Patrick McCarthy


Member Of:
  • School of Economics
  • Center for Paper, Business and Industry Studies
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Office Location:
Old CE Building, Room 216
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Dr. Patrick McCarthy is a Professor in the School of Economics in the Ivan Allen College of Liberal Arts and Director of the Center for Paper Business and Industry Studies (CPBIS) at Georgia Institute of Technology. His research areas include transportation economics, industry studies, regulation, and applied econometrics. He is author of Transportation Economics Theory and Practice: A Case Study Approach (Blackwell Publishers, 2001), has published widely in academic journals and edited volumes, and has received research funding from the Sloan Foundation, National Institutes of Health, Georgia Department of Transportation, Georgia Tech University Transportation Center, the Fedearl Aviation Administration, National Science Foundation, and AAA Foundation for Traffic Safety. He is on the editorial boards of Transportation Research: Part E and Journal of Transport Literature, is incoming President of the Transportation Research Forum, and current President of the Transportation and Public Utilities Group.  Prior to Georgia Tech, he spent two years at Concordia University (Montreal, Canada) and twenty-two years at Purdue University (West Lafayette, Indiana). He has held visiting positions in Greece, Singapore, Germany, and China.

  • Ph.D., Claremont Graduate University
  • B.A., University of San Diego
Research Fields:
  • Applied Econometrics
  • Applied Microeconomics
  • Economic Development
  • Economic Growth and Institutions
  • Economics of the Firm
  • Industrial Organization
  • Industry Studies
  • Paper and Pulp Industry
  • Policy Analysis
  • Regulations
  • Regulatory Reform
  • Transportation Economics
Courses Taught:
  • ECON-2106: Prin of Microeconomics
  • ECON-4430: Transportation Economics
  • ECON-6121: Research Methods
  • ECON-6162: Discrete Choice Econ
  • ECON-6341: Transportation Economics
  • ECON-7025: Empirical Res Methods
  • ECON-7026: Microeconomet Analysis
Selected Publications


  • Transportation Economics Theory and Practice: A Case Study Approach


    Unlike any other book available, this collection uses a detailed analysis of econometric results from current transportation literature to provide an integrated collection of theory and application. Case studies are used to illustrate the economic principles developed, while testable hypotheses and economic results are highlighted throughout the text to provide a well-developed introduction to the foundations of transportation economics.

Journal Articles

  • US Airport Costs and Production Technology: A Translog Cost Function Analysis

    September 2014

    From a panel of fifty airports over a 13-year period, this research estimates a translog model of airport short-run operating costs. Output is departures and the effective number of 10,000 by 150 feet runways is a quasi-fixed factor of production. The analysis finds that airports operate under increasing returns to runway utilisation, input demand for general airport operations is price elastic, and inputs are Morishima substitutes in production. A residuals analysis suggests that air cargo, aeronautical and non-aeronautical services, and serving international travellers are important airport cost discriminators.

  • Bankruptcy in the Pulp and Paper Industry: Market's Reaction and Prediction

    December 2013

    This paper examines North American pulp and paper company bankruptcies that occurred between 1990 and 2009. We demonstrate that shareholders suffer substantial losses (37%) during the month a bankruptcy occurs. Encouragingly, we show that financial ratios are useful in predicting firm failure and that failed firms are less profitable, more liquidity constrained and higher in debt leverage. Using a binary logit model in the spirit of Ohlson, we predict financial distress for pulp and paper firms 1 to 2 years ahead of the bankruptcy. We also adapt and re-estimate the empirical model on a sample of pulp and paper firms and perform in-sample and out-of-sample forecasts. For the out-of-sample analysis, our re-estimated Ohlson models correctly predict 93% of bankruptcy and non-bankruptcy outcomes.

  • Airport Runway Capacity and Economic Development: A Panel Data Analysis of Metropolitan Statistical Areas

    August 2013

    Using an aggregate production function, the impact of runways at commercial airports on several measures of metropolitan statistical areas’ economic welfare in combination with labor, private capital, and public-sector capital is estimated. By focusing on runways at commercial airports, we estimate the impact of reducing congestion that sets in and takeoffs and landings as air activity nears the technical limit for safe operations. Both the number of runways and the maximum length of runway available at a given airport correlate positively with real gross metropolitan product with a negative cross product between the two, suggesting a trade-off between the number of flights possible and the size of the aircraft that can use the airport. Additional analysis examines the impact of additional runways on other measures of economic activity.

  • Long-Run Equilibrium and Short-Run Dynamics Between Risk Exposure and Highway Safety

    June 2012

    Based upon monthly California data, this exploratory analysis uses vector error correction methods and associated statistical tests to identify the long-run relationship and the short-run dynamics between highway exposure and crashes. The analysis finds that there is a cointegrating relationship between exposure and crashes, and for fatal, serious injury, and materials crashes, could not reject the hypothesis that crash exposure and frequency move proportionately. The analysis indicates that vector error correction models may be an important tool for improving our understanding of highway crashes and the near and longer term impacts of alternative safety policies.

