What׳s news in News? A cautionary note on using a variance decomposition to assess the quantitative importance of news shocks

This paper points out a conceptual difficulty in using a variance decomposition to assess the quantitative importance of news shocks. A variance decomposition will attribute to news shocks movements in endogenous variables driven both by news about future exogenous fundamentals that has yet to materialize (what I call “pure news”) as well as movements driven by realized changes in fundamentals that were anticipated in the past (what I call “realized news”). I present a stylized model in which news about yet unrealized changes in fundamentals is irrelevant for output dynamics, but in which a variance decomposition may nevertheless attribute a large share of the variance of output to news shocks. I then revisit the quantitative importance of news in the model of Schmitt-Grohe and Uribe (2012). In their model news shocks account for 40 percent of the variance of output growth, but this is mostly driven by realized news.     

Optimal growth models as Economic Planning Tools

Conclusion In the present paper, I have carried out an investigation into the form of models which would be suitable for economy-wide planning. Optimal growth models have usually been constructed in an abstract framework. Therefore, the economies for which optimal growth models would be suitable are not identified. I have shown that, because these models only embody purely physical constraints, they will, in general, only be suitable for totally controlled economies. The conclusion, establishing the general inapplicability of optimal growth models to non-controlled economies, is dependent on the view of economic planning which regards the economic structure, particularly the scope of government policy, as fixed prior to plan construction.The second half of the paper elucidates the nature of the planning process when planners take into account the economic structure of the economy which they are planning. I have deliberately chosen to show the planning process in an abstract context for a simple economy, because the object is not to describe how to plan a particular type of economy, but to describe a methodology of planning. In that methodology, there is a place for optimal growth methods but only after the planners have given utmost consideration to the particular features of the economy they are planning. In using that methodology, one finds that problems must be confronted which are hidden when optimal growth models are formulated in the usual manner. Thus, planning for an infinite horizon may be the planners' preferred method on some basic philosophical grounds but in fact in order to construct an implementable plan they may need to follow the uncontrolled sector and adopt a pragmatic finite horizon approach.This paper is a revised version of a chapter of my Ph.D. thesis at the University of Pennsylvania. I would like to thank my adviser, Don Green, for many helpful comments.     

Aggregating input–output systems with minimum error

ABSTRACT

Recent advances in multi-region input-output (IO) table construction have led to large databases becoming available. Some of these databases currently demand too much computer memory or user cognition to be handled effectively outside high-performance environments, especially for applications such as virtual laboratories, computable general equilibrium modelling, linear programming, series expansion, or structural decomposition analysis, thus inhibiting their widespread use by analysts and decision-makers. Aggregation is an obvious solution; but there is a need for structured approaches to aggregating an IO system in a way that does not compromise the ability to effectively answer the research question at hand. In this article, I describe how structural path analysis can be used to realise a computationally inexpensive method for aggregating IO systems whilst minimising aggregation errors. I show that there exists no one-fits-all strategy, but that optimal aggregation depends on the research question at hand.     

Robust growth-equity decomposition of change in poverty: The case of Iran (2000–2009)

This paper examines a robust nonparametric methodology for decomposition of change in poverty into growth and redistribution components. The decomposition is exact, symmetric and free of residual terms. It is equivalent to the Shapley value decomposition in this two-component case. We avoid parametric assumptions about the underlying distributions and Lorenz functions. All of the currently popular poverty measures may be decomposed as suggested in this paper. We identify the issues that arise with parametric approaches to decomposition. An empirical application is given based on recent data on real consumption in rural and urban areas of Iran in 2000, 2004 and 2009 (covering the country's third and fourth five-year development plans). We find that both ‘pure growth’ and ‘redistribution’ components are present in a striking change in poverty, especially among rural households. It would appear that stochastic dominance rankings of the consumption distributions make poverty analyses and decompositions robust to the choice of a poverty line, or poverty measure.     

