What You Don’t Know Might Hurt You: Some Unresolved Issues in the Design and Analysis of Discrete Choice Experiments

The papers and comments in this issue focus on four broad areas related to understanding and modeling choices: (1) The use of laboratory experiments to improve valuation methods; (2) The design of stated preference choice set and choice occasions; (3) Latent class models as means of identifying and accommodating preference heterogeneity; and (4) Accommodating uncertainty about the “true” model, modeling ranking and rating tasks and pooling data sources. In what follows I offer some comments on each area, and briefly discuss several unresolved issues associated with each area, closing with some comments about future research opportunities.     

INCOME DISTRIBUTION THEORY

This paper introduces two special issues of the Review devoted to income distribution theory and its empirical implementation. Most of the papers that will appear in these two issues were prepared for a special session on income distribution held during the Eleventh General Conference of the International Association for Research in Income and Wealth, held at Nathanya, Israel, in August 1969. The present issue contains theoretical papers; the following one will present more empirical work. This introductory paper is intended to indicate the relationships among the papers that follow, and to suggest possible future directions for work in this area. In the latter connection, the author discusses the use of microanalytic models applied to microdata sets dealing with individuals and households.     

Learning-by-Using and the Switch to Better Machines

In an attempt to account for the huge observed disparity in international incomes, several recent papers study models in the spirit of R. Solow (1960, in “Mathematical Methods in the Social Sciences 1959,” Stanford Univ. Press, Stanford) where the adoptions of better technologies require investments in new equipment. This paper continues this line of research. It describes an economy in which firms install more productive machines and subsequent to these adoptions, learn how to use those machines. In contrast to these other papers, this one does not predict that firms always adopt the frontier technology whenever they switch technologies. In this model both the upper and lower supports of the distribution of operated technologies may differ between economies that differ in policy. Consequently, this model can generate larger differences in international incomes than these other models. These differences are still small relative to the data, however. Journal of Economic Literature Classification Numbers: O11, O33, O41.     

Fiscal Competition: An Introduction

The papers in this special issue contribute to a rapidly growing literature that departs from traditional public economics by emphasizing that governments (including subnational governments, but also, increasingly, national governments) operate in an environment where labor and capital flow across jurisdictional boundaries. These open–economy considerations raise a host of issues for the analysis of public policy, ranging from practical problems of business taxation in a multi–jurisdictional setting to fundamental conceptual questions about the organizaton of the public sector and the evolution of the institutional structure of governance. The papers in this special issue advance many facets of this broad research program.     

Introduction

This special issue brings together a set of papers in contract theory. Some of these papers date back many years and are well known by researchers in the field, but their circulation has been limited due to the lack of dissemination through widely distributed journals. One of the purposes of this special issue is to make this literature available to a wider audience. Thus James Mirrlees's "The Theory of Moral Hazard and Unobservable Behaviour" (1975), Eric Maskin's "Nash Equilibrium and Welfare Optimality" (1977), Bengt Holmström's "Managerial Incentive Problems—A Dynamic Perspective" (1982), and Eric Maskin and John Moore's "Implementation and Renegotiation" (1987) appear in print in a widely available form for the first time. All of these papers have been rigorously refereed, but with the editors mindful of the danger of meddling too much with the original content. These influential contributions are highly relevant for a number of recent articles on contract theory. Thus, we also bring some of these papers together in this issue. All the recent submissions have gone through the usual refereeing procedure for the Review, and appear here on their own merits.     

Backcasting for sustainability: Introduction to the special issue

In this introductory paper we introduce the special issue on “Backcasting for Sustainability”. We present briefly a historical background, and position backcasting in the wider context of future studies, in which it can be related to “normative forecasting” and normative scenarios. We reflect on the diversity and variety of backcasting studies and experiments, as presented in the ten papers for this special issue. After summarizing the papers we formulate a future research agenda.     

The Emerging Importance of Knowledge for Development: Implications for Technology Policy and Innovation

What new roles for science and technology policy emerge in the knowledge-based economy we live in? This broad question was largely the motivation for the 1st International Conference on Technology Policy and Innovation (ICTPI), held in Macau in July 1997. Some of the important contributions to this conference are gathered in this special issue. The aim of this introductory article is to describe the background of current research in the area of science and technology policy, to summarize the contributions to this special issue, and to issue calls for new policy research. While the contributions to this special issue are diverse in terms of methodological approaches, units of analysis, and disciplinary fields, we try to integrate some important conclusions of the background analysis, suggesting further avenues for policy research, namely: (1) balancing innovation and diffusion; (2) beyond the excludability of software; (3) deepen the conceptual framework established through the interactive models of innovation; (4) promoting wetware and software interaction; and (5) the need for an inclusive development.     

