monetary policy and uncertainty in an empirical small open economy model this paper explores optimal policy design in an estimated model of three small open economies australia canada and new zealand within a class of generalized taylor rules we show that to stabilize a weighted objective of output consumer price in ation and nominal interest variation optimal policy does not respond to the nominal exchange this is despite the presence of local currency pricing and due in large part to observed exchange rate disconnect in these economies optimal policies that account for the uncertainty of model estimates as captured by the parameters posterior distrbution similarly exhibit a lack of exchange rate response in contrast to brainard 1967 the presence of parameter uncertainty can lead to more or less aggressive policy responses depending on the model at hand

behavioral causes of the bullwhip effect and the observed value of inventory information the tendency of orders to increase in variability as one moves up a supply chain is commonly known as the bullwhip effect we study this phenomenon from a behavioral perspective in the context of a simple serial supply chain subject to information lags and stochastic demand we conduct two experiments on two different sets of participants in the first we find the bullwhip effect still exists when normal operational causes e g batching price fluctuations demand estimation etc are removed the persistence of the bullwhip effect is explained to some extent by evidence that decision makers consistently underweight the supply line when making order decisions in the second experiment we find that the bullwhip and the underlying tendency of underweighting remains when information on inventory levels is shared however we observe that inventory information helps somewhat to alleviate the bullwhip effect by helping upstream chain members better anticipate and prepare for fluctuations in inventory needs downstream these experimental results support the theoretically suggested notion that upstream chain members stand to gain the most from information sharing initiatives

competition and cooperation in divisible good auctions an experimental examination an experimental approach is used to examine the performance of three different multiunit auction designs discriminatory uniform price with fixed supply and uniform price with endogenous supply we find the actual strategies to be inconsistent with theoretically identified equilibrium strategies the discriminatory auction is found to be more susceptible to collusion than either uniform price auction and so contrary to theoretical predictions and previous experimental results it generates the lowest average revenue consistent with theoretical predictions the actual bid schedules are more elastic with reducible supply or discriminatory pricing than in the uniform price auction with fixed supply

a note on the use of businessmen as subjects in sealed offer markets using the data from sealed offer laboratory markets we compare the price and quality choices of student subjects with those of businessmen subjects the businessmen subjects were public accounting firm partners and corporate financial officers this is of interest since the financial officer auditor relationship is one particular application of the elementary principal agent model which the laboratory environment was designed to test using several different performance measures we are unable to reject the null hypothesis that the average performance of the two subject pools were the same however the market using businessmen subjects generally exhibited greater variance than the market using students

garp for kids on the development of rational choice behavior in this paper we examine the extent to which consumption choices by 7 and 11 year old children and college undergraduates satisfy the axioms of revealed preference we find that choices by even the 7 year olds are considerably more likely to obey revealed preference axioms than would be true if they were choosing randomly 11 year olds do better still while college students do no better than 11 year old children we also find that mathematical ability is not correlated with choosing rationally we argue that this evidence suggests that the ability to choose rationally is not innate but that it does develop quickly

pre meeting discussions and the possibility of coalition breaking procedures in majority rule committees the concept of a coalition is fundamental to many formal and informal models of group decision processes it finds its way into discussions which report impressionistic accounts of political decisions it underlies most of cooperative game theory and it is at the heart of legal theories which justify institutions such as sunshine laws 1 which in the name of social policy limit the activities of some individuals or groups however in spite of its widespread popularity the usefulness of the concept is still open to question coalitions are not always operationally defined and models which do not reify coalitions predict outcomes as well as those which do

representative trust and reciprocity prevalence and determinants this paper provides evidence about the determinants of trust and reciprocal inclinations that is a tendency for people to respond in kind to hostile or kind actions in a representative setting we investigate the prevalence of reciprocity in the population the correlation between trust and positive and negative reciprocal inclinations within person the individual determinants of reciprocity and the relationship with psychological measures of personality we find that most people state reciprocal inclinations in particular in terms of positive reciprocity as well as substantial heterogeneity in the degree of trust and reciprocity trust and positive reciprocity are only weakly correlated while trust and negative reciprocity exhibit a negative correlation in terms of determinants being female and increasing age are associated with stronger positive and weaker negative reciprocal tendencies taller people are more positively reciprocal but height has no impact on negative reciprocity psychological traits also affect trust and reciprocity jel d63 j3 j6

one two three infinity newspaper and lab beauty contest experiments beauty contest is a game in which participants have to choose typically a number in 0 100 the winner being the person whose number is closest to a proportion of the average of all chosen numbers we describe and analyze beauty contest experiments run in newspapers in uk spain and germany and find stable patterns of behavior across them despite the uncontrollability of these experiments these results are then compared with lab experiments involving undergraduates and game theorists as subjects in what must be one of the largest empirical corroborations of interactive behavior ever tried we claim that all observed behavior across a wide variety of treatments and subject pools can be interpretedas iterative reasoning level 1 reasoning level 2 reasoning and level 3 reasoning are commonly observed in all the samples while the equilibrium choice level maximum reasoning is only prominently chosen by newspaper readers and theorists the results show the empirical power of experiments run with large subject pools and open the door for more experimental work performed on the rich platform offered by newspapers and magazines

on representative social capital abstract this paper analyzes the behavior of subjects randomly drawn from the dutch population who reveal their capacity to provide and sustain social capital by their propensity to invest and reward investments in an economic experiment we find that heterogeneity in behavior is characterized by several asymmetries men the young and elderly and low educated individuals invest relatively less but reward significantly more investments the age effects are found to corroborate existing findings whereas those of gender and education do not higher expected levels of investments by others are found to have a positive and significant effect on own investments finally a laboratory experiment with student subjects is found to provide a lower bound of the population level of social capital