Trend/cycle decomposition of regime-switching processes

We present a new approach to trend/cycle decomposition of time series that follow regime-switching processes. The proposed approach, which we label the “regime-dependent steady-state” (RDSS) decomposition, is motivated as the appropriate generalization of the Beveridge and Nelson decomposition [Beveridge, S., Nelson, C.R., 1981. A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle. Journal of Monetary Economics 7, 151–174] to the setting where the reduced-form dynamics of a given series can be captured by a regime-switching forecasting model. For processes in which the underlying trend component follows a random walk with possibly regime-switching drift, the RDSS decomposition is optimal in a minimum mean-squared-error sense and is more broadly applicable than directly employing an Unobserved Components model.     

TEN YEARS OF GENERAL OLIGOPOLISTIC EQUILIBRIUM: A SURVEY

In this paper, I survey the recent and rapidly increasing theoretical literature using the brand‐new approach in embedding oligopolistic competition in general equilibrium, as designed by J. Peter Neary. First, I introduce the reader to Neary's approach, by describing the main ingredients. Then, I present a comprehensive set of studies that, over the last decade, apply this approach in different contexts, most of which are in open economy, and I examine the relevant outcomes. Although the theoretical literature has generously advanced, there is a lack of research on the empirical side, which would be an important area for future research besides theoretical extensions, some of which I highlight in the conclusions.     

On the Origins of The American Journal of Economics and Sociology: Its Purposes and Objectives

This essay, written with the help of his devoted wife, Mrs. Dorothy Burnham Lissner, was prepared at the request of the current editor of the AJES. This essay was written during the fall of 1999. On September 10, Mrs. Lissner informed me that, “The early history of the Journal is all done. . . . I hope it is satisfactory . . . Will and I worked very hard on it. Long hours. . . . so I decided to interview him and take down what he said or have him answer on tape. Then I put everything together on the computer, almost like an article. He [Will Lissner] has checked it and thinks it's perfect, that we can do no better” (correspendence of D. B. Lissner with L. Moss, 9/10/99). This is the last known writing of Will Lissner and summarizes his aims, goals, and ambitions for this Journal nearly six decades after its founding. Had Will had more time, this essay would have been the first of a series of reflections on this history of this Journal.     

Deriving equity risk premium using dividend futures

In this paper I present a simple stock price decomposition model using the dividend discount model and dividend futures. The main contribution of this paper is the use of dividend futures which represent the risk-adjusted expectations of future dividends. This allows for the calculation of the implied equity risk premium and the decomposition of stock price movements into individual components. Due to the use of daily market data, this method can take into account the structural changes associated with falling interest rates and the Covid-19 pandemic. I empirically show the risk premium development of the S&P 500 Index and Euro Stoxx 50 Index in the last decade.     

The London Business School with Gower Publishing

Over the lastfive years events in the United States have been repeated throughout the OECD area, with a lag of 6–12 months. A repeat of this pattern in I982 would mean that the recovery in Europe and Japan, which has been progressing slowly since the middle of last year. would not last into 1983. The present forecast excludes this possibility. The argument, which we have put previously, is that the US recovety of 1980 was premature and that the current recession Jollows a renewed attempt by US policy-makers to reduce inflation. There are already signs that they will be succes & Consequently we do not expect the US recession to be prolonged In the second haIfof the year we expect an expansion of output to be in progress, both in the US and elsewhere; in the next few months, however, world activity is likely to remain subdued.     

Methods of measuring the distribution of socio-economic conditions

A metropolitan community was faced with the problem of locating areas of the community in terms of more or less need for leisure-time services. The authors developed a set of methods and techniques to solve this problem. It was noted that these methods differed in some ways from prior efforts of this sort. The advantages of the methods were that they could use readily available data, did not require the use of a computer, and presented a relative level of need that was more than a simple ranking of planning areas. Further, the methods could be used to locate any number of conditions in which one might be interested. In addition to spelling out the details of the original effort, an attempt is made to show how factor analysis could be used as an alternate approach to the first effort. The pros and cons of factor analysis as a substitute method are discussed. The major disadvantage would be if the particular community did not have a large computer available. This is outweighed by the higher levels of accuracy, predictability and comparability provided by factor analysis.     

