An extension of mixed estimation,with an application to forecasting new product growth

This paper extends the mixed estimation technique to handle a case in which the coefficients of a set of linear constraints are known nonlinear functions of an unknown parameter vector for which an extraneous unbiased estimate is available. This novel form of the mixed estimation technique is illustrated by applying it to the Bass innovation/diffusion model of new product growth. It is suggested that this is superior to the traditional method whereby managerial intuition is incorporated into this type of model, and is an attractive alternative to recently-suggested Bayesian methods.I thank an anonymous referee for helpful comments and references.     

L'approccio di B. De Finetti per la riassicurazione individuale proporzionale. Modelli semplificati e considerazioni operative

Viene studiato il problema della determinazione della strategia riassicurativa ottima in caso di riassicurazione individuale proporzionale, secondo l'approccio media-varianza. In particolare si analizzano alcuni modelli semplificati nei quali si raggruppano le polizze di un portafoglio sulla base di certe caratteristiche di omogeneità; ciò consente di ridurre in maniera sensibile la complessità dei calcoli previsti nella procedura generale. Completano il lavoro considerazioni di carattere operativo.

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Summary The optimal reinsurance strategy for the proportional reinsurance problem in a meanvariance framework is investigated. In order to simplify the algorithmic complexity, simple models based on the aggregation of portfolio policies are studied. Some operational remarks are added.

     

On the theory of macroeconomic policy

Summary Jan Tinbergen originated the theory of policy in the 1950s. Here I apply it to contemporary macroeconomics. The two standard instruments of short-run demand management cannot achieve the two usual targets, full employment and price stability. With respect to those goals, these two instruments are collinear, except for small and transient effects on foreign exchange rates. But the mix of fiscal and monetary policies, relative to one another, does have important effects on the composition of national output, as between investment and consumption.I point out that policy-makers, like portfolio managers, should diversify the instruments they use when they are uncertain of their effects. I discuss some pitfalls in the empirical estimation of policy effects, especially possible misinterpretations of simple correlations, and I note that policy rules cannot be invariant to changes in macroeconomic structure. I argue that policy rules should involve responses to new information and in practice allow discretion. Finally, I suggest that Tinbergen's theory of policy needs to be extended to policy coordination among nations.Third Tinbergen Lecture delivered on October 20, 1989, in Utrecht for the Royal Netherlands Economic Association.     

Discriminating Among Alternative Theories of the Multinational Enterprise

Recent theoretical developments have incorporated endogenous multinational firms into the general–equilibrium model of trade. One simple taxonomy separates the theory into "vertical" models, in which firms geographically separate activities by stages of production, and "horizontal" models, in which multiplant firms duplicate roughly the same activities in many countries. The authors nest a horizontal and a vertical model within a hybrid (unrestricted) "knowledge–capital model" and estimate the specifications with data on US foreign direct investment activity. In the nested econometric tests, the data sample cannot distinguish statistically between the unrestricted model and the restricted horizontal model, indicating that the latter captures virtually all of the determinants of FDI. The tests overwhelmingly reject the vertical model.