tax evasion and heuristics a research note abstract the paper examines the heuristics which taxpayers use in making tax evasion decisions the following propositions are tested in an experiment using students first the taxpaper s own level of evasion will be positively related to what he perceives as the levels of evasion by others second taxpayers who have been audited are more likely to assess the probability of audit as higher and therefore decrease their levels of evasion the experimental results fail to support the first proposition but do support the second suggesting the presence of an availability effect

assessing brazilian macroeconomic dynamics using a markov switching dsge model abstract the goal of this paper is to evaluate the behavior of the main parameters of the brazilian economy through the estimation of an open economy dynamic stochastic general equilibrium dsge model using bayesian methods and allowing for markov switching of certain parameters using the dsge model developed by justiniano and preston 2010 and the solution method of the markov switching dsge ms dsge model proposed by farmer et al 2008 this paper found a superior fit in the data of markov switching models rejecting the hypothesis of constant parameters in dsge models for the brazilian economy

bubbles crashes and endogenous expectations in experimental spot asset markets1 spot asset trading is studied in an environment in which all investors receive the same dividend from a known probability distribution at the end of each of t 15 or 30 trading periods fourteen of twenty two experiments exhibit price bubbles followed by crashes relative to intrinsic dividend value when traders are experienced this reduces but does not eliminate the probability of a bubble the regression of changes in mean price on lagged excess bids number of bids minus the number of offers in the previous period p pt a f b 1 o l supports the hypothesis that a e d the one period expected value of the dividend and that f 0 where excess bids is a surrogate measure of excess demand arising from homegrown capital gains losses expectations thus when bt 1 o goes to zero we have convergence to rational expectations in the sense of fama 1970 that arbitrage becomes unprofitable the observed bubble phenomenon can also be interpreted as a form of temporary myopia tirole 1982 from which agents learn that capital gains expectations are only temporarily sustainable ultimately inducing common expectations or priors tirole 1982 four of twenty six experiments all using experienced subjects yield outcomes that appear to the chart s eye to converge early to rational expectations although even in these cases we get 0 and small price fluctuations of a few cents that invite scalping

norms of punishment experiments with students and the general population i introduction the issue of external validity of laboratory experiments has received increasing attention in the last decades while the vast majority of experiments are conducted with a fitting sample of college students it remains an open question whether the behavior observed in such studies is informative about society at large here we focus on experiments on social dilemmas to study other regarding preferences and civic norms of cooperation we compare cooperation levels in two distinct subject pools originating from the same geographical area one sample was drawn from the student population of a large public university student treatment the other sample was drawn from the general adult population representative treatment and stratified according to gender age and employment status everyone participated in public good games with and without opportunities for peer punishment there are many contributions in the literature that compare the behavior of students with other pools of participants with the explicit aim to test the external validity of laboratory experiments 1 the existing evidence appears to suggest that students are less prosocial than other subject pools for instance in a prisoner s dilemma students cooperate less than white collar workers bigoni casari and camera 2012 or bicycle messengers burks carpenter and goette 2009 similarly students are less prosocial than rural and urban citizens in a public good game gachter and herrmann 2011 than rural villagers in the appropriation of common pool resources cardenas 2005 and than employees in a dictator game carpenter burks and verhoogen 2005 dragone galeotti and orsini 2013 the gap remains when one compares students and professionals that is self selected subjects with a high degree of expertise who ordinarily deal with situations resembling the experimental task the evidence includes studies on voluntary contributions to a public good among elected officials butler and kousser 2013 and shrimp fishermen carpenter and seki 2011 threshold public goods without refunding among nurses bram cadsby and maynes 1998 trust games among ceo principals fehr and list 2004 2 more in general the most appropriate pool of participants should depend both on the task and the goal of the study for instance contractors may be a better sample than college students for the external validity of auction experiments dyer kagel and levin 1989 and villagers may be a better sample than city dwellers for experiments about the management of a renewable natural resource cardenas 2005 contractors and villagers are more appropriate than students in this case because they are more familiar with the experimental task and their behavior is more relevant because they are those who actually make the decisions in the field both aspects boost the external validity of the experimental results 3 the goal of the study is also relevant when studying issues of bounded rationality for instance one may prefer participants with very high or very low cognitive skills depending on the initial conjecture to be tested high score participants may be preferred when collecting evidence about the presence of a bound to rationality showing that game theorists choose numbers in a guessing game away from the nash equilibrium prediction provides more compelling evidence about the descriptive inaccuracy of the theory than using a representative sample of the general population camerer 2003 conversely participants with low cognitive skills who succeed at a task suggest that such task is not too demanding in short to enhance the external validity of experimental results one should recruit participants with a bias against the initial conjecture as we are interested in norms of cooperation and punishment of the society broadly defined the most appropriate pool of participants would be a representative sample of the population at large

do central banks respond to exchange rate movements a structural investigation abstract we estimate a small scale structural general equilibrium model of a small open economy using bayesian methods our main focus is the conduct of monetary policy in australia canada new zealand and the uk we consider generic taylor type rules where the monetary authority reacts in response to output inflation and exchange rate movements we perform posterior odds tests to investigate the hypothesis whether central banks do target exchange rates the main result of this paper is that the central banks of australia and new zealand do not whereas the bank of canada and the bank of england do include the nominal exchange rate in its policy rule this result is robust for various specification of the policy rule we also find that terms of trade movements do not contribute significantly to domestic business cycles