水利水电工程地质建模与关键技术分析

三维地质建模软件是计算机技术在地质勘测工作中应用的重点和发展的方向。它将大量地质资料和地质人员分析判断结果抽象为可视化的地质模型,使复杂的空间关系可视化。通过对模型的旋转,从不同的角度观看模型,形象直观。它充分利用计算机管理和分析的手段,将数据的数输入、规模指数的计算、模型测算、成果输出综合为一个数据流,实现了全数字化信息处理,为快速,有效、准确地进行水利水电工程提供良好的现代化工具。     

Steriel of niet steriel, dat is de vraag

Summary  This paper deals with a practical problem of sampling inspection, viz. the bacterial control of imported fishmeal (which is used in food for pigs). It was suspected that this fishmeal was often contaminated by salmonella-bacteria, but only in about 0.5% of the samples the presence of these bacteria could be proved. An investigation by the Dutch National Institute of Public Health, at which 4 bags of fishmeal (about 50 kg) after homogenization were divided into 1000 samples of 50 grams each which were individually tested on the presence of salmonella bacteria, showed that nothwithstanding the homogenization the bacteria were very irregularly distributed. Every bag was contaminated, but only about 1.8% of the samples were infected. So the density of infection was low, but the fraction of infected bags was high.
If the fishmeal were fed in a dry condition to the pigs the relevant parameter on which the condition of the fishmeal should be judged would have been the mean number of bacteria per gram of fishmeal. However, as food for pigs is mixed with water the bacteria have the possibility to increase in number so the relevant parameter to judge a batch of fishmeal is the fraction of non-sterile bags.
At the end of this paper a sampling scheme is given, including a system of penalty for producers who regularly supply contaminated fishmeal which will in a relative short time improve the quality of the imported fishmeal.     

Significant drivers of growth in Africa

We employ bootstrap techniques in a production frontier framework to provide statistical inference for each component in the decomposition of labor productivity growth, which has essentially been ignored in this literature. We show that only two of the four components (efficiency changes and human capital accumulation) have significantly contributed to growth in Africa. Although physical capital accumulation is the largest force, it is not statistically significant on average. Thus, ignoring statistical significance would falsely identify physical capital accumulation as a major driver of growth in Africa when it is not.     

The Distributional Effects of Tax‐benefit Policies under New Labour: A Decomposition Approach*

I revisit the distributional effects of tax‐benefit policy reforms under New Labour using counterfactual microsimulations embedded in a Shapley decomposition of time change in inequality and poverty indices. This makes it possible to quantify the relative effect of policy changes compared to all other changes, and to check the sensitivity of this policy effect to the use of (i) income vs. price indexation, and (ii) base vs. end period data. Inequality and poverty depth would have increased, and the sharp fall in child poverty would not have occurred, had the reforms of income support and tax credits not been implemented.     

Engaging in duty of care: towards a terrorism preparedness plan

Abstract

A minor digression, if you will: it has been over 30 years since I (referring to lead author) first wrote on the topic of terrorism and its potential impact on conducting business in a global context. The most vivid memory I have relative to that initial foray into this new topic was making a presentation at the annual summer American Marketing Association (AMA) conference in Chicago. I got halfway through the paper and I started to hear jeering noises emanating from the audience. As I remember (it is not a pleasant memory), the audience thought that I had lost my mind and that the reviewers of the paper allowed this rubbish into the AMA meeting (the implication was that they must have been drinking at the time). This is a true account of the presentation and when I left the session, I would be dishonest if I didn’t tell you that I had made a terrible error and there would be significant ramifications to my young academic career. Yet, no country is untouched by global terrorism today, and the ramifications for global organizations are escalating year by year.     

