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Articles 1 - 30 of 750
Full-Text Articles in Social and Behavioral Sciences
2023-1 The Macroeconomic Consequences Of Subsistence Self-Employment, Juan Herreno, Sergio Ocampo
2023-1 The Macroeconomic Consequences Of Subsistence Self-Employment, Juan Herreno, Sergio Ocampo
Department of Economics Research Reports
We evaluate the aggregate effects of expansions of credit supply in environments where subsistence self-employment is prevalent. We extend a standard macro development model to include unemployment risk, which becomes a key driver of selection into self-employment. The model is consistent with the joint distribution of earnings and occupations, the reaction of wages to labor demand shocks, and the small effects of expansions in the supply of microloans on the earnings of the self-employed. We find that the elasticity of aggregate output to expansions in credit supply is proportional to the elasticity of individual earnings. This proportionality arises due to …
2023-2 Dynamic And Stochastic Rational Behavior, Nail Kashaev, Charles Gauthier, Victor H. Aguiar
2023-2 Dynamic And Stochastic Rational Behavior, Nail Kashaev, Charles Gauthier, Victor H. Aguiar
Department of Economics Research Reports
We analyze consumer demand behavior using Dynamic Random Utility Model (DRUM). Under DRUM, a consumer draws a utility function from a stochastic utility process in each period and maximizes this utility subject to her budget constraint. DRUM allows unrestricted time correlation and cross-section heterogeneity in preferences. We fully characterize DRUM for a panel data of consumer choices and budgets. DRUM is linked to a finite mixture of deterministic behavior represented as the Kronecker product of static rationalizable behavior. We provide a generalization of the Weyl-Minkowski theorem that uses this link and enables conversion of the characterizations of the static Random …
2023-3 Dynamic Programming For Pure-Strategy Subgame Perfection In An Arbitrary Game, Peter Streufert
2023-3 Dynamic Programming For Pure-Strategy Subgame Perfection In An Arbitrary Game, Peter Streufert
Department of Economics Research Reports
This paper uses value functions to characterize the pure-strategy subgame-perfect equilibria of an arbitrary, possibly infinite-horizon game. It specifies the game’s extensive form as a pentaform (Streufert 2023p, arXiv:2107.10801v4), which is a set of quintuples formalizing the abstract relationships between nodes, actions, players, and situations (situations generalize information sets). Because a pentaform is a set, this paper can explicitly partition the game form into piece forms, each of which starts at a (Selten) subroot and contains all subsequent nodes except those that follow a subsequent subroot. Then the set of subroots becomes the domain of a value function, and the …
2023-5 History Of Economic Thought's Place In Macroeconomics Revisited, David Laidler
2023-5 History Of Economic Thought's Place In Macroeconomics Revisited, David Laidler
Department of Economics Research Reports
The History of Economics Society was founded at a time when the History of Economic Thought was being expelled from the Economics post-graduate curriculum in many universities, and was one of the key institutions around which the sub-discipline successfully re-organised itself and continued to develop. Laidler (2003) argued that Economics itself, especially Macroeconomics, was suffering serious damage from this expulsion. It has continued to do so since.