monetary policy and exchange rate volatility in a small open economy we lay out a small open economy version of the calvo sticky price model and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap we use the resulting framework to analyse the macroeconomic implications of three alternative rulebased policy regimes for the small open economy domestic inflation and cpi based taylor rules and an exchange rate peg we show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail we also discuss a special case for which domestic inflation targeting constitutes the optimal policy and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with the suboptimal rules

engaging private actors in transport planning to achieve future emission targets upscaling the climate and economic research in organisations cero process to regional perspectives sustainable transport analyses are traditionally carried out from two fundamentally different perspectives a internal travel analysis at an organisational level often as part of corporate enviro

monetary policy and stagflation in the uk the volatile behavior of inflation output and interest rates in the united kingdom prior to the 1990s helps discriminate between rival explanations for the outbreak of stagflation we examine alternative hypotheses with a new keynesian model of aggregate demand and inflation determination estimated on quarterly uk data for 1959 2000 our model features is and phillips curves based on optimizing behavior and fully incorporates the distinction between detrended output and the output gap stressed by optimizing analysis using simulations of our model as well as information on the real time views of policymakers we test alternative explanations for the outbreak of inflation in the united kingdom in the 1960s and 1970s we find that inaccurate estimates of the degree of excess demand in the economy contributed significantly to the outbreak but we also find a major role for the failure at the time to recognize the importance of monetary policy as opposed to nonmonetary devices in controlling inflation

a welfare based analysis of international monetary policy spillovers at the zero lower bound we study the welfare effects of international monetary policy spillovers at the zero lower bound focusing on the effects of forward guidance in a large economy foreign on its smaller trading partner home in scenarios motivated by the global financial crisis we find that foreign forward guidance has an overall prosper thy neighbor effect on the home economy as long as it increases foreign welfare this finding holds under alternative assumptions about exchange rate pass through or the degree of international financial integration however foreign forward guidance may worsen the trade off between the stabilization objectives of home monetary policy

cash and alternate methods of accounting in an experimental game abstract four methods of communication are compared in the trust game berg j dickhaut j mccabe k 1995 trust reciprocity and social history games and economic behavior 10 122 142 in different treatments subjects exchange currency use play money or write down how much they send and return the final variation is the strategy method in which the responder makes a choice for every possible amount sent the amount sent and propensity to send the entire 10 did not vary among formats but responders returned less of the available funds and were more likely to return zero in the original cash method choices in the strategy method were similar to choices using the game methods

menu costs and nominal price friction an experimental examination abstract this paper examines how menu costs affect monopoly behavior using experimental markets this research takes a new keynesian theory of business fluctuations and tests it in a controlled environment where people are making decisions for real salient payoffs these experiments are the first controlled test of a new keynesian explanation for sticky product prices and they offer some insights into nominal price frictions the results from this research indicate that menu costs have real economic effects in a static situation but not in a dynamic setting

sustainable energy prices and growth comparing macroeconomic and backcasting scenarios how do results from the sustainability research world of backcasting relate to the macroeconomic scenarios used for policy evaluation and planning the answer is that they don t mostly they come

energy backcasting a proposed method of policy analysis abstract there have recently emerged a number of analyses which suggest that there exists a large potential for soft energy policy paths it is difficult to illustrate this argument using conventional forecasting techniques therefore these analyses tend to use an alternative method called energy backcasting this involves setting policy goals and then determining how those goals could be met as yet however little attention has been paid to the theoretical aspects of backcasting techniques in this article a specific backcasting method is proposed which it is argued allows consideration of many factors obscured in traditional energy supply and demand forecasts

u s monetary regimes and optimal monetary policy in the euro area monetary policy in the united states has been documented to have switched from reacting weakly to inflation fluctuations during the 1970s to fighting inflation aggressively from the early 1980s onward in this paper i analyze the impact of the u s monetary policy regime switches on the eurozone i construct a new keynesian two country model where foreign u s monetary policy switches regimes over time i estimate the model for the u s and the euro area using quarterly data and find that the united states has switched between those two regimes in line with existing evidence i show that foreign regime switches affect home eurozone inflation and output volatility and their responses to shocks substantially as long as the home central bank commits to a time invariant interest rate rule reacting to domestic conditions only optimal policy in the home country instead requires that the home central bank reacts strongly to domestic producer price inflation and to international variables such as imported goods relative prices in fact i show that currency misalignments and relative prices play a crucial role in the transmission of foreign monetary policy regime switches internationally interestingly i show that only marginal gains arise for the euro area when the european central bank ecb adjusts its policy according to the monetary regime in the united states thus a simple time invariant monetary policy rule with a strong reaction to producer price index ppi inflation and relative prices is enough to counteract the effects of monetary policy switches in the united states

evolving international inflation dynamics world and country specific factors inflation in the most industrialized economies of the world has an important international common component that accounts for the historical decline in the national rates country specific conditions explain the rise in inflation volatility of the late 1970s and early 1980s and the subsequent fall during the last decade the world contribution to the variance of inflation has become increasingly more important than national contributions monetary policy was a relevant source of country specific fluctuations our conclusions are based on a time varying dynamic factor model applied to a large panel of inflation indicators

committee decisions under alternative procedural rules an experimental study applying a new non monetary method of preference inducement committees operating with simple majority rule procedures and with closed rule procedures are studied a new method the duplicate method was used to induce preferences the results of the control experiments compare favorably to those for which monetary incentives have been used in all cases the core is a relatively accurate model of committee choice

