The codispersion map: a graphical tool to visualize the association between two spatial variables

The codispersion coefficient quantifies the association between two spatial processes for a particular direction (spatial lag) on a two‐dimensional space. When this coefficient is computed for many directions, it is useful to display those values on a single graph. In this article, we suggest a graphical tool called a codispersion map to visualize the spatial correlation between two sequences on a plane. We describe how to construct a codispersion map for regular and non‐regular lattices, providing algorithms in both cases. Three numerical examples are given to illustrate how useful this map can be to detect those directions for which the codispersion coefficient attains its maximum and minimum values. We also provide the R code to construct the codispersion map in practice.     

A Survey of L1 Regression

L₁ regularization, or regularization with an L₁ penalty, is a popular idea in statistics and machine learning. This paper reviews the concept and application of L₁ regularization for regression. It is not our aim to present a comprehensive list of the utilities of the L₁ penalty in the regression setting. Rather, we focus on what we believe is the set of most representative uses of this regularization technique, which we describe in some detail. Thus, we deal with a number of L₁‐regularized methods for linear regression, generalized linear models, and time series analysis. Although this review targets practice rather than theory, we do give some theoretical details about L₁‐penalized linear regression, usually referred to as the least absolute shrinkage and selection operator (lasso).     

Local government efficiency: determinants and spatial interdependence

We analyse the determinants of local government efficiency taking into account the presence of spatial interactions among neighbouring municipalities. To do so, first we estimate an efficiency index using the robust order-m methodology in Valencian municipalities (Spain). Second, we examine the socio-economic, political and budgetary factors that might influence efficiency levels. Finally, we analyse the spatial interactions present in our data. The results of estimating a spatial autoregressive model show that government efficiency in neighbouring municipalities positively affects the local government’s own efficiency. This highlights the importance of considering spatial dependence structures in studies on efficiency in the public sector.     

Tangency capacity notions based upon the profit and cost functions: A non-parametric approach and a general comparison

This contribution provides a way to define and compute a tangency notion of economic capacity based upon the relation between the various directional distance functions and the profit and cost functions using non-parametric technologies. A new result relating profit and cost function-based tangency capacity notions is established.     

Too big to fail? The dynamics of EU influence and fiscal consolidation in Italy and Spain (2008–2016)

ABSTRACT

The article studies the dynamics of fiscal consolidation and public sector reforms in Italy and Spain under the EU governance that took shape as a reaction to the Eurozone crisis. We show how three types of EU pressure – fiscal and economic coordination rules, conditionality, and back-room diplomacy have operated in conjunction. We also show that Italy was more willing than Spain to resist EU pressure. Based on a Two-Level Game framework, we argue that this can be explained by the greater opposition to European integration that has developed in Italy compared to Spain.     

Energy dependence,oil prices and exchange rates: the Dominican economy since 1990

This paper studies the impact that oil prices have had on the floating exchange rate (ER) of the Dominican peso during the 1990–2008 period. The existing empirical literature has documented a link between these two variables for large developed economies and oil-producing countries, always including the 1970s oil crises in their sample periods. Few authors analyze the case of small open economies dependent on oil imports. Since the acceleration of economic growth in the Dominican Republic during the last decade has greatly increased its degree of external energy dependence, this country’s experience presents an ideal case study. We estimate the influence that changes in international gasoline prices have on the real exchange rate between the Dominican peso and the United States dollar. The cointegrated nature of the gasoline price and ER time series are tested and a vector error correction model is developed. Our results indicate that a 10% rise in the price of gas coincides with a 1.2% depreciation of the peso in the long run and that the causality runs from gas prices to the peso.     

The hypothesis of a unit root in OECD inflation revisited

This paper investigates the hypothesis of a unit root in inflation for 13 OECD countries over the period 1957–2005, taking into account cross-sectional dependence and multiple mean shifts. We conduct unit root testing with the more powerful unit root tests with cross-dependence proposed by Smith et al. [Smith, L. V., Leybourne, S., Kim, T., & Newbold, P. (2004). More powerful panel data unit root tests with an application to the mean reversion in real exchange rates. Journal of Applied Econometrics, 19(2), 147–170] and a bootstrap version of the panel stationarity test of Hadri [Hadri, K. (2000). Testing for stationarity in heterogeneous panel data. The Econometrics Journal, 3(2), 148–161.], which provide inconclusive evidence on the time series properties of OECD inflation rates. To shed some light on this issue, we employ the recently developed panel stationarity test of Carrión-i-Silvestre et al. [Carrión-i-Silvestre, J. L., Del Barrio, T., & López-Bazo, E. (2005). Breaking the panels: An application to the GDP per capita. The Econometrics Journal, 8(2), 159–175] that assumes a highly flexible trend function by incorporating an unknown number of breaks in level. Overall, our confirmatory analysis renders clear-cut evidence in favor of regime-wise stationarity. Furthermore, the breaks in inflation detected are closely associated with macroeconomic shocks and changes in monetary policy.