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Articles 451 - 480 of 2930
Full-Text Articles in Social and Behavioral Sciences
Functional Coefficient Panel Modeling With Communal Smoothing Covariates, Peter C.B. Phillips, Ying Wang
Functional Coefficient Panel Modeling With Communal Smoothing Covariates, Peter C.B. Phillips, Ying Wang
Cowles Foundation Discussion Papers
Behavior at the individual level in panels or at the station level in spatial models is often influenced by aspects of the system in aggregate. In particular, the nature of the interaction between individual-specific explanatory variables and an individual dependent variable may be affected by `global’ variables that are relevant in decision making and shared communally by all individuals in the sample. To capture such behavioral features, we employ a functional coefficient panel model in which certain communal covariates may jointly influence panel interactions by means of their impact on the model coefficients. Two classes of estimation procedures are proposed, …
Boosting The Hodrick-Prescott Filter, Peter C.B. Phillips, Zhentao Shi
Boosting The Hodrick-Prescott Filter, Peter C.B. Phillips, Zhentao Shi
Cowles Foundation Discussion Papers
The Hodrick-Prescott (HP) filter is one of the most widely used econometric methods in applied macroeconomic research. The technique is nonparametric and seeks to decompose a time series into a trend and a cyclical component unaided by economic theory or prior trend specification. Like all nonparametric methods, the HP filter depends critically on a tuning parameter that controls the degree of smoothing. Yet in contrast to modern nonparametric methods and applied work with these procedures, empirical practice with the HP filter almost universally relies on standard settings for the tuning parameter that have been suggested largely by experimentation with macroeconomic …
The Causal Effect Of Service Satisfaction On Customer Loyalty, Guofang Huang, K. Sudhir
The Causal Effect Of Service Satisfaction On Customer Loyalty, Guofang Huang, K. Sudhir
Cowles Foundation Discussion Papers
We propose an instrumental-variable (IV) approach to estimate the causal effect of service satisfaction on customer loyalty, by exploiting a common source of randomness in the assignment of service employees to customers in service queues. Our approach can be applied at no incremental cost by using routine repeated cross-sectional customer survey data collected by firms. The IV approach addresses multiple sources of biases that pose challenges in estimating the causal effect using cross-sectional data: (i) the upward bias from common-method variance due to the joint measurement of service satisfaction and loyalty intent in surveys; (ii) the attenuation bias caused by …
Attribute Sentiment Scoring With Online Text Reviews : Accounting For Language Structure And Attribute Self-Selection, Ishita Chakraborty, Minkyung Kim, K. Sudhir
Attribute Sentiment Scoring With Online Text Reviews : Accounting For Language Structure And Attribute Self-Selection, Ishita Chakraborty, Minkyung Kim, K. Sudhir
Cowles Foundation Discussion Papers
The authors address two novel and significant challenges in using online text reviews to obtain attribute level ratings. First, they introduce the problem of inferring attribute level sentiment from text data to the marketing literature and develop a deep learning model to address it. While extant bag of words based topic models are fairly good at attribute discovery based on frequency of word or phrase occurrences, associating sentiments to attributes requires exploiting the spatial and sequential structure of language. Second, they illustrate how to correct for attribute self-selection—reviewers choose the subset of attributes to write about—in metrics of attribute level …
Necessary And Sufficient Conditions For Determinacy Of Asymptotically Stationary Equilibria In Olg Models, Alexander Gorokhovsky, Anna Rubinchik
Necessary And Sufficient Conditions For Determinacy Of Asymptotically Stationary Equilibria In Olg Models, Alexander Gorokhovsky, Anna Rubinchik
Cowles Foundation Discussion Papers
We propose a criterion for determining whether a local policy analysis can be made in a given equilibrium in an overlapping generations model. The criterion can be applied to models with infinite past and future as well as those with a truncated past. The equilibrium is not necessarily a steady state; for example, demographic and type composition of the population or individuals’ endowments can change over time. However, asymptotically, the equilibrium should be stationary. The two limiting stationary paths at either end of the timeline do not have to be the same. If they are, conditions for local uniqueness are …
Wages, Experience And Training Of Women, Richard Blundell, Monica Costa Dias, David Goll, Costas Meghir
Wages, Experience And Training Of Women, Richard Blundell, Monica Costa Dias, David Goll, Costas Meghir
Cowles Foundation Discussion Papers
We investigate the role of training in reducing the gender wage gap using the UK- BHPS which contains detailed records of training. Using policy changes over an 18 year period we identify the impact of training and work experience on wages, earnings and employment. Based on a lifecycle model and using reforms as a source of exogenous variation we evaluate the role of formal training and experience in defining the evolution of wages and employment careers, conditional on education. Training is potentially important in compensating for the effects of children, especially for women who left education after completing high school.
