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On the characterisation and measurement of the welfare effects of income mobility from an ex-ante perspective
Get PDFThe paper employs a rank-dependent formulation of the social welfare function with time-separable utilities to evaluate the economic consequences of income mobility from an ex-ante perspective. The resultant class of measures can be decomposed not only in terms of structural and exchange mobility but also in terms of vertical and horizontal
mobility, thereby encompassing two of the main approaches in the literature. We
illustrate our measurement framework by comparing mobility in the USA and Germany
using data from the Cross-National Equivalent File 1980-2005. We find that the pattern of income mobility in the USA was both less pro-poor and more horizontally inequitable than in Germany, but that the latter did not translate into higher levels of exchange mobility given higher levels of absolute inequality and the vertical stance of the growth process
The Hypothetical Scottish Share of Revenues and Expenditures from the UK Continental Shelf 2000 – 2013
Get PDFCorrelated equilibria, good and bad: an experimental study
Get PDFWe report results from an experiment that explores the empirical validity of correlated equilibrium, an important generalization of the Nash equilibrium concept. Specifically, we seek to
understand the conditions under which subjects playing the game of Chicken will condition their behavior on private, third–party recommendations drawn from known distributions. In a “good–recommendations” treatment, the distribution we use is a correlated equilibrium with payoffs better
than any symmetric payoff in the convex hull of Nash equilibrium payoff vectors. In a “bad–recommendations” treatment, the distribution is a correlated equilibrium with payoffs worse than any Nash equilibrium payoff vector. In a “Nash–recommendations” treatment, the distribution is a convex combination of Nash equilibrium outcomes (which is also a correlated equilibrium), and
in a fourth “very–good–recommendations” treatment, the distribution yields high payoffs, but is not a correlated equilibrium. We compare behavior in all of these treatments to the case where
subjects do not receive recommendations. We find that when recommendations are not given to subjects, behavior is very close to mixed–strategy Nash equilibrium play. When recommendations are given, behavior does differ from mixed–strategy Nash equilibrium, with the nature of the differ-
ences varying according to the treatment. Our main finding is that subjects will follow third–party recommendations only if those recommendations derive from a correlated equilibrium, and further,
if that correlated equilibrium is payoff–enhancing relative to the available Nash equilibria
Assisted Reproductive Technologies (ART) in a Model of Fertility Choice
Get PDFThis paper provides a simple theoretical framework to discuss the relationship
between assisted reproductive technologies and the microeconomics of fertility choice. Individuals make choices of education and work along with decisions about whether and when to have children. Decisions regarding fertility are influenced by policy and labor market factors that affect the earnings
opportunities of mothers and the costs of raising children. We show how observed
differences in these economic factors across countries explain observed different fertility and childbearing age patterns. We then use the model to predict behavioral responses to biomedical improvements in assisted reproductive technologies, and hence the impact of these technologies on fertility
The Global Side of the Investment-Savings Puzzle
Get PDFIn this paper we re-examine the long standing and puzzling correlation between
national savings and investment in industrial countries. We apply an econometric
methodology that allows us to separate idiosyncratic correlation at the country level from correlation at the global level. In a major break with the existing literature, we find no evidence of a long run relationship in the idiosyncratic components of savings and investment. We also find that the global components in savings and investments comove, indicating that they react to shocks of a global nature
Who Matters in Coordination Problems?
Get PDFWe consider a common investment project that is vulnerable to a self-ful lling coordination failure and hence is strategically risky. Based on their private information, agents - who have heterogeneous investment incentives - form expectations or 'sentiments' about the project's outcome. We find that the sum of these sentiments is
constant across di erent strategy profiles and it is independent of the distribution of
incentives. As a result, we can think of sentiment as a scarce resource divided up among
the di erent payo types. Applying this nding, we show that agents who bene t little
from the project's success have a large impact on the coordination process. The
agents with small bene ts invest only if their sentiment towards the project is large per
unit investment cost. As the average sentiment is constant, a subsidy decreasing the
investment costs of these agents will \free up" a large amount of sentiment, provoking a
large impact on the whole economy. Intuitively, these agents, insensitive to the project's
outcome and hence to the actions of others, are in
uential because they modify their
equilibrium behavior only if the others change theirs substantially
Longitudinal analysis of income-related health inequality
Get PDFThis paper considers the characterisation and measurement of income-related health
inequality using longitudinal data. The paper elucidates the nature of the Jones and Lopez Nicholas (2004) index of “health-related income mobility” and explains the negative values of the index that have been reported in all the empirical applications to date. The paper further questions the value of their index to health policymakers and proposes an alternative index of “income-related health mobility” that measures whether the pattern of health changes is biased in favour of those with initially high or low incomes. We illustrate our work by investigating mobility in the General Health Questionnaire measure of psychological well-being over the first nine waves of the British Household Panel
Survey from 1991 to 1999
Outsourcing versus FDI in oligopoly equilibrium
Get PDFWe consider the make-or-buy decision of oligopolistic firms in an industry in which
final good production requires specialised inputs. Factor price considerations dictate
that firms acquire the intermediate abroad, by either producing it in a wholly owned
subsidiary or outsourcing it to a supplier who must make a relationship specific
investment. Firms’ internationalisation mode depends on cost and strategic
considerations. Crucially, asymmetric equilibria emerge, with firms choosing different modes of internationalisation, even when they are ex-ante identical. With ex-ante asymmetries, lower cost producers have a stronger incentive to vertically integrate (FDI), while higher cost firms are more likely to outsource
Is the consumption-income ratio stationary? Evidence from linear and nonlinear panel unit root tests for OECD and non-OECD countries
Get PDFThis paper applies recently developed heterogeneous nonlinear and linear panel unit
root tests that account for cross-sectional dependence to 24 OECD and 33 non-OECD
countries’ consumption-income ratios over the period 1951–2003. We apply a
recently developed methodology that facilitates the use of panel tests to identify which individual cross-sectional units are stationary and which are nonstationary.
This extends evidence provided in the recent literature to consider both linear and
nonlinear adjustment in panel unit root tests, to address the issue of cross-sectional dependence, and to substantially expand both time-series and cross sectional
dimensions of the data analysed. We find that the majority (65%) of the series are
nonstationary with slightly fewer OECD countries’ (61%) series exhibiting a unit root than non-OECD countries (68%)
Common and Idiosyncratic Factors of the Exchange Risk Premium in Emerging European Markets
Get PDFExisting empirical evidence suggests that the Uncovered Interest Rate Parity (UIRP)
condition may not hold due to an exchange risk premium. For a panel data set of eleven
emerging European economies we decompose this exchange risk premium into an
idiosyncratic (country-specific) elements and a common factor using a principal
components approach. We present evidence of a stationary idiosyncratic component and
nonstationary common factor. This result leads to the conclusion of a nonstationary risk premium for these countries and a violation of the UIRP in the long-run, which is in contrast to previous studies often documenting a stationary premium in developed
countries. Furthermore, we report that the variation in the premium is largely
attributable to a common factor influenced by economic developments in the United
States