Economic Theory Commons^™

Mountain Monitor - 3rd Quarter 2013, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

The quarter’s Mountain Monitor marks the four-year anniversary of Brookings Mountain West's quarterly tracking of the uneven pace of recovery across the major metro areas of the Intermountain West and it finds that, although the region continues to outperform the national economy the rate of recovery slowed moderately in the region’s metro areas.

As a group, Mountain region metro areas advanced on all four indicators of economic recovery tracked by the Monitor—employment, output, unemployment, and house prices—but their progress was more restrained in the third quarter of 2013 than it was in the second.

Beneath the regional headline of moderating …

An Efficient Two Sample Capture-Recapture Model With High Recaptures, Danjuma Jibasen, Yusuf J. Adams

CBN Journal of Applied Statistics (JAS)

This paper proposed an efficient two sample capture-recapture model (Ma) with high recaptures and compared it with the existing models like the model of no factor effect (Mo), behavioral response model (Mb) and the Petersen model (Ms), using simulated data. We found that the Petersen model provides a better estimate of the population size when the observations follow a hypergeometric distribution and the population is overestimated when recapture is high. It was also found that the proposed model provides a better estimator of the population size than the existing ones when the recapture is high. This model is particularly useful …

Causal Relationship Between Stock Market Index And Exchange Rate: Evidence From Nigeria, Abdulrasheed Zubair

CBN Journal of Applied Statistics (JAS)

This paper uses Johansen’s cointegration to test for the possibility of cointegration and Granger-causality to estimate the causal relationship between stock market index and monetary indicators (exchange rate and M2) before and during the global financial crisis for Nigeria, using monthly data for the period 2001–2011. Results suggest absence of long-run relationship before and during the crisis. The Granger-causality tests show a uni-directional causality running from M2 to ASI before the crisis while during the period of the crisis there is absence of causality between the variables. This suggests that ASI show responsiveness to M2. Thus, absence of the direct …

Investigating Chaos In The Nigerian Asset And Resource Management (Arm) Discovery Fund, Ibiyinka A. Fuwape, Samuel T. Ogunjo

CBN Journal of Applied Statistics (JAS)

This paper investigates chaos in a Nigerian mutual fund, Asset and Resource Management Company Limited (ARM) for a period of eleven years. The existence of chaotic signals in the data was identified by the reconstruction of the phase space of the daily closing price of the fund and the delay time was quantified using mutual information function and the embedding dimension by the false nearest neighbours, where the values were identified to be 15 and 20 respectively. The presence of chaotic signals in the ARM data was further confirmed by the correlation dimension method which yielded a dimension of 2.2 …

Modeling The Nigerian Inflation Rates Using Periodogram And Fourier Series Analysis, Chukwuemeka O. Omekara,, Emmanuel J. Ekpenyong, Micheal P. Ekerete

CBN Journal of Applied Statistics (JAS)

This work considers the application of Periodogram and Fourier Series Analysis to model all-items monthly inflation rates in Nigeria from 2003 to 2011. The main objectives are to identify inflation cycles, fit a suitable model to the data and make forecasts of future values. To achieve these objectives, monthly all-items inflation rates for the period were obtained from the Central Bank of Nigeria (CBN) website. Periodogram and Fourier series methods of analysis are used to analyze the data. Based on the analysis, it was found that inflation cycle within the period was fifty one (51) months, which coincides with the …

Nigerian Stock Index: A Search For Optimal Garch Model Using High Frequency Data, Olaoluwa Simon Yaya

CBN Journal of Applied Statistics (JAS)

This paper attempts to fit the best Generalized Autoregressive Conditional Heteroscedastic (GARCH) model for All Share Index (ASI) of Nigerian Stock Exchange (NSE) returns. A search is made on various GARCH variants specified on the assumptions of stationarity and asymmetry. Fractionally integrated types are also considered to capture the possibility of return series having property of long range dependency. The parameter estimations are carried out on the assumptions of normality and non-normality of GARCH innovations, with models and forecasts evaluated using information criteria and loss functions respectively. Under normality assumption, Hyperbolic GARCH (HYGARCH(1,d,1)) model is selected and Integrated GARCH (IGARCH(1,1)) …

Time Series Modeling Of Nigeria External Reserves, Iheanyichukwu S. Iwueze, Eleazar C. Nwogu, Valentine U. Nlebedim

CBN Journal of Applied Statistics (JAS)

This paper discusses the levels and trend of external reserves in Nigeria. The relevance of this lies in the fact that it could help to monitor the reserves and throw early warning signal about any economic crisis. Monthly data on Nigeria external reserves for the period January 1999 to December, 2008 derived from the 2008 CBN Statistical Bulletin was analyzed using ARIMA model. Results of the analyses show that (i) the data requires logarithmic transformation to stabilize the variance and make the distribution normal (ii) the appropriate model that best describes the pattern in the transformed data is the Autoregressive- …

A Markov Decision Process Approach To Optimal Control Of A Multi-Level Hierarchical Manpower System, Akaninyene U. Udom

CBN Journal of Applied Statistics (JAS)

A recurrent problem in manpower control is how to attain the desired structural configuration in an optimal way, since it is possible to reach a desired structural configuration using different control inputs. The major aim of this paper is to develop a Markov Decision Process for optimal control of a Multi-level Hierarchical Manpower System (MHMS) by promotion and interdepartmental transfers. This is examined under control by intervention and contraction cost Markov Decision Process.

