To stylize or not to stylize,is it a fact then? Clarifying the role of stylized facts in empirical model evaluation

Though the concept of ‘stylized fact’ plays an important role in the economic literature, there is little analysis of the definition and evaluative use of the term. A permissive account of stylized facts is developed which focuses on their mediating role between models and empirical evidence. The mediation relationship restricts stylized facts by requiring concrete empirical targets. On the other hand, there is much legitimate diversity within the permissive account; key dimensions of diversity are argued to be the part of the model targeted (explanans vs. explanandum) and degree of partiality of correspondence. The use of stylized fact in model evaluation points to the downside of stylization: decreased ability to support strong claims about particular targets. In the final analysis, the role of stylized facts in model-based explanation depends on the view taken of the relative importance of generality and empirical adequacy.     

从零散事实到典型化事实再到规律发现——兼论经济研究的层次划分

本文结合中国经济学发展的思考,对于典型化事实在经济理论中的地位和作用进行了初步探讨。典型化事实是一种能够反映经济运行的真实和基本特征的具有代表性的关键性事实。中国经济的"典型化事实"研究和发现仍然是一个未完成的任务。以计量分析指标所显示的典型化事实,及其所赖以产生的基础模型,必须建立在长期经济理论研究的积累之上。典型化事实,又是经济理论发展的方向。典型化事实的研究中需要排除一些不良的研究方法,并注意采用正确方法从零散事实中提炼典型化事实。经济研究的过程,大致上包括从零散事实到典型化事实,再到一般理论模型和真实模型,最后到经济规律发现等环节。     

Solidarity, Transfers, and Poverty

There is abundant evidence that inter-vivos transfers are more important in low-income countries than in industrialized countries. The authors use a new specification of altruism to explain this stylized fact. Under this specification, individuals feel altruistically towards other individuals genetically related to them. However, they worry about them only when their relatives' consumption falls below a certain level. Simulation results mimic the stylized facts concerning the relation between inter-vivos transfers and income.     

Quarterly US unemployment: Cycles,seasons and asymmetries

This paper documents three stylized facts for the quarterly unemployment rate in the United States. Firstly, unemployment is asymmetric over the business cycle, i.e. it rises sharply in recessions and it falls slowly in expansions. Secondly, its seasonal fluctuations are not constant across the two business cycle stages in the sense that there is less seasonality in recession periods. Thirdly, the effect of shocks to the unemployment rate in expansions seem transitory, while this effect is permanent in recessions. Some implications of these stylized facts for empirical macroeconomics and seasonal adjustment are discussed.     

Trade-related Job Loss and Wage Insurance: a Synthetic Review

The paper seeks to promote further integration of empirical and theoretical discussions of trade and worker adjustment. From the author's recent studies of the costs of job loss, she develops a set of stylized facts of trade‐related job loss, with a focus on worker characteristics and labor market consequences. These stylized facts are relevant to any (credible) model of trade liberalization and adjustment costs. The author discusses the basic ideas of wage insurance and summarizes the few data known about how a program might work if implemented in the United States. A final section provides a list of issues for a model of trade that will be consistent with the empirical stylized facts, and sets out questions for future research.     

Research Program versus Paradigm in the Development of Economics

This paper critiques economists’ past approaches to modeling the issue of intimate parmer violence based on stylized facts about victims and batterers. These stylized facts are an important step in recognizing a broader range of issues than what has been narrowly formulated in economic studies to date. A key factor is the revolving door phenomenon of abused women leaving and returning to a violent union. The ways in which women react to abusive situations is shaped by time-varying and path-dependent, decision-making processes over several episodes of violence. This paper discusses how economists can extend far beyond their current thinking around the constructions of intimate partner violence. The stylized facts presented in the paper have important implications for policy approaches to the issue, particularly where it concerns abused women’s potential for self-sufficiency in the labor market.     

Firm exit,technological progress and trade

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher productivity firms survive longer, most firm closures are young firms, higher productivity exporters are more likely to continue to export compared to less productive exporters and market exits as well as firm closures are typically preceded by periods of contracting market shares. The present paper shows that the simple inclusion of exogenous economy wide technological progress into the standard Melitz (2003) model generates a tractable dynamic framework that generates endogenous exit decisions of firms in line with the stylized facts. Furthermore, we derive the effects of faster technological progress and trade liberalization on export market exit and firm closure.     

