which fiscal multipliers are regime dependent a meta regression analysis we analyse whether estimated multiplier effects are systematically higher if the economy suffers a downturn for that purpose we conduct a meta regression analysis on a unique data set of 98 empirical studies with more than 1800 observations on multiplier effects and control for regime dependence of the multiplier we find that spending multipliers are much higher by about 0 7 0 9 units during a downturn tax multipliers are not sensitive to the economic regime and generally lower than spending multipliers finally for all spending categories other than government consumption the multiplier significantly exceeds one during downturns

regulatory reform in britain regulatory reform in britain john kay and john vickers major sectors of the british economy are currently undergoing far reaching regulatory reform deregulation removal of barriers to competition and the introduction of new methods of regulation are occurring notably in financial services some of the professions and in utility industries such as telecommunications gas and electricity this paper gives an economic assessment of these developments the authors examine the root causes of market failure that call for regulation externalities monopoly and information problems and the pros and cons of various regulatory responses a broad distinction is drawn between structural regulation the determination of which firms or types of firms can engage in which activities and conduct regulation the control of how firms behave in their chosen activities recent examples of deregulation plus re regulation in britain are seen in part as a shift from structural to conduct regulation the relative merits of the two modes of regulation are complex to assess but it is argued that some recent regulatory reforms are placing undue reliance on conduct regulation as well as assessing individual industries the authors draw general conclusions about the desirability of regulatory solutions that make full use of market forces

the drivers of international migration to the uk a panel based bayesian model averaging approach a heterogeneous panel based bayesian model averaging approach is used to identify the robust economic and policy drivers of international migration to the uk from 14 different source regions over 1980 2007 around three quarters of the increase in net immigration over the last decade which is particularly pronounced for selected source regions is associated with structural change which may be attributed to uk and foreign immigration policy the remainder of the rise is largely explained by friends and family effects there are considerable uncertainties associated both with the effects of particular economic drivers of immigration and with forecasts of immigration

the deterrent effect of capital punishment evidence from a judicial experiment i introduction the contemporary debate over capital punishment involves a number of important arguments based on either moral principles or social welfare considerations the primary social welfare issue viewed as the most important single consideration for both sides in the death penalty controversy is whether capital punishment deters capital crimes see for example zimring and hawkins 1986 this issue is also of great interest to several states that are currently considering a change in their death penalty laws 1 psychologists and criminologists studied the death penalty initially and reported no deterrent effect see for example sellin 1959 and eysenck 1970 economists joined the debate later with ehrlich s 1975 and 1977 studies that report a significant deterrent effect applying regression analysis to u s aggregate data for 1933 69 and state level data for 1940 and 1950 ensuing studies use either ehrlich s data with different regression specifications different regressors functional form or endogenous variables or postmoratorium data with a variant of ehrlich s regression model results range from a substantial deterrent effect to no effect or a small adverse effect 2 this study uses a new approach to advance the deterrence literature we exploit an important characteristic that other studies have not considered the experimental nature of the moratorium that the supreme court imposed on executions during the 1970s the moratorium can be viewed as an exogenously imposed judicial experiment the experiment s effect on murder rates provides evidence about the deterrent effect of capital punishment we compare the murder rate for each state immediately before and after it suspended or reinstated the death penalty many factors that affect crime for example law enforcement judicial demographic and economic variables change only slightly over a short period of time therefore changes in a state s murder rate quickly following a change in its death penalty law can be attributed to the legal change also there are considerable cross state variations in the timing and duration of the moratorium that began and ended in different years in different states ranging from four to thirty years see tables 1 and 2 3 these variations can strengthen our comparison based inference because observing similar changes in murder rates immediately after the same legal change in different years and in various states provides compelling evidence of the moratorium s effect on murder moreover our analysis benefits from the experiences of the states that suspended and reinstated their death penalty statutes several times 4 for states that experience similar murder rate changes after suspensions or reinstatements in different crime economic and demographic environments the contribution of the legal change to murder is paramount we supplement the before and after comparisons with time series and panel data regression analyses unlike most existing studies we use both pre and postmoratorium data the regressions disentangle the effect of having death penalty laws on murder from the effect of actual executions on murder basing our inference on two different approaches allows us to corroborate our findings and also detract from the modeling concerns voiced at previous studies that use only regression analysis we also apply a battery of tests to examine the robustness of the findings these include regression sensitivity checks with 89 additional regression equations that differ from our base models in regressors functional form data and estimation method in addition we test whether the moratorium has an effect on property crimes that are not punishable by death if the relationship between the moratorium and these crimes is similar to the relationship between the moratorium and murder then we should suspect that murder rate changes are the result of broader trends in criminal behavior affecting all crimes