2023-4 Macro’S Missing Link: The Unbridged Gap Between Monetarism And The Wicksell Connection, David Laidler
2023-4 Macro’S Missing Link: The Unbridged Gap Between Monetarism And The Wicksell Connection, David Laidler
Department of Economics Research Reports
Modern mainstream macroeconomics treats the economy “as if” always in equilibrium. Two older traditions, Monetarism and the Wicksell Connections have always dissented, arguing that how agents gather information and apply it to the coordination of their activities are prior problems requiring attention before equilibrium can, or cannot, be assumed. They have developed the implications of this claim along different lines, however, with the former dealing with questions raised by the existence of monetary exchange in general and the latter concentrating in particular on inter-temporal issues. This gap has persisted since Wicksell opened it up, and has never been satisfactorily bridged: …
2022-1 A Partial Identification Approach To Identifying The Determinants Of Human Capital Accumulation: An Application To Teachers, Nirav Mehta
Department of Economics Research Reports
This paper views teacher quality through the human capital perspective. Teacher quality exhibits substantial growth over teachers’ careers, but why it improves is not well understood. I use a human capital production function nesting On-the-Job-Training (OJT) and Learning-by-Doing (LBD) and experimental variation from Glewwe et al. (2010), a teacher incentive pay experiment in Kenya, to discern the presence and relative importance of these forces. The identified set for the OJT and LBD components has a closed-form solution, which depends on experimentally estimated average treatment effects. The results provide evidence of an LBD component, as well as an informative upper bound …
2022-2 Robust Contracts In Common Agency, Keler Marku, Sergio Ocampo, Jean-Baptiste Tondji
2022-2 Robust Contracts In Common Agency, Keler Marku, Sergio Ocampo, Jean-Baptiste Tondji
Department of Economics Research Reports
Business activities often involve a common agent managing a variety of projects on behalf of investors with potentially conflicting interests. The extent of the agent’s actions is also often unknown to investors, who have to design contracts that provide incentives to the manager despite this lack of crucial knowledge. We consider a game between several principals and a common agent, where principals know only a subset of the actions available to the agent. Principals demand robustness and evaluate contracts on a worst-case basis. This robust approach allows for a crisp characterization of the equilibrium contracts and payoffs and provides a …
2022-7 Market Power, Taxation And Product Variety In The Brazilian Automobile Industry, Daniel Chaves
2022-7 Market Power, Taxation And Product Variety In The Brazilian Automobile Industry, Daniel Chaves
Department of Economics Research Reports
This paper empirically assesses the impact of a discontinuous tax schedule on prices, markups and product assortment in the Brazilian automobile industry. To this end, I estimate a structural, equilibrium model of demand and supply for over a hundred different models and engine sizes of automobiles. With the model estimates of price elasticities and marginal costs I quantify how market power impacts the progressivity of the discontinuous tax schedule. I also examine how firms would reposition their products to avoid the tax and quantify the impact of this repositioning on equilibrium outcomes.
2022-5 Estimation Of Parametric Binary Outcome Models With Degenerate Pure Choice-Based Data With Application To Covid-19-Positive Tests From British Columbia, Nail Kashaev
Department of Economics Research Reports
I propose a generalized method of moments type procedure to estimate parametric binary choice models when the researcher only observes degenerate pure choices-based or presence-only data and has some information about the distribution of the covariates. This auxiliary information comes in the form of moments. I present an application based on the data on all COVID-19-positive tests from British Columbia. Publicly available demographic information on the population in British Columbia allows me to estimate the conditional probability of a person being COVID-19-positively tested conditional on demographics
2022-6 Prices, Profits, Proxies, And Production, Victor H. Aguiar, Nail Kashaev, Roy Allen
2022-6 Prices, Profits, Proxies, And Production, Victor H. Aguiar, Nail Kashaev, Roy Allen
Department of Economics Research Reports
This paper studies nonparametric identification and counterfactual bounds for heterogeneous firms that can be ranked in terms of productivity. Our approach works when quantities and prices are latent, rendering standard approaches inapplicable. Instead, we require observation of profits or other optimizing-values such as costs or revenues, and either prices or price proxies of flexibly chosen variables. We extend classical duality results for price-taking firms to a setup with discrete heterogeneity, endogeneity, and limited variation in possibly latent prices. Finally, we show that convergence results for nonparametric estimators may be directly converted to convergence results for production sets.
2022-3 A Random Attention And Utility Model, Nail Kashaev, Victor H. Aguiar
2022-3 A Random Attention And Utility Model, Nail Kashaev, Victor H. Aguiar
Department of Economics Research Reports
We generalize the stochastic revealed preference methodology of McFadden and Richter (1990) for finite choice sets to settings with limited consideration. Our approach is nonparametric and requires partial choice set variation. We impose a monotonicity condition on attention first proposed by Cattaneo et al. (2020) and a stability condition on the marginal distribution of preferences. Our framework is amenable to statistical testing. These new restrictions extend widely known parametric models of consideration with heterogeneous preferences.
