A non-parametric test for independence based on symbolic dynamics

In the present paper we propose a powerful, yet simple, non-parametric test for independence based on symbolic dynamic analysis. The absence of dependences in the unknown underlying data generating process is studied via symbolic dynamics. This is possible due to the ordering property of real numbers on an interval. Interestingly, the test is closely related to entropy concepts. Apart from being correctly sized, the new test is powerful for realistic finite data sets, and it is easy to use as one does not need to select any free parameter, which sharply contrasts with other tests of independence. In addition, the test is robust in the presence of noise which is one of the most typical cases when dealing with economic time series.     

Unspeakable September 11th: Taken for‐granted assumptions,selective reality construction and populist politics

The interplay of private and public reactions to the crisis of September 11th in New York is analyzed as an example of well‐functioning populist politics. Using material from observations, interviews and a content analysis of The New York Times obituaries, the sequence of reactions to the catastrophe of September 11th 2001 in New York City is described. The wish for nearness and reassurance was followed by a wish ‘to do something’. The latter, by necessity frustrated for most, was turned into identification with the new heroes who could ‘do something’: fire‐fighters, steel‐workers, and the politicians who presented themselves as organizers of their efforts. Analysis then concentrates on how these ‘private wishes’ were used for ‘public politics’ of a populist kind. Cultural norms and assumptions about family, community and masculinity were utilized for the mobilization of political attitudes of patriarchal protection, patriotism and retaliation. Social differences of victimization were denied (where in fact it can be shown that the financial upper class paid the highest toll) with the effect of creating the perfect ‘populist moment’ out of the situation on the basis of actual needs and sentiments. La combinaison des réactions individuelles et publiques à la crise new‐yorkaise du 11 septembre est analysée comme exemple de politique populiste réussie. A partir d'informations provenant d'observations, d'entretiens et d'une analyse de contenu des nécrologies parues dans The New York Times, la succession de réactions à la catastrophe du 11 septembre 2001 est décrite dans la ville de New York. Le souci de rapprocher et rassurer a été suivi d'une volonté de ‘faire quelque chose’. Cette dernière, frustrée par nécessité pour la majorité, s'est changée en identification aux nouveaux héros qui pouvaient ‘faire quelque chose’: pompiers ou métallurgistes, et politiciens qui se présentaient comme organisateurs de leurs efforts. L'analyse se consacre ensuite à la façon dont ses ‘aspirations privées’ ont été utilisées en faveur d'une ‘politique publique’ de type populiste. Normes culturelles et postulats sur la famille, la communauté et la masculinité ont été exploités pour mobiliser des attitudes politiques de protection patriarcale, de patriotisme et de revanche. Les différences sociales des victimes ont été effacées (alors qu'en fait, on peut montrer que la classe financière supérieure a payé le plus lourd tribut), créant ainsi, à partir des circonstances, le parfait ‘moment populiste’ fondé sur des besoins et sentiments réels.     

Competition in Retail Petrol Markets

We study the relationship between prices and market structure in geographically isolated markets that are exposed to large demand shocks. The temporal variation in market size allows us to overcome the classical endogeneity bias in standard concentration‐performance regressions. We find evidence of local market power in petrol markets due to product differentiation. Additionally, the high margins that characterise concentrated markets dissipate quickly with the number of competitors. Ignoring market structure endogeneity leads to underestimating the effect of market concentration on prices between 55 and 70%.     

Optimal Vertical Arrangements When Resale Is Possible

This paper pinpoints optimal vertical arrangements in settingscharacterized by incomplete contracting and resale of an intermediateinput (a "widget"). In the Grossman-Hart-Moore property rightstheory, we conclude that sometimes strictly complementary assetsshould be owned separately to permit the emergence of a secondarymarket. In a richer model where the parties choose specificand nonspecific investments, vertical separation may also dominatejoint ownership. The article then examines the profitabilityof three integration forms when the proposed bargaining modelsubstitutes random-order values (e.g., the Shapley value). Theconclusions differ markedly from existing claims. (JEL C70,C78, D23, L42)     

Where are we in the political economy of reform?

We review the experiences of developing countries with market-oriented reforms, using the tools of modern political economy. We impose intellectual discipline by requiring that actors behave rationally using available information and that basic economic relationships such as budget constraints be accounted for. We attempt to integrate two approaches, one based on dynamic games played by interest groups, with one that focus on limited information and the dynamics of learning.

We describe the “starting point” as the set of “old” policies and we attempt to explain the dynamics (political, economic and informational) that lead to reform (section II). We analyze strategies for reformers subject to political constraints (section Ш). We evaluate the aggregate and distributional costs of reforms, emphasizing the importance of looking at the right counterfactuals (section IV).

We conclude by pointing to the challenges ahead: the second-stage institutional reforms necessary to take off from underdevelopment.     

State capacity and the quality of policies. Revisiting the relationship between openness and government size

Countries with different levels of state capacity have access to different sets of policies. In particular, countries with strong state capabilities are able to draw from a broader menu of policies than countries with lower capabilities. We apply and test this insight to the case of exposure to trade‐related risk. So far, most of the literature has considered that only one type of policy—the one that increases government size—can help to overcome the challenge imposed by openness. However, there are a number of policies that can mitigate trade‐induced risks, many of which do not have the necessary implication of increasing public spending. Yet, many such policies require governmental capabilities not available to any country. For that reason, while the choice of a particular policy within a menu depends on political conditions, the relationship between openness and the size of government might be mediated by the capabilities of states. This paper provides reduced form evidence confirming that the empirical relationship between openness and government size is conditional on state capabilities. Therefore, public policies cannot be assessed independently of the capacity of the State that would have to implement them.