How useful is yet another data-driven bandwidth in long-run variance estimation?: A simulation study on cointegrating regressions

This paper investigates how bandwidth choice rules in long-run variance estimation affect finite-sample performance of efficient estimators for cointegrating regression models. Monte Carlo results indicate that Hirukawa's (2010) bandwidth choice rule contributes bias reduction in the estimators.     

How reliable and consistent are subjective measures of welfare in Europe and Central Asia?

This paper analyses the reliability and consistency of subjective well‐being measures, using the Life in Transition Survey. Drawing on two life satisfaction questions with alternative scales, our results do not reveal substantial biases in accounts of life satisfaction due to framing. Subjective individual assessments of household relative income position, on the other hand, do not appear to be reliable predictors of objective poverty or wealth. We find that subjective relative income position is only weakly correlated with objective welfare measures. There are differences in evaluations of the household's relative standing across different household members, and these differences are correlated with respondent characteristics.     

How well does a small structural model with sticky prices and wages fit postwar U.S. data?

In this paper, we ask whether a small structural model with sticky prices and wages, embedding various modelling devices designed to increase the degree of strategic complementarity between price-setters, can fit postwar U.S. data. To answer this question, we resort to a two-step empirical evaluation of our model. In a first step, we estimate the model by minimizing the distance between theoretical autocovariances of key macroeconomic variables and their VAR-based empirical counterparts. In a second step, we resort to Watson's [Watson, M.W., 1993. Measures of fit for calibrated models. Journal of Political Economy 101, 1011–1041.] procedure [Measures of fit for calibrated models. Journal of Political Economy 101 (6), 1011.1041] to quantify the model's goodness-of-fit. Our main result is that the combination of sticky prices and sticky wages is central in order to obtain a good empirical fit. Our analysis also reveals that a model with only sticky wages does not perform well according to Watson's criterion [Watson, M.W., 1993. Measures of fit for calibrated models. Journal of Political Economy 101, 1011–1041.].     

Consequences of Hodrick–Prescott filtering for parameter estimation in a structural model of inventory behaviour

Much work in macroeconomics relies on detrending a time series prior to analysis. A popular method of detrending has been the Hodrick–Prescott (HP) filter. This filter has been widely applied in the Real Business Cycle literature to isolate the behaviour of economic variables at business cycle frequencies and to look at comovements between series over the business cycle. Prior work has shown that the use of this filter can have serious consequences for such analysis, such as inducing spurious correlations, and that a researcher should proceed with caution when applying the filter. Another use of HP filtering has been to achieve stationarity prior to estimation of structural econometric models. Little work has been done concerning the possible effects this method of detrending may have on parameter estimation from such models. Given the problems with the filter noted in the literature, it is likely these effects may be of some consequence to estimation results. Using a common model of inventory behaviour, a simulation study is conducted to assess the impact of using the HP filter for detrending prior to estimation. A comparison will be made to other methods of handling trend to gauge relative performance.     

How different are the production functions of the European manufacturing sectors? New empirical evidence

The neo-classical model of international trade assumes that the Total Factor Productivity (TFP) of a sector is common across countries, that returns to scale are constant and that the sectoral production of the countries differs by virtue of the factor endowments. In this article, we consider whether the differences in production can also be explained by the economies of scale in the national industries and by the technological differences across countries. To test this hypothesis, we estimate three models proposed in Harrigan (1999 Harrigan, J. 1999. Estimation of cross-country differences in industry production functions. Journal of International Economics, 47: 267–93.  [Google Scholar]) with data for eight European Union (EU) Member States covering the period 1978 to 1992 and analyse how the TFP changes from country to country.     

How useful is generalized Darwinism as a framework to study competition and industrial evolution?

