Treatment effect analysis of early reemployment bonus program: panel MLE and mode-based semiparametric estimator for interval truncation

We use Korean data to find the effects of Early Reemployment Bonus (ERB) on unemployment duration; ERB is a bonus that the eligible unemployed receive if they find a job before their unemployment insurance benefit expires. A naive approach would be comparing the ERB receiving group with the non-receiving group, but the ERB receipt is partly determined by the unemployment duration itself (thus, an endogeneity problem). Interestingly, there were many individuals who did not receive the ERB despite being fully eligible, and this is attributed to being unaware of the ERB scheme. Taking this as a ??pseudo randomization??, we construct treatment and control groups using only the eligible. Our data set is an unbalanced panel with the response variable interval-truncated due to eligibility requirement of the ERB. We propose a panel random-effect MLE and a semiparametric ??mode-based?? estimator for the interval-truncated response. Our empirical finding is that the effect varies much, depending on individual characteristics. As for the mean effects, whereas the MLE indicates large duration-shortening effects, the semiparametric estimator shows much weaker and mostly insignificant effects.     

河南省大中型工业企业技术创新能力比较研究

企业技术创新能力的大小直接关系到企业的组织绩效,影响着区域经济的发展。笔者将河南省大中型企业按地区分组,建立了企业技术创新能力评价指标体系,利用因子分析的方法比较各地区大中型企业的技术创新能力的差异。在此基础上,提出了提升河南省大中型工业企业技术创新能力的路径。     

Full versus quasi MLE for ARMA-GARCH models with infinitely divisible innovations

We compare the backtesting performance of ARMA-GARCH models with the most common types of infinitely divisible innovations, fit with both full maximum likelihood estimation (MLE) and quasi maximum likelihood estimation (QMLE). The innovation types considered are the Gaussian, Student’s t, α-stable, classical tempered stable (CTS), normal tempered stable (NTS) and generalized hyperbolic (GH) distributions. In calm periods of decreasing volatility, MLE and QMLE produce near identical performance in forecasting value-at-risk (VaR) and conditional value-at-risk (CVaR). In more volatile periods, QMLE can actually produce superior performance for CTS, NTS and α-stable innovations. While the t-ARMA-GARCH model has the fewest number of VaR violations, rejections by the Kupeic and Berkowitz tests suggest excessively large forecasted losses. The α-stable, CTS and NTS innovations compare favourably, with the latter two also allowing for option pricing under a single market model.     

Generalized cointegration: a new concept with an application to health expenditure and health outcomes

We propose a new generalization of the concept of cointegration that allows for the possibility that a set of variables are involved in an unknown nonlinear relationship. Although these variables may be unit-root non-stationary, there exists a nonlinear combination of them that takes account of such non-stationarity. We then introduce an estimation technique that allows us to test for the presence of this generalized cointegration in the absence of knowledge as to the true nonlinear functional form and the full set of regressors. We outline the basic stages of the technique and discuss how the issue of unit-root non-stationarity and cointegration affects each stage of the estimation procedure. We then apply this technique to the relationship between health expenditure and health outcomes, which is an important but controversial issue. A number of studies have found very little or no relationship between the level of health expenditure and outcomes. In econometric terms, if there is such a relationship, then there should exist a cointegrating relationship between these two variables and possibly many others. The problem that arises is that we may be either unable to measure these other variables or that we do not know about them, in which case we may incorrectly find no relationship between health expenditures and outcomes. We then apply the concept of generalized cointegration; we obtain a highly significant relationship between health expenditure and health outcomes.     

On The Allocative Effects of Rent Seeking

We consider the effects of rent-seeking activities on resource allocation. Before rent-seeking activities take place, there are prior probabilities that an object will be given to one of several agents. The posterior probability depends on prior probabilities and the expenses incurred by all agents. In the case of two agents who equally value the object, prior and posterior probabilities coincide, and thus rent seeking has no effect on resource allocation. If there are two agents with different valuations of the object or we have more than two agents, rent seeking matters and posterior probabilities reflect the valuations of the agents.     