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

are any growth theories robust this article investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model using model averaging methods we find little evidence that so called fundamental growth theories play an important role in explaining aggregate growth in contrast we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity as well as some evidence of parameter heterogeneity in the aggregate production function we conclude that the ability of cross country growth regressions to adjudicate the relative importance of alternative growth theories is limited despite the vast amount of empirical research generated by new growth theories there is remarkably little consensus on which mechanisms are most salient in explaining cross country differences this article is designed to provide some evidence on this question by examining the robustness of empirical support for different growth the ories as determinants of both aggregate growth and its underlying components total factor productivity tfp growth and physical and human capital accumulation one reason for the lack of empirical consensus on growth determinants is that the main statistical tool in empirical studies cross country growth regressions provides very different answers depending on how the regression is specified which for this context typically amounts to the choice of control variables individual papers typically employ regressions that include modest subsets of the body of regressors that have been pro posed in the literature as a whole others employ a kitchen sink approach to evaluate the relative evidentiary support of competing growth theories in such an exercise a large number of variables are included in a regression and those variables that prove to be significant are then declared to be the important determinants of growth while the others are dismissed as unimportant rodrik et al 2002 sachs 2003

multimarket competition theory and evidence the multimarket perspective identifies potential entrants as existing firms in related markets the paper uses this new framework to analyze entry strategies and entry deterrence successful entry permitting and entry deterring strategies require understanding of the feedbacks from the entry market to the home market and vice versa the multimarket perspective integrates literature on industrial organization and strategic management

gratitude conscience and reciprocity models of supplier motivation when quality is non contractible abstract standard game theoretic models that apply principal agent problems to analyse buyer supplier relations have postulated that in a single period game the agent will not choose non contractible quality however evidence exists that suppliers or service providers choose costly quality in non contractible dimensions even in absence of reputation concern if they are offered a premium such actions violate the axiom of individual rationality and are not subgame perfect in standard game theory wherein only material payoffs are considered this paper builds three models of supplier behaviour in a single period stackelberg like buyer supplier game by using the framework of psychological game theory and explains supplier motivations to choose quality on non contractible dimensions in absence of any reputation effect if the buyer offers a price higher than the market price the supplier may be motivated to choose non contractible quality due to a sense of gratitude or because of his conscience or in order to reciprocate kindness the results show that maximum possible quality is chosen by the supplier only in the presence of a sufficiently strong sense of gratitude or a sufficiently strong conscience however the buyer is better off with a fair supplier who is motivated to reciprocate than a supplier having a very poor sense of gratitude or one having a weak conscience because the buyer can choose an optimal premium above market price to ensure that a fair and reciprocal supplier chooses an optimal quality

gift giving and the evolution of cooperation gift giving is a practice common to many societies in an evolutionary model the social custom of giving gifts at the beginning of a relationship can lead to trust and cooperation the evolutionary approach makes predictions about the character of the goods that can be used as gifts for example gift goods may have little use value even at low levels of consumption although the gifts themselves are useless the institution is not

on the loss function of the bank of canada a note abstract based on the approach advanced by elliott et al elliott g komunjer i timmermann a 2005 estimation and testing of forecast rationality under flexible loss review of economic studies 72 1107 1125 we studied whether the inflation and output growth projections published by the bank of canada are consistent with an asymmetric loss function current year projections provide no signs of asymmetry but next year projections do the hypothesis of rationality of the projections can be rejected under symmetric loss but not under asymmetric loss

