Time-optimal switching control for the US cocaine epidemic

Behrens et al. developed a control model for the cocaine epidemic in the US. They investigated the problem of allocating resources to treatment, where the objective is to minimize social and control costs. The optimal control strategy they found for a particular case of constrained budget resembles bang-bang control: a treatment-only period follows a prevention-only period. This motivated us to look at the problem of bringing the size of the epidemic down to a target level in minimum possible time, find the necessary number of switchings between treatment and prevention, and the instants these switchings occur. We carry out a computational analysis for the so-called early- and late-action scenarios, where the controls take effect from years 1967 and 1990, respectively. We investigate the problem in terms of the minimized process time, cost of control, and target ratio of heavy users. The best strategy in either scenario emerges as “first prevention, then treatment” with a rather surprising additional requirement: to reach the target in minimum possible time, the ratio of heavy users at the target should be prescribed as small as possible. This also yields the lowest cost. Further comparisons and interpretations are given.     

Commodity money in the presence of goods of heterogeneous quality

Summary The aim of this paper is to demonstrate that uncertainty about the quality of a particular commodity does not necessarily exclude it from emerging as commodity money. This is shown in the context of the model of a simple economy with specialized agents and decentralized trade described in Kiyotaki and Wright (1989). In order to derive this result, considerations about marketability of the different goods are taken into account.I wish to thank Pierre de Trenqualye for many helpful conversations and ideas. For their comments and suggestions I am also very grateful to G. de Fraja and P. J. Simmons. Special thanks are due to Randall Wright for his kind advice. The usual disclaimer applies. Financial support was provided by CIRIT (Generalitat de Catalunya, Spain).     

Monetary policy reaction functions and saving-investment correlations: Some cross-country evidence

Zusammenfassung Reaktionsfunktionen für die Geldpolitik und Korrelationen zwischen Ersparnis und Investitionen: Evidenz aus einer Querschnittsuntersuchung. — In diesem Artikel wird untersucht, wie stark die Geldpolitik auf Ver?nderungen in der Handelsbilanz reagiert. Verschiedene Sch?tzungen der linearen Reaktionsfunktionen mit Quartalsdaten für Deutschland, Italien, Japan und die USA zeigen, da\ in allen L?ndern mit Ausnahme der USA ein Defizit in der Handelsbilanz zu einer restriktiven Geldpolitik führt. Ein spezielles Sch?tzverfahren erlaubt den Schlu\, da\ die Reaktionsfunktionen nicht-linear sind, soweit es sich um die Handelsbilanzvariable handelt. Auch zeigt sich, da\ die Geldpolitik st?rker auf Defizite als auf überschüsse reagiert. Sobald Asymmetrie zugelassen wird, verbessern sich die Reaktionsfunktionen und die Parametersch?tzungen werden pr?ziser.

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Résumé Les fonctions de la réaction de la politique monétaire et les correlations entre épargne et investissements: quelque évidence d’une étude de plusieurs pays. — Dans cet article les auteurs examinent le degré avec lequel la politique monétaire a réagi à la balance courante. L’OMC, robustes et paramètres-variables estimations des fonctions de réaction linéaires avec des données trimestrielles de l’Allemagne, l’Italie, du Japon et des Etats Unis proposent pour les pays sauf les Etats Unis que le déficit de la balance courante mène à une politique monétaire restrictive. Les résultats d’une estimation spécifique indiquent que les fonctions de réaction sont non-linéaires aux termes de la variable pour la balance courante. La politique monétaire réagit plus fortement aux déficits qu’aux surplus. En outre, l’admission de l’asymétrie améliore la performance des fonctions de réaction et produit des paramètres estimés plus précis.

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Resumen Funciones de reacción de politica monetaria y correlaciones entre ahorro e inversión: alguna evidencia para una muestra de países. — En este trabajo se examina el grade en el cual la politica monetaria ha reaccionado a la cuenta corriente. Estimaciones MCC y de parametres robustos y variables de las funciones lineares de reacción con datos trimestrales de Alemania, Italia, Japon y de los Estados Unidos sugieren — los Estados Unidos siendo la excepción — que, ceteris paribus, el déficit de cuenta corriente resulta en una oferta monetaria restrictiva. Los valores criticos de la estimación (threshold estimation) indican que las funciones de reacción son no lineares en cuanto a la variable de la cuenta corriente, y que la política monetaria reacciona más a los déficits que a los superávits. Además, al incorporar la asimetricidad se mejora la performance de las funciones de reacción y se las estimaciones de los parámetros resultan más precisas.

