Das Geschäft mit der Prognose

All prognoses face a predicament of falsification. It is not whether a forecast development will really occur, but whether a forecast can be applied and used for decisions that finally decides its success. Good prognoses possess a reliable starting point, clearly defined conditions and empirically supported hypotheses of the relations between dependent and independent variables. Prognoses in the media usually serve as points for orientation in strategic planning and the formation of knowledge relevant for decisions. Even high-quality prognoses cannot completely do away with a remainder of insecurity, which cannot be totally eliminated with the most expensive research design. According to the degree of specialization and expenditure, various forms of prognostic advice can be classified, reaching from simple previews into the future to complex simulation models and scenarios. The examples of a »bygone future« presented in the article show that the opportunity for prognoses is substantially dependent on conditions of stability, and also finds its limits there.     

World cities in poor countries: conclusions from case studies of the principal regional and global players

This is a brief report on a study of world cities in the under‐researched poor countries. Whereas previous work has focused rather haphazardly on one or a few cities beyond the West, this is the first study to systematically cover such ‘second‐tier’ world cities. Fourteen leading authorities from diverse backgrounds bring their expertise to bear on twelve world cities across four continents. Alongside the economic, they consider the political and cultural role these cities play within their regions and at the global level. The study leads to three principal conclusions: (1) these cities are extraordinarily diverse; (2) the city centers have become elite enclaves; and (3) along with the forces of globalization, the state and popular movements are important actors. These findings indicate the need for research that moves beyond the focus on globalization to take into account the multiple forces shaping world cities. And they demonstrate the benefits of overcoming an ethnocentrism in urban studies that privileges Western cities as locales of study and sources of generalization. Ce compte rendu résume une étude sur les grandes villes mondiales situées dans les pays pauvres délaissés par les recherches. Tandis que les travaux précédents s'étaient consacrés, plutôt au hasard, à quelques grandes villes hors d'Occident, cette étude est la première à couvrir systématiquement les villes mondiales ‘de second ordre’. Quatorze auteurs éminents d'appartenances diverses apportent leur expertise à l'égard de douze grandes villes mondiales réparties sur quatre continents. Ces chercheurs s'intéressent non seulement à la fonction économique, mais aussi aux rôles politique et culturel de ces villes au niveau régional et international. Trois conclusions majeures se dégagent: ces villes sont extraordinairement diverses, les centres‐villes sont devenus des enclaves pour élites et, parallèlement aux poussées de la mondialisation, l'État et les mouvements populaires sont des acteurs importants. Ces résultats montrent la nécessité de réaliser des recherches qui dépassent le seul plan de la mondialisation pour tenir compte des forces multiples qui façonnent les villes mondiales. De plus, ils prouvent qu'il vaut mieux s'émanciper de l'ethnocentrisme des études urbaines, lequel privilégie les villes occidentales comme sites d'étude et sources de généralisation.     

Is it Possible to Identify High-Risk Suppliers from Financial Statements?

International Advances in Economic Research -     

Österreichs Alterssicherung: Vorbild für Deutschland?

As a result of political reforms, pension provision in Germany is the task of a multi pillar model including private and occupational schemes in addition to the public pension insurance. By contrast, the Austrian single pillar model has been developed into an encompassing public insurance system now also covering the self employed and civil servants. A comparison of the two countries shows that the Austrian system provides much higher benefits. Economic developments in Germany and Austria have been rather close in recent years. This, we argue, shows that a strong public pension insurance does not hamper a country’s economic performance.     

Ageing in Europe

For many people all over Europe, there is an understanding and an expectation that in old age they will be taken care of by the state. High social security contributions throughout the three or four decades of a working life are rationalised by the prospect of a straightforward transition out of the labour force when the time comes. While this was a reasonable expectation in decades past, a number of factors have combined to cause people all across the continent to feel very anxious about what awaits them once it is time to exit the labour force into retirement. The well-documented demographic transition of many rich European countries is a big factor, as greying populations start to weigh on the sparser younger generations, leading to increasing dependency ratios that would cause any social security system to buckle. The Great Recession has not helped matters, and the austerity measures still crippling many vulnerable European nations will not make anyone in these countries feel optimistic about their post-working lives. The following papers look at different threads of the new reality of ageing in Europe, from pension reform and prolonging the working life to more qualitative aspects such as an analysis of the quality of life of the elderly across Europe. They serve to inform and advise on an important issue that will affect everyone in Europe at some point in their lives.     

Polynomial processes and their applications to mathematical finance

We introduce a class of Markov processes, called m-polynomial, for which the calculation of (mixed) moments up to order m only requires the computation of matrix exponentials. This class contains affine processes, processes with quadratic diffusion coefficients, as well as Lévy-driven SDEs with affine vector fields. Thus, many popular models such as exponential Lévy models or affine models are covered by this setting. The applications range from statistical GMM estimation procedures to new techniques for option pricing and hedging. For instance, the efficient and easy computation of moments can be used for variance reduction techniques in Monte Carlo methods.