on the political economy of national tax revenue forecasts evidence from oecd countries sustainable budgets are important quality signals for the electorate politicians might thus have an incentive to influence tax revenue forecasts which are widely regarded as a key element of national budget plans looking at the time period from 1996 to 2012 we systematically analyze whether national tax revenue forecasts in 18 oecd countries are biased due to political manipulation drawing on theories from the field of political economy we test three hypotheses using panel estimation techniques we find support for partisan politics left wing governments seem to produce more optimistic or less pessimistic tax revenue forecasts than do right wing ones contrary to the theoretical prediction based on the common pool problem we find that more fragmented governments and parliaments tend to produce more pessimistic or less optimistic tax revenue forecasts we find no empirical evidence that political business cycles play a role in tax revenue forecasts

tackling false positives in business research a statistical toolbox with applications serious concerns have been raised that false positive findings are widespread in empirical research in business disciplines this is largely because researchers almost exclusively adopt the p value less than 0 05 criterion for statistical significance and they are often not fully aware of large sample biases which can potentially mislead their research outcomes this paper proposes that a statistical toolbox rather than a single hammer be used in empirical research which offers researchers a range of statistical instruments including a range of alternatives to the p value criterion such as the bayesian methods optimal significance level sample size selection equivalence testing and exploratory data analyses it is found that the positive results obtained under the p value criterion cannot stand when the toolbox is applied to three notable studies in finance

central banks inflation forecasts under asymmetric loss evidence from four latin american countries we study the rationality of the inflation forecasts of the central banks of argentina brazil chile and mexico we reject rationality under a symmetric chile is an exception but not under an asymmetric loss function an overprediction implies a larger loss than an underprediction we also analyze alternative rationality tests growth forecasts and private sector forecasts

why corporations insure corporations insure to reduce the shirking information problem of joint production insurance encourages specialization in ownership increasing the returns to monitoring and lowering shareholders demand for a more diversified portfolio it enhances the credibility of specific capital as a performance bond and it lowers the cost to shareholders of compensating other members of the team for investing in firm specific assets tax and other factors may further encourage individual corporations to insure

is antitrust enforcement effective in a paper in this journal block nold and sidak 1981 tried to determine the impact of antitrust enforcement on horizontal price fixing after examining data on white bread markups in 20 u s cities they concluded that the enforcement activity of the department of justice against wholesale bakers had both remedial and deterrent effects in this paper i question the authors empirical results for three reasons they used bureau of labor statistics bls retail prices in computing bread markups however the white bread priced by the bureau changed quality over the sample period when a proxy for this quality change is included in the authors specification one deterrent effect disappears second the bread markups are sensitive to the pricing decisions made by grocery retailers when a proxy for retail pricing decisions is included in the model the deterrent effects are weaker finally the significance of the remedial effect depends on a single observation and this observation was affected by the two problems just stated

rough and lonely road to prosperity a reexamination of the sources of growth in africa using bayesian model averaging this paper takes a fresh look at africa s growth experience by using the bayesian model averaging bma methodology bma enables us to consider a large number of potential explanatory variables and sort out which of these variable can effectively explain africa s growth experience posterior coefficient estimates reveal that key engines of growth in africa are substantially different from those in the rest of the world more precisely it is shown that mining primary exports and initial primary education exerted differential effect on african growth these results are examined in relation to the existing literature copyright 2008 john wiley sons ltd

two part pricing for experience goods in the presence of adverse selection abstract because customers learn something when they purchase an experience good for the first time a firm selling experience goods may face different demand curves from new and repeat customers the firm can exploit these differences by using a two part pricing strategy to price discriminate between new and repeat customers the firm may also use a two part pricing strategy to mitigate the information problems of adverse selection when its quality is uncertain the analysis is particularly applicable to service markets where customers and firms seek long term relationships and firms maintain customer records which facilitate price discrimination

trade creation and diversion revisited accounting for model uncertainty and natural trading partner effects summary the effect of preferential trade agreements ptas on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical pta literature the existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the correct set of explanatory variables that ought to be included in the analysis to account for the model uncertainty that surrounds the validity of the competing pta theories we introduce bayesian model averaging bma to the pta literature statistical theory shows that bma successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error and by generating predictive distributions with optimal predictive performance once model uncertainty is addressed as part of the empirical strategy we find strong evidence of trade creation trade diversion and open bloc effects our results are robust to a range of alternative empirical specifications proposed by the recent pta literature copyright 2010 john wiley sons ltd

