SIRE
Not a member yet
655 research outputs found
Sort by
My Group Beats Your Group: Evaluating Non-Income Inequalities
Full text linkThis paper proposes a new methodology, the Domination Index, to evaluate non-income inequalities between social groups such as inequalities of educational attainment, occupational status, health or subjective well-being. The Domination Index does not require specific cardinalisation assumptions, but only uses the ordinal structure of these non-income variables. We approach from an axiomatic perspective and
show that a set of desirable properties for a group inequality measure when the variable of interest is ordinal, characterizes the Domination Index up to a positive scalar transformation. Moreover we make use of the Domination Index to explore the relation between inequality and segregation and show how these two concepts are related theoretically
Factor Proportions and the Growth of World Trade
Full text linkMost of the expansion of global trade during the last three decades has
been of the North-South kind - between capital-abundant developed
and labour-abundant developing countries. Based on this observation,
I argue that the recent growth of world trade is best understood from
a factor-proportions perspective. I present novel evidence documenting
that differences in capital-labour ratios across countries have increased
in the wake of two shocks to the global economy: i) the opening up of
China and ii) financial globalisation and the resulting upstream capital
flows towards capital-abundant regions. I analyse their impact on
specialisation and the volume of trade in a dynamic model which combines
factor-proportions trade in goods with international trade in financial
assets. Calibrating this model, I find that it can account for
60% of world trade growth between 1980 and 2007. It is also capable of
predicting international investment patterns which are consistent with
the dat
Imperfect Credibility and Robust Monetary Policy
Full text linkThis paper studies the behavior of a central bank that seeks to conduct policy optimally while having imperfect credibility and harboring doubts about its model. Taking
the Smets-Wouters model as the central bank.s approximating model, the paper's main
findings are as follows. First, a central bank.s credibility can have large consequences
for how policy responds to shocks. Second, central banks that have low credibility can
bene.t from a desire for robustness because this desire motivates the central bank to follow
through on policy announcements that would otherwise not be time-consistent. Third,
even relatively small departures from perfect credibility can produce important declines in
policy performance. Finally, as a technical contribution, the paper develops a numerical
procedure to solve the decision-problem facing an imperfectly credible policymaker that
seeks robustness
Macroeconomics: Science or Faith Based Discipline?
Full text linkWhether or not macroeconomics is a science depends on the scientific nature
of macroeconomic theories and how the discipline responds when the
empirical evidence fails to match the underlying assumptions and predictions
of the theories. By way of an example, four conditions for macroeconomics
to be a science are developed and used to examine the 'modern' theories of the
Phillips curve. It is found that while the discipline in general maintains one
condition it routinely violates the other three. This suggests the
macroeconomics discipline has some way to go before it can call itself a 'pure
science.
Coordination in Public Good Provision: How Individual Volunteering is Impacted by the Volunteering of Others
Full text linkIn this analysis, we examine the relationship between an individual's decision to
volunteer and the average level of volunteering in the community where the individual
resides. Our theoretical model is based on a coordination game , in which volunteering
by others is informative regarding the benefit from volunteering. We demonstrate that
the interaction between this information and one's private information makes it more
likely that he or she will volunteer, given a higher level of contributions by his or her
peers. We complement this theoretical work with an empirical analysis using Census 2000 Summary File 3 and Current Population Survey (CPS) 2004-2007 September supplement file data. We control for various individual and community characteristics, and employ robustness checks to verify the results of the baseline analysis. We additionally use an innovative instrumental variables strategy to account for reflection bias and endogeneity caused by selective sorting by individuals into neighborhoods, which
allows us to argue for a causal interpretation. The empirical results in the baseline, as
well as all robustness analyses, verify the main result of our theoretical model, and we
employ a more general structure to further strengthen our results
Aggregate and welfare effects of long run inflation risk under inflation and price-level targeting
Full text linkThis paper presents a DSGE model in which long run inflation risk matters for social welfare. Aggregate and welfare effects of long run inflation risk are assessed under two monetary regimes: inflation targeting (IT) and price-level targeting (PT). These effects differ because IT implies base-level drift in the price level, while PT makes the price level stationary around a target price path. Under IT, the welfare cost of long run inflation risk is equal to 0.35 percent of aggregate consumption. Under PT, where long run inflation risk is largely eliminated, it is lowered to only 0.01 per cent. There are welfare gains from PT because it raises average consumption for the young and lowers consumption risk substantially for the old. These results are strongly robust to changes in the PT target horizon and fairly robust to imperfect credibility, fiscal policy, and model calibration. While the distributional effects of an unexpected transition to PT are sizeable, they are short-lived and not welfare-reducing
Monetary policy under the Labour government 1997- 2010: the first 13 years of the MPC
Full text linkThis paper examines the performance of monetary policy under the new framework
established in 1997 up to the end of the Labour government in May 2010. Performance was relatively good in the years before the crisis, but much weaker from 2008. The new framework largely neglected open economy issues, while the Treasury’s EMU assessment in 2003 can be interpreted in different ways. inflation targeting in the UK and elsewhere may have contributed in some way to the eruption and depth of the financial crisis from 2008, but
UK monetary policy responded in a bold and innovative way. Overall, the design and operation of monetary policy were much better than in earlier periods, but there remains scope for significant further evolution
Domestic Violence and Football in Glasgow: Are Reference Points Relevant?
Full text linkMuch research suggests that sporting events can trigger domestic violence with recent evidence suggesting that pre-match expectations (which can be interpreted as reference points) play an especially important role in this relationship. In particular, unexpectedly disappointing results have been associated with large increases in domestic violence. This paper contributes to this literature using a new data set containing every domestic violence incident in Glasgow over a period of more than eight years. We find that Old Firm matches, where Glasgow rivals Celtic and Rangers play, are associated with large increases in domestic violence (regardless
of the timing or the outcome of the match). Non-Old Firm matches tend to have little impact on domestic violence. Furthermore, we find little evidence for the importance of reference points. Matches with disappointing outcomes, relative to pre-match expectations, are found to be associated with unusual increases in domestic violence only in a very limited set of matches
Using VARs and TVP-VARs with Many Macroeconomic Variables
Full text linkThis paper discusses the challenges faced by the empirical macroeconomist and methods for surmounting them. These challenges arise due to the fact that macroeconometric models potentially include a large number of variables and allow for time variation in parameters. These considerations lead to models which have a large number of parameters to estimate relative to the number of observations. A wide range of approaches are surveyed which aim to overcome the resulting problems. We stress the related themes of prior shrinkage, model averaging and model selection. Subsequently, we consider a particular modelling approach in detail. This involves the use of dynamic model selection methods with large TVP-VARs. A forecasting exercise involving a large US macroeconomic data set illustrates the practicality and empirical success of our approach
Matching and Sorting in a Global Economy
Full text linkWe develop a neoclassical trade model with heterogeneous factors of production. We consider
a world with two factors, labor and .managers., each with a distribution of ability levels.
Production combines a manager of some type with a group of workers. The output of a unit
depends on the types of the two factors, with complementarity between them, while exhibiting
diminishing returns to the number of workers. We examine the sorting of factors to sectors and
the matching of factors within sectors, and we use the model to study the determinants of the
trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend
the model to include search frictions and consider the distribution of employment rates