backcasting sustainable freight transport systems for europe in 2050 european freight transport emissions and fuel consumption are projected to increase this study focuses on long distance freight transport ldft and explores possible sustainable futures through quantitative modeling the evaluation was part of european foresight process between researchers policy makers and freight companies freightvision greenhouse gas ghg emissions and energy demand of road rail and inland waterways were estimated for an eu 27 in 2005 development was extrapolated to 2050 based on technology and freight performance forecasts stakeholders found the forecasted ghg emissions and fossil fuel share unsustainable so alternative futures were developed with backcasting the developed emission model was run with random parameter combinations to screen a set of sustainable futures with an 80 reduction of ghg emissions and fossil fuel share freight transport performance was not controlled in the backcasts but several sustainable futures were found if significant changes in transport efficiency and energy mix are implemented in spite of agreeing on the importance of reducing emissions stakeholders had difficulties in choosing a preferred technological future simple models were found to be an effective tool for communicating the influence of various measures further research is recommended to screen preferable technological roadmaps from the broad range of available futures

how optimal is us monetary policy using a small scale microfounded dsge model with markov switching in shock variances and policy parameters we show that the data preferred description of us monetary policy is a time consistent targeting rule with a marked increase in conservatism after the 1970s however the fed lost its conservatism temporarily in the aftermath of the 1987 stock market crash and again following the 2000 dot com crash and has not subsequently regained it the high inflation of the 1970s would have been avoided had the fed been able to commit even without the appointment of paul volcker or the reduction in shock volatilities

var analysis and the great moderation post world war ii us macroeconomic history is usually divided into two distinct subperiods the former period which extends up to the end of the volcker disinflation is characterized by a significant extent of macroeconomic turbulence with highly volatile inflation and output growth the latter period from the end of the volcker disinflation up to the present day is marked in contrast by significantly smaller volatilities for both inflation and output growth these dramatic changes in the reduced form properties of the us economy over the last several decades char acterize a phenomenon known as the great moderation see in particular chang jin kim and charles nelson 1999 margaret mcconnell and gabriel perez quiros 2000 a vast empirical literature has investigated the source s of the great moderation in an attempt to disentangle the relative contributions of two main explanations good policy and good luck based on time varying or markov switching structural var methods the good luck hypoth esis has been advocated by a number of authors including james h stock and mark w watson 2003 giorgio e primiceri 2005 christopher sims and tao zha 2006 and luca gambetti evi pappa and fabio canova 2008

loaded questions new approaches to utility forecasting abstract the purpose of this paper is to evaluate long term load forecasting using as an example the load forecasting process at ontario hydro a large canadian utility it is argued that predictive load forecasting based on econometric models is not a reliable or useful basis for system planning even were accurate predictions possible they wouldn t reveal what other futures are available nor the relative costs and benefits of alternative scenarios what is needed instead are non predictive backcasting analyses of the feasibility and impacts of alternative future electricity demand scenarios based on detailed end use analysis

e stability vis a vis determinacy in regime switching models abstract this paper examines e stability determinacy and indeterminacy in a general class of regime switching models with lagged endogenous variables using determinacy conditions from cho 2016 2020 our first result extends mccallum 2007 to models with time varying parameters the unique mean square stable equilibrium is e stable if agents have current information and one period ahead decision rules further we address the existence of e stable non fundamental equilibria and find that iteratively e stable equilibria of indeterminate switching models can exist finally we show that indeterminate new keynesian models with persistent recurring interest rate peg regimes admit iteratively e stable equilibria in special cases the iterative e stability condition coincides with the long run taylor principle

decision frames opportunity and tax evasion abstract this paper examines the role of decision frames and opportunity in tax evasion in an experiment framed as a business simulation student subjects made a series of decisions two propositions were tested first that having to pay extra tax after insufficient tax has been withheld will lead to more evasion than receiving a refund after too much has been withheld second that greater opportunity to evade taxes will lead to increased evasion both propositions are supported

evolving post world war ii u k economic performance in this paper we use tests for multiple structural breaks at unknown points in the sample and band pass filtering techniques to investigate changes in u k economic performance since the end of world war ii empirical evidence suggests that the most recent decade associated with the introduction of an inflation targeting regime has been significantly more stable than the previous post wwii era both for real gdp growth and for three measures of inflation we identify break dates around the time of the introduction of inflation targeting in october 1992 for all four series the estimated innovation variance over the most recent sub period is the lowest of the post wwii era the volatility of the band pass filtered macroeconomic indicators we consider is after 1992 almost always lower than either during the bretton woods regime or over the 1971 92 period often like in the case of inflation and real gdp markedly so the phillips correlation appears to have undergone significant changes over the last 50 years from being unstable in the 1970s to slowly stabilising from the beginning of the 1980s onwards after 1992 the correlation exhibits by far the greatest extent of stability of the post wwii era

oligopoly experimentation of learning with simulated markets abstract learning is investigated using experimental methods agents have no information about demand conditions the same oligopoly market is finitely repeated and the only link between successive markets is that agents acquire experience over time as the game is played adaptive as well as least squares learning are tested the model of price adjustment followed by firms indicates that the non cooperative bertrand nash equilibrium constitutes an attractor to players strategies

