Calculating Value-at-Risk for high-dimensional time series using a nonlinear random mapping model

In this study, we propose a non-linear random mapping model called GELM. The proposed model is based on a combination of the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model and the Extreme Learning Machine (ELM), and can be used to calculate Value-at-Risk (VaR). Alternatively, the GELM model is a non-parametric GARCH-type model. Compared with conventional models, such as the GARCH models, ELM, and Support Vector Machine (SVM), the computational results confirm that the GELM model performs better in volatility forecasting and VaR calculation in terms of efficiency and accuracy. Thus, the GELM model can be an essential tool for risk management and stress testing.     

Inflation uncertainty revisited: a proposal for robust measurement

Any measure of unobserved inflation uncertainty relies on specific assumptions which are most likely not fulfilled completely. This calls into question whether an individual measure delivers a reliable signal. To reduce idiosyncratic measurement error, we propose using common information contained in different measures derived from survey data, a variety of forecast models, and volatility models. We show that all measures are driven by a common component, which constitutes an indicator for inflation uncertainty. Moreover, our results suggest that using only one individual disagreement measure may be misleading, particularly during turbulent times. Finally, we study the Friedman–Ball hypothesis. Using the indicator, we show that higher inflation is followed by higher uncertainty. By contrast, we obtain contradictory results for the individual measures. We also document that, after an inflationary shock, uncertainty decreases in the first two months, which is traceable to the energy component in CPI inflation.     

Data uncertainty and the role of money as an information variable for monetary policy

In this study, we perform a quantitative assessment of the role of money as an indicator variable for monetary policy in the euro area. We document the magnitude of revisions to euro area-wide data on output, prices, and money, and find that monetary aggregates have a potentially significant role in providing information about current real output. We then proceed to analyze the information content of money in a forward-looking model in which monetary policy is optimally determined subject to incomplete information about the true state of the economy. We show that monetary aggregates may have substantial information content in an environment with high variability of output measurement errors, low variability of money demand shocks, and a strong contemporaneous linkage between money demand and real output. As a practical matter, however, we conclude that money has fairly limited information content as an indicator of contemporaneous aggregate demand in the euro area.     

The effects of remittances on support for democracy in Africa: Are remittances a curse or a blessing?

We examine the effect of remittances on the legitimacy of democracy in Africa, testing whether remittance recipients are less likely to support democracy than non-recipients. We hypothesize that the effect of remittances on support for democracy varies across classes (i.e., groups or subtypes) of individuals sharing similar but unobserved background characteristics. Using the Afrobarometer surveys, we try to find out whether the respondents fall into different hidden classes in such a way that the effect of remittances on the degree of support for democracy depends on the class. Our results support that remittances may be a curse for the degree of endorsement and support for democracy, depending on the class of individuals that we consider. The analysis of the probability of being in the remittance curse class indicates that the perception of national priorities plays an important role. People who attest that freedom and rights are the main national priorities have a lower probability of belonging to the remittances curse class than individuals who choose national priorities that are oriented towards the economic conditions of their country.     

监督式民主：新媒体时代民主实践的新理念

本文检验了现存民主形态正在经历的历史性变革,尤其是新媒体所带来的社会环境变化对民主框架和机制的影响,从而为当代的代议民主提供一种全新的路径。结合新媒体时代中现行民主的转向,本文提出监督式民主的设想,认为该民主形态正将我们从过去以大会为基础的、代议的民主引向一种有着全然不同框架和机制的民主形式,这也是当代民主实践的重要特征。     

Political institutions and economic volatility

We examine the effect of political ‘institutions’ on economic growth volatility, using data from more than 100 countries over the period 1960 to 2005, taking into account various control variables as suggested in previous studies. Our indicator of volatility is the relative standard deviation of the growth rate of GDP per capita. The results of a dynamic panel model indicate that democracy reduces economic volatility. We also find that some dimensions of political instability and policy uncertainty increase economic volatility.     

Temporal causality and the dynamics of democracy,emigration and real income in Fiji

This study is the first to explore temporal causality between democracy, emigration and real income in Fiji within a multivariate cointegration model. We find three long run relationships between democracy, emigration and real income. In the long run there is evidence that migration and democracy Granger cause real GDP in Fiji; real GDP and democracy Granger cause migration from Fiji and that real GDP and migration Granger cause democracy in Fiji. In the short run we find unidirectional Granger causality running from migration to real GDP and from democracy to real GDP, but neutrality between democracy and migration in the short run. We also extend the analysis to examine the degree of exogeneity of the variables beyond the sample period through considering the decomposition of variance and impulse response functions.     