2022-8 Slutsky Matrix Symmetry: A New Behavioral Condition, Victor H. Aguiar, Roberto Serrano
2022-8 Slutsky Matrix Symmetry: A New Behavioral Condition, Victor H. Aguiar, Roberto Serrano
Department of Economics Research Reports
The Slutsky matrix function encodes all the information about local variations in demand with respect to small (Slutsky) compensated price changes. When the demand function is the result of utility maximization the Slutsky matrix is symmetric. However, symmetry does not imply rationality. Here, we provide a necessary and sufficient condition for Slutsky symmetry. The new condition requires symmetric attention to compensated price-paths.
2022-9 A Rationalization Of The Weak Axiom Of Revealed Preference, Victor H. Aguiar, Per Hjertstrand, Roberto Serrano
2022-9 A Rationalization Of The Weak Axiom Of Revealed Preference, Victor H. Aguiar, Per Hjertstrand, Roberto Serrano
Department of Economics Research Reports
Samuelson’s (1938) weak (generalized) axiom of revealed preference– WGARP–is a minimal and appealing consistency condition of choice. We offer a rationalization of WGARP in general settings. Our main result is an exact analog of the celebrated Afriat’s theorem, but for WGARP. Its ordinal rationalization is in terms of an asymmetric and locally nonsatiated preference function. Its cardinal rationalization uses a coalitional multi-utility (CMU) maxmin representation with a coherency restriction on the coalition structure. Effectively, the CMU representation aggregates piecemeal preferences within the decision maker (multiple rationales without preference reversals that allow for transitivity violations). Basic consumer theory and welfare analysis …
2022-11 Peter Howitt – A Keynesian Still In Recovery, David Laidler
2022-11 Peter Howitt – A Keynesian Still In Recovery, David Laidler
Department of Economics Research Reports
Peter Howitt is best known for his contributions to growth theory, but his work in short-run economics, which began with his Ph.D thesis and still continues, is important and deserves attention. It lies firmly in the Keynesian macro-disequilibrium tradition of Clower and Leijonhufvud, and for a long time has been overshadowed by New-classical and New-Keynesian orthodoxy. However, the development of agent based modelling and behavioural economics will perhaps give disequilibrium macroeconomics a new lease on life.
2022-13 Savings After Retirement, Eric French, John Bailey Jones, Rory Mcgee
2022-13 Savings After Retirement, Eric French, John Bailey Jones, Rory Mcgee
Department of Economics Research Reports
Abstract: Retired households, especially those with high lifetime income, decumulate their wealth very slowly, and many die leaving large estates. The three leading explanations for the ‘retirement savings puzzle” are the desire to insure against uncertain lifespans and medical expenses, the desire to leave bequests to one’s heirs, and the desire to remain in one’s own home. We discuss the empirical strategies used to differentiate these motivations, most of which go beyond wealth to exploit additional features of the data. The literature suggests that all the motivations are present, but has yet to reach a consensus about their relative importance
2022-12 The Big Expansion Of Rural Secondary Schooling During The Cultural Revolution And The Returns To Education In Rural China, Mengbing Zhu, Terry Sicular
2022-12 The Big Expansion Of Rural Secondary Schooling During The Cultural Revolution And The Returns To Education In Rural China, Mengbing Zhu, Terry Sicular
Department of Economics Research Reports
During the Cultural Revolution China embarked on a dramatic, albeit temporary, expansion of secondary education in rural areas that affected tens of millions of children who reached secondary school age in the late 1960s and 1970s. The conventional wisdom is that this expansion was politicized and low quality. Using instrumental variables estimation, we exploit variation in the expansion across localities and birth cohorts to estimate the impact of Cultural Revolution education on individual outcomes. Creative use of historical county-level information matched with rich household survey data from the mid-1990s allows analysis of multiple outcomes. We find a significant, positive effect …
2022-10 Computing Longitudinal Moments For Heterogeneous Agent Models, Sergio Ocampo, Baxter Robinson
2022-10 Computing Longitudinal Moments For Heterogeneous Agent Models, Sergio Ocampo, Baxter Robinson
Department of Economics Research Reports
