Coalition Formation: The Role of Procedure and Policy Flexibility

A spatial model of coalition formation is used together with data from Dutch elections and theoretical instances to study different procedures of coalition formation. The model shows that procedure plays an important role in reaching a coalition agreement and that political parties do not necessarily benefit from being a first-mover. Moreover, it is shown that a decrease in a party’s flexibility can be (dis)advantageous in coalition negotiations. Furthermore, certain power sharing tactics appear not always to lead to an agreement that is in a party’s advantage. The main message put forward is that the procedure of forming a coalition plays a more important role than is usually acknowledged in literature and practice.     

The Logit Model in Economics

This paper reviews aspects of the application of logit models in economics. We consider some economic models that lead to a simple or a multinomial logit specification. A detailed account is given of the possible specifications of the multinomial model. We stress the relationship between distributional assumptions and functional form assumptions. Some (mis)specification tests with individual data are discussed. Moreover, we present a new test. We also consider grouping of continuously recorded data, and the biases introduced by an inappropriate grouping.     

INCOMPLETE MARKETS IN INFINITE HORIZON: DEBT CONSTRAINTS VERSUS NODE PRICES1

The general equilibrium model with incomplete markets is here extended to infinite horizon economies populated by a finite number of infinitely lived agents. the crucial issue that divides the infinite horizon setting from the finite horizon setting is in the nature of borrowing constraints, which added to spot constraints, define a plausible budget set for individual agents. the paper relates seven alternative definitions of equilibrium and states corresponding equilibrium existence theorems when assets are one-period and purely financial.     

Social Employment of Welfare Recipients in Belgium: An Evaluation

In Belgium, welfare agencies receive a subsidy to employ welfare recipients for a period sufficiently long to entitle them to unemployment benefits. We investigate the effect of this programme on the exit rate from welfare. We propose a grouping/IV estimator of the programme effect that eliminates selection bias. The estimator is consistent, even if the selection into the programme depends on the average unobserved characteristics of welfare recipients in a region and in a welfare duration interval. Without correction for selectivity we find that the programme reduces welfare dependence, but after correction this conclusion is reversed.     

Attrition in longitudinal panel data and the empirical analysis of dynamic labour market behaviour

In the empirical analysis of unemployment durations and job durations, it is generally assumed that the stochastic processes underlying labour market behaviour and the behaviour concerning participation in a panel survey are independent. However, there are reasons to believe that the probability of dropping out of the panel is related to the rate at which a (different) job is found. If there is such a relation, and if it is ignored, then the estimator of the rate at which individuals become employed or change jobs will generally be inconsistent. In this paper we analyse the relation between the duration spent in a particular labour market state and the duration of panel survey participation, by explicitly modelling and estimating the joint distribution of both durations. The emphasis will be on models allowing for stochastically related unobserved determinants of both types of duration. We estimate models both for unemployment durations and for job durations.     

On the existence of equilibria in economies with an infinite dimensional commodity space

We prove an infinite dimensional extension of the Gale–Nikaido–Debreu lemma which includes all necessary limiting processes and allows a proof of the existence of equilibria under standard assumptions in an economy with infinitely many commodities which exactly parallels the proof of Debreu (1959) for the finite dimensional case.     

Estimation of nonlinear models with mismeasured regressors using marginal information

We consider the estimation of nonlinear models with mismeasured explanatory variables, when information on the marginal distribution of the true values of these variables is available. We derive a semi‐parametric MLE that is shown to be $\sqrt{n}$ consistent and asymptotically normally distributed. In a simulation experiment we find that the finite sample distribution of the estimator is close to the asymptotic approximation. The semi‐parametric MLE is applied to a duration model for AFDC welfare spells with misreported welfare benefits. The marginal distribution of the correctly measured welfare benefits is obtained from an administrative source. Copyright © 2010 John Wiley & Sons, Ltd.     

Risk taking by agents: The role of ex-ante and ex-post accountability

We study the role of accountability in situations where an agent makes risky decisions for a principal. We observe that in the absence of accountability, agents choose less risk averse investments for the principal than investors who invest for their own account. Accountability mitigates the observed decrease in risk aversion. Differences are observed between situations where agents are accountable for their decision (“ex-ante”) and where they are accountable for the outcome (“ex-post”).     

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.     