dimension reduction and model averaging for estimation of artists age valuation profiles abstract in hedonic regression models of the valuation of works of art the age or period at which an artist produces a particular work is often found to have highly significant predictive value most existing results are based on regressions that pool many painters although the uniqueness of artists career paths makes it interesting to estimate such regressions for individual artists sample sizes are often inadequate for a model that would also include the large number of other relevant variables we address this problem of inadequate degrees of freedom in individual artist regressions by using two statistical methods model averaging and dimension reduction to incorporate information from a potentially large number of predictor variables despite relatively small samples we find that individual age valuation profiles can differ substantially from general pooled profiles suggesting that methods that are more responsive to the unique features of individual artists may provide better predictions of art valuations at auction and may be useful more generally in hedonic valuation problems

want export diversification educate the kids first this paper uses bayesian model averaging to uncover the true determinants of export diversification among 36 potential factors and thus 236 potential models using data from 2001 to 2010 our results reveal two strong predictors primary school enrollment 99 7 posterior inclusion probability in the true model raises export diversification whereas the share of natural resources in gross domestic product 98 6 lowers diversification levels the importance of basic education coverage offers policymakers an opening toward diversifying exports at least in the long run this result is robust to accounting for the endogeneity of income levels by applying an instrumental variable bma method jel c11 f1 f34 o1 o2 o11

the credibility revolution in empirical economics how better research design is taking the con out of econometrics since edward leamer s memorable 1983 paper let s take the con out of econometrics empirical microeconomics has experienced a credibility revolution while leamer s suggested remedy sensitivity analysis has played a role in this we argue that the primary engine driving improvement has been a focus on the quality of empirical research designs the advantages of a good research design are perhaps most easily apparent in research using random assignment we begin with an overview of leamer s 1983 critique and his proposed remedies we then turn to the key factors we see contributing to improved empirical work including the availability of more and better data along with advances in theoretical econometric understanding but especially the fact that research design has moved front and center in much of empirical micro we offer a brief digression into macroeconomics and industrial organization where progress by our lights is less dramatic although there is work in both fields that we find encouraging finally we discuss the view that the design pendulum has swung too far critics of design driven studies argue that in pursuit of clean and credible research designs researchers seek good answers instead of good questions we briefly respond to this concern which worries us little

the determinants of cognitive and non cognitive educational outcomes empirical evidence in spain using a bayesian approach abstractthis article aims to extend the literature about the role played by socio economic and family background in educational outcomes by comparing the determinants of two different dimensions of educational output academic achievement and non cognitive traits to do this we explore the information provided by a self report survey developed specifically for the purpose of this research this will provide us with an innovative measure of non cognitive performance based on particular personal traits such as responsibility effort motivation and critical capacity as well as a common measure of cognitive proficiency we use a bayesian approach to estimate the potential influence of multiple individual and family variables on both dimensions of educational output from our results we find that despite some similarities there are several important divergences with regard to some socio economic variables that have been traditionally considered to be the most influential determinants of academic achieve

combining forecast densities from vars with uncertain instabilities recursive weight forecast combination is often found to an ineffective method of improving point forecast accuracy in the presence of uncertain instabilities we examine the effectiveness of this strategy for forecast densities using many vector autoregressive var and autoregressive ar models of output growth inflation and interest rates our proposed recursive weight density combination strategy based on the recursive logarithmic score of the forecast densities produces well calibrated predictive densities for us real time data by giving substantial weight to models that allow for structural breaks in contrast equal weight combinations produce poorly calibrated forecast densities for great moderation data copyright 2010 john wiley sons ltd

price quality and reputation evidence from an online field experiment we examine the link between price quality seller claims and seller reputation in internet auctions after purchasing actual baseball cards and having them professionally graded we find that some buyers in the online graded market are misled by incredible claims of quality they pay higher prices but do not receive better quality and in fact are defrauded more often online seller reputation is effective for identifying good faith sellers but conditional on completed auctions reputable sellers do not provide better quality evidence also suggests that high claim sellers target less experienced buyers we attribute these patterns to two loopholes in the ebay rating system we benefited from the comments of austan goolsbee raphael thomadsen john shea dan vincent david reiley larry ausubel peter cramton v joseph hotz jeff smith jimmy chan vincent crawford mark duggan and attendees at numerous seminars and conferences we are particularly grateful to seth sanders and john list for their constructive advice at the early stage of the research to timothy bresnahan rachel kranton and thomas hubbard for their detailed suggestions in reshaping earlier versions and to editor ariel pakes and two anonymous referees for their careful readings special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets and to numerous sports card store owners who shared their insights on the sportscard industry excellent research assistance from randy alexander moore and krzysztof fizyta is gratefully acknowledged any remaining errors are ours

