http://lists.repec.org/mailman/listinfo/nep-all All new papers 2013-05-19 Laura Stefanescu http://d.repec.org/n?u=RePEc:man:cgbcrp:183&r=all This paper examines the financial and real effects of excess reserves in a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model with monopoly banking, credit market imperfections and a cost channel. The model explicitly accounts for the fact that banks hold excess reserves and they incur costs in holding these assets. Simulations of a shock to required reserves show that although raising reserve requirements is successful in sterilizing excess reserves, it creates a procyclical effect for real economic activity. This result implies that financial stability may come at a cost of macroeconomic stability. The findings also indicate that using an augmented Taylor rule in which the policy interest rate is adjusted in response to changes in excess reserves reduces volatility in output and inflation but increases fluctuations in financial variables. To the contrary, using a countercyclical reserve requirement rule helps to mitigate fluctuations in excess reserves, but increases volatility in real variables. Keyra Primus 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012012&r=all In this paper we establish a relationship between the core cover of a compromise admissible game and the core of a particular bankruptcy game: the core cover of a compromise admissible game is, indeed, a translation of the set of coalitional stable allocations captured by an associated bankruptcy game. Moreover, we analyze the combinatorial complexity of the core cover and, consequently, of the core of a compromise stable game. Arantza Estévez-Fernández, María Gloria Fiestras-Janeiro, Manuel Alfredo Mosquera, Estela Sánchez- Rodríguez 2012-02-10 Cooperative game theory, compromise admissible games, bankruptcy, core cover, complexity http://d.repec.org/n?u=RePEc:fip:feddgw:144&r=all We develop a theoretical model of international trade pricing in which individual exporters and importers bargain over the transaction price and exposure to exchange rate fluctuations. We find that the choice of price and invoicing currency reflects the full market structure, including the extent of fragmentation and the degree of heterogeneity across importers and across exporters. Our study shows that a party has a higher effective bargaining weight when it is large or more risk tolerant. A higher effective bargaining weight of importers relative to exporters in turn translates into lower import prices and greater exchange rate pass-through into import prices. We show the range of price and invoicing outcomes that arise under alternative market structures. Such structures matter not only for the outcome of specific exporter-importer transactions, but also for aggregate variables such as the average price, the average choice of invoicing currency, and the correlation between invoicing currency and the size of trade transactions. Linda Goldberg, Cedric Tille 2013 International trade http://d.repec.org/n?u=RePEc:pra:mprapa:46959&r=all This seminal paper provides global empirical evidence on catch-up processes in scientific and technical publications. Its purpose is to model the future of scientific knowledge monopoly in order to understand whether the impressive growth experienced by latecomers in the industry has been accompanied by a similar catch-up in scientific capabilities and knowledge contribution. The empirical evidence is based on 41 catch-up panels which together consist of 99 countries. The richness of the dataset allows us to disaggregate countries into fundamental characteristics based on income-levels (high-income, lower-middle-income, upper-middle-income and low-income), legal-origins (English common-law, French civil-law, German civil-law and, Scandinavian civil-law) and, regional proximity (South Asia, Europe & Central Asia, East Asia & the Pacific, Middle East & North Africa, Latin America & the Caribbean and, Sub-Saharan Africa). Three main issues are investigated: the presence or not of catch-up processes, the speed of the catch-up processes and, the time needed for full (100%) catch-up. The findings based on absolute and conditional catch-up patterns broadly show that advanced countries will continue to dominate in scientific knowledge contribution. Policy implications are discussed. Asongu, Simplice A 2013-05-01 Research and Development; Catch-up http://d.repec.org/n?u=RePEc:dgr:uvatin:2012026&r=all A class of adaptive sampling methods is introduced for efficient posterior and predictive simulation. The proposed methods are robust in the sense that they can handle target distributions that exhibit non-elliptical shapes such as multimodality and skewness. The basic method makes use of sequences of importance weighted Expectation Maximization steps in order to efficiently construct a mixture of Student-<I>t</I> densities that approximates accurately the target distribution - typically a posterior distribution, of which we only require a kernel - in the sense that the Kullback-Leibler divergence between target and mixture is minimized. We label this approach <I>Mixture of t by Importance Sampling and Expectation Maximization</I> (MitISEM). The constructed mixture is used as a candidate density for quick and reliable application of either Importance Sampling (IS) or the Metropolis-Hastings (MH) method. We also introduce three extensions of the basic MitISEM approach. First, we propose a method for applying MitISEM in a <I>sequential</I> manner. Second, we introduce a <I>permutation-augmented</I> MitISEM approach. Third, we propose a <I>partial</I> MitISEM approach, which aims at approximating the joint distribution by estimating a product of marginal and conditional distributions. This division can substantially reduce the dimension of the approximation problem, which facilitates the application of adaptive importance sampling for posterior simulation in more complex models with larger numbers of parameters. Our results indicate that the proposed methods can substantially reduce the computational burden in econometric models like DCC or mixture GARCH models and a mixture instrumental variables model. Lennart Hoogerheide, Anne Opschoor, Herman K. van Dijk 2012-03-23 mixture of Student-t distributions, importance sampling, Kullback-Leibler divergence, Expectation Maximization, Metropolis-Hastings algorithm, predictive likelihood, DCC GARCH, mixture GARCH, instrumental variables http://d.repec.org/n?u=RePEc:pra:mprapa:46898&r=all Nowadays, the world’s scientific community has been publishing an enormous number of papers in different scientific fields. In such environment, it is essential to know which databases are equally efficient and objective for literature searches. It seems that two most extensive databases are Web of Science and Scopus. Besides searching the literature, these two databases used to rank journals in terms of their productivity and the total citations received to indicate the journals impact, prestige or influence. This article attempts to provide a comprehensive comparison of these databases to answer frequent questions which researchers ask, such as: How Web of Science and Scopus are different? In which aspects these two databases are similar? Or, if the researchers are forced to choose one of them, which one should they prefer? For answering these questions, these two databases will be compared based on their qualitative and quantitative characteristics. Aghaei Chadegani, Arezoo, Salehi, Hadi, Md Yunus, Melor, Farhadi, Hadi, Fooladi, Masood, Farhadi, Maryam, Ale Ebrahim, Nader 2013-02-11 web of science, scopus, database, citations, provenance, coverage, searching, citation tracking, impact factor, indexing, h-index, researcher profile, researcher ID http://d.repec.org/n?u=RePEc:dgr:uvatin:2012099&r=all Attack and defense strengths of football teams vary over time due to changes in the teams of players or their managers. We develop a statistical model for the analysis and forecasting of football match results which are assumed to come from a bivariate Poisson distribution with intensity coefficients that change stochastically over time. This development presents a novelty in the statistical time series analysis of match results from football or other team sports. Our treatment is based on state space and importance sampling methods which are computationally efficient. The out-of-sample performance of our methodology is verified in a betting strategy that is applied to the match outcomes from the 2010/11 and 2011/12 seasons of the English Premier League. We show that our statistical modeling framework can produce a significant positive return over the bookmaker's odds. Siem Jan Koopman, Rutger Lit 2012-09-27 Betting, Importance sampling, Kalman filter smoother, Non-Gaussian multivariate time series models, Sport statistics http://d.repec.org/n?u=RePEc:qed:wpaper:1307&r=all We provide a fast algorithm for calculating the fractional difference of a time series. In standard implementations, the calculation speed (number of arithmetic operations) is of order T^2, where T is the length of the time series. Our algorithm allows calculation speed of order T log(T). For moderate and large sample sizes, the difference in computation time is substantial. Andreas Noack Jensen, Morten Ørregaard Nielsen 2013-05 Circular convolution theorem, fast Fourier transform, fractional difference http://d.repec.org/n?u=RePEc:dgr:uvatin:2012110&r=all We study the forecasting of the yearly outcome of the Boat Race between Cambridge and Oxford. We compare the relative performance of different dynamic models for forty years of forecasting. Each model is defined by a binary density conditional on a latent signal that is specified as a dynamic stochastic process with fixed predictors. The out-of-sample predictive ability of the models is compared between each other by using a variety of loss functions and predictive ability tests. We find that the model with its latent signal specified as an autoregressive process cannot be outperformed by the other specifications. This model is able to correctly forecast 30 out of 40 outcomes of the Boat Race. Geert Mesters, Siem Jan Koopman 2012-10-23 Binary time series, Predictive ability, Non-Gaussian state space model http://d.repec.org/n?u=RePEc:dgr:uvatin:2013025&r=all There has recently been growing interest in modeling and estimating alternative continuous time multivariate stochastic volatility models. We propose a continuous time fractionally integrated Wishart stochastic volatility (FIWSV) process. We derive the conditional Laplace transform of the FIWSV model in order to obtain a closed form expression of moments. We conduct a two-step procedure, namely estimating the parameter of fractional integration via log-periodgram regression in the first step, and estimating the remaining parameters via the generalized method of moments in the second step. Monte Carlo results for the procedure shows reasonable performances in finite samples. The empirical results for the bivariate data of the S&P 500 and FTSE 100 indexes show that the data favor the new FIWSV processes rather than one-factor and two-factor models of Wishart autoregressive processes for the covariance structure. Manabu Asai, Michael McAleer 2013-01-31 Diffusion process; Multivariate stochastic volatility; Long memory; Fractional Brownian motion, Generalized method of moments http://d.repec.org/n?u=RePEc:mos:moswps:2013-06&r=all This study extends the analytical framework for the specification of import demand behaviour from the conventional partial equilibrium to a general equilibrium perspective. This perspective emphasises the macro dimension of import demand and the potential influence of financial factors. Two new structural import demand equations are developed: (1) one specification utilises the macroeconomic income-expenditure relationships in the goods market; and (2) the second specification utilises the portfolio balance approach to capture financial market developments. Tuck Cheong Tang 2013-05 Aggregate import demand; General equilibrium perspective; Income-expenditure equilibrium; Portfolio balance http://d.repec.org/n?u=RePEc:nbr:nberwo:19044&r=all Improving the efficiency with which we use energy is often said to be the most cost-effective way to reduce energy use and greenhouse gas emissions. Yet, such improvements usually lower the cost of using energy-intensive goods and may create wealth from the energy savings, both of which lead to increased energy use, a "rebound'' effect. Disagreements about the magnitude of energy efficiency rebound are immense and play a central role in debates over the role energy efficiency can play in combating climate change. But these differing views seem to stem as much from the lack of a common framework for the analysis as from different estimates of key parameters. I present a theoretical framework that parses rebound into economic income and substitution effects. The framework captures the wide range of rebound effects that have been termed direct, indirect, re-spending, and transformational rebound, among others. It does not capture economy-wide impacts, such as the potential for a macroeconomic multiplier or the impact on energy prices, which I discuss separately. I then explore the implications of this framework for measurement of rebound, examining rebound from improved auto fuel economy and lighting efficiency. The illustrative calculations I carry out suggest that rebound that more than offsets the savings from energy efficiency investments (known as "backfire") is unlikely, but rebound is likely to significantly reduce the net savings from at least these energy efficiency improvements. Severin Borenstein 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012055&r=all We propose a new semiparametric observation-driven volatility model where the form of the error density directly influences the volatility dynamics. This feature distinguishes our model from standard semiparametric GARCH models. The link between the estimated error density and the volatility dynamics follows from the application of the generalized autoregressive score framework of Creal, Koopman, and Lucas (2012). We provide simulated evidence for the estimation efficiency and forecast accuracy of the new model, particularly if errors are fat-tailed and possibly skewed. In an application to equity return data we find that the model also does well in density forecasting. Jiangyu Ji, Andre Lucas 2012-05-22 volatility clustering, Generalized Autoregressive Score model, kernel density estimation, density forecast evaluation http://d.repec.org/n?u=RePEc:dgr:uvatin:2013018&r=all This paper features an analysis of the relationship between the S&P 500 Index and the VIX using daily data obtained from both the CBOE website and SIRCA (The Securities Industry Research Centre of the Asia Pacic). We explore the relationship between the S&P 500 daily continuously compounded return series and a similar series for the VIX in terms of a long sample drawn from the CBOE running from 1990 to mid 2011 and a set of returns from SIRCA's TRTH datasets running from March 2005 to-date. We divide this shorter sample, which captures the behaviour of the new VIX, introduced in 2003, into four roughly equivalent sub-samples which permit the exploration of the impact of the Global Financial Crisis. We apply to our data sets a series of non-parametric based tests utilising entropy based metrics. These suggest that the PDFs and CDFs of these two return distributions change shape in various subsample periods. The entropy and MI statistics suggest that the degree of uncertainty attached to these distributions changes through time and using the S&P 500 return as the dependent variable, that the amount of information obtained from the VIX also changes with time and reaches a relative maximum in the most recent period from 2011 to 2012. The entropy based non-parametric tests of the equivalence of the two distributions and their symmetry all strongly reject their respective nulls. The results suggest that parametric techniques do not adequately capture the complexities displayed in the behaviour of these series. This has practical implications for hedging utilising derivatives written on the VIX, which will be the focus of a subsequent study. David E. Allen, Michael McAleer, Robert Powell, Abhay K. Singh 2013-01-17 S&P 500, VIX, Entropy, Non-Parametric Estimation, Quantile Regressions http://d.repec.org/n?u=RePEc:ukc:ukcedp:1306&r=all Prior to the financial crisis mainstream monetary policy practice had become disconnected from money. We outline the basic rationale for this development using a simple model of money and credit in which we explore the conditions under which money matters directly for the conduct of policy. Then, drawing on Goodfriend and McCallum's (2007) DSGE model, we examine the circumstances under which money becomes more closely linked to inflation. We find that money matters when the variance of the supply of lending dominates productivity and the velocity of money demand. This is because amplifying the role of loans supply leads to an expansion in aggregate demand, via a compression of the external finance premium, which is inflationary. We consider a number of alternative monetary policy rules, and find that a rule which exploits the joint information from money and the external finance premium performs best. Jagjit S. Chadha, Luisa Corrado, Sean Holly 2013-04 money; DSGE; policy rules; external finance premium http://d.repec.org/n?u=RePEc:cer:papers:wp484&r=all I evaluate the effects of a new road traffic law in the Czech Republic that became effective on July 1, 2006. The law introduced tougher punishments through the introduction of a demerit point system and a manifold increase in fines, together with an augmented authority of traffic police. I find a sharp, 33.3 percent, decrease in accident-related fatalities during the first three post-reform months. This translates into 51 to 204 saved lives with 95 percent certainty. The decline was, however, temporary; estimates of the effects going beyond the first year are around zero. Unique data on traffic police activity reveal that police resources devoted to traffic law enforcement gradually declined and were shifted towards general law enforcement. Josef Montag 2013-02 traffic law; traffic fatalities; policy evaluation; deterrence, enforcement; http://d.repec.org/n?u=RePEc:pra:mprapa:46916&r=all We reconcile �findings from the Multiple Price List method (Andersen et al., 2008) and the Convex Time Budget method (Andreoni and Sprenger, 2012a) that seem to have generated a heated debate in the time preference literature. Specifi�cally, we discuss the claims of Andreoni and Sprenger (2012b) that "risk preferences are not time preferences" and assert that this may have been premature given that subsequent fi�ndings from replication and extension studies refute their basic conjecture while another study off�ers an alternative explanation for their results (Andersen et al., 2011a). Although the CTB seems to perform better than the MPL method in terms of predictive validity, we also discuss recent econometric issues that question the validity of claims resulting from analysis of CTB data. We also raise an issue with non-EUT explanations of Andreoni and Sprenger's (2012b) results, since the payment mechanism is not incentive compatible if the isolation assumption is not invoked. Drichoutis, Andreas, Nayga, Rodolfo 2013-04-19 Intertemporal choice; discounting; curvature; convex time budget; risk; multiple price list http://d.repec.org/n?u=RePEc:tse:wpaper:27184&r=all We prove the compactness of the support of the solution of some stationary Schr\"odinger equations with a singular nonlinear order term. We present here a sharper version of some energy methods previously used in the literature and, in particular, by the authors. Bégout, Pascal, Diaz, Jesus Ildefonso 2013-04 http://d.repec.org/n?u=RePEc:pra:mprapa:47028&r=all This study looks into the price behavior of five base metals – aluminum, copper, zinc, lead and nickel traded on Multi Commodity Exchange (MCX), using near month futures contracts and spot contracts for the period from November 2007 to January 2013. To assess the impact of the recent Global Financial Crisis on trading of base metals, the price volatility of the base metals has been examined using GARCH models. The paper also studies the effect of implied volatility of equity market, measured by India VIX on the price volatility of the five base metals. The findings of the study suggest that there is presence of short term persistence in price volatility of the metals, and the daily price volatility of base metals is influenced by the Global Financial Crisis. The implied volatility in equity market is also found to affect the price volatility of the metals. Thus, the paper gives important evidence in support of the introduction of option contracts on base metals in Indian Commodity Markets, since option contracts are priced considering the price volatility of the underlying asset. Sinha, Pankaj, Mathur, Kritika 2013-04-03 Option contracts, Base metals, Volatility, Futures contract, VIX http://d.repec.org/n?u=RePEc:dgr:uvatin:2012130&r=all This paper studies the impact of diversity in cognitive ability among members of a team on their performance. We conduct a large field experiment in which teams start up and manage real companies under identical circumstances. Exogenous variation in - otherwise random - team composition is imposed by assigning individuals to teams based on their measured cognitive abilities. The setting is one of business management practices in the longer run where tasks are diverse and involve complex decision-making. We propose a model in which greater ability dispersion generates greater knowledge for a team, but also increases the costs of monitoring necessitated by moral hazard. Consistent with the predictions of our model, we find that team performance as measured in terms of sales, profits and profits per share first increases, and then decreases, with ability dispersion. Teams with a moderate degree of ability dispersion also experience fewer dismissals due to few er shirking members in those teams. Sander Hoogendoorn, Simon C. Parker, Mirjam van Praag 2012-11-29 Ability dispersion, team performance, field experiment, entrepreneurship, knowledge pooling, moral hazard http://d.repec.org/n?u=RePEc:mos:moswps:2013-05&r=all Since 1958 the hukou (household registration) system has assigned Chinese citizens either a rural or urban status. Some studies argue that the rural-to-urban migrants in China who do not have urban hukou are not entitled to urban social insurance schemes, due to institutional discrimination, which applies differing treatment to urban and rural hukou (chengxiang fenge). Although rural-urban migrants participate less in the social insurance system than their counterparts with urban hukou, a closer examination of recent policy developments shows that migrants actually do have the legal right to access the system. This implies that discrimination between rural and urban workers has been declining, and distinctions based on household registration status are less able to explain China's current urban transition. This paper provides a new way of examining Chinese migrants' social insurance participation, by adopting a framework that includes both rural-to-urban migrants and urban-to-urban migrants, which are an important, but less studied, migrant group. Among our key findings are that urban migrants are more likely to sign a labour contract than rural migrants; urban migrants have higher participation rates in social insurance than rural migrants; having a labour contract has a greater impact than hukou status in determining whether Beijing's floating population accesses social insurance; and urban migrants who have signed a labour contract have higher participation rates in social insurance than either rural migrants or urban migrants without a labour contract. Zhiming Cheng, Ingrid Nielsen, Russell Smyth 2013-05 rural-to-urban migrants, urban-to-urban migrants, social insurance, labour contract http://d.repec.org/n?u=RePEc:snv:dp2009:2013101&r=all IPhone and Android technology only became available in Korea in 2010, yet today, nearly every student in Korea¡¯s top university carries either an iPhone or Android enabled phone. Students are plugged in and communicating constantly. One Lifelong Learning class investigated the use of smartphones among Education and Engineering students. Both the process of the class and the outcomes of the research reveal much of how the practices of learning are changing in a dynamic, globally-linked university. Their answers to a set of surveys on smartphone use for learning revealed that smartphones were used extensively by all students. Students had a broad definition of how they used their smartphones for learning. Engineering and Education students varied somewhat on how they used their phones for learning. Most interesting, the heavy users of smartphones were not usually the ones who were the most intensive users of apps that most students agreed were most useful for learning. Juseuk Kim, Lynn Ilon, Jorn Altmann 2013-02 Smartphones, M-learning, Learning Apps, Collective Learning, Seoul National University. http://d.repec.org/n?u=RePEc:mos:moswps:2013-11&r=all This paper provides an analysis of potential unequal burden of bribery in schools on poor households in developing countries. The rich are more likely to pay bribes in the standard model where the probability of punishment for bribe taking by a teacher is the same irrespective of income of the household. This model is, however, not appropriate in the context of a developing country lacking in rule of law, where the ability to punish a corrupt teacher depends on a household's economic status. Bribery is likely to be regressive at the extensive margin in this case. The conditions required for progressivity at the intensive margin are also quite stringent. A significant part of the available empirical evidence, however, finds bribes in developing countries to be progressive, thus contradicting the theoretical predictions above. We argue that this conflict may largely be due to the identification challenges arising from ability and preference heterogeneity. Using ten year average rainfall variations as instrument for household income in rural Bangladesh, we find that corruption is doubly regressive: (i) the poor are more likely to pay bribes (income elasticity [-0.73, -1]), and (ii) among the bribe payers, the poor pay a higher share of their income. The IV results for intensive margin are in contrast to the OLS estimate that shows bribes to be increasing with household income, substantiating the worry about spurious progressive effects. The results imply that ‘free schooling' is free only for the rich, and corruption makes the playing field skewed against the poor. M. Shahe Emran, Asadul Islam, Forhad Shilpi 2013-05 Corruption, Bribes, Education, Schools, Inequality, Income Effect, Bargaining Power, Regressive Effects. http://d.repec.org/n?u=RePEc:dgr:uvatin:2012117&r=all Consider a government that auctions a franchise for, e.g., an airport, telecommunication network, or utility. Consider an 'incumbent bidder' that owns a complement or substitute. With an auction on the transfer (i.e. payment) to the government, the incumbent is advantaged.If the government regulates the market with an auction on the price asked to consumers, it depends who is advantaged. With complements, the incumbent is advantaged: it can set a lower price on the new franchise, as this increases the profit of the other. With substitutes, the incumbent is disadvantaged. In many settings, the advantage bidder always wins. Vincent van den Berg 2012-11-02 Franchising, auctions, advantaged bidders, incumbent, private supply, regulatory auctions http://d.repec.org/n?u=RePEc:mos:moswps:2013-18&r=all This paper seeks to estimate the causal effects of language proficiency on the earnings and social assimilation of Australian immigrants. Identifying the effects of languages on socio-economic outcomes is inherently difficult, due to the endogeneity of the language skills. This study exploits the phenomenon that younger children learn languages more easily than older children to construct an instrumental variable for language proficiency. To achieve this, we exploit the age at arrival of immigrants who came as children from Anglophone and non-Anglophone countries. We find English proficiency to have a significant positive effect on wages and promotions among adults who immigrated to Australia as children. English proficiency decreases the perceived risk of job loss, but leads to lower levels of health and life satisfaction. People with better English skills take more risks and drink more, and English proficiency increases the age at marriage. Partners of immigrants with better English skills drink more in general. Parents' proficiency in speaking English has a significant, positive effect on their children's English-speaking proficiency, high school achievements and occupational prestige. We show that IV estimates cannot be explained by alternative theories such as reverse causality and immigrants from English-speaking countries being a poor control group for non-language age-at-arrival effects. Cahit Guven, Asadul Islam 2013-05 Economics of Immigration; English Proficiency; Socio-economic Outcomes; Instrumental Variable; Australia. http://d.repec.org/n?u=RePEc:mos:moswps:2013-16&r=all We study trader agent intermediated lending (TRAIL), a new version of microfinance where local intermediaries (lenders) are appointed as agents to recommend borrowers for individual liability loans designed to allow the financing of agricultural operations. The scheme involves no peer monitoring, group meetings or savings requirements. In a randomized evaluation conducted in West Bengal, India, TRAIL loans have higher take-up rates and higher repayment rates than traditional group-based joint liability loans. This can be explained by a model of segmented informal credit markets with adverse selection, in which repayment-based commissions deter collusion and motivate agents to recommend low-risk borrowers. Pushkar Maitra, Sandip Mitra, Dilip Mookherjee, Alberto Motta, Sujata Visaria 2013-05 Microfinance, Agent Based Lending, Group Lending, Selection, Takeup, Repayment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012140&r=all We assess the effect of aggregate stock market illiquidity on U.S. Treasury bond risk premia. We find that the stock market illiquidity variable adds to the well established Cochrane-Piazzesi and Ludvigson-Ng factors. It explains 10%, 9%, 7%, and 7% of the one-year-ahead variation in the excess return for two-, three-, four-, and ve-year bonds respectively and increases the adjusted R<SUP>2</SUP> by 3-6% across all maturities over Cochrane and Piazzesi (2005) and Ludvigson and Ng (2009) factors. The effects are highly statistically and economically significant both in and out of sample. We find that our result is robust to and is not driven by information from open interest in the futures market, long-run inflation expectations, dispersion in beliefs, and funding liquidity. We argue that stock market illiquidity is a timely variable that is related to " right-to-quality" episodes and might contain information about expected future business conditions through funding liquidity and investment channels. Kees E. Bouwman, Elvira Sojli, Wing Wah Tham 2012-12-12 Market liquidity; Bond risk premia; Flight-to-quality http://d.repec.org/n?u=RePEc:dgr:uvatin:2012057&r=all We investigate the effect of model specification on the aggregation of (correlated) market and credit risk. We focus on the functional form linking systematic credit risk drivers to default probabilities. Examples include the normal based probit link function for typical structural models, or the exponential (Poisson) link function for typical reduced form models. We first show analytically how model specification impacts 'diversification benefits' for aggregated market and credit risk. The specification effect can lead to Value-at-Risk (VaR) reductions in the range of 3 percent to 47 percent, particularly at high confidence level VaRs. We also illustrate the effects using a fully calibrated empirical model for US data. The empirical effects corroborate our analytic results. Andre Lucas, Bastiaan Verhoef 2012-05-31 risk aggregation, credit risk, market risk, link function, diversification, reduced form models, structural models http://d.repec.org/n?u=RePEc:nbr:nberwo:19042&r=all This paper considers the relationship between local economic conditions and health with a focus on different approaches to geographic aggregation. After reviewing the tradeoffs associated with more- and less-disaggregated analyses–including an investigation of the migratory response to changing economic conditions–I update earlier state-level analyses of mortality and infant health and then consider how the estimated effects vary when the analysis is conducted at differing levels of geographic aggregation. This analysis reveals that more-disaggregated analyses severely understate the extent to which downturns are associated with improved health. Further investigation reveals that county economic conditions have an independent effect on mortality but that state and regional economic conditions are stronger predictors. I also leverage county-level data to explore heterogeneity in the link between county economic conditions and health across states, demonstrating that local downturns lead to the greatest improvements in health in low-income states. Jason M. Lindo 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012056&r=all This paper analyzes airlines' strategic interactions and airport efficient pricing, with a deterministic bottleneck model of congestion, in Cournot-Nash competition and in sequential competition where a Stackelberg leader interacts with perfectly competitive airlines. We show that the internalization of self-imposed congestion by non-atomistic carriers is consistent with earlier literature based on static models of congestion, but the congestion tolls are not. The tolls derived for fully atomistic airlines achieve the social optimum, when charged to all carriers, in the simultanous setting as well as in the sequential setting. We also find that alternative efficient pricing schemes exist for the sequential competition between a dominant airline and a competitive follower. The analysis suggests that airport congestion pricing has a more signicant role than what previous studies have suggested. Moreover, the financial deficit under optimal pricing may be less severe than what earlier studies suggest, as congestion toll revenues may cover optimal capacity investments. Political feasibility would be enhanced as ecient congestion charges do not depend on market shares and therefore may not be perceived as inequitable. Hugo E. Silva, Erik T. Verhoef, Vincent A.C. van den Berg 2012-05-25 Airport pricing, Congestion, Bottleneck model http://d.repec.org/n?u=RePEc:iza:izadps:dp7363&r=all This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The con- tract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that altruism undermines the credibility of a threat of dis- missal but strengthens the credibility of a bonus. Among others, these two mechanisms imply that higher altruism sometimes leads to higher bonuses, while lower altruism may increase productivity and players utility in equilibrium. Dur, Robert, Tichem, Jan 2013-04 altruism, spite, incentives, relational contracts, efficiency wages, subjective performance evaluation, Nash bargaining http://d.repec.org/n?u=RePEc:dgr:uvatin:2012079&r=all This paper seeks to identify relationships between human capital and cultural capital, in the context of local labour market productivity. The key constituents of human capital, identified in the literature, are jointly examined in a close-to-reality-model. The main advantage of our model of productivity is that, in addition to accounting for the filigree composition of human capital, it also takes into consideration the cultural capital present in a locality. In this manner, we are able to examine the interaction between the quality of the incoming human capital and the cultural encounter context (generating the cultural "milieu" effect) of the modern diverse city. To this end, we operationalize one model with data on the 'melting pot' of EU15, at NUTS2 level. The sources of our data are the Eurostat Regional Database and the World Value Survey, which have served to construct both a cross-section for the year 2001. These datasets allows us: (1) to exa mine the different groups of migrating and local human capital, their interaction and joint impact on local productivity, and (2) to cross-check for the causality direction behind our model. Our findings suggest that benefits from immigrants differ, not only due to their human capital, but also due to their culturally biased different bargaining power on the labour market. Annie Tubadji, Peter Nijkamp 2012-07-27 human capital, cultural capital, diversity, productivity, growth, Weber http://d.repec.org/n?u=RePEc:lpe:wpecbs:201304&r=all This paper contains a report on the findings of a survey on the implementation of the Direct Cash Transfers (Bantuan Langsung Tunai) program. The survey named Susenas (National Socio-Economic Survey) was held across Indonesia in the aftermath of the program in 2006. The economic purpose of this government’s welfare program was to dampen the increasing rate of poverty incidence in Indonesia due to the increase of gas prices. Several issues featured in this paper are the achievement of the program in distributing the cash transfers;, how the recipients used the funds they received; the impact of the cash transfers on the recipients’ working behavior; the socialization method of the program; and finally, the problems that arose during the program’s implementation. The findings are that the program was not properly prepared and not properly organized; it achieves the goal in resisting the increase of poverty rate due to gas price increases. Muliadi Widjaja 2013-04 Cash Transfers, Welfare, Poverty http://d.repec.org/n?u=RePEc:pra:mprapa:46900&r=all In this paper a new econophysics model of investment processes is proposed and discussed. For this purpose an analogy between the electric field flow and the investment supplying flow with credits for the considered investment is used. Spanulescu, Ion, Popescu, Ion, Stoica, Victor, Gheorghiu, Anca 2012-05-25 econophysics, electrical field, Gauss’ Law, investment process, investment field. http://d.repec.org/n?u=RePEc:arx:papers:1305.2655&r=all We propose a correlated stochastic process of which the novel non-Gaussian probability mass function is constructed by exactly solving moment generating function. The calculation of cumulants and auto-correlation shows that the process is convergent and scale invariant in the large but finite number limit. We demonstrate that the model consistently explains both the distribution and the correlation of discrete financial time-series data, and predicts the data distribution with high precision in the small number regime. Jongwook Kim, Junghyo Jo 2013-05 http://d.repec.org/n?u=RePEc:dgr:umagsb:2013015&r=all Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals' willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We find strong evidence for adverse selection if individuals risk profiles can be ranked according to first-order stochastic dominance and only little evidence for adverse selection if risk profiles can only be ranked on the basis of second-order stochastic dominance. We observe the same pattern also for anticipated adverse selection. These results suggest that the degree to which adverse selection erodes voluntary risk sharing arrangements crucially depends on the form of risk heterogeneity. Potters J.A.M., Tausch F., Riedl A.M. 2013 Criteria for Decision-Making under Risk and Uncertainty; http://d.repec.org/n?u=RePEc:pra:mprapa:46901&r=all Bihar has a large agrarian economy of over Rs 250 billion with more than 80 percent of rural population subsisting on farming. Agricultural work force increased more than two-fold from 126 lakh in 1981 to 265 lakh in 2006 whereas net sown area declined by about one lakh hectares and gross cropped area has been stagnating at 80 lakh hectares during the period. Due to increase in number of agricultural labour force in Bihar, per agricultural worker annual real productivity (at 1980 prices) has declined from Rs 1977.00 in 1980-81 to Rs 1278.00 in 2005-06. Among the major states in India, Bihar is at the lowest ladder in terms of proportion of institutional loan to total loan disbursement to farmers. The high indebtedness to money lenders may be an important reason for indifferent attitude of farmers towards lending institutions, resulting in low investment and low productivity in Bihar. An assessment of the situation at ground level indicates that recourse to non-institutional credit continues to dominate as far as rural areas and agriculture sector are concerned. The study recommends interest rate on co-operative agricultural loans be reduced to 3 per cent in Bihar for benefit of farmers. It will motivate farmers to approach cooperatives for agricultural loans who are still not inclined to contact commercial bank branches. Agricultural insurance offers protection against losses caused by fluctuations in the output of a crop from one year to another or from one crop season to another. Its objective is to stimulate and support the production of principal crops in the country. Providing financial support to farmers in the event of crop failure, it makes farmers credit-worthy for the next crop season. It has been observed that the majority of small and marginal farmers, as well as tenant farmers and farm laborers bear the brunt of crop failure. However, the performance of National Agricultural Insurance Scheme has also been unsatisfactory in Bihar. Despite change in form of crop insurance scheme and establishment of Agricultural Insurance Company Ltd. the regional disparities in crop insurance still persist. It is accordingly recommended that a campaign be launched in rural areas to create awareness among farmers about crop insurance involving, inter alia, non-loan taking farmers because a large number of farmers are still not in a position to avail crop loan facility from institutional agencies in Bihar. Singh, R.K.P., Singh, K.M. 2013-01-09 Agricultural credit, Crop insurance, Weather-based insurance Bihar, India http://d.repec.org/n?u=RePEc:dgr:uvatin:2013057&r=all It is common practice to evaluate fixed-event forecast revisions in macroeconomics by regressing current forecast revisions on one-period lagged forecast revisions. Under weak-form (forecast) efficiency, the correlation between the current and one-period lagged revisions should be zero. The empirical findings in the literature suggest that this null hypothesis of zero correlation is rejected frequently, where the correlation can be either positive (which is widely interpreted in the literature as “smoothing”) or negative (which is widely interpreted as “over-reacting”). We propose a methodology to interpret such non-zero correlations in a straightforward and clear manner. Our approach is based on the assumption that numerical forecasts can be decomposed into both an econometric model and random expert intuition. We show that the interpretation of the sign of the correlation between the current and one-period lagged revisions depends on the process governing intuition, and the current and lagged correlations between intuition and news (or shocks to the numerical forecasts). It follows that the estimated non-zero correlation cannot be given a direct interpretation in terms of smoothing or over-reaction. Chia-Lin Chang, Bert de Bruijn, Philip Hans Franses, Michael McAleer 2013-04-11 Evaluating forecasts, Macroeconomic forecasting, Rationality, Intuition, Weak-form efficiency, Fixed-event forecasts http://d.repec.org/n?u=RePEc:pra:mprapa:46889&r=all The removal of infrastructure bottlenecks is widely considered among the most profitable interventions, in socio-economic terms, and rail transport is not an exception. However, as outlined for example by RailPAG (2005), the measurement of the related benefits is difficult and no specific manuals indications seem to exist. From a general point of view, by removing a rail bottleneck we expect at least two kinds of benefits: direct benefits to transport users and external benefits to the rest of society (environmental externalities, accidents and congestion) due to the avoidance of possible shift to more impactful transport modes. The first effect is particularly hard to correctly evaluate, especially without a complete transport model, and thus CBAs currently performed might often result biased. The aim of this paper is to propose a simplified approach to estimate the effects of a capacity constraints for a simple rail network, and assess its removal through a CBA. In the first part, we briefly analyse the transport economics literature on the issue. In the following we introduce the proposed methodology, based on the use of a standard logit model, to measure the rail users’ generalised costs with and without the capacity constraint, and the consequent users and social surplus variation. The model is specified initially for a single link and then extended to a more complex network. Then, we outline the other elements to be included into a CBA in addition to surplus variation: rail service performance improvements, external costs associated to road shift and possible wider economic effects. We also discuss the effect of regulation in the distribution of calculated surplus variations. Beria, Paolo, Grimaldi, Raffaele 2013-05-10 Cost Benefit Analysis; bottleneck; rail; saturation; assessment; infrastructure http://d.repec.org/n?u=RePEc:dgr:uvatin:2013049&r=all Many macroeconomic forecasts and forecast updates like those from IMF and OECD typically involve both a model component, which is replicable, as well as intuition, which is non-replicable. Intuition is expert knowledge possessed by a forecaster. If forecast updates are progressive, forecast updates should become more accurate, on average, as the actual value is approached. Otherwise, forecast updates would be neutral. The paper proposes a methodology to test whether macroeconomic forecast updates are progressive, where the interaction between model and intuition is explicitly taken into account. The data set for the empirical analysis is for Taiwan, where we have three decades of quarterly data available of forecasts and their updates of the inflation rate and real GDP growth rate. Our empirical results suggest that the forecast updates for Taiwan are progressive, and that progress can be explained predominantly by improved intuition. Chia-Lin Chang, Philip Hans Franses, Michael McAleer 2013-03-25 Macroeconomic forecasts, econometric models, intuition, progressive forecast updates, forecast errors http://d.repec.org/n?u=RePEc:mos:moswps:2013-07&r=all The objective of this paper is to examine whether energy consumption in Malaysia, disaggregated by sector and type, is stationary or contains a unit root. To realize our objective we apply the Lagrange multiplier (LM) family of unit root tests with up to two structural breaks. Depending on the decision rule for selecting between results in the no-break, one break and two-break cases, we find that energy consumption is stationary for between 50 per cent and 70 per cent of the disaggregated energy series and between 25 per cent and 50 per cent of sectors. Implications for the Malaysian government's attempts to reduce fossil fuel consumption are discussed. Hooi Hooi Lean, Russell Smyth 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012011&r=all When debt levels approach critical levels, tax payers may revolt against the associated debtservice burden. Funding problems may arise in capital markets when lenders anticipate such revolts and refuse to participate in debt auctions. We provide a stochastic framework to assess whether such problems may arise and argue that the key to fiscal sustainability in a stochastic environment is a feedback rule from debt level shocks back to corresponding adjustments in the primary surplus. We show that such feedback rules narrow future distributions of debt-output ratios and so reduce crisis probabilities. We apply the methodology to Dutch debt and deficit data spanning two centuries. Our results strongly argue for the incorporation of rules stipulating tightening fiscal policy whenever debt stocks exceed previously agreed upon targets (like in the original Eurozone Stability pact). Sweder van Wijnbergen, Alexander France 2012-02-12 E62, H62, H63, H68 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012105&r=all Hamiache (2001) assigns to every TU game a so-called associated game and then shows that the Shapley value is characterized as the unique solution for TU games satisfying the inessential game property, continuity and associated consistency. The latter notion means that for every game the Shapley value of the associated game is equal to the Shapley value of the game itself. In this paper we show that also the EANS-value as well as the CIS-value are characterized by these three properties for appropriately modified notions of the associated game. This shows that these three values only differ with respect to the associated game. The characterization is obtained by applying the matrix approach as the pivotal technique for characterizing linear values of TU games in terms of associated consistency. Genjiu Xu, René van den Brink, Gerard van der Laan, Hao Sun 2012-10-08 TU games, Shapley value, EANS-value, CIS-value, associated consistency, matrix approach http://d.repec.org/n?u=RePEc:eab:develo:23409&r=all This paper explores the impact of past and future growth in the Association of Southeast Asian Nations (ASEAN)1 Since the mid-1990s, ACI growth has improved the non-oil terms of trade of the developed countries. There have also been strong complementarities between ACI suppliers of intermediate inputs and PRC exports. More developed Asian countries have benefited from PRC capital goods demand. ACI growth has, however, put competitive pressures on other less-developed manufacturing exporters, worsening their terms of trade and constraining their pricing ability. ACI growth has been especially beneficial for oil and minerals commodity producers. On the other hand, net food importers and oil importing countries have been adversely affected by high import costs. , the People's Republic of China (PRC), and India—here referred to as the ACI countries—on aggregate welfare, relative wages, and global emissions in the rest of the world. It outlines several analytical frameworks, considers effects over the past decade and, based on consensus forecasts, the implications of that growth for the rest of the world in the decades to come. Future ACI growth provides opportunities and challenges for the rest of the world. For developed countries the opportunities are for selling high-end services and capital and consumer goods in the ACI markets and enjoying the benefits from intra-industry trade; the challenges will come from increased head-to-head competition in manufactured goods and services that should become more intense in future decades. For medium-income producers currently at between 30% and 60% of US levels, there will be a tougher tradeoff between more intensive competition with the PRC and serving the growing middle classes in ACI countries. For poorer countries, there will greater opportunities for becoming part of global supply chains in manufactured exports. Standard frameworks that assume internal factor mobility suggest continuing pressures for wage inequality in developed countries. But these hinge on the assumption that the ACI and developed countries will continue to produce similar products and that the ACI will specialize in unskilled labor-intensive products. In fact, as their exports become more technology—intensive and developed countries more specialized these pressures could be alleviated. On the one hand, as the “flying geese†process continues, exports from countries with lower incomes than the PRC are likely to displace PRC labor-intensive exports rather than domestic production in developed countries. On the other hand, while it may cause job loss and erode the returns to specific factors, PRC export growth is less likely to be a source of wage inequality in advanced economies. Robert Z. Lawrence 2013-04 Association of Southeast Asian Nations (ASEAN), China, PRC, India, trade, flying geese, Intra-industry trade, global supply chains, manufactured exports http://d.repec.org/n?u=RePEc:dgr:uvatin:2013051&r=all We study multiple agents along a general river structure that is expressed by a geography matrix and who have access to limited local resources, quasi-linear preferences over water and money and cost functions dependent upon river inflow and own extraction. Unanimity bargaining determines the water allocation and monetary transfers. We translate International Water Law into either disagreement outcomes or individual aspiration levels. In the former case, we apply the asymmetric Nash bargaining solution, in the latter case the agents have to compromise in order to agree and we apply the asymmetric Nash rationing solution. In both cases the optimization problem is separable into two subproblems: the efficient water allocation that maximizes utilitarian welfare given the geography matrix; and the determination of the monetary transfers associated with the weights. We show that the Nash rationing solution may result in nonparticipation, therefore we generalize to the case with participation constraints. Harold Houba, Gerard van der Laan, Yuyu Zeng 2013-04-02 River Basin Management, International Water Law, Negotiations, Externalities, Political Economy of Property Rights http://d.repec.org/n?u=RePEc:dgr:uvatin:2012087&r=all This paper investigates regulation by auctions of private supply of congestible infrastructures in two networks settings: 1) two serial facilities, where the consumer has to use both in order to consume; and 2) two parallel facilities that are imperfect substitutes. There are four market structures: a monopoly and 3 duopolies that differ in how firms interact. The effects of an auction depend on what the bidders compete. With a transfer auction, the bidders compete on how much money they transfer to the government. This auction leads to the same outcome as the game without an auction (for a given market structure), since this gives the maximum profit to transfer. An auction on the capacity of a facility leads to an even lower welfare than no auction, because firms set very high capacities and usage fees. Conversely, an auction on the generalised price or number of users leads to the first-best outcome. Moreover, these two auctions are robust: they attain the first-best regardless of whether the facilities are auctioned off to a single firm or to two, and for all market and network structures. On the contrary, the performances (relative to the first-best) of the transfer and capacity auctions strongly depend on these considerations. Vincent A.C. van den Berg 2012-08-31 private supply, congestible facilities, auctions, serial facilities, parallel facilities, imperfect substitutes http://d.repec.org/n?u=RePEc:fip:fedmsr:481&r=all We develop a model in which, in order to provide managerial incentives, it is optimal to have costly bankruptcy. If benevolent governments can commit to their policies, it is optimal not to interfere with private contracts. Such policies are time inconsistent in the sense that, without commitment, governments have incentives to bail out firms by buying up the debt of distressed firms and renegotiating their contracts with managers. From an ex ante perspective, however, such bailouts are costly because they worsen incentives and thereby reduce welfare. We show that regulation in the form of limits on the debt-to-value ratio of firms mitigates the time-inconsistency problem by eliminating the incentives of governments to undertake bailouts. In terms of the cyclical properties of regulation, we show that regulation should be tightest in ag-gregate states in which resources lost to bankruptcy in the equilibrium without a government are largest. V.V. Chari, Patrick J. Kehoe 2013 Regulation http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2013-03&r=all Governments often attempt to increase the confidence of financial market participants by making implicit or explicit guarantees of uncertain credibility. Confidence in these guarantees presumably alters the size of the financial sector, but observing the long-run consequences of failed guarantees is difficult in the modern era. We look to America’s free-banking era and compare the consequences of a broken guarantee during the Indiana-centered Panic of 1854 to the Panic of 1857 in which guarantees were honored. Our estimates of a model of endogenous market structure indicate substantial negative long-run consequences to financial depth when panics cast doubt upon a government’s ability to honor its guarantees. Benjamin Chabot, Charles C. Moul 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012107&r=all We study the effects of a bank’s engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, short-term, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its 'spare' capital to profitably expand the scale of trading. However there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepening of financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking. Arnoud W.A. Boot, Lev Ratnovski 2012-10-11 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012146&r=all In imperfectly competitive credit markets, banks can face a tradeoff between exploiting their market power and enforcing hard budget constraints. As market power rises, banks eventually find it too costly to discipline underperforming borrowers by stopping their projects. Lending relationships become "too cozy", interest rates rise, and loan performance deteriorates. Stefan Arping 2012-12-20 Banking Competition, Soft Budget Constraint Problem, Moral Hazard http://d.repec.org/n?u=RePEc:cer:papers:wp479&r=all I present a model in which randomly matched pairs of people bargain over the division of output in each period. Output can be consumed or stored for later consumption. People are identical except possibly in wealth (i.e., the stored output). The one-period utility is linear except for the starvation disutility (i.e., the additional drop in utility under no consumption). The starvation disutility weakens the bargaining position of a poor person and strengthens that of a rich person in an otherwise symmetric bargaining, providing the incentive to accumulate wealth. Policies that deincentivize wealth accumulation (e.g., wealth tax, progressive income tax) can make both the rich and the poor become better off. matters. Byeongju Jeong 2013-01 bargain; wealth accumulation; starvation disutility; wealth tax; income tax; http://d.repec.org/n?u=RePEc:mos:moswps:2013-15&r=all We examine the relationship between gender of the barrister and appeal outcomes on the High Court of Australia. We find evidence of asymmetries in that gender matters if a female barrister presents oral argument for the appellant opposed to a respondent, for which one or more male barristers present oral argument, but the reverse is not true. Specifically, we find that an appellant represented in oral argument by a female barrister, opposed to a respondent represented in oral argument by a male barrister, is less likely to receive the vote of a justice in the majority. However, we also find that the appellant disadvantage of having a female barrister present oral argument is (partially) offset in the case of liberal justices and on panels having a higher proportion of female justices. The extent to which the disadvantage is offset and potentially turns from being a disadvantage to an advantage depends on the degree to which the judge is liberal and the proportion of female justices on the panel. Vinod Mishra, Russell Smyth 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012098&r=all We discuss Bayesian inferential procedures within the family of instrumental variables regression models and focus on two issues: existence conditions for posterior moments of the parameters of interest under a flat prior and the potential of Direct Monte Carlo (DMC) approaches for efficient evaluation of such possibly highly onelliptical posteriors. We show that, for the general case of <I>m</I> endogenous variables under a flat prior, posterior moments of order <I>r</I> exist for the coefficients reflecting the endogenous regressors’ effect on the dependent variable, if the number of instruments is greater than <I>m</I>+<I>r</I>, even though there is an issue of local non-identification that causes non-elliptical shapes of the posterior. This stresses the need for efficient Monte Carlo integration methods. We introduce an extension of DMC that incorporates an acceptance-rejection sampling step within DMC. This <I>Acceptance-Rejection within Direct Monte Carlo</I> (ARDMC) method has the attractive property that the generated random drawings are independent, which greatly helps the fast convergence of simulation results, and which facilitates the evaluation of the numerical accuracy. The speed of ARDMC can be easily further improved by making use of parallelized computation using multiple core machines or computer clusters. We note that ARDMC is an analogue to the well-known 'Metropolis-Hastings within Gibbs' sampling in the sense that one 'more difficult' step is used within an 'easier' simulation method. We compare the ARDMC approach with the Gibbs sampler using simulated data and two empirical data sets, involving the settler mortality instrument of Acemoglu et al. (2001) and father's education's instrument used by Hoogerheide et al. (2012a). Even without making use of parallelized computation, an efficiency gain is observed both under strong and weak instruments, where the gain can be enormous in the latter case. Arnold Zellner (posthumously), Tomohiro Ando, Nalan Basturk, Lennart Hoogerheide, Herman K. van Dijk 2012-09-24 Instrumental variables, Bayesian inference, Direct Monte Carlo, Acceptance-Rejection, numerical standard errors http://d.repec.org/n?u=RePEc:dgr:uvatin:2013015&r=all In this paper we develop and estimate a behavioral model of inflation dynamics with monopolistic competition, staggered price setting and heterogeneous firms. In our stylized framework there are two groups of price setters, fundamentalists and naive. Fundamentalists are forward-looking in the sense that they believe in a present-value relationship between inflation and real marginal costs, while naive are backward-looking, using the simplest rule of thumb, naive expectations, to forecast future inflation. Agents are allowed to switch between these different forecasting strategies conditional on their recent relative forecasting performance. The estimation results support behavioral heterogeneity and the evolutionary switching mechanism. We show that there is substantial time variation in the weights of forward-looking and backward-looking behavior. Although on average the majority of firms use the simple backward-looking rule, the market has phases in which it is dominated by either the fundamentalists or the naive agents. Adriana Cornea, Cars Hommes, Domenico Massaro 2013-01-14 Inflation, Phillips Curve, Heterogeneous Expectations, Evolutionary Selection http://d.repec.org/n?u=RePEc:dgr:uvatin:2013014&r=all We propose behavioral learning equilibria as a plausible explanation of coordination of individual expectations and aggregate phenomena such as excess volatility in stock prices and high persistence in inflation. Boundedly rational agents use a simple univariate linear forecasting rule and correctly forecast the unconditional sample mean and first-order sample autocorrelation. In the long run, agents learn the best univariate linear forecasting rule, without fully recognizing the structure of the economy. The simplicity of behavioral learning equilibria makes coordination of individual expectations on such an aggregate outcome more likely. In a first application, an asset pricing model with AR(1) dividends, a unique behavioral learning equilibrium exists characterized by high persistence and excess volatility, and it is stable under learning. In a second application, the New Keynesian Phillips curve, multiple equilibria co-exist, learning exhibits path dep endence and inflation may switch between low and high persistence regimes. Cars Hommes, Mei Zhu 2013-01-14 Bounded rationality; Stochastic consistent expectations equilibrium; Adaptive learning; Excess volatility; Inflation persistence http://d.repec.org/n?u=RePEc:qed:wpaper:1305&r=all We present an aggregate four good model (consumption, investment and two government goods) in which the current flows of one government good are in part pure public intermediate goods. The other public goods has "final" services for households. We are interested in a benefit approach to charging for government services that includes government services ‡owing directly to firms. The legal system is our representative intermediate public good and benefit charges to firms should include part of the maintenance of the legal system. John Hartwick 2013-01 public goods (intermediate), government charges for firms, cost of the legal system http://d.repec.org/n?u=RePEc:str:wpaper:1305&r=all 1 Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables Dr Kristinn Hermannsson, Fraser of Allander Institute, Department of Economics, University of Strathclyde kristinn.hermannsson@strath.ac.uk Abstract It is a well-established fact in the literature on simulating Input-Output tables that mechanical methods for estimating intermediate trade lead to biased results where cross-hauling is underestimated and Type-I multipliers are overstated. Repeated findings to this effect have led to a primary emphasis on advocating the accurate estimation of intermediate trade flows. This paper reviews previous research and argues for a qualification of the consensus view: When simulating IO tables, construction approaches need to consider spill-over effects driven by wage and consumption flows. In particular, for the case of metropolitan economies, wage and consumption flows are important if accurate Type-II multipliers are to be obtained. This is demonstrated by constructing an interregional Input-Output table, which captures interdependencies between a city and its commuter belt, nested within the wider regional economy. In addition to identifying interdependencies caused by interregional intermediate purchases, data on subregional household incomes and commuter flows are used to identify interdependencies from wage payments and household consumption. The construction of the table is varied around a range of assumptions on intermediate trade and household consumption to capture the sensitivity of multipliers. Kristinn Hermannsson 2013-05 Input-Output; Location Quotients; Commuting; Consumption; Glasgow; Scotland. http://d.repec.org/n?u=RePEc:nbr:nberwo:19037&r=all High and volatile prices of major commodities have generated a wide array of analyses and policy prescriptions, including influential studies identifying price bubbles in periods of high volatility. Here we consider a model of the market for a storable commodity in which price expectations are unbounded. We derive its implications for price time series and empirical tests of price behavior. In this model commodity price is equal to marginal consumption value, and hence bubbles as defined in financial economics cannot occur. However the model generates episodes of price runs that could be characterized as “explosive” and might seem to be bubble-like. At sufficiently long holding periods, a price path can yield average returns consistent with mean reversion, even though the long run expectation of price is infinite. Eugenio S. A. Bobenrieth, Juan R. A. Bobenrieth, Brian D. Wright 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012144&r=all We investigate the cyclicality of the private savings to GDP ratio for a panel of 19 OECD countries over the period 1971-2009. We find robust evidence that the private savings ratio is countercyclical. Three theories unambiguously predict a higher private savings ratio during recessions: a Ricardian offset effect, the presence of credit constraints, and precautionary savings. We find evidence only for the latter theory. Our estimations take into account a large number of econometric complications: persistence in the savings ratio, endogeneity of the regressors, cross-country parameter heterogeneity, cross-sectional dependence, stationarity issues, omitted variables, and instrument strength. Yvonne Adema, Lorenzo Pozzi 2012-12-17 Private Savings, Business Cycles, Ricardian offset, Credit Constraints, Precautionary Savings, Dynamic Panel, Cross-Sectional Dependence http://d.repec.org/n?u=RePEc:iza:izadps:dp7386&r=all The world's poorest people lack capital and skills and toil for others in occupations that others shun. Using a large-scale and long-term randomized control trial in Bangladesh this paper demonstrates that sizable transfers of assets and skills enable the poorest women to shift out of agricultural labor and into running small businesses. This shift, which persists and strengthens after assistance is withdrawn, leads to a 38% increase in earnings. Inculcating basic entrepreneurship, where severely disadvantaged women take on occupations which were the preserve of non-poor women, is shown to be a powerful means of transforming the economic lives of the poor. Bandiera, Oriana, Burgess, Robin, Das, Narayan, Gulesci, Selim, Rasul, Imran, Sulaiman, Munshi 2013-05 asset transfers, capital constraints, vocational training, occupational choice, structural change, poverty http://d.repec.org/n?u=RePEc:dgr:uvatin:2012111&r=all Cross‐border banking needs cross‐border recapitalisation mechanisms. Each mechanism, however, suffers from the financial trilemma, which is that cross‐border banking, national financial autonomy and financial stability are incompatible. In this paper, we study the efficiency of different burdensharing agreements for the recapitalisation of the 30 largest banks in Europe. We consider bank bailouts for these banks in a simulation framework with stochastic country‐specific bailout benefits. Among the burden sharing rules, we find that the majority and qualified‐majority voting rules come close to the efficiency of a bailout mechanism with a supranational authority. Even a unanimous voting rule works better than home‐country bailouts, which are very inefficient. Dirk Schoenmaker, Arjen Siegmann 2012-10-24 Financial Stability, Public Good, International Monetary Arrangements, International http://d.repec.org/n?u=RePEc:dgr:umagsb:2013018&r=all We try to explain the differences between the performance (in both reading and math) of 8430 15-year-old daughters and 8526 15-year-old sons in 17 Organisation for Economic Cooperation and Development destination countries across Europe and Oceania with the PISA 2009 data from 45 origin countries or regions. In addition to the level of societal gender equality of the origin and destination countries (the gender empowerment measure, or GEM) we use macro indicators of the educational systems, economic development, and religions of the countries of origin. We find that migrant daughters from countries with higher levels of gender equality have higher reading scores than comparable migrant sons (but this is not the case for math scores). In addition, the higher the level of gender equality in the destination countries, the lower the reading and math scores of both the male and female migrants’ children in their destination countries. Further analyses suggest that the difference between the levels of gender equality, rather than the levels themselves, of the origin and destination countries explains more of the educational performance of both female and male migrant pupils. Our results also show that the low level of gender equality in Islamic origin countries is a sufficient explanation of the low educational performance of Islam male and female migrants’ pupils. Finally, migrants’ daughters seem to perform slightly better educationally than comparable migrants’ sons. Kornder N., Dronkers J., Dronkers J. 