Nonlinear continuous time modeling approaches in panel research

Stochastic differential equations (SDE) are used as dynamical models for cross-sectional discrete time measurements (panel data). Thus causal effects are formulated on a fundamental infinitesimal time scale. Cumulated causal effects over the measurement interval can be expressed in terms of fundamental effects which are independent of the chosen sampling intervals (e.g. weekly, monthly, annually). The nonlinear continuous–discrete filter is the key tool in deriving a recursive sequence of time and measurement updates. Several approximation methods including the extended Kalman filter (EKF), higher order nonlinear filters (HNF), the local linearization filter (LLF), the unscented Kalman filter (UKF), the Gauss–Hermite filter (GHF) and generalizations (GGHF), as well as simulated filters (functional integral filter FIF) are compared.     

Making logits behave

For the multivariate analysis of binary (or n-ary) dependent variables, common statistical analysis systems offer models with non-homogeneous error variance (LSN-models), and optionally transformations (??response functions??) of the relative frequencies, above all the logit function. Using the simplest possible example??two groups with a relative frequency in each??it is shown that significance tests based on transformed and non-transformed variables can yield substantially diverging results, and even an example of flagrantly inadequate behavior of logit as a response function in significance tests is presented. Dispensing with LSN models can remedy the latter problem; this recommendation is in line with other known objections against using LSN with binary dependents. Furthermore, an improved approximation for the variance of (any) response function makes tests based on transformed and non-transformed variables equivalent, so that problems of discrepant results depending on the response function used are completely removed. In the Appendix a sketch is given of a method to extend the approach to more general situations.     

A New Approach to Identifying Structural Development in Economic Systems: The Case of the Queensland Economy

Recently, some economists have come to view economic development as a process of ongoing structural change which has self-organisational features. What is required is evidence concerning the self-organisational character of economic development. In other words, is economic growth associated with growth in the complexity of its structure and with a parallel rise in organisational interdependence? An extended version of qualitative input-output analysis, termed Minimal Flow Analysis (MFA), is used in this paper to analyse the structural linkages and changes that have occurred in the Queensland economy over the last two decades. The MFA evidence confirms that there has been a steady increase in the complexity of the Queensland economy. Economic coordination has occurred, to an increasing extent, through market intermediation. From a self-organisational perspective, it is clear that the Queensland economy has followed a rapid and coherent developmental path, marked by the emergence of bonded structures in its core and increasing complexity on its periphery.     

On some classes of normed and risk averse preferences

This paper develops a general approach to analyzing the expansion path of preferences. A framework is introduced that looks for modelling risk aversion using a normed distance defined on a real vector space. In this approach the distance between any two indifference curves is unambiguously measured by the absolute difference of a function depending on the utility. This forms a natural basis for analyzing the special case of an ? _p norm. Furthermore, a link is made to the limit case of p = ?? allowing to encompass as a special case CARA preferences. Finally, some notion of normed equivalent is proposed and duality results are established.     

Die Armen zahlen mehr — ein vernachlässigtes Problem der Verbraucherpolitik in der Bundesrepublik Deutschland?

Zusammenfassung Der vorliegende Beitrag zeigt, daß es auch in der BRD etliche empirische Indizien gibt, welche für die aus den USA bakannte These «die Armen zahlen mehr» sprechen. Nach einer kurzen Erläuterung dieser These sowie der sie stützenden Einzelhypothesen und der Erörterung der dafür sprechenden empirischen Indizien in der BRD, wird schließlich die Frage aufgeworfen, ob die Verbraucherpolitik in der BRD nicht stärker auf die besonderen Probleme sozial schwacher Konsumenten ausgerichtet werden soll, um damit zugleich in Übereinstimmung mit sozialpolitischen Zielsetzungen deren Lebenslage zu verbessern.

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The poor pay more — an ignored problem of consumer policy in the Federal Republic of Germany

The aim of this article is to focus the attention of consumer research and consumer policy in West Germany on the special disadvantages of low-income consumers. These disadvantages are well known in U. S. consumer and poverty research since the pioneering study in this field by Caplovitz (The Poor Pay More) but seem to be still largely ignored in West Germany.Surveying the available empirical knowledge on income differences and consumer behaviour in West Germany, four main factors can be identified which cause low-income consumers to pay more for the same goods (T₁), or to get goods of lower quality, i.e., less value for the same amount of money (T₂), than better-off middle-class consumers do.Firstly, in West Germany as in other western countries, low-income consumers, especially low-educated consumers, seem to be less informed than better educated middle-class consumers about market conditions, shopping opportunities, prices, and quality of goods. So they may have a greater risk of uneconomical buying. Remarkably, low-income consumers do not utilize the consumer's advice bureau or consumer information offered by the Stiftung Warentest to the extent that middle-class consumers do.Secondly, low-income consumers more frequently than middle-class consumers shop for food and daily necessities in small stores in their neighbourhood, more often buying in small quantities. Shopping in this way, goods are more expensive than by buying larger quantities in supermarkets or discount-stores. Interviews with low-income consumers in Munich (Studiengruppe für Sozialforschung, 1974) showed that this particular shopping behaviour is not mainly due to the lack of market information or to a preference by low-income consumers for personal contacts at shopping, as is sometimes maintained, but rather stems from budget restrictions which prevent large-scale buying, and from transportation problems facing low-income consumers without an automobile, especially in urban low-income areas and in rural settlements without discount-stores or the like.Thirdly, there is some evidence to suggest that low-income consumers in West Germany more frequently buy on instalment credit, which is supposed to be more costly than cash-payments or banking credits preferred by middle-class consumers.Fourthly, there is some empirical evidence in West Germany that low-income consumers, mostly low-educated, in contrast to middle-class consumers largely lack consumer know-how and shopping sophistication. So it can be assumed that low-income consumers are more frequently caught in unplanned and unfavourable purchases by persuasion of salesmen or pedlars. Presumably they also, more often than middle-class consumers, abstarin from taking action when dissatisfied. It is worth nothing, though, that the latest empirical findings in West Germany do not support the widespread view that low-income consumers do less household planning and budgeting and therefore more frequently do uneconomical shopping than middle-class consumers. Indeed, in the incidence of household planning in the country there seems to be no significant differences by income level. As strict household planning in West Germany is generally rare, in this respect one may only presume that many poor consumers pay more than would be necessary by careful income spending (T₃).Referring to these findings, the recommendation is made that public consumer policy in the Federal Republic of Germany to an increasing extent should face up to the disadvantages of low-income consumers and attempt to contribute to the reduction of real-income poverty. As scientific knowledge on this issue is still very sparse in West Germany, the article closes with a demand for further research in the field.

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Hermann Scherl ist wissenschaftlicher Assistent am Institut für Staats-und Versicherungswissenschaft der Universität Erlangen-Nürnberg (D — 8520 Erlangen, Kochstraße 4).