do macroforecasters herd we show that typical tests of whether forecasters herd will falsely indicate herding behaviour for a variety of types of behaviour and forecasting environments that give rise to disagreement amongst forecasters we establish that forecasters will appear to herd if di erences between them reject noise as opposed to private information or if they arise from informational rigidities noise can have a behavioural interpretation and if so will depend on the behavioural model under consideration an application of the herding tests to us quarterly survey forecasts of inflation and output growth data 1981 2013 does not support herding behaviour

an evaluation of the forecasts of the federal reserve a pooled approach the federal reserve greenbook forecasts of real gdp inflation and unemployment are analysed for the period 1974 to 1997 we consider whether these forecasts exhibit systematic bias and whether efficient use is made of information that is whether revisions to these forecasts over time are predictable rather than analyse the forecasts separately for each horizon of interest we discuss and implement methods that pool information over horizons we conclude that there is evidence of systematic bias and of forecast smoothing of the inflation forecasts

the role of benefit transfer in ecosystem service valuation the demand for timely monetary estimates of the economic value of nonmarket ecosystem goods and services has steadily increased over the last few decades this article describes the use of benefit transfer to generate monetary value estimates of ecosystem services specifically the article provides guidance for conducting such benefit transfers and summarizes advancements in benefit transfer methods databases and analysis tools designed to facilitate its application

preferences for energy efficiency vs renewables how much does a ton of co2 emissions cost concerns about climate change are growing and so is the demand for information about the costs and benefits of mitigating greenhouse gas emissions this paper seeks to estimate the benefits of climate change mitigation as measured by the public s willingness to pay for such policies we investigate the preferences of italian and czech households towards climate change mitigation policy options directly related to residential energy use we use discrete choice experiments which are administered in a standardized fashion to representative samples in the two countries through computer assisted web interviews our preferred estimates of the willingness to pay per ton of co2 emissions avoided is 133 for the italians and 94 euro for the czech respondents at 2014 purchasing power parity we find evidence of considerable heterogeneity in wtp driven by income the two samples differ in their within sample income elasticities of wtp but comparison across the two countries suggests an income elasticity of wtp of one or even greater than one for certain mixed logit specifications

a model of product line design and introduction sequence with reservation utility abstract cannibalization is a major concern for a firm when designing a product line in addition external options from outside the firm s product line may also play a significant role in this paper we investigate the impact of external options represented by reservation utility on product line design and introduction sequence we find that a heterogeneous reservation utility defines the relative attractiveness of segments and corresponding product line b reservation utility makes it more favorable to introduce products sequentially rather than simultaneously c aggregating segments is an effective way to mitigate cannibalization when it becomes too difficult to manage with different values of reservation utility across multiple segments and d introducing products in a non monotone order of quality can improve profit from simultaneous introduction when the value of reservation utility of a middle segment is particularly high

quality and competition in recent years the practitioner literature in operations management has seen a dramatic surge in articles on quality management it reflects the increased emphasis on quality by u s firms which has been attributed largely to increased competition faced by them the question of how quality is influenced by competitive intensity however has not received much attention either in the practitioner or the academic research literatures the notion of competitive intensity itself has not been defined precisely in this paper we develop formal models of oligopolistic competition to investigate whether equilibrium levels of quality increase as competition intensifies we consider three different competitive settings i asymmetric duopolistic competition where the dominant firm s intrinsic demand potential decreases ii a symmetric duopoly where the firms are precluded from cooperating in setting quality levels and iii symmetric oligopolistic competition where the number of firms increases we find that the relation between equilibrium quality and competitive intensity depends on what is understood by increased competition and in addition the relation is contingent on the values of parameters describing the cost and demand structure for the industry

daily house price indexes construction modeling and longer run predictions we construct daily house price indexes for ten major u s metropolitan areas our calculations are based on a comprehensive database of several million residential property transactions and a standard repeat sales method that closely mimics the procedure used in the construction of the popular monthly case shiller house price indexes our new daily house price indexes exhibit similar characteristics to other daily asset prices with mild autocorrelation and strong conditional heteroskedasticity which are well described by a relatively simple multivariate garch type model the sample and model implied correlations across house price index returns are low at the daily frequency but rise monotonically with the return horizon and are all commensurate with existing empirical evidence for the existing monthly and quarterly house price series a simple model of daily house price index returns produces forecasts of monthly house price changes that are superior to various alternative forecast procedures based on lower frequency data underscoring the informational advantages of our new more finely sampled daily price series

strategic behavior of federal open market committee board members evidence from members forecasts abstract in this paper we use panel data to test whether federal open market committee fomc board members forecasts are rational rationality is rejected in the sense that forecasts by members are heavily dependent on previous own forecasts and last consensus made in fomc furthermore we reveal the strategic behavior of fomc board members forecasts by governors who always have voting rights agree much with the previous consensus of fomc members forecasts in contrast non governors who rotate voting rights exaggerate their forecasts they aggressively deviate their forecasts from previous consensus the former is herding behavior and the latter is anti herding behavior our results imply that individual members behave strategically governors want to present policy consistent forecasts to the congress and non governors utilize their forecasts to influence decision making in fomc

explanations of the inconsistencies in survey respondents forecasts a comparison of the point forecasts and the probability distributions of inflation and output growth made by individual respondents to the us survey of professional forecasters indicates that the two sets of forecasts are sometimes inconsistent we evaluate a number of possible explanations and find that not all forecasters update their histogram forecasts as new information arrives this is supported by the finding that the point forecasts are more accurate than the histograms in terms of first moment prediction c 2009 elsevier b v all rights reserved