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013017&r=all When public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate incentives for efficiency without jeopardizing access for high-risk individuals requires, among other things, an adequate system of risk adjustment. While risk adjustment is now widely adopted in health insurance, it is unclear whether adequate risk adjustment is feasible for LTC because of its specific features. We examine the feasibility of risk adjustment for LTC insurance using a rich set of linked nationwide Dutch administrative data. Prior LTC use and demographic information are found to explain much of the variation, while prior health care expenditures are important in reducing predicted losses for subgroups of health care users. Nevertheless, incentives for risk selection against some easily identifiable subgroups persist. Moreover, using prior utilization and expenditure as risk adjusters dilutes incentives for efficiency, but using multiyear data may reduce this disadvantage. Piet Bakx, Erik Schut, Eddy van Doorslaer 2013-01-17 risk adjustment, long-term care, managed competition, public insurance http://d.repec.org/n?u=RePEc:eec:wpaper:1312&r=all In the housing markets three basic facts have been repeatedly reported by empirical studies: the existence of price dispersion, the positive correlation between housing price and timeon-the-market, and between housing price and trading volume. Since housing markets are characterised by a decentralised framework of exchange with important search and matching frictions, this paper examines whether the baseline search and matching model can account for these three basic facts. We find that the standard matching framework allows to obtain a direct relationship between market frictions and house prices which represents the key mechanism to explain the basic facts of the housing market. Gaetano Lisi 2013-05 Matching models, Housing markets, Time-on-the-market, Housing price dispersion, Trading volume http://d.repec.org/n?u=RePEc:dgr:uvatin:2012113&r=all This article analyses the capacity-then-price game for a duopoly market. We add to the literature by explicitly taking product differentiation into account. We study the impact of capacity costs, demand uncertainty, and vertical and horizontal product differentiation on equilibrium capacities, efficiency, and price dispersion. We identify a minimum degree of vertical product differentiation, relative to horizontal product differentiation, for which the subgame perfect Nash equilibrium in pure strategies is guaranteed to exist. We find that if firms' quality differences exactly offset cost differences, asymmetric outcomes in the capacity stage arise, with the low-cost, low-quality firm providing more capacity than its competitor. We show that the highest level of efficiency is reached at the degree of vertical product differentiation where it would be optimal for welfare if firms had equal capacities. Furthermore, our model provides an explanation for ambiguous results in empirical research on price dispersion. Christiaan Behrens, Mark Lijesen 2012-10-26 Price competition, Capacity choice, Demand uncertainty, Product differentiation, Price dispersion http://d.repec.org/n?u=RePEc:nbr:nberwo:19038&r=all We investigate global factors associated with cross-border capital flows. We formulate a model of gross capital flows through the international banking system and derive a closed form solution that highlights the leverage cycle of global banks as being a prime determinant of the transmission of financial conditions across borders. We then test the predictions of our model in a panel study of 46 countries and find that global factors dominate local factors as determinants of banking sector capital flows. Valentina Bruno, Hyun Song Shin 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012100&r=all In a cross-border takeover, the tax base associated with future capital gains is transferred from target shareholders to acquirer shareholders. Crosscountry differences in capital gains tax rates enable us to estimate the discount in target valuation on account of future capital gains. A one percentage point increase in the capital gains tax rate reduces the value of equity by 0.225%. The implied average effective tax rate on capital gains is 7% and it raises the cost of capital by 5.3% of its no-tax level. This indicates that capital gains taxation is a significant cost to firms when issuing new equity. Harry Huizinga, Johannes Voget, Wolf Wagner 2012-09-27 Capital gains taxation, Cost of capital, International takeovers http://d.repec.org/n?u=RePEc:dgr:uvatin:2012122&r=all We study the impact of fuel taxes and kilometer taxes on households' choices of vehicle quality, on their demand for kilometers driven, and on fuel consumption. Moreover, embedding this information in a model of the car market, we analyze the implications of these taxes for the opportunity costs of owning cars of different quality. Higher quality raises the fixed cost of car ownership, but it may raise (engine size, acceleration speed, etc.) or reduce (fuel technology, etc.) the variable user cost. Our results show that kilometer charges and fuel taxes have very different implications. For example, a higher fuel tax raises household demand for more fuel efficient cars, provided that the demand for car use is inelastic; it reduces the demand for characteristics that raise variable user costs. Surprisingly, however, a kilometer tax unambiguously reduces the demand for more fuel efficient cars. Incorporating price adjustments at the market level, we find th at fuel taxes raise the <I>marginal</I> fixed opportunity cost of better fuel efficiency at all quality levels. <I>Total</I> annual opportunity costs of owning highly fuel efficient cars increase, while they decline for cars of low fuel efficiency. We further find that both a fuel tax and a kilometer charge reduce the <I>total</I> annual fixed ownership cost for car attributes that raise the variable cost of driving (engine power, acceleration speed, etc.). There is thus in general a trade-off between fixed and variable car costs: if the latter increase - due to higher fuel prices or a kilometer charge - total demand for cars decreases and a return to equilibrium is only possible by a decrease in fixed costs. All theoretical results are illustrated using a numerical version of the model. The analysis shows that modeling the effect of tax changes on household behavior alone can produce highly misleading results. Bruno de Borger, Jan Rouwendal 2012-11-16 car market, car quality, fuel tax, kilometer charge, market equilibrium http://d.repec.org/n?u=RePEc:dgr:uvatin:2012078&r=all Medical expenditure risk can pose a major threat to living standards. We derive decomposable measures of catastrophic medical expenditure risk from reference-dependent utility with loss aversion. We propose a quantile regression based method of estimating risk exposure from cross-section data containing information on the means of financing health payments. We estimate medical expenditure risk in seven Asian countries and find it is highest in Laos and China, and is lowest in Malaysia. Exposure to risk is generally higher for households that have less recourse to self-insurance, lower incomes, wealth and education, and suffer from chronic illness. Gabriela Flores, Owen O'Donnell 2012-07-24 medical expenditures, catastrophic payments, downside risk, reference-dependent utility, Asia http://d.repec.org/n?u=RePEc:dgr:uvatin:2013060&r=all Accurate prediction of risk measures such as Value at Risk (VaR) and Expected Shortfall (ES) requires precise estimation of the tail of the predictive distribution. Two novel concepts are introduced that offer a specific focus on this part of the predictive density: the censored posterior, a posterior in which the likelihood is replaced by the censored likelihood; and the censored predictive likelihood, which is used for Bayesian Model Averaging. We perform extensive experiments involving simulated and empirical data. Our results show the ability of these new approaches to outperform the standard posterior and traditional Bayesian Model Averaging techniques in applications of Value-at-Risk prediction in GARCH models. Lukasz Gatarek, Lennart Hoogerheide, Koen Hooning, Herman K. van Dijk 2013-04-15 censored likelihood, censored posterior, censored predictive likelihood, Bayesian Model Averaging, Value at Risk, Metropolis-Hastings algorithm. http://d.repec.org/n?u=RePEc:dgr:uvatin:2012093&r=all Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group. We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results. L.J.H. Bettendorf, Egbert L.W. Jongen, Paul Muller 2012-09-13 Childcare subsidies, labour participation, hours worked, difference-in-differences http://d.repec.org/n?u=RePEc:dgr:uvatin:2012070&r=all The initial purpose of this study was to establish the effect of childhood conditions on longevity from the Brabant data set. This data set combines information at ages 12, 43, 53 and mortality between 53 and 71 for a sample of some 3000 individuals born around 1940 in the Dutch province of North Brabant. Proportional hazard analysis confirms the known association of early intelligence or cognitive ability with longevity, with a standardized hazard ratio of .80; this is the only significant childhood influence. Among men, the effect of some elements of adult socio-economic status can also be ascertained: education, income and wealth are each found to contribute about as much to a longer life as intelligence. The joint effect of all four variables is dominated by childhood intelligence and adult wealth at the expense of education and income. Jan S. Cramer 2012-07-17 Cognitive ability, mortality, socio-economic status, proportional hazards http://d.repec.org/n?u=RePEc:pra:mprapa:46961&r=all This paper examines the influence of monetary shocks in China on the U.S. economy over ‎‎1996-2012. The influence on the U.S. is through the sheer scale of China’s growth through ‎effects in demand for imports, particularly that of commodities. China’s growth influences ‎world commodity/oil prices and this is reflected in significantly higher inflation in the U.S. ‎China’s monetary expansion is also associated with significant decreases in the trade ‎weighted value of the U.S. dollar that is due to the operation of a pegged currency. China ‎manages the exchange rate and has extensive capital controls in place. In terms of the ‎Mundell–Fleming model, with imperfect capital mobility, sterilization actions under a ‎managed exchange rate permit China to pursue an independent monetary policy with ‎consequences for the U.S.‎ Vespignani, Joaquin L., Ratti, Ronald A 2013-05-01 International monetary transmission, China’s monetary aggregates http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-10&r=all The case study presented in this section aims to estimate the economic value of the water services used for hydropower in tropical forests in Costa Rica, and to assess the expected economic impact due to climate change. The model developed allows estimating the economic impacts of climate change on the hydroelectric sector, using the association between bio-physical data, technical data related to the plants and economic inputs. A production function is used for this purpose which relates the quantity of water available (runoff) with the energy generated by the selected plants, based on a sample of 40 plants. <br /> Results show a significant reduction in the hydropower production in all future scenarios, estimated between 41 and 43% for Costa Rica. This translates in a considerable reduction in the expected revenues of the hydroelectric sector in Costa Rica under all climate change scenarios considered, but with lower reductions in the B1 scenario, which incorporates sustainability criteria. Taking into account future technological changes, the model shows that it would be necessary to double the installed capacity of all plants to get an increase in annual revenue that ranges from 3-18%. With an increase in the installed capacity of about 50%, economic losses would be reduced by 12% in all the scenarios. Elisa Sainz de Murieta, Aline Chiabai 2013-04 http://d.repec.org/n?u=RePEc:mos:moswps:archive-47&r=all Public scepticism surrounding climate change is an obstacle for implementing climate change mitigation measures in many countries. However, very little is known about: (1) the nature and sources of climate change scepticism; and (2) its influence on preferences for climate change mitigation policies. In this paper, we investigate these two issues using evidence and analysis from an Australian public survey and choice experiment. The study has three key findings. First, the intensity of scepticism varies depending on its type; we observed little scepticism over the cause, trend and impact of climate change and widespread scepticism over the effectiveness of mitigation measures and global co-operation. Second, cause and mitigation scepticism play significant roles in determining public support for climate change abatement. Respondents who believed in human-induced climate change were significantly more supportive of mitigation. Likewise, respondents who believed that mitigation would be successful in slowing down climate change were significantly more likely to be supportive. Third, the general public tend to give the benefit of the doubt to supporting mitigation. Those who expressed higher uncertainty about climate outcomes were more supportive of mitigation than others with similar expectations but lower uncertainty. Sonia Akter, Jeff Bennett, Michael B. Ward 2013 Climate change; Emissions trading scheme; Scepticism; Mitigation; Public opinion; Choice experiment; Australia http://d.repec.org/n?u=RePEc:dgr:uvatin:2012112&r=all This paper develops a general-equilibrium model of skill-biased technological change that approximates the observed shifts in the shares of wage and non-wage income going to the top decile of U.S. households since 1980. Under realistic assumptions, we find that all agents can benefi…t from the technology change, provided that the observed rise in redistributive transfers over this period is taken into account. We show that the increase in capital’s share of total income and the presence of capital-entrepreneurial skill complementarity are two key features that help support the wages of ordinary workers as the new technology diffuses. Mark Kagan 2012-10-25 Income Inequality, Skill-biased Technological Change, Capital-skill Complementarity, Redistribution, Welfare http://d.repec.org/n?u=RePEc:dgr:uvatin:2013040&r=all This paper examines the issue of coercive journal self citations and the practical usefulness of two recent journal performance metrics, namely the Eigenfactor score, which may be interpreted as measuring “Journal Influence”, and the Article Influence score, using the Thomson Reuters ISI Web of Science (hereafter ISI) data for 2009 for the 200 most highly cited journals in each of the Sciences and Social Sciences. The paper also compares the two new bibliometric measures with two existing ISI metrics, namely Total Citations and the 5-year Impact Factor (5YIF) (including journal self citations) of a journal. It is shown that the Sciences and Social Sciences are different in terms of the strength of the relationship of journal performance metrics, although the actual relationships are very similar. Moreover, the journal influence and article influence journal performance metrics are shown to be closely related empirically to the two existing ISI metrics, and hence add little in practical usefulness to what is already known, except for eliminating the pressure arising from coercive journal self citations. These empirical results are compared with existing results in the bibliometrics literature. Chia-Lin Chang, Michael McAleer, Les Oxley 2013-03-04 Journal performance metrics, Coercive journal self citations, Research assessment measures, Total citations, 5-year impact factor (5YIF), Eigenfactor, Journal influence, Article influence http://d.repec.org/n?u=RePEc:dgr:uvatin:2012086&r=all An advantage of collective wage agreement is that search and business-stealing externalities can be internalized. A disadvantage is that it takes more time before an optimal allocation is reached because more productive firms (for a particular worker type) can no longer signal this by posting higher wages. Specifically, we consider a search model with two sided heterogeneity and on-the-job search. We compare the most favorable case of a collective wage agreement (i.e. the wage that a planner would choose under the constraint that all firms in a sector-ocupation cell must offer the same wage) with the case without collective wage agreement. We find that collective wage agreements are never desirable if firms can commit ex ante to a wage and only desirable if firms cannot commit and the relative efficiency of on the job search to off- the job search is less than 20%. This result is hardly sensitive to the bargaining power of workers. Empirically we find both for the Netherlands and the US that this value is closer to 50%. Xiaoming Cai, Pieter A. Gautier, Makoto Watanabe 2012-08-28 Collective wage agreements, on-the-job search, efficiency http://d.repec.org/n?u=RePEc:fip:feddgw:146&r=all This paper extends the Common Correlated Effects (CCE) approach developed by Pesaran (2006) to heterogeneous panel data models with lagged dependent variable and/or weakly exogenous regressors. We show that the CCE mean group estimator continues to be valid but the following two conditions must be satisfied to deal with the dynamics: a sufficient number of lags of cross section averages must be included in individual equations of the panel, and the number of cross section averages must be at least as large as the number of unobserved common factors. We establish consistency rates, derive the asymptotic distribution, suggest using co-variates to deal with the effects of multiple unobserved common factors, and consider jackknife and recursive de-meaning bias correction procedures to mitigate the small sample time series bias. Theoretical findings are accompanied by extensive Monte Carlo experiments, which show that the proposed estimators perform well so long as the time series dimension of the panel is sufficiently large. Alexander Chudik, M. Hashem Pesaran 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013061&r=all This paper develops a testing framework for comparing the predictive accuracy of copula-based multivariate density forecasts, focusing on a specific part of the joint distribution. The test is framed in the context of the Kullback-Leibler Information Criterion, but using (out-of-sample) conditional likelihood and censored likelihood in order to focus the evaluation on the region of interest. Monte Carlo simulations document that the resulting test statistics have satisfactory size and power properties in small samples. In an empirical application to daily exchange rate returns we find evidence that the dependence structure varies with the sign and magnitude of returns, such that different parametric copula models achieve superior forecasting performance in different regions of the support. Our analysis highlights the importance of allowing for lower and upper tail dependence for accurate forecasting of common extreme appreciation and depreciation of different currencies. Cees Diks, Valentyn Panchenko, Oleg Sokolinskiy, Dick van Dijk 2013-04-19 Copula-based density forecast, Kullback-Leibler Information Criterion, out-of-sample forecast evaluation http://d.repec.org/n?u=RePEc:snv:dp2009:2013103&r=all Several Cloud computing business models have been developed and implemented, including dynamic pricing schemes. This paper extends the known concepts of revenue management to the specific case of Cloud computing from two perspectives. First, we propose system architecture for Cloud service providers for combining demand-based pricing and scheduling. Second, a comparison of two yield management methods for cloud computing has been compared: Limited Discount Period Algorithm and VM Reservation Level Algorithm. By taking advantage of demand estimation, the two algorithms find the optimum number of VMs that are sold at full price and the optimum time period before the allocation when the prices should change. Simulation results show that both yield management methods outperform static pricing models and the algorithms perform differently considering the deviation of demand. Mohammad Mahdi Kashef, Azamat Uzbekov, Jorn Altmann, Matthias Hovestadt 2013-05 Cloud Computing, Revenue Management, Pricing Strategy, Autonomic Resource Management. http://d.repec.org/n?u=RePEc:mos:moswps:2013-20&r=all This study contributes to an important, but under-researched, topic on China by empirically examining the theory of compensating differentials in the context of China's migrant workers. Using survey data collected from the Pearl River Delta in Guangdong province in south China, this study applies the Firpo-Fortin-Lemieux quantile decomposition method to examine the compensating wage and income differentials for migrant workers undertaking risky and safe jobs. The results show that migrant workers undertaking risky jobs incur a wage penalty at medium- and low-wage levels and an income penalty at the low-income level. In contrast, migrant workers at the high wage level enjoy positive wage premiums, and those at the medium and high-income levels enjoy positive income premiums. Both the negative wage premiums and positive income premiums exhibit an inverted U-shape with the quantile increment. Overtime allowances, bonuses and other income are the major sources of compensation for job riskiness. In addition, at the medium-income level, workers in risky jobs are further compensated by employee benefits, while at the high-income level they are further compensated by medical reimbursement. Haining Wang, Zhiming Cheng, Russell Smyth 2013-05 China; Pearl River Delta economy; migrant workers; compensating wage/income differentials http://d.repec.org/n?u=RePEc:fip:fedpwp:13-17&r=all Banks supply payment services that underpin the smooth operation of the economy. To ensure an efficient payment system, it is important to maintain competition among payment service providers, but data available to gauge the degree of competition are quite limited. We propose and implement a frontier- based method to assess relative competition in bank-provided payment services. Billion dollar banks account for around 90 percent of assets in the U.S., and those with around $4 to $7 billion in assets turn out to be both the most and the least competitive in payment services, not the very largest banks. Wilko Bolt, David Humphrey 2013 Payment systems ; Competition ; Banks and banking http://d.repec.org/n?u=RePEc:dgr:uvatin:2012116&r=all We analyse the behaviour of market participants in a multi-modal commuter network where roads are not priced, but public transport has a usage fee, which is set while taking the effects on the roads into account. In particular, we analyse the difference between markets with a monopolistic public transport operator, which operates all public transport links, and markets in which separate operators own each public transport link. To do so, we consider a simple transport network consisting of two serial segments and two parallel congestible modes of transport. We obtain a reduced form of the public transport operator's optimal fare setting problem and show that, even if the total travel demand is inelastic, serial Bertrand-Nash competition on the public transport links leads to different fares than a serial monopoly; a result not observed in a static model. This results from the fact that trip timing decisions, and therefore the generalized prices of all commuters, are influenced by all fares in the network. We then use numerical simulations to show that, contrary to the results obtained in classic studies on vertical competition, monopolistic fares are not always higher than duopolistic fares; the opposite can also occur. We also explore how different parameters influence the price differential, and how this affects welfare. Adriaan Hendrik van der Weijde, Erik T. Verhoef, Vincent van den Berg 2012-11-01 Public transport, congestion, market structure, market design http://d.repec.org/n?u=RePEc:fip:fedrwp:13-04&r=all Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities, inter-industry local externalities, employee spinouts, and location fixed-effects. Our findings suggest that inter-industry spillovers, particularly the development of the carriage and wagon industry, play an important role. Spinouts play a secondary role and only contribute to agglomeration at later stages of industry evolution. The presence of other firms in the same industry has a negligible (or maybe even negative) effect on agglomeration. Finally, location fixed-effects account for some agglomeration, though to a lesser extent than inter-industry spillovers and spinouts. Luis Cabral, Zhu Wang, Daniel Yi Xu 2013 Economic growth ; Regional economics ; Automobile industry and trade http://d.repec.org/n?u=RePEc:iza:izadps:dp7373&r=all How does the tax system's complexity affect people's reaction to tax changes? To answer this question, we conduct a real-effort experiment in which subjects receive a piece rate and face a set of taxes. In one treatment the tax system is simple; in the other treatment it is highly complex. The payoff-maximizing effort level and the incentives around this optimum are, however, identical across treatments. We then introduce the same sequence of additional tax rules in both treatments. We find that subjects in the complex treatment adjust their effort provision less in response to a new tax than subjects in the simple treatment. Many subjects in the complex treatment even ignore the new rule entirely, repeating their previous choice. Contrary to predictions from models of rational inattention, we find no evidence that subjects are less likely to ignore larger changes in incentives. Our results suggest that the effect of a newly introduced tax will be attenuated in a more complex tax system. Abeler, Johannes, Jäger, Simon 2013-04 complexity, taxation, attention, salience, laboratory experiment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012047&r=all This paper enriches existing valuation literature in a number of ways by presenting context-specific estimates of immaterial damage. First, it offers an estimation of value of statistical life (VOSL) in the context of a natural hazard (flooding). Next, as one of the contributions, alongside with less biased estimate of VOSL (euro 6.8 mln) it also provides estimates of the value of statistical injury (VOSI, euro 92,000), and of the value of statistical evacuation (VOSE, euro 2,400). Our estimated indicators are plausible and stay robust throughout various estimations. For flood protection policy in the Netherlands, a higher value of VOSL forthcoming from this research would imply 'underprotection' under current conditions. Another important finding concerns the composition of the total value of immaterial damages, where value of fatalities or value of evacuation may dominate depending on the prevailing floor risk circumstances. This implies that, first, VOSL is not an adequate proxy for immaterial damages since it understates prospective benefits of designated protective measures. Second, spatially differentiated composition of immaterial damages should be explicitly considered to guide policy decisions. Marija Bockarjova, Piet Rietveld, Erik T. Verhoef 2012-04-26 cost-benefit analysis, natural hazard, flood risk, stated preferences, choice experiment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012019&r=all Social networks, be it on the internet or in real life, facilitate information flows. We model this by giving agents incentives to link with others and receive information through those links. In many networks agents will value confirmation of the information they receive from others. Our paper analyzes the impact such a need for confirmation has on the social networks which are formed. We first study the existence of Nash equilibria and then characterize the set of strict Nash networks. Next, we characterize the set of strictly efficient networks and discuss the relationship between strictly efficient networks and strict Nash networks. Pascal Billand, Christophe Bravard, Jurjen Kamphorst, Sudipta Sarangi 2012-03-01 connections model, confirmation, two-way flow models http://d.repec.org/n?u=RePEc:dgr:uvatin:2012136&r=all A (point-valued) solution for cooperative games with transferable utility, or simply TU-games, assigns a payoff vector to every TU-game. In this paper we discuss two classes of equal surplus sharing solutions, one consisting of all convex combinations of the equal division solution and the CIS-value, and its dual class consisting of all convex combinations of the equal division solution and the ENSC-value. We provide several characterizations using either population solidarity or a reduced game consistency in addition to other standard properties. Rene van den Brink, Youngsub Chun, Yukihiko Funaki, Boram Park 2012-12-07 TU-game, equal division solution, CIS-value, ENSC-value, population solidarity, consistency http://d.repec.org/n?u=RePEc:dgr:uvatin:2012106&r=all We study the effect of going-concern contingent capital on bank risk choice. The possibility of debt for equity conversion forces deleveraging in highly levered states, when risk incentives are worse. The additional equity reduces endogenous risk shifting by diluting returns in high states. An optimally designed trigger and convertible debt amount trades off this risk reduction against its debt dilution effect. Interestingly, contingent capital may be less risky in equilibrium than traditional debt, as its lower priority is compensated by reduced endogenous risk. Its effectiveness in risk reduction depends critically on the informativeness of the trigger. Adopting a noisy market trigger produces excess conversion (type II error), while an accounting trigger converts too infrequently (type I error) because of regulatory forbearance. Natalya Martynova, Enrico Perotti 2012-10-09 Risk shifting; Financial Leverage; Contingent Capital http://d.repec.org/n?u=RePEc:dgr:uvatin:2012102&r=all Certain types of corporate social responsibility (CSR) activities can generate an ‘insurance-like’ benefit for firms (Godfrey, 2005). Thus far, this risk management hypothesis has been verified for the effects of firm-specific negative events. We argue that this insurance-like benefit of CSR-activities can be equally expected in the context of long-term developments which threaten current business models. We develop our arguments for the incremental, long-term process of internalizing negative externalities. For this, we consider the negative externalities resulting from the emission of greenhouse gases (GHG) and perform a panel analysis of a sample of 1699 firms over a period of 7 years. Our results show that firms can reduce their market-based risk by curbing their GHG-emissions. We furthermore propose an opposing effect on accounting-based risk, but do not find empirical support for this. We conclude that CSR-activities aimed at reducing a firm’s exposure to specific long-term developments can be sound corporate risk management, even if such activities may not yet be profitable. Timo Busch, Nils Lehmann, Volker H. Hoffmann 2012-10-01 GHG-emissions, negative externalities, financial risk, corporate social responsibility, long-term developments http://d.repec.org/n?u=RePEc:iza:izadps:dp7372&r=all Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This paper shows experimentally that in such contexts many people neglect these correlations in the updating process and treat correlated information as independent. In consequence, people's beliefs are excessively sensitive to well-connected information sources, implying a pattern of "overshooting" beliefs. Additionally, in an experimental asset market, correlation neglect not only drives overoptimism and overpessimism at the individual level, but also affects aggregate outcomes in a systematic manner. In particular, the excessive confidence swings caused by correlated signals give rise to predictable price bubbles and crashes. These findings are reminiscent of popular narratives according to which aggregate booms and busts might be driven by the spread of "stories". Our results also lend direct support to recent models of boundedly rational social learning. Enke, Benjamin, Zimmermann, Florian 2013-04 beliefs, correlation neglect, experiments, markets, overshooting http://d.repec.org/n?u=RePEc:pra:mprapa:46874&r=all The aim of this paper is to focus on corrupt practices that develop within the education sector and the consequences associated with them. Given the fact that most previous studies dealing with the costs of corruption put emphasis only on corruption from public officials, we propose a typology of consequences that allows a comprehensive understanding of the effects related to corrupt practices that could thrive in the education sector. The typology of consequences presented in this paper identifies three types of consequences: those related to the achievement of the goals of access, quality and equality given to the education system, those related to the demand for education and school performance and, those related to the achievement of broader objectives of the education sector and the development of society as a whole. Dridi, Mohamed 2013 Corruption, Education http://d.repec.org/n?u=RePEc:dgr:uvatin:2012064&r=all The famous Mohring-Harwitz theorem states that, under certain technical conditions, the degree of self-financing of congested infrastructure is equal to the elasticity of the capacity cost function in the optimum, so that under neutral scale economies exact self-financing applies. Although the theorem has been proven to remain valid for various extensions of the basic set-up for which it was originally derived, it breaks down when the infrastructure is used by operators with market power when competing in Cournot fashion, the case in point often being oligopolistic airlines at a congested airport. This paper proposes a regulatory scheme, not involving lump-sum payments or budget constraints in the optimal pricing problem, that restores self-financing for congested infrastructure for this market form. What is more, under the proposed scheme, exact self-financing applies independent of the elasticity of the capacity cost function. The result remains true both for the case where operators treat the tolls parametrically, and for 'manipulable' tolls, designed to account for the fact that operators with market power can be expected to be aware of, and exploit, the fact that toll are not truly parametric, but instead depend on their own behaviour. Erik T. Verhoef 2012-07-06 Congestion pricing, capacity choice, self-financing infrastructure, market power, airport congestion http://d.repec.org/n?u=RePEc:iza:izadps:dp7392&r=all This paper studies the effect of coworker-based networks on individual labour market outcomes. I analyse how the provision of labour market relevant information by former coworkers affects the employment probabilities and, if hired, the wages of male workers who have previously become unemployed as the result of an establishment closure. To identify the causal effect of an individual worker's network on labour market outcomes, I exploit exogenous variation in the strength of these networks that is due to the occurrence of mass-layoffs in the establishments of former coworkers. The empirical analysis is based on administrative data that comprise the universe of workers employed in Germany between 1980 and 2001. The results suggest a strong positive effect of a higher employment rate in a worker's network of former coworkers on his re-employment probability after displacement: a 10 percentage point increase in the prevailing employment rate in the network increases the re-employment probability by 7.5 percentage points. In contrast, there is no evidence of a statistically significant effect on wages. Glitz, Albrecht 2013-05 networks, labour markets, employment, wages http://d.repec.org/n?u=RePEc:dgr:uvatin:2012142&r=all We examine the impact CDS protection on lending relationships and efficiency. CDS insulate lenders against losses from forcing borrowers into default and liquidation. This improves the credibility of foreclosure threats, which can have positive implications for borrower incentives and credit availability ex ante. However, lenders may also abuse their enhanced bargaining power vis-a-vis borrowers and extract additional surplus in debt renegotiations. If this hold up threat becomes severe, borrowers will be reluctant to agree to debt maturity designs or control right transfers that would have been optimal in the absence of CDS protection. The introduction of CDS markets may then ultimately tighten credit constraints and be detrimental to welfare. Stefan Arping 2012-12-12 Corporate Lending; Financial Innovation; Credit Default Swaps; Credit Derivatives; Credit Risk Transfer; Empty Creditor Problem http://d.repec.org/n?u=RePEc:dgr:uvatin:2012031&r=all We study the role of private equity firms in cross-border mergers and acquisitions. We find that private equity-owned firms are more likely to become targets in crossborder M&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively reach out for an acquirer. On average, cross-border deals with private equity-involvement are not associated with higher announcement returns. However, announcement returns are higher if the acquirer is owned by a private equity firm and the target is from a country with poor corporate governance. We provide evidence indicating that the international networks and connections that result from prior cross-border deals can explain why private equity firms create value in such deals. Our findings suggest that private equity firms can help to reduce information asymmetries in certain cross-border M&A deals. We perform several tests to address possible endogeneity concerns. Mark Humphery-Jenner, Zacharias Sautner, Jo-Ann Suchard 2012-03-29 G34, G32, G24 http://d.repec.org/n?u=RePEc:mos:moswps:2013-21&r=all Consistent estimates of the effect of ethnic identity on labor market outcomes is complicated by the endogenous relationship between performance on the labor market and attitudes towards ethnic identity. This paper uses measures of genetic and linguistic distance between an immigrants' home and host countries as instruments for ethnic identity. We find some evidence for adverse effects of home country identity on male immigrants' unemployment likelihood. Our results also suggest that a stronger host country identity only has a systematic effect on female employment and job satisfaction. Overall, ethnic identity appears to play only a negligible role in immigrants' labour market performance. Asadul Islam, Paul A. Raschky 2013-05 Ethnic Identity, Labor Market Outcomes, Instrumental Variables http://d.repec.org/n?u=RePEc:pra:mprapa:46953&r=all We propose a new climate policy that is efficient, robust, and asks for payments proportional to realized climate damage. In each period, countries are made liable for their share of the responsibility in the current damage. Efficiency follows from countries' anticipations of climate change, hence of future payments. Robustness is achieved thanks to the introduction of a market for carbon liabilities. Rather than being based on the expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries. Billette de Villemeur, Etienne, Leroux, Justin 2013-05 Climate Change; Ex-ante vs ex-post approach; Carbon Liability http://d.repec.org/n?u=RePEc:pra:mprapa:46605&r=all Background: Logistics cost is an important factor affecting the competitiveness on both macro (national) and micro level (firms). Logistics cost indicates the performance of logistics industry, efficiency level and its competitiveness. Research Problem: Despite of its significance, current state of logistics cost accounting and management in Malaysia has not properly addressed and the issues surround logistics cost measurement remains incoherent. Aim of research: The purpose of this study is to give an overview of the current state and issues of logistics cost accounting and management in Malaysia. Research Method: This study used content analysis as a qualitative research tool, and supported by literature material with regards the concerned research tool. Findings: This study has found the importance of having standard logistics cost accounting measurement, which plays a vital role in determining the accuracy of the logistics cost and ascertain the efficiency level of logistics industry in Malaysia. Implication: This study leads to trigger the awareness of current state and issues of logistics cost accounting and management in Malaysia. Zakariah, Sahidah, Pyeman, Jaafar 2013-01-01 logistics cost; logistics cost accounting; cost management http://d.repec.org/n?u=RePEc:iie:pbrief:pb13-11&r=all Theodore H. Moran cites recent instances of the US government intervening to block foreign producers of information technology (IT) from selling goods and services to US firms and argues that such actions based on the nationality of the foreign firm is ineffective, discriminatory, and unfair. The dangers and risks of compromise of US national security are real. But in a world where supply chains of IT companies of every nationality are thoroughly globalized, a better way to protect national security would be to establish a multilateral nondiscriminatory system to ensure the integrity of equipment, software, patches, and upgrades from all sources. Much remains to be done to establish an appropriate regime to protect national security and also the rights of investors and companies doing business with foreign firms. The goal should be to strike a balance between protecting national security without discouraging foreigners from investing in and doing business with US firms. Theodore H. Moran 2013-05 http://d.repec.org/n?u=RePEc:eab:govern:23407&r=all This paper discusses the financial landscape of the Association of Southeast Asian Nations (ASEAN), a region engaged in building an economic community (a “single market and production baseâ€) by 2015. In particular, it reviews where ASEAN’s financial markets and institutions now stand and suggests possible ways in which they might be developed further to meet the aspirations of the region. Diversity characterizes the ASEAN financial landscape today. While some countries have relatively developed capital markets, commercial banks and insurance companies, in the others neither the markets nor the institutions are well developed. But regardless of where they are today, size is the critical constraint in all of ASEAN’s domestic financial systems. Thus, promoting regional financial integration is essential to developing a financial system with sufficient depth and liquidity. To support market development and financial integration, regional cooperation would be particularly useful, which could take the form of creating new institutions, such as : a mechanism for monitoring financial integration; a region-wide deposit insurance system; a regional credit rating scheme; a regional financial market supervisory system; a region-wide payment and settlement system; capacity building initiatives; and a consumer protection system. ASEAN’s consensus-driven decision-making process has delayed many of the institutional reforms critical to integration. The ASEAN leaders must recognize that the ASEAN principles and ideals that have worked well in the past in creating the unity of purpose may no longer be adequate in this fast changing world. In order to succeed in achieving the level of financial development commensurate with high-income status by 2030, the ASEAN member countries must go far beyond what is likely achievable in the early phases of the ASEAN Economic Community by surrendering more of their national sovereignty to create regional institutions with binding rules. Choong Lyol Lee, Shinji Takagi 2013-03 ASEAN, financial markets, financial landscape, regional cooperation, financial integration, regional credit rating scheme http://d.repec.org/n?u=RePEc:dgr:uvatin:2012010&r=all We formulate a simple model of optimal defensive disclosure by a monopolist facing uncertain antitrust enforcement and test its implications using unique data on defensive disclosures and patents by IBM during 1955-1989. Our results indicate that stronger antitrust enforcement leads to more defensive disclosure, that quality inventions are disclosed defensively, and that defensive disclosure served as an alternative but less successful mechanism to patenting at IBM in appropriating returns from R&D. Ajay Bhaskarabhatla, Enrico Pennings 2012-02-09 Antitrust, Defensive Disclosure, Patent, IBM http://d.repec.org/n?u=RePEc:cer:papers:wp486&r=all In this paper we investigate the effects of introduction of lump sum copayments on the utilization of prescription drugs by elderly patients. We make use of an unique dataset and analyze the policy change that implemented patient cost-sharing in the Czech Republic starting in 2008. After the introduction of copayments the number of prescriptions filled decreased by 29%. At the same time, however, total expenditures on prescription drugs dropped only in the first quarter of the postintroduction period and then returned to previous levels. This was partially due to behavioral responses of patients and physicians: strategic shift of prescription purchases to the time right before the introduction of reform, prescription of more packages on one prescription and an upward shift in the price composition of prescribed drugs. Moreover, patients in general decided to forego those types of drugs that did not cause immediate worsening of health status. Eva Hromadkova, Michal Zdenek 2013-04 health insurance; moral hazard; cost sharing; prescription drugs; http://d.repec.org/n?u=RePEc:ehu:dfaeii:10013&r=all This study addresses the issue of intergenerational transmission of democratic values embedded in social choice rules. We focus on a few rules which have been the focus of social choice theory: plurality, plurality with a runoff, majoritarian compromise, social compromise and Borda rule. We confront subjects with preferences profiles of a hypothetical electorate over a set of four alternatives. Different rules produce different outcomes and subjects decide which alternative should be chosen for the society whose preference profile is shown. We elicit each subject's preferences over rules and his/her parents' and check whether there is any relationship; 186 students and their parents attended the sessions at Istanbul Bilgi University. Overall, we find support for the hypothesis of parental transmission of democratic values and gender differences in the transmitted rule. Brañas Garza, Pablo, Espinosa Alejos, María Paz, Giritligil, Ayca E. 2013 experiments, political transmission, democratic values, social choice http://d.repec.org/n?u=RePEc:pra:mprapa:46912&r=all This working paper attributes a (potential) path of per-capita US output to demographic effects of the post-war baby boom. To the extent that the baby-boom generation predominates among age cohorts in the US population, a life-cycle model suggests a secular trend in per-capita GDP that is largely congruent with realized (and realizing) potential economic growth. Belliveau, Stefan 2013-05-11 Demography, US, 1945-2046; economic growth; neoclassical growth model;population dynamics http://d.repec.org/n?u=RePEc:pra:mprapa:46937&r=all In this paper we convert annual GDP, investment spending, and government expenditure data into quarterly figures for Pakistan using observed annual time-series data for the period 1971-2010. Three different econometric disaggregation techniques, namely the Denton (1970) approach, the Chow-Lin (1971) framework, and the cubic spline interpolation method, are used for quarterisation. We use quarterly consumer price index (CPI) and industrial production index (IPI) as the indicator variables while disaggregating annual frequency data into quarterly frequency data. The time series properties of estimated quarterly series are examined using different unit root tests. Correlation estimates indicate that interpolated quarterly series using all three methods are highly correlated. Time series plots illustrate that while the series quartered using the Denton approach and the Chow-Lin procedure exhibit similar trends. However, the quarterisation based on the farmer approach is more variable as compared to that based on the later approach. The data set is given in the appendix and the estimation codes for all three methods are available from the authors. Rashid, Abdul, Jehan, Zanaib 2013-04-14 Quarterly GDP; Quarterly investment; Quarterly government expenditures; Disaggregation methods, Quarterisation; Quarterly Data; Pakistan; the Denton approach; the Chow-Lin framework; the Cubic Spline interpolation process http://d.repec.org/n?u=RePEc:pra:mprapa:46974&r=all This article explores determinants of competitiveness in the booming Turkish textile and apparel industry. Using focus groups, nationwide survey data and explanatory factor analysis we identify 27 competitiveness items grouped into eight constructs. According to Turkish managers, the competitiveness of textile and apparel firm is heavily determined by the product differentiation, efforts across foreign markets, and availability of government’s incentive and support programs. In contrast to existing studies, we find little evidence that firm networking in different forms such as close relationship politicians and state employees, clustering, and participating in the industry associations have a large effect on firm competitiveness. Lau, Chi Keung Marco, Suvankulov, Farrukh, Karabag, Solmaz Filiz 2012-02-13 firm competitiveness, factor analysis, textile industry, apparel industry, Turkey http://d.repec.org/n?u=RePEc:dgr:umagsb:2013016&r=all This paper measures determinants of individual academic achievements. In addition to an extensive list of individual characteristics, skills obtained during study and socio-economic background factors, many dimensions of selectivity into academic study subjects are shown to drive individual academic achievement, such as differences between average student grades during tertiary education or cognitive skills. This paper is based on a large and representative graduate survey of graduates in the academic year 2003/2004 in the German state of Bavaria. Zwick Th. 2013 http://d.repec.org/n?u=RePEc:iza:izadps:dp7395&r=all Subjective expectations are fundamental for understanding individual behavior. Yet, little is known about how individuals use new information to formulate and update their subjective expectations. In this study, we exploit data from a multi-treatment field experiment to investigate how job-market information sent to jobseekers via short text messages (SMS) influence subjective job gain expectations in Peru. Results show that jobseekers who received digital intermediation based on a large information set increased their before-after job gain expectations relative to the control group. Independently of the information channel, no significant effects were found when labor-market intermediation is based on a restricted (short) set of information. Dammert, Ana C., Galdo, Jose C., Galdo, Virgilio 2013-05 subjective expectations, labor-market intermediation, ICT, field experiments, Peru http://d.repec.org/n?u=RePEc:dgr:uvatin:2012124&r=all The majority of cities in our world is not only connected through conventional physical infrastructure, but increasingly through modern digital infrastructure. This paper aims to test whether digital connectivity leads to other linkage patterns among world cities than traditional infrastructure. Using a generalized spatial interaction model, this paper shows that geography (and distance) still matters for an extensive set of world cities analysed in the present study. With a view to the rapidly rising urbanization in many regions of our world, the attention is next focused on the emerging large cities in China in order to test the relevance of distance frictions - next to a broad set of other important explanatory variables - for digital connectivity in this country. Various interesting results are found regarding digital connectivity within the Chinese urban system, while also here geography appears to play an important role. Emmanouil Tranos, Karima Kourtit, Peter Nijkamp 2012-11-16 Digital Networks, Internet, Connectivity, World Cities, Death of Distance, Centrality, Small-World Networks, Clustering, Gravity Model http://d.repec.org/n?u=RePEc:dgr:kubcen:2013026&r=all Summary The present paper analyzes the choices faced by European employers when threatened with the prospect of the mass lay-off of their employees as a result of the Great Recession. By means of a representative survey among employers in Italy, Germany, Denmark, Poland, the Netherlands and Sweden in 2009, we show that employers mainly prefer to tackle such threats by offering short-time work, and by early retirement packages to older workers, in conjunction with buy-outs. The latter preference is particularly visible in countries where employers perceive the level of employment protection to be high. The only notable exception is Denmark, where employers prefer to reduce working hours. In general, a sense of generational fairness influences downsizing preferences, with those employers who favor younger workers particularly likely to use early retirement and buy-outs when downsizing, followed by working time reductions. Wage reductions and administrative dismissal are less favored by European employers. In particular, CEOs and owners are more inclined than lower-level managers to cut wages. Dalen, H.P. van, Henkens, K. 2013 downsizing;early retirement;fairness;older workers;recession http://d.repec.org/n?u=RePEc:arx:papers:1305.2263&r=all We have analyzed the Indices of Industrial Production (Seasonal Adjustment Index) for a long period of 240 months (January 1988 to December 2007) to develop a deeper understanding of the economic shocks. The angular frequencies estimated using the Hilbert transformation, are almost identical for the 16 industrial sectors. Moreover, the partial phase locking was observed for the 16 sectors. These are the direct evidence of the synchronization in the Japanese business cycle. We also showed that the information of the economic shock is carried by the phase time-series. The common shock and individual shocks are separated using phase time-series. The former dominates the economic shock in all of 1992, 1998 and 2001. The obtained results suggest that the business cycle may be described as a dynamics of the coupled limit-cycle oscillators exposed to the common shocks and random individual shocks. Yuichi Ikeda, Hideaki Aoyama, Hiroshi Iyetomi, Hiroshi Yoshikawa 2013-05 http://d.repec.org/n?u=RePEc:iza:izadps:dp7391&r=all Acemoglu and Johnson (2007) present evidence that improvements in population health do not promote economic growth. We show that their result depends critically on the assumption that initial health has no causal effect on subsequent economic growth. We argue that such an effect is likely, primarily because childhood health affects adult productivity. In our augmented model, which includes initial health, the instrumental variable proposed by Acemoglu and Johnson has no significant predictive power for improvements in health and does not identify the effect of contemporaneous improvements in health on economic growth. Bloom, David E., Canning, David, Fink, Günther 2013-05 health, development, economic growth http://d.repec.org/n?u=RePEc:dgr:uvatin:2012060&r=all Firms have not historically called their convertible bonds as soon as they could force conversion. Various explanations for the delay rely on the size of the dividends that bondholders forgo so long as they do not convert. We investigate an important change in convertible security design, namely that more than 95 percent of recent convertible bond issues are dividend-protected. Dividend protection means that the conversion value of the shares into which a bond is convertible is unaffected by dividend payments and dividendrelated rationales for call delay become moot. We document that dividend-protected convertibles are called as soon as conversion can be forced. Bruce D. Grundy, Patrick Verwijmeren 2012-06-26 Call policy, Dividend protection, Convertible securities, Security design http://d.repec.org/n?u=RePEc:iza:izadps:dp7390&r=all Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden. Fuest, Clemens, Peichl, Andreas, Siegloch, Sebastian 2013-05 business tax, wage incidence, administrative data, local taxation http://d.repec.org/n?u=RePEc:pra:mprapa:46862&r=all This paper uses a novel experimental design to study the effect of hypothetical personal experience on the adoption of a new insurance product in rural China. Specifically, we conduct a set of insurance games with a random subset of farmers. Our findings show that playing insurance games improves insurance take-up in real life by 48%. Exploring the mechanism behind this effect, we show that the effect is not driven by changes in risk attitudes, changes in perceived probability of disasters, or learning of insurance benefits, but is driven mainly by the experience acquired in playing the insurance game. Moreover, we find that, compared with experience with real disasters in the previous year, the hypothetical experience gained in the insurance game has a stronger effect on insurance take-up, implying that the impact of personal experience displays a strong recency effect. Cai, Jing, Song, Changcheng 2013-05-09 Insurance, Take-up, Game, Experience, Learning http://d.repec.org/n?u=RePEc:man:sespap:1308&r=all Abdilahi Ali, Baris Alpaslan 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012134&r=all Decisions-makers often rely on information supplied by interested parties. In practice, some parties have easier access to information than other parties. In this light, we examine whether more powerful parties have a disproportionate influence on decisions. We show that more powerful parties influence decisions with higher probability. However, in expected terms, decisions do not depend on the relative strength of interested parties. When parties have not provided information, decisions are biased towards the less powerful parties. Finally, we show that compelling parties to supply information destroys incentives to collect information. Zara Sharif, Otto H. Swank 2012-12-05 information collection, communication, interest groups, decision-making http://d.repec.org/n?u=RePEc:lmu:muenec:15131&r=all What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of a multinational firm about transplanting its business organisation to other countries. We test the theory with original and matched parent and affiliate data on the internal organization of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the business model to the affiliate firm in the host country: a competitive host market, the corporate culture of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organisational transfer by 18.5 percentage points, 37, and 31 percentage points. Marin, Dalia, Rousova, Linda, Verdier, Thierry 2013-04 organisational economics of multinational firms; trade and organisations; the theory of the firm; organisational transfer between countries http://d.repec.org/n?u=RePEc:koc:wpaper:1312&r=all This paper is an attempt to answer the long standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long-run income – purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long-run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long-run incomes is sensitive to the predictor used to proxy long-run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long-run income groups. Sule Alan, Kadir Atalay, Thomas F. Crossley 2013-05 Health inputs; saving rates; income; permanent income. http://d.repec.org/n?u=RePEc:mos:moswps:2013-19&r=all Young adults aged 19-24 are significantly less likely to have health insurance since most family insurance policies cut off dependents when they turn 19 or finish college. In recent years, several states in the United States have expanded eligibility to allow young adults to remain covered under their parents' employer-provided health insurance. For those who qualify for these benefits, the expansion of parental dependent coverage partially reduces the value of being employed by a firm that provides health insurance or of working full-time, as adult children can now obtain health insurance through another channel. In this study, we employ quasi-experimental variation in the timing and generosity of states' eligibility rules to identify the effect of the policy change on young adults' labor market choices. Our results suggest that the expansion of dependent coverage increases the group dependent coverage rate and reduces labor supply among young adults, particularly in full-time employment. The results are robust to a variety of empirical specifications and sample selection. Youjin Hahn, Hee-Seung Yang 2013-05 Young adults; Health insurance; Group dependent coverage; Labor force participation; Full- time employment http://d.repec.org/n?u=RePEc:pra:mprapa:47038&r=all The purpose of this study is to examine whether the performance of regions in providing employment of disabled people according to Law 68/99 can be affected by the performance of neighbouring regions. Hence, we propose a two-step analysis focusing on the Italian regions for the years 2000-2009. In the first step, we verify by means of the Stochastic Frontier Approach that the regions of Central and Northern Italy are more efficient in the matching process between demand and supply of jobs for disabled people than the regions of Southern Italy. Then, the efficiency results are analyzed using a Markov Spatial Transition Matrix in order to provide insights into the transitions of regions between efficiency levels, taking their local context into account. The results of this analysis show that good neighbors are important in promoting the improvement of the performance of the regions. However, the effects produced by bad neighbors should not be underestimated, especially when they are concentrated in an area of the country and have a time-space persistence. The effect of a persistent dualism on the performance of the regions with respect to the application of Law 68/99 is a problem that must be seriously considered by policy makers; especially when the regions with a low efficiency score are surrounded by neighbors with poor efficiency score and show an unhealthy poorly performing labour market. Agovino, Massimiliano 2013-05 Disabled People, Public Policy, Non-Labour Market Discrimination, Stochastic Frontier Approach, Spatial Markov Chain. http://d.repec.org/n?u=RePEc:iza:izadps:dp7385&r=all Trust in the citizens of a potential partner country may affect the decision to trade with or to migrate to a foreign country. This paper employs panel data to examine the causal impact of such bilateral trust on international trade and migration patterns. We apply instrumental variables (IV) approaches that capture the exogenous variance of bilateral trust separately with eight indicators of genetic ("somatic") distance between country-pairs. These indicators work equally well at the first stage. However, second-stage results very much depend on the exact measure employed as instrument. Overall, we find little evidence that bilateral trust affects international movements of goods and labor. More generally, we highlight the potential fragility of IV estimations even when the instruments seem plausible on theoretical grounds and when standard statistical tests confirm their validity. Spring, Eva, Grossmann, Volker 2013-05 instrumental variables, international trade, international migration, bilateral trust, somatic distance http://d.repec.org/n?u=RePEc:pra:mprapa:46899&r=all Journal impact factor (IF) as a gauge of influence and impact of a particular journal comparing with other journals in the same area of research, reports the mean number of citations to the published articles in particular journal. Although, IF attracts more attention and being used more frequently than other measures, it has been subjected to criticisms, which overcome the advantages of IF. Critically, extensive use of IF may result in destroying editorial and researchers’ behaviour, which could compromise the quality of scientific articles. Therefore, it is the time of the timeliness and importance of a new invention of journal ranking techniques beyond the journal impact factor. Fooladi, Masood, Salehi, Hadi, Md Yunus, Melor, Farhadi, Maryam, Aghaei Chadegani, Arezoo, Farhadi, Hadi, Ale Ebrahim, Nader 2013-02-16 Impact factor (IF), Journal ranking, Criticism, Praise, SCOPUS, Web of science, Self-citation http://d.repec.org/n?u=RePEc:iie:wpaper:wp13-3&r=all The authors explore the hypothesis that high home-ownership damages the labor market. The results are relevant to, and may be worrying for, a range of policymakers and researchers. The authors find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? The authors show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. The argument is not that owners themselves are disproportionately unemployed. Evidence suggests, instead, that the housing market can produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known. David G. Blanchflower, Andrew J. Oswald 2013-05 Natural rate of unemployment, labor market, housing market, structural, business cycles, mobility http://d.repec.org/n?u=RePEc:kie:kieliw:1840&r=all The effect of remittances on capital accumulation remains a contested topic. This paper uses a panel data set from rural Mexico to investigate the impact of remittances on agriculture and livestock investments. After controlling for the endogeneity of migration through an instrumental variable estimation our empirical results show that international migration has a significantly positive effect on the accumulated agricultural assets but not on livestock capital. This suggests that households use the capital obtained from international migration only to overcome liquidity constraints for subsistence production whereas migration itself seems to be the superior investment option compared to other productive activities such as livestock husbandry Marcus Böhme 2013-05 migration, investment, Mexico, agriculture http://d.repec.org/n?u=RePEc:dgr:uvatin:2012049&r=all This paper makes use of a new dataset to investigate energy intensity developments in the Netherlands over the period 1987-2005. The dataset allows for a comparison with 18 other OECD countries. A key feature of our analysis is that we combine a cross-country perspective with a high level of sectoral detail, covering 49 sectors. Particularly innovative is our evaluation of energy intensity developments in a wide range of Service sectors. We find that across sectors energy intensity levels in the Netherlands on average decreased only marginally, and increased in Services. This performance is in general worse than the OECD average, especially between 1987 and 1995. Changes in the sectoral composition of the economy play an important role in explaining aggregate trends. In the Manufacturing sector about half of the efficiency improvements were undone by a shift towards a more energy-intensive industry structure, while in the Service sector about one-third of the decrease in efficiency was undone by a shift towards a less energy-intensive sector structure. Peter Mulder, Henri L.F. de Groot 2012-05-01 Energy Intensity, Decomposition, Sectoral Analysis http://d.repec.org/n?u=RePEc:dgr:uvatin:2012137&r=all We consider a monocentric city where a traffic bottleneck is located at the entrance of the central business district. The commuters' choices of the departure times from home, residential location, and lot size, are all endogenous. We show that elimination of queuing time under optimal road pricing induces individuals to spend more time at home and to have larger houses, causing urban sprawl. This is opposite to the typical results of urban models with static congestion, which predict cities to become denser with road pricing. Sergejs Gubins, Erik T. Verhoef 2012-12-10 dynamic traffic congestion, urban equilibrium, road pricing, bottleneck model, monocentric model http://d.repec.org/n?u=RePEc:iza:izadps:dp7364&r=all This study aims to explore poverty measures, its dynamics and determinants using Multidimensional Poverty Index (MPI) and consumption poverty. Our results show that the two measures assign similar poverty status to about 52 percent of households and that both approaches confirm poverty is mainly transient in rural Ethiopia. However, we find that the trend in adjusted head count poverty is different when using these two poverty measures. In terms of determinants of poverty dynamics, we find that household size matters in consumption poverty while we do not find significant effects on multidimensional poverty. Amongst the shocks, drought shock is found to affect consumption poverty but not multidimensional poverty. This implies that short-term shocks are more reflected in consumption poverty while the effect of simultaneous shocks is exhibited significantly on multidimensional poverty. Overall, our result provides empirical evidence on the importance of using both measures as complementary to get a full picture of poverty measure, dynamics and determinants. Brück, Tilman, Workneh Kebede, Sindu 2013-04 poverty dynamics, consumption, multidimensional poverty index, rural Ethiopia http://d.repec.org/n?u=RePEc:ucg:wpaper:0041&r=all The dynamics of European market development before the Industrial Revolution are demonstrated to good effect by the Low Countries, which underwent several distinct phases of economic