Understanding Error Structures and Exploiting Panel Data in Meta-analytic Benefit Transfers

A regression meta-analysis is a statistical summary of results from a set of empirical studies. While, a meta-analysis is typically used to drawn inferences regarding the collective insights from an empirical literature, a regression meta-analysis can also be used to predict outcomes as a substitute for the conduct of a new study. Within the nonmarket-valuation literature benefit transfers are a special case of prediction where value estimates collected for one purpose are used as a basis for predicting value for unstudied applications. Balancing against the prediction opportunities provided by a regression meta-analysis is the potential prediction error. This paper considers some of these issues in the estimation of a regression meta-analysis to support prediction of nonmarket values for applications where an original study does not exist. We do not purport to address all elements of the error structure and prediction issues, but to present a more coherent focus to enhance future research on the validity and reliability of benefit-function transfers, and ultimately assist in enhancing the credibility of benefit transfers to support policy analyses.     

Seeking External Evidence to Assess Benefit Transfers for Environmental Policy

The cost and time required to produce original benefit estimates makes benefit transfers a highly valuable component of the process of assessing the benefits and costs of environmental improvements. Because of the great variety of benefit estimates, conducted at different times with different data sources and different techniques, there is concerted effort to understand the validity of transfers. The research in this paper approaches the validity issue of benefit transfers by asking whether there is indirect evidence of the benefits. The premise of the paper is that policies that give significant benefits should induce expected and unexpected behavioral changes. We look for evidence of potential indirect evidence by by estimating the effect of differences air pollutants on activities such as outdoor recreation and work, as found in the American Time Use Survey.     

The pyramid of Okun’s coefficient for Italy

Our aim is to propose a pyramid of Okun’s coefficient by age and gender in the Italian labour force using a varying-coefficient model. The unemployment rate by age and gender—useful information for estimating Okun’s relationship—is not available for Italy from official statistics. Therefore, we provide an estimation of the indicator using microdata for the 2005–2014 period from ISTAT, the Italian labour force survey. Okun’s law is investigated using two measures of the unemployment rate: a traditional measure based on a labour force with and without work experience, and a new measure restricted to the labour force with experience. When Okun’s relationship is estimated using the unemployment rate restricted to the labour force with experience, the young population is less sensitive to business cycles. As the workforce ages, this gap in sensitivity tends to shrink. We also found that there are no significant differences by gender in the magnitude of Okun’s coefficient among the youngest population when considering the unemployment rate restricted to the labour force with experience.     

Competition in the Portuguese economy: insights from a profit elasticity approach

The article uses the elasticity of profits to marginal costs, as in Boone (Econ J 111:1245–1261, 2008b), to measure the degree of competition in the Portuguese economy in a period characterised by the reallocation of resources towards the non-tradable sector and the accumulation of macroeconomic imbalances. Using firm-level data for the period 2000–2009, we find that there is lower competition intensity in the non-tradable sector. The least competitive markets within this sector lay in professional services, network industries and segments of retail trade. We also find that reductions in competition intensity are relatively widespread in the economy, but in terms of sales, gross value added and employment they are more substantial in the non-tradable sector. Results suggest that some network industries and other services exhibit low and a declining competition intensity in the period under analysis. In addition, the article discusses the coherence of the profit elasticity with classic indicators of market power, such as the Herfindahl–Hirschman index and the price-cost margin, and find that in more than half of the markets there is an agreement in the dynamics of competition intensity.     

Intergenerational occupational dynamics before and during the recent crisis in Spain

The relationship between the socio-economic status of parents and children is referred to by the literature as intergenerational social mobility. Low mobility implies that human capital, skills and talent can be misallocated. As a consequence, the workers’ efforts, their motivation and productivity could be negatively affected, causing adverse effects on economy growth and competitiveness. This paper attempts to study the evolution of intergenerational social mobility before and during the recent economic crisis in Spain. The methodology applied consists in analysing the movements along the occupational scale of children with respect to their parents. This involves associating the National Classification of Occupations with the New International Socio-economic Index of Occupational Status. Statistic and econometric methods are used to assess these occupational transitions and to analyse the covariates’ effects on them. Data used corresponds to the 2005 and 2011 Living Condition Survey (INE 2005, 2011).     