prices as signals of product quality this paper is concerned with the provision of quality in markets in which consumers have only imperfect information the analysis focuses on a market for a product that can be produced at different quality levels all consumers prefer higher to lower quality but they may differ in their willingness to pay for quality producers can produce any quality they like but higher qualities are more costly to produce the information in this market is imperfect in the sense that the exact quality chosen by a firm is known only to the firm itself some information about the quality of a firm s product will however reach its potential customers even if they do not make any special effort to acquire it within the framework suggested here two conclusions are drawn first prices may serve as signals which exactly differentiate the available quality levels that is there exists a fulfilledexpectations equilibrium at which each price signals a unique quality level second the pricesignals are not arbitrary each price signal exceeds the marginal cost of producing the quality it signals such a mark up depends on the nature of the product specific information received by consumers the poorer the information the higher the mark up

monopolistic competition and multiproduct brand names the excess capacity theorem pertaining to monopolistic competition implies a trade off between variety and cost this article shows that the excess capacity theorem does not hold if firms market several products under a single brand name and if marketing efforts spill over from one product to another the argument of the article requires that selling efforts not be prejudged to be wasteful or redundant a position adopted and defended in harold demsetz s writing on monopolistic competition within that framework the article constructs a counterexample to the excess capacity theorem copyright 1989 by the university of chicago

likelihood based estimation of dynamic panels with predetermined regressors this article discusses the likelihood based estimation of panel data models with individual specific effects and both lagged dependent variable regressors and additional predetermined explanatory variables the resulting new estimator labeled as subsystem limited information maximum likelihood ssliml is asymptotically equivalent to standard panel generalized method of moment as n for fixed t but tends to present smaller biases in finite samples as illustrated in simulation experiments simulation results also indicate that the estimator is preferred to other alternatives available in the literature in terms of finite sample performance finally to provide an empirical illustration i revisit the evidence on the relationship between income and democracy in a panel of countries using the proposed estimator

the drivers of local income inequality a spatial bayesian model averaging approach this study analyzes the drivers of local income inequality in spain it derives a novel data set of inequality metrics for a sample of municipalities over the period 2000 06 spatial bayesian model

testing the rationality of state revenue forecasts recent revenue shortfalls in several states focus attention on the question of whether states do a good job of forecasting revenues in modem economics forecasts are eval uated on the basis of whether or not they are rational do the forecasts optimally incorporate all available information this paper develops a method for testing the rationality of state revenue forecasts and applies it to the analysis of data from new jersey massachusetts and maryland one of our main findings is that in all three states the forecasts of own revenues are systematically biased downward tn 1985 the 50 states raised 349 billion in revenues from their own sources and received 84 billion in grants from the federal government u s bureau of the census 1987 p 266 state governments are clearly important players in the u s system of public finance and the efficiency with which they conduct their financial affairs has an important impact on consumer welfare one important determinant of a state s ability to con duct reasonable fiscal policies is the quality of its revenue forecasts sensible deliberations about ex penditures cannot be made in the absence of good forecasts indeed in the presence of con stitutional or statutory provisions for balanced budgets unanticipated changes in revenues can wreak havoc not only on proposals that are sched uled for funding but on plans that have already been put into effect as well in recent months two powerful governors michael dukakis of massachusetts and mario cuomo of new york have suffered major politi cal embarrassments because actual revenues fell substantially short of the predictions in their re spective states such episodes focus attention on the question of whether states do a good job of forecasting revenues in modem economics fore casts are evaluated on the basis of whether or not they are rational do the forecasts optimally incorporate all information that is available at the time they are made although there is a large literature on state revenue forecasting methods that literature focuses mostly on state budgetary institutions forecasts themselves are evaluated only in an informal fashion 1 although the theory and econometric methods of rational expectations have been used to evaluate forecasts made by households and businesses 2 these powerful tools have not been applied to state government fore casts this paper applies these methods to the problem of state revenue forecasting and as an example uses them to analyze data from new jersey massachusetts and maryland the results cast light not only on the question of rationality per se but on issues such as the impact of political factors on forecasts section ii presents the conceptual framework for testing rational expectations the relevant in stitutional issues and data are described in section iii the results are discussed in section iv we find that in all three states forecasts of own rev enues are systematically biased downward section v concludes with a summary

