234
Journal of Applied Economics
budgetary appropriations affect the behavior of competitive tendering and type of
contract distribution in very different and non-systematic ways. An econometric
approach in modeling the behavior of LCPAF is expected to be of limited use,
given the very small sample size. Nevertheless, the modeling was done for purposes
of illustration and to further test for whether competitive tendering affected contract
distribution. The inclusion of LNASAnc at all stages of the relevant estimation
revealed no explanatory power of the relevant variable in affecting the behavior of
LCPAF. Table 3 shows that budgetary appropriations and program-specific policies
(s2001) are important determinants of the behavior of LCPAF since the early 1980s.
The results in Table 3 are not very good in terms of the diagnostic analysis,
given the presence of autocorrelation. The use of first differences, lags, or tests for
omitted variables (LNASAnc) did not improve the performance. It must be noted
that the limitations of econometric approaches in explaining the behavior of NASA’s
contract distribution through time are significant. Limited sample range availability
is a severe constraint on top of the inherent constraint of dealing with variables
that relate to centrally controlled procurement choices. The illustration purposes
of this exercise further reinforce the visual evidence that post-mid-1990s there has
been a decrease in LCPAF, which indicates that NASA’s contract distribution is
unlikely to compensate for the reduction in competitive tendering for the same
time-period, as a rent-control mechanism.
|
Table 3. Modelling LCPAF by OLS (1983 to 2003) | ||||
|
Variable |
Coefficient |
Std.Error |
t-value |
r2 |
|
LSENASA |
0.85 |
0.23 |
3.69 |
0.43 |
|
Constant |
-3.91 |
2.17 |
-1.80 |
0.15 |
|
s2001 |
-0.32 |
0.09 |
-3.80 |
0.43 |
R2 = 0.57 F(2, 16) = 5.34 [0.02] DW = 0.66; RSS = 0.35 for 3 variables and 21 observations.
The diagnostic tests reveal a problem of autocorrelation, but no problems with ARCH
effects, or normality of the error term (probabilities in parenthesis):
AR 1- 2F(2, 16) = 5.34 [0.02]
ARCH F(1, 16) = 2.08 [0.17]
Normality Chi(2)= 0.30 [0.86]
Note: for an explanation of the variables and data sources, see Tables 1 and 2.
In the absence of contestability from foreign firms in the US domestic public
space market, this appears to be in line with the results of Florens et al (1996). In