Parametric Lorenz Curves and the Modality of the Income Density Function

Similar looking Lorenz curves can imply very different income density functions and potentially lead to wrong policy implications regarding inequality. This paper derives a relation between a Lorenz curve and the modality of its underlying income density: given a parametric Lorenz curve, it is the sign of its third derivative which indicates whether the density is unimodal or zeromodal (i.e., downward‐sloping). The density modality of several important Lorenz curves such as the Pareto, Weibull, Singh–Maddala parametrizations and hierarchical families of Lorenz curves are discussed. A Lorenz curve performance comparison with Monte Carlo simulations and data from the UNU–WIDER World Income Inequality Database underlines the relevance of the theoretical result: curve‐fitting based on criteria such as mean squared error or the Gini difference might lead to a Lorenz curve implying an incorrectly‐shaped density function. It is therefore important to take into account the modality when selecting a parametric Lorenz curve.     

Calculating Poverty Measures from the Generalised Beta Income Distribution

Data for measuring poverty are frequently available in a summary form that describes the proportion of income or expenditure for each of a number of population proportions. While various discrete poverty measures can be applied directly to data in this limited form, they typically require an arbitrary approach to within‐group interpolation. This problem can be overcome by fitting either a parametric income distribution or a Lorenz curve to the grouped data and computing the required quantities from estimated parameters. The Lorenz curve approach is widely used by the World Bank, but can encounter problems. As an alternative, in this article we show how to calculate several poverty measures from parameters of the generalized beta income distribution, and its popular special cases. An analysis of poverty changes in countries from South and Southeast Asia is used to illustrate the methodology.     

A product diffusion model incorporating repeat purchases

A logistic-based model for forecasting the rate of product diffusion given aggregate time series data was constructed. The model differs from earlier models based on fitting the logistic to aggregate data in that it includes a submodel to separate replacement demand from first-time sales. We fit the theoretical model to data and show that forecasts will be significantly more accurate using this model instead of the logistic curve.     

Stochastic dominance and decomposable measures of inequality and poverty

In this paper, we characterize some new links between stochastic dominance and the measurement of inequality and poverty. We show that: for second-degree normalized stochastic dominance (NSD), the weighted area between the NSD curve of a distribution and that of the equalized distribution is a decomposable inequality measure; for first-degree and second-degree censored stochastic dominance (CSD), the weighted area between the CSD curve of a distribution and that of the zero-poverty distribution is a decomposable poverty measure. These characterizations provide graphical representations for decomposable inequality and poverty measures in the same manner as Lorenz curve does for the Gini index. The extensions of the links to higher degrees of stochastic dominance are also investigated.     

An alternative functional form for estimating the Lorenz curve

We propose a simple single parameter functional form for the Lorenz curve. The new specification is fitted to existing data sets and is shown to provide a better fit than existing single parameter Lorenz curves for the given data.     

Interpolating the Lorenz Curve: Methods to Preserve Shape and Remain Consistent with the Concentration Curves for Components

C¹‐class interpolation methods that preserve monotonicity and convexity and are thus suitable for the estimation of the Lorenz curve from grouped data are not widely known. Instead, parametric models are usually applied for such estimation. Parametric models, however, have difficulty in accurately approximating every part of income/expenditure distributions. This paper proposes two types of C¹‐class shape‐preserving interpolation methods. One is a piecewise rational polynomial interpolation (proposed independently by Stineman and Delbourgo) that enables consistent interpolation of the concentration curves for income/expenditure components, attaining approximately the same accuracy as that of the existing methods when applied to decile‐grouped data or to more detailed aggregation. Another is a Hybrid interpolation that employs pieces of curves derived from parametric models on end intervals. Empirical comparisons show that the Hybrid interpolation (with the assistance of parametric models for class‐boundary estimation) outperforms the existing methods even when applied to quintile‐grouped data without class boundaries.     

Vacancies, unemployment, and the Phillips curve

The canonical new Keynesian Phillips curve has become a standard component of models designed for monetary policy analysis. However, in the basic new Keynesian model, there is no unemployment, all variation in labor input occurs along the intensive hours margin, and the driving variable for inflation depends on workers’ marginal rates of substitution between leisure and consumption. In this paper, we incorporate a theory of unemployment into the new Keynesian theory of inflation and empirically test its implications for inflation dynamics. We show how a traditional Phillips curve linking inflation and unemployment can be derived and how the elasticity of inflation with respect to unemployment depends on structural characteristics of the labor market such as the matching technology that pairs vacancies with unemployed workers. We estimate on US data the Phillips curve generated by the model. While we can reject the baseline new Keynesian Phillips curve in favor of the search-frictions specification, we show it is still too stylized to fully describe the dynamics of firms’ marginal costs.     

