Unemployment and Catching Up: Europe Vis-à-vis the USA

This paper develops a two-region two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by research done in the (high-tech) tradeables sector. The follower region tends to catch up in terms of labour productivity with the leader region. Differences in unemployment compensation systems can lead to relative convergence, i.e., a steady state with the backward region lagging behind the leader region. The reason for this is that high social welfare compensations generate high unemployment and reduce the amount of labour employed for R&D purposes.     

The use of positively and negatively phrased items and the fit of a factor solution

To avoid the response set phenomenon, in handbooks it is suggested to compose item batteries of both positively and negatively formulated items. However, while doing a factor analysis, researchers usually neglect the effect this may have on the fit of the factor solution. In that case, the fit between a plausibly interpretable factor solution and the observed correlations may prove to be very unsatisfactory. In our opinion, however when both positively and negatively formulated items are used, it seems unrealistic to base the factor analysis on the content of the items only; also the difference in phrasing may influence the intercorrelations of the items. In this paper we discuss some possible additional assumptions in consequence of this consideration and we examine to what extent the deriving analysis decisions may improve the fit.     

Risk and performance estimation in hedge funds revisited: Evidence from errors in variables

This paper revisits the performance of hedge funds in the presence of errors in variables. To reduce the bias induced by measurement error, we introduce an estimator based on cross sample moments of orders three and four. This Higher Moment Estimation (HME) technique has significant consequences on the measure of factor loadings and the estimation of abnormal performance. Large changes in alphas can be attributed to measurement errors at the level of explanatory variables, while we emphasize some shifts in the economic contents of the equity risk premiums by switching from OLS to HME.     

Restructuring the State-Owned Banking Sector: A Comparative Assessment of Approaches in Central Europe

MOCT-MOST: Economic Policy in Transitional Economies -     

The consumer's demand for diversity

The consumer's demand for diversity is measured either by the entropy or by the Hirschman-Herfindahl index of the budget shares. This notion, including the income elasticity of the demand for diversity, is applied to per capita consumption data of 30 countries.     

Real wages,quantity constraints and equilibrium unemployment: Belgium, 1955–1988

This paper examines the determinants of equilibrium wage and unemployment rates in Belgium within the framework of a quantity rationing, right-to-manage model with decentralised wage-setting. Empirical results are obtained by first using the Johansen maximum-likelihood procedure for the analysis of cointegration among the variables of interest. The information from this stage is then used to estimate a three equation econometric model explaining the wage share, the unemployment rate and the capital gap. The slowdown in world trade is depicted as the most important factor explaining the rise in unemployment in Belgium, with dampening effects due to wage control policies imposed in the eighties. Because we obtain only two cointegrating relations, for three endogenous variables, our results are compatible with the hypothesis of path dependency and multiple equilibria.