On the nature,function and composition of technological systems

This paper suggests that the economic growth of countries reflects their developmental potential which, in turn, is a function of the technological systems in which various economic agents participate. The boundaries of technological systems may or may not coincide with national borders and may vary from one techno-industrial area to another. The central features of technological systems are economic competence (the ability to develop and exploit new business opportunities), clustering of resources, and institutional infrastructure. A technological system is defined as a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology. Technological systems are defined in terms of knowledge/competence flows rather than flows of ordinary goods and services. In the presence of an entrepreneur and sufficient critical mass, such networks can be transformed into development blocks, i.e. synergistic clusters of firms and technologies which give rise to new business opportunities.     

THE MARKET SELECTS THE WRONG FIRMS IN THE LONG RUN*

We consider the effects of free entry on the market structure and social welfare of an asymmetric Cournot oligopoly. Even if we allow for the existence of different types of firms initially, only one type (in almost all cases) can survive in the long run. Free entry leads an economy to a symmetric equilibrium, in which the excess entry theorem holds. Further, we consider the socially optimal policy for this economy. In cases of either (i) a concave demand (which implies strategic substitutability) or (ii) strategic complementarity (which implies a convex demand), the type of firms that should remain in the market to achieve social optimality does not necessarily coincide with the type of firms that will survive in the long run. The market may select not only the wrong number of firms but also the wrong type of firms in the long run.     

Effects of Unit-Based Garbage Pricing: A Differences-in-Differences Approach

Using a unique 10-year dataset of all 458 Dutch municipalities, we apply a differences-in-differences approach to estimate the effect of unit-based pricing on household waste quantities and recycling. Community-level studies of unit-based pricing typically do not include fixed effects at the local level. We find that failure to do so may substantially inflate the estimated price effect. We also find that unit-based pricing may be endogenous, and use instrumental variables to account for this. Our analysis shows that user fees depend on user fees in neighboring jurisdictions (policy interaction). Our estimate of the garbage reduction per $1 user fee is lower than any previous estimate bar one. The price effect depends on the pricing system: weight-based systems reduce garbage quantities more than volume-based systems. User fees increase recycling, especially of paper, but not nearly as much as they reduce garbage quantities. We find no evidence for waste tourism or illegal dumping.     

Economic Education Research: Part III,Statistical Estimation Methods

This article is the last in a three-part series on research methodology in economic education in which statistical methods for model estimation are presented. Emphasis is upon the estimation and classical hypotheses testing of economic learning-regression models which may involve systems of equations, collinear regressors, interactions, and distributional effects, when there are errors in the variables and where measures of learning may be ordinal.     

Pure joint production and international trade: a note

This paper applies the principles of the neo-Ricardian (or Sraffian)theory of international trade to certain joint production systems.It is shown that, in contrast with single-product systems, (i)there is not always a pattern of international specialisation,which would entail the increase of the real wage rate in botheconomies, and (ii) the ‘law of comparative advantage’has no general validity. Furthermore, not only the existenceof such a pattern of specialisation but also the validity ofthis law depend on the values of the variables of distributionof income. The analysis is wholly based on two of the numericalexamples formulated by Bidard in 1997, and further generalisedin an elementary way only when this is considered necessary.     

Short-run and long-run demand for financial assets A microeconomic perspective

One of the major issues associated with the short-run aggregate money demand is that the speed of adjustment has become very slow or even negative when the post-1973 periods are included in regressions. This implies that the long-run effects of income, wealth, or the opportunity costs on money demand may be so large that a small change in any of these variables would lead to unreasonably large fluctuations in asset demand. Using microeconomic data from the Survey of Income and Program Participation conducted by the U.S. Bureau of the Census, this study finds that the speeds at which individuals adjust their actual quantities of financial assets toward the desired levels are actually quite fast. In the long run, there is no indication that the desired quantities of monetary assets fluctuate widely whenever an explanatory variable is disturbed.     