Average Derivative Estimation of Hedonic Price Models

Conventional parametric techniques for estimatinghedonic price models require a correct functionalform. In this paper, we side-step this parametricshortcoming by estimating a hedonic price model usingaverage derivative estimation (ADE). Thissemiparametric approach produces robust estimates ofthe marginal effects without assuming a specificfunctional form a priori. In our application ofthe model to a unique data set on Korean home prices,ADE produced estimates consistent with priorexpectations, providing initial evidence that themodel may represent a viable alternative when usingthe hedonic approach.     

Targets and lags in a two-equation model of US stabilization

A simple model of activist macroeconomic policy derives a reaction function by assuming that rational governments have performance objectives, but are constrained by the Phillips curve. Although not formally modeled, governments apply a variety of instruments to influence inflation and output, in addition to monetary policy these include fiscal policy, bailouts and exchange rates. Our econometric results are generally consistent with US economic history. One qualification is that governments appear more likely to target growth rates than output gaps. Another inference is that inflation expectations are more likely to be backward than forward looking; a variety of rational expectation models fit the data less well than do simple inertial expectations. We also find that annual data series are more appropriate than quarterly ones for studying these issues.     

The opportunistic approach to monetary policy and financial market conditions

We test the concept of the opportunistic approach to monetary policy in South Africa post-2000 inflation targeting regime. The article contributes to the current debate on central banks having additional objectives over and above inflation and output by incorporating a measure of financial conditions in the modelling framework. Our findings support the two features of the opportunistic approach. First, we find that the models that include an intermediate target that reflects the recent history of inflation rather than simple inflation target improve the fit of the models. Second, the data supports the view that the South African Reserve Bank (SARB) behaves with some degree of nonresponsiveness when inflation is within the zone of discretion but react aggressively otherwise. Recursive estimates from our preferred model reveal that overall there has been a subdued reaction to inflation, output and financial conditions amidst the increased economic uncertainty of the 2007–2009 financial crisis.     

Redistribution in the age of austerity: evidence from Europe 2006–2013

We examine the relationship between changes in a country’s public sector fiscal position on inequality at the top and bottom of the income distribution during the age of austerity from 2006 to 2013. We use a parametric Lorenz curve model and Gini-like indices of inequality as our measures to assess distributional changes. Based on Statistics of Income and Living Conditions (EU-SILC) and IMF data for 12 European countries, we find that more severe adjustments to the cyclically adjusted primary balance (i.e., more austerity) are associated with a more unequal distribution of income driven by rising inequality at the top. The data also weakly suggests a decrease in inequality at the bottom. The distributional impact of austerity measures reflects the reliance on regressive policies and likely produces increased incentives for rent-seeking while reducing incentives for workers to increase productivity.     

The Lorenz curve as an archetype: A historico-epistemological study

In 1905, Max O. Lorenz suggested a simple method of measuring the concentration of wealth, based on the visual representation of income distribution. The Lorenz curve is now very popular and can be considered as canonical. However, the path leading from Lorenz's original work to contemporary interpretations of his graph has been anything but simple. We thus propose to trace the origin, the evolution and the various subsequent interpretations of the Lorenz graph. We argue that the original Lorenz curve has been shifted in epistemological status as well as inverted in graphic appearance.     

I’LL NEVER FORGET MY FIRST CIGARETTE: A REVEALED PREFERENCE ANALYSIS OF THE “HABITS AS DURABLES” MODEL*

We provide a revealed preference analysis of the “habits as durables” model. This approach avoids the need to impose a functional form on the underlying utility function. We show that our characterization is testable by means of linear programming methods, and we demonstrate its practical usefulness by means of an application to cigarette consumption using a Spanish household consumption data set. We find that the “habits as durables” model has better empirical fit in terms of predictive success compared to the “short memory habits” and life cycle models.     

