Cross-Sectional Evolution of the U.S. City Size Distribution

We report nonparametrically estimated stochastic transition kernels for the evolution of the distribution of U.S. metropolitan area populations, for the period 1900 to 1990. These suggest a fair amount of uniformity in the patterns of mobility during the study period. The distribution of city size is predominantly characterised by persistence. Additional kernel estimates do not reveal any stark differences in intra-region mobility patterns. We characterise the nature of intra-size distribution dynamics by means of measures that do not require discretisation of the city size distribution. We employ these measures to study the degree of mobility within the U.S. city size distribution and, separately, within regional and urban subsystems. We find that different regions show different degrees of intra-distribution mobility. Second-tier cities show more mobility than top-tier cities.     

Brands on the Brain: Neuro-Images of Advertising

Neuroscience is opening a new chapter of understanding in many fields. One such is how advertising works. For the first time we can directly 'see' some effects of advertisements on the brain's activity. This article reports two small-scale experiments into the differential effects of advertising's rational and emotional components. Advertising has long been seen as providing reasons to buy, however subtle. In academic research at least, the importance of emotion has often been downplayed. The preliminary experiment reported here shows how emotional ads are more likely to be remembered. The second experiment uses brain imaging to investigate the part of the brain which responds to emotionally-engaging ('affective') and reason-engaging ('cognitive') advertising stimuli. These are very early days in using brain-imaging techniques and these experiments are very exploratory. However, as the three Commentaries by Simon Broadbent, Thomas O'Guinn and Larry Percy suggest, along with other work, they may point towards a revolution in advertising research.     

Estimating the conditional mode of a stationary stochastic process from noisy observations

Let {(X _i, Y _i,)}, i≥1, be a strictly stationary process from noisy observations. We examine the effect of the noise in the response Y and the covariates X on the nonparametric estimation of the conditional mode function. To estimate this function we are using deconvoluting kernel estimators. The asymptotic behavior of these estimators depends on the smoothness of the noise distribution, which is classified as either ordinary smooth or super smooth. Uniform convergence with almost sure convergence rates is established for strongly mixing stochastic processes, when the noise distribution is ordinary smooth. Received: April 1998     

Market allocation through search: Equilibrium adjustment and price dispersion

This essay discusses market allocation under uncertainty in a market for a homogeneous good. Market participants contact one another at random times to buy or sell single units of the good. Transactions are carried out at different prices simultaneously. Optimal search rules are employed to describe individuals behavior. Such models provide the framework of a market structure within which equilibrium adjustment processes are analyzed. These decentralized, nontâtonnement processes of price and quantity adjustment are utilized to examine equilibrium. Price dispersion, which characterizes equilibrium, is essentially due to finite lifetimes of market participants.     

On temporary layoffs and job search theory

This note explores some properties of job search models in which layoff status to a particular job may be considered as a job offer which is conditional on having been employed at that job.     

Topologies of social interactions

Summary. The paper extends the Brock-Durlauf social interactions model to richer social structures modelled with arbitrary interaction topologies and examines in detail the star, the wheel and the path. It explores Nash equilibria when agents act on the basis of expectations over, and, alternatively, actual knowledge their neighbors’ decisions. It links social interactions with econometrics of systems of simultaneous equations. The local dynamics near steady states combine spectral properties of the adjacency matrix and of the nonlinearities of reaction functions. For regular interaction topologies, adjustment exhibit relative persistence. Cyclical interaction is associated with endogenous spatial oscillations and islands of conformity.Received: 12 August 2004, Revised: 20 May 2005, JEL Classification Numbers: C35, C45, C00, D80.I am grateful to a referee and the editor for very insightful comments and suggestions, and to the National Science Foundation and the John D. and Catherine T. MacArthur Foundation for generous research support. I thank Frank Alexander, Costas Azariadis, Kenneth J. Arrow, Jean-Pierre Aubin, Rob Axtell, Marcelo Bianconi, Larry Blume, Buz Brock, Marcelo Coca-Perraillon, Steven Durlauf, Glenn D. Ellison, Roland Fryer, Hans Haller, Anna Hardman, Alan Kirman, Alexandros Kyrtsis, Chuck Manski, Costas Meghir, Sharun Mukand, Lynne Pepall, Apostolis Philippopoulos, Danny T. Quah, Bertrand Roehner, Jose A. Scheinkman, Adriaan Soetevent, Dimitri Vayanos, Peyton Young, Gerard Weisbuch, Jeff Zabel and other participants in presentations of earlier versions at the joint Brookings and MacArthur Research Network on Social Interactions and Economic Inequality, the Athens University of Economics and Business, the University of Texas-Austin, ASSET 2001 in Rethymno, the Connectionist Complexity Workshop, Institut Henri Poincaré, Paris, 2003, and the North American meeting of the Econometric Society, San Diego, CA., 2004.     

What European Union in the “Age of Uncertainty”? Weathering the Geopolitical Storms in a World of Perpetual Crises

Intereconomics - A world of risks and uncertainties can also be a world of opportunities. How and how quickly the EU adapts to the socio-political, economic, energy and climate transitions at hand,...     

The estimation of a state space model by estimating functions with an application

Conventionally the parameters of a linear state space model are estimated by maximizing a Gaussian likelihood function, even when the input errors are not Gaussian. In this paper we propose estimation by estimating functions fulfilling Godambe's optimality criterion. We discuss the issue of an unknown starting state vector, and we also develop recursive relations for the third- and fourth-order moments of the state predictors required for the calculations. We conclude with a simulation study demonstrating the proposed procedure on the estimation of the stochastic volatility model. The results suggest that the new estimators outperform the Gaussian likelihood.     

Unemployment and liquidity constraints

We present a dynamic framework for the interaction between borrowing (liquidity) constraints and deviations of actual hours from desired hours, both measured by discrete‐valued indicators, and estimate it as a system of dynamic binary and ordered probit models with panel data from the Panel Study of Income Dynamics. We analyze a household's propensity to be liquidity constrained by means of a dynamic binary probit model. We analyze qualitative aspects of the conditions of employment, namely whether the household head is involuntarily overemployed, voluntarily employed, or involuntarily underemployed or unemployed, by means of a dynamic ordered probit model. We focus on the possible interaction between the two types of constraints. We estimate these models jointly using maximum simulated likelihood, where we allow for individual random effects along with an autoregressive process for the general error term in each equation. A novel feature of our method is that it allows for the random effects to be correlated with regressors in a time‐invariant fashion. Our results provide strong support for the basic theory of constrained behavior and the interaction between liquidity constraints and exogenous constraints on labor supply. Copyright © 2007 John Wiley & Sons, Ltd.