“Priors and Posteriors: Implications for Exporters”
While many new exporters cease exporting activity quickly, those that survive tend to thrive in their initial destination markets, and may expand to new markets. I develop a simple model that seeks to explain the dynamic export behavior of firms by incorporating uncertainty regarding product demand, which is resolved by entry into markets. My paper contributes to the literature on international trade by extending the work of Albornoz et al (2012), allowing for greater number of markets.
I assume that the demand for a firm's product is positively correlated across markets, such that while uncertainty regarding a prospective destination market can only be fully resolved through entry into the market, outcomes from other markets are informative. Firm productivity, however, is constant across markets and known to the producer. Consequently, the expansion behavior of a firm is driven by both the information value of an additional observation, as well as the expected profitability. As a result, the expansion speed of a firm will be related to beliefs regarding profitability: highly profitable firms will be more likely expand to multiple markets simultaneously, in contrast to other firms who choose to expand sequentially.
A key result is that sequential nature of expansion places great emphasis on the ranks of the destination markets: being more attractive than a similar market leads to more entry and different outcomes for entrants. While a reduction in trade barriers typically increases entry in all other markets, there are circumstances where entry increases at the expense of markets in close proximity.
“Capabilities and Input Choice”
This paper develops a model in which firms vary by both labor productivity and the quality of their output, with intermediate inputs of heterogeneous quality required in the production process. This paper contributes to the literature by building upon Sutton (2007), as well as Kugler Verhoogen (2012), to analyze the impact of an increased availability of intermediate inputs.
The model shows how input choice is affected by a firm's exogenously determined characteristics, more specifically the productivity and caliber (ability to produce quality output),
and how the distribution of firms responds to changes in factor prices. In doing so, this paper extends Sutton (2007), by allowing heterogeneous inputs, and a stark difference between the models is seen for low wage economies. Further, this paper examines the determinants of correlation between usage of high quality inputs and productivity, finding that, unlike Kugler Verhoogen (2012), a positive correlation need not exist for a given economy.
“Hit or Miss? Test Taking Behavior in Multiple Choice Exams”, with Pelin Akyol and Kala KrishnaWe model and estimate the decision to answer questions in multiple choice tests with negative
marking. Our focus is on the trade-off. between precision and fairness. Negative marking reduces
guessing, thereby increasing accuracy considerably. However, it reduces the expected score of
the more risk averse, discriminating against them. Using data from the Turkish University
Entrance Exam, we .find that students' attitudes towards risk differ according to their gender
and ability. Women and those with high ability are significantly more risk averse: nevertheless,
the impact on scores of such differences is small, making a case for negative marking.
"An Examination of Broadacre Farm Size and Performance in Western Australia", with Tim Lefroy and Ross Kingwell
We analyse a balanced panel of 250 farms in Western Australia using convergence analysis, examining changes in the relative size, output composition and financial performance of small, medium and large farms over the decade 2002 to 2011. Fitted exponential growth rates in key variables allow us to determine whether differences between small, medium and large farms are narrowing or widening. Although farms in each size category grew on average, there were no significant changes in the relative size of farms. Contrasting with earlier studies, smaller farms displayed a relative improvement in their performance, catching up to medium and larger farms.
"Estimation of Multiple Choice Exams", with Pelin Akyol and Kala Krishna
This paper presents an estimation procedure which can be used to analyze multiple choice exams where the data features individual item responses. We extend the model of Akyol et al, where the data for individual students was total score, allowing structural estimation of question difficulty and individual student ability to be estimated. The procedure also allows individual students' risk aversion to be directly estimated, in exams featuring penalties for incorrect answers. We perform the procedure on a small sample of students taking a mock exam in a preparatory school, and use the results to examine the efficacy of reduced form approaches. The model is also used to examine optimal question difficulties.
"Determinants of broadacre farming efficiency in Western Australia: a stochastic frontier analysis", with Tim Lefroy
We analyse a rich panel dataset of farm production to determine the potential for broadacre farms in Western Australia to increase productivity through exploiting economies of scale and increasing technical efficiency. Using stochastic frontier analysis, we find that the majority of farms are operating below the optimal scale and would benefit from expansion. Strong economies of scale are particularly prevalent for large farms, which are typically crop dominant. We also observe a reasonable proportion of farms significantly below the efficient frontier. On average farms are only producing 77 per cent of what they could produce if inputs were used efficiently. Determinants of technical inefficiency were examined in the efficiency effects model, incorporating a suite of business characteristics, socio-managerial characteristics and indicators of technological uptake. The adoption of technologies in the cropping industry was most strongly aligned with reducing inefficiency. Somewhat surprisingly, age and education characteristics were not found to have a significant effect on technical efficiency.