Heterogeneity of agents and exchange rate dynamics: Evidence from the EMS

We develop and estimate a dynamic heterogeneous agent model for the EMS period. Our empirical results suggest that the existence of heterogeneous interacting agents is indeed a possible explanation for the dynamics of exchange rates during the EMS. We find strong evidence of heterogeneous boundedly rational beliefs, and the fact that agents switch between these beliefs. Moreover, we show that the dynamic heterogeneous agent model outperforms the random walk and the static heterogeneous agents’ model in out-of-sample forecasting in the large majority of country-horizon combinations.     

Regulating the Platform Economy: How to Protect Workers While Promoting Innovation

The rise of the platform economy has made it a topic of great interest among European policymakers, as evidenced by the European Commission’s 2016 Communication “A European agenda for the collaborative economy”. The regulatory challenges facing policymakers are manifold, ranging from taxation to competition policy to worker protection. Furthermore, many basic aspects of the platform economy are unclear, such as its size, the number of workers who take part in it and, indeed, its very definition. What types of regulation are necessary to ensure that the benefits of the platform economy are maximised for all Europeans? How can the productivity gains associated with the platform economy be distributed throughout society? Perhaps most importantly, how can policymakers support innovation while also protecting consumers, workers and communities?     

An instrument for collecting informed opinions

For collecting informed public opinions a special kind of questionnaire has been developed: the Choice Questionnaire. With this questionnaire, information relating to a decision problem is made available to respondents. This information includes the various options from which a choice has to be made, and the consequences of these options. The Choice Questionnaire also contains a procedure that is designed to assist participants in processing this information and in making a choice based on it. This paper studies the extent to which the Choice Questionnaire is a useful instrument for collecting informed opinions and the effects the instrument has on the decision-making process of the participants. The factors influencing its performance are also considered. This evaluation study has been carried out in a real life context: the choice made by the Dutch population concerning the further application of nuclear power.     

Delimitation of the class of budget-constrained utility maximizing partially linear consumer expenditure functions: An alternative approach

Zusammenfassung Dieser Aufsatz behandelt eine alternative Herleitung notwendiger und hinreichender Bedingungen, denen Nachfragefunktionen, die linear im Einkommen jedoch nicht notwendigerweise linear in den Preisen sind, genügen müssen, um zu sichern, daß bei gegebenem Einkommen ein Nutzenmaximum realisiert wird. Diese Bedingungen erscheinen weniger einschränkend als jene, die Gorman (1953, 1961) abgeleitet hat. Beispiele für derartige Funktionen werden im dritten Abschnitt angeführt. Einige kritische Anmerkungen beschließen den Aufsatz.

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The author is indebted to Mr. P. M. C. de Boer, Dr. J. van Daal, and Mr. W. J. Keller, staff members of the Netherlands School of Economics, Erasmus University Rotterdam, for their helpful criticisms and suggestions.     

Persistent differences in national productivity growth rates with a common technology and free capital mobility: The roles of private thrift, public debt, capital taxation, and policy toward human capital formation

The paper develops a two-country endogenous growth model to investigate possible causes for the existence and persistence of productivity growth differentials between nations despite a common technology, constant returns to scale, and perfect international capital mobility. Private consumption is derived from a three-period overlapping generations specification. The source of productivity (growth) differentials in our model is the existence of a nontraded capital good (“human capital”) whose augmentation requires a nontraded current input (time spent by the young in education rather than leisure). We consider the influence on productivity growth differentials of private thrift, public debt, the taxation of capital and savings, and policy toward human capital formation.     

European Integration and Manufactures Import Demand: An Empirical Investigation of Ten European Countries

This paper studies import demand in ten European countries over the period 1970–95, and our objective is to investigate whether the process of European integration has affected imports. We provide evidence for parametric change in traditional import demand equations, suggesting that important variables or structural factors are missing from the long-run equations. We present equations based on new trade theory, where effects of technology and foreign direct investment are present. Once we include these there is little evidence that the creation of the Single Market has directly increased aggregated imports in European countries.     

The appropriate intermediate target for monetary policy in less developed countries: Empirical evidence

It is argued in this paper that recent financial innovations and deregulation in less developed countries may have established a case for an intermediate target strategy for monetary policy. The question of which financial aggregate to target is not, however, a trivial one. Three criteria have to be met for a financial aggregate to serve as an appropriate target for monetary policy. Using time series data from a sample of six less developed countries, these three criteria are empirically tested to determine whether narrow money, broad money or domestic credit is the most appropriate target for monetary policy in less developed countries. The results indicate that it is difficult to generalize and that until monetary policy can be independent of fiscal policy in these countries, none of the tested financial aggregates would be appropriate as an intermediate target.