The letter notes that a generalized RESET test can be employed as a test for misspecification in a variety of parametric and semi-parametric micro-econometric models. The test's performance is illustrated using three models commonly used in labour supply studies: the linear, censored (Tobit),...

Investors use the Black-Scholes option pricing model to find theoretically correct option prices. These prices are then compared to market prices to discover mispriced options. However, a difficulty arises in the use of the model, because one variable in the model must be estimated: the...

This paper revisits the issue of the efficiency of the Islamic interest-free banking system. Recently, Yousefi et al. (1997) used a testing methodology proposed in Darrat (1988) and claimed that the evidence does not support interest-free banking in the case of Iran. However, by their own...

New informational technologies have led to a rebirth of interest in primal production functions. This study revisits the vexing question of the estimation of the Cobb-Douglas production function given zero input levels for some observations. A resampling technique is proposed that produces a...

This paper examines the inflationary consequences of elected political parties in Greece before and after its commitment to the Single European Act (SEA). It is shown that prior to the SEA there is evidence of an inflation bias following elected Socialist governments in Greece, whereas after the...

International capital mobility in Taiwan is tested by estimating the regime-switching investment-saving correlation. A Markov-switching model is applied which allows the samples to be drawn from two different regimes; high mobility and low mobility. Empirical results are investigated and...

This paper investigates whether equity market volatility in one major market is related to volatility elsewhere. This paper models the daily conditional volatility of equity market wide returns as a GARCH-(1,1) process. Such a model will capture the changing nature of the conditional variance...

The paper tests the export-led growth hypothesis in Ireland over the last 40 years using the modern econometric analysis of nonstationary time series. It is found that over the 1950-1990 period there is no long-run relationship between real GDP and export volume and no evidence for the...

The roots of time series models are important for analysing model dynamics and have a special importance in the unit root and co-integration literature. In this paper known results about the equivalence of state space and auto-regressive moving-average (ARMA) models are exploited to give better...

The paper utilizes the methodology proposed by Johnson and Solon (American Economic Review, 76 (5), 1117-1125, 1986) to examine the impact of job segregation on the gender wage gap in the UK in 1991. The results suggest that despite implementation of the UK 1983 Equal Pay Amendment there remains...