THE ESTIMATION OF POVERTY DYNAMICS USING DIFFERENT MEASUREMENTS OF HOUSEHOLD INCOME

If surveys offer two different measurements of household income, one can use them simultaneously to identify the potential effects of measurement error on the observed-income mobility of the poor. In this paper we investigate transition tables between subsequent income states. Latent Markov models are used to model incorrect classifications of income states. Misclassifications are interpreted as measurement error or spurious changes that are not consistent with a simple transition table model. The empirical results for the German Socio-Economic Panel (GSOEP) show that the observed transition tables overestimate the mobility between poverty states.     

Versicherungsnachfrage und Ausfallerwartung

Recently, several undesirable feature of classical risk measure like variance or value-at-risk have been mentioned in the literature. Due to this drawbacks, alternative risk measures as the lower partial moments receive increasing attention. The present paper analyzes the lower partial moments with respect to their compatibility to expected utility theory as well as their psychological plausibility. With respect to the latter point, shortfall expectation seems to be more realistic than the other lower partial moments. We proceed by analyzing demand for coinsurance in the context of risk measurement by shortfall expectation.     

Knock-out for descriptive utility or experimental-design error?

Using an experimental design of stating equivalent probabilities for 252 stimulus lottery pairs, Chechile and Cooke (1997) alleged to have refuted generic-utility theory which itself comprises many modern utility theories. The present paper systematically investigates the feasibility of the Chechile-Cooke experimental design using numerical methods. We examine 1,277 utility setups (involving 17 parameter sets for four probability-weighting functions and 11 parameter sets for three component utility functions) which represent ten different utility theories. Our results demonstrate that on average for more than one third of all stimulus lottery pairs no equivalent probabilities exist. That is, the Chechile-Cooke experimental design prevents subjects from stating their true probability equivalents. Therefore, they cannot claim to have refuted generic-utility theory and the members of its family.This paper was submitted to theJournal of Risk and Uncertainty on January 14, 1999. It was, however, rejected on April 16, 1999.     

China’s economic policy on a new course

Since Mao’s death China has greatly strengthened its contacts with Western industrialized states. This year the People’s Republic has concluded trade agreements with Japan and the European Community, amongst others. All these activities suggest that China’s economic policy is set on a new course.     

Real business cycles, sticky wages or sticky prices? The impact of technology shocks on US manufacturing

In this paper, we examine empirically the predictions of a range of theoretical models which give a prominent role to technology shocks in explaining business cycles. To this end, we estimate (4-digit SIC) industry-level VAR models for US manufacturing using real output, the real wage and utilization corrected measures of technology and labor input. Our results support both sticky-wage DGE and RBC models over sticky-price DGE models. Moreover, they cast some doubt on the importance of technology shocks as propulsive mechanism for business cycles at the industry level.     

Labour Market Policy in Post-Soviet Economies: The Case of Azerbaijan

MOCT-MOST: Economic Policy in Transitional Economies -     

Religion and economic growth: was Weber right?

Evidence of falling wages in Catholic cities and rising wages in Protestant cities between 1500 and 1750, during the spread of literacy in the vernacular, is inconsistent with most theoretical models of economic growth. In The Protestant Ethic, Weber suggested an alternative explanation based on culture. Here, a theoretical model confirms that a small change in the subjective cost of cooperating with strangers can generate a profound transformation in trading networks. In explaining urban growth in early-modern Europe, specifications compatible with human-capital versions of the neoclassical model and endogenous-growth theory are rejected in favor of a “small-world” formulation based on the Weber thesis.     

Growth and inflation forecasts for Germany a panel-based assessment of accuracy and efficiency

We analyse forecasts of professional forecasters for Germany regarding the time span from 1970 to 2004. This novel panel data set renders it possible to assess the accuracy and efficiency of growth and inflation forecasts more efficiently than in previous studies. We argue that the forecasts are, on average, unbiased and weakly—but not strongly—efficient. Using model confidence sets suggested by Hansen et al. (2004), we find that, besides the effect of diverging forecasting dates, no other substantial differences in forecasting quality among forecasters exist. Nevertheless, on the basis of a direction-of-change analysis we argue that it is not always advisable to listen to the majority of forecasters.