The relation between sunspot effects and multiplicity in incomplete markets models with numeraire assets

This paper considers the necessity and sufficiency of multiple certainty equilibria for sunspot effects, and shows that neither implication is valid. This claim is made for models with incomplete markets and numeraire assets. First, I prove that a multiplicity of certainty equilibria is neither necessary nor sufficient for sunspot effects by way of two counter-examples. Second, I verify over an entire subset of economies that equilibrium with sunspot effects can never be characterized as a randomization over multiple certainty equilibria.     

Robustness checks and robustness tests in applied economics

A common exercise in empirical studies is a “robustness check”, where the researcher examines how certain “core” regression coefficient estimates behave when the regression specification is modified by adding or removing regressors. If the coefficients are plausible and robust, this is commonly interpreted as evidence of structural validity. Here, we study when and how one can infer structural validity from coefficient robustness and plausibility. As we show, there are numerous pitfalls, as commonly implemented robustness checks give neither necessary nor sufficient evidence for structural validity. Indeed, if not conducted properly, robustness checks can be completely uninformative or entirely misleading. We discuss how critical and non-critical core variables can be properly specified and how non-core variables for the comparison regression can be chosen to ensure that robustness checks are indeed structurally informative. We provide a straightforward new Hausman (1978) type test of robustness for the critical core coefficients, additional diagnostics that can help explain why robustness test rejection occurs, and a new estimator, the Feasible Optimally combined GLS (FOGLeSs) estimator, that makes relatively efficient use of the robustness check regressions. A new procedure for Matlab, testrob, embodies these methods.     

Economics of evaluation (with special reference to promotion and tenure committees)

Previous research suggests that universities that fear tenuring bad candidates more than they fear rejecting good candidates would optimally have both department and outside evaluating committees. I find that a higher relative cost of accepting bad candidates is neither necessary nor sufficient for the optimality of more than one committee. Also, with some probability, t, the administration will tenure one with split recommendations from two committees, if one committee is more accurate than the other, one structure will have fewer errors of both types for some range of t, and possibly a lower expected loss from errors for all t.     

Investments in education and welfare in a two-sector,random matching economy

We consider a random matching model where heterogeneous agents choose optimally to invest time and real resources in education. Generically, there is a steady state equilibrium where some agents, but not all of them, invest. Regular steady state equilibria are constrained inefficient in a strong sense. The Hosios (1990) condition is neither necessary nor sufficient for constrained efficiency. We also provide restrictions on the fundamentals sufficient to guarantee that equilibria are characterized by overeducation (or undereducation), present some results on their comparative statics properties, and discuss the nature of welfare improving policies.     

Monetary Policy Rules, Policy Preferences, and Uncertainty: Recent Empirical Evidence

We survey recent empirical evidence on monetary policy rules, and find that the emphasis in the political economy literature on institutional design (e.g. central bank independence and inflation targeting) is exaggerated. Formal institutional reform seems neither a necessary nor a sufficient condition for the observation of shifts in monetary policy rules. However, there is no doubt that in some cases (e.g. the UK following the start of inflation targeting in 1992, and Bank of England Independence in 1997), a major shift in monetary policy conduct is detectable. We also highlight the problems in explicitly testing the predictions of the political economy literature. Semi-structural modelling approaches, such as time-varying VAR models may be more useful in understanding policy rules, and the interaction between policy shifts and changes in the transmission mechanism.     

No one true path: uncovering the interplay between geography,institutions, and fractionalization in economic development

Do institutions rule when explaining cross‐country divergence? By employing regression tree analysis to uncover the existence and nature of multiple development clubs and growth regimes, this paper finds that to a large extent they do. However, the role of ethnic fractionalization cannot be dismissed. The findings suggest that sufficiently high‐quality institutions may be necessary for the negative impact on development from high levels of ethnic fractionalization to be mitigated. Interestingly, I find no role for geographic factors—neither those associated with climate nor physical isolation—in explaining divergence. There is also no evidence to suggest a role for religious fractionalization. Copyright © 2009 John Wiley & Sons, Ltd.     

