Preference for flexibility in infinite horizon problems

Summary. We consider the extension of the classical problem of preference for flexibility to many periods. Preferences are defined over sets of infinite paths of choices. The main result provides a set of axioms on preferences that yield an additive representation over a subjective state space. This space is the set of preferences over choice today and feasible set tomorrow. The main new axiom, stochastic dominance, is a stronger form of the assumption of monotonicity. Received: September 11 2000; revised version: December 18, 2001     

Preference for flexibility in the absence of learning: the risk attitude effect

Individuals’ preferences over opportunity sets may display “preference for flexibility” which prescribes to gradually eliminate alternatives from a given set until a final choice is made. One rationale for this preference for flexibility is individuals’ incentive to postpone the final choice in order to better learn their underlying preferences over basic alternatives. In this paper we show that even in the absence of learning, preference for flexibility arises if individuals are risk-averse or, at least, are not very risk-seeking. Thus, individual’s attitude towards risk provides yet another rationale for preference for flexibility. One of our results is that in the absence of learning, risk-neutral as well as risk-averse individuals display the same, maximal preference for flexibility. We thank Han Bleichrodt, Robert Dur, Chaim Fershtman, Maarten Janssen, Peran van Reeven, Peter Wakker, and Timothy van Zandt for helpful comments to and inspiring discussions. We are very grateful to the anonymous referee for very constructive comments and suggestions.     

Demographic variables in demand systems: The case for generality

This paper provides evidence in favour of greater generality in the demographic demand literature. We propose two demographic demand procedures. One extends the Gorman model by allowing non additive interaction between overheads and Barten scaling. The other extends Price Scaling, by allowing the equivalence scale to vary with utility, and offers a test of Equivalence Scale Exactness (ESE). The rejection of ESE is robust to the assumed demand functional forms (RNLPS, QAIDS), to items chosen, and the estimation method (MLE, GMM). The results show that published cell averages yield well determined estimates of the demographic generalisation parameters.This paper was written during my visit to the UBC in Vancouver, Canada in 1992/93. I am grateful to two anonymous referees for their helpful remarks on an earlier version. The disclaimer applies.     

Using inverted Engel curves to estimate material standards of living in a household

This article demonstrates how to estimate latent total consumption expenditure or material standard of living in households by inverting estimated Engel curves. While the conventional estimator, total purchase expenditure, is unbiased for latent total household consumption expenditure, it is not variance minimizing since it is an un-weighted sum. In two stages, this article derives a variance-minimizing, unbiased estimator by first estimating and inverting Engel curves; then combining the estimators from the inverted Engel curves. The employed latent variable method allows for utilization of non-expenditure relations. The suggested method may help improve the accuracy in studies of consumption inequality and tax evasion.      

人口统计数据系统误差的检验

人口统计数据的系统误差,常常表现在特定的年龄尾数上数据观测值对真值的偏离。讨论了现行的人口年龄数据质量检验方法,指出了存在的问题,提出了可使用人口函数年龄变动的符号分布来检验人口数据是否存在系统误差,并用实际数据作了验证。经过比较,这种新的检验方法比以往的方法更有效。     

Critical mass of users versus critical mass of services in a multiproduct information service system

In this paper we study the economic behaviour of the suppliers of a set of advanced telecommunications services with a joint adoption cost (common access facilities, learning process, etc.). In fixing the two-part tariffs for their services the suppliers have to share the burden of leaving to the users a surplus sufficient to cover the adoption cost. The lack of coordination in supplying a critical mass of services or in the pricing decisions has high changes to result in suboptimal or unviable diffusion of the new technology as a whole. We present a static optimization model of user behaviour, and derive access and usage demand with a two-part tariff and a joint adoption cost. We compare noncooperative and cooperative market equilibria in a duopoly with perfect information; finally we discuss the extension of our analysis to the case of imperfect information in a dynamic setting.     

Latent class count models of total visitation demand: <Emphasis Type="Italic">days out hiking in the eastern Alps</Emphasis>

We report preliminary results on the investigation of the hypothesis of the existence of latent classes in the total demand for days out in a vast section of the Italian Eastern Alps. Finite mixing is informed by socioeconomic variables and it is limited to the demand portion of a hurdle model of visitation. Gradually more flexible count models are estimated moving from the Poisson to the Negative Binomial -1 and -2, to the generalized negative binomial. The implications for expected consumers surplus, predicted visitation and choke prices are discussed for a plausible 2 class model where years of experience play an important role in class membership.      

Heterogeneity in preferences for redistribution and public spending: A cross-country analysis

Political coordination and policy outcomes may be the result not only of the position of the ‘median voter’ in a political scale but also of the heterogeneity of preferences around the median. Depending on the level of government and the type of policy, such heterogeneity may lead to lower public spending and redistribution. We assess this issue empirically by analyzing the relationship between the distribution of preferences for redistribution and the amount of public expenditure at different levels of government and for several types of spending in 23 European countries. Our results suggest a negative and significant correlation between heterogeneity of preferences for redistribution and public spending that is stronger at the local level and for redistributive functions, independent of the median individual's preferences.     