investing to cooperate theory and experiment we study theoretically and in a lab experiment investment decisions in environments where property rights are absent in our setting a player chooses an investment level before interacting repeatedly with a given set of agents the investment stochastically affects the payoffs of the game in every subsequent period we show that more volatile returns make investment more difficult in the absence of legal protection and might force the investor to invest more to guarantee cooperation experimental results are broadly consistent with the theoretical findings

socio economic development and electricity access in developing economies a long run model averaging approach abstract access to electricity continues to be a popular subject in empirical studies however the choice of key factors related to electricity access in the literature to date has been ad hoc due to the lack of a theoretical framework this paper adopts a bayesian model averaging bma approach to selects important factors related to electricity access from 26 socioeconomic indicators using a sample of 48 developing countries and reveal their long term relationship with electricity access the bma approach allows us to identify the optimal empirical model when a theoretical foundation is not available moreover it allows us to address the relative importance of variables using posterior inclusion probabilities and thus has clear policy relevance our results show that access to finance education economic development infrastructure and industrialisation are positively related to electricity access in the long run although the long run relationship does not indicate causality it shows that to maintain this relationship policy adjustments against any deviations from the relationship are needed our study suggests that electrification needs not only economic educational and infrastructural development but also private sector participation governments commitment and political will and integration with poverty reduction and other development schemes

evaluating rationality of level and growth rate forecasts of direct tax revenues under flexible loss function evidence from swiss cantons abstract we explore the rationality of tax revenue forecasts in swiss cantons under asymmetric loss functions we find evidence of asymmetric losses for the level forecasts but not for growth rates allowing for asymmetric losses alters the outcome of rationality tests for the level forecasts

the market value of rarity abstract most theories of demand assume that consumers value the characteristics of products but are unconcerned with how many other consumers also consume the product however several theories of demand argue that consumers can value the exclusivity of possessing a rare object we test this implication on a particular collectible rare coins our paper examines the case of coins of a given type and identical quality that have mintages in different quantities this allows us to exclude the common case in which rarity or price itself is an indicator of quality for our sample rarer coins command higher prices rarity in the form of original mintage more strongly influences the market price than does collectibility as represented by the rarest coins of each mint mark or year we also point out that here may be other goods such as automobiles for which rarity may influence market demand

looking for a needle in a haystack revisiting the cross country causes of the 2008 9 crisis by bayesian model averaging in this paper we explore the cross country variation in the output impact of the global financial crisis in 2008 9 we use the extensive dataset of rose and spiegel but control for the problems of model uncertainty and outliers by using a variety of bayesian model averaging techniques we find first that cross country differences in crisis intensity can be explained by macroeconomic vulnerabilities second ignoring model uncertainty can lead to incorrect inferences third international trade linkages do matter

marital division of labor with risk of divorce the role of voice enforcement of contracts it is assumed that emotional ties can be relied on to enforce implicit marital contracts by voice therefore in the present model divorce has economic consequences not only because the economies of scale from living together are destroyed but also because the scope for such voice enforcement is weakened moreover perhaps surprisingly i find that it is ambiguous how an increase in the probability of divorce influences predivorce allocation of time even when preferences are assumed to be homothetic

returns to schooling and bayesian model averaging a union of two literatures abstract in this paper we review and unite the literatures on returns to schooling and bayesian model averaging we observe that most studies seeking to estimate the returns to education have done so using particular and often different across researchers model specifications given this we review bayesian methods which formally account for uncertainty in the specification of the model itself and apply these techniques to estimate the economic return to a college education the approach described in this paper enables us to determine those model specifications which are most favored by the given data and also enables us to use the predictions obtained from all of the competing regression models to estimate the returns to schooling the reported precision of such estimates also account for the uncertainty inherent in the model specification using u s data from the national longitudinal survey of youth nlsy we also revisit several stylized facts in the returns to education literature and examine if they continue to hold after formally accounting for model uncertainty