Wages, Experience And Training Of Women Over The Lifecycle, Richard Blundell, Monica Costa Dias, David Goll, Costas Meghir
Wages, Experience And Training Of Women Over The Lifecycle, Richard Blundell, Monica Costa Dias, David Goll, Costas Meghir
Cowles Foundation Discussion Papers
We investigate the role of training in reducing the gender wage gap using the UK-BHPS. Based on a lifecycle model and using tax and welfare bene t reforms as a source of exogenous variation we evaluate the role of formal training and experience in defining the evolution of wages and employment careers, conditional on education. Training is potentially important in compensating for the effects of children, especially for women who left education after completing high school, but does not fundamentally change the wage gap resulting from labor market interruptions following child birth.
Robust Tests For White Noise And Cross-Correlation, Violetta Dalla, Liudas Giraitis, Peter C.B. Phillips
Robust Tests For White Noise And Cross-Correlation, Violetta Dalla, Liudas Giraitis, Peter C.B. Phillips
Cowles Foundation Discussion Papers
Commonly used tests to assess evidence for the absence of autocorrelation in a univariate time series or serial cross-correlation between time series rely on procedures whose validity holds for i.i.d. data. When the series are not i.i.d., the size of correlogram and cumulative Ljung-Box tests can be significantly distorted. This paper adapts standard correlogram and portmanteau tests to accommodate hidden dependence and non-stationarities involving heteroskedasticity, thereby uncoupling these tests from limiting assumptions that reduce their applicability in empirical work. To enhance the Ljung-Box test for non-i.i.d. data a new cumulative test is introduced. Asymptotic size of these tests is unaffected …
Robust Tests For White Noise And Cross-Correlation, Violetta Dalla, Liudas Giraitis, Peter C.B. Phillips
Robust Tests For White Noise And Cross-Correlation, Violetta Dalla, Liudas Giraitis, Peter C.B. Phillips
Cowles Foundation Discussion Papers
Commonly used tests to assess evidence for the absence of autocorrelation in a univariate time series or serial cross-correlation between time series rely on procedures whose validity holds for i.i.d. data. When the series are not i.i.d., the size of correlogram and cumulative Ljung-Box tests can be significantly distorted. This paper adapts standard correlogram and portmanteau tests to accommodate hidden dependence and non-stationarities involving heteroskedasticity, thereby uncoupling these tests from limiting assumptions that reduce their applicability in empirical work. To enhance the Ljung-Box test for non-i.i.d. data a new cumulative test is introduced. Asymptotic size of these tests is unaffected …
Earnings Dynamics And Firm-Level Shocks, Benjamin Friedrich, Lisa Laun, Costas Meghir, Luigi Pistaferri
Earnings Dynamics And Firm-Level Shocks, Benjamin Friedrich, Lisa Laun, Costas Meghir, Luigi Pistaferri
Cowles Foundation Discussion Papers
We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers; firm-specific temporary shocks mostly affect the low-skilled. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55.
