Model misspecification effects for biased samples

The model misspecification effects on the maximum likelihood estimator are studied when a biased sample is treated as a random one as well as when a random sample is treated as a biased one. The relation between the existence of a consistent estimator under model misspecification and the completeness of the distribution is also considered. The cases of the weight invariant distribution and the scale parameter distribution are examined and finally an example is presented to illustrate the results.     

Good practices on cost – effective road infrastructure safety investments

The paper presents the findings of a research project aiming to quantify and subsequently classify several infrastructure-related road safety measures, based on the international experience attained through extensive and selected literature review and additionally on a full consultation process including questionnaire surveys addressed to experts and relevant workshops. Initially, a review of selected research reports was carried out and an exhaustive list of road safety infrastructure investments covering all types of infrastructure was compiled. Individual investments were classified according to the infrastructure investment area and the type of investment and were thereafter analysed on the basis of key safety components. These investments were subsequently ranked in relation to their safety effects and implementation costs and on the basis of this ranking, a set of five most promising investments was selected for an in-depth analysis. The results suggest that the overall cost effectiveness of a road safety infrastructure investment is not always in direct correlation with the safety effect and is recommended that cost–benefit ratios and safety effects are always examined in conjunction with each other in order to identify the optimum solution for a specific road safety problem in specific conditions and with specific objectives.     

Financial crisis and accounting quality: Evidence from five European countries

This study investigates how the economic crisis affects the scope for earnings manipulation and the value relevance of reported financial numbers for companies that are audited by a big 4 auditor. The analysis is focused on Portuguese, Irish, Italian, Greek and Spanish listed companies. The findings show that Portugal, Italy and Greece tend to engage more in earnings management in their effort to improve their lower profitability and liquidity, and accommodate their higher debt and growth. Ireland exhibits less evidence of earnings manipulation, while the findings for Spain are to some extent conflicting. Additionally, the reported financial numbers of Portuguese and Greek companies that are audited by a big 4 auditor were found to be of higher quality before the crisis. In contrast, Irish, Italian and Spanish companies report more value relevant financial numbers during the crisis. The results of this study are particularly useful for accounting regulators when preparing accounting rules that seek to reduce information asymmetry and earnings manipulation and increase the quality of reported disclosures in light of a crisis and for investors that need further assistance for the establishment of a profitable investment strategy in periods characterized by high uncertainty and volatility.     

Alan Gillie,Input-Output Economics.

Turnovsky observes that “the rational expectations hypothesis has had a profound impact on macroeconomic theory and policy during the past decade.” Tracing briefly the evolution of the ideas involved, he concludes that “… a consensus view is emerging that in fact under quite plausible conditions the policy neutrality proposition does not hold; therefore, there is still scope for policy rules to play an important role in stabilizing output.”

The mathematics used in the article is expository rather than analytical, requiring of the reader only somewhat more than the usual amount of persistence, faith in the author's interpretation of the literature, and a willingness to accept the integrity of economic models as representative of the real world. This is “required” reading for those teaching macroeconomics.     

The Law of 1/n Revisited: Distributive Politics,Legislature Size,and the Costs of Collective Action

The foundational model of distributive politics predicts a positive relationship between the number of legislative districts and the level of inefficiency of projects approved by the legislature—Weingast, Shepsle, and Johnsen's “Law of 1/n.” This relationship has been tested extensively in the empirical literature, with mixed results. This article presents a model wherein passing the omnibus legislation typical of distributive politics is a costly process. The model predicts a nonlinear relationship between legislature size and spending as increasing the size of the legislature also increases the costs of collective action. Results from an empirical exercise based on U.S. state legislatures (1962–2014) are consistent with the proposed model, showing a 1/n effect which diminishes at the margin as the legislature's size increases, especially in the lower chamber.     

The visible hand: the role of government in China’s long-awaited industrial revolution

China is undergoing its long-awaited industrial revolution. There is no shortage of commentary and opinion on this dramatic period, but few have attempted to provide a coherent, in-depth, political-economic framework that explains the fundamental mechanisms behind China’s rapid industrialization. This article reviews the Embryonic Economic Development theory put forth by Wen (2016a). This article reviews the Embryonic Economic Development theory put forth by Wen . It illuminates the critical sequence of developmental stages since the reforms enacted by Deng Xiaoping in 1978: namely, small-scale commercialized agricultural production, proto-industrialization in the countryside, a formal industrial revolution based on mass production of labor-intensive light consumer goods, a sustainable ‘industrial trinity’ boom in energy/motive power/infrastructure, and a second industrial revolution involving the mass production of heavy industrial goods. This developmental sequence follows essentially the same pattern as Great Britain’s Industrial Revolution, despite sharp differences in political and institutional conditions. One of the key conclusions exemplified by China’s economic rise is that the extent of industrialization is limited by the extent of the market. One of the key strategies behind the creation and nurturing of a continually growing market in China is based on this premise: The free market is a public good that is very costly for nations to create and support. Market creation requires a powerful ‘mercantilist’ state and the correct sequence of developmental stages; China has been successfully accomplishing its industrialization through these stages, backed by measured, targeted reforms and direct participation from its central and local governments.