A leximin characterization of strategy-proof and non-resolute social choice procedures

Summary. We characterize strategy-proof social choice procedures when choice sets need not be singletons. Sets are compared by leximin. For a strategy-proof rule g, there is a positive integer k such that either (i) the choice sets g(r) for all profiles r have the same cardinality k and there is an individual i such that g(r) is the set of alternatives that are the k highest ranking in i's preference ordering, or (ii) all sets of cardinality 1 to k are chosen and there is a coalition L of cardinality k such that g(r) is the union of the tops for the individuals in L. There do not exist any strategy-proof rules such that the choice sets are all of cardinality to k where . Received: November 8, 1999; revised version: September 18, 2001     

On the dynamics of U.S. consumer sentiment and economic policy assessment

We utilize the Michigan Surveys of Consumers data to first investigate the dynamic relationship between consumers’ assessment of current and future economic conditions (Index of Current Economic Conditions (ICC) and Index of Consumer Expectations (ICE)), and then examine how these assessments are influenced by deterioration/improvement in consumers’ appraisal of economic policies of the government (GP). We further assess how deterioration/improvement in ICC and ICE influences GP. For 1978–2015, our findings first indicate that ICC and ICE are cointegrated and both respond to disequilibrium to restore the long-run equilibrium relationship. Second, deterioration in GP results in deterioration in both ICC and ICE. Improvement in GP, however, results in improvement in ICE with no impact on ICC. Third, deterioration in both ICC and ICE results in deterioration in GP. Improvement in ICE results in improvement in GP, but improvement in ICC has no impact on GP. The observed asymmetries are in line with ‘negativity bias’, whereby people tend to give more weight to negative events than to positive ones.     

The political business cycle: An extension of Nordhaus's model

Summary Nordhaus's (1975) model of the political business cycle is extended in this paper by explicitly formulating the link between the economic sphere (represented by the Phillips curve) and fiscal policy. This extended model yields the hypothesis that during an electoral period the budgetary policy is contractionary in the first half and expansionary in the second half with the consequences of a reduction in unemployment (increase in inflation) before elections and a rise in unemployment (decrease in inflation) after elections. This hypothesis is tested against the data of the Austrian economy by a non-parametric test (which leads to a rejection of our hypothesis for Austria). The extent of the political business cycle bias is demonstrated by policy simulations within a macroeconomic model.

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Zusammenfassung Das Modell vonNordhaus (1975) über den Politischen Konjunkturzyklus wird in diesem Artikel erweitert, indem explizit die Beziehung zwischen dem ökonomischen Bereich (repräsentiert durch die Phillips-Kurve) und der Fiskalpolitik hergestellt wird. Dieses erweiterte Modell führt zu der Hypothese, daß während einer Legislaturperiode die Budgetpolitik in der ersten Hälfte restriktiv und in der zweiten Hälfte expansiv ist. Als Konsequenz dieser Politik kommt es zu einer Verringerung der Arbeitslosigkeit (einem Anstieg der Inflation) vor Wahlen und einem Anstieg der Arbeitslosigkeit (einer Verringerung der Inflation) nach den Wahlen. Diese Hypothese wird an Hand österreichischer Daten mit Hilfe eines nichtparametrischen Tests geprüft (was zu einer Ablehnung unserer Hypothese für Österreich führt). Das quantitative Ausmaß des durch den Politischen Konjunkturzyklus entstehenden bias wird dann mit Hilfe von politischen Simulationen im Rahmen eines makroökonomischen Modells demonstriert.