The role of Darwinist concepts in evolutionary economics has long been a contentious issue. The controversy has recently been rekindled by the proposal of a “Universal” or “generalized” Darwinism, which holds that the ontology of all evolutionary systems accords to the Darwinist scheme of variation, selection and inheritance. This paper focuses on the application of the generalized Darwinist framework to the analysis of markets and industries. It argues that selection and inheritance concepts narrowly construed after the biological example are of limited usefulness. As an alternative to the ‘top–down’ approach of Universal Darwinism, the development of ‘bottom–up’ theories is advocated.

Well-being and the Wealth of Nations: How are They to Be Defined?

Questions relating to well-being have recently returned to the limelight, notably with the publication in September 2009 of the Stiglitz-Sen-Fitoussi commission report on the measurement of economic performance and social progress. Has this commission changed the terms of the debate on what a society's wealth and well-being are? Has it proposed new paradigms? In accepting the limitations of GDP as a key indicator of well-being, has it developed a new theoretical foundation and new evaluation criteria suited to a very different situation and to very different priorities from those that prevailed at the time when GDP first became established as a measure of national economic performance? These are the main questions raised and reviewed by this paper.     

Job satisfaction and disability: lower expectations about jobs or a matter of health?

This article focuses on the analysis of the reported differentials of job satisfaction for disabled and non-disabled individuals. Using the Spanish data of the European Community Household Panel during the period 1995–2001, we estimate a job satisfaction equation for each group and evaluate job satisfaction differentials through the Oaxaca-Blinder methodology. The results show that disabled individuals are more likely to be more satisfied in their jobs than non-disabled ones, but only after controlling for other variables. Oaxaca-Blinder decomposition shows the greater importance of the returns in job satisfaction for disabled people, which is supported by explanations based on the lower expectations about jobs of disadvantaged groups.      

Business cycles in EU new member states: How and why are they different?

This paper uses the business cycle accounting framework to investigate the differences between economic fluctuations in Central and Eastern European (CEE) countries and the euro area. We decompose output movements into the contributions of four economic wedges, affecting the production technology, the agents’ intra- and intertemporal choices, and the aggregate resource constraint. We next analyze the observed cross-country differences in business cycles with respect to these four identified wedges. Our results indicate that business cycles in the CEE countries do differ from those observed in the euro area, even though substantial convergence has been achieved after the eastern EU enlargement. The major differences concern the importance of the intra- and intertemporal wedges, which account for a larger proportion of output fluctuations in the CEE region and also exhibit relatively little comovement with their euro area counterparts.     

What explains the performance of students in a heterogeneous environment? Conditional efficiency estimation with continuous and discrete environmental variables

Efficiency estimations which do not account for the operational environment where production units are operating in may have only a limited value. This article presents a fully nonparametric framework to estimate relative performance of production units when accounting for continuous and discrete background variables. Using insights from recent developments in nonparametric econometrics, we show how conditional efficiency scores can be estimated using a tailored mixed kernel function with a data-driven bandwidth selection. The methodology is applied to the sample of Dutch pupils from the Organization for Economic Co-operation and Development's Programme for International Student Assessment (OECD PISA) data set. We estimate students' performance and the influence of its background characteristics. The results of our application show that several family- and student-specific characteristics have a statistically significant effect on the educational efficiency, while school-level variables do not have impact on performance.     

Institutional specifics and unemployment insurance eligibility in Canada: How sensitive are employment duration effects?

The paper examines the influence of unemployment insurance on the duration of employment spells in Canada using the 1988–90 Labour Market Activity Survey. The primary focus of the paper is to evaluate whether estimated UI effects are sensitive to the degree to which institutional rules and regulations governing UI eligibility and entitlement are explicitly modelled. The key result of the paper is that it is indeed important to allow for institutional detail when estimating unemployment insurance effects. Estimates using simple proxies for eligibility indicate small, often insignificant UI effects. The size and significance of the effects rise as more realistic versions of the variables are adopted. The estimates using the eligibility variables incorporating the greatest level of institutional detail suggest that a jump in the hazard rate by a factor of 2.3 may not be an unreasonable estimate of the effect.     

How much could be saved in Chinese hospitals in procurement of anti-hypertensives and anti-diabetics?