Breaking Ties: Regression Discontinuity Design Meets Market Design, Atila Abdulkadiroğlu, Joshua D. Angrist, Yusuke Narita, Parag A. Pathak
Breaking Ties: Regression Discontinuity Design Meets Market Design, Atila Abdulkadiroğlu, Joshua D. Angrist, Yusuke Narita, Parag A. Pathak
Cowles Foundation Discussion Papers
Many schools in large urban districts have more applicants than seats. Centralized school assignment algorithms ration seats at over-subscribed schools using randomly assigned lottery numbers, non-lottery tie-breakers like test scores, or both. The New York City public high school match illustrates the latter, using test scores and other criteria to rank applicants at \screened” schools, combined with lottery tie-breaking at unscreened \lottery” schools. We show how to identify causal effects of school attendance in such settings. Our approach generalizes regression discontinuity methods to allow for multiple treatments and multiple running variables, some of which are randomly assigned. The key to …
The Economics Of Social Data: An Introduction, Dirk Bergemann, Alessandro Bonatti
The Economics Of Social Data: An Introduction, Dirk Bergemann, Alessandro Bonatti
Cowles Foundation Discussion Papers
Large internet platforms collect data from individual users in almost every interaction on the internet. Whenever an individual browses a news website, searches for a medical term or for a travel recommendation, or simply checks the weather forecast on an app, that individual generates data. A central feature of the data collected from the individuals is its social aspect. Namely, the data captured from an individual user is not only informative about this specific individual, but also about users in some metric similar to the individual. Thus, the individual data is really social data. The social nature of the data …
Global Unanimity Equilibrium On The Carbon Budget, Humberto Llavador, John E. Roemer
Global Unanimity Equilibrium On The Carbon Budget, Humberto Llavador, John E. Roemer
Cowles Foundation Discussion Papers
Carbon budgets are a useful way to frame the climate mitigation challenge and much easier to agree upon than the allocation of emissions. We propose a mechanism with countries agreeing on the global carbon budget, while the decision to emit is decentralized at the country level. The revenue is collected in a global fund and allocated according to endogenously defined weights proportional to the marginal cost of climate change. The proposal features a unanimous agreement of the national citizenries of the world and global Pareto efficiency. We run a simulation in the spirit of the Paris Agreement, with zero emissions …
The Economics Of Social Data: An Introduction, Dirk Bergemann, Alessandro Bonatti
The Economics Of Social Data: An Introduction, Dirk Bergemann, Alessandro Bonatti
Cowles Foundation Discussion Papers
Large internet platforms collect data from individual users in almost every interaction on the internet. Whenever an individual browses a news website, searches for a medical term or for a travel recommendation, or simply checks the weather forecast on an app, that individual generates data. A central feature of the data collected from the individuals is its social aspect. Namely, the data captured from an individual user is not only informative about this specific individual, but also about users in some metric similar to the individual. Thus, the individual data is really social data. The social nature of the data …
Breaking Ties: Regression Discontinuity Design Meets Market Design, Atila Abdulkadiro?Lu, Joshua D. Angrist, Yusuke Narita, Parag A. Pathak
Breaking Ties: Regression Discontinuity Design Meets Market Design, Atila Abdulkadiro?Lu, Joshua D. Angrist, Yusuke Narita, Parag A. Pathak
Cowles Foundation Discussion Papers
Centralized school assignment algorithms must distinguish between applicants with the same preferences and priorities. This is done with randomly assigned lottery numbers, nonlottery tie-breakers like test scores, or both. The New York City public high school match illustrates the latter, using test scores, grades, and interviews to rank applicants to screened schools, combined with lottery tie-breaking at unscreened schools. We show how to identify causal effects of school attendance in such settings. Our approach generalizes regression discontinuity designs to allow for multiple treatments and multiple running variables, some of which are randomly assigned. Lotteries generate assignment risk at screened as …
Variable Mismeasurement In A Class Of Dsge Models: Comment, Ray C. Fair
Variable Mismeasurement In A Class Of Dsge Models: Comment, Ray C. Fair
Cowles Foundation Discussion Papers
This comment points out mismeasurement of variables in the DSGE model in Smets and Wouters (2007) and in models that follow the Smets-Wouters measurement procedures. The mismeasurement errors appear to be large.