differential interpretation in the survey of professional forecasters in this paper i estimate a simple bayesian learning model to expectations data from the survey of professional forecasters i reformulate the model in terms of forecast revisions which allows one to abstract from differences in priors and to focus the analysis on the relationship between news and revisions the empirical analysis shows that there is significant heterogeneity in the interpretation of news among forecasters in particular at longer horizons while it decreases closer to the forecast target date the results also indicate a positive relationship between prior sentiment and interpretation of the signal in the sense that relatively optimistic pessimistic forecasters are likely to believe that the signal under over estimates the future realization and assign it a low high weight in the forecast revision

study on benefit transfer in an international setting how to improve welfare estimates in the case of the countries income heterogeneity abstract the paper aims at investigating the validity of benefit transfer in the case of transfers between countries highly heterogeneous in income and demonstrates relative performance of different benefit transfer methods under these conditions lake water quality valuation studies were conducted in two countries in transition poland and the czech republic they reflected two earlier studies carried out in norway we examine how income elasticity of wtp varies with the levels of income and find support for applying the income elasticity of 1 to adjust transferred welfare estimates in case of high differences in income between countries in addition we show that using site specific measures of income outperforms transfers based on gpd per capita the accuracy of benefit transfer is compared using equivalence testing following the tosc two one sided convolutions test a new more informative way of reporting equivalence is proposed based on computing minimum tolerance level rather than specifying it a priori

accuracy and efficiency in the u s department of energy s short term supply forecasts one step ahead forecasts of quarterly crude oil natural gas electricity and coal supplies are evaluated under two general approaches accuracy based measures and classification or directional based measures results suggest the u s department of energy doe supply forecasts for u s domestic energy products are generally more accurate than a naive alternative there is only limited evidence of bias and inefficiency in the forecasts although there is some evidence of error repetition directional forecasts for supply changes are statistically better than random but they generally do not outperform a naive forecast

strategy switching in the japanese stock market abstract this paper investigates the expectation formation process of japanese stock market professionals by utilizing a monthly forecast survey dataset on the topix distributed by quick corporation we sort forecasters into buy side and sell side professionals we empirically demonstrate that the buy side and sell side professionals use either fundamental or trend following strategies throughout their expectation formation processes and that they switch between fundamental and trend following strategies over time we also discuss that strategy switching can be key in understanding the persistent deviation of the topix from the fundamentals

are professional macroeconomic forecasters able to do better than forecasting trends this paper investigates whether survey forecasters are able to make more accurate forecasts than simply supposing that the future values of the variable will move monotonically to the long run expectation we consider the forecasts individually and the consensus forecasts consensus survey forecasts are able to do so to varying degrees depending on the variable but this ability is largely limited to forecasts of the current quarter

willingness to accept willingness to pay and the income effect abstract the gap between willingness to pay wtp and willingness to accept wta has previously been studied by searching for evidence of substitutability the neoclassical hypothesis or status quo bias testing for neoclassical versus psychological theories of preferences we study the gap differently asking whether the observed pairs of wta and wtp are consistent with neoclassical preferences we use sugden s alternatives to the neoclassical theory of choice in i bateman k g willis eds valuing environmental preferences theory and practice of the contingent valuation method in the us eu and developing countries oxford university press oxford pp 152 180 chapter 6 result showing that the effect of income on wtp can be approximated from information on the ratio wta wtp drawing inferences from a meta analysis of 201 wta wtp ratios we conclude that the data are not consistent with neoclassical preferences

vertical governance change and product differentiation under decreasing component costs in deciding on whether and when to outsource component production firms should consider the trade off between total production costs and the ability to horizontally differentiate products we study the outsourcing decision in a duopoly under decreasing but uncertain market rates for components given that outsourcing increases the substitutability of the final products we find that there is at least one firm that eventually outsources component production because it cannot differentiate its product enough by in house production to justify the eventually higher costs the follower outsources at a lower market rate or may even remain vertically integrated the follower thus incurs the eventually much higher in house component costs longer while the low substitutability is enjoyed by both firms under endogenous roles firms thus engage in a preemption game to be the first to outsource we also find that firms generally outsource at lower market rates if uncertainty is higher but seek to preempt at remarkably higher market rates if substitutability remains low

price and quality competition the effect of differentiation and vertical integration abstract this paper studies an instance of price and quality competition between firms as seen in the recent internet market consumers purchase a product based on not only its price but also its quality level therefore two firms compete in determining their prices and quality levels to maximize their profits characterizing this competition from a microeconomic viewpoint we consider two possible business strategies that firms can utilize to overcome the competition the differentiation and the vertical integration with another complementary firm we show an interesting result not seen in the well known bertrand price competition not only does the differentiation always increase the firms profits but also it can increase the consumer s welfare in a quality sensitive market we further derive that under some mild conditions the monopolistic vertical integration that excludes the combination purchase with a competitor s product is beneficial for both the integrated firm and its consumers

forecasting efficiency concepts and applications this article introduces the concept of forecast efficiency in which the forecast contains all information available at the time of the forecast empirical tests investigate weak efficiency where the information set is all past forecasts and where all forecast revisions and errors should be uncorrelated with past forecast revisions tests of macroeconomic energy consumption and oil price forecasts find a significant autocorrelation of forecast revisions with fifty of fifty one tests showing positive correlation of forecast revisions as opposed to zero correlation consistent with forecast efficiency copyright 1987 by mit press