Causal conditions for loneliness: a set-theoretic analysis on an adult sample in the UK

While age has been identified as a risk factor for loneliness, whether it is a necessary or sufficient condition for loneliness has never been examined. This is the first study that applies fuzzy-set QCA, a special type of set-theoretic method, to discover the necessary and sufficient causal conditions for loneliness, respectively, among adults in the UK, analysing the data collected from the UK sample of Round 6 of the European Social Survey (ESS, 2012, n = 2163). It firstly examines the configurations of five conditions: being female, old age, not living with spouse/partner, bad health, and not being frequently social with others. Gender was found neither a necessary nor a sufficient condition for loneliness, and old age was close to being a necessary condition and became necessary when united with any of the other conditions; the configuration of not living with spouse/partner and not healthy and not frequently social with others is a sufficient condition. Robustness of results was tested with two different conditions (a limiting illness and a confidante), and a separate analysis on the absence of loneliness was conducted. The effect of the unbalanced distribution of cases across different values of the outcome was highlighted as a source of uncertainty, and the results on the absence of loneliness are different from those on its presence.     

The impact of scale length on reliability and validity

The conventional wisdom in political science seems to hold that simply increasing the length of scales automatically increases their reliability and that validity supposedly increases merely as the result of increased reliability. This paper shows analytically and by way of example that—despite their status as conventional wisdom—neither of these statements is true without qualifiers that seem to be unrecognized. The paper thus clarifies the relationships among scale length, reliability, and validity.     

Manipulation of the running variable in the regression discontinuity design: A density test

Standard sufficient conditions for identification in the regression discontinuity design are continuity of the conditional expectation of counterfactual outcomes in the running variable. These continuity assumptions may not be plausible if agents are able to manipulate the running variable. This paper develops a test of manipulation related to continuity of the running variable density function. The methodology is applied to popular elections to the House of Representatives, where sorting is neither expected nor found, and to roll call voting in the House, where sorting is both expected and found.     

Stress at the top: myth or fact? Causal explanations from a fuzzy-set qualitative comparative analysis (fsQCA)

Stress and its associated health issues are a serious concern, because they not only affect employees but also organizations through related costs. The common perception is that being at the top of a hierarchy is associated with higher levels of stress because of the increased responsibilities, challenges, and demands. The present study examines this perception by applying a fuzzy-set qualitative comparative analysis. The study investigates how the top position, authority, number of subordinates, workload, and a sense of control, alone or in combination, lead to stress or its absence. The results show that there are several recipes for stress and that being (or not being) in the top position is neither a sufficient nor a necessary condition for stress (or absence of stress). One of the recipes, however, indicates that being in the top position might be conducive to stress. This finding shows that the position an individual has in the hierarchy does not determine stress. The present study also shows that the absence of a sense of control is almost always a necessary condition for predicting stress and is present in all recipes for the absence of stress. The results can inform managers about the conditions that cause stress and enable managers to think about solutions that can lead to good mental health in their organizations.     

BUDGET ALLOCATION IN A UK UNIVERSITY: CONTRASTING PERIODS OF RESOURCE AVAILABILITY WITH RESOURCE SCARCITY*

This paper seeks to identify variables which explain variations in budget allocations in a UK university using a pooled database relating to two periods: one of resource availability, the other of resource scarcity. the results over both periods indicate, consistent with previous research, that a combination of workload and power proxies explains a very high proportion of budget allocations. However, analysis of the two periods revealed that: (i) incremental budgeting, which was observed to be in operation during the period of resource availability, was not supplanted by comprehensive budgeting during the period of resource scarcity, (ii) the impact of power proxies on budget allocation did not materially change in response to changes in levels of resource availability, and (iii) compared with internally based power, externally based power (as proxied) had neither a greater impact on resource allocation during the period of resource scarcity nor a lower impact during the period of resource availability as hypothesized.     

HRM systems between control and commitment: occurrence,characteristics and effects on HRM outcomes and firm performance

In the literature, it is often assumed that traditional, control‐oriented HRM systems are increasingly being replaced by commitment‐based HRM systems because the latter generally result in higher firm performance. However, an HRM system's effectiveness may depend on an organisation's external and internal context, and neither control nor commitment HR systems are without disadvantages. Thus, the empirical validity of this claim is not clear ex ante. This paper analyses the empirical diffusion and determinants of control and commitment HRM systems in Germany as well as their impact on HRM outcomes and firm performance. The findings indicate that between the two extreme forms of high‐control and high‐commitment HRM systems, there are two hybrid forms (long‐term‐oriented control system and regulated commitment system) that combine elements of both ‘pure’ systems. Commitment HRM systems outperform the high‐control HRM system concerning many HRM outcomes and firm performance measures. However, in direct comparison, the high and the regulated commitment HRM systems do not show substantially different outcomes, indicating that there is no one best way.     