Computing population moments for heterogeneous agent models is a necessary step for their estimation and evaluation. Computation based on Monte Carlo methods is usually time- and resource-consuming because it involves simulating a large sample of agents and potentially tracking them over time. We argue in favor of an alternative method for computing both cross-sectional and longitudinal moments that exploits the endogenous Markov transition function that defines the stationary distribution of agents in the model. The method relies on following the distribution of populations of interest by iterating forward the Markov transition function rather than focusing on a simulated sample of …
2022-4 Identification And Estimation Of Multinomial Choice Models With Latent Special Covariates, Nail Kashaev
2022-4 Identification And Estimation Of Multinomial Choice Models With Latent Special Covariates, Nail Kashaev
Department of Economics Research Reports
Identification of multinomial choice models is often established by using special covariates that have full support. This paper shows how these identification results can be extended to a large class of multinomial choice models when all covariates are bounded. I also provide a new √n-consistent asymptotically normal estimator of the finite-dimensional parameters of the model.
2022-14 Use It Or Lose It: Efficiency And Redistributional Effects Of Wealth Taxation, Fatih Guvenen, Gueorgui Kambourov, Burhan Kuruscu, Sergio Ocampo, Daphne Chen
2022-14 Use It Or Lose It: Efficiency And Redistributional Effects Of Wealth Taxation, Fatih Guvenen, Gueorgui Kambourov, Burhan Kuruscu, Sergio Ocampo, Daphne Chen
Department of Economics Research Reports
How does wealth taxation differ from capital income taxation? When the return on investment is equal across individuals, a well-known result is that the two tax systems are equivalent. Motivated by recent empirical evidence documenting persistent return heterogeneity, we revisit this question. With heterogeneity, the two tax systems typically have opposite implications for both efficiency and inequality. Under capital income taxation, entrepreneurs who are more productive and therefore generate more income pay higher taxes. Under wealth taxation, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity, which expands the tax base, shifts the tax burden toward …
2021-2 A Category For Extensive-Form Games, Peter A. Streufert
2021-2 A Category For Extensive-Form Games, Peter A. Streufert
Department of Economics Research Reports
No abstract provided.
2021-6 The Inner Workings Of A Hub-And-Spoke Cartel In The Automotive Fuel Industry, Daniel Chaves, Marco Duarte
2021-6 The Inner Workings Of A Hub-And-Spoke Cartel In The Automotive Fuel Industry, Daniel Chaves, Marco Duarte
Department of Economics Research Reports
We analyze a hub-and-spoke cartel in the Brazilian automotivefuel industry. Using the court documents and detailed data on the supply chain we uncover three mechanisms beyond information sharing used by wholesalers (hub) to help retailers (spokes) solve the obstacles of price coordination: vertical transfers across asymmetric spokes; subsidies during punishment; and cost stabilization. We argue that wholesalers benefited from the cartel by being the exclusive supplier during the scheme. We use the synthetic control approach to quantify how successful the cartel was in increasing markups. We find that not only retailers, but wholesalers benefited from the cartel.
2021-5 Lucas (1972), A Personal View From The Wrong Side Of The Subsequent Fifty Years, David Laidler
2021-5 Lucas (1972), A Personal View From The Wrong Side Of The Subsequent Fifty Years, David Laidler
Department of Economics Research Reports
Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its “money supply surprise” model lost its central place in the area within a decade because of empirical difficulties. However, Lucas’s novel methodology, based on clearing markets and rational expectations, still dominates orthodox macroeconomic theorising. An unfortunate side effect of this has been that, because mainstream models have no analytic room for money to play a key role in economic activity, the theoretical case for taking that role seriously was undermined just at the time when traditional monetarist macro-models were facing empirical problems. The consequences of …
2021-1 Personal Gini Coefficients, James B. Davies
2021-1 Personal Gini Coefficients, James B. Davies
Department of Economics Research Reports
No abstract provided.
