infonet-economy

We summarize some methods useful in formulating and solving Hansen-Sargent robust control problems, and suggest extensions to discretion and simple rules. Matlab, Octave, and Gauss software is provided. We illustrate these extensions with applications to the term structure of interest rates, the time inconsistency of optimal monetary policy, the effects of expectations on the…

Mit dem Sammelband «Perspektiven der Wirtschaftspolitik - Festschrift zum 65. Geburtstag von Prof. Dr. René L. Frey» wird eine akademische Persönlichkeit geehrt,die es in ihrem über 30-jährigen Wirken an der Universität Basel verstanden hat, Brücken zwischen volkswirtschaftlicher Forschung, Beratung und Lehre und damit zwischen Theorie und Praxis zu bauen. Die nebst einem Vorwort von…

In this paper, the introduction of direct-democratic decision-making in all EU decisions is considered when it is feasible without prohibitively increasing decision-making costs. We start with the contractarian argument that each constitution is a contract joining the citizens of a state and requires as such the explicit agreement of (a majority of) citizens. Thus, the future…

The idea to learn about international capital mobility from saving and investment data remains appealing. Our approach is based on VAR methods and overcomes some of the problems associated with saving–investment regressions when the data are non-stationary. We propose a new measure of long-run capital mobility that can be easily calculated as a by-product of the estimation procedure…

This contribution is based on the Ludwig von Bertalanffy Lecture delivered by the author at the 47th Conference of the International Society for the System Sciences (ISSS) in Crete, 7 July 2003. The conference was organized around the issue Conscious Evolution of Humanity: Using Systems Thinking to Construct Agoras of the Global Village. This article explores the potential and actual…

The portfolio selection problem is traditionally modelled by two different approaches. The first one is based on an axiomatic model of risk-averse preferences, where decision makers are assumed to possess an expected utility function. The second approach, first proposed by Markowitz (1952), reduces the portfolio choice to a set of two criteria, reward and risk. Usually the reward-…

Firms are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility - job-to-job vs. job-unemployment-job - affects the relative…

"Alienation to politics weakens political competition and can undermine the acceptance and legitimacy of democracy as a political system. Governance andnrepresentation problems at the local level cause part of citizens’ lack of power andnpolitical alienation. Citizens have local power if they can process so that its outcomes are closer to their preferences and if they…

Elicitation methods in decision making under risk allow a researcher to infer thensubjective utilities of outcomes as well as the subjective weights of probabilities from observed preferences of an individual. An optimally efficient elicitation method is proposed, which takes into account the inevitable distortion of preferences by random errors and minimizesnthe effect of such…