environmental inequality and economic valuation i study how the economic value of a heterogeneously distributed environmental public good depends on how the endowment with this good and income are distributed i find that the effect of environmental inequality on the societal willingness to pay wtp for the environmental good is determined both by its substitutability and by the correlation of its provision with income specifically environmental inequality decreases societal wtp for substitutes but this effect is reversed if the environmental good is a complement or distributed strongly in favour of richer households moreover i show that richer households living in places where environmental good endowment is high increases decreases societal wtp if and only if the environmental good is a substitute for complement to consumption goods i propose novel adjustment factors for structural benefit transfer to control for differences in the spatial distribution of environmental goods using forest preservation in poland as an empirical example i find that societal wtp is up to 4 higher for equal access to forests and up to 8 higher for an equal distribution of both income and access to forests

is the income elasticity of the willingness to pay for pollution control constant how willingness to pay for environmental quality changes as incomes rise is a central question in several areas of environmental economics this paper explores both theoretically and empirically whether or not the willingness to pay wtp for pollution control varies with income our model indicates that the income elasticity of the marginal wtp for pollution reduction is only constant under very restrictive conditions our empirical analysis tests the null hypothesis that the elasticity of the wtp for pollution control with respect to income is constant employing a multi country contingent valuation study of eutrophication reduction in the baltic sea our findings reject this hypothesis and estimate an income elasticity of the wtp for eutrophication control of 0 1 0 2 for low income respondents and 0 6 0 7 for high income respondents thus our empirical results suggest that the elasticity is not constant but is always less than one this has implications for how benefits transfer exercises and for theoretical explanations of the environmental kuznets curve

socially optimal forest management and biodiversity conservation in temperate forests under climate change abstract forest biodiversity underpins social welfare by preserving ecosystem multifunctionality and the provision of ecosystem goods and services still the social value of biodiversity is not adequately incorporated into forest management and decision support models this study proposes a novel approach for defining socially optimal biodiversity levels wood supply and taxation schemes under climate change we developed a partial equilibrium model to maximize consumers and producers surplus until the end of the century including climate change impacts as productivity shocks in a coupled ecological economic framework in our model we consider a first best and a second best taxation scheme to internalize the value of forest biodiversity into forest planning the framework developed here was applied to a temperate forest landscape in southwestern germany where biodiversity has a high social value our results indicate an increasing consumption of wood and supply of biodiversity up to 38 4 until the end of the century moreover climate change may affect forest productivity optimal harvesting rates and taxation schemes crucially current management is unable to capture the adequate social value of biodiversity and is inefficient under climate change policy mechanisms are therefore required to correct biodiversity provision in temperate forest landscapes

risk perception in psychology and economics abstract the concept of rationality has been basic to most economic analysis its content has been successively refined over the generations as applied to the static world of certainty it has turned out to be a weak hypothesis not easily refuted and therefore not very useful as an explanation though not literally a tautology but recent decades have seen the development of stronger versions applied to a world in which time and uncertainty are real among its most important manifestations have been criteria for consistency in allocation over time the expected utility hypothesis of behavior under uncertainty and what may be termed the bayesian hypothesis for learning that is the consistent use of conditional probabilities for changing beliefs on the basis of new information these hypotheses have been used widely in offering explanations of empirically observed behavior though as not infrequently in economics the theoretical development has gone much further than the empirical implementation these hypotheses have also been used increasingly in normative analysis as a component of benefit cost studies therefore frequently referred to as benefit risk studies the value of reducing mortality rates from diseases for example has been studied by assuming that choice of occupations is made inter alia by comparing wage differences with mortality differences

predictability of output growth and inflation a multi horizon survey approach we develop an unobserved components approach to study surveys of forecasts containing multiple forecast horizons under the assumption that forecasters optimally update their beliefs about past current and future state variables as new information arrives we use our model to extract information on the degree of predictability of the state variable and the importance of measurement errors in the observables empirical estimates of the model are obtained using survey forecasts of annual gdp growth and inflation in the united states with forecast horizons ranging from 1 to 24 months and the model is found to closely match the joint realization of forecast errors at different horizons our empirical results suggest that professional forecasters face severe measurement error problems for gdp growth in real time while this is much less of a problem for inflation moreover inflation exhibits greater persistence and thus is predictable at longer horizons than gdp growth and the persistent component of bot

financial markets forecasts revisited are they rational stubborn or jumpy this paper evaluates professional forecasters behavior using a panel data of individual forecasts we find that i professional forecasts are behavioral and ii there exists a stock bond dissonance the forecasting behavior seems to be stubborn in the stock market but jumpy in the bond market even in the same country forecasting behavior is quite different by market

using survey data to correct the bias in policy expectations extracted from fed funds futures many studies estimate risk premiums on federal funds futures to extract monetary policy expectations by assuming that average forecast errors of the expectations are zero or that survey forecasts are good proxies for the expectations these assumptions however may fail due to an unanticipated declining trend in the federal funds rate and to survey respondents strategic behavior consequently the premiums estimated under these assumptions may be biased we propose a new method to estimate the premiums and find that the premiums have been often negative since 2000 which is generally consistent with the negative betas observed in the 2000s

full line or specialization strategy the negative effect of product variety on product line strategy abstract this paper studies the product line decisions of firms under two consumer segments differing in their quality sensitivity we focus on a negative impact of the product variety on the consumers motivation to purchase while each product is horizontally differentiated in the presence of this impact and high fixed costs relative to variable costs it is shown that when a highly quality sensitive segment exists it is always advantageous for the monopoly to specialize in only one product serving this segment however the appearance of a competitor can drastically change the product line in the market under the duopolistic setting where two firms sequentially determine their product lines we show that the leader gains a better financial result by offering its product to the low segment for many cases including the case where no product is offered to the high segment by either of the firms who are in equilibrium furthermore we obtain another interesting result that indicates that the follower s profit can exceed the leader s profit when the quality sensitivities between the two consumer segments are sufficiently different even though the two firms are symmetric except for the order of their product offerings