Are the Kaldor–Verdoorn Laws Applicable in the Newly Industrializing Countries?

The Kaldor–Verdoorn "laws," the focus of this work, are a set of stylized facts which attempt to describe growth in an economy. This paper tests these stylized facts using macroeconomic data from newly industrializing countries. Results show that high rates of growth of manufacturing do not translate to high productivity rates in Singapore, Indonesia, Thailand, and Mauritius, but they do so in South Korea. A negative relation exists for Malaysia. This work questions the operation of Kaldor's laws in the context of globalization and suggests a revision of the laws.     

农民负担、政府管制与财政体制改革

本文根据一项基于大样本、跨年度的实证研究的结果 ,对中国农村的税费问题进行理论性概括。指出农民负担问题的根源在于政府对农村进行的各种管制。同时指出仅仅通过财政体制改革来解决农民负担问题具有相当的片面性 ,并分析了当前正在进行的农村税改存在的一系列问题。     

地方政府支出,RBC模型与中国的区域经济周期——以天津市为例

In this paper, the actual economy in Tianjin Municipal city are simulated with RBC model through introducing local government expenditure. From the works review and stylized facts, it is easy to find that government expenditure will have important influence on economy. Then this paper provides new evidence to support this judgment by DCC theory. After concluding the stylized facts of Tianjin city, a regional RBC model with local government expenditure is developed. Next, this paper starts to solve this RBC model, get log-linearization of the solution and estimate all parameters. A program on Matlab is made to simulate actual economy in Tianjin city with this RBC model. The result is the RBC model with local government expenditure has better performance than that without local government expenditure. Therefore, it will be necessary to consider local government expenditure, if regional economy is researched.     

Economic coordination in environments with incomplete pricing

The Review of Austrian Economics - Simple observation presents two stylized facts that call for integration into a single explanatory framework. One fact is that societies reflect generally though...     

Simulating Alternative Development Strategies: Some suggestions From Korea' Experience

This paper reviews the stylized facts about Korea's development strategy which distinguish it from most other developing countries. These stylized facts are then incorporated in two multi-sector models, a dynamic input-output (DIO) model and a computable general equilibrium (CEG) model. Both models are used to ask what might have happened to Korea if she had pursed an inward-looking rather than an outward-looking development strategy. [110]     

中国经济周期波动的典型化事实:一个基于CF滤波的研究

从宏观时间序列经验特征中概括经济周期波动的典型化事实是经济学研究的一项重要课题,也是当前中国经济周期波动研究的欠缺所在.本文采集23个主要宏观经济变量数据,运用新近提出的CF滤波,分解得到它们的周期性成分,并计算这些周期性成分的标准差、自相关系数以及它们之间的时差相关系数.在此基础上,分析了中国经济周期波动的经验特征,总结出中国经济周期波动的典型化事实,并与美国的研究结果加以对比,揭示出中国经济周期波动经验特征和典型化事实的一般性和特殊性.本文的研究进一步验证了Lucas(1977)命题,也有助于为相关理论发展和宏观调控操作提供参照和借鉴.     

Price dispersion and the stability of trade*

Research on trade relationships has documented a high rate of relationship breakup and churning. We use data on Norwegian exports to document two stylized facts about the stability of trade relationships. First, the probability of relationship breakup increases in the deviation of the relationship-specific price from a reference price. Second, relationship hazards follow Zipf's law. We propose a search model with limited information and search frictions to explain these facts. Reference prices provide information on outside trade options that inform optimal breakups, leading to the first stylized fact. Strong heterogeneity in breakup frictions across relationships can explain the Zipf's law hazards.     

Income Distribution and Dualism: The Case of Kenya

Development economics has been dominated by the use of dualistic models of the economy. This study investigates whether the stylized facts that emanate from models, such as those of Sir Arthur Lewis and Harris and Todaro, arerelevant in examining issues of income distribution. Based on an examination of Kenyan household data, estimates of the distribution are compared with the stylized facts and past estimates. It is found that while the focus onrural–urban differences that arises from the dualistic models is justifiable, this concern with the spatial duality has led to the neglect of intrasectorial inequality, particularly rural inequality.     

