Uncertainty and central bank transparency: A non-Bayesian approach

We use a non-Bayesian approach to uncertainty, where “ambiguity” is taken into account, in order to analyze the issue of central bank transparency, and we underline that the use of such an approach may greatly change the results. We reconsider a specific argument against transparency found in the literature. We show that, in the presence of ambiguity, the argument can become a case in favor of transparency, which seems more in accordance with some stylized facts. Reduced Knightian uncertainty associated with increased transparency can contribute to making transparency beneficial.     

Estimating the Private Economic Benefits of Sons Versus Daughters in India

In order to understand the economic incentives behind gender discrimination in India, this paper provides the first estimates of the magnitude of the economic benefits of having a son instead of a daughter. The study estimates large gains from a first-born son to per capita income and expenditure, household assets, and a reduction in the probability the household is below the poverty line. Estimates show that a first-born son may provide economic advantages through a reduction in total children born and also from an adult son’s labor supply contribution to his parents’ household. The observed pattern of incentives is also compared with observed patterns in sex selection as a test of whether the relative economic value of first-born sons and daughters can explain the prevalence of sex-selective abortion.     

A sectoral approach to Okun’s Law

The study adds to the existing literature on the relationship between output and unemployment by using a sectoral specification of Okun’s Law to capture the differential sensitivity of the unemployment rate to output developments in the services and manufacturing sectors. Using quarterly data for the period between 2000 and 2012, we show that Malta’s unemployment rate has been more sensitive to output developments in the services sector than to those in the manufacturing sector. We use different equation specifications and the youth unemployment rate to show that the impact resulting from developments in the manufacturing sector occurs mainly via lay-offs while developments in the services sector affect the unemployment rate via the hiring of new entrants into the labour market.     

On the ambiguous economic freedom–inequality relationship

Previous research on the relationship between economic freedom and income inequality has produced mixed results. We provide a short survey of this literature, identifying potential causes for this empirical heterogeneity. Next, we replicate the results from two significant studies using six alternative measures of income inequality for an updated dataset of up to 112 countries over the period 1970–2010. Notably, we use the latest release of the Standardized World Income Inequality Dataset, which allows us to account for the uncertainty of the estimated Gini coefficients. We find that the results of previous studies are sensitive to the choice of country sample, time period and/or inequality measure used. We conclude with suggestions for future research in the area.     

Intolerable nuisances: some laboratory evidence on survivor curve shapes

The fraction of a user population willing to tolerate nuisances of size x is summarized in the survivor curve S(x); its shape is crucial in economic decisions such as pricing and advertising. We report a laboratory experiment that, for the first time, estimates the shape of survivor curves in several different settings. Laboratory subjects engage in a series of six desirable activities, e.g., playing a video game, viewing a chosen video clip, or earning money by answering questions. For each activity and each subject we introduce a chosen level \(x \in [x_{\min }, x_{\max }]\) of a particular nuisance, and the subject chooses whether to tolerate the nuisance or to switch to a bland activity for the remaining time. New non-parametric techniques provide bounds on the empirical survivor curves for each activity. Parametric fits of the classic Weibull distribution provide estimates of the survivor curves’ shapes. The fitted shape parameter depends on the activity and nuisance, but overall the estimated survivor curves tend to be log-convex. An implication, given the model of Aperjis and Huberman (SSRN, doi:  10.2139/ssrn.1672820, 2011), is that introducing nuisances all at once will generally be more profitable than introducing them gradually.     

Technical efficiency analysis correcting for biases from observed and unobserved variables: an application to a natural resource management project

This article brings together the stochastic frontier framework with impact evaluation methodology to compare technical efficiency (TE) across treatment and control groups using cross-sectional data associated with the MARENA Program in Honduras. A matched group of beneficiaries and control farmers is determined using propensity score matching techniques to mitigate biases stemming from observed variables. In addition, possible self-selection arising from unobserved variables is addressed using a selectivity correction model for stochastic frontiers recently introduced by Greene (J Prod Anal 34:15?C24, 2010). The results reveal that average TE is consistently higher for beneficiary farmers than the control group while the presence of selectivity bias cannot be rejected. TE ranges from 0.67 to 0.75 for beneficiaries and from 0.40 to 0.65 for the control depending on whether biases were controlled or not. The TE gap between beneficiaries and control farmers decreases by implementing the matching technique and the sample selection framework decreases this gap even further. The analysis also suggests that beneficiaries do not only exhibit higher TE but also higher frontier output.     

Is There a Free‐Market Economist in the House? The Policy Views of American Economic Association Members

A bstract .   People often suppose or imply that free-market economists constitute a significant portion of all economists. We surveyed American Economic Association members and asked their views on 18 specific forms of government activism. We find that about 8 percent of AEA members can be considered supporters of free-market principles, and that less than 3 percent may be called strong supporters. The data are broken down by voting behavior (Democratic or Republican). Even the average Republican AEA member is "middle-of-the-road," not free-market. We offer several possible explanations of the apparent difference between actual and attributed views.     

Linear Programming Models for the Measurement of Environmental Performance of Firms—Concepts and Empirical Results

I use linear programming models to define standardised, aggregate environmental performance indicators for firms. The best practice frontier obtained corresponds to decision making units showing the best environmental behaviour. Results are obtained with data from U.S. fossil fuel-fired electric utilities, starting from four alternative models, among which are three linear programming models that differ in the way they account for undesirable outputs (pollutants) and resources used as inputs. The results indicate important discrepancies in the rankings obtained by the four models. Rather than contradictory, these results are interpreted as giving different, complementary kinds of information, that should all be taken into account by public decision-makers.