Input–Output Structural Decomposition Analysis: A Critical Appraisal

Over the past decade, input–output structural decomposition analysis (SDA) has developed into a major analytical tool. We review the development of SDA and its relationship to other methodologies. We present the fundamental principles of alternative approaches to deriving SDA estimating equations and explore the various decompositions of changes in IO tables. We also identify several complications and unresolved issues. Most importantly, we find that a rigorous grounding in economic theory is lacking for SDA, but we are able to offer some suggestions as to how it might be established.     

Evaluation of American option prices in a path integral framework using Fourier–Hermite series expansions

In this paper we review the path integral technique which has wide applications in statistical physics and relate it to the backward recursion technique which is widely used for the evaluation of derivative securities. We formulate the pricing of equity options, both European and American, using the path integral framework. Discretising in the time variable and using expansions in Fourier–Hermite series for the continuous representation of the underlying asset price, we show how these options can be evaluated in the path integral framework. For American options, the solution technique facilitates the accurate determination of the early exercise boundary as part of the solution. Additionally, the continuous representation of the state variable allows the relatively accurate and efficient evaluation of the option prices and the delta hedge ratio.     

Von der Inflationsphobie bis zur „schwarzen Null“

The article examines some of the key statements of the supply-side economic theory that rejects debt-financed government investment programs for stabilizing high employment. It turns out that supply-side objections are not empirically proven. Subsequently, the author attempts to explain why nevertheless the supply-side paradigm stubbornly remains the prevailing theory in economics. It shows that the mechanisms of deliberative democracy in the economic decision-making in Germany do not work.