directional accuracy forecasting error and the profitability of currency trading model based evidence three models the flexible price monetary model ppp and a univariate arima model are estimated for 45 currency pairs to find out if the profitability of forecasting based currency trading is more related to the ability of the underlying model to predict the direction of change than the magnitude of the forecasting error theoretical considerations show that a correct prediction of the direction of change is neither a necessary nor a sufficient condition for a profitable trade the results of the exercise indicate that profitability is more strongly correlated with directional accuracy than with the magnitude of the error

limits to substitution between ecosystem services and manufactured goods and implications for social discounting this paper examines implications of limits to substitution for estimating substitutability between ecosystem services and manufactured goods and for social discounting based on a model that accounts for a subsistence requirement in the consumption of ecosystem services we provide empirical evidence on substitution elasticities we find an initial mean elasticity of substitution of two which declines over time towards complementarity we subsequently extend the theory of dual discounting by introducing a subsistence requirement the relative price of ecosystem services is non constant and grows without bound as the consumption of ecosystem services declines towards the subsistence level an application suggests that the initial discount rate for ecosystem services is more than a percentage point lower as compared to manufactured goods this difference increases by a further half percentage point over a 300 year time horizon the results underscore the importance of considering limited substitutability in long term public project appraisal

why do forecasters disagree lessons from the term structure of cross sectional dispersion abstract key sources of disagreement among economic forecasters are identified by using data on cross sectional dispersion in forecasters long and short run predictions of macroeconomic variables dispersion among forecasters is highest at long horizons where private information is of limited value and lower at short forecast horizons moreover differences in views persist through time such differences in opinion cannot be explained by differences in information sets our results indicate they stem from heterogeneity in priors or models differences in opinion move countercyclically with heterogeneity being strongest during recessions where forecasters appear to place greater weight on their prior beliefs

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

economic inequality and the value of nature abstract understanding what influences the value of nature is crucial for informing environmental policy from a sustainability perspective economic valuation should not only seek to determine a society s willingness to pay for environmental goods to devise an efficient allocation of scarce resources but should also account for distributional effects to ensure justice yet how economic inequality affects the value of non market environmental goods remains understudied combining recently developed theoretical results with empirical evidence this commentary shows that more equal societies have a higher valuation for environmental public goods and that non market benefits of environmental policy accrue over proportionally to poorer households on this ground we discuss implications for environmental valuation management and policy making and identify a number of fruitful areas for future research we conclude that environmental valuation should explicitly account for economic inequality and that encompassing assessments of the distributional effects of environmental policies must consider the distribution of non market environmental benefits

forecasting urea prices abstractmanaging urea price risk is a concern of firms in the urea supply chain due to high price volatility and relatively slow transportation this study develops urea price forecasting models as a way to reduce price risk the forecasting models are evaluated based on multiple accuracy measures and compared to fertilizer week a commercial forecast an autoregressive model with exogenous variables arx using a window size of 48 months outperforms the other models no statistical difference exists between our best model and fertilizer week encompassing tests show that a combination model using the two models outperforms using fertilizer week forecasts alone a combined model using 66 8 of fertilzerweekand 33 2 of the arx brings about the minimum forecast error

the value of public information in storable commodity markets application to the soybean market this article provides a framework to estimate the potential effects and benefits of the provision of market information in storable commodity markets this framework is applied to the case of production forecasts for the soybean market a rational expectations storage model of the global soybean market accounting for both inter annual and intra annual market dynamics is built shocks that occur between planting and harvesting affect the size of the potential harvest estimates of the size of these shocks are reported publicly and affect the market equilibrium through adjustments to stock levels by varying counterfactually the observability of seasonal shocks we can estimate the efficiency gains related to the availability of advance information they are equivalent to 2 of storage costs the reduction of stock levels being the main channel explaining the welfare gains the presence of advance information has a limited effect on inter annual price volatility but redistributes price volatility during the season increasing it just before harvest when almost all news has been received and stocks are tight and decreasing it after harvest the effect of news shocks is stronger on higher order moments of the distribution with a strong decrease in skewness and kurtosis related to the lower frequency of price spikes

expectation formation following large unexpected shocks abstract by matching a large database of individual macroforecaster data with the universe of sizable natural disasters across 54 countries we identify a set of new stylized facts forecasters are

income treatment effects in contingent valuation the case of the swedish predator policy this paper provides case study evidence on two relevant issues in estimating the relationship between wtp and income using contingent valuation 1 the choice of income measure and 2 the modelling choice addressing these issues a sensitivity analysis is performed on a dataset concerning implementation of the swedish predator policy the results show that the estimated income elasticity of wtp varies between 0 12 and 0 40 for the models estimated the main conclusion drawn from the analysis is that controlling for the number of adults in the household is important for finding a significant income effect when the household income measure is used besides this finding the empirical analysis finds little support for the hypothesis that the choice of income measure and modelling assumptions significantly influence the overall model fit

intergenerational discounting with intragenerational inequality in consumption and the environment it is now established that the consumption discount rate is determined by the growth of consumption multiplied by the elasticity of marginal utility but distributive concerns are rarely reflected in the literature assuming a social welfare function with inequality aversion we consider a consumption discount rate that can be decomposed into the growth effect and the intragenerational distribution effect the framework is then extended to include population change and inequality in the environment as an amenity in a utility with constant elasticity of substitution numerical examples illustrate that distributional effects turn non negligibly negative that may reduce consumption discount rate by 1 3 for plausible parameters once distribution is adjusted for both population and the environment