Classical and modern business cycle measurement: The European case

This paper intends to harmonize two different approaches employed in the analysis of business cycles and, in doing so, it retrieves the stylized facts of the business cycle in Europe. We start with the classical approach proposed in Burns and Mitchell (1946) of dating and analyzing the business cycle. The stylized facts retrieved are commented and compared to those obtained by Harding and Pagan (2002) for the U.S.. Two conclusions can be extracted from the results: a) though the turning points obtained for individual countries seem to cluster and would suggest the idea of a common cycle, there are relevant differences in the stylized facts characterizing the business cycle in the individual European economies under analysis; b) moreover, we find relevant differences in the business cycle stylized facts of the European countries and the U.S., mostly in terms of the duration, the amplitude of the cycle and the shape of the recovery. We then adopt the modern alternative: the Markov-switching vector autoregression (MS-VAR). The models regime probabilities provide an optimal statistical inference of the turning point of the European business cycle. For assessing the capacity of the parametric approach to generate the stylized facts of the classical cycle in Europe, the stylized facts of the original data are compared to those of simulated data. Contrary to the results reported by Harding and Pagan (2002) , we show that the MS-VAR model is a good candidate to be used as an statistical instrument to improve the understanding of the business cycle.JEL Classification: E32, F43, F47, C32We are grateful to Mike Artis, Mike Clements and Adrian Pagan for useful comments and discussions. Financial support from the UK Economic and Social Research Council under grant L116251015 is gratefully acknowledged by the first author. The research of the second author was supported through a European Community Marie Curie Fellowship, contract HPMF-CT-2000-00761. Corresponding author: Juan Toro     

Small firms in Portugal: a selective survey of stylized facts,economic analysis,and policy implications

I survey a number of stylized facts pertaining to the dynamics of firm entry, growth, and exit in competitive industries. I focus particularly on data for Portugal, although I also consider, for comparison purposes, data from other countries. I then present a series of theoretical models that attempt to explain the stylized facts and evaluate the welfare impact of market distortions. Finally, I derive a number of policy implications, all centered around the notion of economic mobility.

Economics of Guanxi as an Interpersonal Investment Game

The purpose of this paper is to provide a simple model of guanxi given stylized facts. I first outline the intrinsic characteristics of guanxi to draw the stylized facts, and then use these facts to model it as an interpersonal investment game. I find that the degrees of the ability and loyalty of the Recipient must be reasonably high enough for the interpersonal investment to take place. After the investment has occurred, the degree of loyalty must be higher than that of the ability to guarantee stable gaunxi relationships. When the interpersonal investment is made, it is a signal of trust in the ability and loyalty of the Recipient. However, if the ability factor dominates, then the Recipient will not always feel loyal enough to return the favor. This indicates that loyalty counts for more than ability. A related result is that a stable guanxi relationship is unlikely to occur for a highly able person given the equal chance of the two characteristics. This paper also presents some interesting implications for corruption and lock‐in relationships.     

Business cycle, unemployment benefits and productivity shocks

The dimension of aggregate fluctuations is quite different between the European and US economies. Such a result fully justifies attention to non-Walrasian features for improving the empirical performance of the RBC model. In this paper, we introduce two features, present in European economies, into the standard general setting of the infinite-horizon stochastic growth paradigm: trade union behavior and unemployment benefits. We show that this non-Walrasian economy (i) improves the ability to account for the stylized facts, (ii) displays realistic features in explaining the employment and productivity puzzles, (iii) may account for contractions.     

Home Production and China's Hidden Consumption

This paper presents a structural approach to estimating the value of home production in China. The structural model incorporates stylized facts about the time allocation of Chinese households, such as the active participation of retired individuals in home production. Estimates based on the China Health and Nutrition Survey show that the aggregate value of home production as a fraction of adjusted GDP have fallen at a rate of 2.7 percent per year over the past decade in China. However, a significant part of China's private consumption was still satisfied through unpaid home production in 2009, amounting to roughly 18 percent of adjusted GDP.