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.     

Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis

Empirical evidence suggests that the size of the informal sector in the developing countries has increased considerably during the liberalized economic regime. The present paper purports to analyze the consequences of economic reforms on the wellbeing of the informal sector workforce using a three-sector general equilibrium model with two informal sectors. The theoretical analysis finds that different liberalized policies produce diverse effects on the informal wage and that these results are independent of the nature of capital mobility between the informal and the formal sectors. It also shows that labour market reforms, contrary to the common wisdom, are likely to produce favourable effects on the informal wage.     

Stakeholder management and sustainability strategies in the French nuclear industry

This paper describes how a nuclear power corporation integrates sustainability into corporate strategies and practices. The case study focuses on one of the world's largest nuclear power generators and describes the corporate capture of sustainable development in its strategic efforts to promote a growth strategy. The paper shows how corporate strategies to address sustainability concerns involve managing different stakeholders, enabling the corporation to sustain its economic growth strategy. Three types of stakeholder management strategy are identified: reinforcement strategies for supportive stakeholders, containment strategies for obstructive stakeholders and stabilization strategies for passive stakeholders. The paper argues that, despite claims of sustainable development in the nuclear industry, there is no significant shift in the ‘business as usual’ approach and that sustainable development is merely reframed as sustainable growth. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

Generalized time-invariant overtaking

We present a new version of the overtaking criterion, which we call generalized time-invariant overtaking. The generalized time-invariant overtaking criterion (on the space of infinite utility streams) is defined by extending proliferating sequences of complete and transitive binary relations defined on finite dimensional spaces. The paper presents a general approach that can be specialized to at least two, extensively researched examples, the utilitarian and the leximin orderings on a finite dimensional Euclidean space.     

Do rational demand functions differ from irrational ones? Evidence from an induced budget experiment

Various studies (e.g. Becker, 1962; Ariely et al., 2003) have noted anomalies concerning the relationship between observed demand and the preferences presumed to motivate it. We re-examine these findings using experimental choice data. After separating our subjects’ choices into rational and irrational subsets based on consistency with the axioms of revealed preference, we estimate and compare demand coefficients. Mirroring Ariely et al.'s ‘coherently arbitrary’ choice, both rational and irrational demand estimates exhibit negative price and positive endowment coefficients. However, a comparison of the full set of demand coefficients indicates significant differences between the two, yielding an observable artefact of the preference hypothesis. Relaxing the goodness-of-fit of the revealed preference test (Afriat, 1987; Varian, 1994) does not alter our findings.     

Leading Indicators for Euro‐area Inflation and GDP Growth*

In this paper, we evaluate the role of a set of variables as leading indicators for Euro‐area inflation and GDP growth. Our leading indicators are taken from the variables in the European Central Bank's (ECB) Euro‐area‐wide model database, plus a set of similar variables for the US. We compare the forecasting performance of each indicator ex post with that of purely autoregressive models. We also analyse three different approaches to combining the information from several indicators. First, ex post, we discuss the use as indicators of the estimated factors from a dynamic factor model for all the indicators. Secondly, within an ex ante framework, an automated model selection procedure is applied to models with a large set of indicators. No future information is used, future values of the regressors are forecast, and the choice of the indicators is based on their past forecasting records. Finally, we consider the forecasting performance of groups of indicators and factors and methods of pooling the ex ante single‐indicator or factor‐based forecasts. Some sensitivity analyses are also undertaken for different forecasting horizons and weighting schemes of forecasts to assess the robustness of the results.     

A re‐interpretation of the linear quadratic model when inventories and sales are polynomially cointegrated

Estimation of the linear quadratic model, the workhorse of the inventory literature, traditionally takes inventories and sales to be first‐difference stationary series, and the ratio of the two variables to be stationary. However, these assumptions do not always match the properties of the data for the last two decades in the United States. We propose a model that allows for the non‐stationary characteristics of the data, using polynomial cointegration. We show that the closed‐form solution has other recent models as special cases. The resulting model performs well on aggregate and disaggregated data. Copyright © 2006 John Wiley & Sons, Ltd.     

Information Acquisition Under Uncertainty in Credit Markets

This article studies information acquisition through investmentin improved risk assessment technology in competitive creditmarkets. A technology has two attributes: its ability to screenin productive borrowers, and its ability to screen out unproductiveborrowers. The two attributes have fundamentally different effectson acquisition incentives and the structure of equilibrium informationalexternalities between lenders. The article also studies howuncertainty associated with the quality of superior technologyaffects information acquisition incentives. Uncertainty influencesinformation acquisition even with risk-neutral banks. Increaseduncertainty may raise or dampen incentives, depending on whetheruncertainty is, respectively, about screening out or screeningin quality.     

Targeting and salesforce compensation: When sales spill over to unprofitable customers

Quantitative Marketing and Economics - Targeting selling efforts towards profitable customers is widely known to increase sales and allow firms to charge higher prices. In this paper, we show that...