macro economic forecasting and modelling confidence in macro economic forecasting has periodically been punctured by episodes of economic turbulence and concomitant predictive failure the poor performance in predicting the consumer boom in the late i98os and the depth and duration of the recession in the i99os can be viewed as merely the latest examples in a catalogue of failures with noteworthy antecedents including the under prediction of post war consumption and the i974 5 and i979 81 recessions periods of economic turbulence may be informative in highlighting model inadequacy but they also being into question the usefulness of economic forecasting 2 should we be surprised that such failures have occurred econometric theory comprises a body of tools and techniques for analysing the properties of prospective methods under hypothetical states of nature in the forecasting context the methods are forecasting models and procedures and the states of nature relate to the properties of the variables to be forecast for an econometric theory of forecasting to be useful in terms of delivering relevant conclusions about empirical forecasting those states must adequately capture thfie appropriate aspects of the real world to be forecast however the traditional text book theory of economic forecasting fails to allow for a number of vital features of the economy in particular analyses of forecasting have usually been based on assumptions that implicitly rule out structural change or regime shifts in the economy namely i a constant time invariant data generating process dgp 2 a stationary non integrated dgp 3 a unique model of the economy which coincides with the dgp under these assumptions particularly i and 3 forecasts calculated as the conditional expectation given the model are optimal in the sense that they are unbiased and efficient any other forecast will have a larger forecast error variance by definition if the model is the dgp then the expected future value of the variable given all information available at the present time is the conditional expectation with respect to the model in general forecasts are not financial support from the uk economic and social research council under grant rooo233447 is gratefully acknowledged by both authors neil ericsson provided many helpful comments on an earlier draft 1 spanos i989 considers the contemporary predictive failure of aggregate consumption functions over 1945 51 arguing that model mis specification played a role wallis i989 discusses the forecasting record of the major uk model based forecasting teams for the i974 5 and i979 8i recessions

rationality and seasonality evidence from inflation forecasts abstract we examine the seasonal pattern in expectations using a unique israeli survey of quarterly inflation forecasts rationality is rejected with respect to trivial information about calendar quarter seasonal bias is strongest at shorter horizons and in a low inflation environment

contingent valuation a new perspective after several decades of academic research on the contingent valuation cv method a consistent behavioral explanation of hypothetical bias is still lacking based on evidence from economics economic psychology and the political sciences i propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys the first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable informative cues that can be rationally exploited in simplified heuristics the second hypothesis is that the probability and impact of strategic responses in dichotomous choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs the literature on hypothetical bias is revisited in the light of these behavioral hypotheses i find that the hypotheses are generally supported by the empirical data moreover the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain in particular they solve the puzzle that pre election polls but not cv surveys are able to predict actual referendum outcomes and they explain why income effects on willingness to pay are lower in cv responses than in actual votes if confirmed by further studies the hypotheses will have important implications for future research and practice first the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents this can be achieved by specifying the costs as a percentage rather than absolute change in taxes second the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods

pricing and product line strategy in a supply chain with risk averse players abstract we study the pricing and product line strategy of a risk averse manufacturer who sells her products through a risk averse retailer we identify the conditions under which the manufacturer extends her product line or replaces the old product with a new product and find that i a higher retailer s risk aversion decreases the retail price but increases the unit wholesale price ii the manufacturer extends the product line if the price caps for both products are sufficiently high both her risk aversion and product substitutability are sufficiently low iii the manufacturer discontinues the old product if the relative price cap of the new product to the old product is sufficiently high her risk aversion is medium and product substitutability are sufficiently high further we find that i the decentralization of supply chain may increase product line length if the retailer s risk aversion and product substitutability are sufficiently high otherwise it may decrease product line length ii the endogenization of quality design increases the motivation to introduce a new product and iii the manufacturer extends or replaces the product line if quality cost is not too high

environmental goods and the distribution of income the paper presents a theoretical investigation of the distributional impacts of environmental commodities it introduces an appropriate framework defines concepts for measuring benefits and examines the determinants of benefit incidence within this setup its emphasis is on methodology and on recognizing the relevant economic variables and information it turns out that in an equal preference model the magnitude of the income elasticity of marginal willingness to pay for an environmental good is the crucial variable determining progressivity it is related to a number of other elasticities which are more easily accessible to an empirical estimation

rationality and the role of judgement in macroeconomic forecasting this paper examines the effects of judgemental adjustments on the rationality of macroeconomic forecasts published forecasts based on large scale models are rarely purely model based but often include extensive adjustments forecasters adjustments tend to improve forecast accuracy but there is no evidence of their impact on the rationality of forecasts using series of revisions to forecasts we find little evidence that published forecasts are excessively smooth in the nordhaus i 987 sense but intercept corrections do appear to reduce the variation over time in purely modelbased forecasts and to alter the underlying output inflation trade off implicit in the model there is a large literature on the rationality of forecasts and on the efficient use of information in forecasting equally it is now generally recognised that published forecasts are rarely based on the estimated model alone but that adjustments are often made to the model based predictions in arriving at a final forecast thus published forecasts reflect in varying degree the properties of the model and the skills of the model s proprietors while forecasters adjustments do appear to improve forecast accuracy see the work of the esrc

