Continuous time modeling of panel data: SEM versus filter techniques

Although convincing arguments have been put forward for continuous-time modeling, its use in panel research is rare. In one approach, classical N  = 1 state-space modeling procedures are adapted for panel analysis to estimate the exact discrete model (EDM) by means of filter techniques. Based on earlier less satisfactory indirect methods, a more recent approach uses structural equation modeling (SEM) to get the maximum likelihood estimate of the EDM by the direct method. After an introduction into continuous-time state-space modeling for panel data and the EDM, a thorough comparison is made between the two distinct approaches with quite different histories by means of Monte Carlo simulation studies. The model used in the simulation studies is the damped linear oscillator with and without random subject effects.     

Denkanstöße zur Mindestlohnkontroverse

In Deutschland wird anders als in den übrigen Industriestaaten heftig über das Für und Wider von Mindestl?hnen diskutiert. Wie wird die Diskussion theoretisch untermauert? Wie wirken sich Mindestl?hne auf Besch?ftigung und Lohnniveau aus? Kann Armut durch die Festlegung von Mindestl?hnen vermieden werden? Prof. Dr. Hermann Ribhegge, 59, ist Inhaber des Lehrstuhls für Volkswirtschaftslehre, insbesondere Wirtschafts- und Sozialpolitik, an der Europa-Universit?t Viadrina Frankfurt (Oder).     

Nonlinear continuous time modeling approaches in panel research

Stochastic differential equations (SDE) are used as dynamical models for cross-sectional discrete time measurements (panel data). Thus causal effects are formulated on a fundamental infinitesimal time scale. Cumulated causal effects over the measurement interval can be expressed in terms of fundamental effects which are independent of the chosen sampling intervals (e.g. weekly, monthly, annually). The nonlinear continuous–discrete filter is the key tool in deriving a recursive sequence of time and measurement updates. Several approximation methods including the extended Kalman filter (EKF), higher order nonlinear filters (HNF), the local linearization filter (LLF), the unscented Kalman filter (UKF), the Gauss–Hermite filter (GHF) and generalizations (GGHF), as well as simulated filters (functional integral filter FIF) are compared.     

Making logits behave

For the multivariate analysis of binary (or n-ary) dependent variables, common statistical analysis systems offer models with non-homogeneous error variance (LSN-models), and optionally transformations (??response functions??) of the relative frequencies, above all the logit function. Using the simplest possible example??two groups with a relative frequency in each??it is shown that significance tests based on transformed and non-transformed variables can yield substantially diverging results, and even an example of flagrantly inadequate behavior of logit as a response function in significance tests is presented. Dispensing with LSN models can remedy the latter problem; this recommendation is in line with other known objections against using LSN with binary dependents. Furthermore, an improved approximation for the variance of (any) response function makes tests based on transformed and non-transformed variables equivalent, so that problems of discrepant results depending on the response function used are completely removed. In the Appendix a sketch is given of a method to extend the approach to more general situations.     

A New Approach to Identifying Structural Development in Economic Systems: The Case of the Queensland Economy

Recently, some economists have come to view economic development as a process of ongoing structural change which has self-organisational features. What is required is evidence concerning the self-organisational character of economic development. In other words, is economic growth associated with growth in the complexity of its structure and with a parallel rise in organisational interdependence? An extended version of qualitative input-output analysis, termed Minimal Flow Analysis (MFA), is used in this paper to analyse the structural linkages and changes that have occurred in the Queensland economy over the last two decades. The MFA evidence confirms that there has been a steady increase in the complexity of the Queensland economy. Economic coordination has occurred, to an increasing extent, through market intermediation. From a self-organisational perspective, it is clear that the Queensland economy has followed a rapid and coherent developmental path, marked by the emergence of bonded structures in its core and increasing complexity on its periphery.