Microsimulations in the Presence of Heterogeneity

This paper develops a method that improves researchers’ ability to account for behavioral responses to policy change in microsimulation models. Current microsimulation models are relatively simple, in part because of the technical difficulty of accounting for unobserved heterogeneity. This is all the more problematic because data constraints typically force researchers to limit their forecasting models to relatively few, mostly time-invariant explanatory covariates, so that much of the variation across individuals is unobserved. Furthermore, failure to account for unobservables often leads to biased estimates of structural parameters, which are critically important for measuring behavioral responses. This paper develops a theoretical approach to incorporate (univariate and multivariate) unobserved heterogeneity into microsimulation models; illustrates computer algorithms to efficiently implement heterogeneity in continuous and limited dependent models; and evaluates the importance of unobserved heterogeneity by conducting Monte Carlo simulations.

The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands

This paper analyzes retirement saving and portfolio choice in the United States, Italy, and the Netherlands. While these countries enjoy roughly the same standard of living, they vary widely in their institutional organization of retirement income provisions. Building on extensions of the life cycle model, we derive hypotheses on the implications of institutional differences for wealth accumulation and portfolio composition. Examples of implications are that the ratio of net worth and gross wealth should be highest in Italy, that Dutch households should hold the lowest wealth levels at retirement and that the ownership of risky assets should be highest in the U.S. We investigate these and other hypotheses at both the macro and micro level and find that the data are generally consistent with the hypotheses.

Living Labs as a navigation system for innovative business models in the music industry

Media industries and other rapidly evolving, complex, uncertain markets have a hard time to survive if they do not optimize or radically change their business models. This paper analyses the potential of involving all relevant stakeholders of the value network in the development of a business model by means of a panel based multi-method Living Lab approach. Using an in-depth case study analysis, a critical analysis of both the potential value and the weaknesses of such an approach are being assessed. Although some difficulties exist, opening this innovation process and involving external actors in a structural way has the potential to increase the value creation and sustainability of the business model. This paper also stresses the importance of multidisciplinary research on multi-stakeholder involvement in business model innovation

The effect of monetary unification on German bond markets.

This paper uses reprojection to develop a benchmark to assess ECB monetary policy since January 1999, the start of EMU. We first estimate an essentially affine term structure model for the German SWAP yield curve between 1987:04-1998:12. The German monetary policy is then reprojected onto the EMU period (1999:01-2001:08). We find that the German real interest rate in place during the EMU period is significantly lower than it would have been in case the Bundesbank were still in charge of monetary policy. We also show the effect of EMU on the German SWAP\ yield curve. Short- and medium-term bonds seem to have been more affected than long-term bonds.EMU; ECB; Central bank monetary policy rule; Bundesbank; Essentially affine term structure model;

Equity and bond flows to Asia and Latin America : the role of global and country factors

The authors investigate what has motivated the large portfolio flows to several developing countries in recent years. Using monthly data on U.S. capital flows to nine Latin American and nine Asian countries (instead of monthly reserves data), they analyze the behavior of bond and equity flows to those countries. Using panel data, they find that global factors - such as a drop in U.S. interest rates and the slowdown in U.S. industrial production - are important in explaining capital inflows. But country developments are at least as important in determining those flows, especially for Asia. They also find that equity flows are more sensitive than bond flows to global factors, but that bond flows are generally more sensitive to a country's credit rating and to the secondary market price of debt.Economic Theory&Research,Banks&Banking Reform,Financial Intermediation,Environmental Economics&Policies,Macroeconomic Management

Capital flows to Central and Eastern Europe and the Former Soviet Union

The capital flows to Central and Eastern Europe and the Former Soviet Union (CEE/FSU) represent a relatively small, albeit growing share of capital flows to developing countries. Taking all flows together, the total net flows to these 25 countries (Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan) were about $44 billion in 1996 or about 1/8 of aggregate net flows to all developing countries. These countries accounted, however, for about 20 and 22 percent respectively of all developing countries Gross Domestic Product (GDP) and exports in 1996. As a fraction of their GDP, total inflows were consequently smaller than for many other developing countries, and averaged about 5.4 percent over the 1990-96 periods. In more recent years, there has been a more rapid inflow of private capital, as reform efforts have consolidated and economic prospects improved and, for some countries, as European Union (EU) integration became a possibility for the near future. For some countries, short-term capital has recently become an important source of external financing. Since most countries have been late comers to the phenomenon of large private capital inflows, they have not experienced much of the overheating phenomena which have affected other developing countries in the past (Latin America) and recently (East Asia). The paper is organized as follows. Section IIbriefly describes the facts on capital flows to these countries. Section III discusses important links and relationships between macroeconomic variables and the capital flows, including some of the basic motivations, and causes for capital flows. Section IV describes and analyzes the policy framework and policy responses in those countries that received the bulk of capital flows. Econometric tests are presented in section V, while section VI discusses the issues which may be arising with capital flows in these countries in the future and provides some conclusions.Capital Markets and Capital Flows,Banks&Banking Reform,International Terrorism&Counterterrorism,Fiscal&Monetary Policy,Economic Theory&Research,Capital Flows,Banks&Banking Reform,Macroeconomic Management,Economic Theory&Research,Settlement of Investment Disputes

Resolving systemic financial crisis : policies and institutions

The authors analyze the role of institutions in resolving systemic banking crises for a broad sample of countries. Banking crises are fiscally costly, especially when policies like substantial liquidity support, explicit government guarantees on financial institutions’ liabilities, and forbearance from prudential regulations are used. Higher fiscal outlays do not, however, accelerate the recovery from a crisis. Better institutions—less corruption, improved law and order, legal system, and bureaucracy—do. The authors find these results to be relatively robust to estimation techniques, including controlling for the effects of a poor institutional environment on the likelihood of financial crisis and the size of fiscal costs. Their results suggest that countries should use strict policies to resolve a crisis and use the crisis as an opportunity to implement medium-term structural reforms, which will also help avoid future systemic crises.Payment Systems&Infrastructure,Labor Policies,Fiscal&Monetary Policy,Financial Crisis Management&Restructuring,Banks&Banking Reform,Financial Crisis Management&Restructuring,Governance Indicators,National Governance,Banks&Banking Reform,Economic Conditions and Volatility

Meaning without Agency:The Establishment of Meaningful Time Relations as Prerequisite for the Emergence of Biosemiosis

This article reexamines meaning, agency, and interpretation by challenging the view that they require primary or secondary agency. Using Paul Ricœur’s narrative temporality, it explores Terrence Deacon’s autogenic theory, reinterpreting it as a narrative process with non-agentic meaning by distinguishing between distended and displaced temporal relations. Distended relations pertain to agency and biosemiosis, while displaced relations involve the meaning found not in the entity but the processes which gave it a functionally historicized existence. Applying Ricœur’s analysis of temporal aporia and Deacon’s concept of zero, the article suggests that meaning in Deacon’s model mirrors the normative process of narrative interpretation. It emphasizes that primary agency requires meaningful organization for agentic action to have a self for which decisions matter, concluding that meaning, life, and primary agency are grounded in already existing displaced temporal relations resultant from proto-interpretative relations not bounded within an organism.</p