Tax competition and the political economy of public employment: a model for Austria

In this work, we simulate the effects of the tax autonomy of the Austrian states on the levels of public employment in each state. We show that depending on the strength of the public sector lobby, tax autonomy would require a reduction of employment in the public sector of between 25 and 35% of the current level. We also show that tax autonomy increases welfare levels by 1–1.5%; that is, the positive change in the disposable income of the workers more than offsets the welfare loss resulting from the lower provision of public goods. Finally, we show that the reduction of public employment is superior in terms of welfare to an alternative scenario in which employment levels are held constant but the wage levels in the public sector are adjusted.     

A quantitative explanation of the low productivity in South–Eastern European economies: the role of misallocations

It is well known that southeast Europe is the least developed area in Europe. Using a methodology based on the idea of heterogeneous firms, this paper studies the degree to which firm heterogeneity and resource misallocation can explain the lower TFP in southeast Europe. The results show a significant degree of heterogeneity and resource misallocation, although the results are sensitive to the calibration used. There is evidence that firm-level productivity depends on firm size, while taxation negatively influences it. There is also some evidence that foreign-owned firms are more competitive, as are exporting firms. Results are generally robust across the various specifications used, but less so relative to the measure of productivity used. Additional evidence suggests that infrastructure-related obstacles as well as institutional instability drive the output distortion, while no factor is underlined as a significant driver of capital distortions, suggesting the need for better data sources for the latter.     

Monetary policy implications of short-term capital flows in Turkey

The advent of global financial crisis in 2008, unleashed volatile short term capital flows to the emerging markets. This has forced many central banks in the developing world to adopt innovative policy measures to address concerns related to financial instability caused by the volatile nature of capital flows. In 2010 Turkish Central Bank included financial stability in addition to price stability as one of primary goals of its monetary policy. Several macro-prudential measures had been taken and ‘corridor system’ of setting the short-term policy rates had been introduced. In this paper, we have estimated an extended Taylor rule, using error correction model, to examine the impact of global financial factors in impacting the setting up of the policy rate in the pre and post 2010 periods in Turkey. It has been found that in the post-2010 period, global financial factors and monetary policy stance of the core economy, USA, have become major factor(s) in shaping up the monetary policy. Particularly our results of variance decomposition show that global financial indicators such as, VIX and EMBI have taken prominence in the setting of the short-term policy rate. This has not only made the domestic monetary more dependent on external factors but has also made pro-cyclical in nature.     

Context matters

Eliciting the level of risk aversion of experimental subjects is of crucial concern to experimenters. In the literature there are a variety of methods used for such elicitation; the concern of the experiment reported in this paper is to compare them. The methods we investigate are the following: Holt–Laury price lists; pairwise choices, the Becker–DeGroot–Marschak method; allocation questions. Clearly their relative efficiency in measuring risk aversion depends upon the numbers of questions asked; but the method itself may well influence the estimated risk-aversion. While it is impossible to determine a ‘best’ method (as the truth is unknown) we can look at the differences between the different methods. We carried out an experiment in four parts, corresponding to the four different methods, with 96 subjects. In analysing the data our methodology involves fitting preference functionals; we use four, Expected Utility and Rank-Dependent Expected Utility, each combined with either a CRRA or a CARA utility function. Our results show that the inferred level of risk aversion is more sensitive to the elicitation method than to the assumed-true preference functional. Experimenters should worry most about context.     

On the cultural basis of gender differences in negotiation

We study how culture and social structure influence bargaining behavior across gender, by exploring the negotiation culture in matrilineal and patriarchal societies using data from a laboratory experiment and a natural field experiment. One interesting result is that in both the actual marketplace and in the laboratory bargaining game, women in the matrilineal society earn more than men, at odds with years of evidence observed in the western world. We find that this result is critically driven by which side of the market the person is occupying: female (male) sellers in the matrilineal (patriarchal) society extract more of the bargaining surplus than male (female) sellers. In the buyer role, however, we observe no significant differences across societies.