but the problem is how to estimate the corresponding output prices. Once meaningful output prices have been estimated, the measurement of productivity growth using index numbers can proceed in the usual manner. This chapter suggests three possible general methods for measuring public sector output prices and quantities. If little or no information on the quantity of nonmarket outputs produced is available, then the method recommended in the System of National Accounts 1993 must be used, where aggregate output growth is set equal to aggregate input growth. If information on nonmarket public sector outputs is available then the second general method sets the missing output prices equal to the unit costs of producing each output while the third general method uses purchaser’s valuations to determine the missing output prices. Specific measurement issues in the health and education sectors are discussed. Similar output and productivity measurement issues arise in the regulated sectors of an economy since regulated producers are forced to provide services at prices that are not equal to marginal or average unit costs. Finally, the problems associated with measuring capital services are discussed. The focus of the chapter is on the use of index number methods to measure the Total Factor Productivity of production units in the public and regulated sectors.
    Creation Date: 2016-11-25   Revision Date: 2016-11-25
  • Developing Land and Structure Price Indexes for Ottawa Condominium Apartments
    Diewert, W. Erwin, , erwin.diewert@ubc.ca
    Huang, Ning, , nings.huang@canada.ca
    Kate Burnett-Isaacs, Kate, , kate.burnett-isaacs@canada.ca
    Measuring the service flow and the stock value of condominium apartments in Canada and decomposing these values into constant quality price and quantity components is important for many purposes. In addition, the System of National Accounts requires that these service flows and stock values for condos be decomposed into constant quality land and structure components. In Canada and most other countries, such a land and structure decomposition of condominium apartment sale prices does not currently exist. In this paper, we provide such a decomposition of condominium apartment sales in Ottawa for the period 1996-2009. Specific attention is paid to the roles of communal land and structure space, as well as building commercial space, on condominium apartment unit selling prices. Key findings include methods to allocate land and building space to a single condominium unit, identifying the characteristics that best explain condominium prices, and developing an average depreciation rate for condos for the 14 year time period.
    Creation Date: 2016-11-23   Revision Date: 2016-11-23