sustainable mobility from technological innovation to societal learning abstract this paper addresses a persistent and worsening societal dilemma worldwide the ecological unsustainability of the automobile as the primary means for providing personal mobility the solution to this problem will require input from all segments of society and must include technological innovation changes in the physical infrastructure and land use and social cultural and institutional changes a fundamental rethinking of the entire system of personal mobility is necessary governments can play a significant role in promoting change by stimulating technological innovation through regulations incentives and subsidies by investing in the infrastructure by providing leadership and by organizing and supporting a debate with a focus on the system as a whole its spatial characteristics the motives for transport and the alternatives that are presently not developed from the technological perspective one of the much discussed solutions is a hydrogen powered automobile we argue that the future of this approach is questionable and propose a fundamental re framing of the significance of hydrogen from viewing it as a solution to the personal mobility problem to seeing it as a medium for transporting and storing energy that has been generated elsewhere preferably by renewable resources a new and radically different way of seeing the problem of individual mobility and of the roles of various stakeholders in finding solutions is also necessary this is the essence of higher order learning to facilitate such learning among various societal groups we advocate a combination of multi stakeholder visioning processes scenario building backcasting exercises and small scale socio technical experiments these approaches may be practiced at various levels from local to national with experimentation probably being best suited for a smaller scale an ongoing process of visioning future mobility in the boston metropolitan area illustrates how such approaches may be used

what lies beneath a time varying favar model for the uk transmission mechanism we use a time varying factor augmented var to investigate changes in the transmission mechanism of economic shocks in the uk our estimates demonstrate the importance of time variation and suggest that monetary policy shocks had a bigger impact on inflation equity prices and the exchange rate during the inflation targeting period changes in the transmission of policy shocks to bond yields point to more efficient management of long run inflation expectations finally we investigate responses of disaggregated prices with the median becoming more negative and cross sectional patterns consistent with a decrease in the role of cost channels

outlook on biofuels in future studies a systematic literature review abstract foresight methods are useful for long range planning such as strategic energy management energy policy and renewable and sustainable energy planning to manage uncertainties futures studies may affect the anticipation and speculation of future and emerging technologies in this paper biofuels futures are explored based on a critical evaluation of the literature to draw the state of the art for the future oriented biofuel research a six fold typology mapping from two main futures studies methodologies is used i descriptive scenarios forecasts and statistical scenarios as descriptive methods ii roadmaps visions and backcasts as prescriptive methods the expectations embodied in the literature are then explored through deriving research challenges about the future of biofuels 1 the main motives and driving forces in a biofuel era 2 the main obstacles or difficulties confronting a biofuel era 3 the plausibility and importance of each of different scenarios 4 key technological breakthroughs for the bioeconomy 5 details about development maturity and flourish 6 biofuel era s significant achievement the literature explains a wide range of plausible futures from centralized systems related to technological breakthroughs to decentralized systems based on small scale renewable fundamental technological elements are uncovered and a plausible biofuel economy is drawn along with the necessary pathway to reach it the review shows a general agreement that a biofuel economy would develop gradually and a prompt shift to biofuels would require powerful governmental support coupled with significant disruptions such as changes in environmental principles of countries technology breakthroughs higher oil prices and urgency of climate change

a comparison of naive and experienced bidders in common value offer auctions a laboratory analysis laboratory economics experiments typically use financially motivated students as subjects an ongoing issue is whether this is an appropriate subject pool since the students are typically inexperienced in the types of decision making required of them in the lab this paper addresses this issue in the context of common value offer auctions as we compare the behaviour of experienced business executives in the construction contract industry experts with that of naive student subjects results of previous research of this sort have been equivocal in some cases experts make the same errors as novices in other cases they do not hogarth and reder i987 a series of sealed bid common value offer auctions in which bidders compete for the right to supply an item of unknown cost were conducted inherent to common value auctions cvas is an adverse selection problem which may result in below normal or negative profits the winner s curse experimental studies have documented the presence of the winner s curse with financially motivated student subjects in high price demand side auctions kagel et al i986 kagel and levin i986 the experiments reported here generalise these earlier studies from bid to offer auctions also in employing offer auctions we establish a setting with which our experts are familiar thus allowing their experience the best chance to manifest itself

multiproduct activity in an experimental differentiated oligopoly in a symmetric differentiated experimental oligopoly with multiproduct firms we test the predictive power of the corresponding bertrand nash equilibria subjects are not informed on the specification of the underlying demand model in the presence of intense multiproduct activity and provided that a parallel pricing rule is imposed to multiproduct firms strategies tend to confirm the non cooperative multiproduct solution

realized and optimal monetary policy rules in an estimated markov switching dsge model of the united kingdom this paper investigates underlying changes in the u k economy over the past thirty five years using a small open economy dsge model using bayesian analysis we find uk monetary policy nominal price rigidity and exogenous shocks are all subject to regime shifting a model incorporating these cha nges is used to estimate the realised monetary policy and derive the optimal mon etary policy for the uk this allows us to assess the effectiveness of the realis ed policy in terms of stabilising economic fluctuations and in turn provide an ind ication of whether there is room for monetary authorities to further improve their polic ies

monetary rewards and decision cost in experimental economics a survey of thirty one experimental studies which report data on the comparative effects of monetary rewards and opportunity cost shows 1 several studies in which increased rewards shift the central tendency of the data toward the predictions of rational models 2 in virtually all cases rewards reduce the variance of the data around the predicted outcome this is consistent with a model in which rewards are balanced against decision cost in agent behavior and explicates the argument that when rational models fail it can be attributed to low opportunity cost of deviations from the rational prediction