2021-3 Specifying A Game-Theoretic Extensive Form As An Abstract 5-Ary Relation, Peter A. Streufert
2021-3 Specifying A Game-Theoretic Extensive Form As An Abstract 5-Ary Relation, Peter A. Streufert
Department of Economics Research Reports
This paper specifies an extensive form as a 5-ary relation (i.e. set of quintuples) which satisfies certain abstract axioms. Each quintuple is understood to list a player, a situation (e.g. information set), a decision node, an action, and a successor node. Accordingly, the axioms are understood to specify abstract relationships between players, situations, nodes, and actions. Such an extensive form is called a "5-form", and a "5-form game" is defined to be a 5-form together with utility functions. The paper's main result is to construct a bijection between (a) those 5-form games with information-set situations and (b) Gm games (Streufert …
2021-4 Old Age Savings And House Price Shocks, Rory Mcgee
2021-4 Old Age Savings And House Price Shocks, Rory Mcgee
Department of Economics Research Reports
Elderly households hold most of their wealth in housing, maintain high levels of wealth throughout retirement, and often leave bequests. The value of their houses are subject to large shocks. To what extent do these shocks aect their savings, consumption, and bequests? Answering this question requires separating precautionary savings, bequest motives, and the desire to remain in one's home. I develop and estimate a structural model of retirement savings decisions with realistic risks, housing, and heterogeneity in bequest preferences. I exploit policy changes to the taxation of housing and bequests to separately identify the different motives for holding wealth. Estimates …
2020-2 Botswana's Fiscal Policy, Monetary Policy, And Exchange Rate Policy: Three Instruments And Three Targets?, J Clark Leith
2020-2 Botswana's Fiscal Policy, Monetary Policy, And Exchange Rate Policy: Three Instruments And Three Targets?, J Clark Leith
Department of Economics Research Reports
No abstract provided.
2020-1 Distributional Effects Of Flooding, With An Application To A Major Urban Area, James B. Davies, Samantha L. Black
2020-1 Distributional Effects Of Flooding, With An Application To A Major Urban Area, James B. Davies, Samantha L. Black
Department of Economics Research Reports
No abstract provided.
2020-4 The Category Of Node-And-Choice Extensive-Form Games, Peter A. Streufert
2020-4 The Category Of Node-And-Choice Extensive-Form Games, Peter A. Streufert
Department of Economics Research Reports
This paper develops the category NCG. Its objects are node-and-choice games, which include essentially all extensive-form games. Its morphisms allow arbitrary transformations of a game's nodes, choices, and players, as well as monotonic transformations of the utility functions of the game's players. Among the morphisms are subgame inclusions. Several characterizations and numerous properties of the isomorphisms are derived. Also, the game-theoretic concepts of no-absentmindedness, perfect-information, and (pure-strategy) Nash-equilibrium are shown to be isomorphically invariant. Finally, full subcategories are defined for choice-sequence games and choice-set games, and relationships among these two subcategories and NCG itself are expressed and derived via isomorphic …
2020-5 European Puts, Credit Protection, And Endogenous Default, Jorge Cruz Lopez, Alfredo Ibanez
2020-5 European Puts, Credit Protection, And Endogenous Default, Jorge Cruz Lopez, Alfredo Ibanez
Department of Economics Research Reports
No abstract provided.
2020-3 Reforming Canada's Disaster Assistance Programs, James B. Davies
2020-3 Reforming Canada's Disaster Assistance Programs, James B. Davies
Department of Economics Research Reports
No abstract provided.