如何设计国际合资企业的控制机制：基于创新视角的一个整合模型研究

随着国际合资企业（IJV）数量不断增加,合资双方都想通过IJV逐步实现自身战略目标,于是对控制权展开激烈争夺,最终导致创新绩效下降。为了解释并避免这个现象,本文以2018年制造业企业创新调查问卷中的225家IJV企业为样本,构建层次回归模型,实证检验了IJV的控制机制与创新绩效间的关系,以及创新资金来源结构的调节作用。结果表明,双方均衡的股权结构能够为IJV带来最高的产品和工艺创新绩效,中方控股的次之,外方控股的最低;IJV知识产权保护与产品创新绩效间存在倒U型关系,与工艺创新绩效间存在显著线性正相关;文化控制对IJV产品创新绩效与工艺创新绩效均有显著的正向影响;创新资金来源结构会显著正向调节知识产权保护与工艺创新绩效间的关系,且外部主导型创新资金来源结构正向调节作用最高,内部主导型次之,均衡型最低。同时为在华IJV掌握控制权并提升创新绩效提出了对策建议。     

MONTHLY GDP FORECASTING USING BRIDGE MODELS: APPLICATION FOR THE FRENCH ECONOMY

This paper presents a model to predict French gross domestic product (GDP) quarterly growth rate. The model is designed to be used on a monthly basis by integrating monthly economic information through bridge models, for both supply and demand sides, allowing thus economic interpretations. For each GDP component, bridge equations are specified by using a general‐to‐specific approach implemented in an automated way by Hoover and Perez and improved by Krolzig and Hendry. This approach allows to select explanatory variables among a large data set of hard and soft data. A rolling forecast study is carried out to assess the forecasting performance in the prediction of aggregated GDP, by taking publication lags into account in order to run pseudo real‐time forecasts. It turns out that the model outperforms benchmark models. The results show that changing the set of equations over the quarter is superior to keeping the same equations over time. In addition, GDP growth seems to be more precisely predicted from a supply‐side approach rather than a demand‐side approach.     

Fragmentation and Welfare in Monopolistic Competition

We examine the welfare effect of fragmentation with a general‐equilibrium model of monopolistic competition. Using the efficiency property of monopolistic competition models, we develop a diagram that is used to show that fragmentation of production arises, i.e. firms in a country specialize in developing blueprints and out‐source the manufacturing of their products to the other country. Such fragmentation allows countries to benefit from trade due to two different sources: comparative advantage and product diversity. We show how these two sources result in gains from trade induced by this production fragmentation.     

Statistical considerations in the fitting of growth curves

In long range trend projection, one of the most frequently used models is the “S”-shaped growth curve originally suggested by Pearl and Reed. Because of the nonlinear form of this model, problems exist in the statistical evaluation of model fit and in estimating the precision of forecasts developed from the model. Based on an approach first suggested by Yule, a procedure for fitting and evaluating the Pearl–Reed curve is developed. Confidence intervals for parameters and forecast prediction intervals are presented.     

Pro‐Poorness Orderings

An indicator of pro‐poorness of a growth profile associated with a distribution of income is a measure of the extent to which growth is biased towards the poor. This paper proposes a general approach to pro‐poorness, called the progressive sequential averaging principle (PSA), relaxing the requirement of rank preservation due to growth. An endogenous benchmark for evaluating the growth of poor comes out naturally from this principle. A dominance relation on the basis of the above approach for a class of growth profiles is introduced through a simple device, called the PSA curve and its properties are examined in relation to the standard dominances in terms of the generalized Lorenz curve and the inverse generalized Lorenz curve. The paper concludes with an application to evaluate growth profiles experienced by the United States between 2001–07 and 2007–13.     

Does a factor Phillips curve help? An evaluation of the predictive power for U.S. inflation

This article evaluates various models’ predictive power for U.S. inflation rate using a simulated out-of-sample forecasting framework. The starting point is the traditional unemployment Phillips curve. We show that a factor Phillips curve model is superior to the traditional Phillips curve, and its performance is comparable to other factor models. We find that a factor AR model is superior to the factor Phillips curve model, and is the best bivariate or factor model at longer horizons. Finally, we investigate a New Keynesian Phillips curve model, and find that its forecasting performance dominates all other models at the longer horizons.     

Growth and Wage Inequality in a Dual Economy

Who benefits from economic growth? This paper analyses the distributional impact of different types of growth within a two‐sector model. The paper first presents necessary and sufficient conditions for unambiguous changes in wage inequality in a dual economy, based on analysis of the entire Lorenz curve. These conditions are then applied to the Harris–Todaro model with an urban non‐agricultural sector and rural agriculture. It is shown that capital accumulation or technical progress in agriculture can shift the Lorenz curve inwards and reduce wage inequality, while the effects of development in non‐agriculture are typically ambiguous.