low carbon scenarios for russia s energy system a participative backcasting approach abstract despite the high profile of climate change in scientific and policy discourse the russian government has thus far failed to commit to an emission reduction target based on the latest science given russia is a key supplier of fossil fuels a major greenhouse gas emitter and climate impacts on its vast territory likely to have far reaching consequences this contextual research shows that the country s current policies fall woefully short of what is required to implement the paris agreement to support russia in developing informed internally consistent and scientifically literate energy policies this paper presents low carbon emission trajectories commensurate with the 2 c goal using stakeholder informed backcasting the results illustrate that even if russia s co2 emissions peak in 2017 a reduction rate of at least 9 per year between 2020 and 2030 is required to meet a 2 c budget constraint these sustained rates are in excess of anything achieved globally or indeed deemed possible within most studies such emission reductions would involve unprecedented material changes to russia s energy system including both rapidly cutting energy demand and building extensive low carbon infrastructures nevertheless failure to transform russia s existing policies will likely have global repercussions for achieving the paris agreement s goals

nominal shocks in monopolistically competitive markets an experiment abstract a market experiment examines the capacity of price and information frictions to explain real responses to nominal price shocks results indicate that both price and information frictions impede the response to a nominal shock as predicted by the standard dynamic adjustment models observed adjustment delays however far exceed predicted levels results of a pair of subsequent treatments indicate that a combination of announcing the shock privately to all sellers rather than publicly and a failure of many sellers to best respond to their expectations explains the observed adjustment inertia

quantifying loss averse tax manipulation this article presents evidence that loss aversion affects taxpayers as they file their annual tax returns and presents a framework for estimating the policy impact of this psychological phenomenon in my theoretical framework taxpayers manipulate the money paid to the tax authority through avoidance and evasion activities when taxpayers face the prospect of owing the tax authority money on tax day loss aversion generates the perception of a greater marginal utility of tax reduction and therefore motivates greater pursuit of tax reduction activities applying a bunching based identification strategy to u s tax return data i estimate that taxpayers facing a payment on tax day reduce their tax liability by 34 more than taxpayers owed a refund

the great moderation in the united kingdom we use a bayesian time varying parameters structural var with stochastic volatility for gdp deflator inflation real gdp growth a 3 month nominal rate and the rate of growth of m4 to investigate the underlying causes of the great moderation in the united kingdom our evidence points toward a dominant role played by good luck in fostering the more stable macroeconomic environment of the last two decades results from counterfactual simulations in particular show that i bringing the monetary policy committee back in time would only have had a limited impact on the great inflation episode at the cost of lower output growth ii imposing the 1970s monetary rule over the entire sample period would have made almost no difference in terms of inflation and output growth outcomes and iii the great inflation was due to a dominant extent to large demand non policy shocks and to a lesser extent especially in 1973 and 1979 to supply shocks

nonspeculative bubbles in experimental asset markets lack of common knowledge of rationality vs actual irrationality we report the results of an experiment designed to study the role of speculation in the formation of bubbles and crashes in laboratory asset markets in a setting in which speculation is not possible bubbles and crashes are observed the results suggest that the departures from fundamental values are not caused by the lack of common knowledge of rationality leading to speculation but rather by behavior that itself exhibits elements of irrationality much of the trading activity that accompanies bubble formation in markets where speculation is possible is due to the fact that there is no other activity available for participants in the experiment

logistic growth curve modeling of us energy production and consumption abstract this research used four parameter multi cycle logistic growth curve models on us energy information agency annual data from 1949 to 2015 to produce fixed condition forecasts of us energy production and consumption to 2040 these models and forecasts were used to assess the ability of us energy production sources to meet demand to anticipate production and technology challenges and to make general policy recommendations the logistic fixed condition forecasts indicated the ongoing increases in total us energy production dominated by crude oil and natural gas production will likely peak in 2017 at 95 0 quadrillion quad btu then rapidly decrease through 2040 at 36 2 quad btu while total us energy consumption indicated an ongoing plateau at 98 1 quad btu new growth cycles not evident in the 2015 data will certainly occur mitigating the decline in energy production before 2040 however without adequate foresight and preemptive action it is possible that new production growth would not be adequate to reverse the decline given historical growth trends therefore in addition to continued increases in energy efficiency reductions in use and implementation of carbon management technologies direct effort towards the sustainable development of substantial new growth cycles in all energy production sources through adequate investment of resources should be a priority of the us energy industry policy makers and the public alike

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

audit probabilities and tax evasion in a business simulation abstract this paper examines the role of individual differences and audit probabilities in tax evasion and argues that more elaborate experimental studies of evasion are needed

gaming against managers in incentive systems experimental results with chinese students and chinese managers we examine strategic interactions between firms and planners in china comparing behavior between i students and managers with field experience with this situation ii standard versus increased monetary incentives and iii sessions conducted in context making explicit reference to interactions between planners and managers and those without any such references the dynamics of play are similar across treatments with play only gradually and incompletely converging on a pooling equilibrium a fivefold increase in incentives significantly increases initial levels of strategic play games played in context generated greater levels of strategic play for managers with minimal impact on students

production trade prices exchange rates and equilibration in large experimental economies we study market equilibration in laboratory economies that are larger and more complex than any that have been studied experimentally to date complexity is derived from the fact that the economies are international in economic structure with multiple input output and foreign exchange markets in operation the economies have twenty one markets and due to the fact that they have roughly fifty agents the economies are characterized by several hundred equations in spite of the complexity and interdependence of the economy the results demonstrate the substantial power of the general equilibrium model of perfect competition to predict the direction of movement of market level variables empirical patterns in the convergence process are explored and described

