Information, Measurement, And Prediction In Economics

This paper examines the flow of production and use of economic information and analyzes the effects of measurement errors, particularly as transmitted through expectations and forecasts. Economic data are subject to a variety of errors, and the uncertainty about economic measures tends to increase further with the amount and complexity of the processing per-formed on the underlying data as well as with the distance between the user and the processor. With some exceptions, economic time series lag significantly behind their reference periods and many undergo large revisions. The effective information lag includes not only the time required for incremental data to be produced and transmitted but also the time required for the signals to be extracted by the user. This lag is substantial for many important series. In general, there is no presumption that the measurement errors are random: Systematic errors are frequent and their sources and forms vary so much that they may be difficult to detect. In times of strong shocks and surprising developments (such as occurred earlier in this decade),measurement of short-term changes in the economy is particularly difficult and current signals are apt to be often misinterpreted. This can result in broadly diffused decision errors which in time are discovered, leading to sharp corrective reactions. Aggregative predictions from well known and influential sources show certain common patterns of error, which suggests that forecasters react similarly to the observed events and unanticipated shocks. Fore-casts of GNP and related variables are adversely affected by errors in both the preliminary data and the base level estimates. There is some support here for the hypothesis that information lags play a significant role ingenerating business cycles, but it is important to note that the errors involved in predicting the future are typically much larger than the errors involved in estimating the present or recent past.

Rational Expectations and Macroeconomic Forecasts

This paper presents extensive results from testing for bias and serially correlated errors in a large collection of quarterly multiperiod predictions from surveys conducted since 1968 by the National Bureau of Economic Research and the American Statistical Association. The tests of the joint null hypothesis that the regressions of actual on predicted values have zero intercepts and unitary slope coefficients are very unfavorable to the expectations of inflation, but they show the forecasts of several other variables in a generally much better light. There have been strong tendencies for the forecasters in this period to underestimate inflation and overestimate real growth.Considerable attention is given to the effects of the sample size--the issue of the power of the tests--and also to the extent and role of autocorrelations among the residual errors from these regressions.Rationality in the sense of efficient use of relevant information implies the absence of systematic elements in series of errors from the forecaster's own predictions, measured strictly in the form in which such errors could have been known at the time of the forecast. The frequencies of significant auto-correlations among errors so measured vary greatly across the forecasts for different variables, being very high for inflation, high for inventory investment and the unemployment rate, and much lower for most of the predictions ofthe other variables covered (rates of change in nominal and real GNP and expenditures on consumer durables). The corresponding tests for the group meanforecasts show much less evidence of serially correlated ex ante errors, except for inflation.

The effects of environmental regulation on the efficiency of distribution electricity companies in Spain

The objective of this work is to detect what problems of inefficiency electricity distribution companies have, in order to disseminate this information and to allow distributors and public agencies to be more precise in calculating their costs. In turn, this will have an indirect impact on the price of the kilowatt in order to try to reduce its volatility. It should be noted that the volatility of the kilowatt price is mainly due to distribution costs and more specifically to access tolls. In the present paper, knowing that the distribution activity is a regulated activity, the efficiency in the electricity distribution companies will be studied. To this end, a study has been carried out on the efficiency of the main electricity distribution companies in Spain (Endesa, Iberdola, Union Fenosa, EDP and Viesgo) during the period of 2006-2015. The technique used was the Multi-period efficiency measurement in Data Envelopment Analysis, an input-oriented model at constant scales, working with panel data. The conclusions in this paper indicate that Spanish electricity distribution companies could improve their levels of efficiency if they improve the use of some inputs. This analysis demonstrates that overcapacity and deficit tariff have a negative influence on the efficiency level. Finally, this paper is useful as it shows that regulation again plays an essential role in regulated activities, requiring a commitment on the part of the State in order to improve efficiency in regulated activitie

A dynamic network DEA model for accounting and financial indicators: A case of efficiency in MENA banking