     

RACIAL PROFILING OR RACIST POLICING? BOUNDS TESTS IN AGGREGATE DATA*

State‐wide reports on police traffic stops and searches summarize very large populations, making them potentially powerful tools for identifying racial bias, particularly when statistics on search outcomes are included. But when the reported statistics conflate searches involving different levels of police discretion, standard tests for racial bias are not applicable. This article develops a model of police search decisions that allows for nondiscretionary searches and derives tests for racial bias in data that mix different search types. Our tests reject unbiased policing as an explanation of the disparate impact of motor‐vehicle searches on minorities in Missouri.     

Regional Industrial Renewal: The Growth of 'Antenna Technology' in West Sweden

The article analyses how a technical knowledge field ('antenna technology') is developed and exploited in a region (West Sweden). To identify regional actors, the paper outlines a way of delineating a technical knowledge field and its changes over time. Drawing on this, an historical account is given of the international and the regional development, focusing on the changing and expanding nature of industries and markets (from military to civilian applications) and technologies. The paper emphasizes the long regional history, providing experience, which together with a number of diversifications, has given regional actors a platform from which to exploit the growing economic utility of the technical knowledge. It is also shown why some applications have not been exploited in the region.     

Inventory control with a modified Croston procedure and Erlang distribution

This paper considers an inventory control system, primarily for a finished goods inventory. The purpose is to create a procedure that can handle both fast-moving items with regular demand and slow-moving items. The suggested procedure should be easy to implement in a modern computerized ERP-system. Essentially, the system is a periodic review system built around a Croston forecasting procedure. An Erlang distribution is fitted to the observed data using the mean and variance of the forecasted demand rate. According to probabilities for stock shortages, derived from the probability distribution, the system decides if it is time to place a new order or not. The Croston forecasting method is theoretically more accurate than ordinary exponential smoothing for slow-moving items. However, it is not evident that a Croston forecasting procedure (with assumed Erlang distribution) outperforms ordinary exponential smoothing (with assumed normal distribution) applied in a “practical” inventory control system with varying demand, automatically generated replenishment, etc. Our simulation study shows that the system in focus will present fewer shortages at lower inventory levels than a system based on exponential smoothing and the normal distribution.     

Do Financial Market Variables Show Indicator Properties Relative to Exchange Rate Returns?

This paper assesses the contemporaneous indicator properties of financial market variables relative to movements in six major developed country currency pairs. As indicator variables changes in various relative asset prices, short-term portfolio flows and currency options data are used. We find that changes in equity index differentials, short-term speculative flows and risk reversals on currency options prices exhibit consistent indicator properties for several currency pairs. Since 1999, changes in short-term interest rate differentials have gained importance as indicators. The best indicator variables explain over 50 per cent of monthly returns of the USD/EUR and GBP/USD exchange rates and over 60 per cent of the appreciation and depreciation episodes of the USD/EUR and JPY/EUR currency pairs. JEL no. F31, F32, G15, C35     

INTERNATIONAL AND INTERTEMPORAL COMPARISONS OF REAL PRODUCT IN OECD COUNTRIES A GROWTH SENSITIVITY ANALYSIS

This paper provides two new data sets for comparisons of real income in OECD countries. The first set provides adjusted real series for GDP and its components from 1960 to 1993 based on OECD 1990 purchasing power parities. The second set uses OECD PPP of different benchmark years, and interpolates these applying national price indices. Comparisons between both alternatives, Penn World Tahle Mark 5 (PWT 5) and its new version (PWT 5.6), in terms of economic growth and convergence, reveal some remarkable differences. Moreover, there are wider differences concerning the relative countries' position in GDP per capita ranking. Estimations of convergence equations based on OECD data yield a better fit than those obtained using PWT data, although there are also some significant differences between PWT 5 and PWT 5.6. Nevertheless, a very positive result is that other parameters of interest in these equations are not affected by the use of these different data sources.