Inconsistency of the MLE and inference based on weighted LS for LARCH models

This paper considers a class of finite-order autoregressive linear ARCH models. The model captures the leverage effect, allows the volatility to be arbitrarily close to zero and to reach its minimum for non-zero innovations, and is appropriate for long memory modeling when infinite orders are allowed. However, the (quasi-)maximum likelihood estimator is, in general, inconsistent. A self-weighted least-squares estimator is proposed and is shown to be asymptotically normal. A score test for conditional homoscedasticity and diagnostic portmanteau tests are developed. Their performance is illustrated via simulation experiments. It is also investigated whether stock market returns exhibit some of the characteristic features of the linear ARCH model.     

Economies of scale and density in local telephone networks

The production structure of local telephone networks is analyzed with a translog cost function estimated with cross-sectional data on a sample of 44 small local exchange companies (LECs). The output vector includes the number of stations served and the service territory area. Economies of scale are exhausted beyond 992 stations with growth through territorial expansion. The threshold for expansion through densification is 51,053 stations. These results suggest that the optimal LEC's size is small, and that competition may be the most efficient form of production organization for medium to large markets in rural and low-density urban settings.     

Heterogeneity vs. externalities in technological competition: A tale of possible technological landscapes

The article presents a stochastic interaction model based on Gibbs random fields to analyze technological competition in a population of heterogeneous adopters with local or global externalities. The relationships between both heterogeneity and externalities and imperfect and asymmetric information are first emphasized. When local externalities and heterogeneity coexist, the technological landscapes of the industry are then shown to depend on the relative influence of these two parameters, with a phase transition: technologies coexist either in approximately equal market shares when heterogeneity is high enough or with one of the technologies only surviving in technological niches when local externalities dominate. Niches do also spontaneously appear: technological options survive in economic space due to the existence of some amount of heterogeneity among agents. On the contrary, when global externalities are added, pure standardization almost always occurs. We finally argue that different public policies should be designed so as to fit with different technological landscapes.     

Simulating urban population density with a gravity-based model

Theoretical justifications for the negative exponential urban density function were first proposed by urban economists, although some of their foundations have been criticized. From the geographer's perspective, the gravity-based model reported in this research uses a well-known concept (the “potential”) to offer an alternative explanation. Using numerical analysis techniques, the model simulates various urban density patterns. By varying the model's parameters (the distance friction coefficient β and the city size), the numerical simulations do confirm two important empirical findings: the flattening of density gradients over time owing to transportation improvements, and flatter gradients in larger cities. The observed relationship between the β value and the urban density gradient, as established by this research, opens an avenue for empirical testing.     

Cost-effectiveness of asenapine in the treatment of bipolar I disorder patients with mixed episodes

Objective:

Around one-third of patients with bipolar I disorder (BD-I) experience mixed episodes, characterized by both mania and depression, which tend to be more difficult and costly to treat. Atypical antipsychotics are recommended for the treatment of mixed episodes, although evidence of their efficacy, tolerability, and cost in these patients is limited. This study evaluates, from a UK National Health Service perspective, the cost-effectiveness of asenapine vs olanzapine in BD-I patients with mixed episodes.

Methods:

Cost-effectiveness was assessed using a Markov model. Efficacy was informed by a post-hoc analysis of two short-term clinical trials, with response measured as a composite Young Mania Rating Score and Montgomery-Åsberg Depression Rating Scale end-point. Probabilities of discontinuation and relapse to manic, mixed, and depressive episodes were sourced from published meta-analyses. Direct costs (2012–2013 values) included drug acquisition, monitoring, and resource use related to bipolar disorder as well as selected adverse events. Benefits were measured as quality-adjusted life years (QALYs).

Results:

For treating mixed episodes, asenapine generated 0.0187 more QALYs for an additional cost of £24 compared to olanzapine over a 5-year period, corresponding to a £1302 incremental cost-effectiveness ratio. The higher acquisition cost of asenapine was roughly offset by the healthcare savings conferred through its greater efficacy in treating these patients. The model shows that benefits were driven by earlier response to asenapine during acute treatment and were maintained during longer-term follow-up. Results were sensitive to changes in key parameters including short and longer-term efficacy, unit cost, and utilities, but conclusions remained relatively robust.

Conclusions:

Results suggest that asenapine is a cost-effective alternative to olanzapine in mixed episode BD-I patients, and may have specific advantages in this population, potentially leading to healthcare sector savings and improved outcomes. Limitations of the analysis stem from gaps in clinical and economic evidence for these patients and should be addressed by future clinical trials.     

Industrial location,air pollution control and meteorological variability: a dynamic optimization approach2

This paper deals with the short-term, intra-annual control of air pollution, accounting for the variability of meteorological conditions. The concept of a dynamic transfer matrix is presented, and various planning models are developed, which yield optimal abatement sequences in combination with other decisions related to fuel consumption, production levels and location of the polluting sources. This methodology is illustrated by numerical applications to the Haifa area, where the emphasis is set on its two major polluters, the Power Plant and the Refineries, and the variability of the meteorological conditions is accounted for on a monthly basis.     

Economic valuation of the vulnerability of world agriculture confronted with pollinator decline

There is mounting evidence of pollinator decline all over the world and consequences in many agricultural areas could be significant. We assessed these consequences by measuring 1) the contribution of insect pollination to the world agricultural output economic value, and 2) the vulnerability of world agriculture in the face of pollinator decline. We used a bioeconomic approach, which integrated the production dependence ratio on pollinators, for the 100 crops used directly for human food worldwide as listed by FAO. The total economic value of pollination worldwide amounted to €153 billion, which represented 9.5% of the value of the world agricultural production used for human food in 2005. In terms of welfare, the consumer surplus loss was estimated between €190 and €310 billion based upon average price elasticities of − 1.5 to − 0.8, respectively. Vegetables and fruits were the leading crop categories in value of insect pollination with about €50 billion each, followed by edible oil crops, stimulants, nuts and spices. The production value of a ton of the crop categories that do not depend on insect pollination averaged €151 while that of those that are pollinator-dependent averaged €761. The vulnerability ratio was calculated for each crop category at the regional and world scales as the ratio between the economic value of pollination and the current total crop value. This ratio varied considerably among crop categories and there was a positive correlation between the rate of vulnerability to pollinators decline of a crop category and its value per production unit. Looking at the capacity to nourish the world population after pollinator loss, the production of 3 crop categories - namely fruits, vegetables, and stimulants - will clearly be below the current consumption level at the world scale and even more so for certain regions like Europe. Yet, although our valuation clearly demonstrates the economic importance of insect pollinators, it cannot be considered as a scenario since it does not take into account the strategic responses of the markets.     

Discounting and divergence of opinion

Agents impatience rate and their anticipations about the future of the economy, are two essential determinants of the equilibrium discount rate, as illustrated by the Ramsey formula. Heterogeneity in time preference rates and in anticipations is widely acknowledged. Our objective is to determine the equilibrium discount rate when this heterogeneity is taken into account. Among others we tackle the following questions: As an additional risk or uncertainty, can dispersion in agents' characteristics lead to lower discount rates? What is the asymptotic behavior of the discount rate in such a setting? More generally, what is the shape of the yield curve?