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Definitions AK Public purchases of goods and services + public investment (A.S.) - AT Unemployed persons, in total (in 1.000) - AZA Worked hours per worker (in hours) - BAU Central government's expenditures (outlays) in total (A.S.) - BEI Central government's revenues (receipts) in total (A.S.) - BS Budget deficit of the Central government (A.S.) - CB Labour supply (in 1.000) - CH Unemployment rate (%) - CON Public consumption (A.S.) - COR Public consumption (A.S. 1964) - CPN Private consumption (A.S.) - CPR Private consumption (A.S. 1964) - CUB Current balance (A.S.) - DS Direct taxes + public income from property-transfers to households + transfers from households (A.S.) - DX DS-public income from property (A.S.) - D7273 Dummy for monetary policy and Dummy for change from gross turnover tax to VAT (1972+1; 1973–1; other 0) - D7278 Dummy for investment tax (1972+1; 1973–1; 1977+1; 1978–1; other 0) - D73US Dummy for shift of employers to employees (1973+1; other 0) - D7375 Dummy for incomes tax reform (1973–1; 1975–1; other 0) - D7778 Dummy for extra VAT (1977+1; 1978–1; other 0) - EBE Population in total (in 1.000) - EET Employment in total + unemployed (total labour supply; in 1.000) - ESE Employers (in 1.000) - EUS Employees (in 1.000) - FBN Monetary base (A.S.) - FGN Money M1 (A.S.) - FG Money M1 (A.S. 1964) - GDN Gross domestic product (A.S.) - GDR Gross domestic product (A.S. 1964) - GER Energy (1.000 t/TCE) - GIR Industry output (A.S. 1964) - GE Profits in total (A.S.) - GV Profits in total (A.S. 1964) - IS Indirect taxes—transfers to firms (A.S.) - ITN Gross fixed investment (A.S.) - ITR Gross fixed investment (A.S. 1964) - JR Final domestic demand (A.S. 1964) - LA Stocks and statistical discrepancies; National account basis (A.S.) - LEAD Difference of one major party over the other in parliament in percentage points - LB Foreign balance (A.S.) - LKV Long term capital transactions (A.S.) - MA Money M1 + profits (A.S. 1964) - MMN Imports of goods and services (A.S.) - MMR Imports of goods and services (A.S. 1964) - OIN Public investment (A.S.) - OKG Public purchases of goods and services (A.S.) - PC Private consumption deflator (1964=100) - PEN Energy prices (1964=100) - PI Gross fixed investment deflator (1964=100) - PK Imports of goods and services deflator (1964=100) - PL Exports of goods and services deflator (1964=100) - PT Gross domestic product deflator (1964=100) - RES Value change in balance of payments reserves (A.S.) - RIR Interest rate for long term bonds (%) - SD Stocks and statistical discrepancies; National account basis (A.S. 1964) - ST Overall indirect taxes—subsidies; National account basis (A.S.) - STD Direct taxes (A.S.) - STI Indirect taxes (A.S.) - TAH Transfers to households (A.S.) - TBB Trade balance (A.S.) - TTT Time (1960, 1961,..., 1979) - TUN Transfers to firms (A.S.) - TVH Transfers from households (A.S.) - VW Gross fixed investment plus exports of goods and services (A.S. 1964) - WON Changes in foreign currency reserves of the National Bank (A.S.) - WKU Changes in foreign currency reserves of all commercial banks (A.S.) - WW Changes in balance of payments' official reserves (A.S.) - XB Relative energy prices (1964=100) - XXN Exports of goods and services (A.S.) - XXR Exports of goods and services (A.S. 1964) - YLN Wages and salaries (compensation of employees; A.S.) - YOB Public income from property (A.S.) - YVN Net disposable income (A.S.) - YY Net disposable income (A.S.) - YYN National income (A.S.) - ZST Statistical discrepancies in balance of payments (A.S.) - A.S billion Austrian Schilling at current prices - A.S. 1964 billion Austrian Schilling at constant prices (basis 1964)     

Budgetsanierung und Pensionsreform

Summary An effective reduction of budgetary deficits nessecitates the reform of sizeable budgetary programs. In face of high and increasing budgetary transfers to the public pension schemes their reform can be considered as a necessary condition for budgetary consolidation.The exposition of structural characteristics and dynamic properties of the public pension system not only permits an explanation of the actual financial situation, but also facilitates the quantitative evaluation of some reform steps which are being undertaken. Their estimated financial effects appear too small to have an important impact on the consolidation of the federal budget.

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Anhang: Variablenliste A Aktivjahre - AF Aufwertungsfaktor - a (.) Anteilsfaktor - b Beitragssatz - BG Beitragsgrundlage - Ø BG durchschnittliche Beitragsgrundlage - BM Bemessungsgrundlage - BP Bemessungsperiode - BR Bezieherrate - NP Neupension - q Querschnitteffekt - R Ruhestandsjahre - RW Richtwert - RZ Richtzahl - T A+R - VZ Versicherungszeiten - w Einkommensteigerungsrate bzw. Wachstumseffekt - y Aktiveinkommen     

Validity of sustainability framework for China’s mining cities – a structural equation modelling approach

Many studies developed their framework for sustainability through indicator systems, but the interactions and relationships within these indicators have not been studied yet. In this article, based on indicator systems, we use a sample of 78 mining cities in China and employ structural equation modelling (SEM) method to explore the validity of sustainability framework. Our empirical results show that resources abundance positively affects urbanization level significantly but negatively affects cleaner production level and environmental protection level significantly; economic strength positively affects urbanization level significantly; cleaner production level has a significant effect on economic strength and non-mineral resources conversion efficiency. We also find that when economic strength is low, resources abundance might weaken the positive effect of economy on urbanization.     