Middle East and North Africa (MENA) countries present a banking industry that is well-known for regulatory and cultural heterogeneity, besides ownership, origin, and type diversity. This paper explores these issues by developing a Dynamic Network DEA model in order to handle the underlying relationships among major accounting and financial indicators. Firstly, a relational model encompassing major profit sheet, balance sheet, and financial health indicators is presented under a dynamic network structure. Subsequently, the dynamic effect of carry-over indicators is incorporated into it so that efficiency scores can be properly computed for these three substructures. The impact of contextual variables related to bank ownership, its type, and whether or not it has undergone a previous merger and acquisition process is tested by means of a stochastic non-linear model solved by differential evolution, which combines bootstrapped Simplex, Tobit, Beta, and Simar and Wilson truncated regression results. The results reveal that bank type, origin, and ownership impact efficiency levels differently in terms of profit sheet, balance sheet, and financial health indicators, although the impact of culture and regulatory barriers seem to prevail at the country level

The Effects of Pensions and Earnings on Retirement: A Review Essay

Does retirement behavior react predictably to economic incentives? Evidence on this question would be useful to policy makers responsible for work and retirement programs affecting the elderly. This paper reviews the lessons and limitations of recent economics literature on pensions, earnings, and retirement. Section I develops the life cycle context for analyzing this problem. Theoretical literature is examined in Section II, followed by a review of the empirical literature in Section III. Conclusions appear at the end of each Section.

Suorituskykymittaristo osaksi toiminnan tehokasta johtamista Case: Elisa Oyj, Yritysasiakkaiden Palvelutuotanto -tulosyksikkö

Tutkimuksen tavoitteet Tutkimuksen tavoitteena on tuottaa case-yrityksen Palvelutuotanto-yksikölle sen omia tarpeita tukeva, kokonaisvaltaisen kuvan antava, tehokkuutta ja tuottavuutta analysoiva mittaristo. Tavoitteena on määrittää ja kuvata nykyisin käytössä olevat mittarit sekä toimintojen johtamisesta nousevat tarpeet ja tavoitteet Palvelutuotanto-tulosyksikön tehokkuuden analysoimiselle. Teoreettisessa osassa esitellään erilaisia suorituskyky-mittaristoja ja tehokkuuslaskentaa, joita hyödynnetään tutkimuksen konstruktiossa. Lähdeaineisto Tutkimuksessa käytettiin suorituskykymittaristoihin sekä tehokkuuden mittaamiseen liittyvää koti- ja ulkomaista lähdekirjallisuutta. Tutkimusaineiston perustana oli teemahaastattelut kohdeyrityksessä, joita täydennettiin vapaamuotoisilla keskusteluilla sekä osallistuvalla havainnoinnilla. Aineiston käsittely Tutkimuksessa yhdistettiin analyyttinen mallinrakennus, tieteellinen ongelman-ratkaisutoiminta sekä konsultointi tarkoituksena saada aikaan kohde organisaatiolle sopiva konstruktio esitettyyn ongelmaan. Teemahaastattelut analysoitiin aihealueiden suhteen ja suoritettiin kvalitatiivinen tarveanalyysi. Haastatteluja täydennettiin muulla kerätyllä aineistolla ja analyysin tarkkuutta pyritään kasvattamaan eri lähdeaineistojen trianguloinnilla. Tulokset Elisa Oyj:n Yritysasiakkaiden Palvelutuotanto -tulosyksikön palvelujen tehokkuuden ohjaamiseen rakennetun mittariston laadintaprosessi sekä kohdeyksikön toimintojen analyysi osoittivat, että kattava ohjausmalli ja sen kiinnitys strategiaan ei takaa toimivaa organisaation ohjausta. Selkeä ohjausmalli kärsi tutkimuksen mukaan siitä, että mittareiden kehitys on jäänyt jälkeen yksikön ohjausmallin kehityksestä ja organisaation ohjauksessa käytetyissä mittareissa on jouduttu tekemään operatiivisella tasolla kompromisseja. Analyysissä havaittiin myös, että mittareiden väliset kausaliteetit eivät ole kovinkaan helposti havaittavissa. Havaintoja ja analyysejä käytettiin kohdeorganisaatiolle rakennetun konstruktio määrittelyssä

Collective Investment Decision Making with Heterogeneous Time Preferences

We examine the investment decision problem of a group whose members have heterogeneous time preferences. In particular, they have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of shadow prices that would decentralize such allocations. We show in particular that the term structure of interest rates is decreasing when all members have DARA preferences. Heterogeneous groups should not use exponential discounting for their collective investment decisions even if all agents discount exponentially.We also exhibit conditions that lead the representative agent to have a rate of impatience that decreases with GDP per capita.aggregation of preferences, hyperbolic discounting, impatience, time preference, investment and consumption