A State Space Model Approach To Integrated Covariance Matrix Estimation With High Frequency Data, Cheng Liu, Cheng Yong Tang

Research Collection Lee Kong Chian School Of Business

We consider a state space model approach forhigh frequency financial data analysis. An expectationmaximization(EM) algorithm is developed for estimatingthe integrated covariance matrix of the assets. The statespace model with the EM algorithm can handle noisy financialdata with correlated microstructure noises. Difficultydue to asynchronous and irregularly spaced trading data ofmultiple assets can be naturally overcome by consideringthe problem in a scenario with missing data. Since the statespace model approach requires no data synchronization, norecord in the financial data is deleted so that it efficientlyincorporates information from all observations. Empiricaldata analysis supports the general specification of the statespace model, and simulations confirm …

Dynamical Structure Of A Traditional Amazonian Social Network, Paul L. Hooper, Simon Dedeo, Ann E. Caldwell Hooper, Michael Gurven, Hillard Kaplan

ESI Publications

Reciprocity is a vital feature of social networks, but relatively little is known about its temporal structure or the mechanisms underlying its persistence in real world behavior. In pursuit of these two questions, we study the stationary and dynamical signals of reciprocity in a network of manioc beer (Spanish: chicha; Tsimane’: shocdye’) drinking events in a Tsimane’ village in lowland Bolivia. At the stationary level, our analysis reveals that social exchange within the community is heterogeneously patterned according to kinship and spatial proximity. A positive relationship between the frequencies at which two families host each other, controlling for kinship and …

Egalitarian Division Under Leontief Preferences, Jin Li, Jingyi Xue

Research Collection School Of Economics

We consider the problem of fairly dividing l divisible goods among n agents with the generalized Leontief preferences. We propose and characterize the class of generalized egalitarian rules which satisfy efficiency, group strategy-proofness, anonymity, resource monotonicity, population monotonicity, envy-freeness and consistency. On the Leontief domain, our rules generalize the egalitarian-equivalent rules with reference bundles. We also extend our rules to agent-specific and endowment-specific egalitarian rules. The former is a larger class of rules satisfying all the previous properties except anonymity and envy-freeness. The latter is a class of efficient, group strategy-proof, anonymous and individually rational rules when the resources are …

How Do Firms Become Different? A Dynamic Model, Matthew Selove

Business Faculty Articles and Research

This paper presents a dynamic investment game in which firms that are initially identical develop assets that are specialized to different market segments. The model assumes that there are increasing returns to investment in a segment, for example, as a result of word-of-mouth or learning curve effects. I derive three key results: (1) Under certain conditions there is a unique equilibrium in which firms that are only slightly different focus all of their investment in different segments, causing small random differences to expand into large permanent differences. (2) If, on the other hand, sufficiently large random shocks are possible, firms …

Diet And Health Capital: An American Case Study, Matthew J. Klein

Undergraduate Economic Review

This paper begins to model diet's contribution to national stocks of Health Capital as defined in Kenneth Arrow et al.'s (2012) "Sustainability and the Measurement of Wealth" by developing a set of equations that link the diet of a nation’s average citizen to that nation’s per capita welfare over time. The model is applied to the American diet from 2005 to 2009. This research finds that even a small change in diet can have a large impact in whether or not a nation is sustainable over time.

Human Economic Choice As Costly Information Processing, John Dickhaut, Vernon L. Smith, Baohua Xin, Aldo Rustichini

Accounting Faculty Articles and Research

We develop and test a model that provides a unified account of the neural processes underlying behavior in a classical economic choice task. The model describes in a stylized way brain processes engaged in evaluating information provided by the experimental stimuli, and produces a consistent account of several important features of the decision process in different environments: e.g., when the probability is specified or not (ambiguous choices). These features include the choices made, the time to decide, the error rate in choice, and the patterns of neural activation. The model predicts that the further two stimuli are from each other …

The "Play-Out" Effect And Preference Reversals: Evidence For Noisy Maximization, Joyce E. Berg, John Dickhaut, Thomas A. Rietz

