Capacity utilization and technology shocks in the US manufacturing sector

The ability of real business cycle models to generate reasonable aggregate fluctuations depends on the time series properties of technology shocks measured by the change of total factor productivity. Three specifications of a non‐parametric productivity analysis which correct to different degrees for variations of capacity utilization are compared in this article using data for three‐ and four‐digit US manufacturing industries during the years 1958–1996. The results show that correcting for utilization generally leads to substantially smaller technology shocks that are less strongly correlated with growth of output and hours. Moreover, the probability of technological regress is considerably lower after the correction.     

Entwicklung der deutschen Außenwirtschaftsbeziehungen

Die regionale Struktur der deutschen Exporte hat sich seit den 1990er Jahren kontinuierlich ver?ndert. Die Schwellenl?nder, deren Wirtschaft im Verh?ltnis zu den Industrienationen stark w?chst, gewinnen kontinuierlich an Bedeutung. Nach dem dramatischen Rückgang der deutschen Exporte sch?tzen die Autoren die weitere Entwicklung bis 2020 mit Hilfe eines Gravitationsmodells.     

Functional‐dynamic public participation in technological decision‐making: site selection processes of nuclear waste repositories

This study employs the ordered lottery selection approach with field experiment to measure risk attitude of two distinct population groups in China – farmers in Wuhan and freelancers in media and advertising in Beijing. A comparative design was used to reveal the cross-population difference in risk attitude and its affecting factors. The results showed that both groups exhibited constant partial risk aversion and decreasing absolute risk aversion, while the farmers were more risk-averse than the freelancers. The farmer and freelancer respondents demonstrated very different sensitivity to the warming-up games types involving ‘gain-only’ or ‘gain-loss’ while extremely risk-averse respondents in the warming-up games possessed the consistent attitudinal behavior in the formal tests. The comparative experiment revealed that gender and income were two statistically significant factors affecting risk attitude and they appeared to be consistent across the two distinct groups. Surprisingly, respondents’ perceived frequency of risk occurrence was not correlated to their risk attitude. Moreover, the factors of leisure and investment behavior were significantly linked to the freelancers’ risk attitude but not the farmers’. The experiment also found a non-linear relationship between risk attitude and education, and receiving college education was found to be a critical switching point that was significantly linked to respondents’ risk choices. While further research is needed to better understand the governing mechanism in risk attitude, perception, and behavior, this paper tried to link the experimental results to the natural disaster insurance practice in China and discussed their implication to the policy design.     

The influence of linear and cyclical temporal representations on risk perception of nuclear waste: an experimental study

Time is an important aspect of the issue of nuclear waste, both from a technical and from a perceptional perspective. Previous studies have investigated the relationship between time and risk perception of nuclear waste, applying the discounting paradigm and therefore limiting time to one very narrow aspect: its duration. However, time is a multifaceted concept and encompasses more than a linear property. The aim of our study is to test the influence of a different aspect of time, namely temporal representations (linear or cyclical) on risk perception of nuclear waste. In an experimental study we demonstrate that both linear and cyclical representations have a reducing effect on risk perception compared to the control condition, where no specific time representation was activated. Examining group differences, we also demonstrate that temporal representations have a differing influence depending on whether participants have a stable belief about nuclear waste or whether they belong to an ambivalent group that does not yet hold a stable belief. Furthermore, we replicate the well-documented gender gap in risk perception. Our results bear potentially interesting implications for risk communication by demonstrating a causal relationship between the graphic representation of time and risk perception of nuclear waste.     

Exit options in incomplete contracts with asymmetric information

This paper analyzes bilateral contracting in an environment with contractual incompleteness and asymmetric information. One party (the seller) makes an unverifiable quality choice and the other party (the buyer) has private information about its valuation. A simple deterministic exit option contract, which allows the buyer to refuse trade, achieves the first-best in the benchmark cases where either quality is verifiable or the buyer?s valuation is public information. But, when unverifiable and asymmetric information are combined, deterministic contracts are necessarily inefficient. The first-best can be achieved, however, through simple message games with stochastic terms of trade as off-equilibrium outcomes.     

Mundell in 3D, synchronization of supply and demand shocks among sectors not countries, with application to CEECs

We follow recent Optimum Currency Area empirical literature and investigate the correlation of supply and demand shocks between the individual new EU member countries and the ‘EU-core’. Treating the whole economy as one sector this is a standard exercise based on Mundell’s original insight that monetary unification can be welfare improving if (among other things) two or more countries contemplating unification face similar economic disturbances. However, treating the economy of each country as a single sector precludes gaining further insights from the empirical exercise. For this purpose, we propose a novel methodology which treats the economy of each country as a collection of three distinct sectors. This allows us to go beyond the standard results usually presented in the form of international correlation of supply and demand shocks. The methodology combines two pieces of information about each sector in a given economy. The first is the international correlation of sector-specific supply and demand shocks. This information is valuable in itself from the economic policy perspective, as it identifies the most and least internationally synchronized sectors, that is, the sectors that are most and least likely to benefit from monetary unification. The second piece of information is the sector-specific weights used for aggregation across sectors in a given country. While interesting in itself, when combined with the first this piece of information points to sectors that are more and less responsible for the final result one obtains from the empirical exercise. The international correlation of supply and demand shocks is a result common to the standard methodology and our methodology, so the latter can also be seen as a robustness check of the former.