How fast has Chinese industry grown? – The upward bias hypothesis revisited

This study addresses two potential problems when single-benchmark price weights are applied to commodity indicators to assess the official estimates of China’s industrial growth, i.e., the substitution bias and the constant value-added ratio given by a fixed input–output table. It introduces the 2002 and 2007 input–output tables and price weights in order to capture changes in a more market-based pricing and more liberal policy environment following China’s WTO entry. My new findings have not only lent a further and stronger support to the upward-bias hypothesis but also confirmed the Maddison–Wu conjecture (2008) that official estimates tend to smooth out high-growth volatility. By the alternative index, the impact of external shocks to Chinese industry appears to be more pronounced than the official index.     

A Synthesis of the Effects of Exchange Rate Volatility on International Trade: A Meta-Regression Analysis

ABSTRACT

This article surveys literature that investigates the effects of exchange rate volatility on international trade. We perform meta-regression analysis on 41 studies with 807 estimates. We show that the empirical works exhibit substantial publication selection and show a significant genuine exchange rate volatility effect on trade flows after correction of publication bias. In addition, the literature reveals a pronounced heterogeneity with respect to model specifications, samples, time horizons, and countries’ characteristics. These findings are supported by separate assessment of primary studies with, respectively, total exports and sectoral exports as the dependent variable.     

Heaping in Reported Earnings: Evidence from Monthly Financial Reports of Taiwanese Firms

Heaping is a phenomenon in which reported numbers tend to appear in increments that are important for cultural or other reasons. This study reports that heaping is present in monthly earnings reports for publicly listed companies in Taiwan. We find that Taiwanese firms tend to report monthly earnings in increments of 5 in the first two places (digits) of the earnings numbers. Furthermore, we observe predominantly more zeros in the third through fifth places of monthly earnings numbers, suggesting that monthly earnings tend to be reported in increments of 10 in the first three, first four, and first five places. Reporting of monthly earnings in Taiwan is discretionary, and our findings suggest that managers of Taiwanese firms are susceptible to heuristic bias when reporting monthly earnings. These findings complement studies on heaping in U.S. financial markets documenting that managers and financial analysts tend to make earnings per share estimates that heap in increments of nickels.     

Selection Bias in Web Surveys

At first sight, web surveys seem to be an interesting and attractive means of data collection. They provide simple, cheap, and fast access to a large group of potential respondents. However, web surveys are not without methodological problems. Specific groups in the populations are under-represented because they have less access to Internet. Furthermore, recruitment of respondents is often based on self-selection. Both under-coverage and self-selection may lead to biased estimates. This paper describes these methodological problems. It also explores the effect of various correction techniques (adjustment weighting and use of reference surveys). This all leads to the question whether properly design web surveys can be used for data collection. The paper attempts to answer this question. It concludes that under-coverage problems may solve itself in the future, but that self-selection leads to unreliable survey outcomes.     

The gain from commitment in a two-country economy with inflation persistence

In recent years, the worldwide inflation rate appears to be converging to a low stable level. Moreover, the Phillips curve is flattening in many countries. These facts indicate that the output gap fluctuations associated with inflation persistence in one country influence other countries and suggest that the central bank consider the effect of inflation persistence on the real economy in an open economy framework. The objective of this paper is to explore optimal monetary policy in a two-country economy with inflation persistence. To consider the case in which inflation persistence is present in both countries, we assume that a fraction of firms that change their prices follows the rule-of-thumb pricing rule. In this case, the new Keynesian Phillips curve (NKPC) in each country becomes flatter as the fraction of firms employing the rule-of-thumb pricing rule increases in both countries. Our results show gains from commitment in a two-country economy with inflation persistence. This paper addresses that the presence of a severe deflationary bias is the main source of the large gain from a commitment policy in a two-country economy with inflation persistence.     

Akaike-type criteria and the reliability of inference: Model selection versus statistical model specification

Since the 1990s, the Akaike Information Criterion (AIC) and its various modifications/extensions, including BIC, have found wide applicability in econometrics as objective procedures that can be used to select parsimonious statistical models. The aim of this paper is to argue that these model selection procedures invariably give rise to unreliable inferences, primarily because their choice within a prespecified family of models (a) assumes away the problem of model validation, and (b) ignores the relevant error probabilities. This paper argues for a return to the original statistical model specification problem, as envisaged by Fisher (1922), where the task is understood as one of selecting a statistical model in such a way as to render the particular data a truly typical realization of the stochastic process specified by the model in question. The key to addressing this problem is to replace trading goodness-of-fit against parsimony with statistical adequacy as the sole criterion for when a fitted model accounts for the regularities in the data.     

Beef Credence Attributes: Implications of Substitution Effects on Consumers’ WTP

Consumers’ food choices are influenced by a wide variety of credence attributes, but the food industry faces problems assessing whether the price premiums that consumers are willing to pay for these attributes will be sufficient to offset higher production costs. In this context, consumers’ willingness to pay (WTP) for safer, cleaner and animal friendlier beef was investigated through a choice experiment. The relative importance of WTP for these attributes shows that consumers place the highest values on food safety, followed by animal welfare and finally environmental protection. WTP for different combinations of the three attributes cannot be obtained by independent valuation and summation due to the presence of significant substitution relationships. However, some suggestions for the relationships between these attributes can be proposed through an after‐survey analytical solution. The bias involved in separately valuing closely related attributes can potentially jeopardise the success of a differentiation strategy.     

Informational Cascades,Herding Bias,and Food Taste Evaluations

Herding behavior is observed when consumers simply replicate the behavior of others instead of making their own elaborate decision. This study contains two experiments in which participants are asked to evaluate how good different food products taste under different conditions of induced herding situations. The results of the first experiment show that simply convincing consumers that a herd exists (i.e., informing them of the behavior of others) will influence their judgment of how good the food product in question tastes, and also their purchase intentions and belief in future product success. Whether they are informed about the existence of the herd before or after they taste the product also affects their evaluations. In the second experiment, the characteristics of the herd (who it consists of) are manipulated along with the country from where the food product originates. Here, the characteristics of the herd have significant effects on the evaluation of taste, purchase intentions, and expectations of future product success, whereas country-of-origin has no significant main effects. Theoretical and managerial implications are offered.