Teaching Heterodox Economics: Introduction to the Special Issue

This introduction to the special issue of the Forum for Social Economics on teaching heterodox economics provides an overview of the papers in this volume. The papers demonstrate that heterodox economists are particularly gifted at explaining the dynamics of the real world economy; therefore, heterodox economics instruction often specializes in, and benefits from, immersing students into real world situations. Heterodox economists push pedagogic boundaries by directly confronting students with real-world data and situations. In the process, students achieve a rich understanding of the world as it is and not as a hypothetical myth. The overview of papers is followed by suggestions for future work on teaching heterodox economics, and acknowledgments of those who made this special issue possible.     

Overview of the special issue on “Rethinking Risks in International Financial Markets: Modeling Tools and Applications”

This short paper provides an overview of the special issue “Rethinking Risks in International Financial Markets: Modeling Tools and Applications” which features high-quality research papers that have been presented at the 7th International Finance Conference (IFC7). This selection of papers tackles an important issue in financial economics, which is “risk modeling, assessment and management” at both firm and market levels in the aftermath of the recent global financial crisis 2008–2009.     

空间经济学在中国

本文简述了空间经济学和新经济地理学在过去二十年里在中国的发展,并指出空间经济学在中国的下一个发展方向就是和国际贸易、城市经济学、区域经济学以及发展经济学的进一步结合。同时,我们介绍了空间经济学国际研讨会(2011)的概况以及入选的六篇论文。     

Reciprocity: theory and facts

The importance of reciprocity is not new in economics. Contractual market exchanges and long-run interactions are both situations based on self-interested reciprocal behaviour. However, reciprocity is not only a behaviour but also a motive that sometimes appears to be inconsistent with self-interest. This fact produces a tension between those who try to explain reciprocal behaviour within the standard framework and those who aim at enlarging it with the introduction of additional behavioural principles. This special issue collects a selection of papers presented at the International Conference “Reciprocity. Theory and facts” were the two perspectives were compared and discussed. In this Introduction note we provide first a broad view of the role of reciprocity in economics and then a quick introduction to each of the contributions enclosed in this special issue.     

The effects of stochastic wages and non-labor income on labor supply: update and extensions

The analysis of labor supply under risk has a long history dating back to Hicks (The theory of wages, St. Martin’s Press, New York, 2003) and Knight (Risk, uncertainty and profit, Kelly, New York, 1964). In the 1980s more technical papers investigated the impact of stochastic non-labor income and/or wage rate upon labor supply. In this paper, we show that the effect of a mean-preserving increase in risk in wage rate or non-labor income on labor supply is best understood as a special case of an Nth degree risk increase (as defined by Ekern (Econ Lett 6:329–333, 1980)) and the conditions for signing the effect of a higher-order risk increase in wage rate or non-labor income on labor supply are analogous to those for signing the effect of a simple non-stochastic decrease in wage rate or non-labor income. We thus extend, and provide new and more intuitive interpretations for, related earlier results.     

Cultural lag and international communication The Case of Japan

In this special first issue contribution by Dr. Nagai in his capacity of Supervisory Editor of this new Journal, attention is given to the often neglected influence of the cultural lag on communications and its impact on economic policies and international relations.     

时变贝塔资本资产定价模型实证研究

自从1964年CAPM模型提出以来,学术界对它的研究就一直没有停止过。在理论层面,通过放松和改变假设得到了新的模型;在实证层面,则是应用新的实证方法验证理论模型的正确性。最新提出的多元GARCH模型具有预测多元资产条件协方差矩阵的功能,因此将这一特性应用于CAPM模型的研究中就成为了一个独特的视角。通过实证研究发现,这种时变贝塔能够更精确地刻画单个资产相对于市场组合的风险大小。     

Firm innovation persistence: a fresh look at the frameworks of analysis

This paper introduces the special issue on innovation persistence. It delineates three complementary theoretical frameworks assessing drivers and implications of innovation persistence: ‘knowledge accumulation’ approach, the ‘success-breeds-success’ hypothesis and the concept of sunk costs in R&D activities. It emphasizes how path dependence could be related to innovation persistence. It provides an extensive overview of the main empirical findings of recent papers and suggests a new research agenda about firms’ dynamic capabilities and innovation persistence. Finally it highlights a set of issues that deserve further investigation in the future. The contributions to this issue are set out as well.     