  • Production and Cost in the U.S. Paper and Paperboard Industry

    June 2011

    The US paper and paperboard industry has experienced significant structural changes over the past 25 years, including reductions in the number of mills, lower rates of capacity growth, employment cutbacks and a loss of market share to foreign competitors. These structural shifts portray an industry that increasingly has difficulty adapting to a more competitive global environment. Based on aggregate data from 1965 to 1996, this article estimates a short-run translog (TL) cost function for the industry. The estimated model fits the data well and all sample points satisfy monotonicity and concavity conditions at all points. Among the findings, the industry operates at slightly increasing returns to capital utilization and labour and energy are Allen–Uzawa complements but Morishima substitutes in production. Technological progress generated 0.02% reduction in annual operating costs and consistent with an ailing US industry, estimated marginal costs approximated average operating costs until 1982 after which marginal costs significantly diverged from average operating costs.

  • Regional Demands for Pulp and Paper Products

    April 2010

    The pulp and paper industry has experienced dramatic changes during the past several decades with large variations in world regional market shares of production capacity and consumption patterns. Based on panel data available (1961–2000) from the United Nations Food and Agricultural Organization, this paper estimates dynamic demand models for pulp and paper products in four major trading regions: Asia, Europe, the North American Free Trade Agreement Area, and South America. With or without price in the model, short-run demands are generally output inelastic. However, without price in the model, long-run output elasticities were more elastic, particularly in the Paper/Paperboard, Printing/Writing, and Household/Sanitary sectors with most elasticities greater than 1. With price included in the model, long-run demands were generally output inelastic, with primary exceptions being the Paper/Paperboard sector for all but the NAFTA region and Wrapping/Packaging for Asia and South America. Price was generally significant with long-run elasticities, in absolute value, in the (0.05, 0.11) range. And as a measure of urbanization, the percent of the population living in urban areas significantly affects consumption in total and in the Pulp and Printing/Writing sectors.

  • Economic Transition and Product Demand Pattern in China: Evidence from China's Paper and Paperboard Industry

    September 2006

    In this study, we investigate the demand pattern and structural changes during the economic transformation using data from the paper and paperboard industry in China. Instrumental variable estimations as well as co-integration analysis and error correction models are applied to the analysis. Our results show that in the early stages of economic reform before 1993, the demand did not respond to price changes; while in the later stages, the demand shows significant responses to its own-price and the price of international markets. In particular, since 1992, the own and cross-price elasticity of demand for domestically made paper and paperboard products becomes, respectively, − 0.69 and 0.59, in the range found in some market economies. We also find that imports are substitutes for domestically made paper and paperboard products, but the reverse is not true; and in the later stage of economic transition, the reliance on international market has increased, as reflected by the lower price elasticity of imports.

  • Road Safety, Alcohol, and Public Policy

    September 2005

    Special Issue Editorial

  • How Alcohol-Related Crashes of Different Severity Interrelate and Respond to Local Spatial Characteristics: An Evaluation of a Common Site Sales Ban on Alcohol and Gasoline

    March 2005

    Highway safety is an important issue in both urban and rural areas.  Based upon a unique panel of incorporated cities over a 96-month period from January 1982 to December 1989, this paper evaluates the effects of the State of California’s ban on common site sales of gasoline and alcohol to curb drunk driving. Geographic information systems (GIS) contribute spatial variables to an analysis of the impact of the ban on several categories of alcohol related crashes: fatalities, serious injuries, and property damage. By considering the types of alcohol-related crashes for the five-county Los Angeles area as interrelated, a seemingly unrelated regression (SUR) model locates more precise impacts. Overall the ban appears to reduce fatalities, serious injuries, and property damage crashes; but in relatively less population dense cities, the ban increases property damage and may increase more serious crashes in some urban neighborhoods. This suggests that the ban discourages highly impaired drivers but may motivate less impaired drivers to travel to an alternate alcohol purchase site. Diverse experiences in adjacent municipalities warn large regional or nation-wide evaluations of highway safety to take care when adopting large region or state ‘fixed effect’ adjusters in analyses that presume sub-region homogeneity.

  • Alcohol, Public Policy, and Highway Crashes: A Time Series Analysis of Older Driver Behavior

    January 2005

    The increasing proportion of older persons in the population has significant implications for mobility in the US and the safety performance of the US highway system. Health problems, loss of dexterity, medication, and slower reaction times are among the factors that affect older–driver–involved highway safety. Based upon time–series data from January 1981 through December 1998 for California, this study estimates multiple order autoregression models to analyse highway crashes involving older drivers. The results indicate that risk exposure is an important determinant of highway safety, with the greatest effects on fatal crashes in total and on alcohol–related fatal crashes when at least one driver is over the legal limit. Other important factors include alcohol availability, hospital accessibility, and the proportion of older drivers. Alcohol–related legislation had little effect on older–driver crashes when at least one driver was over the legal blood alcohol concentration (BAC) limit and increasing speed limits to 70 mph decreased non–fatal injury crashes at the expense of fatal crashes.