MOSES: Model for studying the economy of Sweden

MOSES is an aggregate econometric model for Sweden, estimated on quarterly data, and intended for policy simulations and short-term forecasting. After a presentation of qualitative model properties, the econometric methodology is summarized. The model properties, within sample simulations, and forecast evaluations are presented. We also address methodology and practical issues relating to building and maintaining a macro model of this type. The detailed econometric equations are reported in Appendix A.“I think it should be generally agreed that a model that does not generate many properties of actual data cannot be claimed to have any ‘policy implications’…”Clive.W. J. Granger (1992, p. 4).     

Discussion of the paper by Aven and Myre

The paper is an interesting contribution to the development of actuarial statistics. Loss of profits insurance presents some peculiar problems that have received little attention from actuaries and—as far as I know—the model framework proposed by the authors has not formerly been applied to actuarial problems.     

Risk-risk tradeoffs: what should we do in Europe?

Risk-risk tradeoffs occur when a regulator focuses on decreasing one particular risk in one area which leads to another risk appearing elsewhere which was not originally considered. These risk-risk tradeoffs abound all around us and are frequently ignored by regulators. In this article we firstly, examine why risk-risk tradeoffs are often ignored. Secondly we summarize some of the criticisms to the use of risk-risk tradeoffs and then we look at the phenomenon via a number of European based case studies. In the final section of the paper we put forward a series of recommendations to help regulators to be better equipped in dealing with risk-risk tradeoffs.     

Cursed by Resources or Institutions?

Natural resource‐abundant countries constitute both growth losers and growth winners, and the main difference between the success cases and the cases of failure lies in the quality of institutions. With grabber‐friendly institutions more natural resources push aggregate income down, while with producer‐friendly institutions more natural resources increase income. Such a theory finds strong support in data. A key question we also discuss is if resources in addition alter the quality of institutions. When that is the case, countries with bad institutions suffer a double resource curse – as the deterioration of institutions strengthens the negative effect of more natural resources.     

Stochastic Production and Heterogeneous Risk Preferences: Commercial Fishers' Gear Choices

We present a model of fishers' gear choice, which allows for heterogeneity both in production technology and risk preferences and apply it on a panel of Swedish trawlers. Stochastic revenue functions are estimated and used to predict the mean and standard deviation of revenue for each trip. In a random-parameters logit model, we test if these predicted values explain gear choice. A majority of fishers respond positively to increased mean and negatively to increased variability of expected landing values, indicating risk aversion, but also show a strong tendency to choose the same gear used on the previous trip.