Elasticity optimism

Estimates of the elasticity of substitution between domestic and foreign varieties are small in macroeconomic data, and substantially larger in disaggregated studies. This may be an artifact of heterogeneity. We use disaggregated multilateral trade data to structurally identify elasticities of substitution in US goods. We spell out a partial equilibrium model to aggregate them adequately at the country level. We compare aggregate elasticities that impose equality across sectors, to estimates allowing for heterogeneity. The former are similar in value to conventional macroeconomic estimates; but they are more than twice larger -up to 7- with heterogeneity. The parameter is central to calibrated models in most of international economics. We discuss the difference our corrected estimate makes in various areas of international economics, including the dynamics of external balances, the international transmission of shocks, international portfolio choice and optimal monetary policy.Trade Elasticities, Aggregation, Calibration, Global Imbalances, International Transmission, International Portfolio, Monetary Policy.

The optimism bias : a cognitive neuroscience perspective

The optimism bias is a well-established psychological phenomenon. Its study has implications that are far reaching in fields as diverse as mental health and economic theory. With the emerging field of cognitive neuroscience and the advent of advanced neuroimaging techniques, it has been possible to investigate the neural basis of the optimism bias and to understand in which neurological conditions this natural bias fails. This review first defines the optimism bias, discusses its implications and reviews the literature that investigates its neural basis. Finally some potential pitfalls in experimental design are discussed.peer-reviewe

Two optimistic traditions in the dismal science: rationalism and the "invisible hand"

This paper explores two traditions of optimism in economics. In one of these traditions optimism is based on the comprehension of a spontaneous (and often progressive) order in a decentralised (or market) economy – what I will call the optimism of the “invisible hand”. Against the optimism of the invisible hand stands another optimistic tradition in economics, whereby we might take courage from our ability to do right by society through instructing governments with the keen edge of our most enlightened plans. This tradition is called “constructivist rationalism” here. The paper explores the logic of each tradition and their historical development and applies both to a recent example of policy making in South Africa: government’s fundamental regulatory overhaul of the pharmaceutical industry based on the Medicines Act of 1997, specifically, the decision to implement price controls on medicines.Spontaneous order, Modernism, Planning, Optimism, Information, Uncertainty, Price controls, Institutions, Constitutions, Law and Economics

Why the optimism?

In spite of the recent recession, hopes for the New Economy have been little daunted. Surprisingly robust productivity growth during the recent downturn provides compelling new evidence that something truly fundamental is going on. This Commentary argues that advances in information technology, and their diffusion through the economy, justify our optimism. Higher productivity growth is not an ephemeral phenomenon but one likely to persist for some time into the future, perhaps even accelerating further.Economic conditions - United States ; Labor productivity

Reasons for optimism

President Minehan delivered these remarks during the July convening of the Bank's Community Development Advisory Council in Haverhill, Massachusetts.Community development - Massachusetts ; Economic conditions - Massachusetts

How Belief in a Just World Benefits Mental Health: The Effects of Optimism and Gratitude

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Past research suggests that individuals’ belief in a just world (BJW) is closely connected with their mental health. To clarify the underlying mechanism, the current study proposes that BJW encourages optimism and gratitude which then mediates the relation- ship between BJW and mental health as indicated by subjective well-being (SWB) and depression. A sample of 1,200 undergraduates yields results indicating that (a) BJW influences optimism, gratitude, SWB, and depression after controlling for gender, age, income, and personality; (b) optimism and gratitude mediate BJW effects by increasing SWB and decreasing depression. The issues of BJW’s adaptive functions are discussed

Confidence intervals of prediction accuracy measures for multivariable prediction models based on the bootstrap-based optimism correction methods

In assessing prediction accuracy of multivariable prediction models, optimism corrections are essential for preventing biased results. However, in most published papers of clinical prediction models, the point estimates of the prediction accuracy measures are corrected by adequate bootstrap-based correction methods, but their confidence intervals are not corrected, e.g., the DeLong's confidence interval is usually used for assessing the C-statistic. These naive methods do not adjust for the optimism bias and do not account for statistical variability in the estimation of parameters in the prediction models. Therefore, their coverage probabilities of the true value of the prediction accuracy measure can be seriously below the nominal level (e.g., 95%). In this article, we provide two generic bootstrap methods, namely (1) location-shifted bootstrap confidence intervals and (2) two-stage bootstrap confidence intervals, that can be generally applied to the bootstrap-based optimism correction methods, i.e., the Harrell's bias correction, 0.632, and 0.632+ methods. In addition, they can be widely applied to various methods for prediction model development involving modern shrinkage methods such as the ridge and lasso regressions. Through numerical evaluations by simulations, the proposed confidence intervals showed favourable coverage performances. Besides, the current standard practices based on the optimism-uncorrected methods showed serious undercoverage properties. To avoid erroneous results, the optimism-uncorrected confidence intervals should not be used in practice, and the adjusted methods are recommended instead. We also developed the R package predboot for implementing these methods (https://github.com/nomahi/predboot). The effectiveness of the proposed methods are illustrated via applications to the GUSTO-I clinical trial

WHY ARE OPTIMISTIC ENTREPRENEURS SUCCESSFUL? AN APPLICATION OF THE REGULATORY FOCUS THEORY

Does entrepreneurial optimism affect business performance? Using a unique data set based on repeated survey design, we investigate this relationship empirically. Our measures of ‘optimism’ and ‘realism’ are derived from comparing the turnover growth expectations of 133 owners-managers with the actual outcomes one year later. Our results indicate that entrepreneurial optimists perform significantly better in terms of profits than pessimists. Moreover, it is the optimist-realist combination that performs best. We interpret our results using regulatory focus theory.Entrepreneurship, Optimism, Venture Growth, Regulatory Focus Theory, Latvia