Re-examining the consumption-wealth relationship : the role of model uncertainty

This paper discusses the consumption-wealth relationship. Following the recent influential workof Lettau and Ludvigson [e.g. Lettau and Ludvigson (2001), (2004)], we use data on consumption, assets andlabor income and a vector error correction framework. Key …ndings of their work are that consumption doesrespond to permanent changes in wealth in the expected manner, but that most changes in wealth are transitoryand have no e¤ect on consumption. We investigate the robustness of these results to model uncertainty andargue for the use of Bayesian model averaging. We …nd that there is model uncertainty with regards to thenumber of cointegrating vectors, the form of deterministic components, lag length and whether the cointegratingresiduals a¤ect consumption and income directly. Whether this uncertainty has important empirical implicationsdepends on the researcher's attitude towards the economic theory used by Lettau and Ludvigson. If we workwith their model, our findings are very similar to theirs. However, if we work with a broader set of models andlet the data speak, we obtain somewhat di¤erent results. In the latter case, we …nd that the exact magnitudeof the role of permanent shocks is hard to estimate precisely. Thus, although some support exists for the viewthat their role is small, we cannot rule out the possibility that they have a substantive role to play

Bootstrapping Smooth Functions of Slope Parameters and Innovation Variances in VAR(∞) Models *

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/101814/1/1468-2354.t01-1-00016.pd

Potential climatic transitions with profound impact on Europe

We discuss potential transitions of six climatic subsystems with large-scale impact on Europe, sometimes denoted as tipping elements. These are the ice sheets on Greenland and West Antarctica, the Atlantic thermohaline circulation, Arctic sea ice, Alpine glaciers and northern hemisphere stratospheric ozone. Each system is represented by co-authors actively publishing in the corresponding field. For each subsystem we summarize the mechanism of a potential transition in a warmer climate along with its impact on Europe and assess the likelihood for such a transition based on published scientific literature. As a summary, the ‘tipping’ potential for each system is provided as a function of global mean temperature increase which required some subjective interpretation of scientific facts by the authors and should be considered as a snapshot of our current understanding. <br/

The state of the Martian climate

60°N was +2.0°C, relative to the 1981–2010 average value (Fig. 5.1). This marks a new high for the record. The average annual surface air temperature (SAT) anomaly for 2016 for land stations north of starting in 1900, and is a significant increase over the previous highest value of +1.2°C, which was observed in 2007, 2011, and 2015. Average global annual temperatures also showed record values in 2015 and 2016. Currently, the Arctic is warming at more than twice the rate of lower latitudes