A class of multiattribute utility functions

A function u(z) is a utility function if u′(z) > 0. It is called risk averse if we also have u′′(z) < 0. Some authors, however, require that u ⁽ⁱ⁾(z) > 0 if i is odd and u ⁽ⁱ⁾(z) < 0 if i is even. The notion of a multiattribute utility function can be defined by requiring that it is increasing in each variable and concave as an s-variate function. A stronger condition, similar to the one in case of a univariate utility function, requires that, in addition, all partial derivatives of total order m should be positive if m is odd and negative if m is even. In this paper, we present a class of functions in analytic form such that each of them satisfies this stronger condition. We also give sharp lower and upper bounds for E[u(X ₁,... , X _s )] under moment information with respect to the joint probability distribution of the random variables X ₁,... , X _s assumed to be discrete and representing wealths. Partially supported by OTKA grants F-046309 and T-047340 in Hungary.     

Remarks on the application of statistical games to technological development forecasting

This work presents the probability of determining a quantitative forecast of technological development S(t) defined by a set m of parameters S⁽¹⁾(t),S⁽²⁾(t),…,S^(m)(t), based on statistical game theory. Assuming that the coordinates S⁽ⁱ⁾(t) (i = 1, 2,…,m) of a forecasted vector S(t) are stochastic processes with given probabilistic characteristics, a formula of a function forecasting the value of a coordinate S⁽ⁱ⁾(t) of this vector can be obtained. This formula permits to determine a vector of forecasts _τT(x) of technological development S(t) at a given moment t = τ+T.     

Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?

We model a monopoly insurance market in which consumers can learn their accident risks at a cost c . We then examine the welfare effects of a policy that reduces c . If c is sufficiently small (c  < c ^*), the optimal contract is such that the consumer gathers information. For c  < c ^*, both the insurer and the consumer benefit from a policy that reduces c further. For c   >  c ^*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is successful, meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.     

Balanced Contributions Axiom in the Solution of Cooperative Games

In a gamevin characteristic function form, suppose the Banzhaf value ψ is used to pay a coalitionSalready formed. Then coalitionSno longer receivesv(S); instead it receivesR^ψ(S) = ∑_{i ∈ S}ψ_i(v_s), wherev_Sdenotes the subgame of coalitionS. Surprisingly, the Shapley value of this new game Sh(N, R^ψ) is equal to the Banzhaf value ofv. In this paper we establish a similar result for all values satisfying balanced contributions axiom. Additionally, we introduce player's weights to obtain the corresponding result in the nonsymmetric case.Journal of Economic LiteratureClassification Number: C71     

Licensing Under Bertrand Competition Revisited

This note indicates that the derivation of the royalty contract for licensing in Wang and Yang (Australian Economic Papers, 39 (1999) 106–119) is not correct. As a consequence, the profits of the innovator in the case of royalty licensing are underestimated.     

Reviews

Book reviewed in this article: External Economic Policy Since the War. Vol. 1. Thc Post-War Financial settlement, by L.S. Pressnell Egalitarianism and the Generation of Inequality, by Henry Phelps Brown Lectures on Advanced Econometric Theory, by D. Sargan States and Markets: An Introduction to International Political Economy, by S. Strange How Much Government? by Michael James Allocation Models: Specification, Estimation & Applications, by R. Bewley Industrial Relations Reform: A Policy for Australia, by William A. Growth, Accumulation, and Unproductive Activity: An Analysis of the Postwar U.S Economy by E.N. Wolff Risk, Decision and Rodonality, edited by B.R. Munier Specification Analysis in the Linear Model—in Honour of Donald Cochrane, edited by M.L. King and D.E.A. Giles Structural Change in Macroeconomic Models, by MJ. Vilares Classical Political Economy: A Survey of Recent Literature edited by W.O. Economic History and the History of Economics, by M. Blang Economic Adjustment: Polices and Problems, edited by F. Holmes Direct Protection of Innovation, edited by W. Kingston     

Population-monotonicity and separability for economies with single-dipped preferences and the assignment of an indivisible object

We study two allocation models. In the first model, we consider the problem of allocating an infinitely divisible commodity among agents with single-dipped preferences. In the second model, a degenerate case of the first one, we study the allocation of an indivisible object to a group of agents. We consider rules that satisfy Pareto efficiency, strategy-proofness, and in addition either the consistency property separability or the solidarity property population-monotonicity. We show that the class of rules that satisfy Pareto efficiency, strategy-proofness, and separability equals the class of rules that satisfy Pareto efficiency, strategy-proofness, and non-bossiness. We also provide characterizations of all rules satisfying Pareto efficiency, strategy-proofness, and either separability or population-monotonicity. Since any such rule consists for the largest part of serial-dictatorship components, we can interpret the characterizations as impossibility results. Received: September 29, 1999; revised version: March 22, 2000     

Numerical Computation of Equilibrium Bid Functions in a First-Price Auction with Heterogeneous Risk Attitudes

We use numerical methods to compute Nash equilibrium (NE) bid functions for four agents bidding in a first-price auction. Each bidderi is randomly assigned:r _i [0,r _max], where 1 –r _i is the Arrow-Pratt measure of constant relative risk aversion. Eachr _i is independently drawn from the cumulative distribution function (·), a beta distribution on [0,r _max]. For various values of the maximum propensity to seek risk,r _max, the expected value of any bidder's risk characteristic,E (r _i ), and the probability that any bidder is risk seeking,P (r _i > 1), we determine the nonlinear characteristics of the (NE) bid functions.     