german business cycle forecasts asymmetric loss and financial variables abstract we examine the efficiency of german forecasts for output growth and inflation allowing for an asymmetric loss function of the forecasters we find the loss of output growth forecasts to be approximately symmetric while there is an asymmetry in the loss of the inflation forecasts the information of financial variables seems to be adequately incorporated into the output forecasts but to a lesser extent into the inflation forecasts

model averaging in economics an overview standard practice in empirical research is based on two steps first researchers select a model from the space of all possible models second they proceed as if the selected model had generated the data therefore uncertainty in the model selection step is typically ignored alternatively model averaging accounts for this model uncertainty in this paper i review the literature on model averaging with special emphasis on its applications to economics finally as an empirical illustration i consider model averaging to examine the deterrent effect of capital punishment across states in the usa

the antecedents and performance implications of cooperative exchange norms our study investigates the antecedents and performance implications of cooperative exchange norms we argue that in early relationships the level of expected cooperative norms in an exchange is the result of a calculative process facilitated by transaction attributes joint transaction specific investments and observability the greater the level of these two exchange attributes the greater the level of cooperative exchange norms all else being equal we further argue that the realized level of cooperative exchange norms can deviate from the expected level because the development of such norms is the result of social processes that management cannot directly and fully control this gap between realized and expected norms affects exchange performance performance suffers when the realized level of cooperative exchange norms falls below the expected level but overshooting expectations lays a critical groundwork for repeat transactions the analysis of a survey of 182 collaborative r d alliances provides initial support for our theory

growth empirics in panel data under model uncertainty and weak exogeneity this paper considers panel growth regressions in the presence of model uncertainty and reverse causality concerns for this purpose my econometric framework combines bayesian model averaging with a suitable likelihood function for dynamic panel models with weakly exogenous regressors and xed eects an application of this econometric methodology to a panel of countries over the 1960 2000 period highlights the diculties in identifying the sources of economic growth by means of cross country regressions in particular none of the nine candidate regressors considered can be labeled as a robust determinant of economic growth moreover the estimated rate of conditional convergence is indistinguishable from zero

real time prediction with u k monetary aggregates in the presence of model uncertainty a popular account for the demise of the u k s monetary targeting regime in the 1980s blames the fluctuating predictive relationships between broad money and inflation and real output growth yet ex post policy analysis based on heavily revised data suggests no fluctuations in the predictive content of money in this paper we investigate the predictive relationships for inflation and output growth using both real time and heavily revised data we consider a large set of recursively estimated vector autoregressive var and vector error correction models vecm these models differ in terms of lag length and the number of cointegrating relationships we use bayesian model averaging bma to demonstrate that real time monetary policymakers faced considerable model uncertainty the in sample predictive content of money fluctuated during the 1980s as a result of data revisions in the presence of model uncertainty this feature is only apparent with real time data as heavily revised data obscure these fluctua

an empirical analysis of the canadian budget process this paper provides a statistical analysis of the forecasts of a significant number of expenditure and revenue components of the federal budget provided each year by the department of finance the sample available for such an investigation is limited and the authors describe an easily applied non parametric testing methodology that is more appropriate than the usual regression based approach in small samples the reliability and relative power of the various non parametric tests are illustrated in a series of simulations applying these tests to the fiscal forecasts they find that there is little cause to be concerned with the forecast performance of the department of finance over the last seventeen years

is god in the details a reexamination of the role of religion in economic growth summary barro and mccleary 2003 religion and economic growth across countries american journal of sociology 68 760 781 is a key research contribution in the new literature exploring the macroeconomic effects of religious beliefs this paper represents an effort to evaluate the strength of their claims we evaluate their results in terms of replicability and robustness overall their analysis generally meets the standard of statistical replicability though not perfectly on the other hand we do not find that their results are robust to changes in their baseline statistical specification when model averaging methods are employed to integrate information across alternative statistical specifications little evidence survives that religious variables help to predict cross country income differences copyright 2011 john wiley sons ltd