论计算机病毒及防范的措施

目前，计算机病毒渗透到信息社会的各个领域，给计算机系统带来了巨大的破坏和潜在的威胁，甚至给用户带来经济上的损失。为确保信息的安全与畅通，研究计算机病毒的防范措施已迫在眉睫。文章从计算机的特点入手，初步探讨了对付计算机病毒的方法和措施。     

Competition in long-distance and telecommunications equipment markets: Effects of the MFJ

The Modification of Final Judgement (MJF) is now 10 years old. The MFJ was a historic change in US antitrust policy and in telecommunications policy. Pre-divestiture AT&T was divided into a single company, AT&T, which was allowed to compete in long-distance markets, telecommunications equipment markets and (with some delay) information service markets. Seven regional Bell Operating Companies (RBOCs) were permitted to provide local service and nearby long-distance service. However, the BOCs were not permitted to enter the three markets reserved for AT&T. In 1991 the Information Services restriction was eliminated for the BOCs. However, the ban on provision of (interLATA) long distance and equipment remains. The policy experiment was quite interesting since no other nation has followed the USA, despite numerous other countries ending the formerly monopoly status of their telecommunications provider. In this paper I evaluate how competitive the remaining markets reserved for AT&T, and from which the BOCS are banned, have become. I conclude that (interLATA) long-distance market for residential and small business users, by far the largest fraction of users of long distance is currently uncompetitive. AT&Ts prices are constrained by FCC regulation, not by competition. AT&T has market power and is exercising market power. For equipment markets, I find a good deal more competition. However, I conclude that the BOCs could not impede competition in long distance and that removal of the MFJ restrictions would be pro-competitive. Thus, I conclude that removal of the MFJ estrictions on the BOCs would be pro-competitive, would increase economic efficiency, and would improve consumer welfare.     

The growth of information workers in the US economy, 1950–2000: the role of technological change,computerization, and structural change

Using data from the decennial US Censuses of 1950, 1960, 1970, 1980, 1990, and 2000, I construct matrices of employment by 267 occupations and 64 industries and then aggregate the occupations into four categories: (i) knowledge producers; (ii) data processors; (iii) service workers; and (iv) goods-processing workers. I find that information workers (the sum of the first two categories) increased from 37% of the workforce in 1950 to 59% in 2000. Then, using an input–output decomposition analysis, I find that the growth in information workers was driven not by a shift in tastes toward information-intensive goods and services (as measured by the composition of final demand) but rather by a roughly equal combination of the substitution of information workers for goods and service workers within the structure of production of industries and the unbalanced growth effect (from differential rates of industry productivity growth). Finally, on the basis of regression analysis, I find that R&D expenditures and computer investment are positively associated with the growth in knowledge workers but negatively associated with the growth of data workers.     

Why the Pound Should be Devalued Inside the ERM

I believe the choice of DM2.95 as a central rate for sterling's entry into the ERM was a major mistake of macroeconomic policy, on a par with monetary targeting and underestimatingtlle late 1980s' consumer-led boom. Indeed it was a belief that we were about to make this mistake that led me to undertake, with colleagues at the National Institute of Economic and Social Research, a detailed and unique study of the choice facing policy makers. I shall have more to say on that study below. Shortly after entry I wrote: "The danger is that the government will attempt to defend the present exchange rate bands at all costs. As a result it may produce, or fail to prevent, a recession on the same scale as 1980-81. (Wren-Lewis, 1990, emphasis added). I fear that much of this has come to pass, but we still have a chance to retrieve something.
To propose a devaluation of sterling within the ERM requires three distinct arguments. The first is that we entered the ERM at a real exchange rate which was above a level required to produce a sustainable current account of the balance of payments. The second is that this matters, and in particular that it has prevented the government from taking steps to counteract the recession. The third is that the gains in adjusting, through a realignment, to a lower rate now outweigh the loss of credibility that would be involved. I shall consider each point in turn.¹