Accounting Faculty Articles and Research

In this paper, we document a "play-out" effect in preference reversal experiments. We compare data where preferences are elicited using (1) purely hypothetical gambles, (2) played-out, but unpaid gambles and (3) played-out gambles with truth-revealing monetary payments. We ask whether a model of stable preferences with random errors (e.g., expected utility with errors) can explain the data. The model is strongly rejected in data collected using purely hypothetical gambles. However, simply playing-out the gambles, even in the absence of payments, shifts the data pattern so that noisy maximization is no longer rejected. Inducing risk preferences using a lottery procedure, using …

Robust Virtual Implementation With Almost Complete Information, Takashi Kunimoto

Research Collection School Of Economics

Artemov, Kunimoto, and Serrano (2013a,b, henceforth, AKS) study amechanism design problem where arbitrary restrictions are placed on the setof first-order beliefs of agents. Calling these restrictions Δ, they adopt Δ-rationalizability (Battigalli and Siniscalchi (2003)) and show that Δ-incentivecompatibility and Δ-measurability are necessary and sufficient conditions forrobust virtual implementation. By appropriately defining Δ in order to restrictattention to complete information environments, I exploit the implicationsof AKS and show that the permissive implementation result of Abreu andMatsushima (1992a) is robust to how the underlying type space is specified.However, AKS need to fix a complete information environment throughouttheir analysis and therefore does not …

Patterns Of Senescence In Human Cardiovascular Fitness: Vo2 Max In Subsistence And Industrialized Populations, Anne C. Pisor, Michael Gurven, Aaron D. Blackwell, Hillard Kaplan, Gandhi Yetish

ESI Publications

Objectives—This study explores whether cardiovascular fitness levels and senescent decline are similar in the Tsimane of Bolivia and Canadians, as well as other subsistence and industrialized populations. Among Tsimane, we examine whether morbidity predicts lower levels and faster decline of cardiovascular fitness, or whether their lifestyle (e.g., high physical activity) promotes high levels and slow decline. Alternatively, high activity levels and morbidity might counterbalance such that Tsimane fitness levels and decline are similar to those in industrialized populations.

Methods—Maximal oxygen uptake (VO2max) was estimated using a step test heart rate method for 701 participants. We compared these estimates …

Age-Independent Increases In Male Salivary Testosterone During Horticultural Activity Among Tsimane Forager-Farmers, Benjamin C. Trumble, Daniel K. Cummings, Kathleen A. O'Connor, Darryl J. Holman, Eric A. Smith, Hillard Kaplan, Michael D. Gurven

ESI Publications

Testosterone plays an important role in mediating male reproductive trade-offs in many vertebrate species, augmenting muscle and influencing behavior necessary for male-male competition and mating-effort. Among humans, testosterone may also play a key role in facilitating male provisioning of offspring as muscular and neuromuscular performance are deeply influenced by acute changes in testosterone. This study examines acute changes in salivary testosterone among 63 Tsimane men ranging in age from 16–80 (mean 38.2) years during one-hour bouts of treechopping while clearing horticultural plots. The Tsimane forager-horticulturalists living in the Bolivian Amazon experience high energy expenditure associated with food production, have high …

Mountain Monitor - 2nd Quarter 2013, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

Economic recovery progressed steadily across the metropolitan Mountain West in the second quarter of 2013. Many of the region’s major metro areas counted among the strongest economic performers nationally, but output growth slowed over the quarter and the region‘s unemployment recovery looked to be stagnating. Moderate job growth and a fast and accelerating housing recovery buoyed the Mountain West economy in the second quarter.

Agricultural Biotechnology, International Trade, General Equilibrium And Efficiency, Comlanvi Martin Konou

College of Business: Dissertations, Theses, and Student Research

Ongoing debates about the adoption of the agricultural biotechnology in the developing countries and EU have dominated the literature in development economics and biosciences. This dissertation considers some environmental, economic and social consequences of the technology from three perspectives: 1) the impact of the ongoing pest density on the performance of the agricultural biotechnology in India; 2) trade consequences of EU restrictive trade policies towards biotech products; and 3) the adoption decision of the technology in the EU and the developing economies.

Agricultural biotechnology appears to be successful in increasing yield and reducing the use of pesticides. However, most studies …

Project-Based Section 8 Housing Participants' Perception Of Cultural And Structural Factors To Explain Barriers To Economic Self-Sufficiency, Yolanda Javette Clark

Dissertations

The Project-Based Section 8 program began as temporary housing of the last resort for people who experience temporary setbacks. However, due to participants' inability to become economically self-sufficient, the anti-poverty program has become permanent housing from which few families have been able to escape. Recent studies related to escaping poverty and becoming economically self-sufficient suggest cultural and structural factors are equally important and collectively impact upward economic mobility.