growth between 1000 and 1800. This case study presents a highly illuminating contrast between a considerable degree of economic integration between regions and continuing local variations in the organization of markets. We argue that the relative ease of trade and communication combined with economic competition between towns and regions to produce a fairly rapid diffusion of information, production techniques, legal concepts, and market design from one region to the next. Thus, it was not the early decline of feudalism that stimulated the successive phases of economic growth, but urban competition which produced both a dynamic evolution of contracting institutions and effective constraints on local and central executives. This explains why the political and legal fragmentation of the Low Countries did not end in economic stagnation. Oscar Gelderblom, Joost Jonker 2013-05 Low Countries, Pre-Industrial Europe, Markets, Capitalism, Urban Competition http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-22&r=all Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock. Robert Argento, Victoria L. Bryant, John Sabelhaus 2013 http://d.repec.org/n?u=RePEc:ehu:dfaeii:10021&r=all Global warming of the oceans is expected to alter the environmental conditions that determine the growth of a fishery resource. Most climate change studies are based on models and scenarios that focus on economic growth, or they concentrate on simulating the potential losses or cost to fisheries due to climate change. However, analysis that addresses model optimization problems to better understand of the complex dynamics of climate change and marine ecosystems is still lacking. In this paper a simple algorithm to compute transitional dynamics in order to quantify the effect of climate change on the European sardine fishery is presented. The model results indicate that global warming will not necessarily lead to a monotonic decrease in the expected biomass levels. Our results show that if the resource is exploited optimally then in the short run, increases in the surface temperature of the fishery ground are compatible with higher expected biomass and economic profit. Da Rocha, José María, Gutiérrez Huerta, María José, Villasante, Sebastián 2013 stock growth uncertainty, European sardine fishery,, global warming http://d.repec.org/n?u=RePEc:dgr:uvatin:2012024&r=all This paper identifies the role of cultural diversity in explaining spatial disparities in wages and housing prices across Dutch cities, using unique individual panel data of home owners. We distinguish between the effects of interactions-based productivity, consumption amenities and sorting of heterogeneous home owners while controlling for interactions between the labor and housing market. We find that an increase in the cultural diversity of the population positively impacts equilibrium wages and housing prices, particularly in the largest and most densely populated cities. This result is largely driven by spatial sorting of individuals in both the labor and housing market. After controlling for home owner heterogeneity we find that increasing cultural diversity no longer impacts local labor markets and negatively impacts local housing markets. The latter result is likely to be driven by a negative causal effect of increased cultural diversity on neighb orhood quality that outweighs a positive effect of increased cultural diversity in consumption goods. Jessie Bakens, Peter Mulder, Peter Nijkamp 2012-03-19 cultural diversity, immigrants, local amenities, sorting, housing prices, productivity http://d.repec.org/n?u=RePEc:dgr:uvatin:2013044&r=all We aim to disentangle the relative contributions of (i) cognitive ability, and (ii) education on health and mortality using a structural equation model suggested by Conti et al. (2010). We extend their model by allowing for a duration dependent variable, and an ordinal educational variable. Data come from a Dutch cohort born around 1940, including detailed measures of cognitive ability and family background at age 12. The data are subsequently linked to the mortality register 1995-2011, such that we observe mortality between ages 55 and 75. The results suggest that the treatment effect of education (i.e. the effect of entering secondary school as opposed to leaving school after primary education) is positive and amounts to a 4 years gain in life expectancy, on average. Decomposition results suggest that the raw survival differences between educational groups are about equally split between a 'treatment effect' of education, and a 'selection effect' on basis of cognitive ability and family background. Govert Bijwaard, Hans van Kippersluis, Justus Veenman 2013-03-15 Education, Cognitive Ability, Mortality, Structural Equation Model, Duration Model http://d.repec.org/n?u=RePEc:dgr:uvatin:2012069&r=all The One Million Initiative aims to give one million people in rural Mozambique access to clean drinking water and adequate sanitation by constructing new water points and providing sanitation training. We use panel survey data for 1600 households to analyze the health impact of the Initiative. The paper moves beyond a black box evaluation by analyzing the contribution of various channels through which the interventions affected health. To our knowledge this is the first rigorous evaluation of such a large scale program in the water and sanitation sector. We find that the water point intervention had a sizeable impact on the use of improved water sources and on the health of young children (up to 3 years), while the sanitation training had a strong impact on latrine ownership and on the health of both adults and older children. Chris Elbers, Samuel Godfrey, Jan Willem Gunning, Matteus van der Velden, Melinda Vigh 2012-07-17 impact evaluation, water and sanitation programs, health impact http://d.repec.org/n?u=RePEc:dgr:uvatin:2012039&r=all The introduction of the New Cooperative Medical Scheme in rural China is one of the largest health care reforms in the developing world since the millennium. The literature to date has mainly used the uneven rollout of NCMS across counties as a way of identifying its effects on access to care and financial protection. This study exploits the cross-county variation in NCMS generosity in 2006 and 2008 in Ningxia and Shandong province and adopts an instrumenting approach to estimate the effect of a continuous measure of coverage level. Our results confirm earlier findings of NCMS being effective in increasing access to care, but not increasing financial protection. In addition, we find that NCMS enrollees are sensitive to the incentives set in the NCMS design when choosing their provider, but also that providers seem to respond by increasing prices and/or providing more expensive care. Zhiyuan Hou, Ellen Van de Poel, Eddy Van Doorslaer, Baorong Yua, Qingyue Menge 2012-04-16 Health insurance, access, financial protection, China http://d.repec.org/n?u=RePEc:dgr:uvatin:2013026&r=all An anticipated benefit of the prospective European Banking Union is stronger supervision of European banks. Another benefit would be enhanced resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority would follow a supranational approach, under which domestic and cross-border effects within Europe are incorporated. Using a model of recapitalising banks, this paper develops indicators to measure the efficiency improvement of resolution. Next, these efficiency indicators are applied to the hypothetical resolution of the top 25 European banks, which count for the vast majority of cross-border banking in Europe. Our cost-benefit analysis indicates that the UK, Spain, Sweden, and the Netherlands are the main beneficiaries and thus have the largest economic incentives to join Europe’s Banking Union. Dirk Schoenmaker, Arjen Siegmann 2013-02-11 Financial Stability, Financial Crises, Public Good, International Banking http://d.repec.org/n?u=RePEc:cer:papers:wp477&r=all Investor sentiment proved to be an important factor during the recent financial and current euro crises. At the same time many existing general equilibrium models do not account for agents' expectations, market volatility, or over-pessimism of investors' forecasts. In this paper we incorporate into the DSGE model a financial sector populated by a continuum of banks with heterogeneous forecasts. We simulate the model with expectational shocks calibrated by the values observed during the financial crisis. Our results suggest that expectational shocks alone could generate a recession of a magnitude comparable to the recent crisis. We then conduct a simple exercise to mimic the credit support policy of a central bank. The results indicate that without influencing agents' expectations, the liquidity provision alone reduces the magnitude of the recession, but neither stops it nor shortens its duration. One reason for low ec ciency of the policy in our model is that banks hoard the liquidity provided by a central bank. Volha Audzei 2012-12 financial intermediation; expectations; DSGE; liquidity provision; http://d.repec.org/n?u=RePEc:pra:mprapa:46954&r=all This paper aims to analyze the technical efficiency of farms in Brazil and its regions, based on the data from the 2006 Census of Agriculture. More specifically, it seeks to compare the technical efficiency of farm households in relation to business farms, considering the regional differences in the country. To do so, one simultaneously estimated, under different assumptions, stochastic production frontiers and inefficiency effects models. Thus, it was possible to measure the technical efficiency of farms, as well as analyze the influence of factors related to the production environment, allowing the indication of public policies aimed at improving the performance of producers. In the empirical estimation, it was observed, as expected, lower technical efficiency for farm households. In regional terms, with respect to the technical efficiency of business farms, the South region of Brazil stood out, also presenting, along with the Midwest region, the highest efficiency rates for farm household, on average. Regarding the influence of production environment, it was found that formal education and access to credit are noteworthy as important factors for the technical efficiency of Brazilian agriculture. Imori, Denise, Guilhoto, Joaquim José Martins, Postali, Fernando Antonio Slaibe 2012 Censo agropecuário; Econometria; Economia agropecuária http://d.repec.org/n?u=RePEc:arx:papers:1305.3184&r=all The stochastic volatility model is one of volatility models which infer latent volatility of asset returns. The Bayesian inference of the stochastic volatility (SV) model is performed by the hybrid Monte Carlo (HMC) algorithm which is superior to other Markov Chain Monte Carlo methods in sampling volatility variables. We perform the HMC simulations of the SV model for two liquid stock returns traded on the Tokyo Stock Exchange and measure the volatilities of those stock returns. Then we calculate the accuracy of the volatility measurement using the realized volatility as a proxy of the true volatility and compare the SV model with the GARCH model which is one of other volatility models. Using the accuracy calculated with the realized volatility we find that empirically the SV model performs better than the GARCH model. Tetsuya Takaishi 2013-05 http://d.repec.org/n?u=RePEc:dgr:umagsb:2013017&r=all This paper reports the results from a controlled field experiment designed to investigate the causal effect of public recognition on employee performance. We hired more than 300 employees to work on a three-hour data-entry task. In a random sample of work groups, workers unexpectedly received recognition after two hours of work. We find that recognition increases subsequent performance substantially, and particularly so when recognition is exclusively provided to the best performers. Remarkably, workers who did not receive recognition are mainly responsible for this performance increase. This result is consistent with workers having a preference for conformity. Dur R., Neckermann S., Bradler C., Non J.A. 2013 Field Experiments; http://d.repec.org/n?u=RePEc:knz:dpteco:1309&r=all Third parties such as trade associations often assist cartels by collecting and evaluating market behaviour at the firm level. Under incomplete information neutral market oversight helps to distinguish defecting from complying behaviour, increasing the effectiveness of punishments for defectors and increasing cartel persistence. We investigate how cartels sort themselves into different organizational forms and whether cartel enforcement can be improved by setting fines contingent on the organizational form. A fine reduction for firms operating without the help of a third party causes some cartels to switch to a less persistent organizational form. Two drawbacks of this fine differentiation are that some new cartels will arise and that some of the existing cartels will become more persistent as the need to punish defectors decreases. Our paper is the first in the marginal deterrence literature to identify this second effect. Tim Reuter 2013-05-06 cartel organization, antitrust enforcement, trade association, marginal deterrence http://d.repec.org/n?u=RePEc:iza:izadps:dp7380&r=all The immense literature on discrimination treats outcomes as relative: One group suffers compared to another. But does a difference arise because agents discriminate against others – are exophobic – or because they favor their own kind – are endophilic? This difference matters, as the relative importance of the types of discrimination and their inter-relation affect market outcomes. Using a field experiment in which graders at one university were randomly assigned students' exams that did or did not contain the students' names, on average we find favoritism but no discrimination by nationality, and neither favoritism nor discrimination by gender, findings that are robust to a wide variety of potential concerns. We observe heterogeneity in both discrimination and favoritism by nationality and by gender in the distributions of graders' preferences. We show that a changing correlation between endophilia and exophobia can generate perverse predictions for observed market discrimination. Feld, Jan, Salamanca, Nicolas, Hamermesh, Daniel S. 2013-05 favoritism, discrimination, field experiment, wage differentials, economics of education http://d.repec.org/n?u=RePEc:izm:wpaper:1303&r=all In this paper, we attempt to derive and test the role of energy prices on economic growth. We first developed a two-sector endogenous growth model, based on Rebelo (1991). We modified the model such that consumption goods sector uses energy as an input along with capital. The model allows us to show that the growth rate of energy price has a negative effect on the growth rates of energy use and real GDP, consistent with the finding of van Zon and Yetkiner (2003), who studied a similar model by placing energy as an input in the intermediate goods sector. Following this, derived theoretical relationships between energy prices and economic growth and energy consumption were tested empirically using error-correction based panel cointegration tests and panel Autoregressive Distributed Lag (ARDL) approach. We applied this methodology on annual data of composite energy prices, GDP per capita and energy consumption per capita for fifteen countries for the period between 1978 and 2011. We found significant cointegration between energy prices and real GDP per capita as well as between energy prices and energy consumption per capita. Moreover, long-run elasticity estimates reveal a negative and significant impact of composite energy prices on both GDP per capita and energy consumption per capita. Ýstemi Berk, Ý. Hakan Yetkiner 2013-04 Two-sector model, energy price, endogenous growth, panel cointegration, panel ARDL http://d.repec.org/n?u=RePEc:pra:mprapa:46950&r=all Monetary Policies of expanding liquidity through bottom low interest rate; stimulus packages, quantitative easing, etc should be transmissible to the entire market (i.e. economy) for best performance. However, current markets (i.e. economies) do not posses enough market security to provide the transmissionability to reach adequate market development (i.e. economic growth). This paper theoreticizes that by mitigating of 1) the shady business practices of 2) vague personal corporate liability and 3) contract laws, 4) vague insurance and bonding laws, 5) inadequate 1) intellectual property laws, 2) environmental protection and 3) consumer protection laws, etc market marginalization in fact will enhance the market security, and improve the transmissionability and the effectiveness of the monetary policies to boost market development (i.e. economic growth). Konov, Joshua Ioji / JK 2013-04-10 monetary policies,transmissionability,economy,macroeconomicsmglonalization,market economics http://d.repec.org/n?u=RePEc:pra:mprapa:46955&r=all This study proposes a social-environmental economic model, based on Regional Sequential Interindustry Model (SIM) integrated with geoprocessing data, in order to identify economic, pollution and public health impacts in state and municipality levels for energy planning analysis. Integrating I-O framework with electrical and dispersion models, dose-response functions and GIS data, this model aims to expand policy makers’ scope of analysis and provide an auxiliary tool to assess energy planning scenarios in Brazil both dynamically and spatially. Moreover, a case study for wind power plants in Brazil is performed to illustrate its usage. Avelino, Andre F. T., Hewings, Geoffrey J. D., Guilhoto, Joaquim José Martins 2012 Energy Planning, Input-Output, Sequential Interindustry Model, Energy Economics http://d.repec.org/n?u=RePEc:dgr:uvatin:2013028&r=all We consider equilibrium and optimum use of a Vickrey road bottleneck, distinguishing between long-run and short-run scheduling preferences in an otherwise stylized scheduling model. The preference structure reflects that there is a distinction between the (exogenous) 'long-run preferred arrival time', which would be relevant if consumers were unconstrained in the scheduling of their activities, versus the 'short-run preferred arrival time', which is the result of an adaptation of travel routines in the face of constraints caused by, in particular, time-varying congestion levels. We characterize the unpriced equilibrium, the social optimum as well as second-best situations where the availability of the pricing instruments is restricted. All of them imply a dispersed distribution of short-run preferred arrival times. The extent of dispersion in the unpriced equilibrium, however, is higher than socially optimal. Stefanie Peer, Erik T. Verhoef 2013-02-14 bottleneck model; scheduling decisions; travel routines; long-run vs. short-run http://d.repec.org/n?u=RePEc:arx:papers:1305.2716&r=all We study a phenomenological model for the continuous double auction, equivalent to two independent $M/M/1$ queues. The continuous double auction defines a continuous-time random walk for trade prices. The conditions for ergodicity of the auction are derived and, as a consequence, three possible regimes in the behavior of prices and logarithmic returns are observed. In the ergodic regime, prices are unstable and one can observe an intermittent behavior in the logarithmic returns. On the contrary, non-ergodicity triggers stability of prices, even if two different regimes can be seen. Tijana Radivojevi\'c, Jonatha Anselmi, Enrico Scalas 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012071&r=all Randomized experiments provide policy relevant treatment effects if there are no spillovers between participants and nonparticipants. We show that this assumption is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model we show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite. Pieter Gautier, Paul Muller, Bas van der Klaauw, Michael Rosholm, Michael Svarer 2012-07-18 randomized experiment, policy-relevant treatment effects, job search, http://d.repec.org/n?u=RePEc:dgr:uvatin:2013005&r=all Credit risk models should reflect the observation that the relevant value of collateral is generally not the average value of the asset over all possible states of nature. In most cases, the relevant value of collateral for the lender is its secondary market value in bad states of nature, where marginal utilities are high. Although the negative correlation between recovery rates and default probabilities is well documented, the majority of pricing models does not allow for correlation between the two. In this paper, we propose a relatively parsimonious reduced-form continuous time model that estimates expected recovery rates and default probabilities from the term structure of CDS spreads. The parameters of the model and latent factors driving recovery risk and default risk are estimated using a Bayesian MCMC algorithm. We find that the Bayesian deviance information criterion (DIC) favors the model with stochastic recovery over constant recovery. We also observe that for companies with a good rating, implied constant recovery rates do not differ much from stochastic recovery. However, if a company is very risky, then forward stochastic recovery rates are significantly lower at longer maturities. Marcin Jaskowski, Michael McAleer 2013-01-07 Constant recovery, stochastic recovery, implied recovery rate, term structure, CDS spreads http://d.repec.org/n?u=RePEc:pra:mprapa:47026&r=all The expansion of wind-generation in the United States poses significant challenges to policy-makers, particularly because wind’s intermittency and unpredictability can exacerbate problems of congestion on a transmission constrained grid. Understanding these issues is necessary if optimal development of wind energy and transmission is to occur. This paper applies a model that integrates the special concerns of electricity generation to empirically consider the challenges of developing wind resources in the Rocky Mountain region of the United States. Given the lack the high frequency data needed to address the special problems of intermittency and congestion, our solution is to create a dispatch model of the region and to use simulations to generate the necessary data, then use this data to understand the development patterns that have occurred as wind resources have been developed. Our results indicate that the price effects caused by changes in power output at intermittent sources are strongly dependent on supply conditions and the presence of market distortions caused by transmission constraints. Peculiarities inherent in electric grid operation can cause system responses that are not always intuitive. The distribution of the rents accruing to wind generation, particularly in unexpectedly windy periods are strongly dependent on the allocation of transmission rights when congestion occurs, which impacts potential returns to developing wind resources. Incidents of congestion depend on the pace of development of wind and transmission capacity. Not accounting for such distortions may cause new development to worsen market outcomes if mistaken estimates of benefits or costs lead to sub-optimal development of wind and transmission facilities. Godby, Robert, Torell, Greg, Coupal, Roger 2013-01-16 transmission, wind integration, wind energy, renewable energy, electricity grid, transmission value, dispatch model http://d.repec.org/n?u=RePEc:pra:mprapa:46956&r=all The production of a country is associated both with their linkages between productive sectors as the linkages of this structure to the formation of income and consumption patterns of the families. The used model, Leontief-Miyazawa, seeks to take into account all these relations to analyze an economy. From input-output matrices for Brazil in 2008 and surveys as POF, PNAD and PME conducted by IBGE it has been estimated the proposed model. As a result it was found that an example of effective policy to generate income for the poorest (families with monthly income of up to three minimum wages in January, 2009) would be the stimulus for sectors such as Ethanol and Wood Products - sectors that have their potential untapped in the economy, according to the linkages indices. It was found also that shocks in the income of middle class families have greater potential to generate income in the economy and that the growth in family income leads to a less concentrated pattern of consumption of basic goods and more concentrated in services general. Gutierre, Leopoldo M., Guilhoto, Joaquim José Martins, Nogueira, Tatiana A. 2012 Distribuição de Renda; Leontief-Miyazawa; Insumo-Produto http://d.repec.org/n?u=RePEc:dgr:uvatin:2012068&r=all One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the causal impact of ethnic diversity on the performance of business teams using a randomized field experiment. We follow 550 students who set up 45 real companies as part of their curriculum in an international business program in the Netherlands. We exploit the fact that companies are set up in realistic though similar circumstances and that we, as outside researchers, had the unique opportunity to exogenously vary the ethnic composition of otherwise randomly composed teams. The student population consists of 55% students with a non-Dutch ethnicity from 53 different countries of origin. We find that a moderate level of ethnic diversity has no effect on team performance in terms of business outcomes (sales, profits and profits per share). However, if at least the majority of team members is ethnically diverse then more ethnic diversity has a positive impact on the performance of teams. In line with theoretical predictions, our data suggest that this positive effect could be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams. Sander Hoogendoorn, Mirjam van Praag 2012-07-13 Ethnic diversity, team performance, field experiment, entrepreneurship, (mutual) learning http://d.repec.org/n?u=RePEc:dgr:uvatin:2012081&r=all There is a growing interest in extending project evaluation methods to the evaluation of programs: complex interventions involving multiple activities. In general a program evaluation cannot be based on separate evaluations of its components since interactions between the activities are likely to be important. We propose a measure of program impact, the total program effect (TPE), which is an extension of the average treatment effect on the treated (ATET). Regression techniques can be applied to observational data from a representative sample to estimate the TPE for complex interventions in the presence of selection effects and treatment heterogeneity. As an example we present an estimate of the TPE for a rural water supply and sanitation program in Mozambique. Estimating the TPE from randomized controlled trials would appear to be an alternative; however, the scope for using RCTs in this context is limited. Chris Elbers, Jan Willem Gunning 2012-07-31 program evaluation, randomized controlled trials, policy evaluation, treatment heterogeneity, budget support, sector-wide programs, aid effectiveness http://d.repec.org/n?u=RePEc:dgr:uvatin:2012025&r=all The empirical support for features of a Dynamic Stochastic General Equilibrium model with two technology shocks is valuated using Bayesian model averaging over vector autoregressions. The model features include equilibria, restrictions on long-run responses, a structural break of unknown date and a range of lags and deterministic processes. We find support for a number of features implied by the economic model and the evidence suggests a break in the entire model structure around 1984 after which technology shocks appear to account for all stochastic trends. Business cycle volatility seems more due to investment specific technology shocks than neutral technology shocks. Rodney Strachan, Herman K. van Dijk 2012-03-20 Posterior probability; Dynamic stochastic general equilibrium model; Cointegration; Model averaging; Stochastic trend; Impulse response; Vector autoregressive model http://d.repec.org/n?u=RePEc:nbr:nberwo:19032&r=all Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer. We model the factors that influence how people trade off a Social Security stream for a lump sum, and we also examine the consequences of such tradeoffs for work, retirement, and life cycle wellbeing. Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1.5-2 years. This will interest policymakers seeking to reform the Social Security system without raising costs or cutting benefits, while enhancing the incentives to delay retirement. Jingjing Chai, Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla 2013-05 http://d.repec.org/n?u=RePEc:tse:wpaper:27183&r=all We prove some existence (and sometimes also uniqueness) of weak solutions to some station- ary equations associated to the complex Schrodinger operator under the presence of a singular nonlinear term. Among other new facts, with respect some previous results in the literature for such type of nonlinear potential terms, we include the case in which the spatial domain is possibly unbounded (something which is connected with some previous localization results by the authors), the presence of possible non-local terms at the equation, the case of boundary conditions different to the Dirichlet ones and, finally, the proof of the existence of solutions when the right-hand side term of the equation is beyond the usual L2-space Bégout, Pascal, Diaz, Jesus Ildefonso 2013-04 http://d.repec.org/n?u=RePEc:mos:moswps:2013-03&r=all The study examines the export-led growth (ELG) hypothesis for Cambodia. The sample covers annual observations between 1972 and 2008. The Granger's non-causality tests support ELG as well as the growth-led exports. Also, there is causality from imports growth to exports growth. The study also presents the results of impulse response functions and variance decomposition. Some policy implications are viewed in the study. Tuck Cheong Tang, Chea Ravin 2013-05 Cambodia; Exports; Imports; Growth http://d.repec.org/n?u=RePEc:nbr:nberwo:19033&r=all Gains from trade due to exporting can result from the reallocation of resources to more productive producers, or from efficiency increases within exporting firms over time. While there is strong evidence for the former, the latter has received little support in the data. Previous research has documented minuscule or no efficiency gains within exporting plants. This result is derived from revenue productivity measures and thus also reflects variation in prices. Using a census panel of Chilean manufacturing plants, we first show that, in line with the previous results, there is no evidence for within-plant increases in revenue productivity after export entry. We then derive product-plant level marginal cost and use it as an efficiency measure that is not affected by prices. We find that marginal costs drop substantially when plants begin to export – on average by 15-25%. Prices drop by the same order of magnitude (while volume grows). Since new exports initially charge lower prices, revenue productivity measures fail to identify these within-plant efficiency gains from exporting. Alvaro Garcia Marin, Nico Voigtländer 2013-05 http://d.repec.org/n?u=RePEc:pra:mprapa:46878&r=all This paper attempts to ascertain the determinants of watching anime in Japan based on individual-level data from Japan. In particular, this study investigates how adults are influenced by the existence of their children. After controlling for individual characteristics, it was found that people are more likely to watch anime when they have children aged less than 12 years. Such an effect is larger for women than for men. This tendency is observed even when respondents are full-time workers. This implies that the externality coming from children results in parents watching anime. Furthermore, the externality is larger for women than men regardless of their time constraints. Yamamura, Eiji 2013-05-02 Anime; Japan; Externality http://d.repec.org/n?u=RePEc:pra:mprapa:47029&r=all We experimentally investigate the effect of social identification and information feedback on individual behavior in contests. In all treatments we find significant over-expenditure of effort relative to the standard theoretical predictions. Identifying subjects through photo display decreases wasteful effort. Providing information feedback about others’ effort does not affect the aggregate effort, but it decreases the heterogeneity of effort and significantly affects the dynamics of individual behavior. We develop a behavioral model which incorporates a non-monetary utility of winning and relative payoff maximization. The model explains significant over-expenditure of effort. It also suggests that decrease in ‘social distance’ between group members through photo display promotes pro-social behavior and decreases over-expenditure of effort, while improved information feedback decreases the heterogeneity of effort. Mago , Shakun, Samak , Anya, Sheremeta, Roman 2013-05-15 contest, information, identification, over-expenditure, experiments http://d.repec.org/n?u=RePEc:iza:izadps:dp7369&r=all In this paper, I will describe in detail both the Earned Income Tax Credit and the Child Tax Credit in the U.S., including their origins, their structure, and the effects they have on the labor market and family formation. I will then discuss the macroeconomic implications of U.S. welfare reform, and then conclude by analyzing the effectiveness of the U.S. safety net (broadly defined) during the Great Recession of 2007-2008. Simpson, Nicole B. 2013-04 taxes, welfare, families, EITC, child tax credit, TANF http://d.repec.org/n?u=RePEc:iza:izadps:dp7376&r=all We study the role of the most primitive institution in society: the family. Its organization and relationship between generations shape values formation, economic outcomes and influences national institutions. We use a measure of family ties, constructed from the World Values Survey, to review and extend the literature on the effect of family ties on economic behavior and economic attitudes. We show that strong family ties are negatively correlated with generalized trust; they imply more household production and less participation in the labor market of women, young adult and elderly. They are correlated with lower interest and participation in political activities and prefer labor market regulation and welfare systems based upon the family rather than the market or the government. Strong family ties may interfere with activities leading to faster growth, but they may provide relief from stress, support to family members and increased wellbeing. We argue that the value regarding the strength of family relationships are very persistent over time, more so than institutions like labor market regulation or welfare systems. Alesina, Alberto, Giuliano, Paola 2013-04 family values, cultural economics, labor market regulations, growth, institutions http://d.repec.org/n?u=RePEc:dgr:uvatin:2012008&r=all We show that efficient importance sampling for nonlinear non-Gaussian state space models can be implemented by computationally efficient Kalman filter and smoothing methods. The result provides some new insights but it primarily leads to a simple and fast method for efficient importance sampling. A simulation study and empirical illustration provide some evidence of the computational gains. Siem Jan Koopman, Thuy Minh Nguyen 2012-01-12 Kalman filter, Monte Carlo maximum likelihood, Simulation smoothing http://d.repec.org/n?u=RePEc:iza:izadps:dp7375&r=all We consider the impact of tax credits and income support programs on female education choice, employment, hours and human capital accumulation over the life-cycle. We analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings, we quantify the insurance value of alternative programs. We find important incentive effects on education choice and labor supply, with single mothers having the most elastic labor supply. Returns to labor market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model, marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group. Blundell, Richard, Costa Dias, Monica, Meghir, Costas, Shaw, Jonathan 2013-04 labour supply, human capital, welfare reform http://d.repec.org/n?u=RePEc:dgr:uvatin:2013022&r=all This paper features the application of a novel and recently developed method of statistical and mathematical analysis to the assessment of financial risk: namely Regular Vine copulas. Dependence modeling using copulas is a popular tool in financial applications, but is usually applied to pairs of securities. Vine copulas offer greater exibility and permit the modelling of complex dependency patterns using the rich variety of bivariate copulas which can be arranged and analysed in a tree structure to facilitate the analysis of multiple dependencies. We apply Regular Vine copula analysis to a sample of stocks comprising the Dow Jones Index to assess their interdependencies and to assess how their correlations change in different economic circumstances using three different sample periods: pre-GFC (Jan 2005- July 2007), GFC (July 2007-Sep 2009), and post-GFC periods (Sep 2009 - Dec 2011). The empirical results suggest that the dependencies change in a complex manner, and there is evidence of greater reliance on the Student <I>t</I> copula in the copula choice within the tree structures for the GFC period, which is consistent with the existence of larger tails in the distributions of returns for this period. One of the attractions of this approach to risk modelling is the exibility in the choice of distributions used to model co-dependencies. David.E. Allen, Mohammad.A. Ashraf, Michael. McAleer, Robert.J. Powell, Abhay K. Singh 2013-01-22 Regular Vine Copulas, Tree structures, Co-dependence modelling http://d.repec.org/n?u=RePEc:dgr:uvatin:2013013&r=all We investigate actual capital chosen by banks in presence of capital minimum requirements and ex-post penalties for violating them. The model yields excess capital that is always positive and increases during times of distress in the economy, which is in line with empirical evidence. Next, we show that in presence of ex-post violation penalties the introduction of the conservation buffer under Basel III will not contribute to lowering the pro-cyclicality of capital regulations. The countercyclical buffer proposed under Basel III is then even more desirable as it significantly attenuates fluctuations of actual capital also when the penalties are accounted for. Lucyna Gornicka, Sweder van Wijnbergen 2013-01-14 capital requirements, Basel regulatory framework, excess capital, countercyclical buffer, market discipline http://d.repec.org/n?u=RePEc:fip:feddgw:145&r=all This paper analyzes the way in which international financial integration affects the transmission of monetary policy in a New Keynesian open economy framework. It extends Woodford’s (2010) analysis to a model with a richer financial markets structure, allowing for international trading in multiple assets and subject to financial intermediation costs. Two different forms of financial integration are considered, in particular an increase in the level of gross foreign asset holdings and a decrease in the costs of international asset trading. The simulations in the calibrated model show that none of the analyzed forms of financial integration undermine the effectiveness of monetary policy in influencing domestic output and inflation. Under realistic parameterizations, monetary policy is more, rather than less, effective as the positive impact of strengthened exchange rate and wealth channels more than offsets the negative impact of weakened interest rate channels. The paper also analyzes the interaction of financial integration with trade integration, varying both the importance of trade linkages and the degree of exchange rate pass-through. These interactions show that the positive effects of financial integration are amplified by trade integration. Overall, monetary policy is most effective in parameterizations with the highest degree of both financial and real integration. Simone Meier 2013 Monetary policy http://d.repec.org/n?u=RePEc:cer:papers:wp485&r=all Economies have markedly different firm size distributions. At the same time, firms of different size grow differently after identical financial- and product-market liberalization reforms. Thus, identical reforms can produce different growth outcomes across countries. This result is reached after exploring firm-level data on sales and sales per worker across 135 developing and post-transition economies. It helps explain the remarkable variation in the vast development literature studying the effects of various market-oriented reforms across countries and over time. Petar Stankov 2013-04 financial reforms; economic growth; firm size distributions; reform outcome divergence; http://d.repec.org/n?u=RePEc:dgr:uvatin:2012044&r=all Recent macro developments in the euro area have highlighted the interactions between fiscal policy, sovereign debt, and financial fragility. We take a structural macroeconomic model with frictions in the financial intermediation process, in line with recent research, but introduce asset choice and sovereign debt holdings in the portfolio of banks. Using this model, we emphasize a new crowding-out mechanism that works through reduced private access to credit when banks accumulate sovereign debt under a leverage constraint. Our results show that, when banks invest a substantial fraction of their assets in sovereign debt, the effectiveness of fiscal stimulus policies may be impaired because deficit-financed fiscal expansions may tighten financial conditions to such an extent that private demand is crowded out. We also analyze the macroeconomic effectiveness of liquidity support to commercial banks through recapitalizations or loans by the government and the impact of different ways of financing those policies. Markus Kirchner, Sweder van Wijnbergen 2012-04-26 Financial intermediation; Fiscal policy; Sovereign debt http://d.repec.org/n?u=RePEc:knz:dpteco:1310&r=all For modelling mixed-frequency data with business cycle pattern we introduce the Markovswitching Mixed Data Sampling model with unrestricted lag polynomial (MS-U-MIDAS). Usually models of the MIDAS-class use lag polynomials of a specific function, which impose some structure on the weights of regressors included in the model. This may deteriorate the predictive power of the model if the imposed structure differs from the data generating process. When the difference between the available data frequencies is small and there is no risk of parameter proliferation, using an unrestricted lag polynomial might not only simplify the model estimation, but also improve its forecasting performance. We allow the parameters of the MIDAS model with unrestricted lag polynomial to change according to a Markov-switching scheme in order to account for the business cycle pattern observed in many macroeconomic variables. Thus we combine the unrestricted MIDAS with a Markov-switching approach and propose a new Markov-switching MIDAS model with unrestricted lag polynomial (MS-U-MIDAS). We apply this model to a large dataset with the help of factor analysis. Monte Carlo experiments and an empirical forecasting comparison carried out for the U.S. GDP growth show that the models of the MS-UMIDAS class exhibit similar or better nowcasting and forecasting performance than their counterparts with restricted lag polynomials. Fady Barsoum, Sandra Stankiewicz 2013-05-08 Markov-switching, Business cycle, Mixed-frequency data analysis, Forecastsing http://d.repec.org/n?u=RePEc:dgr:uvatin:2012076&r=all Many economic studies on inflation forecasting have found favorable results when inflation is modeled as a stationary process around a slowly time-varying trend. In contrast, the existing studies on interest rate forecasting either treat yields as being stationary, without any shifting endpoints, or treat yields as a random walk process. In this study we consider the problem of forecasting the term structure of interest rates with the assumption that the yield curve is driven by factors that are stationary around a time-varying trend. We compare alternative ways of modeling the time-varying trend. We find that allowing for shifting endpoints in yield curve factors can provide gains in the out-of-sample predictive accuracy, relative to stationary and random walk benchmarks. The results are both economically and statistically significant. Dick van Dijk, Siem Jan Koopman, Michel van der Wel, Jonathan H. Wright 2012-07-19 term structure of interest rates, forecasting, non-stationarity, survey forecasts, yield curve http://d.repec.org/n?u=RePEc:dgr:uvatin:2012042&r=all We explore a new approach to the forecasting of macroeconomic variables based on a dynamic factor state space analysis. Key economic variables are modeled jointly with principal components from a large time series panel of macroeconomic indicators using a multivariate unobserved components time series model. When the key economic variables are observed at a low frequency and the panel of macroeconomic variables is at a high frequency, we can use our approach for both nowcasting and forecasting purposes. Given a dynamic factor model as the data generation process, we provide Monte Carlo evidence for the finite-sample justification of our parsimonious and feasible approach. We also provide empirical evidence for a U.S. macroeconomic dataset. The unbalanced panel contain quarterly and monthly variables. The forecasting accuracy is measured against a set of benchmark models. We conclude that our dynamic factor state space analysis can lead to higher forecasting precisions when panel size and time series dimensions are moderate. Falk Brauning, Siem Jan Koopman 2012-04-20 Kalman filter, Mixed frequency; Nowcasting, Principal components, State space model, Unobserved Components Time Series Model http://d.repec.org/n?u=RePEc:iza:izadps:dp7367&r=all In this paper we analyze the impact of foreign-born workers in the fields of Science, Technology, Engineering and Math (STEM) on employment and wages in Canadian geographical areas during the period 1991-2006. Canadian policies select immigrants with a strong emphasis on high educational attainment. Moreover the foreign-born constitute a third of the Canadian population making Canada a very good case to analyze the effect of foreign-STEM workers on the local economy. We use the dispersion of immigrants by nationality across 17 geographical areas in 1981 to predict the supply-driven increase in foreign Scientists and Engineers during the period 1991-2006. Then we analyze their impact on the employment and wages of college and non-college educated Canadian-born (native) workers. We find significant positive effects on the wages and (to a lesser extent) employment of college educated natives. We also find a smaller positive effect on the wages and employment of native workers with very low levels of education (i.e. those with no high school degree). This implies a positive productivity effect of foreign-STEM workers in Canada, and also a college bias in their contribution to productivity growth. Compared to the effect of foreign Scientists and Engineers in US cities, the Canadian results show similar effects on wages of college educated and at least partial evidence of a positive diffusion of the effect to non-college educated, which was not present in the US. Peri, Giovanni, Shih, Kevin Y. 2013-04 STEM workers, foreign-born, Canadian-born, college-educated, wage, employment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012132&r=all We consider the possibility that cooperation in a prisoner's dilemma is fostered by people's voluntarily enhancement of their own vulnerability. The vulnerability of a player determines the effectiveness of possible punishment by the other. In the "Gradual" mechanism, players may condition their incremental enhancements of their vulnerability on the other's choices. In the "Leap" mechanism, they unconditionally choose their vulnerability. In our experiment, subjects only learn to cooperate when either one of these mechanisms is allowed. In agreement with theory, subjects aiming for cooperation choose higher vulnerability levels in Gradual than in Leap, which maps into higher mutual cooperation levels. Anita Kopanyi-Peuker, Theo Offerman, Randolph Sloof 2012-12-04 prisoner's dilemma, cooperation, endogenous punishment http://d.repec.org/n?u=RePEc:pra:mprapa:46968&r=all European cities today need to confront the challenges of the current socio economic changes. In this framework the role of city marketing becomes essential especially during the socio economic crisis. City marketing is important because it is related to procedures connected with city global competition, tourist attraction, urban management, urban government and the special identity of cities (city branding). Many European cities take initiatives either creative or innovative to improve their competitiveness through cultural and tourism development/growth. Further, the majority of applied city marketing policies concern the culture and tourism. City marketing have encounter criticism like a)replace urban planning, b) emphasis on profit, c) emphasis on tourism attraction, d) regenerate socio geographical inequalities. In Greece only recently city marketing has been developed while even more new phenomenon is the process of field studies. The first case study is the Pilot Strategic Planning of City Marketing in Nea Ionia Magnisia which is part of the CultMark programme “Cultural heritage, local identity and place marketing for sustainable development” (contacted under INTERREG IIIc in five European locations during 2004-2006 (Nea Ionia, Magnisia (leader partner), UK, Kainou/Finland, Rostok-TLM/Germany and Pafos/Cyprus. Museums are one of the top/main categories of cultural locations which contribute to the cultural and tourism development of cities. Cities benefit from the existence of museums in specific ways but in order to work effectively it is necessary to be promoted in an organized way and with a strategic perspective which will be implemented by a Strategic Pilot Marketing Plan. A second case study is the unique Museum of Tobacco in Kavala, Greece. The scope of it is to show how the museum could contribute as a unique “tourism and cultural good/product to reinforce the city image and its development under a Strategic Marketing Plan for the city with main axe the Museum. This paper uses data from recent primary field studies contacted on enterprises, citizens of the city and visitors in order to form a strategic frame in which the (intrinsic) promotion of the Museum will work effectively on the general development of the Museum and the city of Kavala. Metaxas, Theodore 2013 cultural planning, tourism development, Strategic Pilot Marketing Plan, Nea Ionia Magnisia, Tabacco Museum of Kavala http://d.repec.org/n?u=RePEc:pra:mprapa:46975&r=all Although most of the marginalist economists’ methodology was influenced by 19th century classical physics, the work of second generation marginalist Francis Ysidro Edgeworth represents the highest point of classical physics influence to the development of mainstream economic methodology. Edgeworth’s close parallelism between celestial and social mechanics expressed in his analogies between utility and energy and the principle of utility maximization to maximum energy, are important indications of the physics scientific ideal for economics. Subsequent leading theorists were not as explicit, although economic theory continued to be influenced by physics scientific ideal as the work of Pareto, Fisher and Samuelson indicates. However, the physics methodological framework has made a recent reappearance in the relatively new field of econophysics. Although there are methodological similarities, there are also important differences between mainstream economics and econophysics. Econophysicists’ emphasis to statistical mechanics rather to mechanical models, their reservations towards rational agent theory and their rejection of many standard assumptions of mainstream economics, are examples of such differences. This might also explain the resistance of mainstream economic theorists to incorporate econophysics into economics. The paper examines the above from a methodological viewpoint. It also discusses the possible reasons for this historical development and its implications for economic methodology. Drakopoulos, Stavros A., Katselidis, Ioannis 2013-05 Economic Method, Econophysics, Edgeworth http://d.repec.org/n?u=RePEc:dgr:uvatin:2013042&r=all Mine-related transport infrastructure specializes in connecting mines to the coast, and not so much to neighboring countries. This is most clearly seen in developing countries, whose transport infrastructure was originally designed to facilitate the export of natural resources in colonial times. We provide first econometric evidence that mine-to-coast transport infrastructure matters for the pattern of trade of developing countries, and can help explaining their low level of regional integration. The main idea is that, to the extent that it can be used not just to export natural resources but also to trade other commodities, this infrastructure may bias a country's structure of transport costs in favor of overseas trade, and to the detriment of regional trade. We investigate this potential bias in the context of a gravity model of trade. Our main findings are that coastal countries with more mines import less than average from their neighbors, and this effect is s tronger when the mines are located in such a way that the related infrastructure has a stronger potential to affect trade costs. Consistently with the idea that this effect is due to mine-to-coast infrastructure, landlocked countries with more mines import less than average from their non-transit neighbors, but more then average from their transit neighbors. Furthermore, this effect is specific to mines and not to oil and gas fields, arguably because pipelines cannot possibly be used to trade other commodities. We discuss the potential welfare implications of our results, and relate these to the debate on the economic legacy of colonialism for developing countries. Roberto Bonfatti, Steven Poelhekke 2013-03-07 Mineral Resources, Transport Infrastructure, Regional Trade Integration, Gravity Model, Economic Legacy of Colonialism http://d.repec.org/n?u=RePEc:dgr:uvatin:2012035&r=all This paper introduces the Small World model (Watts and Strogatz, Nature, 1998) into the theory of economic growth and investigates how increasing economic integration affects firm size and efficiency, norm enforcement, and aggregate economic performance. When economic integration is low and local connectivity is high, informal norms control entrepreneurial behavior and more integration mainly improves search for efficient investment opportunities. At a higher level of economic integration neighborhood enforcement deteriorates and formal institutions are needed to keep entrepreneurs in check. A gradual take-off to perpetual growth is explained by a feedback effect from investment to the formation of long-distance links and the diffusion of knowledge. If formal institutions are weak, however, the economy does not take off but stagnates at an intermediate income level. Structurally, the equilibrium of stagnation differs from balanced growth by the presence of relatively many small firms of low productivity. Ines Lindner, Holger Strulik 2012-04-10 modernization, economic integration, firm size, norms, networks, knowledge spillovers, growth http://d.repec.org/n?u=RePEc:eab:tradew:23408&r=all In all the regions of the contemporary world—including Asia—there is a growing trend in market consolidation through regional collaboration in the form of bilateral and regional trade agreements. Regional cooperation and integration can facilitate the way for expanding markets and creating trade opportunities. However, market-led integration in South Asia lags behind other regions, even though the region’s geography and comparative advantages offer the potential for a highly integrated trade, investment, and production space. The South Asian Association for Regional Cooperation (SAARC), which is the most important umbrella organization in the region, has taken several initiatives for enhancing integration—the South Asian Preferential Trading Arrangement (SAPTA), and the South Asian Free Trade Area (SAFTA), and more recently the SAARC Agreement on Trade in Services (SATIS), which was signed in 2010 (SAARC Secretariat 2004, 2010). It is early days, but there is statistical evidence suggesting that intra-regional trade among the SAFTA members is rising slowly but surely. Policymakers as well as business communities across the South Asian region have become increasingly interested in SAFTA and its potential benefits. The purpose of this paper is to examine the determinants and trade effects of SAFTA using empirical methods. It begins with an overview of South Asia for a general understanding of the state of the region’s economy and trade as well as the recent progress in global and regional integration of the South Asian economies. The paper then proceeds to review some of the relevant studies on South Asia’s trade integration within the context of the empirical methods used in analyzing trade effects of regional instruments. An empirical specification of the gravity model is developed in the next section to analyze the determinants of trade flows for the SAFTA countries. Based on the results of the modeling exercise, the concluding section of the paper discusses the policy implications of SAFTA, highlighting the need for maintaining the primacy of economic integration in the region’s growth and development processes. The paper argues that the recent success in the growth performance of the South Asian countries offers prospects as well as challenges for deeper integration with the global economy. Integration under the SAFTA is, South Asia must understand, the first step in that direction. Mustafa Moinuddin 2013-04 South Asian Free Trade Area, the South Asian Preferential Trading Arrangement, SAPTA, SAFTA, intra-regional trade, trade effects of SAFTA, Regional Integration, the gravity model, South Asian countries http://d.repec.org/n?u=RePEc:dgr:uvatin:2012126&r=all It is known that peer group games are a special class of games with a permission structure. However, peer group games are also a special class of (weighted) digraph games. To be specific, they are digraph games in which the digraph is the transitive closure of a rooted tree. In this paper we first argue that some known results on solutions for peer group games hold more general for digraph games. Second, we generalize both digraph games as well as games with a permission structure into a model called games with a local permission structure, where every player needs permission from its predecessors only in order to generate worth, but does not need its predecessors in order to give permission to its own successors. We introduce and axiomatize a Shapley value type solution for these games, generalizing the conjunctive permission value for games with a permission structure and the beta-measure for weighted digraphs. Rene van den Brink, Chris Dietz 2012-11-27 Cooperative TU-game, peer group game, digraph game, game with a permission structure, local permission structure http://d.repec.org/n?u=RePEc:dgr:uvatin:2013027&r=all In recent years, Combinatorial Clock Auctions (CCAs) have been used around the world to allocate frequency spectrum for mobile telecom licenses. CCAs are claimed to significantly reduce the scope for gaming or strategic bidding. In this paper, we show, however, that CCAs significantly enhance the possibilities for strategic bidding. Real bidders in telecom markets are not only interested in the spectrum they win themselves and the price they pay for that, but also in the price competitors pay for that spectrum. Moreover, budget constraints play an important role. When these considerations are taken into account, CCAs provide bidders with significant gaming possibilities, resulting in high auction prices and problems associated with multiple equilibria and bankruptcy (given optimal bidding strategies). Maarten Janssen, Vladimir Karamychev 2013-02-11 Combinatorial auctions, Telecom markets, Raising rivals' cost http://d.repec.org/n?u=RePEc:dgr:uvatin:2013047&r=all We analyze the impact of the estimation frequency - updating parameter estimates on a daily, weekly, monthly or quarterly basis - for commonly used GARCH models in a large-scale study, using more than twelve years (2000-2012) of daily returns for constituents of the S&P 500 index. We assess the implication for one-day ahead 95% and 99% Value-at-Risk (VaR) forecasts with the test for correct conditional coverage of Christoffersen (1998) and for Expected Shortfall (ES) forecasts with the block-bootstrap test of ES violations of Jalal and Rockinger (2008). Using the false discovery rate methodology of Storey (2002) to estimate the percentage of stocks for which the model yields correct VaR and ES forecasts, we reach the following conclusions. First, updating the parameter estimates of the GARCH equation on a daily frequency improves only marginally the performance of the model, compared with weekly, monthly or even quarterly updates. The 90% confidence bands overlap, reflecting that the performance is not significantly different. Second, the asymmetric GARCH model with non-parametric kernel density estimate performs well; it yields correct VaR and ES forecasts for an estimated 90% to 95% of the S&P 500 constituents. Third, specifying a Student-<I>t</I> (or Gaussian) innovations' density yields substantially and significantly worse forecasts, especially for ES. In sum, the somewhat more advanced model with infrequently updated parameter estimates yields much better VaR and ES forecasts than simpler models with daily updated parameter estimates. David Ardia, Lennart Hoogerheide 2013-03-21 GARCH, Value-at-Risk, Expected Shortfall, equity, frequency, false discovery rate http://d.repec.org/n?u=RePEc:ris:uncgec:2013_009&r=all Our descriptive analysis of a random sample of businesses that received Phase II Small Business Innovation Research (SBIR) program awards shows that female-owned businesses are disadvantaged, compared to male-owned businesses, in their ability to attract alternative investment funding to commercialize their technology-based innovations. Differences in the probability of receiving such financial support are most evident in the West and Northeast Census region states. Respectively, in states in those regions female-owned businesses are 17 and 9 percentage points less likely to attract alternative investment funding. Bradley, Samantha R., Gicheva, Dora, Hassell, Lydia, Link, Albert N. 2013-05-15 Entrepreneurship; Innovation; Technology http://d.repec.org/n?u=RePEc:iza:izadps:dp7379&r=all This study investigates possible reasons for the gender difference in sickness absence. We estimate both short- and long-term effects of parenthood in a within-couple analysis based on the timing of parenthood. We find that after entering parenthood, women increase their sickness absence by between 0.5 days per month (during the child's third year) and 0.85 days per month (during year 17) more than their spouse. By investigating possible explanations for the observed effect, we conclude that the effect mainly stems from higher home commitment, which reduces women's labour market attachment and, in turn, increases female sickness absence. Angelov, Nikolay, Johansson, Per, Lindahl, Erica 2013-04 double burden, health investment, household work, labour market work, moral hazard, parenthood, sickness insurance, work absence http://d.repec.org/n?u=RePEc:nbr:nberwo:19023&r=all We examine causes and consequences of relative income within households. We establish that gender identity – in particular, an aversion to the wife earning more than the husband - impacts marriage formation, the wife's labor force participation, the wife's income conditional on working, marriage satisfaction, likelihood of divorce, and the division of home production. The distribution of the share of household income earned by the wife exhibits a sharp cliff at 0.5, which suggests that a couple is less willing to match if her income exceeds his. Within marriage markets, when a randomly chosen woman becomes more likely to earn more than a randomly chosen man, marriage rates decline. Within couples, if the wife's potential income (based on her demographics) is likely to exceed the husband's, the wife is less likely to be in the labor force and earns less than her potential if she does work. Couples where the wife earns more than the husband are less satisfied with their marriage and are more likely to divorce. Finally, based on time use surveys, the gender gap in non-market work is larger if the wife earns more than the husband. Marianne Bertrand, Jessica Pan, Emir Kamenica 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012009&r=all An exact maximum likelihood method is developed for the estimation of parameters in a nonlinear non-Gaussian dynamic panel data model with unobserved random individual-specific and time-varying effects. We propose an estimation procedure based on the importance sampling technique. In particular, a sequence of conditional importance densities is derived which integrates out all random effects from the joint distribution of endogenous variables. We disentangle the integration over both the cross-section and the time series dimensions. The estimation method facilitates the flexible modeling of large panels in both dimensions. We evaluate the method in a Monte Carlo study for dynamic panel data models with observations from the Student's <i>t</i> distribution. We finally present an extensive empirical study into the interrelationships between the economic growth figures of countries listed in the Penn World Tables. It is shown that our dynamic panel data model can provide an insightful analysis of common and heterogeneous features in world-wide economic growth. Geert Mesters, Siem Jan Koopman 2012-02-06 Panel data, Non-Gaussian, Importance sampling, Random effects, Student's t, Economic growth http://d.repec.org/n?u=RePEc:dgr:uvatin:2011085&r=all This paper examines the effects of specialisation (within-sector clustering) and diversity (between-sector clustering) on business services profitability and location choice. We apply a semiparametric Poisson sorting model allowing for firm-specific effects. We find that for most firms, profitability of business services firms is substantially higher close to specialised clusters of business services firms. A standard deviation increase in business services specialisation leads to on average a 40 percent increase in the probability that a business services firm locates there, supporting theories of Marshall, Arrow and Romer. It is also profitable for most business services firms to locate near a group of firms that belong to the same sector, not necessarily business services firms, so diversity is negatively related to location decisions. Almost all firms either benefit from within-sector clustering or between-sector clustering. Within-sector clusters are particularly profitable for large mature firms, whereas between-sector clusters are relatively more profitable for smaller innovative firms. Hans Koster, Jos N. van Ommeren, Piet Rietveld 2011-06-06 Sorting; Agglomeration Economies; Specialisation; Diversity; Heterogeneity; Semiparametric Estimation http://d.repec.org/n?u=RePEc:mos:moswps:2013-17&r=all This paper examines the link between the Female Secondary School Stipend Program in Bangladesh, its effects on schooling of girls, and the subsequent impact on the education of their younger siblings. The stipend program was introduced nationwide in 1994, and affected girls in rural areas who were of secondary school age (grades 6-10) in 1994 or later, but not boys of the same cohort. We examine the effect of educational attainment of older siblings on schooling outcomes of younger siblings. We also examine the role of the gender of older siblings on the schooling outcomes of younger siblings. We find that the education of older siblings has a positive effect on the schooling of younger siblings, and that the effect is stronger on younger brothers than on younger sisters. When we take into account the endogeneity of education of older siblings, we find that their gender composition generally has no effect on the schooling attainment of younger siblings. The instrumental variable estimates, using stipend program eligibility as an instrument, suggest that the completed years of schooling by younger siblings would increase by about 0.13 years if the education of older siblings increased by one year. The intent-to-treat effect suggests that the stipend program increased schooling by 2.6 years. This implies about a 10 per cent increase in the schooling of younger siblings if elder siblings participated in the program. Our results suggest that school programs that benefit children's education could bring both short- and long-term gains, not only directly to the affected children, but also indirectly to their siblings. Lutfunnahar Begum, Asadul Islam, Russell Smyth 2013-05 Girls' education, stipend program, siblings' schooling, Bangladesh http://d.repec.org/n?u=RePEc:gdm:wpaper:10313&r=all In this chapter, we briefly review the overall system of global health governance and its evolution over the last decade, the emerging challenges it faces, its strengths and weaknesses, and how these strengths and weaknesses affect the system’s ability to address tropical diseases in the future. Till Bärnighausen, David E. Bloom, Salal Humair 2013-05 Global health governance, Tropical diseases http://d.repec.org/n?u=RePEc:dgr:tuecis:wpaper:1305&r=all Faced with ever-increasing pressure to innovate and perform, firms consider universities as a significant, external source of knowledge. There is a variety of ways through which such knowledge flow can take place, including academic publications, contract research, staff mobility and university patents and licenses, but also more collaborative modes such as joint research projects. This paper focuses on a specific – and promising – collaborative model, in which firms and universities are together involved in a Ph.D. project, carried out by a doctoral candidate. We model the relationship on the one hand on various aspects of governance, and the success of the collaboration on the other. Here, success is operationalized in a number of different ways, including the successful transfer, the application and the commercialization of knowledge. Our model was tested using a survey conducted at the Eindhoven University of Technology. We conclude that governance decisions have a significant impact on the ultimate success. Among other things, the choice of university supervisor plays a pivotal role. Moreover, success is more likely if there is joint decision-making by both university and partner on the content of the project, and communication between the Ph.D. candidate and their supervisor in the firm has a high frequency and quality. We believe our findings can help universities and firms to collaborate successfully. Negin Salimi, Rudi Bekkers, Koen Frenken 2013-04 