modelling socio economic and energy data to generate business as usual scenarios for carbon emissions abstract the uk government is legally committed to achieving an 80 reduction in carbon dioxide emissions compared with 1990 by 2050 the use of scenarios is wide ranging to inform policy development and forming a business as usual scenario helps to understand possible effects of different policy interventions however the term business as usual is frequently misused we show how econo physical business as usual scenarios can be developed by examining the historical behaviour of coefficients which manifest the relationship between components of an economy we endogenise economic growth by mimicking national level policies that focus on a target level of unemployment our case study demonstrates the trendability of coefficients which for one example coefficient is replicated for australia colombia taiwan and the usa we manifest a gross domestic product growth of 2 falling to 1 which contrasts with an exogenous growth of 2 3 of a comparator business as usual scenario we suggest that it may be possible to achieve a greater reduction in the business as usual carbon dioxide emissions in the uk fifth carbon budget than currently projected

limited rationality and strategic complements the implications for macroeconomics this paper considers the implications of heterogeneity in information processing abilities for macroeconomic models that exhibit strategic complements the latter is the same concept that has received much attention in the recent macro literature under the headings keynesian coordination problems and positive trading externalities we consider environments in which agents vary in terms of their ability to form expectations and ask whether it is the sophisticated agents or the naive agents who have a disproportionately large effect on macroeconomic equilibrium we find that if macroeconomic interaction exhibits strategic complementarity then it is the naive agents who have a disproportionate impact

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

backcasting and econometrics for sustainable planning information technology and individual preferences of travel this paper develops a framework building on backcasting from sustainable outcomes or more sustainable outcomes in combination with econometric modelling to arrive at the outcomes to reach lon

state dependence in labor market fluctuations this paper documents state dependence in labor market uctuations using a threshold vector autoregression model tvar we establish that the unemployment rate the job separation rate and the job finding rate exhibit a larger response to productivity shocks during periods with low aggregate productivity a diamond mortensen pissarides model with endogenous job separation and on the job search replicates these empirical regularities well we calibrate the model to match the standard deviation of the job transition rates explained by productivity shocks in the tvar and show that the model explains 88 percent of the state dependence in the unemployment rate 76 percent for the separation rate and 36 percent for the job finding rate the key channel underpinning state dependence in both job separation and job finding rates is the interaction of the firm s reservation productivity level and the distribution of match specific idiosyncratic productivity results are robust across several variations to the baseline model

evolving macroeconomic dynamics in a small open economy an estimated markov switching dsge model for the uk this paper investigates the possibility of shifts in the uk economy using a markov switching open economy dynamic stochastic general equilibrium dsge model we find overwhelming evidence to reject the hypothesis that the deep structural parameters of the underlying structural model had stayed constant throughout the sample period and there is significant changes to the volatility of the structural shocks counterfactual experiments based on the model with the best empirical fit indicate that the change in the policy rule as well as changes to the volatility of the structural shocks over the sample period are crucial features in explaining uk s macroeconomic performance

preferences intentions and expectation violations a large scale experiment with a representative subject pool we specify and estimate an econometric model which separately identifies the effects of distributional preferences and penalizing unfair proposer behavior perceived intentions on responder decisions in the ultimatum game we allow the effects of perceived intentions to depend among other things on the subjective probabilities responders attach to the possible offers the latter allows expectation violations to be a driving force for responder behavior we estimate the model on a large representative sample from the dutch population we find that the relative importance of distributional preferences and perceived intentions depends significantly on the socio economic characteristics of responders strong inequity aversion to the other player s disadvantage is found for lower educated and older respondents responders tend to punish more unequal offers made by proposers if they expect that unequal proposals are made less often

negotiating energy futures the politics of energy forecasting abstract over the last decade it has become increasingly clear that energy forecasts have been used for partisan purposes through energy models and forecasts industrial political and administrative interests compete for cognitive and methodological hegemony we have termed this integration of modelling and politics the scientific negotiation of energy futures this article presents core elements of a sociopolitical and institutional perspective with which to analyse the generation of assumptions that underlie energy models and forecasts we focus on the factors that shape the choice of data functional forms and modelling methodologies we point to the filters of professional orientation and organizational structures that give every forecast an inherent cognitive bias we stress the legitimation function of forecasts in political decision making these factors are illustrated with a comparative analysis of energy modelling and forecasting over the last 20 years in the uk canada denmark france the netherlands norway the usa and fr germany and a discussion of the iiasa world energy model

were there regime switches in u s monetary policy working paper 2004 14 june 2004 abstract a multivariate model identifying monetary policy and allowing for simultaneity and regime switching in coefficients and variances is confronted with u s data since 1959 the best fit is with a model that allows time variation in structural disturbance variances only among models that also allow for changes in equation coefficients the best fit is for a model that allows coefficients to change only in the monetary policy rule that model allows switching among three main regimes and one rarely and briefly occurring regime the three main regimes correspond roughly to periods when most observers believe that monetary policy actually differed and the differences in policy behavior are substantively interesting though statistically ill determined the estimates imply monetary targeting was central in the early 80s but was also important sporadically in the 70s the changes in regime were essential neither to the rise in inflation in the 70s nor to its decline in the 80s jel classification e52 e47 c53 key words counterfactuals lucas critique policy rule monetary targeting simultaneity volatility model comparison i the debate over monetary policy change in an influential paper clarida gali and gertler 2000 cgg presented evidence that us monetary policy changed between the 1970 s and the 1980 s indeed that in the 70 s it was drastically worse they found that the policy rule apparently followed in the 70 s was one that when embedded in most stochastic general equilibrium models would imply non uniqueness of the equilibrium and hence vulnerability of the economy to sunspot fluctuations of arbitrarily large size their estimated policy rule for the later period on the other hand eliminated this indeterminacy these results are a possible explanation of the volatile and rising inflation of the 70 s and of its subsequent decline the cgg analysis has two important weaknesses one is that it fails to account for stochastic volatility us macroeconomic variables and particularly the federal funds rate have gone through periods of tranquility and of agitation with forecast error variances varying greatly from period to period ignoring such variation does not lead to inconsistent estimates of model parameters when the forecasting equations themselves are constant but it strongly biases toward a finding of changed parameters tests of the stability of the forecasting equations the other weakness is that the cgg analysis rests on powerful and implausible identifying assumptions they require that we accept that the response of the monetary authority to expected future inflation and output does not depend on the recent history of inflation money growth or output it is hard to understand why this should be so especially in the 70 s when monetarism was a prominent theme in policy debates congress was requiring reports from the fed of projected time paths of monetary aggregates and financial markets were reacting sensitively to weekly money supply numbers the requirement for existence and uniqueness of equilibrium in dynamic models is that the monetary policy rule show a more than unit response of interest rates to the sum of the logs of all nominal variables that appear on the right hand side of the reaction function if we force a particular measure of expected future inflation to proxy for all the nominal variables that actually appear independently in the reaction function we are bound to get distorted conclusions on the one hand because expected future inflation will be a noisy measure of the full set of nominal influences on policy we might get downward bias in our estimates from the usual errorsin variables effect on the other hand to the extent that expected future inflation like most expected future values shows less variation than current nominal variables we could find a mistaken scaling up of coefficients