Physical Laws And Human Behavior: A Three-Tier Framework, Shabnam Mousavi, Shyam Sunder
Physical Laws And Human Behavior: A Three-Tier Framework, Shabnam Mousavi, Shyam Sunder
Cowles Foundation Discussion Papers
Social sciences start by looking at the social-psychological attributes of humans to model and explain their observed behavior. However, we suggest starting the study of observed human behavior with the universal laws of physics, e.g., the principle of minimum action. In our proposed three-tier framework, behavior is a manifestation of action driven by physical, biological, and social-psychological principles at the core, intermediate, and top tier, respectively. More broadly, this reordering is an initial step towards building a platform for reorganizing the research methods used for theorizing and modeling behavior. This perspective outlines and illustrates how a physical law can account …
Non-Exclusive Insurance With Free Entry: A Pedagogical Note, Pradeep Dubey, John Geanakoplos
Non-Exclusive Insurance With Free Entry: A Pedagogical Note, Pradeep Dubey, John Geanakoplos
Cowles Foundation Discussion Papers
We consider the Rothschild-Stiglitz model of insurance but without the exclusivity constraint. It turns out that there always exists a unique equilibrium, in which the reliable and unreliable consumers take out a primary insurance up to its quantity limit, and the unreliable take out further secondary insurance at a higher premium. We provide a simple proof of this result (extended to multiple types of consumers) with the hope that it may be pedagogically useful.
Variable Mismeasurement In A Class Of Dsge Models: Comment, Ray C. Fair
Variable Mismeasurement In A Class Of Dsge Models: Comment, Ray C. Fair
Cowles Foundation Discussion Papers
This comment points out mismeasurement of three of the variables in the DSGE model in Smets and Wouters (2007) and in models that use the Smets-Wouters model as a benchmark. The mismeasurement appears serious enough to call into question the reliability of empirical results using these variables.
Inflation In The Great Recession And New Keynesian Models: Comment, Ray C. Fair
Inflation In The Great Recession And New Keynesian Models: Comment, Ray C. Fair
Cowles Foundation Discussion Papers
This comment points out mismeasurement of three of the variables in the DSGE model in Del Negro, Giannoni, and Schorfheide (2015). These errors began with the model in Smets and Wouters (2007), and they also exist in other models that use the Smets-Wouters model as a benchmark. The mismeasurement appears serious enough to call into question the reliability of empirical results using these variables.
Some Important Macro Points, Ray C. Fair
Some Important Macro Points, Ray C. Fair
Cowles Foundation Discussion Papers
This paper lists 19 points that follow from results I have obtained using a structural macroeconomic model (SEM). Such models are more closely tied to the aggregate data than are DSGE models, and I argue that DSGE models and similar models should have properties that are consistent with these points. The aim is to try to bring macro back to its empirical roots.
Global Collateral And Capital Flows, Ana Fostel, John Geanakoplos, Gregory Phelan
Global Collateral And Capital Flows, Ana Fostel, John Geanakoplos, Gregory Phelan
Cowles Foundation Discussion Papers
Cross-border financial flows arise when (otherwise identical) countries differ in their abilities to use assets as collateral to back financial contracts. Financially integrated countries have access to the same set of financial instruments, and yet there is no price convergence of assets with identical payoffs, due to a gap in collateral values. Home (financially advanced) runs a current account deficit. Financial flows amplify asset price volatility in both countries, and gross flows driven by collateral differences collapse following bad news about fundamentals. Our results can explain financial flows among rich, similarly-developed countries, and why these flows increase volatility.
Some Important Macro Points, Ray C. Fair
Some Important Macro Points, Ray C. Fair
Cowles Foundation Discussion Papers
This paper lists 19 points that follow from results I have obtained using a structural macroeconomic model (SEM). Such models are more closely tied to the aggregate data than are DSGE models, and I argue that DSGE models and similar models should have properties that are consistent with these points. The aim is to try to bring macro back to its empirical roots.
