Linear SAM models for inequality changes analysis: an application to the Extremadurian economy

Social accounting matrices are adequate databases for the economic modelling. These matrices emphasize the role of households in the economy, and so, they usually disaggregate the household sector into several groups. This disaggregation allows social accounting matrices to be used for diverse income distribution analysis. The objective of this work is to use the linear SAM models to study how inequality is modified by several exogenous injections of income. The set of multipliers and indicators presented is applied to the economy of Extremadura – a region situated in the southwest of Spain. In particular, together with the accounting multipliers, two redistributed income matrices are presented to show how changes in final demand and in income transfers cause opposite effects in inequality. For contrasting these results, Gini and Theil indices are also used. Finally, a major reduction in both would result from an appropriate re-allocation of transfers.     

Quantifying the development of agreement among experts in Delphi studies

Delphi studies are often conducted with the aim of achieving consensus or agreement among experts. However, many Delphi studies fail to offer a concise interpretation of the meaning of consensus or agreement. Whereas several statistical operationalizations of agreement exist, hardly any of these indices is used in Delphi studies. In this study, computer simulations were used to study different indices of agreement within different Delphi scenarios. A distinction was made between the indices of consensus (Demoivre index), agreement indices (e.g., Cohen's kappa and generalizations thereof), and association indices (e.g., Cronbach's alpha, intraclass correlation coefficient). Delphi scenarios were created by varying the number of objects, the number of experts, the distribution of object ratings, and the degree to which agreement increased between subsequent rounds. Each scenario consisted of three rounds and was replicated 1000 times. The simulation study showed that in the same data, different indices suggest different levels of agreement, and also, different levels of change of agreement between rounds. In applied Delphi studies, researchers should be more transparent regarding their choice of agreement index and report the value of the chosen index within every round as to provide insight into how the suggested agreement level has developed across rounds.     

On discretion versus commitment and the role of the direct exchange rate channel in a forward-looking open economy model

Abstract

This paper compares optimal monetary policy under discretion and commitment in an economy where the direct exchange rate channel is operative. The stabilization bias under discretion is shown to be weaker in an open economy relative to a closed economy. In an open economy, a ‘less conservative central banker’, one that attaches a smaller weight to the variance of inflation in the loss function, can be appointed to replicate the behaviour of real output that eventuates under commitment. Evaluating the social loss function under discretion and commitment, we find that the existence of a direct exchange rate channel in the Phillips Curve mitigates the pronounced differences between the two strategies in case of high persistence in the stochastic shocks.     

THE CHANGING GOVERNANCE OF KNOWLEDGE IN AVIONICS

Abstract

Taking in hand the two sides (i.e. cognitive and risk-bearing) of authority in design and production in complex tasks, this paper aims to give a first look at shifts in the locus of authority in the aviation electronics—or avionics—industry. Relying on patent and joint ventures data, we attempt to trace the evolution of problem-solving ‘authority’ over the evolution of the industry, using an empirical approach which can then be used to explore similar trends in other industries. We find that while it is still too early to say whether we are observing a wholesale shift of ‘authority’ from aircraft makers to avionics producers, it is clear that the leading avionics producers are challenging their clients in taking the role of systems integrators. We can speculate that we may be observing the beginning of a ‘market for technology’. At the very least, we are observing an increasing distribution of both problem-solving authority and risk in this industry.     

On the estimation of 'an implicitly additive demand system'

Motivated by a lack of Engel flexibility in commonly used demand systems, Rimmer and Powell developed a new demand system. This system, referred to AIDADS, is implicitly, directly additive, possesses marginal budget shares and thus Engel elasticities, that vary nonlinearly with expenditure such that predicted budget shares are restricted to the [0,1] interval. Due to these attractive Engel properties, AIDADS represents a significant contribution to the literature on demand analysis. This paper presents an alternative estimation procedure to the one used by Rimmer and Powell and examines its properties via a case study. The proposed approach avoids a linear approximation employed in Rimmer and Powell's estimation framework. Based on a small Monte Carlo study, it appears that the approach produces more accurate estimates of the parameters and Engel elasticities.     

Is living in African cities expensive?

Although several studies have examined why overall price levels are higher in richer countries, little is known about whether there is a similar relationship at the urban and city level across countries. This paper compares the price levels of cities in Sub-Saharan Africa with those of other regions by analyzing price information collected for the purpose of calculating official purchasing power parities. The approach of the paper is to readjust the calculated price levels from national to urban levels, using known price-level ratios between those areas. The results indicate that African cities are relatively more expensive, despite having lower income levels. The price levels of goods and services consumed by households are 25 to 28 percent higher in Sub-Saharan Africa than in other low- and middle-income countries, relative to their income levels. Such high costs of living could constrain livelihood of low-income urban residents, as well as the development of Africa’s urban economies.     

Invention in the Face of Necessity: Marshallian Rhetoric and the Giffen Good(s)

Alfred Marshall's introduction of the 'Giffen Good' case appears puzzling, if only because it was not discussed by Robert Giffen. This article suggests that the analytical framework which Marshall used to discuss the case owed a good deal to the work of W.S. Jevons. The precise argument, however, was introduced as a rhetorical device to defend the notion of consumer surplus (against J.S. Nicholson) and to criticize the advocacy of tariff reform (by W.A.S. Hewins).     

Accounting for retiree medical liabilities--considerations for selecting financial assumptions

The Financial Accounting Standards Board proposed statement on employer's accounting for postretirement benefits other than pensions closely parallels the Board's pension accounting rules. Mr. Amoroso explains the calculations and financial assumptions involved.