On the Empirical Failure of Purchasing Power Parity Tests

Empirical research on the validity of the purchasing power parity (PPP) condition is generally based on real exchange rates built using the consumer price index (CPI), but fails to provide clear support to PPP. In this paper we show theoretically that, even if the law of one price (LOP) holds for traded goods, CPI‐based real exchange rates are not mean reverting, and are neither stationary nor integrated. Therefore, both unit root and stationarity tests should reject their null. Our theoretical results are validated both by simulations and an empirical application. Copyright © 2014 John Wiley & Sons, Ltd.     

The Impact of Sexual Harassment Policy in the Dutch Police Force

The aim of the present study was to evaluate the outcome of sexual harassment policy in the Dutch Police Force. Using a survey, sexual harassment was measured in 2000 and again in 2006 and we tested whether sexual harassment is associated with the comprehensiveness of policies. To be able to identify divisions with comprehensive policies, we interviewed 29 key persons in semi-structured interviews. It appeared that between 2000 and 2006 sexual harassment did not decrease: neither for women nor for men. Furthermore, the risk of sexual harassment was not lower in divisions that implemented comprehensive policies than in divisions with less comprehensive policies. The results suggest that sexual harassment is a workplace hazard that is very difficult to prevent in male dominated workplaces and implementing a comprehensive policy is not sufficient to prevent this workplace hazard.     

Observable implications of Nash and subgame-perfect behavior in extensive games

We provide necessary and sufficient conditions for observed outcomes in extensive game forms, in which preferences are unobserved, to be rationalized first, weakly, as a Nash equilibrium and then as the unique subgame-perfect equilibrium. Thus, one could use these conditions to find that play is (a) consistent with subgame-perfect equilibrium, or (b) not consistent with subgame-perfect behavior but is consistent with Nash equilibrium, or (c) consistent with neither.     

Monopolies and mergers commission reports: A note

It is shown that the UK Monopolies and Mergers Commission has typically neither produced, nor correctly processed, the information necessary for making rational decisions. The case for an explicit quantitative approach using the expected value criterion is outlined.     

Electricity Auctions

This article examines auctions in the electricity industry. We find that the laws of physics that rule power transmission networks defeat ex post productive efficiency: the cheapest combination of generating plants is not always selected, not even in the optimal auction. Furthermore, neither the pay-your-bid nor the uniform-price auction coincides in general with the optimal auction, nor do they yield productive efficiency. Our analysis also sheds light on behavior observed in existing power markets, and leads to policy recommendations. First, producers protected by transmission constraints must see their bids capped in the short run to curb their ability to extract large rents. Second, producers apparently hurt by the unavailability of transmission capacity may benefit from it. Hence, contrary to common wisdom, policy makers cannot rely on them to finance or advocate transmission expansion.     

Stability of a Cournot-Nash equilibrium: The multiproduct case

This paper examines the stability conditions of Cournot-Nash equilibria in models in which each firm produces multiple outputs in m related markets. Using a discrete adjustment process, we establish sufficient and necessary conditions for stability. We derive further specialized stability conditions for three important cases, namely a multiproduct duopoly, a multiproduct oligopoly with homogeneous products, and a single-product oligopoly with product heterogeneity. The paper shows that the stability conditions of the m markets individually are in general sufficient nor necessary for the stability of the m markets as a group. In addition, an example is given of how the stability conditions can be applied to determine comparative statics for multiproduct oligopoly.     

Minimum Advertised Price

This paper examines minimum advertised price (MAP), a vertical restraint that is observed in manufacturer-retailer interactions. Under MAP, the manufacturer announces that it will reimburse retailers for a fraction of their advertising expenditures if retailers do not advertise the product at below a specified price. MAP can be considered a combination of resale price maintenance (RPM) and a cooperative advertising subsidy. Current antitrust law treats RPM as illegal per se, whereas MAP is judged according to a rule of reason. A framework is presented within with neither a minimum retail price nor a cooperative advertising subsidy is individually sufficient to enable maximization of profits in the complete manufacturer-retailer structure, but the two instruments together are. MAP is therefore a sufficient instrument for the maximization of joint profits. We argue that MAP can also be designed as a second-best instrument that replicates RPM.     

Perron's stability theorem for non-linear mappings

Perron's theorem on positive matrices including its stability statement is extended to non-linear mappings which need neither additive nor homogeneous nor primitive. This generalizes known results and yields in particular a concave version of Perron's theorem. The theorem may be applied to balanced growth in non-linear systems and also to obtain a dynamic non-substitution theorem for general cost functions.