tax evasion is not a gamble a report on two experiments abstract a tax evasion experiment and an equivalent gambling experiment indicate that contrary to the standard model of evasion tax evasion and gambling are quite different although the standard model provides a good basis for analysis of evasion

forecasts scenarios visions backcasts and roadmaps to the hydrogen economy a review of the hydrogen futures literature scenarios roadmaps and similar foresight methods are used to cope with uncertainty in areas with long planning horizons such as energy policy and research into the future of hydrogen energy has been no exception such studies can play an important role in the development of shared visions of the future creating powerful expectations of the potential of emerging technologies and mobilising resources necessary for their realisation this paper reviews the hydrogen futures literature using a six fold typology to map the state of the art of scenario construction the paper then explores the expectations embodied in the literature through the answers it provides to questions about the future of hydrogen what are the drivers barriers and challenges facing the development of a hydrogen economy what are the key technological building blocks required in what kinds of futures does hydrogen become important what does a hydrogen economy look like how and when does it evolve and what does it achieve the literature describes a diverse range of possible futures from decentralised systems based upon the small scale renewables through to centralised systems reliant on nuclear energy or carbon sequestration there is a broad consensus that the hydrogen economy emerges only slowly if all under business as usual scenarios rapid transitions to hydrogen occur only under conditions of strong governmental support combined with or as a result of major discontinuities such as shifts in society s environmental values game changing technological breakthroughs or rapid increases in the oil price or speed and intensity of climate change

monetary policy in a low pass through environment in a dynamic new keynesian optimizing model we introduce incomplete exchange rate pass through on import prices three results stand out first unlike canonical models with perfect pass through which emphasize a type of isomorphism incomplete pass through renders the analysis of monetary policy of an open economy fundamentally different from the one of a closed economy second productivity driven deviations from the law of one price assume the interpretation of endogenous cost push shocks third the optimal commitment policy relative to discretion entails a smoothing of the deviations from the law of one price and requires more stable nominal and real exchange rates

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

state dependent pricing and the general equilibrium dynamics of money and output economists have long suggested that nominal product prices are changed infrequently because of fixed costs in such a setting optimal price adjustment should depend on the state of the economy yet while widely discussed statedependent pricing has proved difficult to incorporate into macroeconomic models this paper develops a new tractable theoretical state dependent pricing framework we use it to study how optimal pricing depends on the persistence of monetary shocks the elasticities of labor supply and goods demand and the interest sensitivity of money demand

strategic interactions market information and predicting the effects of mergers in differentiated product markets abstract this paper reports an experiment conducted to examine the effects of changing the form of strategic interactions bertrand or cournot and changing underlying information conditions on the usefulness of the alm a merger simulation device used by the us department of justice the experiment consists of 20 60 period quadropolies after period 40 a merger is induced behaviorally cournot markets are much more variable than bertrand markets also providing information about others actions and earnings dampens merger related comparative statics effects consequently the alm predicts post merger performance poorly nevertheless results do not undermine a previous finding that the alm screens out nonproblematic consolidations

responsible mineral and energy futures views at the nexus societal prosperity is underpinned by access to the increasingly interdependent resources of minerals and energy in an era of mineral resource constraints and radical transition in the energy sector this paper reviews the extent to which a long term view of production and use is adopted in both fields a long term view including the mineral energy nexus is deemed to be necessary although not sufficient for managing future resource constraints and energy transitions alarmingly it identifies that the future of minerals resources and production is generally considered 5 10 years ahead rather than several decades or more as for energy additionally the sectors are generally studied independently rather than with a focus on the nexus with these findings as evidence of an unaddressed problem the paper then focusses on the current forces for change in the minerals industry namely community drivers regarding social licence to operate new technologies and consumer and government drivers on responsible minerals as discussions of sustainable development become displaced by the emerging discourse of responsible minerals what is adopted and discarded whilst responsible minerals considers chain of custody it does not adopt a long term view and overlooks the mineral energy nexus using three illustrative cases at the nexus of i rare earths renewables ii coal steel and iii uranium nuclear we extend the theoretical discussion on responsible with a range of contemporary examples from the perspectives of producing australia and consuming countries japan switzerland and propose a research agenda for an expanded notion of responsible minerals which recognises the complexity of the mineral energy nexus and connects it to progressing sustainable futures