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

on the efficiency of bertrand and cournot equilibria with product differentation in a differentiated products setting with n varieties it is shown under certain regularity conditions that if the demand structure is symmetric and bertrand and cournot equilibria are unique then prices and profits are larger and quantities smaller in cournot than in bertrand competition and as n grows both equilibria converge to the efficient outcome at a rate of at least 1n if bertrand reaction functions slope upwards and are continuous then even with an asymmetric demand structure given any cournot equilibrium price vector one can find a bertrand equilibrium with lower prices in particular if the bertrand equilibrium is unique then it has lower prices than any cournot equilibrium

when are gdp forecasts updated evidence from a large international panel based on a large international panel of surveyed gdp forecasts i analyze the frequency of forecast revisions and the factors that influence the likelihood of forecast revisions i find that each month on average 40 50 of forecasters revise their forecasts in addition i find that the likelihood of forecast revisions significantly depends on a number of factors such as the forecast horizon the business cycle or strategic interactions between forecasters my results suggest that a realistic modeling of expectations forecasts of agents has to take into account cross sectional heterogeneity strategic interaction between agents and effects of the economic environment features that existing models such as the sticky information framework are missing

a note on price and quality competition between asymmetric firms abstract this paper analyzes the impact of asymmetry between firms on the outcome of price and quality competition from a microeconomic viewpoint consumers purchase a product based on not only its price but also its quality level therefore two firms compete in determining their prices and quality levels to maximize their profits the asymmetry arises from the difference in consumers loyalty to each firm that asymmetry then determines a character of differentiation between firms our purpose is to show how asymmetry influences competition under varying consumers price and quality sensitivity in doing so we extend earlier work in the area of price and quality competition we show that in both the moderately quality sensitive and price sensitive markets higher consumers sensitivity as well as lower consumers loyalty to any firm leads to intense competition resulting in a decrease of both firms equilibrium profits on the other hand in highly quality sensitive market asymmetry compels the smaller firm to change its competitive strategy in general this is more beneficial to the larger firm as the smaller firm s profit tends to decline in the worst case the smaller firm is driven out of business under equilibrium

when do the usda forecasters make mistakes this study analysed forecasts for all us corn soya bean and wheat categories published within the world agricultural supply and demand estimates wasde reports over the 1987 88 through 2009 10 marketing years in an attempt to identify patterns and better understand when the usda forecasters make mistakes two general sources of errors were investigated behavioural and macroeconomic factors the first objective was to examine how these factors affect the size of the forecast error and the second concentrated on the direction of the error due to these effects our findings suggest that the largest increase in the size of usda forecast errors was associated with structural changes in commodity markets that took place in the mid 2000s corn soya bean and wheat forecast errors also grew during the periods of economic growth and with changes in exchange rates while inflation and changes in oil price had a much smaller impact with respect to behavioural sources we identified patterns consistent with leni

multivariate forecasting of a commodity portfolio application to cattle feeding margins and risk traditionally economists have utilized univariate approaches to forecast prices even for firms operating in multicommodity environments this research improves the way in which managerial decision making is analysed by developing a model better representing the price risks and opportunities faced by firms that produce using a portfolio of commodities using the situation of cattle feedlot investors and managers as an example this is accomplished by recognizing the multivariate live cattle feeder cattle and corn prices situation that feedlots operate in and employing corresponding multivariate simulation techniques evaluation suggests that properly modelling the cattle feeding margin as a multivariate set of prices significantly improves the accuracy of forecasting future feeding margin values realized in the cash market the model also suggests incorporating both implied and historical time varying volatility information when forecasting margin variability implications for other multicommodity sit

progression under the benefit approach to the theory of taxation abstract the implications for progression of the benefit approach to the theory of taxation are studied in this paper it is concluded that the case for progression rests on the degree of substitutability between public and private goods

forecasting the ecb s main refinancing rate a field experiment abstract when no appropriate markets to derive expectations on economic variables are available surveying methods are often employed however surveys suffer from the problem of how to aggregate individual expectations in a reasonable manner we show at the example of a market on the ecb s main refinancing rate that experimental markets aggregate information quite efficiently and thus are a useful tool in this respect

durable goods leasing in the presence of exporting used products to an international secondary market abstract with the rapid growth of global trade used durable goods from wealthy countries increasingly find their way into the secondary market of less wealthy countries exporting used products to a physically separate market not only removes cannibalization for new products at home but also fetches additional revenue in this paper we investigate the implications of exporting used products to international secondary markets in the durable goods industry we find that such a practice may significantly stimulate new product lease on the home market an effect in which the market attractiveness and product quality are mutually reinforcing we discover that removing cannibalization pressure is more of a priority than generating additional revenue while exporting used products if the export is carried out by an agent who exports used products bought from oem original equipment manufacturer we observe the disadvantage of double marginalization in a channel structure which slows down export and causes quantity distortion and also reduces the effectiveness of government stimulus however if the agent and oem set export price based supply and demand equilibrium this reduces the quantity distortion one special characteristic of used products trade across borders is the involvement of governments on both sides of the border the government measures include penalties imposed on aging durable goods and trade barriers we find that legislation of penalizing used products on the domestic market can stimulate export but it does not have an intended effect of stimulating new products produced at home the channel structure worsens the problem

elasticities of demand and willingness to pay for environmental services in sweden are environmental services luxuriesor necessities are low income groupsrelatively more willing to pay forenvironmental improvements than high incomegroups the discussion on the shape of theenvironmental kuznets curve and environmentaljustice call for analyses that approach thesequestions following a survey based approachfor modelling the demand for public goods thispaper provides estimates of income and priceelasticities of demand for reduced marineeutrophication effects in the case of thebaltic sea using data from five swedishcontingent valuation studies point estimatesindicate that reduced marine eutrophicationeffects can be classified as a necessity and anordinary and price elastic service confidenceintervals show however that the classificationas a necessity is not statisticallysignificant income elasticities of willingnessto pay not to be confused with incomeelasticities of demand are estimated for abroad range of environmental services insweden a basic finding is that income tends toinfluence willingness to pay positively andsignificantly the elasticity estimates are inmost cases greater than zero but less thanunity indicating that the benefits ofenvironmental improvements tend to beregressively distributed in a cost benefitanalysis of a project suggesting environmentalimprovements distributional concerns thereforecall for an introduction of weights or at leasta sensitivity analysis of how weighting wouldchange decisions about the project s socialprofitability