The effects of government expenditure on imports in the Eurozone reconsidered: evidence from panel data

This study examines the impact of government expenditure on imports. The empirical analysis is based on annual data of the euro area countries for the period 1995–2015. We employ econometric methods that mitigate heterogeneity and cross-sectional dependence. We provide empirical indications that the components of expenditure have different impact on imports demand. The findings of this study indicate that the import context of government expenditure is lower than the import context of others expenditure components. Finally, we find that an increase in government expenditure leads to an increase in imports; this implies that, ceteris paribus that it can lead to a deterioration of the trade balance.     

Patterns of innovation and intra-industry heterogeneity in Turkey

This study investigates the patterns of innovation in Turkey and its primary aim is to examine the intra-industry heterogeneity in innovative activities. For this purpose double-level factor analysis is performed and the resulting factor scores are used in the subsequent cluster analyses. Four distinct innovation patterns, which may be interpreted as ingredients of different technological regimes, are identified. A taxonomy of innovative firms is also constructed by grouping firms according to their innovation characteristics and, to the authors’ knowledge, this is the first empirical classification study in Turkey. These results indicate that industries differ in terms of innovative activities. However, industries are not dominated by a single technological regime. On the contrary, five technological regimes were observed in almost all sectors. Building upon these facts, it can be speculated that sector-specific conditions determine the extent of intra-industry heterogeneity.     

Increasing school quantity versus quality in kenya: impact on children from low-and high-income households

A common dilemma facing educational planners engaged in educational reform in developing countries is the allocation of sharply-reduced resources to the expansion of school facilities versus improvement of existing school facilities (say, by raising the teacher/pupil ratio). The empirical results presented in this paper for Kenya suggest that the two interventions have diametrically opposite effects on poor and nonpoor children. An expansion of school facilities increases the enrollment of children in the poorest expenditure quintiles but has no impact on the enrollment of children in the top quintiles. On the other hand, an improvement in the teacher-pupil ratio increases the enrollment rate of children in the top quintiles, and actually reduces the enrollment of children in the poor quintiles. These findings suggest that in situations where there is less than universal primary enrollment (UPE) and the government has set a time-bound goal of UPE, such as in Kenya, policies that serve to expand the number of school facilities may make more sense than interventions that increase the teacher-pupil ratio.     

江苏省财政科技支出与经济增长的协整关系研究

在对财政科技支出与经济增长关系的相关文献进行回顾的基础上,综合运用协整分析、因果关系检验等计量方法定量分析江苏省财政科技支出总量与江苏省国内生产总值之间关系。结论是：江苏省财政科技支出与经济增长之间存在正向的长期稳定的均衡关系,江苏省国内生产总值不是财政科技支出的格兰杰原因,江苏省财政科技支出是国内生产总值的格兰杰原因。最后分析结果,提出相关政策建议。     

Coordination versus flexibility in wage formation: a focus on the nominal wage impact of productivity in Germany,Greece, Ireland,Portugal, Spain and the United States

Wage coordination between countries of the European Monetary Union (EMU) aims at aligning nominal wage growth with labour productivity growth at the national level. We analyse the developments in Germany, the EMU’s periphery countries Greece, Ireland, Portugal and Spain along with the United States over the period 1980 to 2010. Apart from the contribution of productivity to nominal wages, we take into account the contributions of prices, unemployment, replacement rates and taxes by means of an econometrically estimated nonlinear equation resulting from a wage bargaining model. We further study the downward rigidities of nominal wages. The findings show that in past times of low productivity, price inflation and reductions in unemployment still put significant upward pressure on nominal wage growth. The periphery countries are far from aligning nominal wage growth with productivity growth. German productivity is a major wage determinant, but surely not the only one. Within the context of a free bargaining process between employers and labour unions, policy-makers can effectively use the replacement rate to steer the nominal wages outcome.     

Luck versus skill over time: time-varying performance in the cross-section of mutual fund returns

ABSTRACT

Using returns histories spanning January 1984 to October 2014 of 5785 actively managed US closed-end equity mutual funds, we address the ‘thorny problems’ highlighted by Fama and French (The Journal of Finance, 2010, vol. 65, p. 1925) that arise due to their resampling procedure. This prevents them from capturing time variation in the parameters of equilibrium asset pricing models. These problems are addressed by combining innovative procedures which allow for testing of multiple break dates on fund-specific parameters along with cross-section bootstraps that remain valid in the presence of time-varying parameters. We find that substantial proportion – 8% – of the estimated versions of the asset pricing model have significant changes in their parameters. The effects of this time variation on the cross-section distribution of the risk-adjusted performance measure are significant and substantially increase centiles of the right tail of this distribution when compared to those produced without time-varying parameters. Our evidence regarding the lack of actively managed US equity mutual funds that generate excess returns is significantly weaker than those of Fama and French but our results do not overturn their pessimistic conclusion regarding the lack of skilled managers. We do find, unlike Fama and French, that managers generating negative returns are just unlucky but have no skill.