Does democracy facilitate economic growth or does economic growth facilitate democracy? An empirical study of Sub-Saharan Africa

This paper examines the relationship between democracy and economic growth in 30 Sub-Saharan African countries. As our proxy for democracy we first use the democracy index constructed by Freedom House and then check the sensitivity of our findings using, as an alternative proxy for democracy, the Legislative Index of Electoral Competitiveness (LIEC). We find support for the Lipset hypothesis - in the long run, real GDP Granger causes democracy and an increase in GDP results in an improvement in democracy - in Botswana and Niger with both datasets, for Chad with the Freedom House data only and for Cote d'Ivoire and Gabon with the LIEC data only. Support for the compatibility hypothesis - in the long run democracy Granger causes real income and an increase in democracy has a positive effect on real income - is found for Botswana with the Freedom House data and for Madagascar, Rwanda, South Africa and Swaziland with the LIEC data. Support for the conflict hypothesis - in the long run democracy Granger causes real income and an increase in democracy has a negative effect on real income - is found for Gabon with the Freedom House data and Sierra Leone with the LIEC data.     

Overstrained citizens? The number of ballot propositions and the quality of the decision process in direct democracy

We study how the number of ballot propositions affects the quality of decision making in direct democracy, as reflected in citizens’ knowledge, voting behavior, and attitudes toward democracy. Using three comprehensive data sets from Switzerland with over 3,500 propositions, we exploit variation in the number of federal and cantonal propositions. Voters know the most about the content of federal propositions when they are exclusively presented and less with a high number of concurrent cantonal propositions on the ballot. Across other outcomes we find no consistent indications that – for the observed variation in the exposure to popular votes – a high number of propositions impedes the quality of decision making in Swiss federal direct democracy. In the medium to longer term, more federal propositions on the ballot rather relate to higher perceived political influence and satisfaction with democracy.     

Does Democracy Lead to a Better Environment? Deforestation and the Democratic Transition Peak

The relationship between democracy and environment is subject to controversy. Some scientists find that democracy has a positive impact in reducing environmental disruption. Other scholars claim that democracy tends to accelerate environmental degradation. By using deforestation rates as a proxy for environmental disruption, we suggest that both sides might be right. Our quantitative analysis has three important outcomes. First, there is evidence of an inverted U-shaped relationship between deforestation and democracy. Second, countries in democratic transition experience the highest deforestation rates, compared to non-democracies and mature democracies. Third, in explaining deforestation rates democracy has larger explanatory power than income. This last result implies that in reducing deforestation rates the emphasis should not only be on economic development but even more on democratization.     

TWO OR THREE PROBLEMS CONCERNING SOCIAL STABILITY AND OUR MEASURES OF WELFARE: WHAT CAN ECONOMISTS LEARN FROM OTHER SOCIAL SCIENCES?*

This paper takes up several problems that are related to psychology, political science and ethics—disciplines that we regard as neighbours on the boundaries of economics. I pay particular attention to such topics as mass psychology and social stability, democracy and economic performance and the notions of wellbeing and happiness. After laying out some of the history of academic discourse on these problems and notions, I reconsider the nature of discrepancy between microlevel motivations and macrolevel phenomena, trade‐offs between equality and liberty and the problem of measurement of social welfare and “happiness” from the perspective of “dissociation of intention and consequence”.     

参与机制对党内民主建设的价值考量

党内民主作为一种民主形式,与广大党员积极参与是不可分割的。党的代表大会制度是党内民主的根本制度,其本质就是一种党内参与机制;完善党内选举制度的方式就是让广大党员行使参与权利;保障党员民主权利是党内民主的最终归宿,其实现途径就是党内参与机制;扩大党务公开透明是党内民主的表现形式,其目的就是通畅党内参与渠道;党内监督制度是党内民主的重要功能,其制约作用需要通过参与机制来发挥。     

Democracy,Development and Comparative Institutional Advantage in Africa

Development in Africa has been stalled for decades in a vicious cycle of poverty, underdevelopment, corruption, and conflict. In this paper, we argue that donors should focus on democracy and accountability as a first priority in development aid. We use the theory of comparative institutional advantage to identify the key institutions that are most likely to facilitate economic development in communities in the modern world. These institutions include an efficient non-corrupt government sector. Subsequently, we discuss how a lack of democracy and accountability inevitably undermines development efforts and investment, referring especially to the Ethiopian experience but also considering the experiences of other African dictatorships. Finally, we discuss how donors, by emphasizing democracy and accountability along with other policies that support democratic institutions, have a greater chance of effectively contributing to African economic development.     