Uniqueness of Positive Fixed Points for Increasing Concave Functions on : An Elementary Result

The square root function has a unique positive fixed point. This function has the following properties: it is strictly increasing and strictly concave, with f(0) = 0, and there are points a ≥ 0 and b ≥ 0 such that f(a) ≥ a and f(b) ≤ b. It is shown that any function from ⁿ to ⁿ satisfying these properties has a unique positive fixed point. Journal of Economic Literature Classification Number: C62.     

Bayesian assessment of Lorenz and stochastic dominance

We introduce a Bayesian approach for assessing Lorenz and stochastic dominance. For two income distributions, say X and Y, estimated via Markov chain Monte Carlo, we describe how to compute posterior probabilities for: (i) X dominates Y, (ii) Y dominates X and (iii) neither Y nor X dominates. The proposed approach is applied to Indonesian income distributions using mixtures of gamma densities that ensure flexible modelling. Probability curves depicting the probability of dominance at each population proportion are used to explain changes in dominance probabilities over restricted ranges relevant for poverty orderings. They also explain some seemingly contradictory outcomes from the p-values of some sampling theory tests.     

Interactions between hospital admissions,cost per day and average length of stay

Hospital cost per day (COST), annual admissions per capita (ADMIT), and average length of stay (ALOS) are important health policy variables because each variable provides important information about hospital industry performance. This study uses country-level data to explore the empirical relationships between COST, ADMIT, and ALOSin three steps: OLS estimation, application of the Wu-Hausman endogeneity test, and re-estimation with two-stage least squares. The major results are (i) ADMITand ALOSexert exogenous influences on COSTand (ii) ADMITand ALOSare endogenously related with possible one-way casuality from ADMITto ALOS.     

DISCRIMINATING SHORT AND LONG MEMORY IN FINITE SAMPLES USING SENSITIVITY ANALYSIS: AN APPLICATION TO GROWTH CONVERGENCE

The standard linear model where u_t is generated from an ARFIMA process, is considered. The sensitivity of the predictor and sensitivity of variance estimates of the linear model to long memory are investigated by constructing the statistical measures B_L/S and D_L/S , respectively. B_L/S and D_L/S is interpreted as a sensitivity measure for the long‐memory process without the short‐memory effects. As an application, the memory characteristics of per capita GDP of 30 countries are investigated from the Maddison GDP dataset. It is found that per‐capita GDP exhibits long memory characteristics, and the long‐run growth estimates are sensitive to the long memory characteristics.     

Topological upper limits of mixed Nash equilibria

Our purpose in this article is to prove that given any integer n ≥ 2 and any non-empty compact Polish spaces S ₁, ..., S _n , if for any u ∈ C( S ₁ × ... × S _n , R) ⁿ , we denote by MNE(u) the set of mixed Nash equilibria of (S ₁, ..., S _n , u), then MNE(u) is a non-empty compact subset of P(S ₁) × ... × P(S _n ) and if u ^k → u in C(S ₁ × ... × S _n , R) ⁿ as k → ∞, then lim sup _{k → ∞} MNE (u ^k ) MNE(u). The author would like to thank the referee for offering critical comments on this paper.     

The relation between two different notions of direct and indirect input requirements

Ki-Jun Jeong (1982) proposed to distinguish between the notion of direct and indirect input requirements to support a unit of final demand (r_f) and that to produce a unit of gross output (r_g) in the open input-output model. In this note the two notions are related by the relation r_f = r_gc₁₁, where c₁₁ is direct and indirect output requirements to support a unit of final demand, or c₁₁ = 1 + r_f.     

China’s fiscal stimulus package for the current international crisis: What does 1996–2006 tell us?

This paper uses Bi-Directional Reiterative Truncated Projected Least Squares (BD-RTPLS) to estimate annual ∂GPP/∂G and %∂GPP/%∂G multipliers for China’s 31 provinces between 1996 and 2006 (GPP = Gross Provincial Product and G = government spending in the province). In order to account for the influence of omitted variables, BD-RTPLS produces a separate ∂GPP/∂G and %∂GPP/%∂G estimate for every observation in the data set. I find that ∂GPP/∂G and %∂GPP/%∂G were highest in 1996 while China was drastically cutting government spending to curb inflation, were lowest in 1997 during the Asian Financial Crisis, slowly rose between 1998 and 2004, and then declined some in 2005 and 2006 when the Chinese yuan was slowly appreciating.