Background: Efficient use of government funding has been increasingly relevant for the success and sustainability of ongoing health-system reform in China; however, as there is no generic substitution policy, patients and basic health-insurance programs pay more for public-preferred brand originators. Such phenomenon is especially typical in public hospitals. The objective of this study is to estimate the potential cost savings in procurement by Chinese public hospitals when switching from brand originators of anti-hypertensive and anti-diabetic medications to their generic equivalents between 2012–2014.

Method: IMS Health volume and value consumption data (IMS China Hospitals Audit system 2012–2014) were used, which covered all Chinese hospitals with 100 beds and above. The top 60% IMS volume consumption of respective anti-hypertensive and anti-diabetic medication with unique dosage form and strength were included. The potential cost savings were calculated from a switch of brand originators with their generic equivalents on the Chinese and international market. An independent sample t-test was conducted to compare the difference of proportion of cost savings in value between the Chinese and international market.

Results: An average of 44% (US$44 million) and 87% (US$90 million) and a total of US$1.4 and 2.8 billion (2014?US$) could be saved from a switch from originator brand anti-hypertensives and anti-diabetics to domestically and internationally available generic equivalents, respectively. The differences of cost savings (in proportion) between domestic and international market were statistically significant (α?=?0.005, p?=?0.003, p?=?0.002, p?=?0.000).

Conclusion: Expensive brand originators dominated the anti-hypertensive and anti-diabetic market in Chinese hospitals between 2012–2014. Preference of brand originators wastes a huge amount of health resources in China and these limited resources could have been used more efficiently. As one of the world’s key generic suppliers, if China wants to use its health resource more efficiently on medicines, comprehensive measures are needed to address both demand-side (consumers’ low trust in the quality of local generics) and supply-side barriers (health professionals’ preference of brand originators).     

Capital growth in a global warming model: will China and India sign a climate treaty?

Global warming is now recognized as a significant threat to sustainable development on an international scale. One of the key challenges in mounting a global response to it is the seeming unwillingness of the fastest growing economies such as China and India to sign a treaty that limits their emissions. The aim of this paper is to examine the differential incentives of countries on different trajectories of capital growth. A benchmark dynamic game to study global warming, introduced in Dutta and Radner (J Econ Behav Organ, 2009), is generalized to allow for exogenous capital accumulation. It is shown that the presence of capital exacerbates the “tragedy of the common”. Furthermore, even with high discount factors, the threat of reverting to the inefficient “tragedy” equilibrium is not sufficient to deter the emissions growth of the fastest growing economies—in contrast to standard folk theorem like results. However, foreign aid can help. If the slower growth economies—like the United States and Western Europe—are willing to make transfers to China and India, then the latter can be incentivized to cut emissions. Such an outcome is Pareto improving for both slower and faster growth economies.     

What's in a grade? Grading policies and practices in principles of economics

This study created an experimental design with which students can empirically assess their risk behavior with respect to exam grades within an expected utility framework. Specifically, the authors analyzed students’ risk preferences associated with taking exams and earning a “risky” unknown grade versus not taking exams and instead obtaining a “sure” grade. Students have grade-choice decisions in nonhypothetical situations that impact their actual exam grades. Estimates indicate that the more risk-averse a student is, the more willing he or she is to accept a lower certain grade and not take an exam than to run the risk of actually taking it. We believe that this experimental setup and its binding results make it an easy but effective way of teaching the obtuse concept of risk aversion.     

Does offshoring of materials and business services affect employment? Evidence from a small open economy

The fear of massive job losses has prompted a fast-growing literature on offshoring and its impact on employment in advanced economies. This article examines the situation for Belgium. It improves the offshoring intensity measure by computing a volume measure of the share of imported intermediates in output, and it is among the first to address both materials and business services offshoring to high wage and low wage countries. Estimations of static and dynamic industry-level labour demand equations augmented by offshoring intensities do not reveal a significant impact of either materials or business services offshoring on total employment for Belgium between 1995 and 2003. This result holds for both the manufacturing sector and the service sector and it proves robust to splitting the manufacturing sector into high technology and low technology industries.     