How to tame two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation

We explore how the presence of direct democracy across hierarchical levels of government in a federation affects the level of public expenditure. In so doing we revisit the effect of direct democratic institutions on public policies. Particularly, we are interested whether the effect of upper-level (state) direct democratic institutions on lower-level expenditure varies with lower-level direct democracy. Empirically, we exploit the large institutional variation in the degree of direct democracy both for state (cantons) and local governments (municipalities) in Switzerland. Considering 119 municipalities belonging to 22 cantons for the period 1993–2007, we find that the cantonal fiscal referendum increases local spending for those municipalities without fiscal referenda, while this effect is significantly reduced for municipalities that also avail of referenda. This suggests that upper-level fiscal restraint can be undone by lower-level profligacy if direct-democratic control is limited to the upper level.     

The heterogeneous effect of oil discoveries on democracy

This paper evaluates the existence of a resource curse on political regimes using the Synthetic Control Method. Focusing on 12 countries, we compare their democracy level with the weighted democracy level of countries that have not experienced oil shocks and have similar pre‐event characteristics. We find that the exogenous variation in oil endowment does not have the same effect on all countries. In most cases, the event has a negative effect in the long run, but countries with a pre‐existing high level of democracy are not negatively affected.     

Does democracy cause growth? A meta-analysis (of 2000 regressions)

The relationship between democracy and economic growth has been widely debated in the social sciences with contrasting results. We apply a meta-analytical framework surveying 188 studies (2047 models) covering 36 years of research in the field. We also compare the effect of democracy on growth with the effect of human capital on growth in a sub-sample of 111 studies (875 models). Our findings suggest that democracy has a positive and direct effect on economic growth beyond the reach of publication bias, albeit weaker (about one third) of that of human capital. Further, the growth effect of democracy appears to be stronger in more recent papers not surveyed in Doucouliagos and Ulubaşoğlu (2008). Finally, we show that the heterogeneity in the reported results is mainly driven by spatial and temporal differences in the samples, indicating that the democracy and growth nexus is not homogeneous across world regions and decades.     

Income Shocks,Inequality, and Democracy*

In this paper, motivated by contradictory evidence on the effect of income on democracy, we investigate the hypothesis that it is income shocks – major income fluctuations relative to the trend – rather than marginal year‐on‐year variation in income levels that lead to non‐trivial changes in the quality of political institutions. Empirical results provide support for this hypothesis, and show how income inequality plays a crucial role in the effects of economic shocks on democracy. In particular, negative income shocks reveal a positive effect on democracy in countries with high inequality, and vice versa.     

The (small) blessing of foreign aid: further evidence on aid’s impact on democracy

In an empirical contribution to the literature of foreign aid, we estimate the impact of foreign aid on democracy in a panel of 93 developing economies during 1971–2010. We find that foreign aid promotes democracy, with the result robust to different estimation methodologies and control variables and to instrumenting for foreign aid.     

Democratic revolutions as institutional innovation diffusion: Rapid adoption and survival of democracy

Recent ‘democratic revolutions’ in Islamic countries call for a re-consideration of transitions to and from democracy. Transitions to democracy have often been considered the outcome of socio-economic modernization and therefore slow and incremental processes. But as a recent study has made clear, in the last century, transitions to democracy have mainly occurred through rapid leaps rather than slow and incremental steps. Here, we therefore apply an innovation and systems perspective and consider transitions to democracy as processes of institutional, and therefore systemic, innovation adoption. We show that transitions to democracy starting before 1900 lasted for an average of 50 years and a median of 56 years, while transitions originating later took an average of 4.6 years and a median of 1.7 years. However, our results indicate that the survival time of democratic regimes is longer in cases where the transition periods have also been longer, suggesting that patience paid in previous democratizations. We identify a critical ‘consolidation-preparing’ transition period of 12 years. Our results also show that in cases where the transitions have not been made directly from autocracy to democracy, there are no main institutional paths towards democracy. Instead, democracy seems reachable from a variety of directions. This is in line with the analogy of diffusion of innovations at the nation systems level, for which assumptions are that potential adopter systems may vary in susceptibility over time. The adoption of the institutions of democracy therefore corresponds to the adoption of a new political communications standard for a nation, in this case the innovation of involving in principle all adult citizens on an equal basis.     

A farewell to critical junctures: Sorting out long-run causality of income and democracy

We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition hypothesis claims that rising incomes cause a transition to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is motivated by Unified Growth Theory, which hypothesizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.