Similarly, the purpose of this study was to determine if Project-Based Section 8 housing participants' characteristics, described as cultural and structural barriers to economic self-sufficiency, interrelate and collectively predict ability to escape …

Volatility Occupation Times, Jia Li, Viktor Todorov, George Tauchen

Research Collection School Of Economics

We propose nonparametric estimators of the occupation measure and the occupation density of the diffusion coefficient (stochastic volatility) of a discretely observed Itô semimartingale on a fixed interval when the mesh of the observation grid shrinks to zero asymptotically. In a first step we estimate the volatility locally over blocks of shrinking length, and then in a second step we use these estimates to construct a sample analogue of the volatility occupation time and a kernel-based estimator of its density. We prove the consistency of our estimators and further derive bounds for their rates of convergence. We use these results …

Economic Indices: Managing By The Numbers, Singapore Management University

Perspectives@SMU

Understanding indices is not just about crunching numbers, but appreciating how it is constructed

Comparative Approaches To Studying Strategy: Towards An Evolutionary Account Of Primate Decision Making, Sarah F. Brosnan, Michael J. Beran, Audrey E. Parrish, Sara A. Price, Bart J. Wilson

Economics Faculty Articles and Research

How do primates, humans included, deal with novel problems that arise in interactions with other group members? Despite much research regarding how animals and humans solve social problems, few studies have utilized comparable procedures, outcomes, or measures across different species. Thus, it is difficult to piece together the evolution of decision making, including the roots from which human economic decision making emerged. Recently, a comparative body of decision making research has emerged, relying largely on the methodology of experimental economics in order to address these questions in a cross-species fashion. Experimental economics is an ideal method of inquiry for this …

Equality Of Outcome Or Equality Of Opportunity? A Simulation Of Wealth Distribution Using Agent-Based Modeling, Ozgur Ekmekci

Clinical Research and Leadership Faculty Publications

Against the backdrop of calls for a more just form of capitalism, this paper specifically focuses on the notion of equality within capitalist societies and utilizes findings from a computer simulation to explore which of one two fundamental principles, namely: (1) equality of opportunity; or (2) equality of outcome might better inform and guide reform efforts to create more uniform distribution of wealth among members of society. In this study, Agent Based Modeling (ABM), as a form of computer simulation was used to explore how the fundamental principles of equality of opportunity or equality of outcome might impact wealth …

Mountain Monitor-1st Quarter 2013, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

Economic recovery gained strength across the major metro areas of the Mountain West in the first quarter of 2013. Multiple metro areas achieved long-awaited full employment recoveries in the first quarter and regional production surpassed pre-recession levels of output for the first time. The region’s strong housing rebound continued to be a boon. Additionally, a special supplement to the Monitor shows that the healthcare sector has been an outsized contributor to recovery throughout the region. Despite progress on multiple fronts, though, many Mountain metro areas remain scarred with high unemployment rates, severely depressed house prices, and daunting jobs deficits.

Endogenous Group Formation Via Unproductive Costs, Jason A. Aimone, Laurence R. Iannaccone, Michael D. Makowsky, Jared Rubin

Economics Faculty Articles and Research

Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups. We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modified VCM game—one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member …

The Fii Model As An Investment In Patience: Exploring Time Preferences In Medellin, Colombia, Jennifer Graham

Master's Theses

The motivation for this research is to explore the success behind the Oakland based Family Independence Initiative (FII) as a model for poverty alleviation. During the period of June-December 2012, nearly 200 small business owners in Medellin, Colombia participated in a field experiment intended to replicate the FII model by randomizing the treatments of setting goals, receiving conditional payments, and participating in self-help groups, as well as the combinations thereof. The data shows that the subjects in the full FII treatment group achieve more goals and have significantly higher monthly sales than those subjects in any other treatment or control …

Collusion In Peer Evaluation, Suo Wang

Honors Scholar Theses

The exact consensual and impartial division function by DeClippel et al (2008) offers a procedure for dividing a fixed award among partners. The peer evaluation mechanism proposed by DeClippel et al (2008) offers participating partners incentives to tell the truth. This paper examines and demonstrates that, when agents form at most one coalition and report wrong values of the relative shares, they capture the total amount of money being divided and their share improves by exactly the same percentage. When multiple coalitions emerge, the division function fails to assign payoffs to each partner. This paper also includes a discussion of …

Three Essays On Renewable Energy, Kepifri Alpha Lakoh

Department of Agricultural Economics: Dissertations, Theses, and Student Research

This dissertation studies three main issues related to renewable energy in the United States and in Sub Sahara Africa.

The first chapter seeks to provide answers to a very fundamental question for second generation biofuels: “How much crop residue can farmers harvest from their fields for sale to cellulosic ethanol companies without affecting current levels of production?” The model developed is applied to 101 counties from four Midwestern states in the United States (Colorado, Iowa, Nebraska and Wyoming). Results show that soil organic matter significantly contributes to explaining changes in technical efficiency and total factor productivity. Furthermore, average crop …