Who Counts in Crises? The New Geopolitics of International Migration and Refugee Governance

Recent migration ‘crises’ raise important geopolitical questions. Who is ‘the migrant’ that contemporary politics are fixated on? How are answers to ‘who counts as a migrant’ changing? Who gets to do that counting, and under what circumstances? This forum responds to, as well as questions, the current saliency of migration by examining how categories of migration hold geopolitical significance—not only in how they are constructed and by whom, but also in how they are challenged and subverted. Furthermore, by examining how the very concepts of ‘migrant’ and ‘refugee’ are used in different contexts, and for a variety of purposes, it opens up critical questions about mobility, citizenship and the nation state. Collectively, these contributions aim to demonstrate how problematising migration and its categorisation can be a tool of enquiry into other phenomena and processes.     

Do we need a global VAR model to forecast inflation and output in South Africa?

This study determines whether the global vector autoregressive (GVAR) approach provides better forecasts of key South African variables than a vector error correction model (VECM) and a Bayesian vector autoregressive (BVAR) model augmented with foreign variables. The article considers both a small GVAR model and a large GVAR model in determining the most appropriate model for forecasting South African variables. We compare the recursive out-of-sample forecasts for South African GDP and inflation from six types of models: a general 33 country (large) GVAR, a customized small GVAR for South Africa, a VECM for South Africa with weakly exogenous foreign variables, a BVAR model, autoregressive (AR) models and random walk models. The results show that the forecast performance of the large GVAR is generally superior to the performance of the customized small GVAR for South Africa. The forecasts of both the GVAR models tend to be better than the forecasts of the augmented VECM, especially at longer forecast horizons. Importantly, however, on average, the BVAR model performs the best when it comes to forecasting output, while the AR(1) model outperforms all the other models in predicting inflation. We also conduct ex ante forecasts from the BVAR and AR(1) models over 2010:Q1–2013:Q4 to highlight their ability to track turning points in output and inflation, respectively.     

Are the kinship networks a resource or a curse for small firms in post-communist countries? The case of Albania

Cross-sectional data are compiled from the 2002, 2005, 2008 and 2012 World Bank Living Standards Measurement Study databases for Albania. Based on responses from 1169 firms, the entrepreneurs’ kinship networks are found to influence firm activity in a positive and negative way. The positive contribution occurs through employment, be it formal or informal. The persisting impact of the kinship networks fades away, and business and friendship networks have gained importance in recent years.     

What are the drivers of business demography and employment in the countries of the European Union?

ABSTRACT

The aim of this contribution is to establish a typology of European entrepreneurship countries with respect to variables related to entrepreneurial activity and economic development. Using a combination of multidimensional data analyses allows us to extend the concept of ‘entrepreneurial regimes’ and leads to the distinction of five such entrepreneurial regimes. Moreover, in order to better characterize these classes, a wide set of illustrative variables representative of national economic development, labour market functioning, and formal and informal institutional environments, as well as variables specific to the entrepreneurial population, are considered. Finally, discriminant analyses show that the five explanatory themes considered (Innovation, Employment, Formal Institutions, Entrepreneurship and Governance) differentiate the classes, and significantly explain the diversity of entrepreneurial regimes. These findings have important implications for the implementation of public policy, in order to promote entrepreneurial activity and reduce unemployment.     

To defer or not defer? UK state pension and work decisions in a lifecycle model

The UK state pension (which depends only on age) includes an option to defer take up which yields either a subsequent lump sum or higher weekly pension. We analyse the joint decisions on pension deferral and intertemporal labour supply/participation in a lifecycle setting. We show that deferral is purely a financial decision, but the impact of deferral on work decisions depends on preferences, wage rates, non-labour income and initial wealth. To exactly characterize this, we use a quasilinear utility function and provide calibrated simulations. We also discuss the choice between a lump sum or increased weekly pension.