Determinants of International Research Collaboration: Evidence from International Co‐Inventions in Asia and Major OECD Countries

International research collaboration has become important in recent years. This paper analyzes what gains drive the expansion of international research collaboration and what costs prevent it, with a special focus on the incidence of international co‐inventions (ICIs) in Asia and major Organisation for Economic Cooperation and Development countries. The major findings are as follows. ICIs become more prevalent in those technology sectors where scientific literature becomes important as prior art, inventor team size increases, and the relative inventor resources of the own country in the world declines. Thus, ICIs allow a country to exploit more efficiently the world stock of new knowledge and to realize the gains from combining diverse sources of knowledge and skills. Moreover, the results of estimating a gravity model centered on the USA and Great Britain suggest that language differences measured by Test of English as a Foreign Language scores matter significantly. The results also suggest that exporting from these two countries are significantly and positively associated with ICIs.     

Empirical applications of discrete choice dynamic programming models

The development over the past 25 years of methods for the estimation of discrete choice dynamic programming (DCDP) models opened up new frontiers for empirical research in a host of areas, including labor economics, industrial organization, economic demography, health economics, development economics, political economy and marketing. In this paper, we first describe the development of the DCDP framework, showing how it was a natural extension of static discrete choice modeling. We then summarize six papers that adopt the DCDP paradigm that address substantively important social and economic questions. Finally, we consider the issue of the credibility of empirical findings based on the structural estimation of DCDP models.     

Firm age and performance

Amid increasing interest in firm age and its effects on firm performance, this special issue offers an exhaustive review of the literature and a novel collection of evidence on the effects of firm age on performance, including a special focus of interest on innovation performance, financial performance, exports, survival and growth. This editorial positions the theme in the extant literature, and provides key definitions and challenges ahead in the field of evolutionary economics. It introduces the collection of articles composing the special issue. The papers offer a diversity of country contexts, as well as analytical approaches and methods. They include an exhaustive review of the literature on age and firms’ performance, and present original empirical studies focusing on the effects of age on firms’ economic outcomes on the one hand, and on innovation outcomes on the other hand. While most of the papers use econometric analysis, the level of analysis ranges from firm to individual.     

Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models

Computable General Equilibrium (CGE) models are now routinely utilized for the evaluation of trade policy reforms, yet they are typically quite highly aggregated, which limits their usefulness to trade negotiators who are often interested in impacts at the tariff line. On the other hand, Partial Equilibrium (PE) models, which are typically used for analysis at disaggregate levels, deprive the researcher of the benefits of an economy-wide analysis, which is required to examine the overall impact of broad-based trade policy reforms. Therefore, a PE–GE, nested modeling framework has the prospect of offering an ideal tool for trade policy analysis. In this paper, we develop a PE model that captures international trade, domestic consumption and output, using Constant Elasticity of Transformation (CET) and Constant Elasticity of Substitution (CES) structures, market clearing conditions and price linkages, nested within the standard GTAP model. In particular, we extend the welfare decomposition of Huff and Hertel (2001) to this PE–GE model in order to contrast the sources of welfare gain in PE and GE analyses. To illustrate the usefulness of this model, we examine the contentious issue of tariff liberalization in the Indian auto sector, using PE, GE and PE–GE models. Both the PE and PE–GE models show that the imports of motorcycles and automobiles change drastically with both unilateral and bilateral tariff liberalization by India, but the PE model does a poor job predicting the overall size and price level in the industry, post-liberalization. On the other hand, the GE model overestimates substitution between regional suppliers due to “false competition” and underestimates the welfare gain, due to the problem of tariff averaging in the aggregated model. These findings are shown to be robust to wide variation in model parameters. We conclude that the linked model is superior to both the GE and PE counterparts.     

An introduction to rural and agricultural development in the digital age

This special issue contributes to the development economics literature by highlighting the role of information communication and technologies (ICTs) in supporting rural and agricultural development. It is comprised of nine papers. Key findings from this special issue include: (1) internet use increases rural consumption diversity and agricultural productivity; (2) smartphone use empowers rural women in household decision-making and off-farm work participation; (3) smartphone-based agricultural extension services boost rural income growth; (4) a lack of ICT infrastructure and inadequate skills to use digital technologies are two key factors that lead to digital poverty traps for smallholder rural farmers; (5) ICT adoption increases the probability of rural households' access to credit and empowers rural women and farm households in relatively less developed regions to access credit; (6) digital financial inclusion reduces farmers' vulnerability to poverty; and (7) e-commerce adoption increases both sales prices and marketing costs, but the magnitude of increasing the former is higher than the magnitude of increasing the latter, which finally contributes to a higher gross return. This special issue also proposes practical instruments and implications for advancing the application of ICTs in rural areas to accelerate rural and agricultural development in the digital age.