Collaborative Ph.D. projects; governance of university-industry collaborations; collaboration success. http://d.repec.org/n?u=RePEc:pra:mprapa:46946&r=all Nevertheless the share of agriculture sector in the GDP has declined in the recent past; agriculture is the backbone and engine of the Indian economy. Agriculture continues play a vital role in the development of India. More than 60 per cent of the people, especially rural Indians, still depends agriculture sector for their subsistence and most of the industries also depend upon agriculture for their raw materials. Any developmental activity needs investment; like that GDP growth needs investment. On the other hand, any investment has to yield some benefit. Hence it is imperative to measure the effectiveness or yield of any investment. In this perspective, the Gross Capital Formation (GCF) and the Gross Domestic Product (GDP) change in Indian agriculture sector study is getting importance. marimuthu, sivakumar 2013-05-13 India, Agriculture, GDP, Gross Capital Formation, ICOR http://d.repec.org/n?u=RePEc:tse:wpaper:27178&r=all I characterize and discuss in this paper the challenges and pitfalls we must face to grow out for good of the recent and future financial crises and economic recessions. I propose a brief history of the last crisis and insist on the loss of confidence within the banking and financial sector, which propagated later to the real sector. I discuss ways to rebuild confidence and move out of a stable bad economic equilibrium, due in part to inefficiently designed bonus systems. Considering data on gross job creation and loss in the private sector, I challenge the sorcerer’s apprentices plan for reforming capitalism and I recall the role of creative destruction. I show that government deficits and economic growth are not good friends and I offer a reference to the Canadian experience of the two decades 1985-2005. Finally, I discuss fiscal and regulatory reforms and propose redesigned roles for governmental and competitive sectors in generating a more prosperous economy. Boyer, Marcel 2013-04 Financial crisis, confidence, creative destruction, fiscal reform, prudential regulation, competitive social-democracy. http://d.repec.org/n?u=RePEc:mos:moswps:2013-08&r=all This study investigates determinants of happiness and job satisfaction of urban locals, first-generation migrants and new-generation migrants in China's urban workforce. We present evidence to suggest that new-generation migrants are less satisfied with their jobs and lives than first-generation migrants, despite having higher income. This finding is consistent with aspirations rising faster than income in China's fast growing urban economy. Haining Wang, Zhiming Cheng, Russell Smyth 2013-05 China; Migrants; Subjective wellbeing http://d.repec.org/n?u=RePEc:dgr:uvatin:2013010&r=all The Basel II Accord requires that banks and other Authorized Deposit-taking Institutions (ADIs) communicate their daily risk forecasts to the appropriate monetary authorities at the beginning of each trading day, using one or more risk models to measure Value-at-Risk (VaR). The risk estimates of these models are used to determine capital requirements and associated capital costs of ADIs, depending in part on the number of previous violations, whereby realised losses exceed the estimated VaR. In this paper we define risk management in terms of choosing from a variety of risk models, and discuss the selection of optimal risk models. A new approach to model selection for predicting VaR is proposed, consisting of combining alternative risk models, and we compare conservative and aggressive strategies for choosing between VaR models. We then examine how different risk management strategies performed during the 2008-09 global financial crisis. These issues are illustrated using Standard and Poor’s 500 Composite Index. Michael McAleer, Juan-Ángel Jiménez-Martín, Teodosio Pérez-Amaral 2013-01-08 Value-at-Risk (VaR), daily capital charges, violation penalties, optimizing strategy, risk forecasts, aggressive or conservative risk management strategies, Basel Accord, global financial crisis http://d.repec.org/n?u=RePEc:ucn:wpaper:201305&r=all This paper reviews developments in income and health poverty in Ireland over the 2003-2011 period using data from the Survey of Income and Living Conditions (SILC). It also examines developments in the correlation between the two. Income poverty fell up to and including 2009, after which this trend is reversed. Health poverty shows less of a trend over the period though there is some evidence of a reduction in health inequality from 2006. Movements in bi-dimensional poverty are mostly driven by income poverty, but there is evidence of a reduction in the correlation between health and income poverty over the period. David Madden 2013-05-15 multidimensional poverty; dominance http://d.repec.org/n?u=RePEc:dgr:uvatin:2012051&r=all Explanations of growth in health expenditures have restricted attention to the mean. We explain change throughout the distribution of expenditures, providing insight into how growth and its explanation differ along the distribution. We analyse Dutch data on actual health expenditures linked to hospital discharge and mortality registers. Full distribution decomposition delivers findings that would be overlooked by examination of changes in the mean alone. The growth in expenditures on hospital care is strongest at the middle of the distribution and is driven mainly by changes in the distributions of determinants. Pharmaceutical expenditures increase most at the top of the distribution and are mainly attributable to structural changes, including technological progress, making treatment of the highest cost cases even more expensive. Changes in hospital practice styles make the largest contribution of all determinants to increased spending not only on hospital care but also on pharmaceuticals, suggesting important spill over effects. Claudine de Meijer, Marc Koopmanschap, Owen O'Donnell, Eddy van Doorslaer 2012-05-08 Health care expenditure, decomposition, aging, pharmaceuticals, the Netherlands http://d.repec.org/n?u=RePEc:pra:mprapa:46926&r=all This study is an investigation into relative overeducation and life satisfaction using British longitudinal data. The focus is on young people rather than the whole of the life cycle, avoiding the possibility that overeducation may simply capture the increased participation in Higher Education of the young. The hypothesis is that there is a negative relationship between being overeducated and life satisfaction, and a key reason for this relates to comparisons (both with others, and the past). Using dynamic panel analysis, to account for omitted dynamics, such an association is found: the relatively overeducated seem to be relatively less happy. This result appears to fade over time, consistent with the relative comparisons notion. In addition, evidence is presented that income compensates somewhat for the loss of life satisfaction incurred by the overeducation. Piper, Alan T. 2012-07 Life Satisfaction; Happiness; Overeducation; Dynamic Panel Analysis; BHPS http://d.repec.org/n?u=RePEc:dgr:uvatin:2012018&r=all This paper investigates the importance of speed for technical trading rule performance for three highly liquid ETFs listed on NASDAQ over the period January 6, 2009 up to September 30, 2009. In addition we examine the characteristics of market activity over the day and within subperiods corresponding to hours, minutes, and seconds. Speed has a clear impact on the return of technical trading rules. For strategies that yield a positive return when they experience no delay, a delay of 200 milliseconds is enough to lower performance significantly. On low volatility days this is already the case for delays larger than 50 milliseconds. In addition, the importance of speed for trading rule performance increases over time. Market activity follows a U-shape over the day with a spike at 10:00AM due to macroeconomic announcements and is characterized by periodic activity within the day, hour, minute, and second. Martin Scholtus, Dick van Dijk 2012-03-01 Technical Trading, High-Frequency Trading, Latency Costs, Trading Speed, Market Activity http://d.repec.org/n?u=RePEc:qed:wpaper:1306&r=all KolstadÂ’'s (1994) model of intertemporal, competitive supply to a linear market from two distinct exhaustible resource deposits admits two different interior solutions - one with the low cost deposit "earning" the higher resource rent and the other with the low cost deposit "earning" the lower resource rent. This latter outcome turns on the initial size of the low cost deposit being significantly larger than the high cost deposit. We infer then that size can trump quality in the determination of the resource rent for a deposit, when geography is explicit. John Hartwick 2012-09 exhaustible resource extraction, deposit quality, linear market http://d.repec.org/n?u=RePEc:dgr:uvatin:2012119&r=all We formulate a horizontal differentiation model with price-sensitive demand and asymmetric transport costs, in the context of transport scheduling. Two competitors choose fares and departure times in a fixed time interval. Consumers are distributed uniformly along the interval; their location indicates their desired departure time. In a standard Hotelling model, locations are chosen before prices. In our context, the opposite order is also conceivable, but we show that it does not result in a Nash equilibrium; the same is true for a game in both variables are chosen simultaneously. We also discuss Stackelberg game structures and second-best regulation. We conclude that the addition of price-sensitive demand results in equilibria in the traditional Hotelling model with price setting; there, services are scheduled closer together than optimal. We also show that it is possible to include asymmetric schedule delay functions. Our results show that departure times can be strategic instruments. Optimal regulatory strategies depend on the value of schedule delay, and on whether the regulator can commit. Adriaan Hendrik van der Weijde, Erik T. Verhoef, Vincent A. C. van den Berg 2012-11-08 horizontal differentiation, scheduling, transport http://d.repec.org/n?u=RePEc:win:winwop:2013-01&r=all This paper provides the first estimates of the effects of housework burdens on the earnings of men and women in China, using data from the country’s time use survey in 2008. The analysis shows that working women in China not only spend many more hours on housework than their male co-workers but are also more likely to experience interference with their market work by housework activities. Three indicators are introduced to measure the degree to which market work is intertwined with housework. The estimates show that both housework time and its interference with market work have negative effects on the earnings of men and women. Quantitatively, the gender differences in housework-related indicators account for 27 to 28 percent of the gender earnings gap. This result supports the feminist contention that gender inequality at home is a major contributor to the weaker position of women in the labor market. Liangshu Qi, Xiao-Yuan Dong 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012002&r=all There are two important reasons for consumers to spend gift certificates differently than gifts in cash or non-gift income: a) they are forced to change their shopping pattern because of the conditions imposed by the issuer of the certificates, or b) they purposely separate gift certificates from other sources of income. The first reason implies a welfare loss, the second reason does not. We survey consumers who have just redeemed one or more gift certificates. For the gift certificate considered in our empirical application, we find that consumers are not constrained by the set of accepting merchants but that they do make some small changes in the timing of expenditures because of the certificate's no-refund policy. About 14 percent of recipients separate their gift certificates from other income sources in order to buy a product they really love to have. Males tend to spend the certificates on ordinary items, whereas females are more likely to treat themselves by buying more personalized items. Flora Felso, Adriaan R. Soetevent 2012-01-02 gift giving, labeling http://d.repec.org/n?u=RePEc:dgr:uvatin:2012088&r=all Transaction costs play a key role in the behaviour of smallholders in developing countries. We exploit the quasi experimental design of the introduction of an additional tobacco auction floor in Malawi in order to investigate the impact of a reduction in transaction costs and improved market access on yield and underlying smallholder's decisions on production and area of tobacco, the major cash crop in Malawi. Estimations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for 2003-04 to 2009-10. The estimation results support a statistically significant positive impact of the introduction of a new auction floor on tobacco yield and production of smallholders. Yield increases over the years to 21-25% above base year level. Smallholder production increases are of a similar size with a larger variation, ranging from 12% to 30%. The evidence further suggests that smallholder area is not affected. Results are shown to be robust after controlling for rainfall, fertilizer use, tobacco prices, maize prices and after including the lagged dependent variable. Wouter Zant 2012-09-03 transaction costs, market access, subsistence, food & cash crops, Malawi, Africa http://d.repec.org/n?u=RePEc:nbr:nberwo:19016&r=all Disability Insurance (DI) programs have long been criticized by economists for apparent work disincentives. Some countries have recently modified their programs such that DI recipients are allowed to keep some of their benefits if they return to work, and other countries are considering similar return-to-work policies. However, there is little empirical evidence of the effectiveness of programs that incentivize the return to work by DI recipients. Using a local randomized experiment that arises from a sharp discontinuity in DI policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work. Andreas Ravndal Kostøl, Magne Mogstad 2013-05 http://d.repec.org/n?u=RePEc:dgr:umagsb:2013020&r=all This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks. Montizaan R.M., Fouarge D., Grip A. de 2013 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; http://d.repec.org/n?u=RePEc:usf:wpaper:0113&r=all The extent to which fixed factors of production such as land constrain per-capita income growth has been a widely discussed topic in economics since at least Malthus (1798). Whether fixed factors limit growth depends crucially on two variables: the substitutability of fixed factors in production, and the extent to which innovation will be biased towards land-saving technologies. However, there are few estimates of either variable, and most models assume this elasticity of substitution is unity out of con- venience. This paper attempts to fill that gap in the literature. Using the timing of plague epidemics as an instrument for labor supply, this paper estimates the elasticity of substitution between fixed and non-fixed factors in pre-industrial England. I find that the elasticity of substitution between land and other factors during this period was signicantly less than one, which implies that the Malthusian effects of population on income were stronger than current models predict. In addition, I am able to esti- mate the direction and magnitude of induced innovation. I find evidence that denser populations -- and hence higher land scarcity -- induced innovation towards land-saving technologies. Specically, I find that a doubling of population density in England from its year 1500 level raises the difference in the growth rates of land- and labor-enhancing productivity by 0.22% per year. Joshua Wilde 2013-02 Land, Substitution, Population, England, Industrial Revolution, Demographic Transition, Induced Innovation, Plagues, Malthus http://d.repec.org/n?u=RePEc:dgr:uvatin:2013007&r=all This paper analyzes two indexes in order to capture the volatility inherent in El Niños Southern Oscillations (ENSO), develops the relationship between the strength of ENSO and greenhouse gas emissions, which increase as the economy grows, with carbon dioxide being the major greenhouse gas, and examines how these gases affect the frequency and strength of El Niño on the global economy. The empirical results show that both the ARMA(1,1)-GARCH(1,1) and ARMA(3,2)-GJR(1,1) models are suitable for modelling ENSO volatility accurately, and that 1998 is a turning point, which indicates that the ENSO strength has increased since 1998. Moreover, the increasing ENSO strength is due to the increase in greenhouse gas emissions. The ENSO strengths for Sea Surface Temperature (SST) are predicted for the year 2030 to increase from 29.62% to 81.5% if global CO2 emissions increase by 40% to 110%, respectively. This indicates that we will be faced with even stronger El Nino or La Nina effects in the future if global greenhouse gas emissions continue to increase unabated. Lan-Fen Chu, Michael McAleer, Chi-Chung Chen 2013-01-08 El Niños Southern Oscillations (ENSO), Greenhouse Gas Emissions, Global Economy, Southern Oscillation Index (SOI), Sea Surface Temperature (SST), Volatility. http://d.repec.org/n?u=RePEc:pra:mprapa:46957&r=all Current world capacity of hydrocarbon liquefaction is around 400,000 barrels per day (kb/d), providing a marginal share of the global liquid fuel supply. This study performs a broad review of technical, economic, environmental, and supply chains issues related to coal-to-liquids (CTL) and gas-to-liquids (GTL). We find three issues predominate. First, significant amounts of coal and gas would be required to obtain anything more than a marginal production of liquids. Second, the economics of CTL plants are clearly prohibitive, but are better for GTL. Nevertheless, large scale GTL plants still require very high upfront costs, and for three real world GTL plants out of four, the final cost has been so far approximately three times that initially budgeted. Small scale GTL holds potential for associated gas. Third, CTL and GTL both incur significant environmental impacts, ranging from increased greenhouse gas emissions (in the case of CTL) to water contamination. Environmental concerns may significantly affect growth of these projects until adequate solutions are found. Höök, Mikael, Fantazzini, Dean, Angelantoni, André, Snowden, Simon 2013 hydrocarbon liquefaction, gas-to-liquids, CTL, GTL, coal-to-liquids, peak oil http://d.repec.org/n?u=RePEc:dgr:uvatin:2012128&r=all In simple static linear simultaneous equation models the empirical distributions of IV and OLS are examined under alternative sampling schemes and compared with their first-order asymptotic approximations. We demonstrate that the limiting distribution of consistent IV is not affected by conditioning on exogenous regressors, whereas that of inconsistent OLS is. The OLS asymptotic and simulated actual variances are shown to diminish by extending the set of exogenous variables kept fixed in sampling, whereas such an extension disrupts the distribution of IV and deteriorates the accuracy of its standard asymptotic approximation, not only when instruments are weak. Against this background the consequences for the identification of parameters of interest are examined for a setting in which (in practice often incredible) assumptions regarding the zero correlation between instruments and disturbances are replaced by (generally more credible) interval assumptions on the correlation between endogenous regressor and disturbance. This yields OLS-based modified confidence intervals, which are usually conservative. Often they compare favorably with IV-based intervals and accentuate their frailty. Jan F. Kiviet 2012-11-27 partial identification, weak instruments, (un)restrained repeated sampling, (un)conditional (limiting) distributions, credible robust inference http://d.repec.org/n?u=RePEc:qss:dqsswp:1307&r=all Children born at the end of the academic year have lower educational attainment, on average, than those born at the start of the academic year. Previous research shows that the difference is most pronounced early in pupils’ school lives, but remains evident and statistically significant in high-stakes exams taken at the end of compulsory schooling. To determine the most appropriate policy response, it is vital to understand which of the four possible factors (age at test, age of starting school, length of schooling and relative age without cohort) lead to these differences in attainment between those born at different points in the academic year. However, research to date has been unable to adequately address this problem, as the four potential drivers are all highly correlated with one another, and three of the four form an exact linear relationship (age at test = age of starting school + length of schooling). This paper is the first to apply the principle of maximum entropy to this problem. Using two complementary sources of data we find that a child’s age at the time they take the test is the most important driver of the differences observed, which suggests that age-adjusting national achievement test scores is likely to be the most appropriate policy response to ensure that children born towards the end of the year are not at a disadvantage simply because they are younger when they take their exams. Claire Crawford, Lorraine Dearden, Ellen Greaves 2013-05-13 Age-period-cohort problem, maximum entropy, month of birth, relative age, educational attainment http://d.repec.org/n?u=RePEc:usf:wpaper:0613&r=all This paper studies a model in which an agent considers proposing a project of unknown quality to an evaluator, who has to decide on whether or not to accept it. Earlier papers considered the case when the evaluation is perfect and showed than higher submission fees increase the expected quality of projects submitted for review by discouraging long-shot submissions. We examine the case of two-sided incomplete information where not only the agent's, but also the evaluator's assessment of the project is imperfect. We show that under this specifcation, an increase in the submis- sion fee may lead to a decrease in the quality of projects that are implemented because of its adverse effects on the evaluator's acceptance policy. Andrei Barbos 2013-01 Evaluation, Project Screening, Regulatory Burden http://d.repec.org/n?u=RePEc:dgr:uvatin:2012097&r=all We suggest improved tests for cointegration rank in the vector autoregressive (VAR) model and develop asymptotic distribution theory and local power results. The tests are (quasi-)likelihood ratio tests based on a Gaussian likelihood, but of course the asymptotic results apply more generally. The power gains relative to existing tests are due to two factors. First, instead of basing our tests on the conditional (with respect to the initial observations) likelihood, we follow the recent unit root literature and base our tests on the full likelihood as in, e.g., Elliott, Rothenberg, and Stock (1996). Secondly, our tests incorporate a 'sign' restriction which generalizes the one-sided unit root test. We show that the asymptotic local power of the proposed tests dominates that of existing cointegration rank tests. H. Peter Boswijk, Michael Jansson, Morten Ø. Nielsen 2012-09-21 Cointegration rank, efficiency, likelihood ratio test, vector autoregression http://d.repec.org/n?u=RePEc:fip:fedpwp:13-16&r=all We provide a new and superior measure of U.S. GDP, obtained by applying optimal signal-extraction techniques to the (noisy) expenditure-side and income-side estimates. Its properties -- particularly as regards serial correlation -- differ markedly from those of the standard expenditure-side measure and lead to substantially-revised views regarding the properties of GDP. S. Boragan Aruoba, Francis X. Diebold, Jeremy Nalewaik, Frank Schorfheide, Dongho Song 2013 Income ; Expenditures, Public ; Business cycles ; Recessions http://d.repec.org/n?u=RePEc:dgr:uvatin:2012089&r=all We explore evolutionary dynamics for repeated games with small, but positive complexity costs. To understand the dynamics, we extend a folk theorem result by Cooper (1996) to continuation probabilities, or discount rates, smaller than 1. While this result delineates which payoffs can be supported by neutrally stable strategies, the only strategy that is evolutionarily stable, and has a uniform invasion barrier, is All D. However, with sufficiently small complexity costs, indirect invasions - but now through 'almost neutral' mutants - become an important ingredient of the dynamics. These indirect invasions include stepping stone paths out of full defection. Matthijs van Veelen, Julian Garcia 2012-09-06 repeated games, evolutionary game theory, complexity costs, indirect invasions, robustness against indirect invasions, neutrally stable strategy, evolutionarily stable strategy, iterated prisoners dilemma http://d.repec.org/n?u=RePEc:dgr:uvatin:2013045&r=all We examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. For that we utilize a dynamic model of R&D whereby we consider all possible initial marginal cost levels (technologies), including those that exceed the choke price. This global analysis yields four possibilities: initial marginal costs are above the choke price and this technology is, or is not, developed further, and initial marginal costs are below the choke price and the technology is, or is not, (eventually) taken off the market. We show that an extension of the cooperative agreement towards collusion in the product market is not necessarily welfare reducing: if firms collude, they (i) develop further a wider range of initial technologies, (ii) invest more in R&D such that process innovations are pursued more quickly, and (iii) abandon the technology for a smaller set of initial marginal costs. We also dis cuss the implications of our analysis for antitrust policy. Jeroen Hinloopen, Grega Smrkolj, Florian Wagener 2013-03-15 Antitrust policy, Bifurcations, Collusion, R&D cooperatives, Spillovers http://d.repec.org/n?u=RePEc:iza:izadps:dp7393&r=all Between 2009 and 2011, data were collected under the first wave of The Irish Longitudinal Study on Ageing (TILDA). Over 8,500 people aged 50 and over and living in Ireland were interviewed on a wide range of topics covering socioeconomic and health issues. Our primary goals in this paper are (a) to present details on two of the variables which will be of particular interest to economists, namely income and wealth and (b) to discuss issues in relation to their use, in particular with respect to missing data. We describe how the income and wealth data were collected. We assess the quality of the income data by comparing them to those obtained through the European Union Statistics on Income and Living Conditions (EU-SILC). We find that the distribution of income in the TILDA sample resembles closely that found in a comparable sample from the EU-SILC. We undertake two pieces of analysis, by way of demonstrating potential applications of the data. First, we examine the joint distribution of income and assets and find that there is a small but non-negligible number of people who have low levels of income but high levels of assets and another similarly sized group in the opposite situation. Second, we consider the relationship between income/wealth and life satisfaction, another variable captured in TILDA. We find that income and housing wealth both affect life satisfaction but that the influence of income is much larger. O'Sullivan, Vincent, Nolan, Brian, Barrett, Alan 2013-05 income, wealth, ageing http://d.repec.org/n?u=RePEc:pra:mprapa:46880&r=all Demographic transition creates a small window for countries to leverage their demographic dividend and leapfrog to a higher level of income-employment situation. This opportunity comes in the middle stage of demographic transition when the population pyramid shows signs of maturity and bulges in the middle, indicating a relatively larger share of youth or working age persons in total population, and hence a low dependency ratio. Consequently, countries can engage this human resource to augment its productive capacity. If sensibly utilised, this can raise per capita income level dramatically – pulling up the country to a substantially higher plane of living standards. However, the efforts will fall flat if this group of youth, on which so much depends, are not productive enough to enhance output significantly. Often questions are raised about the employability of the youth because of their inadequate education, training, and market ready skill and if the youth are not absorbed meaningfully into the workforce and are productive enough, this demographic dividend will turn into a demographic nightmare. Huge youth unemployment is the surest way to social tension, unrest, and unlawful activities. Hence to understand India’s readiness in this aspect we must look at the issue of education, skill formation and employment among youth in India. In this overview paper we find that current skill/training situation of youth in India is inadequate. Surplus and shortage coexists in the labour market indicating serious mismatch between supply and demand. There is an urgent need to relook at human resource development pattern in the country. It appears that a socioeconomic crisis is looming large and demographic opportunities will turn to threat unless intervened immediately. Majumder, Rajarshi 2013-04-02 Demographic Dividend; Employment; Skill Gap; Labour Demand http://d.repec.org/n?u=RePEc:dgr:uvatin:2013016&r=all The way in which individual expectations shape aggregate macroeconomic variables is crucial for the transmission and effectiveness of monetary policy. We study the individual expectations formation process and the interaction with monetary policy, within a standard New Keynesian model, by means of laboratory experiments with human subjects. Three aggregate outcomes are observed: convergence to some equilibrium level, persistent oscillatory behavior and oscillatory convergence. We fit a heterogeneous expectations model with a performance-based evolutionary selection among heterogeneous forecasting heuristics to the experimental data. A simple heterogeneous expectations switching model fits individual learning as well as aggregate macro behavior and outperforms homogeneous expectations benchmarks. Moreover, in accordance to theoretical results in the literature on monetary policy, we find that an interest rate rule that reacts more than point for point to inflation has some stabilizing effects on inflation in our experimental economies, although convergence can be slow in presence of evolutionary learning. Tiziana Assenza, Peter Heemeijer, Cars Hommes, Domenico Massaro 2013-01-14 Experiments, New Keynesian Macro Model, Monetary Policy, Expectations, Heterogeneity http://d.repec.org/n?u=RePEc:dgr:uvatin:2012016&r=all Recent studies suggest that the type of strategic environment or expectation feedback can have a large impact on whether the market can learn the rational fundamental price. We present an experiment where the fundamental price experiences large unexpected shocks. Markets with negative expectation feedback (strategic substitutes) quickly converge to the new fundamental, while markets with positive expectation feedback (strategic complements) do not converge, but show under-reaction in the short run and over-reaction in the long run. A simple evolutionary selection model of individual learning explains these differences in aggregate outcomes. Te Bao, Cars Hommes, Joep Sonnemans, Jan Tuinstra 2012-02-17 Expectation feedback, under- and overreaction, strategic substitutes and strategic complements, heuristic switching model, experimental economics http://d.repec.org/n?u=RePEc:usf:wpaper:0313&r=all This paper analyzes the importance of malaria prevalence, malaria ecology, and indoor residual spraying on the probability of sleeping under an insecticide-treated net (ITN) in six African countries. Using individual data on ITN usage combined with the malaria prevalence and ecology data for the area where the person lives, we show that malaria prevalence and ecology have positive effects on ITN usage. However, ITN usage is inelastic with respect to malaria prevalence, with elasticity of 0.181 for children under 5 and of 0.223 for adult women. We also find that indoor residual spraying does not crowd out ITN usage. Gabriel Picone, Robyn Kibler, Benedicte Apouey 2013-02 Malaria prevalence elasticity, ITN usage, public intervations http://d.repec.org/n?u=RePEc:pra:mprapa:46929&r=all Are formal institutions instrumental in the effect globalization mechanisms have on the human face? If so, through which freedoms channels are poverty and inequality mitigated? With the instrumentality of formal institutions: (1) de jure financial liberalization (KAOPEN) has a positive income-redistribution impact while the de facto measure (FDI) does not; (2) political liberalization has a disequalizing effect and; (3) economic freedom has a positive (negative) effect on inequality (poverty). Hence, economic freedom does not stop the wealthy from growing wealthier, but at the same time provides for conditions that mitigate poverty. The findings broadly show that, despite the substantially documented negative incidences of some channels of globalization on poverty (and inequality), formal institutions have the capacity to device policies that will give capital openness, trade and economic liberalizations a human face. Social implications and policy options are discussed. Asongu, Simplice A 2013-01-14 Globalization; Inequality; Poverty; Formal institutions; Africa http://d.repec.org/n?u=RePEc:dgr:uvatin:2012084&r=all We apply the theory of inequality in opportunity to measure inequity in mortality. Our empirical work is based on a rich dataset for the Netherlands (1998-2007), linking information about mortality, health events and lifestyles. We show that distinguishing between different channels via which mortality is affected is necessary to test the sensitivity of the results with respect to different normative positions. Moreover, our model allows for a comparison of the inequity in simulated counterfactual situations, including an evaluation of policy measures. We explicitly make a distinction between inequity in mortality risks and inequity in mortality outcomes. The treatment of this difference - “luck”- has a crucial in‡uence on the results. Pilar Garcia-Gomez, Erik Schokkaert, Tom Van Ourti, Teresa Bago d'Uva 2012-08-20 equity, equality of opportunities, mortality, lifestyles http://d.repec.org/n?u=RePEc:pra:mprapa:47018&r=all The objective of this paper is to assess if inflation targeting post-communist economies performed better, in terms of output growth, during the crisis than their non-inflation targeting counterparts. The paper also puts the issue in the context of the preconditions of inflation targeters to adopt this regime. 26 post-communist economies of Central and Eastern Europe and the Commonwealth of Independent States are analyzed during the ongoing economic crisis. Results suggest that inflation targeters of those countries performed worse than non-inflation targeters. The growth decline in inflation targeters post-communist economies has been estimated to be deeper by about four percentage points than that in non-inflation targeters. The study finds very limited role of the preconditions for growth decline. Only the lower amount of monetary financing of the budget may have contributed in inflation-targeting countries to have gone through the crisis better. Petreski, Marjan 2013 inflation targeting, pre-conditions for adoption, post-communist economies http://d.repec.org/n?u=RePEc:usf:wpaper:0713&r=all This paper studies information acquisition under competitive pressure and proposes a model to examine the relationship between product market competition and the level of innovative ac- tivity in an industry. Our paper offers theoretical support for recent empirical results that point to an inverted-U shape relationship between competition and innovation. The model presents an optimal timing decision problem where a firm endowed with an idea trades the benefits of waiting for additional information on whether this idea can be converted into a successful project against the cost of delaying innovation: a given firm's profit following innovation is decreasing in the number of firms that invested at earlier dates. By recognizing that a firm can intensify its innovative activity on two dimensions, a risk dimension and a quantitative dimension, we show that firms solve this trade-off precisely so as to generate the inverted-U shape relationship. Andrei Barbos 2013-01 Innovation, Information Acquisition, Timing Games, Preemption http://d.repec.org/n?u=RePEc:dgr:uvatin:2012143&r=all The supposed irrelevance of historical costs for rational decision making has been the subject of much interest in the economic literature. In this paper we explore whether individual decision making under risk is affected by the cost of the supplied information. Outside of the lab, it is difficult to disentangle the effect of the cost of information itself from the effect of self-selection by individuals who tend to gain the most from this information. We thus create an environment in the lab where subjects are offered additional, useful and identical information on the state of the world across treatments. By varying the cost of information we can distinguish between selection and sunk cost effects. We find a systematic effect of sunk costs on the manner in which subjects update their beliefs on the state of the world. Subjects over-weigh costly information relatively to free information, which results in a 'push' of beliefs towards the extremes. This shift does not necessarily lead to behavior more attuned with Bayesian updating. Pedro Robalo, Rei S. Sayag 2012-12-14 sunk cost, information, Bayesian updating, decision under risk, heuristics and biases, lab experiment http://d.repec.org/n?u=RePEc:cde:cdewps:230&r=all This paper studies the innovation, production efficiency and productivity responses to the stronger protection of intellectual property post-Trade Related Intellectual Property Rights (TRIPs) agreement, with specific reference to manufacturing industry in the BRIC economy of India. Using the fact that the post-TRIPs strengthening of intellectual property rights in developing countries was largely exogenous, we are able to correct for any endogeneity biases that may obtain in the estimation. Using a large panel data set for Indian firms in the manufacturing sector spanning the period 1995-2011, we find that intellectual property reform is associated with a significant increase in the rates of technical change, production efficiency change, and productivity growth. Thus, the annual rate of technological growth spurted by about 3 percentage points or more, production efficiency grew by almost 8 percentage points, and consequently total factor productivity growth accelerated by about 0.8 percentage points in the post-reform period. This holds promise for other similar reforming countries, and helps to set at rest the misgivings one might have for the tightening of intellectual property protection. Sunil Kanwar 2013-04 Innovation, Efficiency, Productivity, IPRs http://d.repec.org/n?u=RePEc:cdp:texdis:td477&r=all This article analyzes how investments in transportation infrastructure made by the PROACESSO program affected employment and wages of the municipalities of Minas Gerais, using data on employment and earnings from 2000 to 2010. For this, we use a differences-in-differences strategy that explores variations in the time that the municipalities received investments of the program. First, we discussed how investments in transportation infrastructure can have adverse effects on the peripheral regions. Next, we analyzed the program´s impact on local employment and wages. The results indicate that the greater accessibility favored industries that sell to other locations (industry) and buy inputs produced elsewhere (trade and industry) but hurt the service sector which suffers from increased competition of more diversified and competitive services produced in central locations. Rodrigo Ferreira Simões, Agda Martins 2013-04 urban attributes; biotechnology; innovation; patent; Zero-Inflated Poisson Model; Brazilian cities. http://d.repec.org/n?u=RePEc:crg:wpaper:dt2013-06&r=all Like many cases of tropical small-scale fisheries, the French Guiana coastal fishery is characterized by the high fish biodiversity of its ecosystem, the weak selectivity of the fleets exploiting the resources and the heterogeneity of the vessels in terms of size and fishing techniques. We use Rapfish method [Pitcher & Preikshot, 2001] to assess sustainability within 11 fishery systems in the ecological, economic, social and technological fields through 27 attributes. Overall results point out an average performance in the scale of sustainability. Comparisons made among the FSs show a gradient of sustainability performance from the west coast to the east coast. Several recommendations have been formulated to raise the current ‘sustainability’ status as for example the reduction of discards. This study is postulated as a complementary tool to bioeconomic model in order to define a sustainable management of the French Guiana costal fishery. Abdoul Ahad Cisse, Fabian Blanchard, Olivier Guyader 2013-03 http://d.repec.org/n?u=RePEc:dgr:uvatin:2011115&r=all Empirical research suggests that - rather than improving incentives - exerting control can reduce workers' performance by eroding motivation. The present paper shows that intention-based reciprocity can cause such motivational crowding-out if individuals differ in their propensity for reciprocity and preferences are private information. Not being controlled might then be considered to be kind, because not everybody reciprocates not being controlled with high effort. This argument stands in contrast to existing theoretical wisdom on motivational crowding-out that is primarily based on signaling models. Ferdinand von Siemens 2011-08-09 extrinsic and intrinsic motivation, crowding-out, intention-based reciprocity http://d.repec.org/n?u=RePEc:pra:mprapa:46897&r=all WTO, OECD with many others, suggest the trade in value-added would be a “better” measure to understand the impact of trade on employment, growth, production etc. when import content in exports is important. We use in this work an Input-Output table for 2008, to calculate the value-added exported by Brazilian states. We distinguish the value-added exported directly by the state itself or indirectly via other states. First, by using value-added we define the extent of vertical specialization among Brazilian states. Exported value-added are then used in a gravity model to determine the structure of trade in value-added terms. We also define a trilateral gravity structure which permits to control for the vertical specialization between states and to estimate the trade determinants at three steps: origin state, re-exporter state and importer country. Guilhoto, Joaquim José Martins, Siroën, Jean-Marc, Yucer, Ayçil 2013 Vertical Specialization, Input-Output Analysis, Gravity Model, Brazil, intra-national trade http://d.repec.org/n?u=RePEc:dgr:uvatin:2012123&r=all Migration has become a prominent research theme in geography and regional science and it has been approached from various methodological angles. Nonetheless, a common missing element in most migration studies is the lack of awareness of the overall network topology, which characterizes migration flows. Although gravity models focus on spatial interaction - in this case migration - between pairs of origins and destinations, they do not provide insights into the topology of a migration network. In the present paper, we will employ network analysis to address such systemic research questions, in particular: How centralized or dispersed are migration flows and how does this structure evolve over time? And how is migration activity clustered between specific countries, and if so, do such patterns change over time? Going a step further than exploratory network analysis, this paper estimates international migration models for OECD countries based on a dual ap proach: gravity models estimated using conventional econometric approaches such as panel data regressions as well as network-based regression techniques such as MRQAP. The empirical results reveal not only the determinants of international migration among OECD countries, but also the value of blending network analysis with more conventional analytic methods. Emmanouil Tranos, Masood Gheasi, Peter Nijkamp 2012-11-16 immigration, gravity model, complex networks, community detection, MRQAP http://d.repec.org/n?u=RePEc:eab:microe:23410&r=all This paper focuses on the pricing behavior of Japanese and United States firms selling their identical products in New York City, Chicago, Osaka, and Tokyo. The authors utilize some simple models of international price dispersion and market segmentation that generate predictions about testable prices. The dataset, which consists of prices of identical products in the Japanese and American cities, was collected and accepted by both governments. Using this data, versions of international price dispersion theories are tested and some empirical evidence to support the view that simple international price dispersion models can partly explain the observed prices is found. K.C. Fung, Alicia Garcia-Herrero, Francis Ng 2013-04 International Price Dispersion, market segmentation, Japan, The United States, pricing behavior, firms, idetntial products http://d.repec.org/n?u=RePEc:cfi:fseres:cf316&r=all We construct a simple two-country model that enables us to examine the interactions between trade in goods and international capital movement under financial imperfection. We show that they are complements in the sense that trade in goods facilitates capital outflow from the South, which is either financially less-developed or endowed less capital than the North. This complementarity disappears if financial institution is perfect or almost perfect; trade in goods and capital movement are substitutes as traditional literature shows in such cases. We also show the possibility that capital account liberalization entails capital leakage from the manufacturing industries to an inferior investment opportunity. Taiji Furusawa, Taiji Furusawa, Noriyuki Yanagawa 2013-05 http://d.repec.org/n?u=RePEc:iza:izadps:dp7378&r=all We examine how immigrants in Canada fare in terms of promotions relative to their native peers. Using linked employer-employee data and firm effects, we identify the extent to which differences in promotion outcomes result from immigrants sorting into firms offering "dead-end" jobs versus facing intra-firm barriers to advancement. We find that while white immigrants experience broadly similar promotion outcomes relative to their white native peers, visible minority immigrants – particularly those in their first five years in Canada – are substantially less likely to have been promoted and have been promoted fewer times with their employers than their white native peers. Newly arrived female visible minority immigrants sort into firms offering "dead end" jobs, but most of the differences in promotion outcomes between immigrants and their native peers result from intra-firm differences in promotion outcomes. The findings imply that policies that do not tackle barriers to advancement within firms may be insufficient to address the difficulties faced by immigrants in the labor force. Javdani, Mohsen, McGee, Andrew 2013-04 promotions, immigration http://d.repec.org/n?u=RePEc:hai:wpaper:201307&r=all We investigate the long-run impact of environmental regulations on the intra-industry distribution of firm-level productivity and the resulting aggregate variables. In a general-equilibrium model that accounts for endogenous entry/exit of heterogeneous firms, neither the average productivity of firms nor the mass of firms is independent of the choice of policy instruments (i.e. emissions tax vs. emissions trading) or permit allocation rules. The equilibrium price of permits under emissions trading is lower than the emissions tax rate that would support the same aggregate emissions. An incomplete emissions market results in a net increase in combined aggregate emissions. Yoshifumi Konishi, Nori Tarui 2013-05 Emissions Tax; Emissions Trading; Heterogeneous Firms; Endogenous Entry/Exit; Melitz Model; Incomplete Regulation; Emissions Leakage http://d.repec.org/n?u=RePEc:dgr:uvatin:2012135&r=all We examine differences in altruism and laziness between public sector employees and private sector employees. Our theoretical model predicts that the likelihood of public sector employment increases with a worker's altruism, and increases or decreases with a worker's laziness depending on his altruism. Using data from the German Socio-Economic Panel Study, we find that public sector employees are significantly more altruistic and lazy than observationally equivalent private sector employees. A series of robustness checks show that these patterns are stronger among higher educated workers; that the sorting of altruistic people to the public sector takes place only within the caring industries; and that the difference in altruism is already present at the start of people's career, while the difference in laziness is only present for employees with sufficiently long work experience. Robert Dur, Robin Zoutenbier 2012-12-07 public service motivation, altruism, laziness, sorting, public sector employment, personality characteristics http://d.repec.org/n?u=RePEc:ukc:ukcedp:1308&r=all We study the implications of a stockout constraint in a dynamic general equilibrium model, which can explain both RBC and inventory facts well. Under the stockout constraint, inventories and demand are complements in generating sales, and hence the optimal level of inventories increases in expected demand. We also show that the inventory to sales ratio is both persistent and countercyclical because the cost of carrying inventories is mainly determined by the interest rate. We use this model to disentangle output and sales, by matching the key inventory moments, and find that preference and productivity shocks are equally important in data. Finally, we assess whether improvements in inventory management can explain the Great Moderation. We find that, although improvements in inventory management can reduce the need for inventory holdings, which decreases output volatility relative to sales volatility, lower levels of inventories actually increases sales volatility. Because these two effects offset each other, a change in inventory management does not change output volatility to any great extent. Katsuyuki Shibayama, Jagjit S. Chadha 2013-05 Inventory investment; Inventory cycles; Stockout constraint; Great Moderation http://d.repec.org/n?u=RePEc:tky:fseres:2013cf888&r=all 　　 　　 This study evaluates the Japanese Long-Term Care Insurance(LTCI) a decade after its launch, focusing on the effects of its 2006 amendment. The radical program led to the emergence of markets for various care services such as home care, daycare and temporary institutional care besides permanent institutional care, which comprises only a formal care sector in many developed countries. We analyze the labor market behavior of women who face requirement for elderly care in their household, under the availability of the various formal care services. Our empirical analysis shows that the 2006 amendment reduced the negative impacts of care requirement both on the rate of female labor force participation and their working hours. However, our results also indicate that regular workers are more likely to utilize formal care, while many non-regular workers provide informal care by themselves. Shinya Sugawara, Jiro Nakamura 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012090&r=all We measure the impact of the Farmers Income Diversification Program (FIDP), an EU funded program implemented in Malawi from late 2005 onwards, aiming at increasing agricultural productivity, diversification, value addition, commercialization and trade of subsistence farmers. The geographical spread of the implementation of FIDP is exploited to identify its impact. Computations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for the period 2003-04 to 2009-10. The estimations support a statistically significant impact of FIDP on agricultural productivity, with increases reaching 20% to 24% relative to base period levels, with a lag of at least one year after the start of the program and increasing over the years. Evidence on diversification of crop income is less strong but still suggests increases ranging from 5% to 10%. Results are robust for instrumental variables, synthetic controls, clustering of standard errors and inclusion of additional covariates. Wouter Zant 2012-09-07 agricultural policy, impact evaluation, subsistence farming, Malawi, Africa http://d.repec.org/n?u=RePEc:dgr:uvatin:2013008&r=all This paper examines the size effects of volatility spillovers for firm performance and exchange rates with asymmetry in the Taiwan tourism industry. The analysis is based on two conditional multivariate models, BEKK-AGARCH and VARMA-AGARCH, in the volatility specification. Daily data from 1 July 2008 to 29 June 2012 for 999 firms are used, which covers the Global Financial Crisis. The empirical findings indicate that there are size effects on volatility spillovers from the exchange rate to firm performance. Specifically, the risk for firm size has different effects from the three leading tourism sources to Taiwan, namely USA, Japan, and China. Furthermore, all the return series reveal quite high volatility spillovers (at over sixty percent) with a one-period lag. The empirical results show a negative correlation between exchange rate returns and stock returns. However, the asymmetric effect of the shock is ambiguous, owing to conflicts in the significance and signs of the asymmetry effect in the two estimated multivariate GARCH models. The empirical findings provide financial managers with a better understanding of how firm size is related to financial performance, risk and portfolio management strategies that can be used in practice. Chia-Lin Chang, Hui-Kuang Hsu, Michael McAleer 2013-01-07 Tourism, Size effects, Small-firm effects, Financial performance, Spillover effects, MGARCH, VARMA, BEKK http://d.repec.org/n?u=RePEc:nbr:nberwo:19036&r=all We exploit migration patterns from the UK to Australia, South Africa, and the US to investigate whether a person’s decision to smoke is determined by culture. For each country, we use retrospective data to describe individual smoking trajectories over the life-course. For the UK, we use these trajectories to measure culture by cohort and cohort-age, and more accurately relative to the extant literature. Our proxy predicts smoking participation of second-generation British immigrants but not that of non-British immigrants and natives. Researchers can apply our strategy to estimate culture effects on other outcomes when retrospective or longitudinal data are available. Rebekka Christopoulou, Dean R. Lillard 2013-05 http://d.repec.org/n?u=RePEc:nbr:nberwo:19028&r=all Motivated by a novel stylized fact – countries with isolated capital cities display worse quality of governance – we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory. Filipe R. Campante, Quoc-Anh Do, Bernardo V. Guimaraes 2013-05 http://d.repec.org/n?u=RePEc:nbr:nberwo:19027&r=all We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability, and in contrast with the alternative hypothesis that it might forestall political capture. We then provide direct evidence that the spatial distribution of population relative to the capital affects different accountability mechanisms over state politics: newspaper coverage, voter knowledge and information, and turnout. We also find evidence against the capture hypothesis: isolated capitals are associated with more money in state-level campaigns. Finally, we show that isolation is linked with worse public good provision. Filipe R. Campante, Quoc-Anh Do 2013-05 http://d.repec.org/n?u=RePEc:iza:izadps:dp7384&r=all We show that the distinction between job spells and employer spells matters for returns to tenure. Employer spells encompass between-job wage movements linked to promotions or demotions while job spells don't. Using a 1% sample of the British workforce over the period 1975-2010, we find that a significant proportion of the return to employer tenure arises due to job changes within employer spells. Conditional on tenure with employer, the return to job tenure is negative. This suggests that any positive effects of job-specific human capital on wage growth within jobs are outweighed by the effects of job changes within firms. Devereux, Paul J., Hart, Robert A., Roberts, J. Elizabeth 2013-05 job spells, employer spells, wage-tenure profiles http://d.repec.org/n?u=RePEc:dgr:uvatin:2012050&r=all We propose a new methodology for the Bayesian analysis of nonlinear non-Gaussian state space models with a Gaussian time-varying signal, where the signal is a function of a possibly high-dimensional state vector. The novelty of our approach is the development of proposal densities for the joint posterior density of parameter and state vectors: a mixture of Student's t-densities as the marginal proposal density for the parameter vector, and a Gaussian density as the conditional proposal density for the signal given the parameter vector. We argue that a highly efficient procedure emerges when these proposal densities are used in an independent Metropolis-Hastings algorithm. A particular feature of our approach is that smoothed estimates of the states and an estimate of the marginal likelihood are obtained directly as an output of the algorithm. Our methods are computationally efficient and produce more accurate estimates when compared to recently proposed alternativ es. We present extensive simulation evidence for stochastic volatility and stochastic intensity models. For our empirical study, we analyse the performance of our method for stock return data and corporate default panel data. Istvan Barra, Lennart Hoogerheide, Siem Jan Koopman, Andre Lucas 2012-03-26 nonlinear non-Gaussian state space model, Bayesian inference, Monte Carlo estimation, Metropolis-Hastings algorithm, mixture of Student's t-distributions http://d.repec.org/n?u=RePEc:dgr:uvatin:2013002&r=all This paper examines the practical usefulness of two new journal performance metrics, namely the Eigenfactor score, which may be interpreted as measuring “Journal Influence”, and the Article Influence score, using the Thomson Reuters ISI Web of Science (hereafter ISI) data for 2009 for the 200 most highly cited journals in each of the Sciences and Social Sciences, and compares them with two existing ISI metrics, namely Total Citations and the 5-year Impact Factor (5YIF) of a journal (including journal self citations). It is shown that the Sciences and Social Sciences are different in terms of the strength of the relationship of journal performance metrics, although the actual relationships are very similar. Moreover, the journal influence and article influence journal performance metrics are shown to be closely related empirically to the two existing ISI metrics, and hence add little in practical usefulness to what is already known. These empirical results are compared with existing results in the literature. Chia-Lin Chang, Michael McAleer, Les Oxley 2013-01-04 Journal performance metrics, Research assessment measures, Total citations, 5-year impact factor (5YIF), Eigenfactor, Journal and Article influence http://d.repec.org/n?u=RePEc:dgr:uvatin:2012029&r=all In criminal cases judges evaluate and combine probabilistic evidence to reach verdicts. Unavoidably, errors are made, resulting in unwarranted conviction or acquittal of defendants. This paper addresses the questions (1) whether hearing cases by teams of three persons leads to less error than hearing cases alone; (2) whether deliberation leads to better decisions than mechanical aggregation of individual opinions; and (3) whether participating in deliberations improves future individual decisions. We find that having more than one judge consider cases reduces error effectively. This does not mean that it is necessary to deliberate about all cases. In simple cases many errors can be avoided by mechanical aggregation of independent opinions, and deliberation has no added value. In difficult cases discussion leads to less error. The advantage of deliberation goes beyond the case at hand: although we provide no feedback about the quality of verdicts, it improves individual decisions in subsequent cases. Frans van Dijk, Joep H. Sonnemans, Ed Bauw 2012-03-27 judicial decision making, experiment, law and economics http://d.repec.org/n?u=RePEc:ucf:innins:innins693&r=all Negli ultimi vent'anni, Internet è diventata parte integrante della nostra vita. Abbiamo abbracciato con entusiasmo il suo potenziale in termini di comunicazione, intrattenimento e ricerca di informazioni. Per molti bambini di oggi, Internet, telefoni cellulari e tecnologie affini costituiscono una presenza familiare e costante: si muovono agevolmente tra ambiente online e offline, tanto che ai loro occhi la distinzione risulta sempre più irrilevante. La ricerca analizza il comportamento, I rischi e le vulnerabilità dei bambini in Internet e documenta le misure preventive e protettive contro lo sfruttamento e l'abuso di minori online attualmente in vigore. UNICEF Innocenti Research Centre 2013 child pornography; child protection; children's participation; communication systems; http://d.repec.org/n?u=RePEc:iza:izadps:dp7366&r=all We empirically analyze the language proficiency of migrants in the Netherlands. Traditionally, the emphasis in studying language proficiency and economic outcomes has been on the relation between earnings and indicators for language proficiency, motivated by the human capital theory. Here we analyze whether there is a relation between proficiency of the destination language and job level. A lack of language skills may induce the migrant to work in jobs of a lower level leading to lower job satisfaction. We use subjective survey information about job satisfaction and the fit between the migrant's education and skill level and the job. We also use objective information on professional level. For men, we find evidence for a positive relationship between indicators for language proficiency and satisfaction with work type and professional level. Bloemen, Hans 2013-04 immigrants, skills, job satisfaction http://d.repec.org/n?u=RePEc:nbr:nberwo:19031&r=all We present evidence from an ongoing field experiment in college coaching/ mentoring. The experiment is designed to ask whether mentoring plus cash incentives provided to high school students late in their senior year have meaningful impacts on college going and persistence. For women, we find large impacts on the decision to enroll in college and to remain in college. Intention to treat estimates are an increase in 15 percentage points in the college going rate (against a base rate of 50 percent) while treatment on the treated estimates are 30 percentage points. Offering cash bonuses alone without mentoring has no effect. There are no effects for men in the sample. The absence of effects for men is not explained by an interaction of the program with academic ability, work habits, or family and guidance support for college applications. However, differential returns to college and/or occupational choice may explain some of the differences in treatment effects for men and women. Scott E. Carrell, Bruce Sacerdote 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012043&r=all Support for economic reforms has often shown puzzling dynamics: there are many examples of reforms that started off successfully but nevertheless lost public support, and vice versa. We show that learning dynamics can rationalize this apparent paradox, the reason being that the process of revealing reform outcomes is an example of sampling without replacement: every winner revealed reduces the number of unfilled winning places left, thereby making individuals who remain uncertain on their identity (reform winner or loser?) more pessimistic about their chances of benefiting from the reform. Consequently, learning considerations challenge the conventional wisdom that sequencing should be such that favorable reform outcomes are revealed first. Finally, we provide an explanation for why the gradual reform strategy worked well for China, while this is much less so for Latin American and Central and Eastern European countries. Sweder van Wijnbergen, Tim Willems 2012-04-23 learning, political economy, reform, sequencing, privatization http://d.repec.org/n?u=RePEc:dgr:uvatin:2012015&r=all Rational Expectations (RE) models have two crucial dimensions: 1) agents correctly forecast future prices given all available information, and 2) given expectations, agents solve optimization problems and these solutions in turn determine actual price realizations. Experimental testing of such models typically focuses on only one of these two dimensions. In this paper we consider both forecasting and optimization decisions in an experimental cobweb economy. We report results from four experimental treatments: 1) subjects form forecasts only, 2) subjects determine quantity only (solve an optimization problem), 3) they do both and 4) they are paired in teams and one member is assigned the forecasting role while the other is assigned the optimization task. All treatments converge to Rational Expectation Equilibrium (REE), but at very different speeds. We observe that performance is the best in treatment 1) and worst in the treatment 3). Most forecasters use a n adaptive expectations rule. Subjects are less likely to make conditionally optimal production decision for given forecasts in treatment 3) where the forecast is made by themselves, than in treatment 4) where the forecast is made by the other member of their team, which suggests that "two heads are better than one" in finding REE. Te Bao, John Duffy, Cars Hommes 2012-02-17 Learning, Rational Expectations, Optimization, Experimental Economics, Bounded Rationality http://d.repec.org/n?u=RePEc:pra:mprapa:46943&r=all The paper describes the main determinants of electricity intensity in twenty-nine transition economies. We provide an original analysis on the way the local power sector unreliability may affect the firm-level electricity intensity. The paper explains the different firm’s behaviour, within EU and outside EU, in front of outages and/or local supply power quality. For this purpose, we use the Business Environment and Enterprise Performance Survey (BEEPS) done in 2008-2009 over 2400 enterprises. Moreover, we built an innovative measure of the electricity supply quality at the local-level inspired by the previous work of Guiso et al. (2004). Our results indicate that in non-EU (or insufficiently reformed) countries power sector unreliability increases firm’s electricity intensity. We estimated a potential reduction of one-fifth of firm’s electricity intensity associated with an improvement from the 75th percentile to the 25th percentile of the distribution of the local power sector unreliability. Our results suggest that bad quality of the local power sector seems to dampen the firms’ ability to decreases their electricity consumption, if the country’s institutional framework is poor. Bagayev, Igor, Najman, Boris 2013-05-13 Electricity Intensity, Local Power Sector, Electric Power Reforms, Transition Economies http://d.repec.org/n?u=RePEc:eab:tradew:23411&r=all European economic integration fascinates and inspires for the way it brought peace to a continent torn by violent and long-standing rivalries. The lessons from Europe, however, cannot be applied directly as the degree of the European Union’s supranationality is unthinkable elsewhere. This paper discusses how Europe overcame the specific problem of overlapping free trade agreements (FTAs) with the Pan-European Cumulation System which instituted common rules of origin, regional cumulation of value, and completed the full matrix of bilateral FTAs. After this, Europe had what can be thought of as a “customs union†for rules of origin. Richard Baldwin 2013-04 Spaghetti Bowl, European Union, EU, overlapping free trade agreements (FTAs), customs union http://d.repec.org/n?u=RePEc:dgr:uvatin:2013003&r=all The paper proposes a general asymmetric multifactor Wishart stochastic volatility (AMWSV) diffusion process which accommodates leverage, feedback effects and multifactor for the covariance process. The paper gives the closed-form solution for the conditional and unconditional Laplace transform of the AMWSV models. The paper also suggests estimating the AMWSV model by the generalized method of moments using information not only of stock prices but also of realized volatilities and co-volatilities. The empirical results for the bivariate data of the NASDAQ 100 and S&P 500 indices show that the general AMWSV model is preferred among several nested models. Manabu Asai, Michael McAleer 2013-01-07 Multivariate Stochastic Volatility; Wishart Process; Leverage Effects; Feedback Effects; Multifactor Model; Option Pricing http://d.repec.org/n?u=RePEc:nbr:nberwo:19030&r=all We develop a liability driven investment framework that incorporates downside risk penalties for not meeting liabilities. The shortfall between the asset and liabilities can be valued as an option which swaps the value of the endogenously determined optimal portfolio for the value of the liabilities. The optimal portfolio selection exhibits endogenous risk aversion and as the funding ratio deviates from the fully funded case in both directions, effective risk aversion decreases. When funding is low, the manager “swings for the fences” to take on risk, betting on the chance that liabilities can be covered. Over-funded plans also can afford to take on more risk as liabilities are already well covered and so invest aggressively in risky securities. Andrew Ang, Bingxu Chen, Suresh Sundaresan 2013-05 http://d.repec.org/n?u=RePEc:pra:mprapa:47002&r=all We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three-district model. We show that full information equivalence holds at a stable equilibrium in only one of the three districts when transportation cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet. Berliant, Marcus, Tabuchi, Takatoshi 2013-05-15 information aggregation in elections; informative voting; new economic geography; local politics http://d.repec.org/n?u=RePEc:dgr:uvatin:0000037&r=all While there is no doubt that health is strongly correlated with education, whether schooling exerts a causal impact on health is not yet firmly established. We exploit Dutch compulsory schooling laws in a Regression Discontinuity Design applied to linked data from health surveys, tax files and the mortality register to estimate the causal effect of education on mortality. The reform provides a powerful instrument, significantly raising years of