An econometric CS-model of West Germany

Zusammenfassung Ein ?konometrisches CS-Modell für Westdeutschland. — In dieser Untersuchung wird ein ?konometrisches Modell für Westdeutschland entwickelt. Eine wesentliche Eigenschaft dieses Modells ist, da\ der Versuch unternommen wird, strukturelle und zyklische Elemente der makro?konomischen Theorie zu vereinigen. Die Strukturelemente sind haupts?chlich neoklassischer Art, wie etwa in der Arbeitsangebotsfunktion und in der ?vintage?-Produktionsfunktion des sogenannten ?clay-clay?-Typs. Aus der letzten werden strukturelle Aspekte der Nachfrage nach Arbeitskr?ften und der Investitionen abgeleitet. Die zyklischen Elemente stützen sich vor allem auf die nachfrageorientierte Makro?konomie. Eine entscheidende Variable in diesem Ansatz ist der Auslastungsgrad des Produktionspotentials. Diese Variable spielt eine wichtige Rolle bei der Bestimmung sowohl der kurzfristigen Schwankungen der wirtschaftlichen Aktivit?t als auch der mittel- oder langfristigen Entwicklung. Befindet sich eine Wirtschaft z. B. in einer Situation der übernachfrage, so wird dies die Unternehmer zu erh?hten Investitionsausgaben anregen, die einerseits zwar eine weitere Erh?hung der übernachfrage bewirken, andererseits aber auch einen positiven Effekt für das Wachstum des Produktionspotentials haben werden. Neben der Integration der kurz- und langfristigen Ph?nomene wurde auch der Verknüpfung von monet?ren und realen Variablen Aufmerksamkeit gewidmet. Die Verknüpfung wurde im Rahmen des herk?mmlichen IS-LM-Modells durchgeführt. Der Prognosewert des Modells ist zufriedenstellend. Die Ergebnisse für den untersuchten Zeitraum (1953-1968) waren ermutigend. Hier betrug der gesamte Sch?tzfehler etwa 20 vH der beobachteten Werte. Es war au\erdem m?glich, die Prognoseleistung des Modells auf der Basis der dem untersuchten Zeitraum folgenden drei Jahre (1969-1971) zu testen. Dabei betrug der gesamte Sch?tzfehler ungef?hr 30 vH der beobachteten Werte.

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Résumé Un modèle économétrique du type C.S. pour l’Allemagne de l’Ouest. — Une propriété essentielle du modèle est que le cadre théorique représente l’effort d’ intégrer des éléments structurels et cycliques de la théorie macroéconomique. Les éléments structurels sont pour la plupart de caractère néoclassique. Ils peuvent être trouvés dans la fonction de l’offre de travail et dans la fonction de production du type ?clay-clay?. En ce qui concerne les propriétés structurelles, les fonctions de la demande de travail et d’investissement sont dérivées de la dernière relation. Les éléments cycliques sont basés sur la théorie macroéconomique de la demande. Une variable importante dans ce modèle est le degré d’utilisation de la capacité productive qui est un indicateur de la demande excédentaire. Il joue un r?le décisif pour les fluctuations de court terme et, en même temps, pour le développement de moyen ou long termes. Dans la situation d’une demande excédentaire, par exemple, les entrepreneurs sont stimulés d’augmenter les investissements. D’une c?té, l’accroissement des investissements aggravera la situation déjà caractérisée par un excédent de demande, de l’autre c?té, il aura un effet positif sur la capacité productive. En outre, l’auteur a essayé de lier des variables monétaires et réelles. La liaison fut complétée dans le cadre d’un IS-LM modèle traditionel. Les prévisions du modèle sont satisfaisantes. Le modèle reproduit très bien le développement au cours de la période de l’échantillon (1953-1968). Dans ce cas, l’erreur globale de la prévision se chiffre à 20 p.c. des valeurs observées; elle montait à 30 p.c. si la période comprend les trois années suivantes (1969-1971).

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Resumen Un modelo econométrico C.S. para Alemania Occidental. — El modelo econométrico que se ha elaborado en este articulo para la economía alemana trata de integrar elementos estructurales y elementos ciclicos de la teoría macroecóndmica. Los elementos estructurales son, esencialmente, de tipo neoclásico. Se reflejan en la función de oferta de trabajo y en la función de productión ?vintage? que es del llamado tipo ?clay-clay?. De aquí se derivan las propiedades estructurales de la demanda de trabajo y de inversión. Los elementos cíclicos se basan, en su mayor parte, en la teoría macroeconómica orientada en la demanda. Una variable crucial en este enfoque es la referente al grado de utilización de la capacidad productiva que viene a indicar el grado de demanda excesiva. Esta variable juega un importante papel en la determinación de fluctuaciones a corto plazo de la actividad económica y del desarrollo a medio y largo plazo. Por ejemplo, si existe exceso de demanda los empresarios se verán estimulados a invertir. La consecuencia será que, por un lado, la inversión adicional incrementará dicho exceso de demanda, mientras que por otro lado aumentará la capacidad productiva. Despúes de integrar los elementos a largo y corto plazo en el mundo ?real?, se ha tratado de asociar las variables monetarias con las reales. Para este fin se ha recurrido al modelo tradicional IS-LM. La calidad de previsión del modelo es satisfactoria. Describe de manera alentadora lo ocurrido en el periodo 1953-1968. El error de predicción es del 20% de los valores observados aproximadamente. También fue posible examinar el potencial de predicción del modelo, basándose en los datos correspondientes al período 1969-1971. En este caso el error de previsíon es del 30%.