Narratives About Technology-Induced Job Degradation Then And Now, Robert J. Shiller
Narratives About Technology-Induced Job Degradation Then And Now, Robert J. Shiller
Cowles Foundation Discussion Papers
Concerns that technological progress degrades job opportunities have been expressed over much of the last two centuries by both professional economists and the general public. These concerns can be seen in narratives both in scholarly publications and in the news media. Part of the expressed concern about jobs has been about the potential for increased economic inequality. But another part of the concern has been about a perceived decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and meaning of life. Public policy should take account …
Contract Enforcement And Productive Efficiency: Evidence From The Bidding And Renegotiation Of Power Contracts In India, Nicholas Ryan
Contract Enforcement And Productive Efficiency: Evidence From The Bidding And Renegotiation Of Power Contracts In India, Nicholas Ryan
Cowles Foundation Discussion Papers
Weak contract enforcement may reduce the efficiency of production in developing countries. I study how contract enforcement affects efficiency in procurement auctions for the largest power projects in India. I gather data on bidding and ex post contract renegotiation and find that the renegotiation of contracts in response to cost shocks is widespread, despite that bidders are allowed to index their bids to future costs like the price of coal. Connected firms choose to index less of the value of their bids to coal prices and, through this strategy, expose themselves to cost shocks to induce renegotiation. I use a …
Spatial Linkages, Global Shocks, And Local Labor Markets: Theory And Evidence, Rodrigo Adão, Costas Arkolakis, Federico Espósito
Spatial Linkages, Global Shocks, And Local Labor Markets: Theory And Evidence, Rodrigo Adão, Costas Arkolakis, Federico Espósito
Cowles Foundation Discussion Papers
How do shocks to economic fundamentals in the world economy affect local labor markets? In a framework with a flexible structure of spatial linkages, we characterize the model-consistent shock exposure of a local market as the exogenous shift in its production revenues and consumption costs. In general equilibrium, labor outcomes in any market respond directly to the market’s own shock exposure, and indirectly to other markets shocks exposures. We show how spatial linkages control the size and the heterogeneity of these indirect effects. We then develop a new estimation methodology - the Model-implied Optimal IV (MOIV) - that exploits quasi-experimental …
Contract Enforcement And Productive Efficiency: Evidence From The Bidding And Renegotiation Of Power Contracts In India, Nicholas Ryan
Contract Enforcement And Productive Efficiency: Evidence From The Bidding And Renegotiation Of Power Contracts In India, Nicholas Ryan
Cowles Foundation Discussion Papers
Weak contract enforcement may reduce the efficiency of investment in developing countries. I study how contract enforcement affects efficiency in procurement auctions for the largest power projects in India. I gather data on bidding and ex post contract renegotiation and find that the renegotiation of contracts in response to cost shocks is widespread, despite that bidders are allowed to index their bids to future costs like the price of coal. Connected firms choose to index less of the value of their bids to coal prices and, through this strategy, expose themselves to cost shocks to induce renegotiation. I use a …
Counterfactuals With Latent Information, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Counterfactuals With Latent Information, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
We describe a methodology for making counterfactual predictions when the information held by strategic agents is a latent parameter. The analyst observes behavior which is rationalized by a Bayesian model, in which agents maximize expected utility, given partial and differential information about payoff-relevant states of the world, represented as an information structure. A counterfactual prediction is desired about behavior in another strategic setting, under the hypothesis that the distribution of the state and agents’ information about the state are held fixed. When the data and the desired counterfactual prediction pertain to environments with finitely many states, players, and actions, there …
Counterfactuals With Latent Information, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Counterfactuals With Latent Information, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
We describe a methodology for making counterfactual predictions in settings where the information held by strategic agents is unknown. The analyst observes behavior assumed to be rationalized by a Bayesian model, in which agents maximize expected utility, given partial and differential information about payoff-relevant states of the world. A counterfactual prediction is desired about behavior in another strategic setting, under the hypothesis that the distribution of the state and agents’ information about the state are held fixed. When the data and the desired counterfactual prediction pertain to environments with finitely many states, players, and actions, the counterfactual prediction is described …
Learning Under Diverse World Views: Model-Based Inference, George J. Mailath, Larry Samuelson
Learning Under Diverse World Views: Model-Based Inference, George J. Mailath, Larry Samuelson
Cowles Foundation Discussion Papers
People reason about uncertainty with deliberately incomplete models, including only the most relevant variables. How do people hampered by different, incomplete views of the world learn from each other? We introduce a model of “model-based inference.” Model-based reasoners partition an otherwise hopelessly complex state space into a manageable model. We nd that unless the differences in agents’ models are trivial, interactions will often not lead agents to have common beliefs, and indeed the correct-model belief will typically lie outside the convex hull of the agents’ beliefs. However, if the agents’ models have enough in common, then interacting will lead agents …