Testing slope homogeneity in large panels with serial correlation

Pesaran and Yamagata (Pesaran, M.H., Yamagata, T., Testing slope homogeneity in large panels, Journal of Econometrics 142, 50–93, 2008) propose a test for slope homogeneity in large panels, which has become very popular in the literature. However, the test cannot deal with the practically relevant case of heteroskedastic and/serially correlated errors. The present note proposes a generalized test that accommodates both features.     

Social Behaviour in Work Absence*

By making use of a large‐scale randomized experiment, we test whether social behaviour is important for work absence due to illness. The individuals treated in the experiment were exposed to less monitoring of their eligibility to collect sickness insurance benefits, which sharply increased their non‐monitored work absence. This exogenous variation is exploited in two complementary analyses. In both analyses, we find significant social‐behaviour effects. Using detailed data, we conclude that the social‐behaviour effects most likely stem from fairness concerns.     

Cost-effectiveness of once-weekly semaglutide versus dulaglutide and lixisenatide in patients with type 2 diabetes with inadequate glycemic control in Sweden

Abstract

Aims: This analysis evaluated the cost-effectiveness of once-weekly semaglutide vs glucagon-like peptide-1 receptor agonists (GLP-1 RAs) in patients with type 2 diabetes (T2D) uncontrolled on metformin or basal insulin in Sweden.

Materials and methods: This cost-effectiveness analysis (CEA) was conducted using the Swedish Institute of Health Economics (IHE) Diabetes Cohort Model. Analyses were conducted from the Swedish societal perspective over a time horizon of 40?years. For patients uncontrolled on metformin, dulaglutide was the comparator, and data from the SUSTAIN 7 clinical trial was used. For patients uncontrolled on basal insulin, lixisenatide was chosen as the comparator and data was obtained from a network meta-analysis (NMA).

Results: The results show that, in patients with inadequate control on metformin, semaglutide 1.0?mg dominated (i.e. provided greater clinical benefit, and was less costly) dulaglutide 1.5?mg. In patients with inadequate control on basal insulin, semaglutide 1.0?mg dominated lixisenatide. The reduction in costs is largely driven by the reduction in complications seen with once-weekly semaglutide.

Limitations and conclusions: It is likely that this analysis is conservative in estimating the cardiovascular (CV) cost benefits associated with treatment with once-weekly semaglutide. In patients inadequately controlled on basal insulin, the analyses vs lixisenatide were based on results from an NMA, as no head-to-head clinical trial has been conducted for this comparison. These CEA results show that once-weekly semaglutide is a cost-effective GLP-1 RA therapy for the treatment of T2D in patients inadequately controlled on metformin or basal insulin, addressing many current clinician, patient, and payer unmet needs in Sweden.     

Environmental Valuation – To Use or Not to Use? A Comparative Study of the United States and Europe

Valuation methods have been used for five main purposes in environmental decision-making. Cost–benefit analysis (CBA) of projects, CBA of new regulations, natural resource damage assessment, environmental costing, and environmental accounting. The relatively lower importance attached to economic efficiency in environmental decision-making in most European countries compared to the U.S.A., both legally and in practice, might account for our general finding that there are very few valuation studies in Europe which have served as a decisive basis for environmental policy and regulations. However, with EU's goal to establish environmentally adjusted national accounts and to apply CBA to environmental policy and regulations, time seems ripe for an increased use of valuation techniques in Europe.     

VERTICALLY INTEGRATED PRODUCTIVITY MEASURES: TESTS OF STANDARD ASSUMPTIONS

In this paper we use an input-output framework to examine two criticisms of standard measures of total factor productivity. These criticisms are (1) that the contribution of capital to productivity growth is underestimated, and (2) that the use of cost shares to weigh factor input contribution is questionable. Using various vertically integrated productivity measures we find that capital's productivity contribution is underestimated in the neoclassical formulation. We also find that in a Pasinetti-Rymes growth model, factor shares do not approximate output elasticities. We conclude that the argument made by Pasinetti, Rymes, and others is supported, that in long-run productivity analysis capital should not be treated as a primary input, but should be measured as an intermediate, produced input.     

Upstream Competition between Vertically Integrated Firms

We propose a model of two‐tier competition between vertically integrated firms and unintegrated downstream firms. We show that, even when integrated firms compete in prices to offer a homogeneous input, the Bertrand logic may collapse, and the input may be priced above marginal cost in equilibrium. These partial foreclosure equilibria are more likely to exist when downstream competition is fierce or when unintegrated downstream competitors are relatively inefficient. We discuss the impact of several regulatory tools on the competitiveness of the wholesale market.     

Liability Insurance and Choice of Cars: A Large Game Approach

If a car, already on the road, is replaced by another one, more expensive to collide with, a negative externality spills over to other drivers. This paper studies such externalities, relating them to insurance and incentives. It formalizes links from liability rules to choice of car. By assumption, insurance is cooperative but car acquisition is noncooperative. Construing drivers' interaction as a large game, the paper considers how a Nash equilibrium—and its efficiency or fairness—is shaped by the underlying liability regime.     

Farmers, Vertical Coordination, and the Restructuring of Dairy Supply Chains in Central and Eastern Europe

The combination of transition and globalization since the early 1990s has caused dramatic changes in the dairy chains in Central and Eastern Europe. This paper uses survey evidence from several Central and East European countries to document the growth of vertical coordination in the dairy chain, its relationship with policy reforms, its effects and the implications for small farms. Evidence suggests that in several countries small dairy farms have benefited from vertical coordination processes by providing them access to inputs and higher value markets.     

From Business Ethics to the Vocation of Business Leaders to Humanize the World of Business

This article is the integral text of an inaugural lecture as professor extraordinary for business ethics at the Catholic University of Brabant at Tilburg, the Netherlands. The author is professor of ethics at the Catholic University of Leuven (K.U.Leuven) and an Associate Editor of this Review.     

Convexity theory for the term structure equation

We study the convexity and model parameter monotonicity properties for prices of bonds and bond options when the short rate is modeled by a diffusion process. We provide sharp conditions on the model parameters under which the convexity of the price in the short rate is guaranteed. Under these conditions, the price is decreasing in the drift and increasing in the volatility of the short rate. We also study the convexity properties of the logarithm of the price and find simple conditions on the coefficients that guarantee that the price is log-convex or log-concave.