Dynamic inefficiency in an overlapping generations economy with production

Reichlin [Equilibrium cycles in an overlapping generations economy with production, J. Econ. Theory 40 (1986) 89-102] has shown in an OLG model with productive capital that whenever the steady state is locally indeterminate and undergoes a Hopf bifurcation, it is Pareto-optimal. While these results were established under the assumption of Leontief technology, the author has partially extended them to show that the Hopf bifurcation is robust with respect to the introduction of capital-labor substitution. In this note, we prove that the Pareto-optimality of the steady state does not extend to technologies with capital-labor substitution. When the steady state is a sink or undergoes a Hopf bifurcation, it is characterized by over-accumulation with respect to the Golden Rule—the interest rate is negative—hence not Pareto-optimal. Most importantly, it follows that stabilization policies targeting the steady state leave room for welfare losses associated with productive inefficiency, apart from the very special case of Leontief technology.     

Dynastic Inequality Compared: Multigenerational Mobility in the United States,the United Kingdom,and Germany

Using harmonized household survey data, we analyze long‐run social mobility in the United States, the United Kingdom, and Germany, and test recent theories of multigenerational persistence of socioeconomic status. In this country comparison setting, we find evidence against a universal law of social mobility. Our results show that the long‐run persistence of socioeconomic status and the validity of a first‐order Markov chain in the intergenerational transmission of human capital is country‐specific. Furthermore, we find that the direct and independent effect of grandparents' social status on grandchildren's status tends to vary by gender and institutional context.     

Forecasting monthly industrial production in real-time: from single equations to factor-based models

The aim of this paper is to analyze the performance of alternative forecasting methods to predict the index of industrial production in Italy from 1 to 3 months ahead. We use twelve different models, from simple ARIMA to dynamic factor models exploiting the timely information of up to 110 short-term indicators, both qualitative and quantitative. This allows to assess the relevance for the forecasting practice of alternative combinations of types of data (real-time and latest available), estimation methods and periods. Out-of-sample predictive ability tests stress the relevance of more indicators in disaggregate models over sample periods covering a complete business cycle (about 7 years in Italy). Our findings downgrade the emphasis on both the estimation method and data revision issues. In line with the classical “average puzzle”, the use of simple averages of alternative forecasts often improves the predictive ability of their single components, mainly over short horizons. Finally, selected indicators and factor-based models always perform significantly better than ARIMA models, suggesting that the short-run indicator signal always dominates the noise component. On this regard, selected indicators models can further increase the amount of signal extracted to improve up to 30–40% the short-run predictive ability of factor-based models and to forecast-encompass them.     

When do Non‐Family CEOs Outperform in Family Firms? Agency and Behavioural Agency Perspectives

Family firms represent a globally dominant form of organization, yet they confront a steep challenge of finding and managing competent leaders. Sometimes, these leaders cannot be found within the owning family. To date we know little about the governance contexts under which non‐family leaders thrive or founder. Guided by concepts from agency theory and behavioural agency theory, we examine the conditions of ownership and leadership that promote superior performance among non‐family CEOs of family firms. Our analysis of 893 Italian family firms demonstrates that these leaders outperform when they are monitored by multiple major family owners as opposed to a single owner; they also outperform when they are not required to share power with co‐CEOs who are family members, and who may be motivated by parochial family socioemotional priorities.     

Relative wage concern: the missing piece in the contract multiplier?

Recent research has cast serious doubts on the explanatory power of staggered wage/price setting to account for both output and inflation persistence following money shocks. This paper extends a dynamic general equilibrium model with wage staggering by incorporating relative wage concern on the part of workers. In sharp contrast to previous analyses, in this model both output and inflation dynamics exhibit substantial persistence. Moreover, persistence results hold for a wide range of parameterisations. Our results suggest that relative wage concern may be the missing piece in the money shock persistence puzzle.     

„Wir haben bei Henkel international eine einheitliche Arbeitsweise im Finanzbereich geschaffen“

Praxis / ArtikelInterview

„Wir haben bei Henkel international eine einheitliche Arbeitsweise im Finanzbereich geschaffen“ Jürgen H. Daum im Gespr?ch mit Dr. Carlo Mackrodt, vormals Vice President Global Financial Services, Henkel KGaA, zur Neugestaltung des Henkel-Finanzbereichs     

The Corn–Guano Model

The model presented here can be seen as an extension, specifically designed to deal with the issue of exhaustible resources, of the well‐known ‘corn model’. We believe that useful insights are obtained by concentrating on a benchmark case, that of an economy with only one reproducible ‘good’, corn, and only one ‘resource’, guano. The corn–guano model aims at delineating some major issues related to the introduction of exhaustible resources within a post‐Sraffian model. In this paper we concentrate on the dynamics of the price variables. The ultimate goal concerns more generally the treatment of intertemporal economies outside a regular growth path, i.e. it concerns the degree of generality of the post‐Sraffian theory itself.     

Wrapped input selection using multilayer perceptrons for repeat‐purchase modeling in direct marketing

In this paper, we try to validate existing theory on and develop additional insight into repeat‐purchase behavior in a direct marketing setting by means of an illuminating case study. The case involves the detection and qualification of the most relevant RFM (Recency, Frequency and Monetary) variables, using a neural network wrapper as our input pruning method. Results indicate that elimination of redundant and/or irrelevant inputs by means of the discussed input selection method allows us to significantly reduce model complexity without degrading the predictive generalization ability. It is precisely this issue that will enable us to infer some interesting marketing conclusions concerning the relative importance of the RFM predictor categories and their operationalizations. The empirical findings highlight the importance of a combined use of RFM variables in predicting repeat‐purchase behavior. However, the study also reveals the dominant role of the frequency category. Results indicate that a model including only frequency variables still yields satisfactory classification accuracy compared to the optimally reduced model. Copyright © 2001 John Wiley & Sons, Ltd.     

Interest rate assumptions and predictive accuracy of central bank forecasts

The interest rate assumptions for macroeconomic forecasts differ among central banks. Common approaches are given by the assumptions that interest rates remain constant over the forecast horizon, follow a path as expected by market participants or follow a path as expected by the central bank itself. Theoretical papers such as Svensson (The instrument-rate projection under inflation targeting: the Norwegian example. Centre for European Policy Studies Working Paper (127), 2006) and Galí (J Monet Econ 58:537–550, 2011) suggest an accuracy ranking for these forecasts, from employing central bank expectations yielding the highest forecast accuracy to conditioning on constant interest rates yielding the lowest. Yet, when investigating the predictive accuracy of the Bank of England’s and the Banco Central do Brasil’s forecasts for interest rates, inflation and output growth, we hardly find any significant differences between forecasts based on the different interest rate paths. Our results suggest that the choice of the interest rate assumption appears to be of minor relevance empirically.