schooling, which, in turn, has a large and significant effect on mortality even in old age. An extra year of schooling is estimated to reduce the probability of dying between ages of 81 and 88 by 2-3 percentage points relative to a baseline of 50 percent. High school graduation is estimated to reduce the probability of dying between the ages of 81 and 88 by a remarkable 17-26 percentage points but this does not appear to be due to any sheepskin effects of finishing high school on mortality beyond that predicted lin early by additional years of schooling. Hans van Kippersluis, Owen O'Donnell, Eddy van Doorslaer Health, Mortality, Education, Causality, Regression Discontinuity http://d.repec.org/n?u=RePEc:dgr:uvatin:2013052&r=all We analyze the interaction between bank rescues, financial fragility and sovereign debt discounts. We construct a model that contains balance sheet constrained financial intermediaries financing both capital expenditure of intermediate goods producers and government deficits. The financial intermediaries face the risk of a (partial) default of the government on its debt obligations. We analyse the impact of a financial crisis, first under full government credibility and then with an endogenous sovereign debt discount. The introduction of the default possibility does not have any impact IF all government debt is short term. Interest rates on debt reflect higher default probabilities, but because all debt is short term, bank balance sheets are unaffected and no further negative effects arise through the endogenous sovereign debt channel. But once long term government debt is introduced, the possibility of capital losses on bank balance sheets arises. Then o utcomes significantly deteriorate compared to the short term debt only case. Higher interest rates on new debt lead to capital losses on banks' holding of existing long term government debt. The associated increase in credit tightness leads to a negative amplification effect, significantly increasing output losses and declines in investment after a financial crisis. This causes potentially conflicting macroeconomic effects of a debt financed recapitalization of banks. We investigate the case where the government announces a bankrecapitalization to occur 4 quarters after announcement. Under the parameter values chosen, the positive effects from an anticipated capital injection dominate the effects of the associated increase in sovereign default risk. Christiaan van der Kwaak, Sweder van Wijnbergen 2013-04-02 Financial Intermediation; Macrofinancial Fragility; Fiscal Policy; Sovereign Default Risk http://d.repec.org/n?u=RePEc:dgr:uvatin:2012013&r=all This is the first study to analyze effects of in utero exposure to the severe Dutch Hunger Winter famine (1944/45) on labor market outcomes and hospitalization. This famine is clearly demarcated in time and space. It was not anticipated. Nutritional conditions were stable before and after the famine. We provide results of exposure by sub-interval of gestation. We are the first to use population registers for the full population. We find a significantly negative effect of exposure during the first trimester of gestation on employment outcomes 53 or more years after birth, as well as effects on hospitalization. Robert S. Scholte, Gerard J. van den Berg, Maarten Lindeboom 2012-02-14 famine, long-run effects, labor and hospitalization outcomes http://d.repec.org/n?u=RePEc:dgr:uvatin:2012053&r=all We determine the importance of long-term and short-term components of state variables for asset allocation decisions. The long-term and short-term decompositions are performed using a variety of filtering techniques. We allow for a flexible semiparametric form of the dependence of asset allocation decisions on state variable components. To account for short-sale restrictions, we extend the regular GMM moment conditions with the appropriate Lagrange-Kuhn-Tucker multipliers. Empirically, we find that investors can benefit from reacting differently to short-term versus long-term dynamics of state variables. The induced allocation decisions are implemented in an investment backtest. We find significant improvements in terms of out-of-sample Sharpe ratios and expected utilities for state variables such as the dividend yield and stock market trend. Mahmoud Botshekan, Andre Lucas 2012-05-15 Portfolio choice, long and short-term asset allocation, trend-cycle decomposition, GMM under short-sale constraints http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-23&r=all Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock. Javed I. Ahmed, Brad M. Barber, Terrance Odean 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012131&r=all A Forecast Support System (FSS), which generates sales forecasts, is a sophisticated business analytical tool that can help to improve targeted business decisions. Many companies use such a tool, although at the same time they may allow managers to quote their own forecasts. These sales forecasters (managers) can take the FSS output as their input, but they can also fully ignore the FSS out- comes. We propose a methodology that allows to evaluate the forecast accuracy of these managers, relative to the FSS, while taking aboard latent variation across managers' behavior. We show that the results, here for a large Germany-based pharmaceutical company, can in fact be used to manage the sales forecasters by giving clear-cut recommendations for improvement. Bert de Bruijn, Philip Hans Franses 2012-12-03 Forecast Support System; Sales forecasters; Forecast accuracy http://d.repec.org/n?u=RePEc:nbr:nberwo:19025&r=all The wave of crises that began in 2008 reheated the debate on market deregulation as a tool to improve economic performance. This paper addresses the consequences of increased flexibility in goods and labor markets for the conduct of monetary policy in a monetary union. We model a two-country monetary union with endogenous product creation, labor market frictions, and price and wage rigidities. Regulation affects producer entry costs, employment protection, and unemployment benefits. We first characterize optimal monetary policy when regulation is high in both countries and show that the Ramsey allocation requires significant departures from price stability both in the long run and over the business cycle. Welfare gains from the Ramsey-optimal policy are sizable. Second, we show that the adjustment to market reform requires expansionary policy to reduce transition costs. Third, deregulation reduces static and dynamic inefficiencies, making price stability more desirable. International synchronization of reforms can eliminate policy tradeoffs generated by asymmetric deregulation. Matteo Cacciatore, Giuseppe Fiori, Fabio Ghironi 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012139&r=all We consider price-fee competition in bilateral oligopolies with perfectly-divisible goods, non-expandable infrastructures, concentrated agents on both sides, and constant marginal costs. We define and characterize stable market outcomes. Buyers exclusively trade with the supplier with whom they achieve maximal bilateral joint welfare. Prices equal marginal costs. Threats to switch suppliers set maximal fees. These also arise from a negotiation model that extends price competition. Competition in both prices and fees necessarily emerges. It improves welfare compared to price competition, but consumer surpluses do not increase. The minimal infrastructure achieving maximal aggregate welfare differs from the one that protects buyers most. Yukihiko Funaki, Harold Houba, Evgenia Motchenkova 2012-12-14 Assignment Games, Infrastructure, Negotiations, Non-linear pricing, Market Power, Countervailing power http://d.repec.org/n?u=RePEc:arx:papers:1305.2693&r=all In this paper, we consider a discrete time economy where we assume that the short term interest rate follows a quadratic term structure of a regime switching asset process. The possible non-linear structure and the fact that the interest rate can have different economic or financial trends justify the interest of Regime Switching Quadratic Term Structure Model (RS-QTSM). Indeed, this regime switching process depends on the values of a Markov chain with a time dependent transition probability matrix which can well captures the different states (regimes) of the economy. We prove that under this modelling that the conditional zero coupon bond price admits also a quadratic term structure. Moreover, the stochastic coefficients which appear in this decomposition satisfy an explicit system of coupled stochastic backward recursions. St\'ephane Goutte 2013-05 http://d.repec.org/n?u=RePEc:iza:izadps:dp7371&r=all The substantial increase in female employment rates in Europe over the past two decades has often been linked in political and public rhetoric to negative effects on child development, including obesity. We analyse this association between maternal employment and childhood obesity using rich objective reports of various anthropometric and other measures of fatness from the IDEFICS study of children aged 2-9 in 16 regions of eight European countries. Based on such data as accelerometer measures and information from nutritional diaries, we also investigate the effects of maternal employment on obesity's main drivers: calorie intake and physical activity. Our analysis provides little evidence for any association between maternal employment and childhood obesity, diet or physical activity. Gwozdz, Wencke, Sousa-Poza, Alfonso, Reisch, Lucia A., Ahrens, Wolfgang, De Henauw, Stefaan, Eiben, Gabriele, Fernández-Alvira, Juan M., Hadjigeorgiou, Charalampos, Kovács, Eva, Lauria, Fabio, Veidebaum, Toomas, Williams, Garrath, Bammann, Karin 2013-04 maternal employment, children, obesity, Europe http://d.repec.org/n?u=RePEc:cfi:fseres:cf315&r=all Given a monotone convex function on the space of essentially boundedrandom variables with the Lebesgue property (order continuity), we consider its extension preserving the Lebesgue property to as big solid vector space of random variables as possible. We show that there exists a maximum such extension, with explicit construction, where the maximum domain of extension is obtained as a (possibly proper) subspace of a natural Orlicz-type space, characterized by a certain uniform integrability property. As an application, we provide a characterization of the Lebesgue property of monotone convex function on arbitrary solid spaces of random variables in terms of uniform integrability and a ''nice'' dual representation of the function. Keita Owari 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:0000019&r=all In a recent paper Hong and Shum [2006. Using price distributions to estimate search costs. Rand Journal of Economics 37, 257–275] present a structural method to estimate search cost distributions. We extend their approach to the case of oligopoly and present a new maximum likelihood method to estimate search costs. We apply our method to a data set of online prices for different computer memory chips. The estimates suggest that the consumer population can be roughly split into two groups which either have quite high or quite low search costs. Search frictions confer a significant amount of market power to the firms: Despite more than 20 firms operating in each of the markets, we estimate price-cost margins to be around 25%. The paper also illustrates how the structural method can be employed to simulate the effects of the introduction of a sales tax. <P> This discussion paper has resulted in a publication in the <A HREF="http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V64-4P59XD2-1&_user=499884&_coverDate=07%2F31%2F2008&_rdoc=4&_fmt=high&_orig=browse&_srch=doc-info(%23toc%235804%232008%23999479994%23691064%23FLA%23display%23Volume)&_cdi=5804&_sort=d&_docanchor=&_ct=8&_acct=C000024499&_version=1&_urlVersion=0&_userid=499884&md5=72c5b07d36fc7bd6459fb38121d60294"><I>European Economic Review</I></A>, 2008, 52(5), 820-48. Jose Luis Moraga-Gonzalez, Matthijs R. Wildenbeest consumer search; oligopoly; price dispersion; structural estimation; maximum likelihood http://d.repec.org/n?u=RePEc:pra:mprapa:46902&r=all Emerging challenges in livelihood security necessitate group action; hence, building social capital is the critical in reducing rural poverty in India. Self-help groups (SHGs) have emerged as an effective mechanism of empowerment as well as being an efficient mode of technology dissemination. Therefore, a study was undertaken to measure the attitude and behavior constructs of SHG member. A Likert-type scale developed by Meena et al. (2008) was applied to measure the attitude construct. However, behavior construct was developed consisted of 30-items, for which Cronbach’s alpha coefficient of reliability was observed as 0.80. Data were solicited from one-hundred randomly selected SHG members of Patna district of Bihar state, India. Study reveals that most of the SHG members were male (53%), aged from 27 to 47 years, had rural background (94%), experienced less than 6 year in SHG (61%), adopted agriculture as prime occupation (61%), educated up to primary level (51%) with low income. A significant change in the attitude of SHG members was observed in the areas viz., socio-economic upliftment, educational and training, marketing and entrepreneurship qualities, technology adoption and participatory research, and credit aspect. Overall, 91% SHG members had a favorable attitude; however 62% SHG members moderately changed in their behavior. The independent variables i.e., age and education had positive and significant correlation with the behavior construct. Henceforth, for addressing the issues of rural poverty, enrichment of the system with social capital through empowerment and formation SHGs; provision of financial and credit support; creation of market-driven and decentralized extension system; use of media-mix for technology transfer, informal education at rural level; conduction of need-based capacity building programmes and strong political will need to be emphasized. Meena, M.S., Singh, K.M. 2012-11-06 Attitude, Behavior, Self help groups, Eastern India http://d.repec.org/n?u=RePEc:dgr:uvatin:20130063&r=all Two new measures for financial systemic risk are computed based on the time-varying conditional and unconditional probability of simultaneous failures of several financial institutions. These risk measures are derived from a multivariate model that allows for skewed and heavy-tailed changes in the market value of financial firms’ equity. Our model can be interpreted as a Merton model with correlated Levy drivers. This model incorporates dynamic volatilities and dependence measures and uses the overall information on the shape of the multivariate distribution. Our correlation estimates are robust against possible outliers and influential observations. For very large cross-sectional dimensions, we propose an approximation based on a conditional Law of Large Numbers to compute extreme joint default probabilities. We apply the model to assess the risk of joint financial firm failure in the European Union during the financial crisis. By augmenting the dynamic parameter model with Euribor-EONIA rate and other variables that capture situations of systemic stress, we find that including extra economic variables helps to explain systemic correlation dynamics. Andre Lucas, Bernd Schwaab, Xin Zhang 2013-05-13 systemic risk; dynamic equicorrelation model; generalized hyperbolic distribution; Law of Large Numbers http://d.repec.org/n?u=RePEc:dgr:uvatin:2013012&r=all We analyze the effects of mergers in first-price sealed-bid auctions on bidders' equilibrium bidding functions and on revenue. We also study the incentives of bidders to merge given the private information they have. We develop two models, depending on how after-merger valuations are created. In the first, single-aspect model, the valuation of the merged firm is the maximum of the valuations of the two firms engaged in the merger. In the multi-aspect model, a bidder's valuation is the sum of two components and a merged firm chooses the maximum of each component of the two merging firms. In the first model, a merger creates incentives for bidders to shade their bids leading to lower revenue. In the second model, the non-merging firms do not shade their bids and revenue is actually higher. In both models, we show that all bidders have an incentive to merge. Maarten Janssen, Vladimir Karamychev 2013-01-10 Mergers, first-price sealed-bid auctions http://d.repec.org/n?u=RePEc:dgr:uvatin:2012138&r=all This paper studies an intermediated market operated by middlemen with high inventory holdings. I present a directed search model in which middlemen are less likely to experience a stockout because they have the advantage of inventory capacity, relative to other sellers. The model explains why popular items are sold at a larger premium, and everyday items at a larger discount, by large-scaled intermediaries. The concentration of middlemen's market, i.e., few middlemen, each with large capacity, can lead to a higher matching efficiency, but with a lower total welfare, compared to having many middlemen, each with small capacity. Makoto Watanabe 2012-12-10 Directed Search, Intermediation, Inventory holdings http://d.repec.org/n?u=RePEc:dgr:uvatin:2013024&r=all The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods. Ping-Yu Chen, Chia-Lin Chang, Chi-Chung Chen, Michael McAleer 2013-01-25 Fertilizer Price, Oil Price, Volatility http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0043&r=all We study monopolistic competition under indirect additivity of preferences. This is dual to the Dixit-Stiglitz model, where direct additivity is assumed, with the CES case as the only common ground. Other examples include (perceived) demand functions that are exponential or linear. Our equilibrium results are generally in contrast with those received by the literature. An increase of the number of consumers never affects prices and firms’ size, but increases proportionally the number of firms, creating pure gains from variety. An increase in individual income increases prices (and more than proportionally the number of varieties) and reduces firms’ size if and only if the price elasticity of demand is increasing. We also study the endogenous market structure with Bertrand competition (in which a pro-competitive effect of market size arises) and the case for inefficient entry. Paolo Bertoletti, Federico Etro 2013-05 Monopolistic competition, Indirect additivity, Dixit-Stiglitz model, Endogenous entry http://d.repec.org/n?u=RePEc:arx:papers:1305.3433&r=all This paper sets up a methodology for approximately solving optimal investment problems using duality methods combined with Monte Carlo simulations. In particular, we show how to tackle high dimensional problems in incomplete markets, where traditional methods fail due to the curse of dimensionality. L C G Rogers, Pawel Zaczkowski 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012001&r=all A situation in which a finite set of agents can generate certain payoffs by cooperation can be described by a cooperative game with transferable utility (or simply a TU-game) where each agent is represented by one player in the game. In this paper, we assume that one agent can be represented by more than one player. We introduce two solutions for this multi-player agent game model, both being generalizations of the Shapley value for TU-games. The first is the agent-Shapley value and considers the agents in the most unified way in the sense that when an agent enters a coalition then it enters with all its players. The second is the player-Shapley value which takes all players as units, and the payoff of an agent is the sum of the payoffs over all its players. We provide axiomatic characterizations of these two solutions that differ only in a collusion neutrality axiom. The agent-Shapley value satisfies player collusion neutrality stating that collusion of two players belonging to the same agent does not change the payoff of this agent. On the other hand, the player-Shapley value satisfies agent collusion neutrality stating that after a collusion of two agents, the sum of their payoffs does not change. After axiomatizing the player- and agent-Shapley values we apply them to airport games and voting games. Rene van den Brink, Chris Dietz 2012-01-02 Cooperative TU-game, Shapley value, multi-player agent, collusion neutrality, airport games http://d.repec.org/n?u=RePEc:dgr:uvatin:2012014&r=all See also the publication in <A href="http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6419.2012.00723.x/abstract">'Journal of Economic Surveys'</A>, 26(3), 468-91.<p> Empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions. Both localization and urbanization economies are hypothesized to foster agglomeration and growth, but recent meta-analyses of this burgeoning body of empirical research show that the results are ambiguous. Recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space, aggregation, growth definitions, and the functional form of the models applied. Alternatively, in this paper, we argue that ambiguity may be due to a lack of research on firm-level performance in agglomerations. This research is necessary because the theories that underlie agglomeration economies are microeconomic in nature. Hierarchical or multilevel modeling, which allows micro levels and macro levels to be modeled simultaneously, is becoming an increasingly common practice in the social sciences. As illustrated by detailed Dutch data on firm-level productivity, employment growth and firm survival, we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration-firm performance relationship and for addressing spatial, sectoral and cross-level heterogeneity. Frank G. van Oort, Martijn J. Burger, Joris Knoben, Otto Raspe 2012-02-16 agglomeration economies, micro-macro link, multilevel analysis, productivity http://d.repec.org/n?u=RePEc:dgr:uvatin:2012129&r=all The paper provides a theoretical foundation for the empirical regularities observed in estimations of wage consequences of overeducation and undereducation. Workers with more education than required for their jobs are observed to suffer wage penalties relative to workers with the same education in jobs that only require their educational level. Similarly, workers with less education than required for their jobs earn wage rewards. These departures from the Mincer human capital earnings function can be explained by Nash bargaining between workers and employers. Under fairly mild assumptions, Nash bargaining predicts a wage penalty for overeducation and a wage reward for undereducation, and further predicts that the wage penalty will exceed the wage reward. This paper reviews the established empirical regularities and then provides Nash bargaining results that explain these regularities. Joop Hartog, Michael Sattinger 2012-11-27 Overeducation, Undereducation, Nash bargaining, Qualitative mismatches, Mincer earnings function, Wages http://d.repec.org/n?u=RePEc:iza:izadps:dp7389&r=all This paper considers the labor market assimilation of immigrants in terms of earnings and employment (employment probability, unemployment probability, and hours worked per week). Using the 2006 Australian Census of Population and Housing the analyses are performed separately by gender, and separately by whether or not the origin is an English-speaking developed country (ESDC). Among men in general, 'negative assimilation' is found for immigrants from the ESDC, and positive assimilation for other origins. Among women, the pattern of assimilation in earnings and employment is more positive than among their male counterparts. This may reflect the greater tendency for female immigrants to be tied movers. Among never married immigrant women from the ESDC, who are more likely than married immigrant women from the same countries to be economic migrants, the pattern of negative assimilation is observed. Chiswick, Barry R., Miller, Paul W. 2013-05 immigrants, assimilation, earnings, hours worked, employment, unemployment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012032&r=all This paper proposes a new measure for a group's ability to lead society to adopt their standard of behavior, which in particular takes account of the time the group takes to convince the whole society to adopt their position. This notion of a group's power to initiate action is computed as the reciprocal of the resistance against it, which is in turn given by the expected absorption time of a related finite state partial Markov chain that captures the social dynamics. The measure is applicable and meaningful in a variety of models where interaction between agents is formalized through (weighted) binary relations. Using Percolation Theory, it is shown that the group power is monotonic as a function of groups of agents. We also explain the differences between our measure and those discussed in the literature on Graph Theory, and illustrate all these concerns by a thorough analysis of two particular cases: the Wolfe Primate Data and the 11S hijackers' network. Ramon Flores, Maurice Koster, Ines Lindner, Elisenda Molina 2012-03-29 Collective action, Social networks, Influence and diffusion models, Network intervention, Group centrality measures http://d.repec.org/n?u=RePEc:dgr:uvatin:2012005&r=all This paper is dating from 1995, when it has been presented at the Ragnar Frisch Centennial Memorial Conference in Oslo. It has never been published before. In this paper for the first time the Cantril ladder question data have been employed in the way which later has become known as happiness economics. After two introductory sections 1and 2, Section 3 explains the Leyden School methodology to estimate financial satisfaction or in traditional terms a (cardinal) welfare function of money. In Section 4 the Cantril ladder question is employed to estimate a function of satisfaction with life as a whole. It is found that well-being is quadratic in the number of children, leading to an optimum number of children, given income and given the fact of a one-breadwinner- or two- breadwinners-family. In Section 5 the effects of children on financial satisfaction and on satisfaction with life as a whole are compared. With respect to financial satisfaction it is found that the more children there are the smaller financial satisfaction. Comparison of the two effects makes it possible to distinguish between the monetary cost associated with having children and the non-monetary benefits caused by having children. Part of this paper is based on Plug and Van Praag (1995). Bernard M.S. van Praag, Erik J.S. Plug 2012-01-16 happiness economics, Leyden School, Cantril Ladder, family equivalence scales, costs and benefits of children http://d.repec.org/n?u=RePEc:dgr:uvatin:2012083&r=all This study examines the fungibility of foreign aid and makes three contributions to the existing literature. Firstly, fungibility of aid at the aggregate level is reexamined on a richer panel dataset of 91 developing countries for 1980-2009, taking into account endogeneity of aid and autocorrelation in residuals. Results indicate that aid is strongly fungible: around 80 % is substituting rather than increasing government spending in the short run. There is also substantial heterogeneity in the sample, with aid being more fungible for countries with a low share of aid in GDP. Secondly, aid is disaggregated into bilateral and multilateral components. Despite substantial differences between both components, there are only very small indications that multilateral aid is less fungible than bilateral aid and estimates are volatile when aid is instrumented. Thirdly, this study attempts to distinguish between off- and on-budget aid at the aggregate level using the value of technical cooperation as a proxy for off-budget aid. While on-budget aid is strongly fungible, off-budget aid is non-fungible. In the long run, around 50 % of aid increases government expenditures, although results are not stable. High levels of fungibility (except for off-budget aid) suggest that resources spent on earmarking may be wasted and donors should rethink the way aid is distributed. Lukasz Marc 2012-08-14 foreign aid, fungibility, government expenditures http://d.repec.org/n?u=RePEc:cer:papers:wp481&r=all For the biofuel markets and related commodities, we study their price transmission, which is in fact equivalent to studying price cross-elasticities. Importantly, we focus on the price dependence of the price transmission mechanism. Several methodological caveats are discussed. Specifically, we combine the memory robust feasible generalized least squares estimation with two-stage least squares to control for endogeneity bias and inconsistency. We find that both ethanol and biodiesel prices are responsive to their production factors (ethanol to corn, and biodiesel to German diesel). The strength of transmission between both significant pairs increased remarkably during the food crisis of 2007/2008. Causality tests further show that price changes in production factors lead the changes in biofuels even after controlling for price effects. Ladislav Kristoufek, Karel Janda, David Zilberman 2013-02 biofuels; price transmission; price cross-elasticity; causality; http://d.repec.org/n?u=RePEc:cer:papers:wp483&r=all This article uses data on Czech public procurement contracts from 2005 - 2010 in order to uncover patterns suggestive of corrupt behavior of procuring officials. Using polynomial regressions and local linear density estimators, the article provides evidence that procurement officials manipulate anticipated values of procurements so that contracts can be awarded through less transparent procedures with restricted entry. Manipulations manifest through emergence of sharp discontinuities in the anticipated value distribution. Procurements excessively bunch below statutory thresholds, which determine officials’ scope of discretion, entry-restrictiveness and transparency of the contract-awarding process. The first appearance of discontinuities coincides almost exactly with thresholds being introduced into the procurement legislation. Manipulations occur only in procedures restricted by thresholds and are prevalent only among a narrow group of procuring bodies. The last finding is consistent with manipulations being driven by corruption of procurement officials. Manipulations concern 8.6% of all below-limit procurements. Jan Palguta 2013-03 public procurement, corruption, manipulation, incentives, statutory thresholds http://d.repec.org/n?u=RePEc:nbr:nberwo:19034&r=all A nonlinear programming formulation is introduced to solve infinite horizon dynamic programming problems. This extends the linear approach to dynamic programming by using ideas from approximation theory to avoid inefficient discretization. Our numerical results show that this nonlinear programming method is efficient and accurate. Yongyang Cai, Kenneth L. Judd, Thomas S. Lontzek, Valentina Michelangeli, Che-Lin Su 2013-05 http://d.repec.org/n?u=RePEc:pra:mprapa:46958&r=all Since the nineties culture is seen also as a vector of development of an economy. "Cultural Economics", is a term that has been often used in the current economic debate, is a new and important source of development in modern economies because of its impact on other sectors and their great capacity for income generation and employment. With this in mind, this study has the objective to study the importance of the cultural sector in the Brazilian economy in 2006. For a better definition of the activities that make up this sector, the work takes into account the cultural indicators of the Brazilian Institute of Geography and Statistics (IBGE) and thus makes use of input-output methodology, which allows to understand the relationships of the sector with the rest of Brazil's economy. David, Leticia Scretas, Guilhoto, Joaquim José Martins 2012 Economia Cultural; Economia Criativa; Insumo-Produto http://d.repec.org/n?u=RePEc:dgr:uvatin:2012092&r=all We consider the problem of axiomatizing the Shapley value on the class of assignment games. We first show that several axiomatizations of the Shapley value on the class of all TU-games do not characterize this solution on the class of assignment games by providing alternative solutions that satisfy these axioms. However, when considering an assignment game as a communication graph game where the game is simply the assignment game and the graph is a corresponding bipartite graph buyers are connected with sellers only, we show that Myerson's component efficiency and fairness axioms do characterize the Shapley value on the class of assignment games. Moreover, these two axioms have a natural interpretation for assignment games. Component efficiency yields submarket efficiency stating that the sum of the payoffs of all players in a submarket equals the worth of that submarket, where a submarket is a set of buyers and sellers such that all buyers in this set hav e zero valuation for the goods offered by the sellers outside the set, and all buyers outside the set have zero valuations for the goods offered by sellers inside the set. Fairness of the graph game solution boils down to valuation fairness stating that only changing the valuation of one particular buyer for the good offered by a particular seller changes the payoffs of this buyer and seller by the same amount. Rene van den Brink, Miklos Pinter 2012-09-13 Assignment game, Shapley value, communication graph game, submarket efficiency, valuation fairness http://d.repec.org/n?u=RePEc:bsl:wpaper:2013/08&r=all <span lang="DE-CH">The Benini distribution is a lognormal-like distribution generalizing the Pareto distribution. Like the Pareto and the lognormal distributions it was originally proposed for modeling economic size distributions, notably the size distribution of personal income. This paper explores a probabilistic property of the Benini distribution, showing that it is not determined by the sequence of its moments  </span>although all the moments are finite. It also provides explicit examples of distributions possessing the same set of moments. Related distributions are briefly explored. <span lang="DE-CH"> </span> Christian Kleiber 2013 Benini distribution, characterization of distributions, income distribution, moment problem, statistical distributions, Stieltjes class http://d.repec.org/n?u=RePEc:dgr:uvatin:2013031&r=all This paper explores the interactions between congestion pricing and a tax-distorted labor market within a monocentric urban equilibrium model. We compute the efficiency gains of various second-best policies, i.e. combinations of toll schemes and revenue recycling programs, with a predetermined level of public revenue. We find that 35% of the space-varying road tax does not reflect marginal external congestion costs, but rather functions as a Ramsey-Mirrlees tax, i.e. an efficiency enhancing mechanism allowing space differentiation of the labor tax. Such a space-varying tax adds a quite different motivation to road pricing, since it can produce large welfare gains even in the absence of congestion. We show that both a cordon toll and a flat kilometer tax achieve over 80% of these gains when combined with specific types of revenue recycling, such as labor tax cuts or public transport subsidies. Sensitivity analysis shows that the optimal type of revenue recycling depends on the level of inefficiency in the provision of public transport prior to the introduction of congestion pricing. Ioannis Tikoudis, Erik T. Verhoef, Jos N. van Ommeren 2013-02-21 Second-best road pricing, revenue recycling, monocentric city http://d.repec.org/n?u=RePEc:dgr:uvatin:2012022&r=all This paper deals with the relation between excessive risk taking and capital structure in banks. Examining a quarterly dataset of U.S. banks between 1993 and 2010, we find that equity is valued higher when more risky portfolios are chosen when leverage is high, and that more risk taking has a negative impact on valuation of the debt of highly leveraged banks. We find no evidence that deposit insurance is encouraging risk taking behaviour. We do find that banks with a more troubled loan portfolio take on more risk. Banks whose share price has slumped tend to gamble for resurrection by increasing the riskiness of their asset portfolios. The results suggest that incentives embedded in the capital structure of banks contribute to systemic fragility, and so support the Basel III proposals towards less leverage and higher loss absorption capacity of capital. Martin Koudstaal, Sweder van Wijnbergen 2012-03-12 bank fragility, risk shifting, deposit insurance, gambles for resurrection http://d.repec.org/n?u=RePEc:dgr:uvatin:2012101&r=all In this paper, we analyze cost sharing problems arising from a general service by explicitly taking into account the generated revenues. To this cost-revenue sharing problem, we associate a cooperative game with transferable utility, called cost-revenue game. By considering cooperation among the agents using the general service, the value of a coalition is defined as the maximum net profit that the coalition may obtain by means of cooperation. As a result, a coalition may profit from not allowing all its members to get the service that generates the revenues. We focus on the study of the core of cost-revenue games. Under the assumption that cooperation among the members of the grand coalition grants the use of the service under consideration to all its members, it is shown that a cost-revenue game has a non-empty core for any vector of revenues if, and only if, the dual game of the cost game has a large core. Using this result, we investigate minimum cost spanning tree games with revenues. We show that if every connection cost can take only two values (low or high cost), then, the corresponding minimum cost spanning tree game with revenues has a non-empty core. Furthermore, we provide an example of a minimum cost spanning tree game with revenues with an empty core where every connection cost can take only one of three values (low, medium, or high cost). Arantza Estevez-Fernandez, Hans Reijnierse 2012-09-27 Cost-revenue allocation problem, cooperative game, core, minimum cost spanning tree problem http://d.repec.org/n?u=RePEc:dgr:uvatin:2012075&r=all Although the literature on the effectiveness of child care centers in developing countries is thin, most of the studies have concluded that the provision of these services are beneficial to enhance the development of poor children at early ages. Using different matching techniques, the results in this paper contrast with that conclusion as it finds no support of a positive effect of a large scale child care program in Ecuador on any of the dimensions considered of cognitive development. This paper also provides evidence that the program increased mother's labor force participation and family income but reduced health outcomes of children. The results are in line with the ones found in (Rosero and Oosterbeek, 2011) and support the existence of a trade-off between children development and labor market participation that should be considered at the moment of designing and implementing social policies. Jose Rosero 2012-07-19 Early childhood development, child care centers, propensity score matching, developing country, Ecuador http://d.repec.org/n?u=RePEc:cfi:fseres:cf317&r=all The Lebesgue property (order-continuity) of a monotone convex function on a solid vector space of measurable functions is characterized in terms of (1) the weak inf-compactness of the conjugate function on the order-continuous dual space, (2) the attainment of the supremum in the dual representation by order-continuous linear functionals. This generalizes and unifies several recent results obtained in the context of convex risk measures. Keita Owari 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012030&r=all The main purpose of the present paper is to disentangle the mix-up of the notions of success and satisfaction which is prevailing in the voting power literature. We demonstrate that both notions are conceptually distinct, and discuss their relationship and measurement. We show that satisfaction contains success as one component, and that both coincide under the canonical set-up of a simultaneous decision-making mechanism as it is predominant in the voting power literature. However, we provide two examples of sequential decision-making mechanisms in order to illustrate the difference between success and satisfaction. In the context of the discussion of both notions we also address their relationship to different types of luck. René van den Brink, Frank Steffen 2012-03-27 success, satisfaction, luck, power http://d.repec.org/n?u=RePEc:dgr:uvatin:2012077&r=all We study career choice when competition for promotion is a contest. A more meritocratic profession always succeeds in attracting the highest ability types, whereas a profession with superior promotion benefits attracts high types only if the hazard rate of the noise in performance evaluation is strictly increasing. Raising promotion opportunities produces no systematic effect on the talent distribution, while a higher base wage attracts talent only if total promotion opportunities are sufficiently plentiful. John Morgan, Dana Sisak, Felix Vardy 2012-07-20 career choice, promotion competition, selection, meritocracy http://d.repec.org/n?u=RePEc:fip:fedcwp:1306&r=all I show, under intuitive conditions on the risk-averse utility function, the nonoptimality of the Diamond and Dybvig (1983) contract in the Goldstein and Pauzner (2005) environment. If marginal utility at zero is low enough, then Goldstein and Pauzner (2005)’s claim about the optimality of the Diamond and Dybvig (1983) contract is true. When it is not, the optimal contract insures the patient depositor against a project default. The contract may exhibit risk-sharing with the impatient depositor. Unlike when Goldstein and Pauzner (2005)’s claim is correct, relative risk aversion greater than 1 does not necessarily make the optimal bank contract run-prone. I present a condition under which it is. Mahmoud Elamin 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013054&r=all This paper proposes the use of a double correlation coefficient as a nonpara- metric measure of phase-dependence in time-varying correlations. An asymp- totically Gaussian test statistic for the null hypothesis of no phase-dependence is derived from the proposed measure. Finite-sample distributions, power and size are analyzed in a Monte-Carlo exercise. An application of this test provides evidence that correlation strength between major macroeconomic aggregates is both time-varying and phase dependent in the business cycle. Francisco Blasques 2013-04-04 nonparametric, phase-dependence, time-varying correlation http://d.repec.org/n?u=RePEc:tse:wpaper:27174&r=all This article addresses the existence of a wide range of estimated government spending multipliers in a dynamic stochastic general equilibrium model of the euro area. Our estimation results and counterfactual exercises provide evidence that omitting the interactions of key ingredients at the estimation stage (such as Edgeworth complementarity between private consumption and government expenditures, endogenous government spending policy and general time nonseparable preferences) paves the way for potentially large biases. We argue that uncertainty on the quantitative assessments of fiscal programmes could partly originate from these biases. Fève, Patrick, Sahuc, Jean-Guillaume 2013-04 Government spending multiplier, DSGE models, Estimation bias, Euro area. http://d.repec.org/n?u=RePEc:sef:csefwp:332&r=all In this paper, we look at the (Kajii and Ui) mixed equilibrium notion, which has been recognized by previous literature as a natural solution concept for incomplete information games in which players have multiple priors on the space of payoff relevant states. We investigate the problem of stability of mixed equilibria with respect to perturbations on the sets of multiple priors. We find out that the (Painlevé-Kuratowski) convergence of posteriors ensures that stability holds; whereas, convergence of priors is not enough to obtain stability since it does not always implies convergence of posteriors when we consider updating rules (for multiple priors) based on the classical Bayesian approach. Giuseppe De Marco, Maria Romaniello 2013-05-13 Incomplete information games, multiple priors, equilibrium stability http://d.repec.org/n?u=RePEc:dgr:uvatin:20130064&r=all This paper derives and estimates rules for fiscal policy that prescribe the optimal response to changes in unemployment and debt. We combine the reducedform model of the economy from a linear VAR with a non-linear welfare function and obtain analytic solutions for optimal policy. The variables in our reducedform model –growth, unemployment, primary surplus– have a natural rate that cannot be affected by policy. Policy can only reduce fluctuations around these natural rates. Our welfare function contains future GDP and unemployment, the relative weights of which determine the optimal response. The optimal policy rule demands an immediate and large policy response that is procyclical to growth shocks and countercyclical to unemployment shocks. This result holds true when the weight of unemployment in the welfare function is reduced to zero. The rule currently followed by policy makers responds procyclically to both growth and unemployment shocks, and does so much slower than the optimal rule, leading to significant welfare losses. Jasper Lukkezen, Coen Teulings 2013-05-06 optimal control; optimal policy; fiscal policy rules; fiscal consolidation; debt sustainability http://d.repec.org/n?u=RePEc:dgr:uvatin:2012085&r=all Climate skeptics argue that the possibility that global warming is exogenous implies that we should not take additional action towards reducing greenhouse gas emissions until we know more. However this paper shows that even climate skeptics have an incentive to reduce emissions: such a change of direction facilitates their learning process on the causes of global warming. Since the optimal policy action depends on these causes, they are valuable to know. Although an increase in emissions would also ease learning, that option is shown to be inferior because emitting greenhouse gases is irreversible. Consequently the policy implications of the different positions in the global warming debate turn out to coincide - thereby diminishing the relevance of this debate from a policy perspective. Uncertainty is no reason for inaction. Sweder van Wijnbergen, Tim Willems 2012-08-20 climate policy, global warming, climate skepticism, active learning, irreversibilities http://d.repec.org/n?u=RePEc:dgr:rugggd:gd-133&r=all Using the world input-output tables available from the WIOD project (www.wiod.org), we quantify production line positions of 35 industries for 40 countries and the rest of the world region over 1996-2009. In contrast to the previous related literature we do not focus only on the output supply chain, but also consider sectors? input demand chain. This distinction is important because both these chains jointly constitute the entire production process, and the output sales structure of each sector is generally different from the structure of its inputs purchases. We use the (output) upstreamness measure of Antr`as et al. (2012) and our proposed input downstreamness measure to quantify industry relative position, respectively, along the global output supply chain and the global input demand chain. The results are examined in detail at the levels of the world, six aggregate economic branches, sectors and countries. Temurshoev, Umed, Miller, Ronald E. 2013 http://d.repec.org/n?u=RePEc:iza:izadps:dp7399&r=all This paper examines the relationship between outsourcing and various aspects of employee well-being by devoting special attention to the role of occupational restructuring as a conveying mechanism. Using linked employer-employee data, we find that offshoring involves job destruction, especially when the destination is a low-wage country. In such circumstances, staying employees' job satisfaction is reduced. However, the relationship between outsourcing and employee well-being is not entirely negative. Our evidence also shows that offshoring to high-wage countries stimulates the vertical mobility of employees in affected firms in a manner that improves perceived well-being, particularly in terms of better prospects for promotion. Böckerman, Petri, Maliranta, Mika 2013-05 globalization, outsourcing, offshoring, downsizing, working conditions, subjective well-being, job satisfaction http://d.repec.org/n?u=RePEc:dgr:uvatin:2013033&r=all Consider a government tendering the right to operate, for example, an airport, telecommunication network, or utility. There is an 'incumbent bidder' who owns a complement or substitute facility, and one entering 'new bidder'. With a 'standard auction' on the payment to the government, the incumbent is willing to bid higher than its expected profit from the facility as winning implies that it is a monopolist instead of a duopolist. The incumbent is therefore more likely to win. However, it tends to have a lower expected surplus unless the new bidder can never win, which occurs with 'private values' when the facilities are strong complements or substitutes and always with 'common values'. The 'standard auction' leads to an unregulated outcome which hurts consumers as tendered facilities tend to have limited competition. The government could improve the outcome by endogenously regulating using a 'price auction' on the price to be a sked to consumers. Now, it depends who is advantaged: with complements, the incumbent bids below its marginal cost and is more likely to win; with substitutes, it bids above and is less likely to win. The same effects occur in auctions on service quality or number of users. In many settings, the advantaged bidder always wins, and this can greatly affect the competition for the field. Vincent van den Berg 2013-02-22 tendering, overbidding, advantaged bidders, network markets http://d.repec.org/n?u=RePEc:clb:wpaper:201304&r=all The paper studies the impact of firms’ over-indebtedness on innovation. First, we build up an over-indebtedness index which takes account of the firm’s level and structure of the debt as well as of its sustainability. Secondly, we investigate to what extent over-indebtedness explains firms’ innovative activity by focusing on Italian manufacturing firms over the 2003-2010 period. Empirical evidence suggests that indebtedness plays a significant role in explaining firms’ innovative activity, both in the Centre-North and in the South of Italy. Highly indebted firms are also more innovative, but more innovative firms are also less capable to sustain their debts out of current profits. With respect to the Centre-North, empirical results confirm the significant role played by other forms of indebtedness in explaining innovation also when we focus only on high-tech sectors and on over-indebted firms. With respect to the South, the relationship between debt and innovation is confirmed, but it is stronger for the over-indebted firms in the high tech industries. Damiana Giuseppina Costanzo, Damiano Bruno Silipo, Marianna Succurro 2013-04 Over-indebtedness, Innovation, PCA http://d.repec.org/n?u=RePEc:dgr:uvatin:2013055&r=all This paper presents the Matlab package DeCo (Density Combination) which is based on the paper by Billio et al. (2013) where a constructive Bayesian approach is presented for combining predictive densities originating from different models or other sources of information. The combination weights are time-varying and may depend on past predictive forecasting performances and other learning mechanisms. The core algorithm is the function DeCo which applies banks of parallel Sequential Monte Carlo algorithms to filter the time-varying combination weights. The DeCo procedure has been implemented both for standard CPU computing and for Graphical Process Unit (GPU) parallel computing. For the GPU implementation we use the Matlab parallel computing toolbox and show how to use General Purposes GPU computing almost effortless. This GPU implementation comes with a speed up of the execution time up to seventy times compared to a standard CPU Matlab implementation on a multicore CPU. We show the use of the package and the computational gain of the GPU version, through some simulation experiments and empirical applications. Roberto Casarin, Stefano Grassi, Francesco Ravazzolo, Herman K. van Dijk 2013-04-09 Density Forecast Combination, Sequential Monte Carlo, Parallel Computing, GPU, Matlab http://d.repec.org/n?u=RePEc:dgr:uvatin:2012036&r=all In this paper we provide new axiomatizations of the Shapley value for TU-games using axioms that are based on relational aspects in the interactions among players. Some of these relational aspects, in particular the economic or social interest of each player in cooperating with each other, can be found embedded in the characteristic function. We define a particular relation among the players that it is based on mutual indifference. The first new axiom expresses that the payoffs of two players who are not indifferent to each other are affected in the same way if they become enemies and do not cooperate with each other anymore. The second new axiom expresses that the payoff of a player is not affected if players to whom it is indifferent leave the game. We show that the Shapley value is characterized by these two axioms together with the well-known efficiency axiom. Further, we show that another axiomatization of the Shapley value is obtained if we replace t he second axiom and efficiency by the axiom which applies the efficiency condition to every class of indifferent players. Finally, we extend the previous results to the case of weighted Shapley values. Conrado Manuel, Enrique Gonzalez-Aranguena, Rene van den Brink| 2012-04-11 TU-game, Shapley value, axiomatization, indifferent players, weighted Shapley values http://d.repec.org/n?u=RePEc:egc:wpaper:1022&r=all Due to moral hazard problems, municipal mergers in Japan did not result in as many amalgamations as a central planner would have chosen. The inefficiency of the decentralized mergers is calculated using structural parameter estimates based on observed mergers and actual national government policies. Estimation requires neither an equilibrium selection assumption nor the enumeration of all possible mergers. Eric Weese 2013-04 boundaries, mergers, moment inequalities, municipalities http://d.repec.org/n?u=RePEc:nbr:nberwo:19029&r=all We investigate the impact of the diffusion of high-speed Internet on different forms of political participation, using data from Italy. We exploit differences in the availability of ADSL broadband technology across municipalities, using the exogenous variation induced by the fact that the cost of providing ADSL-based Internet services in a given municipality depends on its relative position in the pre-existing voice telecommunications infrastructure. We first show that broadband Internet had a substantial negative effect on turnout in parliamentary elections between 1996 and 2008. However, we also find that it was positively associated with other forms of political participation, both online and offline: the emergence of local online grassroots protest movements, and turnout in national referenda (largely opposed by mainstream parties). We then show that the negative effect of Internet on turnout in parliamentary elections is essentially reversed after 2008, when the local grassroots movements coalesce into the Five-Star Movement (M5S) electoral list. Our findings are consistent with the view that: 1) the effect of Internet availability on political participation changes across different forms of engagement; 2) it also changes over time, as new political actors emerge who can take advantage of the new technology to tap into the existence of a disenchanted or demobilized contingent of voters; and 3) these new forms of mobilization eventually feed back into the mainstream electoral process, converting “exit” back into “voice”. Filipe R. Campante, Ruben Durante, Francesco Sobbrio 2013-05 http://d.repec.org/n?u=RePEc:hit:hjbswp:171&r=all 本論文は、育児休業施策と短時間勤務施策を利用する育児中の女性正社員を対象とし、 それぞれの施策効果がいかなる状況で得られるのかについて検討することを目的とする。 分析は、フルサンプル・育児休業施策利用者・短時間勤務施策利用者で行われ、ぞれぞれ のデータセットにおいて両立支援施策を利用することによるコスト意識と（ネガティブパ ス）組織からの支援（WPC、ポジティブパス）といった二つのメカニズムを探索的に検討 した。分析結果、両立支援施策の利用によるコスト認識が組織支援によって解消される模 様と度合いにおいて、育児休業者と短時間勤務者の間に明確な違いがあった。キャリア意 識の高低を示す代理変数として施策利用状況を解釈できるとするならば、本論文はキャリ ア観の違いに応じた組織からの個別的な取り組みについて議論する必要性を支持するもの である。, While the academic attentions toward work-life balance (WLB) practice in Japan have been growing, there are not enough arguments using consensual theoretical framework. This paper depicts the both light and shadow effects attached in WLB practice use from the view of employees’ perception. The results using data from interview and survey shows two unconventional findings. 1) WLB practice use can has negative impact on employee’s perceived WLB and willingness to stay long for a standard Japanese fulltime worker, because of the cost perception which WLB practice use can draws losses of opportunities in internal labor market. 2) There is WLB domain-specific Psychological Contracts (WPC) and its fulfillment can has positive impact on employee outcomes. This study browse there is not the easy way from the introduction of WLB practice to employee outcomes, negative with positive paths coexisting practically and also theoretically. Further study focusing how WLB implement at workplace fit to overall Human Resource functions each other, is needed. IM, YOUJIN 2013-04 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013011&r=all Changing time series properties of US inflation and economic activity are analyzed within a class of extended Phillips Curve (PC) models. First, the misspecification effects of mechanical removal of low frequency movements of these series on posterior inference of a basic PC model are analyzed using a Bayesian simulation based approach. Next, structural time series models that describe changing patterns in low and high frequencies and backward as well as forward inflation expectation mechanisms are incorporated in the class of extended PC models. Empirical results indicate that the proposed models compare favorably with existing Bayesian Vector Autoregressive and Stochastic Volatility models in terms of fit and predictive performance. Weak identification and dynamic persistence appear less important when time varying dynamics of high and low frequencies are carefully modeled. Modeling inflation expectations using survey data and adding level shifts and stochastic volatility improves substantially in sample fit and out of sample predictions. No evidence is found of a long run stable cointegration relation between US inflation and marginal costs. Tails of the complete predictive distributions indicate an increase in the probability of disinflation in recent years. Nalan Basturk, Cem Cakmakli, Pinar Ceyhan, Herman K. van Dijk 2013-01-10 New Keynesian Phillips curve, unobserved components, level shifts, inflation expectations http://d.repec.org/n?u=RePEc:dgr:uvatin:2012020&r=all We study whether and when parameter-driven time-varying parameter models lead to forecasting gains over observation-driven models. We consider dynamic count, intensity, duration, volatility and copula models, including new specifications that have not been studied earlier in the literature. In an extensive Monte Carlo study, we find that observation-driven generalised autoregressive score (GAS) models have similar predictive accuracy to correctly specified parameter-driven models. In most cases, differences in mean squared errors are smaller than 1% and model confidence sets have low power when comparing these two alternatives. We also find that GAS models outperform many familiar observation-driven models in terms of forecasting accuracy. The results point to a class of observation-driven models with comparable forecasting ability to parameter-driven models, but lower computational complexity. Siem Jan Koopman, Andre Lucas, Marcel Scharth 2012-03-06 Generalised autoregressive score model, Importance sampling, Model confidence set, Nonlinear state space model, Weibull-gamma mixture http://d.repec.org/n?u=RePEc:dgr:uvatin:2013041&r=all When the yield curve is modelled using an affine factor model, residuals may still contain relevant information and do not adhere to the familiar white noise assumption. This paper proposes a pragmatic way to improve out of sample performance for yield curve forecasting. The proposed adjustment is illustrated via a pseudo out-of-sample forecasting exercise implementing the widely used Dynamic Nelson Siegel model. Large improvement in forecasting performance is achieved throughout the curve for different forecasting horizons. Results are robust to different time periods, as well as to different model specifications. Eran Raviv 2013-03-07 Yield curve; Nelson Siegel; Time varying loadings; Factor models http://d.repec.org/n?u=RePEc:pra:mprapa:46918&r=all We present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate. Three offsetting pricing mechanisms occur: skimming, compressing price changes, and delaying product launch. We identify a novel trade off in piracy's effect on welfare. We find that piracy quickens sales times and raises welfare in fixed capacity markets, and does the opposite in growing markets. In our model, consumers benefit from piracy except at very high rates in rapidly expanding markets, legal sellers always dislike it, and pirate providers like high but not very high rates. Purchase delay, transient heterogeneity, inelastic demand, and network externalities reduce piracy's effect, but demand uncertainty doesn't. Waters, James 2013-05-12 Information goods; software; piracy; skimming; intertemporal price discrimination; prices; pricing; welfare http://d.repec.org/n?u=RePEc:dgr:uvatin:2012103&r=all In rare event simulation, we look for estimators such that the relative accuracy of the output is ''controlled'' when the rarity is getting more and more critical. Different robustness properties have been defined in the literature, that an estimator is expected to satisfy. Though, those properties are not adapted to estimators for which the estimators come from a parametric family and the optimal parameter is learned and random. For this reason, we motivate in this paper the need to define probabilistic robustness properties, because the accuracy of the resulting estimator is therefore random. We especially focus on the so-called probabilistic bounded relative error property. We additionally provide sufficient conditions, both in general and Markov settings, to satisfy such a property, illustrate them and simple but standard examples, and hope that it will foster discussions and new works in the area. Ad Ridder, Bruno Tuffin 2012-10-01 Rare event probability, Importance sampling, Probabilistic robustness, Markov chains http://d.repec.org/n?u=RePEc:egc:wpaper:1023&r=all An extensive literature uses anthropometric measures, typically heights, to draw inferences about living standards in the past. This literature's influence reaches beyond economic history; the results of historical heights research appear as crucial components in development economics and related fields. The historical heights literature often relies on micro-samples drawn from sub-populations that are themselves selected: examples include volunteer soldiers, prisoners, and runaway slaves, among others. Contributors to the heights literature sometimes acknowledge that their samples might not be random draws from the population cohorts in question, but rely on normality alone to correct for potential selection into the sample. We use a simple Roy model to show that selection cannot be resolved simply by augmenting truncated samples for left-tail shortfall. Statistical tests for departures from normality cannot detect selection in Monte Carlo exercises for small to moderate levels of self-selection, obviating a standard test for selection in the heights literature. We show strong evidence of selection using micro-data on the heights of British soldiers in the late eighteen and nineteenth centuries. Consequently, widely accepted results in the literature may not reflect variations in living standards during a soldier's formative years; observed heights could be predominantly determined by the process determining selection into the sample. A survey of the current historical heights literature illustrates the problem for the three most common sources: military personnel, slaves, and prisoners. Howard Bodenhorn, Timothy W. Guinnane, Thomas A. Mroz 2013-05 self-selection, selection bias, heights, anthropometrics, standards of living,industrialization puzzle, long-run economic growth http://d.repec.org/n?u=RePEc:dgr:uvatin:2013037&r=all Allowing for three labor market settings (perfect competition or right-to-manage bargaining, efficient bargaining and monopsony), this paper relies on an extension of Hall's econometric framework for estimating simultaneously price-cost margins and scale economies. Using an unbalanced panel of 17,653 firms over the period 1986-2001 in France, 8,725 firms over the period 1994-2006 in Japan and 7,828 firms over the period 1993-2008 in the Netherlands, we first apply two procedures to classify 30 comparable manufacturing industries in 6 distinct regimes that differ in terms of the type of competition prevailing in product and labor markets. For each of the three predominant regimes in each country, we then investigate industry differences in the estimated product and labor market imperfections and scale economies. We find important regime differences across the three countries and also observe differences in the levels of product and labor market imperfection s and scale economies within regimes. Sabien Dobbelaere, Kozo Kiyota, Jacques Mairesse 2013-03-04 Rent sharing, monopsony, price-cost mark-ups, production function, panel data http://d.repec.org/n?u=RePEc:dgr:uvatin:2012065&r=all We empirically examine the heterogeneity in the effects of multiple dimensions of distance on trade across detailed product groups. Using finite mixture modeling on bilateral trade data at the 3-digit SITC level, we endogenously group product categories into an, a priori unknown, number of segments based on estimated coefficients of multiple dimensions of distance in the gravity equation. We find that institutional distance, whether countries belong to the same trade block and especially geographical distance are crucial and distinct factors to classify commodities in homogeneous groups. Maureen B.M. Lankhuizen, Thomas de Graaff, Henri L.F. de Groot 2012-07-09 bilateral trade, gravity models, distance, institutions, product heterogeneity, finite mixture modeling http://d.repec.org/n?u=RePEc:dgr:uvatin:2012072&r=all This paper exploits micro firm level data to examine the impact of spatial clustering and links to foreign buyer networks on firm performance in the wood furniture industry in Central Java, Indonesia. The analysis is based on an annual manufacturing survey. We identify the impact of specialization of the cluster, diversification, and links to foreign buyer networks. For this purpose, a production function framework is developed. The results lend support to the view that clustering of large and medium scale specialized firms improves firm performance, while clustering of small scale specialized firms and clustering of diverse firms are not conducive to firm performance. We also find a clear positive association between involvement in exporting activities and firm performance. Roos K. Andadari, Henri L.F. de Groot, Piet Rietveld 2012-07-18 Productivity, Externalities, Wood Furniture Industry, Indonesia http://d.repec.org/n?u=RePEc:iza:izadps:dp7394&r=all This paper analyzes the effects of training quality on the likelihood of treatment completion by estimating dose-response functions via a generalized propensity score. Results show a statistically positive relationship between training quality and treatment completion for youth participants in Peru. Dammert, Ana C., Galdo, Jose C. 2013-05 training, quality, dropouts, propensity scores, dose-response functions http://d.repec.org/n?u=RePEc:dgr:uvatin:2013032&r=all We embed proprietary trading into a model of bank lending. Opportunities to engage in purely speculative trading can harm the real economy. This is because banks, when devoting cheap but scarce deposits to lending rather than to gambling, must be compensated for giving up gambling rents. This makes corporate loans more costly, stifling real economic activity. Worse, gambling can crowd out lending, forcing firms to seek costly bond financing. By contrast, when trading is required for the provision of complementary banking services, banks may actually engage in too <I>little</I> trading. Ring-fencing trading can facilitate the efficient provision of banking services. Stefan Arping 2013-03-04 Proprietary Trading, Volcker Rule, Disintermediation, Shadow Banking, Depositor Preference, Safe Harbors, Covered Bonds, Ring-fencing, Financial Stability http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-021&r=all This paper experimentally examines a procedurally fair provision mech- anism allowing members of a small community to determine, via their bids, which of four alternative public projects to implement. Previous experi- ments with positive cost projects have demonstrated that the mechanism is efficiency enhancing. Our experiment tests whether the mechanism re- mains conducive to efficiency when negative cost, but less efficient, projects are made available. We find that this is not the case. On the other hand, we detect no significant difference in bid levels depending on whether mixed feelings are present or absent, and on whether the others' valuations are known or unknown. Werner Güth, Anastasios Koukoumelis, M. Vittoria Levati, Matteo Ploner 2013-05-13 Public projects, Bidding behavior, Procedural fairness, Experiment http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2013-024&r=all We derive recursive representations of nonlinear moving average (NLMA) perturbations of DSGE models. As the stability of higher order NLMA representations follows directly from stability at first order, these recursive representations provide rigorous support for the practice of pruning that is becoming widespread. Our recursive representation differs from pruned perturbations in that it centers the approximation and its coefficients at the approximation of the stochastic steady state consistent with the order of approximation. We compare our algorithm with six different pruning algorithms at second and third order, documenting the differences between these six algorithms and standard (non pruned) state space perturbations at first, second, and third order in a unified notation compatible with the popular software package Dynare. While our third order algorithm is the most accurate, the gains over two alternate algorithms are modest, suggesting that this choice is unlikely to be a potential source of error. Hong Lan, Alexander Meyer-Gohde, , 2013-05 Perturbation; DSGE; nonlinear; pruning http://d.repec.org/n?u=RePEc:tse:wpaper:27166&r=all We present an