A large factor model for forecasting macroeconomic variables in South Africa

This paper uses large Factor Models (FMs), which accommodate a large cross-section of macroeconomic time series for forecasting the per capita growth rate, inflation, and the nominal short-term interest rate for the South African economy. The FMs used in this study contain 267 quarterly series observed over the period 1980Q1-2006Q4. The results, based on the RMSEs of one- to four-quarter-ahead out-of-sample forecasts from 2001Q1 to 2006Q4, indicate that the FMs tend to outperform alternative models such as an unrestricted VAR, Bayesian VARs (BVARs) and a typical New Keynesian Dynamic Stochastic General Equilibrium (NKDSGE) model in forecasting the three variables under consideration, hence indicating the blessings of dimensionality.     

Modeling approaches for the design of resilient supply networks under disruptions

This paper studies various modeling approaches to design resilient supply networks (SN) for the location-transportation problem under uncertainty. The future environment of the SN is shaped by random demands, and by disruptions perturbing depots capacity and ship-to-point demand processes. The paper proposes several stochastic programming models incorporating alternative resilience seeking formulations. A generic approach to model SN disruptions, and to elaborate and evaluate SN designs is also proposed. Experiments are made to compare the SN design models formulated, and recommendations are drawn on the approach to use to design effective and robust supply networks.     

Once were farmers: Occupation, social mobility, and mortality during industrialization in Saguenay-Lac-Saint-Jean, Quebec 1840–1971

We study men's adult mortality and longevity by socio-occupational status during industrialization in Saguenay-Lac-Saint-Jean, Quebec. Data were extracted from the BALSAC database (Université du Québec à Chicoutimi), which comprehensively traces the demographic history of the region since the beginning of the French Canadian settlement in 1840 up to the early 1970s. Using five occupational classes and controlling for year, age at marriage, urban/rural residence, and literacy, we found no evidence for the emergence of a socioeconomic gradient in mortality. At least until the early 1970s, mortality in the region is the lowest for farmers and appears to be driven by occupational risk rather than fundamental social causes.     

Voluntary firm restructuring: why do firms sell or liquidate their subsidiaries?

This paper examines why companies decide to divest a subsidiary in a corporate environment characterised by concentrated ownership, using a unique dataset of non-listed Belgian subsidiaries. The results of the binomial logit analyses are consistent with the idea that management will intervene in order to improve the controlling firm’s focus or when subsidiary performance imposes a burden on the group’s financial situation. Especially when blockholders hold more than 75% of the shares, these motives drive the divestiture decision. At lower levels of ownership concentration, these hypotheses cannot explain the higher divestiture likelihood, which supports the agency hypothesis. Once the divestment decision has been taken, the choice has to be made between a sale and liquidation. The logit analysis reveals that although selling a subsidiary seems the preferred option, liquidation is likely when the subsidiary is small, active in a sector with few competitors and when financial distress is eminent.     

Federalism and Conflicts over Principalship. Some Insights into the American Constitutional History

The article provides an economic interpretation of Kelsen's theory of decentralized governments. It helps to distinguish different forms of federalism and in particular the corresponding conflicts of principalship inside the governmental structure. The model is applied to the early American constitutional history and shows how opposed views of agency relationships in the constitution foreshadowed what would later end up in a civil war.     

Altruism and Determinacy of Equilibria in Overlapping Generations Models with Externalities

This paper deals with an OLG model with production and a single commodity, in which agents are assumed altruistic and the aggregate production function contains external effects. I prove that, if the technology satisfies a minor assumption, which encompasses positive and negative externalities, some curvature conditions on the utility function ensure local determinacy of stationary and period 2 equilibria. I prove that non-separable, strictly concave preferences are a fundamental ingredient for the occurrence of indeterminate equilibria. Finally, considering the case of unbounded growth, I establish that for any utility and production functions a unique balanced growth path is globally determinate.
JEL Classification Numbers: C62, E32     

Common cyclical features analysis in VAR models with cointegration

The paper considers n-dimensional VAR models for variables exhibiting cointegration and common cyclical features. Two specific reduced rank vector error correction models are discussed. In one, named the “strong form” and denoted by SF, the collection of all coefficient matrices of a VECM has rank less than n, in the other, named the “weak form” and denoted by WF, the collection of all coefficient matrices except the matrix of coefficient of error correction terms has rank less than n. The paper explores the theoretical connections between these two forms, suggests asymptotic tests for each form and examines the small sample properties of these tests by Monte Carlo simulations.     

ATTAINABLE CLAIMS IN A MARKOV MARKET1

It is shown how, even when the market is incomplete, certain contingent claims are attainable: that is, they can be represented as stochastic integrals with respect to the process which describes the evolution of the asset prices.