scope effects in contingent valuation does the assumed statistical distribution of wtp matter abstract economic theory assumes that willingness to pay wtp increases with the quantity of the consumed good this implies that there should be a scope effect in contingent valuation studies however in previous issues of ecological economics several authors criticized the contingent valuation cv method for the absence of such effect or its inadequacy in this paper we contribute to this ongoing debate by proposing to systematically apply several wtp statistical distribution assumptions to test for scope effects and check its plausibility following whitehead s 2016 recent recommendations we perform this approach using data from a swiss case study assessing the wtp for an increased surface of forest reserves we find that both mean wtp and scope effects are sensitive to the statistical distribution assumption regarding plausibility scope elasticities provide mixed result and also depend on the assumed statistical distribution of wtp for small sample size cv studies a non parametric analysis a spike model or an open ended format can thus be better suited to reveal scope effects than the classical parametric dichotomous choice analysis we thus recommend to systematically apply several statistical distribution assumptions of wtp to test for scope effects and their plausibility

forecast performance of wasde price projections for u s corn we conduct a comprehensive evaluation of the season average price projections for u s corn as published by the u s department of agriculture s world agricultural supply and demand estimates wasde an important issue given reduced resources and increased program scrutiny within the federal government this study is the first in the literature to evaluate the wasde corn projections relative to futures adjusted forecasts throughout the forecasting cycle using a lengthy evaluation period 1980 81 2012 13 we find that wasde projections provide lower rmses relative to futures adjusted forecasts for 9 of the 16 forecast periods 4 of which are statistically different encompassing tests show that wasde projections often provide incremental information not present in the futures adjusted forecasts composite forecasts based on futures adjusted forecasts and wasde projections reduced the rmses over all forecast periods by an average 12 16 favorable average trading profits may be generated for some forecast months using wasde projections overall our results suggest that wasde projections of the u s corn season average price provide useful information to the market and could enhance the efficiency of the agricultural sector

income inequality and willingness to pay for environmental public goods we study how the distribution of income among members of society and income inequality in particular affects social willingness to pay wtp for environmental public goods we find that social wtp for environmental goods decreases increases with income inequality if and only if environmental goods and manufactured goods are substitutes complements we derive adjustment factors for benefit transfer to control for differences in income distributions between a study site and a policy site for illustration we quantify how social wtp for environmental public goods depends on the respective income distributions for empirical case studies in sweden and the world at large we find that the adjustment for income inequality can be substantial

subsistence substitutability and sustainability in consumption we propose a representation of individual preferences with a subsistence requirement in consumption and examine its implications for substitutability and sustainability specifically we generalize the standard constant elasticity of substitution ces utility specification for manufactured goods and environmental services by adding a subsistence requirement for environmental services we find that the hicksian elasticity of substitution strictly monotonically increases with the consumption of environmental services above the subsistence requirement and approaches the standard ces value as consumption becomes very large whether the two goods are market substitutes depends on the level of income we further show that the subsistence requirement may jeopardize the existence of an intertemporally optimal and sustainable consumption path our results have important implications for growth development and environmental policy

international benefit transfer methods and validity tests abstract the use of value estimates measured in one country to value policy changes in another country would seem to introduce some unique issues and challenges even when the good being valued is identical these issues include how should values be converted from one currency to another how to account for differences in measurable characteristics when those can vary markedly between countries especially income and how to account for differences between countries in culture and shared experiences that are difficult to quantify however these challenges in international benefit transfer are not that different from those encountered in transfers between regions within a country and transfer errors are comparable to those seen in intra country transfers

how quickly do forecasters incorporate news evidence from cross country surveys using forecasts from consensus economics inc we provide evidence on the efficiency of real gdp growth forecasts by testing whether forecast revisions are uncorrelated as the forecast data used are multi dimensional 18 countries 24 monthly forecasts for the current and the following year and 16 target years the panel estimation takes into account the complex structure of the variance covariance matrix due to propagation of shocks across countries and economic linkages among them efficiency is rejected for all 18 countries forecast revisions show a high degree of serial correlation we then develop a framework for characterizing the nature of the inefficiency in forecasts for a smaller set of countries the g 7 we estimate a var model on forecast revisions the degree of inefficiency as mananifested in the serial correlation of forecast revisions tends to be smaller in forecasts of the usa than in forecasts for european countries our framework also shows that one of the sources of the inefficiency in a country s forecasts is resistance to utilizing foreign news thus the quality of forecasts for many of these countries can be significantly improved if forecasters pay more attention to news originating from outside their respective countries this is particularly the case for canadian and french forecasts which would gain by paying greater attention than they do to news from the usa and germany respectively

redistribution and pollution taxes with non linear engel curves abstract this paper analyses optimal corrective taxation and optimal income redistribution the pigouvian pollution tax is higher if pollution damages disproportionally hurt the poor due to equity weighting of pollution damages moreover under general utility functions optimal pollution taxes should be set below the pigouvian tax if the poor spend a disproportionate fraction of their income on polluting goods however if engel curves are linear optimal pollution taxes should follow the first best rule for the pigouvian corrective tax even if the government wants to redistribute income and the poor spend a disproportional part of their income on polluting goods the often used quasi linear ces and stone geary utility functions all have linear engel curves if engel curves are linear and if pollution taxes are not optimised pareto improving green tax reforms exist that move the pollution tax closer to the pigouvian tax simulations demonstrate that optimal corrective taxes should be pigouvian if the demand for polluting goods is derived from a les demand system but deviate from the pigouvian taxes if demand for polluting goods demand is derived from a piglog demand system