Consumer cohorts and purchases of nonalcoholic beverages

Age, period and cohort (APC) variables are included in a demand system that is used to estimate Norwegian purchases of nonalcoholic beverages. To take account of censoring, a two-step method is used. In the first step, the probabilities of purchasing milk, carbonated soft drinks and other soft drinks are estimated by probit models. The APC variables are highly significant. Older cohorts have higher probabilities of purchasing milk and lower probabilities of purchasing carbonated soft drinks than younger cohorts. In the second step, the probability density functions and the cumulative density function are used to correct for censoring. In the corrected demand system, there are positive cohort and negative age effects for milk. These effects suggest that the replacement of older by younger cohorts, in an increasingly older population, will result in reduced per capita purchases of milk. For carbonated soft drinks, there are no cohort or negative age effects, while there are positive age but no cohort effects for other soft drinks.     

Environmental activism and dynamics of unit-based pricing systems

It is well-known that unit-based pricing systems have a significant effect on the quantity of collected waste. Part of this effect may, however, result from a selection bias or environmental activism effect. Based on a pooled cross-section for the Netherlands for 1998–2005 we show that despite the correction for environmental activism the effect of the weight and bag unit-based pricing system on the quantity of waste is sizeable. Moreover, this environmental activism effect is decreasing over time, so that the most environmental friendly municipalities implement unit-based pricing systems at first. In addition, we show that the volume effects of the different unit-based pricing systems are rather stable over time. Although we find some evidence for a learning effect, nearly no evidence is found for an awareness erosion effect. This means at least that the effect of unit-based pricing does not decrease over time, which is reassuring from an environmental point of view. Pricing waste helps.     

Mapping issues and envisaging futures: An evolutionary scenario approach

In parallel with the increasing complexity and uncertainty of social, technological, economic, environmental, political and value systems (STEEPV), there is a need for a systemic approach in Foresight. Recognizing this need, the paper begins with the introduction of the Systemic Foresight Methodology (SFM) is introduced briefly as a conceptual framework to understand and appreciate the complexity of systems and interdependencies and interrelationships between their elements. Conducting Foresight systemically involves a set of ‘systemic’ thought experiments, which is about how systems (e.g. human and social systems, industrial/sectoral systems, and innovation systems) are understood, modelled and intervened for a successful change programme. A methodological approach is proposed with the use of network analysis to show an application of systemic thinking in Foresight through the visualisation of interrelationships and interdependencies between trends, issues and actors, and their interpretation to explain the evolution of systems. Network analysis is a powerful approach as it is able to analyse both the whole system of relations and parts of the system at the same time and hence it reveals the otherwise hidden structural properties of the systems. Our earlier work has attempted to incorporate network analysis in Foresight, which helped to reveal structural linkages of trends and identify emerging important trends in the future. Following from this work, in this paper we combine systemic Foresight, network analysis and scenario methods to propose an ‘Evolutionary Scenario Approach,’ which explains the ways in which the future may unfold based on the mapping of the gradual change and the dynamics of aspects or variables that characterise a series of circumstances in a period of time. Thus, not only are evolutionary scenarios capable of giving a snapshot of a particular future, but also explaining the emerging transformation pathways of events and situations from the present into the future as systemic narratives.     

The emergence of countercyclical US fertility: a reassessment of the evidence

Recently Butz and Ward (BW) have challenged the conventional view that fertility is closely linked to economic prosperity. In 1979, they argued that they had detected the emergence of countercyclical fertility in the US and that this phenomenon would become the norm in advanced economies. They argued that, as more women entered the work force, couples would increasingly time births to coincide with periods of high female unemployment and periods when the female real wage is low--that is, during economic slumps rather than booms. Their analysis of US data for the post-war period apparently confirms this theory. In this papger we have reanalyzed BW's estimated equations. This analysis indicates that their key vairable do not help to explain fertility. We conclude that the data do not provide empirical support for BW's theory and that their key variables (real wages and income) do not aid in forecasting fertility rates.     

