Killing off cohorts: Forecasting mortality of non-extinct cohorts with the penalized composite link model

Mortality forecasting has crucial implications for insurance and pension policies. A large amount of literature has proposed models to forecast mortality using cross-sectional (period) data instead of longitudinal (cohort) data. As a consequence, decisions are generally based on period life tables and summary measures such as period life expectancy, which reflect hypothetical mortality rather than the mortality actually experienced by a cohort. This study introduces a novel method to forecast cohort mortality and the cohort life expectancy of non-extinct cohorts. The intent is to complete the mortality profile of cohorts born up to 1960. The proposed method is based on the penalized composite link model for ungrouping data. The performance of the method is investigated using cohort mortality data retrieved from the Human Mortality Database for England & Wales, Sweden, and Switzerland for male and female populations.     

Dynamic monopoly pricing with network externalities

In this paper, we study the optimal dynamic monopoly pricing for a good which exhibits positive network externalities. When network externalities are of sufficient magnitude, we show that, contrary to the Coase theorem, (1) there is no time inconsistency problem; (2) subgame perfect equilibrium prices increase as time passes. From this point of view, positive network externalities allow the monopoly to commit itself credibly to increasing future prices.Ce papier étudie la tarification optimale intertemporelle d'un monopole qui vend un bien exhibant des externalités positives de réseau. Lorsque ces externalités sont suffisamment importantes, nous montrons que, contrairement au théorème de Coase, (1) il n'y a pas de problème d'incohérence temporelle, (2) les prix d'équilibre parfait croissent avec le temps. De ce point de vue, les externalités positives de réseau permettent au monopole de s'engager crédiblement sur une politique de prix futurs à la hausse.     

The explosive combination of religious decentralization and autocracy

The relationship between religion and politics is explored from a theoretical standpoint. Religious clerics can be seduced by an autocrat and political stability is at stake. The autocrat's decisions consist of two measures both capable of antagonizing religious clerics: adopting secular reforms and unduly appropriating part of the national wealth, which generally are complements. Compared to centralized religions, decentralized religions, such as Islam, tend to discourage secular reforms and corruption but those effects are not guaranteed if the autocrat accepts political instability. The main hypotheses and the central results of the theory are illustrated with regime case studies that refer to contemporary times.     

Nominal exchange rate volatility,relative price volatility,and the real exchange rate

We model real exchange rate, nominal exchange rate, and relative price volatility using real and nominal factors. We analyze these volatility measures across developing and industrialized countries. We find that the inclusion of nominal factors achieves a sizable reduction in the real exchange rate volatility spread between developing and industrialized countries. In addition, we find that nominal factors matter to real exchange rate volatility in the short run and the long run, and that for developing countries, a higher share of real exchange rate volatility stems from relative price volatility.     

STRUCTURAL HOMOPHILY

Homophily, or the fact that similar individuals tend to interact with each other, is a prominent feature of economic and social networks. I show that the equilibrium structure of homophily has empirical power. I build a strategic model of network formation, which produces a unique equilibrium network. Individuals have homophilic preferences and face capacity constraints on the number of links. I develop a novel empirical method, based on the shape of the equilibrium network, which allows for the identification and estimation of the underlying homophilic preferences. I apply this new methodology to the formation of friendship networks.     

Mitigating shortage and distribution costs in damaged water networks

Recent events have sparked renewed interest in disaster mitigation for public infrastructures. Presidential Decision Directive 63 identifies water distribution as being among the most vital and vulnerable of our large-scale infrastructures. Water distribution networks are vulnerable to threats such as chemical and biological contamination, cyber attacks on computer-based management systems, and physical destruction from acts of nature and intentional attack. This research develops methods for configuring the undamaged portion of the water network to mitigate the consequences of physical destruction. The approach is to find a hydraulically feasible residual network that can be pressurized to meet the demand of a subset of demand sectors. Demand sectors not pressurized then receive water through truck distribution from pressurized sectors. The objective is to minimize weighted water shortage and water truck distribution costs by identifying sectors to pressurize along with an assignment of unpressurized sectors to pressurized sectors for water delivery by truck. The paper develops an optimization model, describes a solution method, and presents computational results for three example networks.     

Internal Relative Price Stationarity in Long-Run Purchasing Power Parity

This study demonstrates that the joint relationship among domestic traded-goods prices, dometic nontraded-goods prices, foreign traded-goods prices, and foreign nontraded-goods prices is important to understanding rejections or confirmations of long-run PPP. This joint relationship is defined as the "cross-country internal relative price structure." For nine of the ten pairs of countries studied, the cross-country internal relative price structure is found to be stationary; thus, factors other than the influence of nontraded-goods prices must be responsible for the rejections of long-run PPP.