can rational stubbornness explain forecast biases this paper examines whether the rational jumpiness stubbornness hypothesis can explain forecast biases using a dataset of professional gdp forecasts for the g7 countries over the period 1989 2010 we find evidence supporting the rational stubbornness hypothesis specifically forecasters underreact more when large forecast revisions are highly indicative of low forecast ability underreaction is less likely when the size of forecast revisions is unrelated to ability these findings are consistent with the hypothesis that forecasters choose to smooth gdp forecasts to maximize their perceived ability

evaluating the efficiency of the fomc s new economic projections since 2007 fomc policymakers have been publishing detailed numerical projections of macroeconomic series over the next three years by testing whether the revisions to these projections are unpredictable i find that fomc s efficiency is generally accepted for inflation but often rejected for real economic variables notably for the unemployment rate the rejection is due to the strong autocorrelation of revisions which may reflect information rigidity of fomc s unemployment projections the joint efficiency of the entire projection is accepted in most cases

the transferability of benefit transfer contingent valuation of water quality improvements in costa rica abstract identical contingent valuation studies of willingness to pay wtp for improvements in coastal water quality were conducted in the town of jaco and city of puntarenas on the pacific coast of costa rica several common hypotheses for benefit transfer reliability were tested for the transfer of wtp estimates between the two communities as well as between districts within puntarenas this study finds no basis for the claim that the reliability of benefit transfer increases with proximity between the study site where wtp estimates are taken from and the policy site estimates are transferred to the claim that transfer of wtp adjusted by the benefit function outperforms transfers of unadjusted or simple income adjusted wtp is rejected for this particular study results also show that census type socio economic site characteristics are necessary but not sufficient to explain site specific differences in wtp the trade offs in designing valid and reliable benefit transfer studies with transferable results are discussed

the relationship between the income elasticities of demand and willingness to pay abstract the relationship between income and willingness to pay for collectively provided public environmental goods is investigated we show that while the income elasticity of willingness to pay and the ordinary income elasticity of demand are related knowledge of one is insufficient to determine the magnitude or even the sign of the other the income elasticity of willingness to pay is influenced by additional factors which are generally unobservable examples are provided to illustrate the degree to which the two income elasticities may diverge our results indicate that even when goods are demand luxuries they may or may not have income elasticities of willingness to pay which are greater than one

are revisions to usda crop production forecasts smoothed this article uses nordhaus framework to determine the efficiency of the revision process for usda corn and soybean production forecasts over the 1970 1971 through 2004 2005 marketing years positive autocorrelation and consistency of directional changes in forecast revisions suggest these forecasts are smoothed evidence is provided that the loss in forecast accuracy due to smoothing is statistically and economically significant in several cases a conservative bias in farm operators assessments of yield potential and in the procedure for translating enumerator s information about plant fruit counts into objective yield estimates are identified as plausible sources of smoothing

political biases despite external expert participation an empirical analysis of tax revenue forecasts in germany this paper explores whether and how political biases arise in an institutional setting where revenue forecasting is delegated to a body that includes experts from institutions neither part of nor controlled by the government the empirical analysis focuses on the performance of german federal tax revenue forecasts in the preparation of which the advice of external experts has a long tradition as an institutional safeguard while on average revenue forecasts turn out to be unbiased the results show that the government exerts an influence in particular optimism pessimism in the government s gdp forecast helps to explain why the revenue forecast turns out too optimistic pessimistic in addition governmental estimates of the revenue effects of tax law changes are found to contribute to forecast errors

strategic investments with spillovers vertical integration and foreclosure in the broadband access market abstract we analyse competition between two retailers of broadband access when they differ in their ability to offer value added services one retailer is vertically integrated and controls the input market for local access this firm invests to increase the input quality upgrading to broadband before an access price regulation is set we first show that access price regulation may lower consumer surplus and welfare if retailers do not differ too much second if the integrated firm s ability to offer value added services is much higher than that of the rival the integrated firm uses overinvestment as an alternative foreclosure tool

perceived inflation persistence this article constructs and estimates a measure called perceived inflation persistence that can be used to determine if professional forecasters inflation forecasts indicate there has been a change in inflation persistence this measure is built via the implied autocorrelation function that follows from the estimates obtained using a forecaster specific state space model findings indicate that u s perceived inflation persistence has changed since the mid 1990s with more consensus among forecasters at lower levels of persistence when compared to the autocorrelation function for actual inflation forecasters typically react less to shocks to inflation than the actual inflation data would suggest

updates to household inflation expectations signal or noise abstract using data from the new york fed s survey of consumer expectations we examine the information content of the updates to household inflation expectations we find that although consumers frequently revise their expectations the adjustments are largely uninformative

quality choice and vertical integration abstract we show that despite coordination in the quality level of the components that they provide independent vertically related disintegrated monopolists will provide products of lower quality level than a sole integrated monopolist further the integrated monopolist achieves higher market coverage higher consumer surplus and higher profits we establish these results for any distribution of preferences in the standard model of quality differentiation despite the lower quality we also show that for a wide class of cost functions price will be higher in a market of independent vertically related monopolists all results are the effects of the interaction of double marginalization occurring in the market of independent monopolists with the choice of quality