Direct effects of money on aggregate demand: another look at the evidence

Now that a number of central banks are faced with short-term nominal interest rates close to or at the zero lower bound, there is a renewed interest in the long-running debate about whether or not changes in the stock of money have direct effects. In particular, do changes in money have additional effects on aggregate demand outside of those induced by changes in short-term nominal interest rates? This article revisits and reinterprets the empirical evidence based on single equation regressions which is quite mixed, with some results supporting and other results denying the existence of direct effects. We use a structural model with no direct effects of money to show that the finding of positive and statistically significant coefficients on real money growth can be misleading. The model generates data that, when used to estimate analogues of the empirical regressions, produce positive and statistically significant coefficients on real money growth, similar to those often found when using actual data. The problem is that single equation regressions leave out a set of variables, which in turn, give rise to an omitted variables bias in the estimated coefficients on real money growth. Hence, they are an unreliable guide to calibrate monetary policies, in general, including at the zero lower bound.     

A note on the periodicities in the logistic analyses of growth processes

In real life growth processes there is always an intrinsic finite response time. This means that these systems do not respond instantaneously so that the logistic modeling of such processes should be formally described by a delayed logistic equation. This poses enormous difficulties to their time evolution modeling as there are no analytical solutions to the delayed logistic equation. In this paper we show that by performing a conventional Verhulst logistic modeling of the corresponding time series data, associated with a fine-coarse analysis of the resulting residuals, we can disclose the underlying periodicities due to the finite time response effects.     

中国收入差距的走势和影响因素分析

中国收入差距在过去20年中持续扩大,对经济的持续增长、社会公正与稳定都提出了挑战。本文通过计量模型检验库兹涅茨曲线在中国是否存在,证明收入差距还有继续上升的明显趋势,但其下降阶段不能确证。同时模型分析发现有一系列因素对收入差距的扩大或缩小有重要影响。这包括经济增长方面的因素、收入再分配和社会保障、公共产品和基础设施,以及制度方面的因素。这说明有可能通过合理的政策调整来控制收入差距的继续扩大。文章讨论了这些发现的政策含义。     

‘JUMPS’ IN MACROECONOMIC MODELS: AN EXAMPLE WHEN EIGENVALUES ARE COMPLEX‐VALUED*

The dynamic properties of continuous‐time macroeconomic models are typically characterised by having a combination of stable and unstable eigenvalues. In a seminal paper, Blanchard and Kahn showed that, for linear models, in order to ensure a unique solution, the number of discontinuous or ‘jump’ variables must equal the number of unstable eigenvalues in the economy. Assuming no zero eigenvalues and that all eigenvalues are distinct, this also means that the number of predetermined variables, otherwise referred to as continuous or non‐ ‘jump’ variables, must equal the number of stable eigenvalues. In this paper, we investigate the application of the Blanchard and Kahn results and establish that these results also carry through for linear dynamical systems where some of the eigenvalues are complex‐valued. An example with just one complex conjugate pair of stable eigenvalues is presented. The Appendix contains a general n‐dimensional model.     

The impact of technological opportunity on the dynamics of trade performance

The paper examines statistically whether the degree to which countries are specialised in and/or increasingly move into sectors with above average levels of technological opportunity has any impact on growth in aggregate market shares of exports. A novelty of the paper is that it applies structural decomposition (SD) analysis not only on trade statistics, but also on US patent statistics. Nineteen countries and 17 manufacturing sectors for the period 1965–1988 are considered. A number of variables, in addition to the effects from the SD analysis, are included as explanatory variables. In this context, it is shown that there is a positive relationship between trade performance and the individual country’s ability to move into technological sectors offering above average technological opportunity.