experimental lab-in-the-field study on co?ee farmers in Costa Rica, to investigate the importance of real world institutions on abstract game behavior. Farmers participated in experimental public-good games with partners drawn either from their own or di?erent from their own background (members of a cooperative or free market traders). While free market participants are largely uninfluenced in their decisions by the identity of their partners, cooperativists strongly react to it. Behavior of cooperativists in the experiment is predicted through real world behavior, experience and motivations. Specifically, labels that create additional institutional constraints (Fair Trade, Rainforest alliance) influence behavior. Hopfensitz, Astrid, Miquel-Florensa, Pepita 2013-04-26 Trust – Digit Ratio – Testosterone – Strategy Detection – Betrayal Aversion http://d.repec.org/n?u=RePEc:nbr:nberwo:19026&r=all The international gold standard of the late nineteenth century has been described as a system of ‘spontaneous order’, capturing the idea that its architects at the time were fashioning domestic monetary systems which created a system of fixed exchange rates almost as a by-product. In contrast the framers of the Bretton Woods System were intentional in building an international monetary system and so it is by advocates of designing an international monetary order. In this paper we examine the transition from spontaneous order circa 1850 to designed system and then back towards spontaneous order in the late twentieth century, arguing that it is an evolution with multiple stops and starts, and that the threads that underlie the general tendency through these hesitations are the interplay between monetary and fiscal factors and the evolution of the financial system. This transformation is embedded within deep evolving political fundamentals including the rise of democracy, nationalism, fascism and communism and two world wars. Michael D. Bordo, Angela Redish 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013058&r=all We quantify the causal effect of foreign investment on total factor productivity (TFP) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling for unobservable firm and country-sector-year factors. Using our well identified firm level estimates for the direct effect of foreign ownership on acquired firms and for the spillover effects on domestic firms, we calculate the aggregate impact of foreign investment on country-level productivity growth and find it to be very small. Christian Fons-Rosen, Sebnem Kalemli-Ozcan, Bent E. Sorensen, Carolina Villegas-Sanchez, Vadym Volosovych 2013-04-11 Multinationals, FDI, Knowledge Spillovers, Selection, Productivity http://d.repec.org/n?u=RePEc:dgr:uvatin:2012115&r=all We propose a simple network–based methodology for ranking systemically important financial institutions. We view the risks of firms –including both the financial sector and the real economy– as a network with nodes representing the volatility shocks. The metric for the connections of the nodes is the correlation between these shocks. Daily dynamic centrality measures allow us to rank firms in terms of risk connectedness and firm characteristics. We present a general systemic risk index for the financial sector. Results from applying this approach to all firms in the S&P500 for 2003–2011 are twofold. First, Bank of America, JP Morgan and Wells Fargo are consistently in the top 10 throughout the sample. Citigroup and Lehman Brothers also were consistently in the top 10 up to late 2008. At the end of the sample, insurance firms emerge as systemic. Second, the systemic risk in the financial sector built–up from early 2005, peaked in September 2008, and greatly reduced after the introduction of TARP and the rescue of AIG. Anxiety about European debt markets saw the systemic risk begin to rise again from April 2010. We further decompose these results to find that the systemic risk of insurance and deposit– taking institutions differs importantly, the latter experienced a decline from late 2007, in line with the burst of the housing price bubble, while the former continued to climb up to the rescue of AIG. Mardi Dungey, Matteo Luciani, David Veredas 2012-10-26 Systemic risk, ranking, financial institutions, Lehman http://d.repec.org/n?u=RePEc:pra:mprapa:46879&r=all Exchange rate regimes evolution in the European transition economies refers to one of the most crucial policy decision in the beginning of the 1990s employed during the initial stages of the transition process. During the period of last two decades we may identify some crucial milestones in the exchange rate regimes evolution in the European transition economies. due to existing diversity in exchange rate arrangements in the European transition economies in the pre-ERM2 period there seems to be two big groups of countries - “peggers” (Bulgaria, Estonia, Latvia, Lithuania) and “floaters” (Czech republic, Hungary, Poland, Romania, Slovak republic, Slovenia). Despite the fact, there seems to be no real prospective alternative to euro adoption for the European transition economies, we emphasize disputable effects of sacrificing monetary sovereignty in the view of positive effects of exchange rate volatility and exchange rate based adjustments in the country experiencing sudden shifts in the business cycle. In the chapter we analyze effects of the real exchange rate volatility on real output and inflation in ten European transition economies. From estimated VAR model (recursive Cholesky decomposition is employed to identify structural shocks) we compute impulse-response functions to analyze responses of real output and inflation to negative real exchange rate shocks. Results of estimated model are discussed from a prospective of the fixed versus flexible exchange rate dilemma. To provide more rigorous insight into the problem of the exchange rate regime suitability we estimate the model for each particular country employing data for two subsequent periods 2000-2007 and 2000-2011. Mirdala, Rajmund 2013-01 exchange rate volatility, economic growth, economic crisis, vector autoregression, variance decomposition, impulse-response function http://d.repec.org/n?u=RePEc:dgr:rugggd:gd-134&r=all This paper revisits the issue of Europe?s growth slowdown in the light of the developments of the first decade of the 21st century, including the devastating effects from the 2008/09 recession and the subsequent economic and financial crisis on Europe?s growth performance. Overmeer, Wim, Jaeger, Kirsten, Colijn, Bert, Chen, Vivian, Ark, Bart van, Timmer, Marcel 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2013021&r=all Research papers in empirical finance and financial econometrics are among the most widely cited, downloaded and viewed articles in the discipline of Finance. The special issue presents several papers by leading scholars in the field on “Recent Developments in Financial Economics and Econometrics”. The breadth of coverage is substantial, and includes original research and comprehensive review papers on theoretical, empirical and numerical topics in Financial Economics and Econometrics by leading researchers in finance, financial economics, financial econometrics and financial statistics. The purpose of this special issue on “Recent Developments in Financial Economics and Econometrics” is to highlight several novel and significant developments in financial economics and financial econometrics, specifically dynamic price integration in the global gold market, a conditional single index model with local covariates for detecting and evaluating active management, whether the Basel Accord has improved risk management during the global financial crisis, the role of banking regulation in an economy under credit risk and liquidity shock, separating information maximum likelihood estimation of the integrated volatility and covariance with micro-market noise, stress testing correlation matrices for risk management, whether bank relationship matters for corporate risk taking, with evidence from listed firms in Taiwan, pricing options on stocks denominated in different currencies, with theory and illustrations, EVT and tail-risk modelling, with evidence from market indices and volatility series, the economics of data using simple model free volatility in a high frequency world, arbitrage-free implied volatility surfaces for options on single stock futures, the non-uniform pricing effect of employee stock options using quantile regression, nonlinear dynamics and recurrence plots for detecting financial crisis, how news sentiment impacts asset volatility, with evidence from long memory and regime-switching approaches, quantitative evaluation of contingent capital and its applications, high quantiles estimation with Quasi-PORT and DPOT, with an application to value-at-risk for financial variables, evaluating inflation targeting based on the distribution of inflation and inflation volatility, the size effects of volatility spillovers for firm performance and exchange rates in tourism, forecasting volatility with the realized range in the presence of noise and non-trading, using CARRX models to study factors affecting the volatilities of Asian equity markets, deciphering the Libor and Euribor spreads during the subprime crisis, information transmission between sovereign debt CDS and other financial factors for Latin America, time-varying mixture GARCH models and asymmetric volatility, and diagnostic checking for non-stationary ARMA models with an application to financial data. Chia-Lin Chang, David Allen, Michael McAleer 2013-01-21 Dynamic price integration, local covariates, risk management, global financial crisis, credit risk, liquidity shock, micro-market noise, corporate risk taking, options, volatility, quantiles, news sentiment, contingent capital, value-at-risk (see paper) http://d.repec.org/n?u=RePEc:dgr:uvatin:2013039&r=all Systemic banking crises often continue into recessions with large output losses (Reinhart & Rogoff 2009a). In this paper we ask whether the way Governments intervene in the financial sector has an impact on the economy's subsequent performance. Our theoretical analysis focuses on bank incentives to manage bad loans. We show that interventions involving bank restructuring provide banks with incentives to restructure bad loans and free up resources for new economic activity. Other interventions lead banks to roll over bad loans, tying up resources in distressed firms. Our analysis suggests that zombie banks are a drag on economic recovery. We then analyze 65 systemic banking crises from the period 1980-2012, of which 25 are part of the recent global financial crisis, to answer the question: how effective are intervention measures from the macro perspective, in particular how do they affect recession duration? We find that bank restructuring, which includes bank recapitalizations, significantly reduces recession duration. The effect of liquidity support on the probability of recovery is positive but smaller. Blanket guarantees on bank liabilities and monetary policy do not have a significant effect. Sweder van Wijnbergen, Timotej Homar 2013-03-04 Financial crises, intervention policies, zombie banks, economic recovery, bank restructuring, bank recapitalization http://d.repec.org/n?u=RePEc:fip:fedmwp:705&r=all The rise in within-group consumption inequality in response to the increase in within-group income inequality over the last three decades in the U.S. is puzzling to expected-utility-based incomplete market models. The two-sided lack of commitment models exhibit too little consumption inequality while the standard incomplete markets models tend to predict too much consumption inequality. We show that a model with two-sided lack of commitment and chance attitudes, as emphasized by prospect theory, can explain the relationship and can avoid the systematic bias of the expected utility models. The chance attitudes, such as optimism and pessimism, imply that the households attribute a higher weight to high and low outcomes compared to their objective probabilities. For realistic values of risk aversion and of chance attitudes, the incentives for households to share the idiosyncratic risk decrease. The latter effect endogenously amplifies the increase in consumption inequality relative to the expected utility model, thereby improving the fit to the data. Vadym Lepetyuk, Christian A. Stoltenberg 2013 Consumption (Economics) ; Income http://d.repec.org/n?u=RePEc:pra:mprapa:46928&r=all To what extent can monetary and financial crises and cycles be explained through economic theories? This paper is aimed at highlighting why a reliance on economic theories may be necessary given certain flaws which have been revealed from the recent Financial Crisis. Namely, that economic and legal foundations of financial stability cannot always be considered to be credible. Further, the paper aims to accentuate on why despite the valid argument (that a reference to economic theories may be required to explain causalities of financial and monetary crises), causalities could also be explained from other perspectives – even though these perspectives may sometimes, not be as accurate. (¿En qué medida pueden las crisis y los ciclos monetarios y financieros se explica a través de las teorías económicas? Este trabajo tiene como objetivo poner de relieve por qué puede ser necesario un mayor recurso a las teorías económicas dadas ciertas fallas que se han revelado desde la crisis financiera reciente. Es decir, lo hicieron fundamentos económicos y jurídicos de la estabilidad financiera no siempre pueden ser considerados como creíbles. Además, el trabajo tiene como objetivo acentuar el por qué a pesar del argumento válido (una referencia a las teorías económicas puede ser necesario para explicar causalidades de las crisis financieras y monetarias), causalidades también podrían ser explicadas desde otras perspectivas - a pesar de estas perspectivas pueden, a veces, no ser lo más preciso). Ojo, Marianne 2013-05-12 Teoría del Tiempo Económico (TET); mercados eficientes de hipótesis; la estabilidad financiera; la Teoría de moneda; crisis del euro; Austrian, Keynesian or Quantitativist-monetarist; Teoría Random Walk http://d.repec.org/n?u=RePEc:lnz:wpaper:20130401&r=all This study reviews the importance of the bilateral economic relationship between the EU and US. It integrates NTB estimates, based on gravity modeling and firm surveys, with computable general equilibrium (CGE)-based estimates for the economy-wide impact of reducing both tariff and non-tariff barriers (NTBs). Estimates are provided with regards to expected changes in GDP, sector output, aggregate and bilateral trade flows, wages, and labour displacement, among other issues. The study investigates different policy options for the deepening of the bilateral trade and investment relationship between the EU and US. These range from partial agreements that are limited in the scope of barriers they would address (tariffs only, or services only, or procurement only) to a full-fledged free trade agreement (FTA) with a comprehensive liberalisation agenda covering simultaneously tariffs, procurement, NTBs for goods, and NTBs for services. The study also quantifies potential benefits from NTB reduction affecting FDI. The overall message is that negotiating an agreement that would be of a comprehensive nature would bring significantly greater benefits to both economies. A core message that follows from the results is that focusing efforts on reducing NTBs is critical to the logic of transatlantic trade liberalization. Different approaches to the same regulatory challenges have the unintended consequence of increasing costs for firms, which have to comply with two regulatory environments, dragging down labour productivity. Negotiation on NTBs provides the opportunity to pursue a mix of cross-recognition and regulatory convergence to reduce these barriers. Compared to a focus on NTBS, just limiting the exercise to tariffs would lead to much more limited, though positive effects. CEPR report for the European Commission. Joseph Francois, Miriam Manchin, Hanna Norberg, Olga Pindyuk, Patrick Tomberger 2013-04-01 regional trade agreements, TTIP, NTBs, deep regionalism, trade in services, bilateral services trade, trade costs http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2013-023&r=all Supported by several recent investigations, the empirical pricing kernel (EPK) puzzle might be considered a stylized fact. Based on an economic model with state dependent preferences for the financial investors, we want to emphasize a microeconomic view that succeeds in explaining the puzzle. We retain the expected utility framework in a one period model and illustrate the case when the state is defined with respect to a reference point. We further investigate how the model relates the shape of the EPK to the economic conditions. Maria Grith, Wolfgang Karl Härdle, Volker Krätschmer, 2013-05 Pricing kernel, aggregate agent, empirical pricing kernel, EPK puzzle, state dependent http://d.repec.org/n?u=RePEc:cwl:cwldpp:1894&r=all After the financial crisis that began in 2007 many have expressed renewed doubts about the basic goodness of the financial sectors, doubts related to deeply-held moral principles and traditions of larger society. We need to reconcile these doubts with financial practice. We must acknowledge the important principle of reciprocity. We must understand that there are natural human tendencies towards aggression and hoarding, which no financial institutions and codes of ethics can completely eliminate. We must appreciate the important role of professional organizations in moderating these tendencies. When these principles are made part of financial education we can expect better public acceptance of the important role that finance plays in our society. Robert J. Shiller 2013-05 Business ethics, Religion, Reciprocity, Aggression, Hoarding, Repugnance, Speculation, Professional organizations, Dodd-Frank Act, Teaching, Business education http://d.repec.org/n?u=RePEc:dgr:uvatin:2012073&r=all This paper explores the determinants of regional differences in interest rates based on a simple theoretical model of loan pricing. The model demonstrates how risks, costs, market concentration and scale economies jointly determine the bank's interest rates. Using recent data of the Indonesian local credit markets, we find that regional interest rate variations are positive and significantly affected by the banks' risk factor, the operating costs, and market concentration. Scale economies negatively affect the interest rates. These findings help to explain geographical segmentation in loan markets. Masagus M. Ridhwan, Henri L.F. de Groot, Piet Rietveld, Peter Nijkamp 2012-07-18 regional capital mobility, loan pricing, interest rates, Indonesia http://d.repec.org/n?u=RePEc:pra:mprapa:46996&r=all This study aimed to quantify the inter sectoral and inter-regional relations and compare the productive structure of five polarized regions of the Parana state economy, namely: Curitiba, Ponta Grossa, Londrina, Maringá and Cascavel gathered on a inter-regional input-output system for 2006. The main results indicate that: a) the region polarized by Curitiba was mostly responsible for the total demanded by other regions of the system, 38.56%, so that they could meet their final demand, b) the rest of the system impacted on least 20% of the economy of Curitiba and Londrina compared with 1995, which may indicate greater diversification of local production or greater commercial relations with other regions outside of Paraná c) all polarized regions showed production structure reasonably dynamic, although Curitiba, Cascavel and Ponta Grossa have shown less regional dependence on the demand generation for its products and services, d) the region polarized by Curitiba accounted for 54.42% of the value of total production of Paraná, and that 51.74% were caused by its own final demand, e) the polarized region by Curitiba was inducer of final demand of the other regions in the Parana interregional system in 2006. Moretto, Antonio Carlos, Rodrigues, Rossana Lott, Sesso Filho, Umberto Antonio, Guilhoto, Joaquim José Martins, Maia, Katy 2012 regiões polarizadas; relações setoriais; economia regional http://d.repec.org/n?u=RePEc:dgr:uvatin:2013019&r=all Accident externalities are among the most important external costs of road transport. We study the regulation of these when insurance companies have market power. Using analytical models, we compare a public-welfare maximizing monopoly with a private profit-maximizing monopoly, and markets where two or more firms compete. A central mechanism in the analysis is the accident externality that individual drivers impose on one another via their presence on the road. Insurance companies will internalize some of these externalities, depending on their degree of market power. We derive optimal insurance premiums, and "manipulable" taxes that take into account the response of the firm to the tax rule applied by the government. Furthermore, we study the taxation of road users under different assumptions on the market structure. We illustrate our analytical results with numerical examples, in order to better understand the determinants of the relative performance of different market structures. Maria Dementyeva, Paul R. Koster, Erik T. Verhoef 2013-01-18 accident externalities, traffic regulation, safety, second-best, market power http://d.repec.org/n?u=RePEc:mos:moswps:2013-12&r=all Microfinance groups often engage in a variety of collective activities not directly related to credit. Groups can sanction members who default on their loans by excluding them from these activities. Our experiment is designed to explore the effectiveness of such sanctions in improving repayment incentives. Groups of 10 members are provided with joint-liability loans for a specific investment project. If groups repay their loans, contributing members have the option of excluding other members and those that remain play a public goods game. By varying loan sizes across groups and allowing for heterogeneous gains from the public good within groups, we identify the role of incentives in repayment decisions. In line with theoretical predictions, groups with the largest repayment burdens have the highest default rates and within groups, individual decisions to contribute to loan repayment depend on gains from the public good game. Jean-Marie Baland, Lata Gangadharan, Pushkar Maitra, Rohini Somanathan 2013-05 Microfinance, Joint Liability, Social Exclusion, Public Good, Heterogeneous Productivity, Laboratory Experiments. http://d.repec.org/n?u=RePEc:dgr:uvatin:2013059&r=all We estimate welfare losses of policies that provide on-street parking permits to residents almost free of charge in shopping districts. Our empirical results indicate that parking supply is far from perfectly price elastic, implying that there are substantial welfare losses related to under-priced parking permits. Our results suggest that the provision of residential parking permits in shopping districts induces a yearly deadweight loss of at least euro 500 per permit, which is about 30% of the supply cost of a parking place in shopping districts. Jos van Ommeren, Jesper de Groote, Giuliano Mingardo 2013-04-12 parking supply; residential parking permit; deadweight loss http://d.repec.org/n?u=RePEc:pra:mprapa:46947&r=all To what extent can monetary and financial crises and cycles be explained through economic theories? This paper is aimed at highlighting why a reliance on economic theories may be necessary given certain flaws which have been revealed from the recent Financial Crisis. Namely, that economic and legal foundations of financial stability cannot always be considered to be credible. Further, the paper aims to accentuate on why despite the valid argument (that a reference to economic theories may be required to explain causalities of financial and monetary crises), causalities could also be explained from other perspectives – even though these perspectives may sometimes, not be as accurate. Ojo, Marianne 2013-05-13 théorie du temps économique (TET); efficience des marchés hypothèse; la stabilité financière; Monnaie Theory; crise de l'euro; l'Autriche Keynésien ou quantitativiste-monétariste; théorie de la marche aléatoire http://d.repec.org/n?u=RePEc:pra:mprapa:46911&r=all To what extent can monetary and financial crises and cycles be explained through economic theories? This paper is aimed at highlighting why a reliance on economic theories may be necessary given certain flaws which have been revealed from the recent Financial Crisis. Namely, that economic and legal foundations of financial stability cannot always be considered to be credible. Further, the paper aims to accentuate on why despite the valid argument (that a reference to economic theories may be required to explain causalities of financial and monetary crises), causalities could also be explained from other perspectives – even though these perspectives may sometimes, not be as accurate. Ojo, Marianne 2013-05-11 Theory of Economic Time (TET); Efficient Markets Hypothesis; financial stability; Currency Theory; Euro crisis; Austrian, Keynesian or Quantitativist-monetarist; Random Walk Theory http://d.repec.org/n?u=RePEc:iza:izadps:dp7387&r=all The paper studies retirement behavior of wage‐earners in Belgium – for the first time using rich survey data to explore retirement incentives as faced by individuals. Specifically, we use SHARE data to estimate a model à la Stock and Wise (1990). Exploring the longitudinal nature of SHARELIFE, we construct measures of financial and non‐financial incentive. Our analysis explicitly takes into account the different take‐up rates of the various early retirement exit paths across time and ages. The results show that financial incentives play a strong role. Health and education also matter, as does regional variation – though the latter in an unexpected way. A set of policy simulations illustrate the scope and also the limits associated with selective parametric reforms. Jousten, Alain, Lefèbvre, Mathieu 2013-05 pensions, social security, disability, early retirement, unemployment, labor force participation http://d.repec.org/n?u=RePEc:dgr:uvatin:2013020&r=all The purpose of this paper is to examine the asymmetric relationship between price and implied volatility and the associated extreme quantile dependence using linear and non linear quantile regression approach. Our goal in this paper is to demonstrate that the relationship between the volatility and market return as quantified by Ordinary Least Square (OLS) regression is not uniform across the distribution of the volatility-price return pairs using quantile regressions. We examine the bivariate relationship of six volatility-return pairs, viz. CBOE-VIX and S&P-500, FTSE-100 Volatility and FTSE-100, NASDAQ-100 Volatility (VXN) and NASDAQ, DAX Volatility (VDAX) and DAX-30, CAC Volatility (VCAC) and CAC-40 and STOXX Volatility (VSTOXX) and STOXX. The assumption of a normal distribution in the return series is not appropriate when the distribution is skewed and hence OLS does not capture the complete picture of the relationship. Quantile regression on the other hand can be set up with various loss functions, both parametric and non-parametric (linear case) and can be evaluated with skewed marginal based copulas (for the non linear case). Which is helpful in evaluating the non-normal and non-linear nature of the relationship between price and volatility. In the empirical analysis we compare the results from linear quantile regression (LQR) and copula based non linear quantile regression known as copula quantile regression (CQR). The discussion of the properties of the volatility series and empirical findings in this paper have significance for portfolio optimization, hedging strategies, trading strategies and risk management in general. David E. Allen, Abhay K. Singh, Robert J. Powell, Michael McAleer, James Taylor, Lyn Thomas 2013-01-18 Return-Volatility relationship, quantile regression, copula, copula quantile regression, volatility index, tail dependence http://d.repec.org/n?u=RePEc:dgr:uvatin:2012063&r=all In the modern economy, cities are assumed to be in fierce competition over attracting foreign investments in leading sectors of the world economy. Despite the rich theoretical discourse on these 'wars', it remains unclear which territories are competing with each other over which types of investments Combining insights from international economics, international business, and urban systems literature, we develop an indicator to measure revealed competition between territories for investments based on the overlap of investment portfolios of regions. Taking competition for greenfield investments between European regions as a test subject, we identify competitive market segments, derive the competitive threat a region faces from other regions, the competitive threat regions pose to other regions, and the most important market segments in which regions compete. We show that European regions with similar locational endowments pose a fiercer competitive thre at to one another. In addition, regions that are sufficiently large and distinctive, face the smallest average competitive threat from all other regions. Martijn J. Burger, Bert van der Knaap, Ronald S. Wall 2012-07-06 territorial competition, greenfield investments, Europe http://d.repec.org/n?u=RePEc:dgr:uvatin:2012091&r=all During the last decades, China has experienced double-digit economic growth rates and rising inequality. This paper implements a new decomposition on the China Health and Nutrition panel Survey (1991-2006) to examine the extent to which changes in level and distribution of incomes and in income mobility are related to health disparities between rich and poor. We find that health disparities in China relate to rising income inequality and in particular to the adverse health and income experience of older (wo)men, but not to the growth rate of average incomes over the last decades. These findings suggest that replacement incomes and pensions at older ages may be one of the most important policy levers in combating health disparities between rich and poor Chinese. Steef Baeten, Tom Van Ourti, Eddy Van Doorslaer 2012-09-10 China, income growth, income inequality, income mobility, health inequality http://d.repec.org/n?u=RePEc:dgr:uvatin:2012045&r=all As societies are increasingly concerned with social risks, it is important to evaluate risks not only from an individual perspective, but also from a societal one. Many increases in social risk involve a simultaneous increase in risk and inequality. This paper presents an experiment which disentangles concerns for risk and inequality in a social risk context. Subjects choose between different types of allocations of risks over 10 other participants. The allocations differ only in terms of dispersion. We disentangle four types of dispersion: ex ante inequality, ex post inequality, individual risk, and collective risk. The results show that people are averse towards ex ante inequality and individual risk, whereas they are ex post inequality and collective risk seeking. Ingrid M.T. Rohde, Kirsten I.M. Rohde 2012-04-26 inequality, risk, experiment http://d.repec.org/n?u=RePEc:dgr:uvatin:2013036&r=all In this paper, we develop a modified maximum likelihood (MML) estimator for the multiple linear regression model with underlying student t distribution. We obtain the closed form of the estimators, derive the asymptotic properties, and demonstrate that the MML estimator is more appropriate for estimating the parameters of the Capital Asset Pricing Model by comparing its performance with least squares estimators (LSE) on the monthly returns of US portfolios. The empirical results reveal that the MML estimators are more efficient than LSE in terms of the relative efficiency of one-step-ahead forecast mean square error in small samples Guorui Bian, Michael McAleer, Wing-Keung Wong 2013-03-04 Maximum likelihood estimators; Modified maximum likelihood estimators; Student t family; Capital asset pricing model; Robustness http://d.repec.org/n?u=RePEc:pra:mprapa:46993&r=all This paper applies an alternative model to analyze criminal behaviour by countries based on real option models. Criminal options incorporate a richer framework than traditional cost-benefit models and allow examining the optimal timing of a crime as criminals have the possibility but not the obligation to commit a crime in the near future. From the model, we show how criminal states can actively manage their criminal options. More importantly, we show how the international community can optimally intervene pro-actively, by reducing the incentives for criminal states to execute their criminal options. These novel insights are then applied to two episodes of criminal behaviour by Rwanda in the Democratic Republic of Congo (DRC): the massive killing of Hutu refugees by the Rwanda Patriotic Army (RPA) in late 1996-early 1997 and the illegal exploitation of Congolese resources from August 1998 onwards. This article describes and assesses these activities from this real option perspective. Cassimon, Danny, Engelen, Peter-Jan, Reyntjens, Filip 2013 criminal behaviour, real options, criminal state, Rwanda, Democratic Republic of Congo (DRC) http://d.repec.org/n?u=RePEc:iza:izadps:dp7397&r=all Language is a strong and robust determinant of international trade patterns: Countries sharing a common language trade significantly more with each other than countries using different languages, holding other factors constant. In this paper, we show that this trade-promoting effect of language is likely to reflect cultural ties, rather than lower costs of communication or similar institutions. Analyzing unique data for a single-language country, Germany, we find that similarities in the local dialect between regions have a sizable and significant positive impact on intra-national trade. We interpret this finding as evidence for the effect of culture on trade. Lameli, Alfred, Nitsch, Volker, Suedekum, Jens, Wolf, Nikolaus 2013-05 language, culture, trade costs, gravity, dialects http://d.repec.org/n?u=RePEc:kob:dpaper:dp2013-17&r=all This paper links firms' endogenous quality choice to worker effort and efficiency wages. The model generates two distinct features: effort is rewarded and quality is rewarded. Then firms with higher monitoring accuracy pay higher wages. When trade is opened, while bad jobs with low wages and low rents are destroyed, good jobs are created. Nevertheless, unemployment could either rise or fall, depending on the structure of monitoring cost and on the share of exporting firms. These results contrast sharply with the literature, and are consistent with empirical evidence. Yongjin Wang, Laixun Zhao 2013 Trade liberalization; Unemployment; Efficiency wages; Quality choice http://d.repec.org/n?u=RePEc:dgr:uvatin:2013053&r=all We include initial holdings in the jungle economy of Piccione and Rubinstein (Economic Journal, 2007) and relax the assumptions on consumption sets and preferences. We show that initial holdings are irrelevant for lexicographic welfare maximization. Equilibria other than such maximizers can be jungle equilibria due to myopia. We show that farsightedness restores the equivalence between jungle equilibria and lexicographic welfare maximization. However, we also derive farsighted equilibria in which stronger agents withhold goods from weaker agents. Then, gift giving by stronger agents is needed to restore Pareto efficiency. Our results add to understanding coercion and the crucial assumptions underlying jungle economies. Harold Houba, Roland Iwan Luttens, Hans-Peter Weikard 2013-04-04 jungle economy, withholding, coercion, power http://d.repec.org/n?u=RePEc:dgr:uvatin:2012037&r=all Deciding how much to save for retirement is a difficult task that includes many uncertainties. In this paper, we use data from a representative Dutch household panel to study the impact of uncertainty regarding one's savings adequacy on retirement savings contributions and information search processes. We combine ideas from the literature in psychology and economics that provide opposing predictions regarding the impact of uncertainty on retirement savings contributions. Our results indicate that the effect of uncertainty is moderated by two factors: an individual's perceived adequacy of current savings and that individual's financial constraints. In particular, we find that uncertainty increases retirement contributions for those who believe that they save adequately; however, it hinders retirement contributions for those who believe that they save inadequately. This effect of uncertainty is further moderated by the availability of financial means: a reduction in uncertainty results in greater contributions to savings only when financial constraints are absent. We also find that uncertainty has both indirect and direct effects on savings information search. In particular, uncertainty indirectly affects savings information search because it impacts individuals' intentions to save, which consequently forces individuals to engage in purchase-oriented information search; however, uncertainty also has a direct effect because individuals engage in ongoing information search processes to directly reduce uncertainty. The implications of these findings are discussed. Ron J.G. van Schie, Bas Donkers, Benedict G.C. Dellaert 2012-04-11 uncertainty, savings adequacy, retirement, financial decision making http://d.repec.org/n?u=RePEc:dgr:uvatin:2012046&r=all In this paper we use data from an SP study on flood safety in the Netherlands, and elicit individual preferences for reduction of risk to life and limb. We perform context analysis to test the robustness of fatality risk valuation throughout choice experiments. The main interest of this paper is VOSL sensitivity to the valuation of correlated risks (scope effect). Besides, we explore the role of cognition on the stability of valuation across choice experiments using age and education. We pool data from multiple choice experiments and apply nested and mixed logit models in our analysis. We confirm statistically significant sensitivity to scope, comparing VOSL estimates for the test group in a choice experiment where correlated risks were present (risks of fatality, injury and evacuation) to an experiment where only fatality risk is valued. We find that the origin of differences in VOSL valuations across the choice experiments lies in differences in age and educational attainment, and may therefore be related to cognitive abilities of respondents. In particular, we conclude that higher VOSL sensitivity to scope is most prominently present among respondents of senior age (65 and older) and respondents without college education. This finding has important implications for discrete choice modeling and the use of obtained values in cost-benefit analyses. Marija Bockarjova, Piet Rietveld, Erik T. Verhoef 2012-04-26 stated preferences, value of statistical life, value of statistical injury, value of statistical evacuation, flood risk http://d.repec.org/n?u=RePEc:arx:papers:1305.3243&r=all We present and discuss a stochastic model of financial assets dynamics based on the idea of an inverse renormalization group strategy. With this strategy we construct the multivariate distributions of elementary returns based on the scaling with time of the probability density of their aggregates. In its simplest version the model is the product of an endogenous auto-regressive component and a random rescaling factor embodying exogenous influences. Mathematical properties like increments' stationarity and ergodicity can be proven. Thanks to the relatively low number of parameters, model calibration can be conveniently based on a method of moments, as exemplified in the case of historical data of the S&P500 index. The calibrated model accounts very well for many stylized facts, like volatility clustering, power law decay of the volatility autocorrelation function, and multiscaling with time of the aggregated return distribution. In agreement with empirical evidence in finance, the dynamics is not invariant under time reversal and, with suitable generalizations, skewness of the return distribution and leverage effects can be included. The analytical tractability of the model opens interesting perspectives for applications, for instance in terms of obtaining closed formulas for derivative pricing. Further important features are: The possibility of making contact, in certain limits, with auto-regressive models widely used in finance; The possibility of partially resolving the endogenous and exogenous components of the volatility, with consistent results when applied to historical series. Marco Zamparo, Fulvio Baldovin, Michele Caraglio, Attilio L. Stella 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012058&r=all We develop a method to screen for local cartels. We first test whether there is statistical evidence of clustering of outlets that score high on some characteristic that is consistent with collusive behavior. If so, we determine in a second step the most suspicious regions where further antitrust investigation would be warranted. We apply our method to build a variance screen for the Dutch gasoline market. Pim Heijnen, Marco A. Haan, Adriaan R. Soetevent 2012-06-18 collusion, variance screen, spatial statistics, K-function http://d.repec.org/n?u=RePEc:dgr:uvatin:2012017&r=all This paper studies the incentives to merge in a Bertrand competition model where firms sell differentiated products and consumers search for satisfactory deals. In the pre-merger symmetric equilibrium, the probability that a firm is the next one to be visited by a consumer is equal across firms not yet visited. However, in the short-run after a merger, because insiders raise their prices more than what the outsiders do, consumers start searching for good deals at the non-merging stores. Only when they do not find any product satisfactory enough, they continue searching at the merging stores. When search costs are sufficiently large, consumer traffic from the non-merging firms to the merged ones is so small that mergers become unprofitable. This new merger paradox,which is more likely the higher the number of non-merging firms, can be overcome in the mediumto long-run if the merging firms choose to stock their shelves with all the products of the constituent firms, which generates sizable search economies. Such demand-side economies can confer the merging firms a prominent position in the marketplace, in which case their price may even be lower than the price of the outsiders. In that case, consumers visit first the merged entity and the firms outside the merger lose out. Search cost economies may render a merger beneficial for consumers and so overall welfare may increase. Jose L. Moraga-Gonzalez, Vaiva Petrikaite 2012-02-21 mergers, insiders, outsiders, short-run, long-run, consumer search, demand-side economies, economies of search, order of search, sequential search, prominence http://d.repec.org/n?u=RePEc:dgr:uvatin:0000028&r=all Unobserved components time series models decompose a time series into a trend, a season, a cycle, an irregular disturbance, and possibly other components. These models have been successfully applied to many economic time series. The standard assumption of a linear model, often appropriate after a logarithmic transformation of the data, facilitates estimation, testing, forecasting and interpretation. However, in some settings the linear-additive framework may be too restrictive. In this paper, we formulate a non-linear unobserved components time series model which allows interactions between the trend-cycle component and the seasonal component. The resulting model is cast into a non-linear state space form and estimated by the extended Kalman filter, adapted for models with diffuse initial conditions. We apply our model to UK travel data and US unemployment and production series, and show that it can capture increasing seasonal variation and cycle dependent seasonal fluctuations. Siem Jan Koopman, Kai Ming Lee Seasonal interaction; Unobserved components; Non-linear state space models http://d.repec.org/n?u=RePEc:dgr:uvatin:2004110&r=all This paper considers second-best congestion pricing in the monocentric city, with endogenous residential density and endogenous labour supply. A spatial general equilibrium model is developed that allows consideration of the three-way interactions between urban density, traffic congestion and labour supply. Congestion pricing schemes are analyzed that are second-best ‘by design’ (and not because distortions exist elsewhere in the spatial economy), like cordon charging and flat kilometre charges. Both for Cobb-Douglas utility and for CES utility, the analyses suggest that the relative welfare losses from second-best pricing, compared to first-best pricing, are surprisingly small. Erik T Verhoef Traffic congestion; second-best pricing; urban structure; spatial general equilibrium http://d.repec.org/n?u=RePEc:dgr:umarep:2013002&r=all De HBO-Monitor vierde in 2010 haar 20-jarige bestaan. In de eerste twintig jaar van de HBO-Monitor is op verschillende manieren gerapporteerd over de aansluiting tussen het HBO en de arbeidsmarkt, over de vraag wat de HBO-studenten tijdens hun studie hebben geleerd en over de vraag hoe zij de gevolgde opleiding beoordelen. Hierbij is vooral gericht gerapporteerd op landelijk niveau en op het niveau van de onderwijsinstelling. De tussenliggende laag, de afzonderlijke sectoren, is daarbij (met uitzondering van het eerste jaar van de HBO-Monitor) zelden als insteek gebruikt. Afgezien van de sector Kunst, wordt voor de resterende zes sectoren: Economie, Gezondheidszorg, Landbouw, Pedagogisch, Sociaal-agogisch en Techniek in het kader van het 20-jarige bestaan dan ook een rapport geschreven met de betreffende sector als centraal ankerpunt. Vanuit dit perspectief is de voorliggende rapportage specifiek gericht op de HBO-sector Hoger Economisch Onderwijs (HEO). Hierbij staan de implicaties van recente alsook toekomstige arbeidsmarktontwikkelingen in de sector op de gevraagde competenties van afgestudeerden centraal. Zo wordt achterhaald op welke competenties het onderwijsveld zich de komende jaren zou moeten richten om afgestudeerden optimaal voor te kunnen bereiden op hun beroepsloopbaan in de economische sector. Allen J.P., Verhagen A.M.C., Thor J.A.F. van 2013 http://d.repec.org/n?u=RePEc:iza:izadps:dp7374&r=all Laboratory experiments have become a wide-spread tool in economic research. Yet, there is still doubt about how well the results from lab experiments generalize to other settings. In this paper, we investigate the self-selection process of potential subjects into the subject pool. We alter the recruitment email sent to first-year students, either mentioning the monetary reward associated with participation in experiments; or appealing to the importance of helping research; or both. We find that the sign-up rate drops by two-thirds if we do not mention monetary rewards. Appealing to subjects' willingness to help research has no effect on sign-up. We then invite the so-recruited subjects to the laboratory to measure a range of preferences in incentivized experiments. We do not find any differences between the three groups. Our results show that student subjects participate in experiments foremost to earn money, and that it is therefore unlikely that this selection leads to an over-estimation of social preferences in the student population. Abeler, Johannes, Nosenzo, Daniele 2013-04 methodology, selection bias, laboratory experiment, field experiment, other-regarding behavior, social preferences, social approval, experimenter demand http://d.repec.org/n?u=RePEc:tse:wpaper:27182&r=all This paper deals with the study of "\textit{sharp localized}" solutions of a nonlinear type Schr\"odinger equation in the whole space $\R^N,$ $N\ge1,$ with a zero order term, in modulus, like a power $m$ less than one of the modulus of the solution, and with a non zero external forcing term $\f.$ Our fundamental assumption is that such an exponent $m$ verifies $m\in (0,1).$ The self-similar structure of the solution is justified from the assumption that the external forcing term satisfies that $\f(t,x)=t^{-(\vp-2)/2}\F(t^{-1/2}x)$ for some complex exponent $\vp$ and for some profile function $\F$ which is assumed to be with compact support in $\R^N.$ We show the existence of solutions $\vu(t,x)=t^{\vp/2}\U(t^{-1/2}x),$ with a profile $\U,$ which also have compact support in $\R^N,$ reason why we call as "\textit{sharp localized}" solutions to this type of solutions. The proof of the localization of the support of the profile $\U$ uses some suitable energy method applied to the stationary problem satisfied by $\U$ after some unknown transformation. Bégout, Pascal, Diaz, Jesus Ildefonso 2013-04 http://d.repec.org/n?u=RePEc:rif:briefs:11&r=all Pajarinen, Mika, Rouvinen, Petri, Ylä-Anttila, Pekka 2013-05-07 http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps01&r=all Performance appraisal can be biased in two main ways: lenient supervisors assign pre- dominantly high evaluations (thus rewarding also undeserving agents who have exerted no effort) while severe supervisors assign predominantly low evaluations (thus failing to reward deserving agents who have exerted effort). The principal-agent model with moral hazard predicts that both biases will be equally detrimental to effort provision. We test this prediction with a laboratory experiment and we show that failing to reward deserving agents is significantly more detrimental than rewarding undeserving agents. This finding is compatible with empirical evidence on real world supervisors being preponderantly biased towards lenient appraisals. We discuss our result in the light of alternative economic the- ories of behavior. Our result brings interesting implications for strategic human resource management and personnel economics and contributes to the debate about incentives and organizational performance. Lucia Marchegiani, Tommaso Reggiani, Matteo Rizzolli 2013-05 Agency theory, Performance appraisal, Type I and Type II errors, Leniency bias, Severity bias, Economic experiment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012052&r=all In a standard TU-game it is assumed that every subset of the player set can form a coalition and earn its worth. One of the first models where restrictions in cooperation are considered is the one of games with coalition structure. In such games the player set is partitioned into unions and players can only cooperate within their own union. Owen introduced a value for games with coalition structure under the assumption that also the unions can cooperate among them. Winter extended this value to games with levels structure of cooperation, which consists of a game and a finite sequence of partitions defined on the player set, each of them being coarser than the previous one. A share function for TU-games is a type of solution that assigns to every game a vector whose components add up to one, and thus they can be interpreted as players' shares in the worth to be allocated. Extending the approach to games with coalition structure developed by van den Brink and van der Laan (2005), we introduce a class of share functions for games with levels structure of cooperation by defining, for each player and each level, a standard TU-game. The share given to each player is then defined as the product of her shares in the games at every level. We show several desirable properties and provide axiomatic characterizations of this class of LS-share functions. Mikel Alvarez-Mozos, Rene van den Brink, Gerard van der Laan, Oriol Tejada 2012-05-11 cooperative game, Shapley value, coalition structure, share functions, levels structure of cooperation http://d.repec.org/n?u=RePEc:fip:fednsr:612&r=all This paper provides an empirical analysis of the extent to which people in different occupations locate near one another, or coagglomerate. We construct pairwise Ellison-Glaeser coagglomeration indices for U.S. occupations and use these measures to investigate the factors influencing the geographic concentration of occupations. The analysis is conducted separately at the metropolitan area and state levels of geography. Empirical results reveal that occupations with similar knowledge requirements tend to coagglomerate and that the importance of this shared knowledge is larger in metropolitan areas than in states. These findings are robust to instrumental variables estimation that relies on an instrument set characterizing the means by which people typically acquire knowledge. An extension to the main analysis finds that, when we focus on metropolitan areas, the largest effects on coagglomeration are due to shared knowledge about the subjects of engineering and technology, arts and humanities, manufacturing and production, and mathematics and science. Todd M. Gabe, Jaison R. Abel 2013 Industrial location ; Professional employees ; Metropolitan areas - Statistics ; Information theory ; Labor market ; Geography http://d.repec.org/n?u=RePEc:dgr:uvatin:0000042&r=all This article analyzes under which conditions a manager can motivate a junior worker by verbal communication, and explains why communication is often tied up with organizational choices as job enlargement and collaboration. Our model has two important features. First, the manager has more information about a junior's ability than the junior himself. Second, the junior's effort and ability are complements. We show that the manager has an incentive to exaggerate the junior's ability. We discuss two ways in which the manager can make credible statements about the junior's ability. First, the senior can delegate a task to the junior for which it is important that the junior has a correct perception of his ability. Information is shared through a costless signal. Second, the senior can spend more time on a junior she perceives as able than on a junior she perceives as less able. Information is then shared through a costly signal. Otto H. Swank, Bauke Visser Communication; incentives; signalling; overconfidence; delegation; collaboration http://d.repec.org/n?u=RePEc:ris:albaec:2013_005&r=all Business divorce is an arduous affair. The process of resolving deadlocks is time consuming and expensive, typically requiring the services of lawyers, financial experts and judges. Prolonged resolution processes, cost-inefficient administration of those processes, and inequitable outcomes impose high monetary and non-monetary costs on the parties themselves and on society as a whole. Asset valuation, which is required to complete the transfer of assets in a business divorce, can pose particular problems for closely-held businesses.In contrast to publicly-traded companies with active markets for equity ownership, closely-held companies may be very difficult for outsider investors and appraisers to evaluate. The economic value of closely-held businesses is often intertwined with the human capital of the founders, their relationships with business associates (including key suppliers and customers), and their tacit business knowledge. The true economic value of closely-held businesses may not be fully reflected in the official business documents and financial statements; instead, the best wisdom concerning the value of the business may lie in the minds of the business owners themselves. This article studies business deadlocks and their resolution. We advance a proposal to reform the way that courts resolve business deadlocks and value business assets. Specifically, we argue that Shotgun mechanisms, where one owner names a single buy-sell price and the other owner is compelled to either buy or sell shares at the named price, should play a larger role in the judicial management of business divorce. Since the party proposing the offer may end up either buying or selling shares, the party has an incentive to identify and name a fair price. Thus, accurate asset valuation is achieved without the use of outside appraisers or inefficient public auctions. We also show that our proposal is aligned with current statutory rules and case law. General partnerships and limited liability companies (LLCs), the most commonly chosen legal entities, are the focus of this study. Important lessons and insights for the judicial resolution of business deadlock are derived from our analysis of the private design and implementation of Shotgun provisions. Although Shotgun provisions have the potential for achieving equitable, expedient, and cost-efficient outcomes, these mechanisms pose challenges in private contractual settings, including the risk of opportunistic behaviors by owners who are at an informational or financial advantage. We argue that these risks are less severe in the judicial context than they are in the private context. Since courts have the ability to design the Shotgun procedure ex-post rather than ex-ante, they are in a better position to identify the presence and nature of the asymmetries and to tailor the mechanism accordingly. Although our arguments regarding the benefits of ex-post judicial design of Shotgun mechanisms are logically consistent and supported by current legal cases, actual field data on the use of these mechanisms is not available. To begin to fill this void, we conducted a series of controlled laboratory experiments with human subjects to assess whether the Shotgun mechanism will have the predicted effects. Our experimental design simulated a deadlocked business venture with two owners where only one of the two owners knew the true value of the business assets. Two different treatments were considered. In the first treatment, the better-informed owner was compelled to make buy-sell offer; in the second treatment, the less-informed owner was compelled to make the buy-sell offer. Our experimental findings support our arguments: (1) Inequitable outcomes arose when the less-informed owner made the buysell offer, and (2) equitable outcomes were obtained when the better informed owner made the buy-sell offer. Specifically, when obligated to make a buy-sell offer, the better-informed owner truthfully revealed his private information to the less-informed owner. To the best of our knowledge, ours is the first experimental study of mandatory Shotgun mechanisms where one party knows the value of the assets while the other does not. Our analysis demonstrates that the application of Shotgun mechanisms by judges when they are called upon to resolve deadlocks and manage business divorce will serve the interests of the business parties themselves and, more generally, the interest of society as a whole. Landeo, Claudia, Spier, Kathryn 2013-05-01 judicial resolution of business deadlocks; general partnerships; liited liabiity companies; closely-held business entities; shotgun provisions; buy-sell clauses; cake-cutting mechanisms; bargaining with common values; asymmetric information; experiments http://d.repec.org/n?u=RePEc:iza:izadps:dp7370&r=all This paper analyses incomes and socioeconomic status of internal migrants over time and in comparison to their new neighbors and investigates whether status consumption is a way for newly arrived city dwellers to signal their social standing. Using a novel dataset from the emerging economy of Kazakhstan we find that internal migrants earn an income and status premium for their move. In a comparison to indigenous city dwellers their earnings and household incomes are not significantly different; however, mobile households report a significantly higher subjective socio-economic status. Exploiting expenditure data, we find that recent migrant households gain status from using visible consumption to impress their new neighbors. This signaling might be used as adaptation to the new economic and social environment or to gain access to social capital. Danzer, Alexander M., Dietz, Barbara, Gatskova, Ksenia, Schmillen, Achim 2013-04 absolute and relative welfare, income, status consumption, signaling model, conspicuous consumption, adaptation, internal migration, emerging economy, rural-urban migration http://d.repec.org/n?u=RePEc:ucg:wpaper:0040&r=all The beguine movement is in many ways one of the most remarkable movements in the history of the Low Countries; the impetus for the movement as a whole still remains to be explained. Factors such as the sex-ratio, diminished access to convents, and the religious revival of the late Middle Ages have been put forward, but remain insufficient to explain the specificity of the movement and its popularity in the long run. In many ways, the beguine movement stands out as different from other female organisations or religious movements. The question then arises why this was possible and whether the local conditions of the Low Countries had something to do with it. In this paper, I argue that the specific attitude towards women in the Low Countries that is reflected in their wages, as well as their level of human capital, and labour market participation created a fertile basis for the beguinages to develop: the beguinages may have offered women in the Low Countries – who enjoyed an exceptional “liberated” position regarding social and financial independence, the origins of this position lying in the emergence of the European Marriage Pattern (EMP) – safety and security in case they chose to remain single Tine De Moor 2013-04 beguines, single women, Low Countries, agency http://d.repec.org/n?u=RePEc:mos:moswps:2013-10&r=all The paper examines the effects of skilled immigration on US wages that are due to innovation. We extend the studies by Hunt & Gauthier-Loiselle (2010), and Hunt (2011) to explore the immigration-innovation-wages nexus. Using the National Survey of College Graduates (NSCG) and the US Census datasets we find a significant positive effect of immigration on wages that are attributable to immigrants‘ contribution to innovation. Our findings suggest that as the share of skilled immigrants increases in a particular group, the wages of both natives and immigrants in that group get a positive boost. The effects are more pronounced through immigrants‘ impact on patent granted and patent commercialized, compared with their impact on other measures of innovations. The results also show that the immigrants are more likely to present a paper at a conference or publish in professional journals, primarily because they are more educated or concentrated in the related occupation compared to the natives. Our findings indicate that immigrants make a substantial contribution to the host economy‘s innovation which is a major driver of productivity growth. Asadul Islam, Faridul Islam, Chau Nguyen 2013-05 Innovation, immigration, wages http://d.repec.org/n?u=RePEc:dgr:uvatin:2012108&r=all Using data on the age, sex, ethnicity and criminal involvement of 14.3 million residents aged 10-89 residing in 4,007 neighborhoods in the Netherlands, this article tests whether an individual's decision whether or not to be involved in crime is affected by the number of criminals in the neighborhood. Controlling for unobserved neighborhood heterogeneity and endogeneity of this decision, a small positive effect is found on violent crime, but not on property crime. The results suggest that individual characteristics and other neighborhood characteristics play a much greater role in an individual's decision to be involved in crime. Wim Bernasco, Thomas de Graaff, Jan Rouwendal, Wouter Steenbeek 2012-10-11 social interactions, neighborhoods, crime http://d.repec.org/n?u=RePEc:dgr:uvatin:2012120&r=all This paper analyzes the relationship between unexplained racial/ethnic wage differentials on the one hand and social network segregation, as measured by inbreeding homophily, on the other hand. Our analysis is based on both U.S. and Estonian surveys, supplemented with Estonian telephone communication data. In case of Estonia we consider the regional variation in economic performance of the Russian minority, and in the U.S. case we consider the regional variation in black-white differentials. Our analysis finds a strong relationship between the size of the differential and network segregation: regions with more segregated social networks exhibit larger unexplained wage gaps. Ott Toomet, Marco van der Leij, Meredith Rolfe 2012-11-13 social networks, wage differential, homophily, segregation, race, minorities http://d.repec.org/n?u=RePEc:pra:mprapa:46861&r=all Using data from a randomized experiment in rural China, this paper studies the influence of social networks on weather insurance adoption and the mechanisms through which social networks operate. To quantify network effects, the experiment offers intensive information sessions about the insurance product to a random subset of farmers. For untreated farmers, the effect of having an additional treated friend on take-up is equivalent to granting a 15% reduction in the insurance premium. By varying the information available about peers’ decisions and using randomized default options, the experiment shows that the network effect is driven by the diffusion of insurance knowledge rather than purchase decisions. Cai, Jing, de Janvry, Alain, Sadoulet, Elisabeth 2013-05-09 Social network, Insurance demand, Learning http://d.repec.org/n?u=RePEc:iza:izadps:dp7377&r=all Although social institutions permeate the world in which we live, they are all but absent from our analyses of economic growth and development. This paper argues the need to mitigate this omission by demonstrating the importance of social institutions for growth and development. Greif, Avner, Iyigun, Murat 2013-04 economic development, institutions http://d.repec.org/n?u=RePEc:dgr:uvatin:2012003&r=all Social preference models were originally constructed to explain two things: why people spend money to affect the earnings of others and why the income of others influences reported happiness. We test these models in a novel experimental situation where participants face a risky decision that affects only their own earnings. In the social (individual) treatment participants do (not) observe the earnings of others. In the social treatment gambles therefore not only affect absolute but also relative earnings. Outcome-based social preference models therefore predict a treatment difference. We find that decisions are generally the same in both treatments, in line with rule-based social preference models, like procedural fairness. Jona Linde, Joep Sonnemans 2012-01-09 fairness, social preferences, decision making under risk, experiment http://d.repec.org/n?u=RePEc:dgr:uvatin:2012054&r=all This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that good social relationships undermine the credibility of a threat of dismissal but strengthen the credibility of a bonus. Among others, these two mechanisms imply that better social relationships sometimes lead to higher bonuses, while worse social relationships may increase productivity and players' utility in equilibrium. Robert Dur, Jan Tichem 2012-05-16 Altruism, spite, social relations, incentives, relational contracts, efficiency wages, subjective performance evaluation, Nash bargaining http://d.repec.org/n?u=RePEc:cer:papers:wp478&r=all We study price discrimination in a monopolistic software market. The monopolist charges different prices for the upgrade version and for the full version. Consumers are heterogeneous in taste for infinitely durable software and there is no resale. We show that price discrimination leads to a higher software quality but raises both absolute price and price per quality. This price discrimination does not increase sales and it decreases the total number of consumers compared to no discrimination. Finally, such discrimination decreases consumers' surplus but increases the developer's profit and social welfare that attains the social optimum in the limit. Jiri Strelicky, Kresimir Zigic 2013-01 monopoly; durable goods; software; upgrades; price discrimination; http://d.repec.org/n?u=RePEc:dgr:uvatin:2013062&r=all This paper proposes a functional specification approach for dynamic stochastic general equilibrium (DSGE) models that explores the properties of the solution method used to approximate policy functions. In particular, the solution-driven specification takes the properties of the solution method directly into account when designing the structural model in order to deliver enhanced flexibility and facilitate parameter identification within the structure imposed by the underlying economic theory. A prototypical application reveals the importance of this method in improving the specification of functional nonlinearities that are consistent with economic theory. The solution-driven specification is also shown to have the potential to greatly improve model fit and provide alternative policy recommendations when compared to standard DSGE model designs. Francisco Blasques 2013-04-19 Nonlinear Model Specification, DSGE, Perturbation Solutions http://d.repec.org/n?u=RePEc:crg:wpaper:dt2013-08&r=all In this paper our interest is in investigating properties and numerical solutions of Proximal Split feasibility Problems. First, we consider the problem of nding a point which minimizes a convex function f such that its image under a bounded linear op- erator A minimizes another convex function g. Based on an idea introduced in [9], we propose a split proximal algorithm with a way of selecting the step-sizes such that its implementation does not need any prior information about the operator norm. Because the calculation or at least an estimate of the operator norm kAk is not an easy task. Secondly, we investigate the case where one of the two involved functions is prox-regular, the novelty of this approach is that the associated proximal mapping is not nonexpan- sive any longer. Such situation is encountered, for instance, in numerical solution to phase retrieval problem in crystallography, astronomy and inverse scattering [10] and is therefore of great practical interest. A. Moudafi, B.S. Thakur 2013-04 http://d.repec.org/n?u=RePEc:dgr:uvatin:0000109&r=all The purpose of this paper is to suggest that a fundamental shift in Europe, along with the other OECD countries, is taking place. This shift is from the managed economy to the entrepreneurial economy. While politicians and policy makers have made a plea for guidance in the era of entrepreneurship, scholars have been slow to respond. The purpose of this paper is to make a first step identifying and articulating these differences. We do this by contrasting the most fundamental elements of the newly emerging entrepreneurial economy with those of the managed economy. We identify fifteen trade-offs confronting these two polar worlds. The common thread throughout these trade-offs is the increased role of new and small enterprises in the entrepreneurial economy. A particular emphasis is placed on changes in economic policy demanded by the entrepreneurial economy vis-à-vis the managed economy. We then explore whether restructuring towards the entrepreneurial economy has been conducive to economic growth and job creation. Our empirical analysis links the stage of the transition towards an entrepreneurial economy to the growth rates of European countries over a recent period. We find that those countries which have