hierarchical markov normal mixture models with applications to financial asset returns motivated by the common problem of constructing predictive distributions for daily asset returns over horizons of one to several trading days this article introduces a new model for time series this model is a generalization of the markov normal mixture model in which the mixture components are themselves normal mixtures and it is a specific case of an artificial neural network model with two hidden layers the article uses the model to construct predictive distributions of daily s p 500 returns 1971 2005 and one year maturity bond returns 1987 2007 for these time series the model compares favorably with arch and stochastic volatility models the article concludes by using the model to form predictive distributions of one to ten day returns during volatile episodes for the s p 500 and bond return series copyright 2010 john wiley sons ltd

does it pay to change your company s name a stock market perspective a company s name is commonly considered to be an integral part of its image just like the quality of its products or the quality of its technical services changing a company s name is a major policy decision contemplated by many firms and actually implemented by some each year this paper attempts to examine albeit indirectly whether a name change can improve the profit performance of a firm and what type of firm is more likely to succeed in doing so we use the event study methodology developed in finance to examine the above questions with respect to 58 corporations that changed their names in 1981 1985 our findings are that for most of the firms name changes are associated with improved performance and that the greatest improvement tends to occur in firms that produce industrial goods and whose performance prior to the change was relatively poor evidence that industrial good producers are also heavy users of corporate advertising lends further credence to this finding our findings do not support however the contention that the new name per se will enhance demand for the firm s products rather it seems that the act of a name change serves as a signal that other measures to improve performance such as changes in product offerings and organizational changes will be seriously and successfully undertaken the rationale behind why such a signal is sent and why it is believed is discussed

jointness of growth determinants this paper introduces a new measure of dependence or jointness among explanatory variables jointness is based on the joint posterior distribution of variables over the model space thereby taking model uncertainty into account by looking beyond marginal measures of variable importance jointness reveals generally unknown forms of dependence positive jointness implies that regressors are complements representing distinct but mutually reinforcing effects negative jointness implies that explanatory variables are substitutes and capture similar underlying effects in a cross country dataset we show that jointness among 67 determinants of growth is important affecting inference and informing economic policy copyright 2009 john wiley sons ltd

habit formation in consumption a meta analysis abstract we examine 597 estimates of habit formation reported in 81 published studies the mean reported strength of habit formation equals 0 4 but the estimates vary widely both within and across studies we use bayesian and frequentist model averaging to assign a pattern to this variance while taking into account model uncertainty studies employing macro data report consistently larger estimates than micro studies 0 6 vs 0 1 on average the difference remains 0 5 when we control for 30 factors that reflect the context in which researchers obtain their estimates such as data frequency geographical coverage variable definition estimation approach and publication characteristics we also find that evidence for habits strengthens when researchers use lower data frequencies employ log linear approximation of the euler equation and utilize open economy dsge models moreover estimates of habits differ systematically across countries

earning through learning in legislatures this inquiry applies gary becker s theoretical notions of general and specific training to the experiential learning that occurs within political institutions in particular the u s congress in the process we isolate economic facets of these legislative experiences that influence the rental value of human capital derived from congressional training we identify four factors that structure legislators post elective wages pre congressional salary year of entry tenure and variables closely related to general training in congress specifically assignment to powerful legislative committees acquisition of broad skill packages investment in expanding skill set proficiencies and to a lesser extent life cycle driven declines in such investments

estimation and testing of forecast rationality under flexible loss in situations where a sequence of forecasts is observed a common strategy is to examine rationality conditional on a given loss function we examine this from a different perspective supposing that we have a family of loss functions indexed by unknown shape parameters then given the forecasts can we back out the loss function parameters consistent with the forecasts being rational even when we do not observe the underlying forecasting model we establish identification of the parameters of a general class of loss functions that nest popular loss functions as special cases and provide estimation methods and asymptotic distributional results for these parameters this allows us to construct new tests of forecast rationality that allow for asymmetric loss the methods are applied in an empirical analysis of imf and oecd forecasts of budget deficits for the g7 countries we find that allowing for asymmetric loss can significantly change the outcome of empirical tests of forecast rationality