introduced a greater element of entrepreneurship have been rewarded with additional growth. David Audretsch, Roy Thurik http://d.repec.org/n?u=RePEc:iza:izadps:dp7362&r=all Using census data for 1996, 2001 and 2007 we study the labor market effect of immigration to South Africa. The paper contributes to a small but growing literature on the impact of South-South migration by looking at one of the most attractive destinations for migrant workers in Sub-Saharan Africa. We exploit the variation – both at the district level and at the national one – in the share of foreign-born male workers across schooling and experience groups over time. At the district level, we estimate that increased immigration has a negative and significant effect on natives' employment rates – and that this effect is more negative for skilled and white South African native workers – but not on total income. These results are robust to using an instrumental variable estimation strategy. At the national level, we find that increased immigration has a negative and significant effect on natives' total income but not on employment rates. Our results are consistent with outflows of natives to other districts as a consequence of migration, as in Borjas (2006). Facchini, Giovanni, Mayda, Anna Maria, Mendola, Mariapia 2013-04 South Africa, labor market effects, immigration http://d.repec.org/n?u=RePEc:iie:pbrief:pb13-12&r=all Italy changed its debt contracts, Belize passed new debt legislation, and Taiwan sued Grenada this year, all in response to a string of court rulings in New York that tried to make Argentina pay its debts from its financial crisis in 2001. The court rulings have gone to unprecedented lengths to isolate Argentina but are unlikely to make the country pay. The rulings, however, do threaten collateral damage to other countries and parts of the financial system. The lawsuit—NML Capital Ltd. et al. v. Republic of Argentina—promises to shift the balance of power from sovereign debtors to their creditors. The shift would come courtesy of one obscure debt contract term, the pari passu clause, that has gained destructive power in a case where the government and its creditors are uniquely willing to test the limits of the law. The impact may be magnified because of possible effects on the public debt distress in Europe, new emerging-market restructurings, and the recent regulatory focus on clearing and payment systems. Anna Gelpern 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012121&r=all This paper documents that speed is crucially important for high frequency trading strategies based on U.S. macroeconomic news releases. Using order level data of the highly liquid S&P500 ETF traded on NASDAQ from January 6, 2009, to December 12, 2011, we find that a delay of 300 milliseconds (1 second) significantly reduces returns by 3.08% (7.33%) compared to instantaneous execution over all announcements in the sample. This reduction is stronger in case of high impact news and on days with high volatility. In addition, we assess the effect of algorithmic trading on market quality around macroeconomic news. Increases in algorithmic trading activity have a positive (mixed) effect on market quality measures when we use algorithmic trading proxies that capture the top of the orderbook (full orderbook). Martin L. Scholtus, Dick van Dijk, Bart Frijns 2012-11-13 Macroeconomic News, High Frequency Trading, Latency Costs, Market Activity, Event-Based Trading http://d.repec.org/n?u=RePEc:ris:albaec:2013_004&r=all We develop a monopolistic competition model of urban service consumption and production that includes spatial structure and property values. The model shows that the introduction of a new professional sports facility and team generates agglomeration effects that change the mix of services and property values, and increases local welfare, part of which is transferred to the team as subsidies for the construction of the facility. The distributional consequences of the new facility and the implications of property tax based financing for the subsidy are analyzed. Humphreys, Brad, Zhou, Li 2013-04-19 agglomeration effects; sports facilities; subsidies http://d.repec.org/n?u=RePEc:iza:izadps:dp7381&r=all Since 1991 more than two dozen states have adopted merit-based student financial aid programs, intended at least in part to increase the stock of human capital by improving the knowledge and skills of the state's workforce. At the same time, there has been growing concern that the U.S. is producing too few college graduates in science, technology, engineering, and mathematics (STEM) fields. Using both microdata from the American Community Survey and student records from the University System of Georgia, this paper examines whether recently adopted state merit-aid programs have affected college major decisions, with a focus on STEM fields. We find consistent evidence that state merit programs did in fact reduce the likelihood that a young person in the state will earn a STEM degree. Sjoquist, David L., Winters, John V. 2013-05 merit aid, HOPE scholarship, college major, STEM http://d.repec.org/n?u=RePEc:dgr:uvatin:2012059&r=all We characterize the dynamic properties of Generalized Autoregressive Score (GAS) processes by identifying regions of the parameter space that imply stationarity and ergodicity. We show how these regions are affected by the choice of parameterization and scaling, which are key features of GAS models compared to other observation driven models. The Dudley entropy integral is used to ensure the non-degeneracy of such regions. Furthermore, we show how to obtain bounds for these regions in models for time-varying means, variances, or higher-order moments. Francisco Blasques, Siem Jan Koopman, Andre Lucas 2012-06-22 Dudley integral, Durations, Higher-order models, Nonlinear dynamics, Time-varying parameters, Volatility http://d.repec.org/n?u=RePEc:dgr:uvatin:2013006&r=all In this paper, the annual maximum daily rainfall data from 1961 to 2010 are modelled for 18 stations in Taiwan. We fit the rainfall data with stationary and non-stationary generalized extreme value distributions (GEV), and estimate their future behaviour based on the best fitting model. The non-stationary model means that the parameter of location of the GEV distribution is formulated as linear and quadratic functions of time to detect temporal trends in the maximum rainfall. Future behavior refers to the return level and the return period of the extreme rainfall. The 10, 20, 50 and 100-years return levels and their 95% confidence intervals of the return levels stationary models are provided. The return period is calculated based on the record-high (ranked 1st) extreme rainfall brought by the top 10 typhoons for each station in Taiwan. The estimates show that non-stationary model with increasing trend is suitable for the Kaohsiung, Hengchun, Taitung and Dawu stations. The Kaohsing and Hengchun stations have greater trends than the other two stations, showing that the positive trend extreme rainfall in the southern region is greater than in the eastern region of Taiwan. In addition, the Keelung, Anbu, Zhuzihu, Tamsui, Yilan, Taipei, Hsinchu, Taichung, Alishan, Yushan and Tainan stations are fitted well with the Gumbel distribution, while the Sun Moon Lake, Hualien and Chenggong stations are fitted well with the GEV distribution. Lan-Fen Chu, Michael McAleer, Ching-Chung Chang 2013-01-08 Extreme theory, Extreme rainfall, Return level, Typhoon http://d.repec.org/n?u=RePEc:dgr:uvatin:2012004&r=all This paper has two primary purposes. First, we fit the annual maximum daily rainfall data for 6 rainfall stations, both with stationary and non-stationary generalized extreme value (GEV) distributions for the periods 1911-2010 and 1960-2010 in Taiwan, and detect the changes between the two phases for extreme rainfall. The non-stationary model means that the location parameter in the GEV distribution is a linear function of time to detect temporal trends in maximum rainfall. Second, we compute the future behavior of stationary models for the return levels of 10, 20, 50 and 100-years based on the period 1960-2010. In addition, the 95% confidence intervals of the return levels are provided. This is the first investigation to use generalized extreme value distributions to model extreme rainfall in Taiwan. Lan-Fen Chu, Michael McAleer, Szu-Hua Wang 2012-01-07 Generalized extreme value, Extreme rainfall, Return level, Statistical modelling http://d.repec.org/n?u=RePEc:crg:wpaper:dt2013-07&r=all This paper presents an application of stochastic viability approach in a tropical small scale fishery context, offering a theoretical and empirical model of ecosystem-based fishery management. A multi-species and multi-fleet bio-economic model integrating Lotka-Volterra trophic dynamics as well as production and profit assessments is applied to the French Guiana coastal fishery. This case study is interesting as consistent time series data are available with data collection system set up since 2006. The dynamic model is calibrated with thirteen species and four fleets using monthly catch and effort data from 2006 to 2010. We compare different management strategies relying on different combinations of fishing effort, from the viewpoints of both biodiversity preservation and socio-economic performance, assuming fixed landing prices and fixed costs. The risk for the fishery to mismatch the potential local fish demand growth is pointed out, as well as the loss of species which cannot be avoided without closure. A.A. Cisse, L. Doyen, F. Blanchard, J.C. Pereau 2013-03 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012125&r=all The paper proposes a model for the dynamics of stock prices that incorporates increased asset co-movements during extreme market downturns in a continuous-time setting. The model is based on the construction of a multivariate diffusion with a pre-specified stationary density with tail dependence. I estimate the model with Markov Chain Monte Carlo using a sequential inference procedure that proves to be well-suited for the problem. The model is able to reproduce stylized features of the dependence structure and the dynamic behaviour of asset returns. Denitsa Stefanova 2012-11-21 tail dependence, multivariate diffusion, Markov Chain Monte Carlo http://d.repec.org/n?u=RePEc:dgr:uvatin:0000036&r=all Strategic investors, such as corporate venture capitalists, engage in the financing of start-up firms to complement their core businesses and to facilitate the internalization of externalities. We argue that while strategic objectives make it more worthwhile for an investor to elicit high entrepreneurial effort, they can also undermine his commitment to penalize poorly performing entrepreneurs by terminating their projects. Based on this tradeoff we develop a theory of financing choice between strategic and financial investors. Our framework provides insights into the design of corporate venturing deals and the choice between corporate venturing and independent venture capital finance. Stefan Arping, Sonia Falconieri Corporate Venturing, Soft Budget Constraint http://d.repec.org/n?u=RePEc:dgr:uvatin:2013043&r=all Minority games are a stylized description of strategic situations with both coordination and competition. These games are widely studied using either simulations or laboratory experiments. Simulations can show the dynamics of aggregate behavior, but the results of such simulations depend on the type of strategies used. So far experiments provided little guidance on the type of strategies people use because the set of possible strategies is very large. We therefore use a multi-round strategy method experiment to directly elicit people's strategies. Between rounds participants can adjust their strategy and test the performance of (possible) new strategies against strategies from the previous round. Strategies gathered in the experiment are subjected to an evolutionary competition. The strategies people use are very heterogeneous although aggregate outcomes resemble the symmetric Nash equilibrium. The strategies that survive evolutionary competition achieve much higher levels of coordination. Jona Linde, Joep Sonnemans, Jan Tuinstra 2013-03-07 minority game, strategy experiment, evolution, simulation http://d.repec.org/n?u=RePEc:dgr:uvatin:2012109&r=all Strong consistency of least squares estimators of the slope parameter in simple linear regression models is established for predetermined stochastic regressors. The main result covers a class of models which falls outside the applicability of what is presently available in the literature. An application to the identification of economic models with adaptive learning is discussed. Norbert Christopeit, Michael Massmann 2012-10-12 linear regression, least-squares, consistency, stochastic regressors, adaptive learning, decreasing gain http://d.repec.org/n?u=RePEc:rif:report:11&r=all Euro Area member states have agreed to introduce a structural budget balance target to their national legislation (Treaty on Stability, Coordination and Governance). However, there exists no commonly agreed methodology to calculate this macroeconomic indicator. This report presents the conceptual framework underlying the calculation of structural fiscal balances as suggested by different international organizations such as the European Commission and the IMF. We emphasize that the methodology indeed affects both the quantitative estimates and the interpretation of the indicator for policy analysis. In addition we discuss some of the possible limitations of the indicator within real-time macroeconomic surveillance. Virkola, Tuomo 2013-05-14 cyclically-adjusted budget balance, structural balance, fiscal policy, macroeconomic surveillance http://d.repec.org/n?u=RePEc:dgr:uvatin:2012027&r=all This paper uses a new dataset derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 OECD countries and 50 sectors over the period 1970-2005. We find that across countries energy intensity levels tend to increase in a fairly wide range of Services subsectors, but decrease in most Manufacturing sectors. A decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics. A convergence analysis reveals that only after 1995 cross-country variation in aggregate energy intensity levels clearly tends to decrease, driven by a strong and robust trend break in Manufacturing and enhanced convergence in Services. Moreover, we find evidence for the hypothesis that across sectors lagging countries are catching-up with leading countries, with rates of convergence on average being higher in Services than in Manufacturing. Aggregate convergence patterns are almost exclusively caused by convergence of within-sector energy intensity levels, and not by convergence of the sectoral composition of economies. Peter Mulder, Henri L.F. de Groot 2012-03-12 Energy Intensity, Convergence, Decomposition, Sectoral Analysis http://d.repec.org/n?u=RePEc:dgr:uvatin:2012007&r=all We adopt a structural time series analysis to investigate the impact of parole abolition and sentence reform in Virginia on reported crime rates. The Commonwealth of Virginia abolished parole and reformed sentencing for all felony offences committed on or after January 1, 1995. To examine the impact of Virginia's change in legislation on reported crime rates from 1995 onwards, we perform an intervention time series analysis based on structural time series models. We empirically find that the change in legislation has significantly reduced the burglary rates and to a lesser extent the murder rates in Virginia. For other violent crimes such as rape and aggravated assault the evidence of a significant reduction in crime rates is less evident or is not found. This empirical study for Virginia also provides an illustration of how an effective intervention time series analysis can be carried out in crime studies. Suncica Vujic, Jacques Commandeur, Siem Jan Koopman 2012-01-30 Intervention time series analysis; Crime rates; Structural time series models; Unobserved components time series models http://d.repec.org/n?u=RePEc:dgr:uvatin:2012141&r=all We use the introduction and the subsequent removal of the flash order facility (an actionable indication of interest, IOI) from the NASDAQ as a natural experiment to investigate the impact of voluntary disclosure of trading intent on market quality. We find that flash orders significantly improve liquidity in the NASDAQ. In addition, overall market quality improves substantially when the flash functionality is introduced and deteriorates when it is removed. One explanation for our findings is that flash orders are placed by less informed traders and fulfill their role as an advertisement of uninformed liquidity needs. They successfully attract responses from liquidity providers immediately after the announcement is placed, thus lowering the risk-bearing cost for the overall market. Our study is important in understanding the impact of voluntary disclosure, in guiding future market design choices, and in the current debate on dark pools and IOIs. Johannes A. Skjeltorp, Elvira Sojli, Wing Wah Tham 2012-12-12 Actionable Indication of Interest (IOI); Flash orders; High-frequency Trading http://d.repec.org/n?u=RePEc:dgr:uvatin:2013001&r=all Countless test statistics can be written as quadratic forms in certain random vectors, or ratios thereof. Consequently, their distribution has received considerable attention in the literature. Except for a few special cases, no closed-form expression for the cdf exists, and one resorts to numerical methods. Traditionally the problem is analyzed under the assumption of joint Gaussianity; the algorithm that is usually employed is that of Imhof (1961). The present manuscript generalizes this result to the case of multivariate generalized hyperbolic (MGHyp) random vectors. The MGHyp is a very exible distribution which nests, among others, the multivariate <I>t</I>, Laplace, and variance gamma distributions. An expression for the first partial moment is also obtained, which plays a vital role in financial risk management. The proof involves a generalization of the classic inversion formula due to GilPelaez (1951). Two applications are considered: first, the nite-sample distribution of the 2SLS estimator of a structural parameter. Second, the Value at Risk and Expected Shortfall of a quadratic portfolio with heavy-tailed risk factors. Simon A. Broda 2013-01-08 Finite Samples; Characteristic Function; Transform Inversion; 2SLS; CVaR; Expected Shortfall http://d.repec.org/n?u=RePEc:crg:wpaper:dt2013-05&r=all This paper presents a continuous time stochastic growth model to study the effects of tax evasion and tax corruption on the level and volatility of private investment and public spending. Our results suggest that there do exist several regimes of mean growth and growth volatility, depending upon the consumer's degree of risk aversion, the tax income yield, the risk-adjusted return of the agent's portfolio, the productivity of public spending. We find that public spending is described asymptotically by an incomplete upper Gamma distribution, while private capital is described by a power law distribution. Depending upon the values of the parameters of these distributions, growth can be characterized by extreme values (high volatility) when the return to taxation lies under a certain threshold and/or when the risk-adjusted return of investing the proceeds of illegal activities evolves above a given threshold. We provide an empirical illustration of the model. Fred Celimene, Gilles Dufrenot, Gisele Mophou, Gaston N'Guerekata 2013-02 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012104&r=all This paper analytically derives the conditions under which the slope of the tax reaction function is negative in a classical tax competition model. If countries maximize welfare, we show that a negative slope (reflecting strategic substitutability) occurs under relatively mild conditions. Simulations suggest that strategic substitutability occurs under plausible parameter configurations. The strategic tax response is crucial for understanding tax competition games, as well as for assessing the welfare effects of partial tax unions (whereby a subset of countries coordinate their tax rates). Indeed, contrary to earlier findings that have assumed strategic complementarity in tax rates, we show that partial tax unions might reduce welfare under strategic substitutability. Ruud A. de Mooij, Hendrik Vrijburg 2012-10-02 Strategic Substitutes, Asymmetry, Strategic Tax Response, Tax Coordination http://d.repec.org/n?u=RePEc:fip:fedgif:1079&r=all A large public finance literature argues that taxable income elasticities are a sufficient statistic for the social welfare consequences of taxation. We develop calibrations that show such deadweight loss calculations are overestimates proportional to the quantitative significance of heterogeneity in amenities across job matches. In particular, the endogenous supply of amenities can substantially exacerbate this overestimation in both static and dynamic environments. Given the possibility of gradual migration of workers into more amenity-focused job matches in response to tax increases, welfare calculations based on long-run taxable income elasticities can be more misleading than those based on short-run elasticities. Brendan Epstein, Ryan Nunn 2013 http://d.repec.org/n?u=RePEc:qss:dqsswp:1308&r=all This paper estimates the relationship between teacher characteristics and teacher quality by applying point-in-time pupil-fixed effects. It uses a large cross-sectional dataset of grade 6 teaching and learning in 12 sub-Saharan countries. The findings are generally in line with the existing literature that finds such observable characteristics to be weak predictors that significantly differ in their effects across countries. Teacher subject competency test scores, the only consistent predictor of teacher quality across African countries in other studies, are only significant in the Seychelles. Contrary to US studies, we do not find consistent returns to teacher experience. Our estimates suggest that teacher characteristics are complementary rather than mutually exclusive. The analysis presented here provides comparable estimates of within-school variation of teacher quality and unique lower-bound estimates of teaching ability. Christopher F. Hein, Rebecca Allen 2013-05-13 Teacher Quality, Teacher Characteristics, Africa, SACMEQ, Complementarity http://d.repec.org/n?u=RePEc:dgr:uvatin:2013048&r=all The purpose of the paper is to discuss ten things potential users should know about the limits of the Dynamic Conditional Correlation (DCC) representation for estimating and forecasting time-varying conditional correlations. The reasons given for caution about the use of DCC include the following: DCC represents the dynamic conditional covariances of the standardized residuals, and hence does not yield dynamic conditional correlations; DCC is stated rather than derived; DCC has no moments; DCC does not have testable regularity conditions; DCC yields inconsistent two step estimators; DCC has no asymptotic properties; DCC is not a special case of GARCC, which has testable regularity conditions and standard asymptotic properties; DCC is not dynamic empirically as the effect of news is typically extremely small; DCC cannot be distinguished empirically from diagonal BEKK in small systems; and DCC may be a useful filter or a diagnostic check, but it is not a model. Massimiliano Caporin, Michael McAleer 2013-03-21 DCC, BEKK, GARCC, Stated representation, Derived model, Conditional covariances, Conditional correlations, Regularity conditions, Moments, Two step estimators, Assumed properties, Asymptotic properties, Filter, Diagnostic check http://d.repec.org/n?u=RePEc:nbr:nberwo:19024&r=all This paper analyzes the effects of the reforms initiated in India following the balance of payments (BOP) crisis of 1991 on economic performance. We do not find persuasive the contention of many analysts that growth accelerated after the mid-1980s when reforms were initiated. Nor does statistical analysis support the contention that reforms in the mid-1980s resulted in a growth acceleration. We show that there is an accelerating rate of growth of GDP after the mid 1970s and it is difficult to relate this gradual acceleration to specific policy changes. The changed policies in the 1980s did not mean a basic change in the policy framework. Furthermore, since corporate investment as a share of GDP did not increase in the 1980s it is difficult to identify the mechanism by which the more pro-business policies of the government were translated to higher growth. We also find that the differences with East Asia and particularly China depend on the basis of the comparison. We compare changes in performance since the reforms, which started in China in 1979 and in India in 1991. Such a comparison shows more similarities than differences. We finally examine social progress. We find that South Asia lags behind other regions in making progress towards the Millennium Development Goals (MDGs) and India lags behind other South Asian countries. The responsiveness of the improvement in the MDGs to increases in per capita income is usually low in Asia and particularly in India. Manmohan Agarwal, John Whalley 2013-05 http://d.repec.org/n?u=RePEc:eab:govern:23412&r=all This paper investigates and analyzes the present status, potential, and prospects of Association of Southeast Asian Nations (ASEAN) free trade agreements (FTAs). It begins with a review of the historical evolution of ASEAN FTAs, which captures the achievements of the ASEAN Free Trade Agreement (AFTA) and the efforts meant to lead to a further step of deeper integration, i.e., the realization of the ASEAN Economic Community (AEC) by 2015. The paper then offers a view on how the grouping adopted an extension of ASEAN FTAs beyond the AEC—a widening integration process that includes ASEAN+1 FTAs, bilateral trading arrangements, and region-wide economic integration. These parallel developments present major challenges to ASEAN, particularly the move towards the AEC by 2015 and the attempts to broaden FTAs in East Asia. Ultimately, it is desirable for ASEAN to draw a clear picture of how the architecture of ASEAN FTAs in 2030 can be given shape. Suthiphand Chirathivat, Piti Srisangnam 2013-04 ASEAN, FTAs, ASEAN+1, AEC, integration process, East Asia http://d.repec.org/n?u=RePEc:dgr:uvatin:2012074&r=all This paper examines the effect of a housing assistance program on school enrollment, child labor and poverty reduction among poor families in Ecuador. Administrative data is merged to a household panel to link the history of a voucher application with socioeconomic information. Two empirical approaches are employed. First, I exploit variation in duration of the different stages to obtain a voucher and convert it into a house, using a sample of approved applicants. Second, I use variation across siblings that arises from the fact that siblings are exposed to the program at different ages. Results show that the program improves enrollment into post-compulsory education, decreases the probability that a child participates in the labor market and reduces the likelihood to live in poverty. Potential mediating factors are increased access to sanitation, better quality materials of the house and a reduced probability to live overcrowded. Jose Rosero 2012-07-19 Housing assistance programs, Housing voucher, Children, Fixed Effects, Within family estimators, Developing country, Ecuador http://d.repec.org/n?u=RePEc:ege:wpaper:1304&r=all This study measures economic performances of the 15 transition economies for two periods: The Soviet Union period and transition period. These periods include data of countries for 1970-1989 and 1991-2005. It is known that centrally planned economies are mainly criticized for widespread economic inefficiency and low total factor productivity. Thus, in order to see how the efficiency levels and productivity growth of the former Soviet union countries have changed during the transition or market-based period, we analyze two periods by using Data Envelopment Analysis. The results of analysis indicate that, on average, technical efficiency has slightly increased, however, total factor productivity decreased due to technical regress over the transition period when compared to the era of Soviet union for 15 countries. Ertugrul Deliktas 2013-05 technical efficiency, total factor productivity, transition countries, Soviet union countries, data envelopment analysis http://d.repec.org/n?u=RePEc:dgr:uvatin:2012023&r=all In the literature various models of games with restricted cooperation can be found. In those models, instead of allowing for all subsets of the set of players to form, it is assumed that the set of feasible coalitions is a proper subset of the power set of the set of players. In this paper we consider such sets of feasible coalitions that follow from a permission structure on the set of players, in which players need permission to cooperate with other players. We assume the permission structure to be an oriented tree. This means that there is one player at the top of the permission structure and for every other player there is a unique directed path from the top player to this player. We introduce a new solution for these games based on the idea of the Average Tree value for cycle-free communication graph games. We provide two axiomatizations for this new value and compare it with the conjunctive permission value. Rene van den Brink, Jean-Jacques Herings, Gerard van der Laan, Dolf Talman 2012-01-24 TU game, restricted cooperation, permission structure, Shapley value, Average Tree value, axiomatization http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps03&r=all This study presents a theoretical and operational framework for analysing repeat visit to museums. Starting from the literature on repeat visit in tourism, the specificities of these cultural attractions are made explicit through a review of theoretical and applied works. Consistently with previous contributors, the paper suggests that the analysis of actual past behaviours has to be preferred to the one of attitudes. The application of proper econometric models is also remarked in order to put into account individual profiles. Information coming from three techniques is then used in an integrated way in order to provide a more comprehensive view of the phenomenon. Evidence from an ad-hoc survey suggests the necessity to give a greater attention to perceived cultural value during the visit, promoting cultural events during the week and addressed to children, and taking care of those visitors that come from far places also through an integrated tourist supply. Juan Gabriel Brida, Marta Disegna, Raffaele Scuderi 2013-05 Repeat visit; Museum; Behavioural Approach; Econometric modelling http://d.repec.org/n?u=RePEc:cbt:econwp:13/13&r=all Sentences for employers convicted of offences under NZ health and safety in employment law have been subject to constraints from two main sources (i) legislation; and (ii) guideline judgment cases. This paper analyses the determinants of HSE offences over the period following the introduction of the De Spa Guidelines in March 1994 to the Hanham & Philp Guideline judgment in December 2008, and also splits the period to account for the implementation of the Sentencing Act 2002 and the HSE Amendment Act 2002. Among the De Spa Guidelines we find that the level of harm in particular, and employer culpability are not only consistently represented among significant determinants of HSE sentences in respect of fines and total liability faced by employers, but also emerge as important determinants of awards to accident victims. These results hold at the single s 6 charge level and at the case level, as well as for alternative specifications of our estimating model. Considering the two periods separately, we find that estimated coefficients are considerably larger in magnitude for the latter period. Results for the remaining De Spa factors and case-specific facts are less robust, although a defendant’s financial limitations provides a consistent and sizable fine discount, and several others also regularly appear as systematic HSE sentencing determinants. Andrea Menclova, Alan Woodfield 2013-04-29 Health & Safety Offences; Judicial Guidelines; Sentencing Determinants http://d.repec.org/n?u=RePEc:nbr:nberwo:19035&r=all Many believe that “big data” will transform business, government and other aspects of the economy. In this article we discuss how new data may impact economic policy and economic research. Large-scale administrative datasets and proprietary private sector data can greatly improve the way we measure, track and describe economic activity. They also can enable novel research designs that allow researchers to trace the consequences of different events or policies. We outline some of the challenges in accessing and making use of these data. We also consider whether the big data predictive modeling tools that have emerged in statistics and computer science may prove useful in economics. Liran Einav, Jonathan D. Levin 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012066&r=all This paper studies the impact of physical distance and different relational proximity types on the formation of the Internet infrastructure. Although there is some anecdotal evidence on the 'end of geography' effect of the Internet, the relationship between physical space and the Internet has not been yet scrutinized. In addition, owing to the network nature of the Internet, the structure of the Internet infrastructure (the cyber-place) cannot be approached in a unidimensional way. Our paper builds upon recent studies in economic geography and relational proximities, and aims to study whether physical distance survives in virtual geography even after controlling for relational proximities. In order to do so, a unique and extensive database with geo-coded IP links is utilized. Based on this, a spatial interaction model with panel data specifications is constructed to study the impact of different types of proximity on the formation of cyber-place. The above analysis is framed by a complex network analysis exercise, which enhances our understanding of the complexity of the Internet infrastructure from a spatial network perspective. Our results indicate that physical distance, but also different relational proximities, have a significant impact on the intensity of the Internet infrastructure, highlighting the spatiality of the Internet. Emmanouil Tranos, Peter Nijkamp 2012-07-12 death of distance, Internet geography, Internet infrastructure, distance, proximities, spatial interaction models http://d.repec.org/n?u=RePEc:gdm:wpaper:10213&r=all Developing countries are increasingly aware of the need to design and implement improvements in public systems for providing pensions to the elderly. Such systems may aim to smooth consumption and thus provide reliable income to older people, reduce poverty among the elderly, insure those no longer working against the risk of running out of funds, and promote equal treatment of men and women in retirement security even when lifetime earnings and projected average life expectancy may differ greatly. The increasing share of the elderly in the population of all countries makes implementation of sustainable pension systems both more urgent and more difficult. Planners must consider numerous options in pension system design and choose the combination of policies that will optimize coverage, benefits, and financing given a country’s demographics, history, practices regarding family support of the elderly, political system, extent of informal labour, and fiscal situation. David E. Bloom, Roddy McKinnon 2013-05 Public Pensions, Public Systems for Elderly, Income to Elderly http://d.repec.org/n?u=RePEc:qss:dqsswp:1306&r=all This paper uses data from a rich UK birth cohort to estimate the differences in cognitive and non-cognitive skills between children born at the start and end of the academic year. It builds on the previous literature on this topic in England by using a more robust regression discontinuity design and is also able to provide new insight into the drivers of the differences in outcomes between children born in different months that we observe. Specifically, we compare differences in tests that are affected by all three of the potential drivers (age at test, age of starting school and relative age) with differences in tests sat at the same age (which are therefore not affected by the age at test effect) as a way of separately identifying the age at test effect. We find that age at test is the most important factor driving the difference between the oldest and youngest children in an academic cohort; highlighting that children born at the end of the academic year are at a disadvantage primarily because they are almost a year younger than those born at the start of the academic year when they take national achievement tests. An appropriate policy response in this case is to appropriately age-adjust these tests. However, we also find evidence that a child’s view of their own scholastic competence differs significantly between those born at the start and end of the academic year, even when eliminating the age at test effect. This means that other policy responses may be required to correct for differences in outcomes amongst children born in different months, but not necessarily so: it may be that children’s view of their scholastic competence would change in response to the introduction of appropriately age-adjusted tests, for example as a result of positive reinforcement. Claire Crawford, Lorraine Dearden, Ellen Greaves 2013-05-13 Month of birth, regression discontinuity design http://d.repec.org/n?u=RePEc:gdm:wpaper:10413&r=all The world has enjoyed huge improvements in population health during the last half century. But major health problems persist, particularly in tropical countries, which are still struggling with infectious diseases while increasingly having to deal with noncommunicable diseases. Several classic arguments for public spending on health have buttressed governments’ efforts to improve health. These efforts have now been further spurred by new economic arguments that better population health may promote economic well-being – via beneficial changes in labor productivity, education, and investment, and through demographic change. The economic consequences of improved health can be large, but realizing them depends on the policies adopted in myriad other arenas. David E. Bloom, Günther Fink 2013-05 Public resources, Noncommunicable disease, Economic impacts of health http://d.repec.org/n?u=RePEc:mos:moswps:2013-01&r=all We report results from a multi-period game designed to stimulate feelings of envy. There are a number of important features of our game that distinguish it from previous games used to examine envy. A unique and important feature of our design is that it addresses the two negative effects of envy: the wasteful expenditure of resources in an attempt to harm others and the wasteful use of resources by those envied in an attempt to protect themselves. We find that as wasteful as attacks are, spending on protection against attacks, while individually rational, results in even more waste. Players purchase insurance at twice the rate of attacks. Our multiperiod game permits us to examine how subjects' behaviour motivated by envy or the threat of envious actions changes over time. We report evidence consistent with players learning that envious feelings are wasteful and are less satisfying than the foregone monetary rewards. Philip J. Grossman, Mana Komai 2013-05 anti-social preferences, envy, insurance http://d.repec.org/n?u=RePEc:dgr:uvatin:2012080&r=all This study analyses the relation between education and commuting behaviour of Dutch workers. Results show that, ceteris paribus, higher educated workers commute further, both in terms of distance and time. In addition, higher educated workers are more frequent users of public transport and of bicycles. Furthermore, we find that higher educated workers are relatively more likely to commute towards agglomerated areas and areas that pay relatively high wages, while they are more likely to live in and commute from areas with higher land rents. Stefan P.T. Groot, Henri L.F. de Groot, Paolo Veneri 2012-07-30 commuting, education, urban amenities, agglomeration http://d.repec.org/n?u=RePEc:dgr:uvatin:2012041&r=all The aim of this study is to analyze the effectiveness of early entrepreneurship education. To this end, we conduct a randomized field experiment to evaluate a leading entrepreneurship education program that is taught worldwide in the final grade of primary school. We focus on pupils' development of relevant skill sets for entrepreneurial activity, both cognitive and non-cognitive. The results indicate that cognitive entrepreneurial skills are unaffected by the program. However, the program has a robust positive effect on non-cognitive entrepreneurial skills. This is surprising since previous evaluations found zero or negative effects. Because these earlier studies all pertain to education for adolescents, our result tentatively suggests that non-cognitive entrepreneurial skills are best developed at an early age. Laura Rosendahl Huber, Randolph Sloof, Mirjam van Praag 2012-04-20 Skill formation, field experiment, entrepreneurship education, entrepreneurship http://d.repec.org/n?u=RePEc:cde:cdewps:229&r=all In this paper we investigate the effect of the Delhi Metro, an intra-city mass rail transit system, on air pollution within Delhi. To identify effects on pollution, we exploit the discontinuous jumps in metro ridership, each time the network is extended. Our identifying assumption is that in the absence of the extension there would be a smooth transition in pollution levels. We find strong evidence to show that the Delhi Metro has resulted in reductions of two important vehicular emissions, namely, nitrogen dioxide and carbon monoxide. We estimate a cumulative impact of a 35 percent reduction in CO levels for the region around ITO (a major traffic intersection in Delhi). This is suggestive of a traffic diversion effect, where people are switching from private modes of travel to the Delhi Metro. Given, documented evidence on the adverse health effects of air pollution, our findings suggest that these indirect benefits must be considered in any cost-benefit analysis of a rapid mass transport system. Deepti Goel, Smriti Sharma 2013-04 http://d.repec.org/n?u=RePEc:pra:mprapa:46415&r=all This study is designed to study the relationship between the performance evaluation system and its impact on job satisfaction of employees. A questionnaire is designed for this purpose and the study is conducted to the employees of Pakistan International Airline Corporation. For this purpose the employees of Admin, Sales, HR, Flight crew, Engineering and other departments filled up 34 questionnaires. Literature survey described in the report served as the conceptual framework. Analysis of data includes comparison of results through graphs, co-relation techniques. Findings of the data indicate that there is no relationship between the performance evaluation and its impact on job satisfaction on employees. Additionally, in view of the limitations of the study (small sample, low response) limited conclusions can be drawn from the study. And this study disapproves the null hypothesis. Alvi, Mohsin, Surani, Mehreen, Hirani, Saneea 2013-04-25 Performance Evaluation, Job Satisfaction, Appraisal Systems, Percentage, Correlation http://d.repec.org/n?u=RePEc:cer:papers:wp480&r=all The current literature shows a significant negative impact of terrorism on countries' economies. We explore this relationship in more detail. Using an unbalanced panel of over 160 countries for up to 25 years and the Global Terrorism Database (GTD) we show a decrease in FDI as a consequence of terrorism. We also find evidence that FDI flows are more sensitive to terrorism than either portfolio investments or external debt flows. Finally, we test the hypothesis that terrorism has negative spill-over effects on FDI flows into neighboring countries and find evidence that cultural but not geographical closeness matters. Randall K. Filer, Dragana Stanisic 2013-01 capital flow; terrorism; FDI; spill-over effect; http://d.repec.org/n?u=RePEc:iza:izadps:dp7368&r=all With worldwide migration becoming increasingly prevalent in policy agendas over the past several decades, understanding the effects that migrants have on a host country's population continues to be an important research agenda. There is a large literature documenting the effects that migrants have on native wages, tax burden, unemployment, etc. However, very little is understood about how migrants affect the happiness, or subjective well-being, of natives. This paper uses the European Social Survey to analyze the effects of aggregate immigration inflows on the subjective well-being of native-born populations in a panel of 26 countries between 2002 and 2010. We find that recent immigrant flows have a nonlinear, yet overall positive impact on the well-being of natives. Specifically, we find that immigrant flows from two years prior have larger positive effects on natives' well-being than immigrant inflows from one year prior. Our findings are very small in magnitude and in practical application; only large immigrant flows would affect native well-being significantly. Betz, William, Simpson, Nicole B. 2013-04 international migration, happiness, life satisfaction http://d.repec.org/n?u=RePEc:dgr:uvatin:2011120&r=all We conduct a field experiment in a large retail chain to test basic predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second round of the tournament. As predicted by theory, we find that a more convex prize spread increases performance in the second round at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is significantly larger for stores that historically have relatively stable performance as compared to stores with more noisy performance. Josse Delfgaauw, Robert Dur, Arjan Non, Willem Verbeke 2011-08-11 Elimination tournaments, Incentives, Prize spread, Performance measurement, Field experiment http://d.repec.org/n?u=RePEc:pra:mprapa:46973&r=all This paper examines the decision of Turkish women to participate in the labor force. We administered a original survey questionnaire in 2009 to 518 non-working women. Employing logistic regression, we found that religious belief is a crucial factor that discourages women from participating in the labor market. In particular, the regular performance of religious rituals have the greatest negative effect on labor market participation for educated women, who are the most productive human resource in the economy. Lou O'Neil, Mary, Bilgin, Mehmet Huseyin, Lau, Chi Keung Marco 2012-02-10 Women, religious beliefs, labor force, working decisions, Turkey http://d.repec.org/n?u=RePEc:dgr:uvatin:2012094&r=all After pressure from shareholder activists, proxy advisory firms, and the New York Stock Exchange, the Securities and Exchange Commission has eliminated uninstructed broker voting in director elections. We observe that average director approval rates remain high after the change in regulation, while the probability of a director being voted off the board remains low. In addition, we find no evidence of significant wealth effects of the change in regulation. We do find that firms are increasingly letting shareholders ratify their auditors after the change in regulation, which helps in establishing a quorum. Ali Akyol, Konrad Raff, Patrick Verwijmeren 2012-09-14 Broker voting, shareholder empowerment, Securities and Exchange Commission, board effectiveness http://d.repec.org/n?u=RePEc:pra:mprapa:47011&r=all Institutions are the equilibrium states of games, and the emergence of institutions is an evolutionary, stochastic, and (social) structural dependence process of interactions among agents. In this paper, we address the relationship between the institutional emergence and the structure of social interactions under the context of (network) coordination games. The model here shows when the agents are socially restricted, and individual decision-making is based on mutual agreements, inefficient institutions will be the stable states in the long run, say, institutions are locked-in inefficiently. When the agents are not restricted socially, the institutional stability will wander between two states. The efficient institutions can emerge only as the agents are facing strong cost constraints and, are in the contexts with relative high certainties, for instance, as the interactive population size is becoming smaller. Dai, Shuanping 2012-07-01 Institutional Emergence, Coordination Games, Stochastically Stable Equilibrium, Network Formation, Social Distance http://d.repec.org/n?u=RePEc:bdi:opques:qef_145_13&r=all This paper summarizes the results attained by the Eurosystem in harmonizing the statistics used for the conduct of monetary policy. Since the creation of the euro area, in January 1999, significant progress has been made in the harmonization of data on banks&#x2019; balance sheets, central banks and money market funds; on interest rates on deposits and loans; on non-bank financial intermediaries, especially mutual funds and financial vehicle corporations engaged in securitization; and on financial accounts. The paper also outlines the debate on statistical information gaps that came to the fore after the 2007-08 financial crisis. Riccardo De Bonis 2013-01 banks, money, credit, interest rates, financial accounts, statistics and the financial crisis http://d.repec.org/n?u=RePEc:dgr:uvatin:2012021&r=all We establish that CEOs of companies experiencing volatile industry conditions are more likely to be dismissed. At the same time, industry risk is, controlling for various other factors, unlikely to be directly associated with CEO compensation other than through dismissal risk. Using this identification strategy, we document that CEO turnover risk is significantly positively associated with compensation. This finding is important because job-risk compensating wage differentials arise naturally in competitive labor markets. By contrast, the evidence rejects a simple entrenchment model according to which powerful CEOs have lower job risk and at the same time secure higher compensation. Florian S. Peters, Alexander F. Wagner 2012-03-08 CEO turnover; CEO Compensation; Corporate Governance http://d.repec.org/n?u=RePEc:mos:moswps:2013-14&r=all Using a millennium of data for 12 countries in the East and in the West this paper tests the extent to which the three most influential hypotheses on growth and development can shed light on why some economies developed earlier than others and which factors were fundamental for the Great Divergence. These hypotheses are the contracting institutions, property right institutions, and culture. It is tested whether these theories influence growth through science and technology or human capital or channels that are independent of these two channels. It is found that culture, contracting institutions and property right institutions have all been relevant for growth and development. Jakob Madsen, Eric Yan 2013-05 the Great Divergence, culture, institutions http://d.repec.org/n?u=RePEc:mos:moswps:2013-09&r=all In this paper we explore how the nature of the equilibria changes when the interest income from nominal bond holdings is also taxed in an fully flexible endowment economy. We find that the stability properties of this economy depend on the slope and the intercept of both monetary and fiscal policy rules. Thus, the parameter space consistent with locally determinate equilibria is much larger compared to that of Leeper (1991). For instance, deviations from the Taylor principle can still yield determinate equilibria even when fiscal policy does not aggressively respond to rises in debt levels. In addition, we show that if the government taxes all sources of income and the fiscal authority sets taxes taking into account the level of debt, then the economy exhibits a Laffer curve yielding multiple steady states. As we can see, ignoring the tax treatment of interest income generated by bond holdings is not as innocuous as it may seem. Pedro Gomis-Porqueras, Solmaz Moslehi, Vivianne Vilar 2013-05 Taxes, Bond Income, Laffer Curve, Monetary and Fiscal Policy Interactions. http://d.repec.org/n?u=RePEc:fip:fednsr:613&r=all The unemployment gender gap, defined as the difference between female and male unemployment rates, was positive until 1980. This gap virtually disappeared after 1980--except during recessions, when men's unemployment rates always exceed women's. We study the evolution of these gender differences in unemployment from a long-run perspective and over the business cycle. Using a calibrated three-state search model of the labor market, we show that the rise in female labor force attachment and the decline in male attachment can mostly account for the closing of the gender unemployment gap. Evidence from nineteen OECD (Organisation for Economic Co-operation and Development) countries also supports the notion that convergence in attachment is associated with a decline in the gender unemployment gap. At the cyclical frequency, we find that gender differences in industry composition are important in recessions, especially the most recent, but they do not explain gender differences in employment growth during recoveries. Stefania Albanesi, Aysegül Sahin 2013 Unemployment ; Women - Employment ; Business cycles ; Recessions http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-09&r=all We investigate the effect of climate policies on fossil fuel use in the presence of a clean alternative technology that exhibits learning-by-doing. In a two-period framework, the costs of clean and regenerative energy in the second period are decreasing with the amount of this energy produced in the first one. While a carbon tax on present fossil fuels always reduces the use of the conventional energy source, the effect of a subsidy for regenerative energy is ambiguous and depends on the size of the learning effect. For small learning effects, a subsidy reduces the present use of fossil fuels since their substitute becomes comparatively cheap. However, for larger learning effects, a subsidy leads to the green paradox as the cost reduction in the clean energy sector reduces the future demand for conventional energy and brings forward extraction. We conclude that the best way to reduce present CO2 emissions is the implementation of a carbon tax. If the learning effect is small, the carbon-tax revenues should additionally finance the subsidy for the renewable energy.<br /> Daniel Nachtigall, Dirk Rübbelke 2013-04 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012082&r=all There is evidence from the literature that firms enjoy higher productivity levels when the workforce employed is culturally more diverse. It is an open question whether this gain is utilized to shift the supply curve and set lower prices, in order to achieve a higher demand and possibly higher revenues. This knowledge gap is not addressed in the existing literature, and forms the departure of our research. We introduce a reduced-form model, inspired by the study of Melitz and Ottaviano (2008) on heterogeneous firms, and add labour productivity by using the approach of Ottaviano and Peri (2005) on cultural diversity. In our empirical study, we employ German data, while the field of research is conducted for single plants, and industry-specific effects are taken into account. Our analysis shows significant positive effects of the cultural diversity of the high-skilled workforce on the market size of single establishments. We conclude that emerging productivity gains are not just paid as dividend or factor rewards but are also used to set lower prices in order to achieve higher demand. Stephan Brunow, Peter Nijkamp 2012-08-09 cultural diversity, firm heterogeneity, market size http://d.repec.org/n?u=RePEc:qss:dqsswp:1305&r=all Children born at the end of the academic year have lower educational attainment, on average, than those born at the start of the academic year. Previous research has shown that the difference is most pronounced early in pupils’ school lives, but remains evident and statistically significant in high-stakes exams taken at the end of compulsory schooling. Those born later in the academic year are also significantly less likely to participate in post-compulsory education than those born at the start of the year. We provide the first evidence on whether these differences in childhood outcomes translate into differences in the probability of employment, occupation and earnings for adults in the UK. We also examine whether there are differences in broader measures of well-being such as self-perceived health and mental health. We find that the large and significant differences observed in educational attainment do not lead to pervasive differences in adulthood; those born towards the end of the academic year are more likely to experience unemployment (which is particularly true for females and those that don’t achieve a degree level qualification) but in general there are few substantial or statistically significant differences in terms of occupation, earnings and self-perceived health and mental health. It is not clear why this should be the case, but if employers reward productivity equally as they learn more about their workers, irrespective of their educational attainment, then this lack of significant differences may not be surprising. Claire Crawford, Lorraine Dearden, Ellen Greaves 2013-05-13 Month of birth, wages, employment, educational attainment http://d.repec.org/n?u=RePEc:cte:werepe:we1308&r=all This paper studies the role of extremely highly cited articles in two instances: the measurement of citation inequality, and mean citation rates. Using a dataset, acquired from Thomson Scientific, consisting of 4.4 million articles published in 1998-2003 in 22 broad fields with a five-year citation window, the main results are the following. Firstly, both within each of 22 broad fields and in the all-sciences case, citation inequality is strongly affected by the presence of a handful of extreme observations, particularly when it is measured by citation inequality indices that are very sensitive to citation differences in the upper tail of citation distributions. Secondly, the impact of extreme observations on citation averages is generally much smaller. The concluding Section includes some practical lessons for students of citation inequality and/or users of high-impact indicators Yungron Li, Javier Ruiz-Castillo 2013-04 http://d.repec.org/n?u=RePEc:clb:wpaper:201305&r=all The aim of the paper is to investigate the impact of financial structure on firms’ performance in Western Europe convergence regions. While large amount of evidence exists on the relation between financial development, firms’ survival and growth both cross-country and cross-industry, much less is known at the microeconomic level of the firm. In this context, the contribution of our research - which relies on accounting data collected from the Bureau van Dijk’s Amadeus database - is twofold. First, we make a microeconomic comparison across Western Europe convergence regions, where the percentage of small and medium enterprises is relatively higher than in more developed regions. Second, following the most recent literature in this field, our research takes into account several financial ratios instead of a commonly used one-dimensional definition of financial status. The empirical evidence shows that the financial strength is a key factor explaining firm survival in Western Europe convergence regions. Some differences arise from a deeper analysis of the financial ratios. While both the debt and the cash flow ratios, as well as profitability, are strongly significant in explaining firms’ survival in Western Europe convergence regions, structure and operational ratios are not important factors explaining firms’ survival. Additional differences arise when we consider the countries separately: while debt and cash flow ratios are significant for bank based economies, they are not significant for United Kingdom, which is characterized by a more developed financial market. This analysis would have interesting applications, given the potential impact of financial constraints on market selection mechanisms and, therefore, on market structure. Lidia Mannarino, Marianna Succurro 2013-04 Financial Structure, Firm Survival http://d.repec.org/n?u=RePEc:pra:mprapa:46888&r=all Since the late 1990s, Spain has played host to a sizeable flow of immigrants who have been absorbed into the compulsory stage of the education system. In this paper, our aim is to assess the impact of that exogenous increase in the number of immigrant students from 2003 to 2009 on grade retention using Spanish data from PISA 2003 and 2009. For this purpose, we use the difference-in-differences method (DiD), capable of detecting whether the immigrant concentration has had a significant effect on student performance. Within this framework, the control group will be the schools without sampled immigrants from 2003 to 2009 and the treatment group will be schools with immigrant students that experienced a significant increase of immigrants throughout this period. As the percentage of immigrants is different across schools, the DiD methodology is adapted to deal with a dose treatment. What we are looking for then is not simply the average effect of there being or not being foreign students at the school, but the effect of their concentration. In this way, the effect of immigrants joining schools can be isolated and estimated through a DiD dose estimator controlling by other educational variables that also influence school performance. Our results evidenced that their arrival does not on average decrease school promotion rates with respect to 2003 and is even beneficial to native students. Although the concentration of immigrant students at the same school does have a negative impact on immigrant students generating more grade retention, native students are unaffected until concentrations of immigrant students are higher. Pedraja Chaparro, Francisco, Santín González, Daniel, Simancas Rodríguez, Rosa 2013 difference in differences, immigration, education, PISA http://d.repec.org/n?u=RePEc:lpe:wpecbs:201305&r=all The purpose of this paper is to observe how the changes of political regime, fiscal decentralization, degree of openness in Indonesia after the 1998 political turbulence affect the economic institution and public goods provision. Because available time series data are limited, estimation on individual country parameter is obtained by applying panel data regional convergence method. The findings are that, while the changes of political settings from dictatorial to democracy worsen economic institution in Indonesia, it does not change the public goods provision in Indonesia. Muliadi Widjaja 2013-04 http://d.repec.org/n?u=RePEc:pra:mprapa:46864&r=all Taking advantage of a natural experiment and a rich household-level panel dataset, this paper tests the impact of an agricultural insurance program on household level production, borrowing, and saving. The empirical strategy includes both difference-in-difference and triple difference estimations. I find that, first, introducing insurance increases the production area of insured crops by around 20% and decreases production diversification; second, provision of insurance raises the credit demand by 25%; third, it decreases household saving by more than 30%; fourth, the effect of insurance on borrowing persists in the long-run, while the effect on saving is significant only in the medium-run; and fifth, the impact of insurance is greater on larger farmers and on households with lower migration remittance. Cai, Jing 2013-05-09 Insurance; Production; Borrowing; Saving http://d.repec.org/n?u=RePEc:ris:albaec:2013_006&r=all This paper investigates the effect of resale allowance on entry strategies in a second price auction with two bidders whose entries are sequential and costly. We first characterize the perfect Bayesian equilibrium in cutoff strategies. We then show that there exists a unique threshold such that if the reseller's bargaining power is greater (less) than the threshold, resale allowance causes the leading bidder (the following bidder) to have a higher (lower) incentive on entry; i.e., the cutoff of entry becomes lower (higher). We also discuss asymmetric bidders and the original seller's expected revenue. Che, XiaoGang, Lee, Peter, Yang, Yibai 2013-05-01 second price auctions; costly participation; sequential entry; resale http://d.repec.org/n?u=RePEc:iza:izadps:dp7383&r=all We investigate one possible explanation for observed rates of corrupt behavior namely that individual decision makers who frequently engage in illegal actions may underestimate the overall probability of being caught. This might in particular be true for petty corruption where small amounts of bribes are involved and the detection rate is rather low. To abstract from confounding effects of reciprocal behavior, we design an experiment where a public official decides upon accepting a bribe that leads to a higher present period income while facing the risk of being audited and being left with a considerable lower income in all subsequent periods. Because risk attitudes might differ when putting earned versus endowed income at risk, we compare treatments where participants either receive an endowment beforehand, or earn their income by conducting a real effort task in every period. Independent of the treatments we already find high rates of corruption in very early periods. Risk attitudes measured with a subsequent lottery-choice experiment do not correlate with the behavior observed in the corruption experiment. We explain our findings by a systematic underestimation of the overall probability of being audited. Although detection probability is small in each period, the probability of being caught only once is substantially high when engaging in corrupt behavior on a regular basis. Our findings have important political implications because the underestimation of the total risk involved in engaging in corrupt behavior might nullify measures to fight petty corruption by increased governmental auditing. Djawadi, Behnud Mir, Fahr, René 2013-05 petty corruption, risk, choice bracketing, experimental economics http://d.repec.org/n?u=RePEc:dgr:uvatin:2012038&r=all Previous studies have proposed a link between corruption and wages in the public sector. This paper investigates this link using a laboratory experiment. In the experiment, public officials have the opportunity to accept a bribe and can then decide between a neutral and a corrupt action. The corrupt action benefits the briber but poses a large negative externality on a charity. The results show that increasing public officials' wages greatly reduces their corruptibility. In particular, experienced low wage public officials accept 91% of bribes on average, whereas high wage public officials accept 38%. Moreover, high wage public officials are less likely to choose the corrupt option. Roel van Veldhuizen 2012-04-13 bribery, corruption, experimental economics, laboratory experiment http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-24&r=all In this paper we estimate the value of the embedded option in U.S. Treasury Inflation Protected Securities (TIPS). The option value exhibits significant time variation that is correlated with periods of deflationary expectations. We use our estimated option values to construct an embedded option price index and an embedded option return index. We then use our embedded option indices as independent variables and examine their statistical and economic significance for explaining the future inflation rate. In almost all of our regressions, the embedded option return index is significant even in the presence of traditional inflation variables, such as lagged inflation, the return on gold, the return on crude oil, the VIX index return, and the yield spread between nominal Treasuries and TIPS.We conduct several robustness tests, including alternative weighting schemes, alternative variable specifications, and alternative control variables. We conclude that the embedded option in TIPS contains useful information for future inflation, both in-sample and out-of-sample. Our results should be valuable to anyone who is interested in assessing inflationary expectations. Olesya V. Grishchenko, Joel M. Vanden, Jianing Zhang 2013 http://d.repec.org/n?u=RePEc:qed:wpaper:1304&r=all We set out a city as a price-taking exporter and importer with its own local structure (housing (land per household) and a local pure public good are produced endogenously). We improve labor efficiency in the export sector, observe a jump in the local wage, and trace the impact, particularly on production of the public good. In one case the population, output of the public good, and residential density expand (the law of urban growth) and in another, population, output of the public good and density contract. John Hartwick 2013-05 small, open city, urban public sector, law of urban growth http://d.repec.org/n?u=RePEc:pra:mprapa:46890&r=all It is reasonable to believe that the degree of housing satisfaction may depend on the motivation of home owning as motivation has been an important reason in the explanation of homeownership. There is little empirical evidence demonstrating how homeownership motivation, as defined by local amenities investment, social capital investment, residential stability, and financial benefits of home owning affect housing satisfaction in the Malaysian context. In this paper, Structural Equation Modeling (SEM) was used to examine the link between homeownership motivation and housing satisfaction. Results showed that social capital investment and residential stability of homeownership appears to be important determinants of housing satisfaction. The findings also indicated that interdependencies among homeownership motivation variables were important extensions of the housing satisfaction model because they help improve the ability of model to predict housing satisfaction. Tan, Teck Hong, Khong, Kok Wei 2012-04-18 Homeownership, Motivation, Housing Satisfaction, Structural Equation Modeling (SEM) http://d.repec.org/n?u=RePEc:iza:izadps:dp7365&r=all Many economists and educators favour public support for education on the premise that education improves the overall well-being of citizens. However, little is known about the causal pathways through which education shapes people's subjective well-being (SWB). This paper explores the direct and indirect well-being effects of extra schooling induced through compulsory schooling laws in Australia. We find the net effect of schooling on later SWB to be positive, though this effect is larger and statistically more robust for men than for women. We then show that the compulsory schooling effect on male's SWB is indirect and is mediated through income. Powdthavee, Nattavudh, Lekfuangfu, Warn N., Wooden, Mark 2013-04 schooling, indirect effect, well-being, mental health, windfall income, HILDA survey http://d.repec.org/n?u=RePEc:nbr:nberwo:18950&r=all This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. They were no more likely to start any new business, although they were more likely to start several at once, and they invested more in their existing businesses. There was no effect on average monthly expenditure per capita. Expenditure on durable goods increased in treated areas, while expenditures on “temptation goods” declined. Three to four years after the initial expansion (after many of the control slums had started getting credit from Spandana and other MFIs ), the probability of borrowing from an MFI in treatment and comparison slums was the same, but on average households in treatment slums had been borrowing for longer and in larger amounts. Consumption was still no different in treatment areas, and the average business was still no more profitable, although we find an increase in profits at the top end. We found no changes in any of the development outcomes that are often believed to be affected by microfinance, including health, education, and women’s empowerment. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts. Esther Duflo, Abhijit Banerjee, Rachel Glennerster, Cynthia G. Kinnan 2013-05 http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-25&r=all This paper studies the nature of business cycle variation in individual earnings risk using a dataset from the U.S. Social Security Administration, which contains (uncapped) earnings histories for millions of anonymous individuals. The base sample is a nationally representative panel containing 10 percent of all U.S. males from 1978 to 2010. We use these data to decompose individual earnings growth during recessions into "between-group" and "within-group" components. We begin with the behavior of within-group shocks. Contrary to past research, we do not find the variance of idiosyncratic earnings shocks to be countercyclical. Instead, it is the left-skewness of shocks that is strongly countercyclical. That is, during recessions, the upper end of the shock distribution collapses--large upward earnings movements become less likely--whereas the bottom end expands--large drops in earnings become more likely. Thus, while the dispersion of shocks does not increase, shocks become more left skewed and, hence, riskier during recessions. Second, to study between-group differences, we group individuals based on several observable characteristics at the time a recession hits. One of these characteristics--the average earnings of an individual at the beginning of a business cycle episode--proves to be an especially good predictor of fortunes during a recession: prime-age workers that enter a recession with high average earnings suffer substantially less compared with those who enter with low average earnings (such "asymmetry" is not evident in expansions). Finally, we find that the cyclical nature of earnings risk is dramatically different for the top 1 percent compared with all other individuals--even relative to those in the top 2 to 5 percent. Fatih Guvenen, Serdar Ozkan, Jae Song 2013 http://d.repec.org/n?u=RePEc:izm:wpaper:1304&r=all This paper presents empirical evidence that the neoclassical explanation of real wage has a high explanatory power at macro level. The factor endowments explanation of wage is surprisingly rare in the literature, at least at empirical level. In this paper, using panel data from 26 OECD countries, we show that technology and factor endowments (physical capital and labor stocks) have a significant explanatory power on the determination of real wage. Based on our results, we speculate that the supply-side rather than demand-side variables may be the major source of wage differences across countries. Mehmet Ivrendi, Bulent Guloglu, Ý. Hakan Yetkiner 2013-04 wage, factor endowment, inter-country wage differences, panel data http://d.repec.org/n?u=RePEc:dgr:uvatin:2013030&r=all In a competitive market with taxed transactions, it does not matter under full rationality which side of the market legally transfers the taxes. In the labor market, a tax levied on employers and a corresponding income tax levied on employees are equivalent. With boundedly rational agents, this equivalence is no longer obvious. If people react differently to the two taxes this has direct impact on policy making, political economics, and optimal taxation theory. This paper examines how people react to these duties in a real effort laboratory experiment. We study the differential effects of the two types of taxes on preferences concerning the size of the public sector, subjective well-being, labor supply, and on-the-job performance. To elicit public-sector-size preferences in the laboratory we introduce a novel, incentive compatible approach. Our findings suggest that employer-side taxes induce preferences for a larger public sector. Our findings also sugges t that subjective well-being is higher while both labor supply and on-the-job performance are lower when the taxes are levied on employers. Furthermore, there are gender effects, e.g., women's subjective well-being appears to be more sensitive to framing than men's, while men's labor supply is more sensitive to framing than women's. Matthias Weber, Arthur Schram 2013-02-19 tax perception, liability side equivalence, political economy, labor supply http://d.repec.org/n?u=RePEc:dgr:uvatin:2012040&r=all We introduce a methodology to estimate the effect of parking prices on car drivers' choice between street and garage parking. Our key identifying assumption is that the marginal benefit of parking duration does not depend on this choice. The endogeneity of parking duration is acknowledged in the estimation procedure. We apply the methodology to an area where cruising for parking is absent, street parking is ubiquitous and garage parking is discretely located over space. So, in this area, the average distance to the final destination is longer for garage parking than for street parking. We find that drivers are willing to pay a premium for street parking which ranges from euro 0.35 to euro 0.58. Given a parking duration of one hour, we find that the demand for street parking is extremely price elastic: the price elasticity of demand for the share of street parking is -4. However, the price elasticity is much smaller for shorter parking durations. Our estimates imply that even small reductions in street parking prices induce a strong increase in the stock of cars parked on-street. Our estimates also imply that a policy which contains an on-street premium (so street prices exceed garage prices) is welfare improving, because drivers with longer parking durations are induced to use parking locations that are, on average, farther away. Martijn Kobus, Eva Gutierrez Puigarnau, Piet Rietveld, Jos Van Ommeren 2012-04-20 street parking; garage parking http://d.repec.org/n?u=RePEc:nbr:nberwo:19040&r=all Black women were more likely than white women to participate in the labor force from 1870 until at least 1980 and to hold jobs in agriculture or manufacturing. Differences in observables cannot account for most of this racial gap in labor force participation for the 100 years after Emancipation. The unexplained racial gap may be due to racial differences in stigma associated with women’s work, which Goldin (1977) suggested could be traced to cultural norms rooted in slavery. In both nineteenth and twentieth century data, we find evidence of inter-generation transmission of labor force participation from mother to daughter, which is consistent with the role of cultural norms. Leah Platt Boustan, William J. Collins 2013-05 http://d.repec.org/n?u=RePEc:pra:mprapa:46896&r=all We test here the kahneman (kahneman 2011) results about fund managers: that is, do managers are really skilled or could any chimpanzee do the job? Moreover, the recent stormy period should enlighten us about the interest to invest in mutual funds: do they over perform the market? Do they smooth the losses? Do they have well managed the alternative bearish and bullish periods of the markets? Few recent studies focus on the French Stock market. In this paper, we investigate the performance, persistence and behavior of mutual funds only investing in the Paris stock exchange market from 2000 to 2012. We find that funds clearly over-perform the market on average but only on a 60 months investment horizon. Average annual excess is close to zero (+0.3%) for funds which were active over all the period. Yet, some have salient good (bad) relative performances. The challenge is then to distinguish skill from luck since funds can have extreme returns by luck. Our approach is to test for persistence in fund returns, that is, whether past winners continue to produce high returns and losers continue to underperform. Then, we apply the Carhart 1997 4-factors model, in order to evaluate the weight of the systematic drivers of the performance. Blanchard, Michel, Bernard, philippe 2013-05-10 Mutual funds performances, overperformance, fund managers skills http://d.repec.org/n?u=RePEc:dgr:uvatin:2013034&r=all This survey reviews how a recent political economy literature helps explaining variation in governance, competition, funding composition and access to credit. Evolution in political institutions can account for financial evolution, and appear critical to explain rapid changes in financial structure, such as the Great Reversal in the early XX century, unlike time-invariant legal institutions or cultural traits. Future research should model the sources and consequences of financial instability, and to predict how major redistributive shocks will shape regulatory choices and financial governance. Enrico Perotti 2013-02-25 political institutions, property rights, investor protection, financial development, access to finance, entry, banking http://d.repec.org/n?u=RePEc:isu:genres:36181&r=all We build a parsimonious partial equilibrium political-economy model for a tradable good associated with a negative externality mitigated by a single quality standard. The policy-maker solves for the standard that maximizes a weighted sum of welfare measures reflecting rent-seeking activities. Derived comparative statics are ambiguous but provide useful guidance for the econometric specification. We empirically implement the derived reduced form to econometrically investigate the determinants of protectionism in maximum residue limits affecting food trade among a large number of countries. Protectionism is measured using an index of stringency of MRLs relative to Codex international standards as in Li and Beghin (2012). Higher-income countries tend to protect their domestic market and their consumers’ health more than lower income countries do; MRL stringency and tariffs are substitute policy instruments; the impact of democratization on strictness of MRLs shows a inverted u-shaped pattern; and the quality of governmental institutions increases MRL protection.   Beghin, John C., Li, Yuan 2013-05-08 political economy; NTMs; Non-tariff measures; MRL; endogenous; NTBs; food trade; maximum residue limits http://d.repec.org/n?u=RePEc:dgr:uvatin:2012061&r=all Field-experimental studies have shown that people litter more in more littered environments. Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may also invite free-riding on public cleaning services. We are the first to show that both forces are at play. We conduct a natural field experiment where, in a randomly assigned part of a residential area, the frequency of cleaning was drastically reduced during a threemonth period. We find evidence that some people start to clean up after themselves when public cleaning services are diminished. However, the tendency to litter more dominates. We also find evidence for persistency in these responses after the treatment has ended. Robert Dur, Ben Vollaard 2012-07-03 littering, public services, free-riding, field experiment http://d.repec.org/n?u=RePEc:dgr:euriss:558&r=all Communal Councils (CCs) in Venezuela are deemed as part of a greater project of social transformation under a radical approach to participatory democracy. The Hugo Chavez’s administration endorsed the creation of thousands of allegedly self-governing CCs in every neighbourhood of every city or town in the country. The initial goal was to address people’s most urgent needs while including them in the decision-making process in their communities. The passing of President Chavez, a charismatic leader who was the driving force behind Chavismo and the Bolivarian Revolution, represents a challenge to the participatory process where CCs have been framed. Within this overall context, a radical approach to participation should lay the foundations of a State-led process of social transformation of the left. Based on this, the objectives of this paper are: on the one hand, to propose a set of indicators to study spaces of participation at the community level framed in a State-led process of social transformation; on the other, to show the viability of these indicators in the analysis of Communal Councils in the context of the Bolivarian Revolution in Venezuela. These indicators refer to the recognition of ‘the other’; autonomy from state institutions; mobilization of the community; and design and internal dynamics. In order to advance these objectives, this paper explores how participation in the CCs has been operationalized under the Bolivarian Revolution. Therefore, this research has empirically implemented the proposed indicators in six CCs of Caracas through semi-structure interviews with community leaders. The results suggest that the type of participation offered is one strongly conditioned by an ideological system which promises transformation but impedes this transformation in practice. I have called this situation a ‘conditioned participation’. Triviño Salazar, J.C. 2013-04-24 community;Bolivarian Revolution;Communal Councils;participatory democracy;radical democracy;spaces of participation http://d.repec.org/n?u=RePEc:dgr:uvatin:2012096&r=all This paper presents the R package MitISEM, which provides an automatic and flexible method to approximate a non-elliptical target density using adaptive mixtures of Student-t densities, where only a kernel of the target density is required. The approximation can be used as a candidate density in Importance Sampling or Metropolis Hastings methods for Bayesian inference on model parameters and probabilities. The package provides also an extended MitISEM algorithm, ‘sequential MitISEM’, which substantially decreases the computational time when the target density has to be approximated for increasing data samples. This occurs when the posterior distribution is updated with new observations and/or when one computes model probabilities using predictive likelihoods. We illustrate the MitISEM algorithm using three canonical statistical and econometric models that are characterized by several types of non-elliptical posterior shapes and that describe well-known data patterns in econometrics and finance. We show that the candidate distribution obtained by MitISEM outperforms those obtained by ‘naive’ approximations in terms of numerical efficiency. Further, the MitISEM approach can be used for Bayesian model comparison, using the predictive likelihoods. Nalan Basturk, Lennart Hoogerheide, Anne Opschoor, Herman K. van Dijk 2012-09-20 finite mixtures, Student-t distributions, Importance Sampling, MCMC, Metropolis-Hastings algorithm, Expectation Maximization, Bayesian inference, R software http://d.repec.org/n?u=RePEc:dgr:umagsb:2013019&r=all This paper is the first that analyzes the relation between maternal work hours and the cognitive outcomes of young school-going children. When children attend school, the potential time working mothers miss out with their children, is smaller than when children do not yet attend school. At the same time, working might benefit children through, for example, greater family income. Our study is highly relevant for public policy as in most countries maternal employment rates rise when children enter school. We find no negative relation between maternal working hours and child outcomes as is often found for pre-school aged children. Instead, we find that children's sorting test score is higher when their mothers work part-time (girls) or full-time (boys). Furthermore, we find that planned parent-child activities are positively related to children's language test scores. Nevertheless, we do not find that a richer home environment in terms of the number of parent-child activities provided to the child explain the relation between maternal work hours and children's test scores. Grip A. de, Fouarge D., Künn-Nelen A.C. 2013 Household Behavior: General; http://d.repec.org/n?u=RePEc:iie:wpaper:wp13-4&r=all The rapid economic rise of China, India, and the Association of Southeast Asian Nations (ASEAN) could have several effects on regional peace and global security. The power transition perspective overstates the risk of conflict that results from convergence between dominant and challenger states. Rapid changes in economic and military capabilities can, however, have negative consequences for regional peace. Three features of the international environment—democratization, economic interdependence, and international institutions—provide weak insurance, at best, against conflict in Asia. Emerging Asian powers may also challenge existing global security regimes, a more indirect threat to global peace. The continuing contribution of Asia to global peace and security will require measures that will be difficult for newly empowered actors competing for status and influence. Miles Kahler 2013-05 emerging economies, power transition, regional institutions, Asia, conflict, interdependence, democratization http://d.repec.org/n?u=RePEc:dgr:uvatin:2012034&r=all In many organizations, reward decisions depend on subjective performance evaluations. However, evaluating an employee's performance is often difficult. In this paper, we develop a model in which the employee is uncertain about his own performance and about the manager's ability to assess him. The manager gives an employee a performance appraisal with a view of affecting the employee's self perception, and the employee's perception of the manager's ability to assess performance. We examine how performance appraisals affect the employee's future performance. The predictions of our model are consistent with various empirical findings. These comprise (i) the observation that managers tend to give positive appraisals, (ii) the finding that on average positive appraisals motivate more than negative appraisals, and (iii) the observation that the effects of appraisals depend on the employee's perception of the manager's ability to assess performance accurately. Jurjen J.A. Kamphorst, Otto H. Swank 2012-04-10 Subjective Performance Appraisal, Credibility, Cheap Talk http://d.repec.org/n?u=RePEc:dgr:uvatin:2012145&r=all This paper analyzes free-riding and coordination problems in microinsurance. Our proposition is that the demand for insurance suffers from a social dilemma when formal insurance is introduced in existing risk-sharing networks. Less risk averse individuals offered welfare-improving insurance are tempted to free-ride on the enrollment of their network members while the more risk averse may fail to coordinate. This results in suboptimal demand. Group insurance binds both types to the social optimum. A framed laboratory experiment in Tanzania elicits demand for group versus individual insurance among microcredit clients who typically share risk through joint liability. The experiment demonstrates substantial free-riding but only limited coordination failures. These findings extend the literature on strategic decisions in the presence of a public good and provide a potential explanation for the low take-up of microinsurance. Wendy Janssens 2012-12-18 Framed field experiment, micro health insurance, microfinance, risk-sharing, public good game http://d.repec.org/n?u=RePEc:arx:papers:1305.2824&r=all The sharp decline in Ireland's economic performance in recent years has coincided with a recent fall in asylum applications. Simultaneously countries such as Switzerland are seeing increases in asylum numbers with evidence for greater numbers of Nigerian applicants, a group that have for some time been the largest nationality group applying in Ireland. A possible reason for this shift in asylum seeker preference is the general economic conditions here versus those in other European countries. In this paper we investigate whether this belief holds water. We model asylum applications as a function of GDP using a time varying parameter multiplicative growth model. Our results show there is an economic basis for asylum seeker preferences. We further show there is no regional basis for asylum seekers' expectation of a more favourable claim in the 'developed box' in central Europe as compared to countries on the so-called 'periphery'. Gerard Keogh 2013-05 http://d.repec.org/n?u=RePEc:fip:feddop:1:x:1&r=all This paper describes the structure of a rule-based econometric forecasting system designed to produce multi-equation econometric models. The paper describes the functioning of a working system which builds the econometric forecasting equation for each series submitted and produces forecasts of the series. The system employs information criteria and cross validation in the equation building process, and it uses Bayesian model averaging to combine forecasts of individual series. The system outperforms standard benchmarks for a variety of national economic datasets. Jiaqi Chen, Michael L. Tindall 2013 Econometrics http://d.repec.org/n?u=RePEc:nwu:cmsems:1563&r=all In many economic applications involving comparisons of multivariate distributions, supermodularity of an objective function is a natural property for capturing a preference for greaterinterdependence. One multivariate distribution dominates another according to the supermodular stochastic ordering if it yields a higher expectation than the other for all supermodular objective functions. We prove that this ordering is equivalent to one distribution being derivable from another by a sequence of elementary, bivariate, interdependence-increasing transformations, and develop methods for determining whether such a sequence exists. For random vectors resulting from common and idiosyncratic shocks, we provide non-parametric sufficient conditions for supermodular dominance. Moreover, we characterize the orderings corresponding to supermodular objective functions that are also increasing or symmetric. We use the symmetric supermodular ordering to compare distributions generated by heterogeneous lotteries. Applications to welfare economics, committee decision-making, insurance, finance, and parameter estimation are discussed. JEL Classification Numbers: D63, D81, G11, G22 Margaret Meyer, Bruno Strulovici 2013-05-06 Interdependence, Supermodular, Correlation, Copula, Concordance, Mixture, Majorization, Tournament http://d.repec.org/n?u=RePEc:dgr:uvatin:2013056&r=all We derive the expected user costs of US domestic air travel delay variability taking into account scheduling behavior of travelers. Travelers do not only consider mean arrival delays, but also face scheduling costs because they arrive too early or too late at their destination. The model allows travelers to anticipate arrival delay variability by choosing an earlier flight. We show that the expected user costs of US air traffic delays are underestimated by 16% if arrival delay variability is ignored. Paul Koster, Eric Pels, Erik Verhoef 2013-04-09 air traffic delay, travel time variability, scheduling, value of reliability http://d.repec.org/n?u=RePEc:iza:izadps:dp7382&r=all Employee referrals are a very common means by which firms hire new workers. Past work suggests that workers hired via referrals often perform better than non-referred workers, but we have little understanding as to why. In this paper, we demonstrate that this is primarily because referrals allow firms to select workers better-suited for particular jobs. To test our model, we use novel and detailed productivity and survey data from nine large firms in three industries: call-centers, trucking, and high-tech (software). Referred workers are 10-30% less likely to quit and have substantially higher performance on rare "high-impact metrics" (e.g. creating patents and avoiding truck accidents), despite having similar characteristics and similar performance on non-rare metrics. To identify the source of these behavioral differences, we develop four new statistical tests, all of which indicate that firms benefit from referrals predominantly by selecting workers with a better fit for the job, as opposed to referrals selecting workers with higher overall quality; to referrals enabling monitoring or coaching; or to it being more enjoyable to work with friends. We document that workers refer others like themselves, not only in characteristics but in behavior (e.g. unsafe workers refer other unsafe workers), suggesting that firms may gain by incentivizing referrals most from their highest quality workers. Referred workers achieve substantially higher profits per worker and the difference is driven by referrals from high productivity workers. Burks, Stephen V., Cowgill, Bo, Hoffman, Mitchell, Housman, Michael 2013-05 referrals, productivity, worker selection, innovation, patents, cognitive ability, non-cognitive ability, job testing, call centers, high-tech, software, trucking, truck accidents http://d.repec.org/n?u=RePEc:pra:mprapa:46906&r=all It is common practice to have subjects make decisions which pay out in a fictitious experimental currency. Earnings in the experimental currency are then converted to cash at the end of the experiment. Like many practices in experimental economics, however, these procedural choices seems to be driven more by habit or tradition than by empirical evidence that more desirable outcomes are produced. In this paper, we report the results of an induced value experiment in which we manipulated the exchange rate between the experimental currency and cash. We find virtually no relationship between a stronger/weaker experimental currency and the ability of theory to predict observed outcomes. The only significant effect that was generated relates to the comparison of the cash-only condition to the 1-to-1 exchange condition, with the latter producing greater behavioral deviations from theoretical predictions. The results suggest that experimenters might be able to spread scarce research dollars over more subjects by using weaker experimental currency but using a 1-to-1 conversion between the experimental currency and cash might, in the words of Davis and Holt (1993), "create an artificial 'game-board' sense of speculative competitiveness." Drichoutis, Andreas, Lusk, Jayson, Nayga, Rodolfo 2013-05-09 experimental currency units; ECU; tokens; Vickrey auction; induced values http://d.repec.org/n?u=RePEc:duk:dukeec:13-7&r=all This paper examines mortgage outcomes for a large, representative sample of individual home purchases and refinances linked to credit scores in seven major US markets in the recent housing boom and bust. Among those with similar credit scores, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. These differences are not readily explained by the likelihood of receiving a subprime loan or by differential exposure to local shocks in the housing and labor market and are especially pronounced for loans originated near the peak of the boom. Our findings suggest that those black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise serious concerns about homeownership as a mechanism for reducing racial disparities in wealth. Patrick Bayer, Fernando Ferreira, Stephen Ross 2013 http://d.repec.org/n?u=RePEc:nbr:nberwo:19039&r=all We show that Eurozone bank risks during 2007-2012 can be understood as a “carry trade” behavior. Bank equity returns load positively on peripheral (Greece, Ireland, Portugal, Spain and Italy, or GIPSI) bond returns and negatively on German government bond returns, a position that generated “carry” until the deteriorating GIPSI bond returns inflicted losses on banks. The positive GIPSI loadings correlate with banks’ holdings of GIPSI bonds; and, the negative German loading with banks’ short-term debt exposures. Consistent with moral hazard in the form of risk-taking by large, under-capitalized banks to exploit government guarantees, arbitrage regulatory risk weights, and access central-bank funding, we find that this carry-trade behavior is stronger for large banks, and banks with low Tier 1 ratios and high risk-weighted assets, in both GIPSI and non-GIPSI countries’ banks, but not so for similar banks in other Western economies or for non-bank firms. Viral V. Acharya, Sascha Steffen 2013-05 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012118&r=all We propose a Bayesian combination approach for multivariate predictive densities which relies upon a distributional state space representation of the combination weights. Several specifications of multivariate time-varying weights are introduced with a particular focus on weight dynamics driven by the past performance of the predictive densities and the use of learning mechanisms. In the proposed approach the model set can be incomplete, meaning that all models can be individually misspecified. A Sequential Monte Carlo method is proposed to approximate the filtering and predictive densities. The combination approach is assessed using statistical and utility-based performance measures for evaluating density forecasts. Simulation results indicate that, for a set of linear autoregressive models, the combination strategy is successful in selecting, with probability close to one, the true model when the model set is complete and it is able to detect parameter instability when the model set includes the true model that has generated subsamples of data. For the macro series we find that incompleteness of the models is relatively large in the 70's, the beginning of the 80's and during the recent financial crisis, and lower during the Great Moderation. With respect to returns of the S&P 500 series, we find that an investment strategy using a combination of predictions from professional forecasters and from a white noise model puts more weight on the white noise model in the beginning of the 90's and switches to giving more weight to the professional forecasts over time. Monica Billio, Roberto Casarin, Francesco Ravazzolo, Herman K. van Dijk 2012-11-07 Density Forecast Combination, Survey Forecast, Bayesian Filtering, Sequential Monte Carlo http://d.repec.org/n?u=RePEc:dgr:uvatin:2012114&r=all This paper develops a general-equilibrium model of skill-biased technological change that approximates the observed shifts in the shares of wage and non-wage income going to the top decile of U.S. households since 1980. Under realistic assumptions, we find that all agents can benefit from the technology change, provided that the observed rise in redistributive transfers over this period is taken into account. We show that the increase in capital’s share of total income and the presence of capital-entrepreneurial skill complementarity are two key features that help support the wages of ordinary workers as the new technology diffuses. Kevin J. Lansing, Agnieszka Markiewicz 2012-10-26 Income Inequality, Skill-biased Technological Change, Capital-skill http://d.repec.org/n?u=RePEc:dgr:uvatin:0000034&r=all Total factor productivity of twenty OECD countries for a recent period (1971-2002) is explained using six different models based on the established literature. Traditionally, entrepreneurship is not dealt with in these models. In the present paper it is shown that – when this variable is added - in all models there is a significant influence of entrepreneurship while the remaining effects mainly stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita). Hugo Erken, Piet Donselaar, Roy Thurik Total factor productivity, research and development, entrepreneurship, OECD http://d.repec.org/n?u=RePEc:dgr:uvatin:0000016&r=all During the last decades, the growth of trade between China and the Netherlands has been larger than the increase in bilateral trade flows between China and most other countries. Using a time series based gravity model, this paper investigates the main determinants of this increase. The empirical analysis indicates that, apart from GDP growth, Dutch in-house offshoring to China is a major determinant of Dutch import growth from China. Dutch firms tend to offshore production in-house when the asset specificity of the traded inputs is high and offshore via the market when this asset specificity is low. Controlling for these product types also reveals that transport costs are more important for trade in homogeneous and reference priced goods than for trade in differentiated goods Frank A.G. den Butter, Raphie Hayat international trade; transaction costs; offshoring; foreign direct investments; asset specificity; gravity model http://d.repec.org/n?u=RePEc:bdi:opques:qef_150_13&r=all This paper studies the case of the Marche footwear districts. Statistical evidence and interviews with entrepreneurs suggest that the traditional inter-firm relationships within these districts have significantly changed during the past decade. Some leading firms have been building up more exclusive relations with their suppliers, including those abroad, along &#x201C;buyer-driven&#x201D; value chains. Moreover, firms have been adopting different strategies, following two main paths: the first is a &#x201C;focusing-on-quality&#x201D; strategy, based on upgrading the quality of the goods and investing in brands, R&D and specific distribution channels; the second is a &#x201C;focusing-on-costs&#x201D; strategy, which aims at minimizing the production costs of a medium-quality range of goods, including outsourcing abroad. This study shows that firms which focused on quality did better than others, both in the years before the crisis of 2008-09 and during the recession. Eleonora Cutrini, Giacinto Micucci, Pasqualino Montanaro 2013-02 global value chain, industrial districts, internationalization, footwear industry, firms&#x2019; organization and strategies http://d.repec.org/n?u=RePEc:dgr:uvatin:2012006&r=all In this paper we study international river pollution problems. We introduce a model in which the agents (countries) located along a river derive benefit while causing pollution, but also incur environmental costs of experiencing pollution from all upstream agents. We find that total pollution in the model decreases when the agents decide to cooperate. The resulting gain in social welfare can be distributed among the agents based on the property rights over the river. Using principles from international water law we suggest 'fair' ways of distributing the property rights and therefore the cooperative gain. Gerard van der Laan, Nigel Moes 2012-01-19 international river, pollution, externality, property rights, value http://d.repec.org/n?u=RePEc:dgr:uvatin:2012133&r=all This paper proposes a new set of transformed polynomial functions that provide a flexible setting for nonlinear autoregressive modeling of the conditional mean while at the same time ensuring the strict stationarity, ergodicity, fading memory and existence of moments of the implied stochastic sequence. The great flexibility of the transformed polynomial functions makes them interesting for both parametric and semi-nonparametric autoregressive modeling. This flexibility is established by showing that transformed polynomial sieves are sup-norm-dense on the space of continuous functions and offer appropriate convergence speeds on Holder function spaces. Francisco Blasques 2012-12-05 time-series, nonlinear autoregressive models, semi-nonparametric models, method of sieves. http://d.repec.org/n?u=RePEc:nbr:nberwo:19043&r=all We present a two-armed bandit model of decision making under uncertainty where the expected return to investing in the "risky arm'' increases when choosing that arm and decreases when choosing the "safe'' arm. These dynamics are natural in applications such as human capital development, job search, and occupational choice. Using new insights from stochastic control, along with a monotonicity condition on the payoff dynamics, we show that optimal strategies in our model are stopping rules that can be characterized by an index which formally coincides with Gittins' index. Our result implies the indexability of a new class of "restless'' bandit models. Roland G. Fryer, Jr., Philipp Harms 2013-05 http://d.repec.org/n?u=RePEc:ehu:dfaeii:10012&r=all Regulators and market participants have become increasingly concerned about the Spanish electricity tariff deficit due to its size and the difficulties to control its growth. The deficit can be traced to inefficiencies in market organization and solutions should be designed to mitigate those inefficiencies. Tariff deficits have allowed for the transfer of part of the present costs of electricity services to future consumers, but this situation has reached a limit and a deep revision of regulation in this market cannot be postponed. In general, solutions that interfere with market prices and signals are not appropriate. Espinosa Alejos, María Paz 2013 regulated activities, energy policy, electricity market, renewable energy http://d.repec.org/n?u=RePEc:pra:mprapa:46881&r=all Researchers claim that India is poised for reaping demographic dividend and leapfrog to a higher level of income-employment situation utlising the relatively larger share of youth or working age persons in total population. However, the outcome depends on the contribution of youth to national product. India at present suffers from remarkably high educated unemployment and questions are also raised about the employability of the youth because of their inadequate education, training, and market ready skill. Huge youth unemployment, especially educated unemployment is the surest way to social tension, unrest, and unlawful activities turning the demographic dividend into a demographic nightmare. In this paper we look at the issue of education, skill formation and unemployment among youth in India, focusing specially on educated unemployment. We find that current skill/training situation of youth in India is inadequate. Surplus and shortage coexists in the labour market indicating serious mismatch between supply and demand. There is an urgent need to relook at human resource development strategies in the country. Regional analysis suggests presence of both demand scarcity and excess supply of educated youth in the labour market. Majumder, Rajarshi 2013-05-09 Youth; Unemployment; India; Skill Gap; Labour Demand; http://d.repec.org/n?u=RePEc:nbr:nberwo:19041&r=all This handbook chapter seeks to document the economic forces that led the US to become an urban nation over its two hundred year history. We show that the urban wage premium in the US was remarkably stable over the past two centuries, ranging between 15 and 40 percent, while the rent premium was more variable. The urban wage premium rose through the mid-nineteenth century as new manufacturing technologies enhanced urban productivity; then fell from 1880 to 1940 (especially through 1915) as investments in public health infrastructure improved the urban quality of life; and finally rose sharply after 1980, coinciding with the skill- (and apparently also urban-) biased technological change of the computer revolution. The second half of the chapter focuses instead on the location of workers and firms within metropolitan areas. Over the twentieth century, both households and employment have relocated from the central city to the suburban ring. The two forces emphasized in the monocentric city model, rising incomes and falling commuting costs, can explain much of this pattern, while urban crime and racial diversity also played a role. Leah Platt Boustan, Devin Bunten, Owen Hearey 2013-05 http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps02&r=all Trying to understand what comprises and influences visitor satisfaction is one of the most relevant areas of research for the tourism sector. The aim of this study is to analyze which factors influence overall satisfaction with the visit at the museum, with particular interest in origin, feelings, and motivations. The research is based on 1038 questionnaires collected from June to December 2011 among the visitors of the South Tyrol Museum of Archaeology (ÖTZI) in Bolzano, Northern Italy. Logit models were used in order to estimate the set of independent variables that significantly influence both the overall satisfaction of the sample and the eventually differences between Italian and foreign visitors in the perception of satisfaction. The results suggested that the overall satisfaction was related to the origin of the respondent, their feelings, and motivations. Furthermore, opinion about showrooms and other services received during the visit appears to be positively and significantly related with overall satisfaction. From this knowledge, museum managers can profit in their willingness to offer the optimal museum experience, as well as museum marketers in their advertisement campaigns in Italy and abroad. Juan Gabriel Brida, Marta Disegna, Tsvetina Vachkova 2013-05 Overall satisfaction, feelings, museum, Logit model. http://d.repec.org/n?u=RePEc:dgr:uvatin:2013009&r=all This paper features an analysis of volatility spillover effects from the US market, represented by the S&P500 index to the Australian capital market as represented by the Australian S&P200 for a period running from 12th September 2002 to 9th September 2012. This captures the impact of the Global Financial Crisis (GFC). The GARCH analysis features an exploration of whether there are any spillover effects in the mean equations as well as in the variance equations. We adopt a bi-mean equation to model the conditional mean in the Australian markets plus an ARMA model to capture volatility spillovers from the US. We also apply a Markov Switching GARCH model to explore the existence of regime changes during this period and we also explore the non-constancy of correlations between the markets and apply a moving window of 120 days of daily observations to explore time-varying conditional and fitted correlations. There appears to be strong evidence of regime switching behaviour in the Australian market and changes in correlations between the two markets particularly in the period of the GFC. We also apply a tri-variate Cholesky-GARCH model to include potential effects from the Chinese market, as represented by the Hang Seng Index. David E. Allen, Michael McAleer, R.J. Powell, A.K. Singh 2013-01-08 Volatility spillovers, Markov-switching GARCH, Cholesky-GARCH, Time-varying correlations http://d.repec.org/n?u=RePEc:csa:wpaper:2013-08&r=all We test whether early-life war exposure influences later-life political engagement in Africa. We combine data on the location and intensity of conflicts since 1945 with nationally representative data on political attitudes and behaviors from 17 sub-Saharan African countries. Exposure from ages 0 to 14 has a very small (standardized) impact on later attitudes and behaviors. Our results are robust to migration, and hold across several definitions, specifications, and sources of data. Our results are consistent with recent studies demonstrating that, on average, individuals and localities recover quickly from the destructive effects of conflict, though those most exposed experience large and prolonged effects. Achyuta Adhvaryu, James Fenske 2013 http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-020&r=all Behavioural economics attracted attention from environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental and cooperative behaviour should help to improve environmental policy design. The aim of this paper is a critical discussion of the way how this branch of research is interpreting the explanatory power and the normative (policy) implications of behavioural economics. Markus Pasche 2013-05-08 Behavioural economics, environmental economics, policy design, methodology http://d.repec.org/n?u=RePEc:dgr:uvatin:2012028&r=all Growing interest in using personality variables in economic research leads to the question whether personality as measured by psychology is useful to predict economic behavior. Is it reasonable to expect values on personality scales to be predictive of behavior in economic games? It is undoubted that personality can influence large-scale economic outcomes. Whether personality variables can also be used to understand micro-behavior in economic games is however less clear. We discuss reasons in favor and against this assumption and test in our own experiment, whether and which personality factors are useful in predicting behavior in the trust or investment game. We can also use the trust game to understand how personality measures fare relatively in predicting behavior when situational constraints vary in strength. This approach can help economists to better understand what to expect from the inclusion of personality variables in their models and experiments, and where further research might be useful and needed. Julia Muller, Christiane Schwieren 2012-03-26 Personality, Big Five, Five Factor Model, Incentives, Experiment, Trust Game http://d.repec.org/n?u=RePEc:iza:izadps:dp7398&r=all This paper examines the evolving effects of England's Old Poor Law (1601-1834). It establishes that poor relief reduced social unrest from around the late-17th century through the turn of the 19th century, at which point it began to spur population growth and its social stability effects dissipated. These conclusions are based on a new dataset encompassing 39 English counties from 1650 to 1815. It includes observations on the amount of poor relief offered, occurrences of food riots and other types of social unrest, population growth and a host of other variables. The paper first documents that county-level variations in poor relief had a statistically significant and quantitatively meaningful non-monotonic impact on population growth. Aid to the poor reduced population growth through the 1780s or 1820s when it began to exert significantly positive effects. Moreover, the Old Poor Law reduced food riots in the late-17th century and through most of the 18th century, but this effect dissipated in the early 19th century when poor relief began to generate population growth. Our analyses, thus, establish that the Old Poor Law fostered social order and stability for more than a century after which the Malthusian income effects dominated. Greif, Avner, Iyigun, Murat 2013-05 social institutions, Malthus, social stability, economic development http://d.repec.org/n?u=RePEc:dgr:uvatin:2013029&r=all Experts possess knowledge and information that are not publicly available. The paper is concerned with forecasting academic journal quality and research impact using a survey of international experts from a national project on ranking academic finance journals in Taiwan. A comparison is made with publicly available bibliometric data, namely the Thomson Reuters ISI Web of Science citations database (hereafter ISI) for the Business - Finance (hereafter Finance) category. The paper analyses the leading international journals in Finance using expert scores and quantifiable Research Assessment Measures (RAMs), and highlights the similarities and differences in the expert scores and alternative RAMs, where the RAMs are based on alternative transformations of citations taken from the ISI database. Alternative RAMs may be calculated annually or updated daily to answer the perennial questions as to When, Where and How (frequently) published papers are cited (see Chang et al. (2011a, b, c)). The RAMs include the most widely used RAM, namely the classic 2-year impact factor including journal self citations (2YIF), 2-year impact factor excluding journal self citations (2YIF*), 5-year impact factor including journal self citations (5YIF), Immediacy (or zero-year impact factor (0YIF)), Eigenfactor, Article Influence, C3PO (Citation Performance Per Paper Online), h-index, PI-BETA (Papers Ignored - By Even The Authors), 2-year Self-citation Threshold Approval Ratings (2Y-STAR), Historical Self-citation Threshold Approval Ratings (H-STAR), Impact Factor Inflation (IFI), and Cited Article Influence (CAI). As data are not available for 5YIF, Article Influence and CAI for 13 of the leading 34 journals considered, 10 RAMs are analysed for 21 highly-cited journals in Finance. The harmonic mean of the ranks of the 10 RAMs for the 34 highly-cited journals are also presented. It is shown that emphasizing the 2-year impact factor of a journal, which partly answers the question as to When published papers are cited, to the exclusion of other informative RAMs, which answer Where and How (frequently) published papers are cited, can lead to a distorted evaluation of journal impact and influence relative to the Harmonic Mean rankings. A linear regression model is used to forecast expert scores on the basis of RAMs that capture journal impact, journal policy, the number of high quality papers, and quantitative information about a journal. The robustness of the rankings is also analysed. Chia-Lin Chang, Michael McAleer 2013-02-18 Expert scores, Journal quality, RAMs, Impact factor, IFI, C3PO, PI-BETA, STAR, Eigenfactor, Article Influence, h-index, harmonic mean, robustness http://d.repec.org/n?u=RePEc:eth:wpswif:13-179&r=all This paper investigates the impact of four key economic variables on an expert firm’s incentive to defraud its customers in a credence goods market: the level of competition, the expert firm’s financial situation, its competence, and its reputational concerns. We use and complement the dataset of a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition and high competence lower firms’ incentive to overcharge. A low concern for reputation and a critical financial situation increase the incentive to overcharge. Alexander Rasch, Christian Waibel 2013-05 Asymmetric information; Auto repair market; Credence goods; Expert; Fraud; Overcharging. http://d.repec.org/n?u=RePEc:dgr:uvatin:2012067&r=all Earnings forecasts can be useful for investment decisions. Research on earnings forecasts has focused on forecast performance in relation to firm characteristics, on categorizing the analysts into groups with similar behaviour and on the effect of an earnings announcement by thefirm on future earnings forecasts. In this paper we investigate the factors that determine the value of the forecast and also investigate to what extent the timing of the forecast can be modeled. We propose a novel methodology that allows for such an investigation. As an illustration we analyze within-year earnings forecasts for AMD in the period 1997 to 2011, where the data are obtained from the I/B/E/S database. Our empirical findings suggest clear drivers of the value and the timing of the earnings forecast. We thus show that not only the forecasts themselves are predictable, but that also the timing of the quotes is predictable to some extent. Bert de Bruijn, Philip Hans Franses 2012-07-12 Earnings Forecasts; Earnings Announcements; Financial Markets; Financial Analysts http://d.repec.org/n?u=RePEc:dgr:uvatin:2012127&r=all At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue and next chooses for either a major reform or a minor reform. Not addressing an issue means that the status quo is maintained. Politicians differ in their ability to make correct decisions. They want to make good decisions and want to come across as able decision makers. An important characteristic of the model is that politicians and voters have different priors concerning the desirability of a major reform. We show that electoral concerns may lead to anti-pandering. Politicians tend to put issues on their political agenda when voters are relatively pessimistic about a major reform, and keep issues off the table when voters are optimistic about major reform. Rei S. Sayag, Otto H. Swank 2012-11-27 Agenda Setting, Career concerns, Pandering http://d.repec.org/n?u=RePEc:iza:izadps:dp7388&r=all This paper analyses the determinants and correlates of different forms of migration, including circular, temporary and permanent. Using Moldovan data we show that age, education, number of children in a household and social as well as economic development in the region of origin play a crucial role in the decision to migrate permanently or on temporary/circular basis. We believe that understanding who moves and whether temporarily or circularly will help formulate more effective migration policies both in the sending and receiving countries. Borodak, Daniela, Piracha, Matloob 2013-05 circular migration, return migration, nested logit, Moldova http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2013-02&r=all Refinancing a mortgage is often one of the biggest and most important financial decisions that people make. Borrowers need to choose the interest rate differential at which to refinance and, when that differential is reached, they need to take the steps to refinance before rates change again. The optimal differential is where the interest saved by refinancing equals the sum of refinancing costs and the option value of refinancing. Using a unique panel data set, we find that approximately 59% of borrowers refinance sub-optimally – with 52% of the sample making errors of commission (choosing the wrong rate), 17% making errors of omission (waiting too long to refinance), and 10% making both errors. Financially sophisticated borrowers make smaller mistakes, refinancing at rates closer to the optimal rate and waiting less after mortgage rates reach the borrowers’ trigger rates. Evidence suggests borrowers learn from their refinancing experiences as they make smaller mistakes on their second refinancing than on their first one. Sumit Agarwal, Richard J. Rosen, Vincent Yao 2013 http://d.repec.org/n?u=RePEc:dgr:uvatin:2012062&r=all Parental entrepreneurship is a strong, probably the strongest, determinant of own entrepreneurship. We explore the origins of this intergenerational association in entrepreneurship. In particular, we identify the separate effects of pre- and post-birth factors (nature and nurture), by using a unique dataset of Swedish adoptees. Its unique characteristic is that it not only includes data on occupational status for the adoptees and their adoptive parents, but also for their biological parents. Moreover, we use comparable data on entrepreneurship for a large, representative sample of the Swedish population. Based on the latter sample, and consistent with previous findings, we show that parental entrepreneurship increases the probability of children's entrepreneurship by about 60%. We further show that for adoptees, both biological and adoptive parents make significant contributions. These effects, however, are quite different in size. The effect of post-bir th factors (adoptive parents) is approximately twice as large as the effect of pre-birth factors (biological parents). The sum of these two effects for adopted children is almost identical to the intergenerational transmission of entrepreneurship for own-birth children. We explore several candidate explanations for this important post-birth effect and present suggestive evidence in favor of role modeling. Matthew Lindquist, Joeri Sol, Mirjam van Praag 2012-07-06 adoption, entrepreneurship, self-employment, intergenerational mobility, occupational choice, role model http://d.repec.org/n?u=RePEc:dgr:uvatin:2012033&r=all We analyse daily lead-lag patterns in US equity and credit default swap (CDS) returns. We first document that equity returns robustly lead CDS returns. However, we find that the CDS-lag is due to <I>common</I> (and not firm-specific) news and arises predominantly in response to <I>positive</I> (instead of negative) equity market news. We provide an explanation for this news-specific price discovery based on dealers in the CDS market exploiting their informational advantage vis-à-vis institutional investors with hedging demands. In support of this explanation we find that the CDS-lag and its news-specificity are related to various firm-level proxies for hedging demand in the cross-section as well measures for economy-wide informational asymmetries over time. Ian W. Marsh, Wolf Wagner 2012-04-02 price discovery, hedging demand, CDS markets, equity markets http://d.repec.org/n?u=RePEc:dgr:uvatin:2013035&r=all Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by developing a theory of health behavior, and exploiting both lottery winnings and inheritances to test the theory. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed provide an explanation for behavioral differences, and ultimately health outcomes, between wealth groups. Hans van Kippersluis, Titus J. Galama 2013-03-05 consumption, health, health capital, health behavior, wealth http://d.repec.org/n?u=RePEc:pra:mprapa:46930&r=all To what extent can monetary and financial crises and cycles be explained through economic theories? This paper is aimed at highlighting why a reliance on economic theories may be necessary given certain flaws which have been revealed from the recent Financial Crisis. Namely, that economic and legal foundations of financial stability cannot always be considered to be credible. Further, the paper aims to accentuate on why despite the valid argument (that a reference to economic theories may be required to explain causalities of financial and monetary crises), causalities could also be explained from other perspectives – even though these perspectives may sometimes, not be as accurate. (Inwieweit können Währungs-und Finanzkrisen durch ökonomischen Theorien erklärt werden? Dieses Papier ist auf die Hervorhebung warum ein Rückgriff auf ökonomische Theorien kann notwendig sein, aus Gründen von einigen Mängeln, die aus der jüngsten Finanzkrise enthüllt worden sind. Nämlich, dass die wirtschaftlichen und rechtlichen Grundlagen der finanziellen Stabilität nicht immer als glaubwürdig betrachtet werden können. Ferner zielt das Papier zu betonen, warum trotz der gültiges Argument (dass ein Verweis auf ökonomische Theorien erforderlich sein, um Kausalitäten von Finanz-und Währungskrisen zu erklären), Kausalitäten könnten auch aus anderen Perspektiven erklärt werden – auch wenn diese Perspektiven nicht immer so präzise oder genaue sind). Ojo, Marianne 2013-05-12 Theory of Economic Time (TET); Hypothese Effizienter Märkte; finanzielle stabilität; Currency-Theorie; Euro-Krise; Austrian; Keynesian or Quantitativist-monetarist; Random Walk Theory http://d.repec.org/n?u=RePEc:mos:moswps:2013-02&r=all Models of social preferences (i.e. inequality aversion), assuming society is defined by a hierarchy based on income or wealth, predict that the poor envy the rich. Reference Group Theory predicts that the poor (rich) envy others from the same social group or class. We report results from a game designed to stimulate feelings of envy. Players are defined both by their place within an overarching hierarchy as well as by their place within the hierarchy of their specific class (i.e. their reference groups). We find that, while across class envy is common; within class envy motivates the most anti-social behaviour. Philip J. Grossman, Mana Komai 2013-05 anti-social preferences, envy, hierarchy, reference group theory http://d.repec.org/n?u=RePEc:iza:izadps:dp7361&r=all We examine the relationship between works councils and two different types of employment separation: dismissals by the firm and voluntary quits by employees. Based on representative data from the German Socio-Economic Panel, we find a negative relationship between works councils and both kinds of separation. This is particularly true for skilled blue collar as well as qualified white collar workers compared to employees in other job categories. Additionally, we find first hints for a positive relation between works councils and the relevance of severance payments in the case of dismissals. Grund, Christian, Schmitt, Andreas 2013-04 dismissal, employment separation, quit, severance pay, works council http://d.repec.org/n?u=RePEc:ukc:ukcedp:1307&r=all Do sector-specific factors common to all countries play an important role in explaining business cycle co-movement? We address this question by analyzing international co-movements of value added (VA) growth in a multi-sector dynamic factor model. The model contains a world factor, country-specific factors, sector-specific factors, and idiosyncratic components. We estimate the model using Bayesian methods for 30 disaggregated sectors in the G7 economies for the 1974-2004 period. Our findings show that, although there is a substantial role for sector-specific factors, fluctuations are dominated by country-factors. The world factor appears to play a minimal role because, when using aggregate data, the world factor captures both the factor common to all countries and industries and the factor common to the same industry across countries. We then examine how these factors evolved as globalization deepened over the past two decades. Our results suggest that business cycles at a disaggregate level have not become more synchronized internationally. This is mainly driven by a substantial fall in the volatility of world shocks during the globalization period, rather than a lower sensitivity of sectoral growth to world factors. Our results also reveal that world factors appear to be more important for industries with a higher level of international vertical integration. Aikaterini Karadimitropoulou, Miguel Leon-Ledesma 2013-04 dynamic factors; disaggregated business cycles; international co-movement http://d.repec.org/n?u=RePEc:ubi:deawps:60&r=all In this paper, we use a Micro-Macro model to evaluate the effects of a euro's depreciation on the French economy, both at the macro and micro level. Our Micro-Macro model consists of a Microsimulation model that includes an arithmetical model for the French fiscal system and two behavioral models used to simulate the effects on consumption behavior and labor supply, and a multisectoral CGE model which simulates the macroeconomic effects of a reform or a shock. The integration of the two models is made using an iterative (or sequential) approach. We find that a 10% euro's depreciation stimulates the aggregate demand by increasing exports and reducing imports which increases production and reduces the unemployment rate in the economy. At the individual level, we find that the macroeconomic shock reduces poverty and, to a lesser extent, income inequality. In particular, the decrease in the equilibrium wage, determined in the macro model, slightly reduces the available income for people who have already a job, while the reduction in the level of unemployment permits to some individuals to find a job, substantially increasing their income and, in many cases, bringing them out of poverty. Riccardo Magnani, Luca Piccoli, Martine Carré, Amedeo Spadaro 2013 Exchange rates; Microsimulation; CGE models http://d.repec.org/n?u=RePEc:por:fepwps:495&r=all In this paper we gather empirical evidence on the existence of strategic interaction among Portuguese municipal executives when they set rates of property tax and in particular if we are in the presence of yardstick competition. For that purpose, we adopted the assumption of geographic interaction among Portuguese municipalities when setting rates of property tax. We have estimated, for evaluated and non-evaluated urban property, spatial lag models with two spatial dependency regimes (municipalities with and without a solid majority) and cross-section fixed effects coefficients. The results provide strong empirical evidence on the existence of strategic interaction among Portuguese municipalities when setting rates of municipal taxes and on the yardstick hypothesis. José da Silva Costa, Armindo Cravalho 2013-05 Yarstick competition; Local Governments; Portugal. http://d.repec.org/n?u=RePEc:pra:mprapa:46767&r=all The purpose of the monography is to develop the methodology for analysis of socio-economic systems. To this end, we propose a holistic concept including the system of interrelated concepts and categories, exposing the underlying mechanisms, cause-and-effect relationships and regularities of socio-economic processes. All the more urgent problem is the control of socio-economic processes on the basis of a clear understanding of the hidden underlying mechanisms that give rise to social dynamics. But effective governance requires, firstly, a clear statement of purpose, secondly, the "feedback" from "managed object", ie the monitoring of social reality on the basis of a clear set of indicators characterizing the orientation of social dynamics. In this perspective, the main goal of regulation should be the social progress based on a economic growth subservient to first one. That brings to the fore the problem of accurate determination of the content of this concept. Monitoring the social reality suggests the formulation of key indicators for the "feedback". Thus, if the main purpose of the research is to seek for the way of increasing the controllability of the socio-economic processes, we should elucidate their underlying mechanisms and influencing factors, secondly, clearly identify key indicators, and third, formulate the basic principles of regulation. Filippova, Irina 2012 Socio-economic system, Institutions, Institutional Matrix, Labour, Social Capital, Human Capital, Social Responsibility, Social Control http://d.repec.org/n?u=RePEc:pra:mprapa:46921&r=all The paper considers the line city model of spatial competition with the exogenous Stackelberg competition. With low transport costs, firms' equilibrium locations are in the center of the market. The leader profit is twice as big as the follower's profit, the price is minimum and the quantity is maximum in the center of the market. With high transport costs, firms are differentiated and the market splits into two submarkets. Both the leader and the follower sell the largest share of their goods near their location. The price is minimum in the leader's location. Then transport costs are rising, while the price is increasing and the quantity of goods is decreasing. Torbenko, Alexander 2013-05-11 пространственная конкуренция; олигополия Штакельберга; модель линейного города Хотеллинга http://d.repec.org/n?u=RePEc:pra:mprapa:46891&r=all The monograph and study materials present the concepts of modern economics. The essences of micro - , macroeconomic theories, economic sociology, institutional economics, and economic psychology are revealed on examples of real situations with regard of the experience of the Russian economy transformations. The regularities of the development of the world and national economies, of international economic relations are discussed. Pyastolov, S.M. 2013 Economy, institutes, economic psychology, Russian national economy, development http://d.repec.org/n?u=RePEc:ira:wpaper:201307&r=all This paper examines the returns to education taking into consideration the existence of educational mismatches in the formal and informal employment of a developing country. Results show that the returns of surplus, required and deficit years of schooling are different in the two sectors. Moreover, they suggest that these returns vary along the wage distribution, and that the pattern of variation differs for formal and informal workers. In particular, informal workers face not only lower returns to their education, but suffer a second penalty associated with educational mismatches that puts them at a greater disadvantage compare to their formal counterparts. Paula Herrera, Enrique López-Bazo, Elisabet Motellón 2013-05 Educational Mismatch; Formal/Informal Employment; Economic Development; Wage Gap. JEL classification: O17; J21; J24. http://d.repec.org/n?u=RePEc:mos:moswps:2013-04&r=all Eduard J. Bomhoff, Grace Lee Hooi Yean 2013-05 social capital, general trust, in-trust/out-trust, civicness http://d.repec.org/n?u=RePEc:hit:hjbswp:170&r=all 本論文の目的は、「仕事と育児の両立」という文脈で組織と従業員間における交換関係が いかに成り立っているかについて考察することである。その理論的枠組として心理的契約 を援用し既存の両立支援施策文献を再整理することで、「仕事と育児の両立」の文脈におけ る組織と従業員の義務項目と履行状況を測定した。分析結果は以下の3 つで要約できる。 第一に、性別に基づく差別的文化を是正することや両立支援施策を幅広く設けるなどの組 織義務が多く履行されているほど、両立に対する従業員の満足や長期雇用への意思が高ま った。第二に、従業員の価値観を反映する従業員義務の影響を確認したところ、自らの義 務を多く果たしたと本人が認識するほど、ポジティブ態度結果を示した。第三に、休業前 のキャリア相談といった既存研究では勧められた一部の組織的取り組みは従業員にかえっ てネガティブな心理的影響を与えていた。本論文の結果から、一括的に提供されがちな両 立支援施策やその取り組みが個人のキャリア感や人生感における違いを踏まえた上での再 考察が必要であるという点が提示される。, This paper is aimed to get more profound arguments about Work-Family Balance practices in Japanese organization. Borrowing psychological contract framework, we asssumed that there are new psychological contracts in the WFB domain. Listing obligation from employer’s and employee’s, we also checked whether each obligation is fulfilled or not. The result showed sum of fulfilments has the positive effects on employee’s deisrable outcomes(perceived WLB, willingness to stay in current organization). Further, we browsed the independent effect from each obligation and it’s fulfillment. Considering the result as a whole, we argued that there are significant difference between female fulltime workers in terms of career orientation, which makes them perceive the norm of exchange differently. 林, 有珍 2013-04 http://d.repec.org/n?u=RePEc:pra:mprapa:47030&r=all This paper reports a survey result conducted in May 2012. We sent a questionnaire to 3,000 small and medium-sized enterprises (SMEs), whose main business sector is manufacture and which locate in Aichi Prefecture, one of the largest economic regions in Japan. 803 SMEs answered this questionnaire. We asked 53 questions, including firm’s current business condition, relationship with their main banks, financial support from local governments, cooperation with universities and research institutes, and usage of public guarantee scheme. The main feature of this survey is that it focuses on the role of local government in providing financial supports to SMEs. According to the results, approximately 30% of the respondents currently use financial support programs provided by local governments, such as favorable fixed interest rates loan guaranteed by public guarantee corporations. Over 90% of the respondents understand outlines of these financial support programs. We find that the support programs are very popular among SMEs. Many respondents that have used the program said that the programs contribute to the improvement of corporate performance and enable them to invest new equipment. Also, we asked SMEs about cooperation with universities and research institutes. We found that 63% of the respondents have not worked with universities and research institutes, and only 3.7% of the respondents experienced successful results, such as new products and services. We believe that Japanese SMEs should conduct innovations in order to survive in more and more competitive environments, and business-academia collaboration appears a promising way to conduct innovations. We have to analyze what are main obstacles for the collaboration and how we can encourage SMEs to participate in the collaborating activity. Yamori, Nobuyoshi, Tomimura, Kei, Takaku, Kenya 2013-05-14 SME; Japan; Regional government, Regional banking; Business Support; questionnaire ; Aichi