Political uncertainty and household savings

Despite macroeconomic evidence pointing to a negative aggregate consumption response due to political uncertainty, few papers have used microeconomic panel data to analyze how households adjust their consumption after an uncertainty shock. We study household savings and expenditure adjustment from an unexpected, large-scale and rapidly evolving political shock that occurred largely in May 1989 in Beijing, China. Using monthly micro panel data, we present evidence that a surge in political uncertainty resulted in significant temporary increases in savings among urban households in China. Households responded mainly by reducing semi-durable expenditure and frequency of major durable adjustment. The uncertainty effect is more pronounced among older, wealthier, and more socially advantaged households. We interpret our findings using existing models of precautionary behavior. By focusing on time variation in uncertainty, our identification strategy avoids many of the potential problems in empirical studies of precautionary savings such as self-selection and life-cycle effects.This is the author accepted manuscript. The final version is available from Elsevier via http://dx.doi.org/10.1016/j.jce.2015.12.01

Measuring long-term inequality of opportunity

In this paper, we introduce a new family of rank-dependent measures of inequality and social welfare consistent with the equality of opportunity (EOp) principle. The proposed framework can be used to measure long-term as well as short-term EOp, depending on whether we let permanent income or snapshots of income form the basis of the analysis. Furthermore, it allows for both an ex-ante and an ex-post approach to EOp. There is long-term ex-post inequality of opportunity if individuals who exert the same effort have different permanent incomes. In comparison, the ex-ante approach focuses on differences in the expected permanent income between groups of individuals with identical circumstances. To demonstrate the empirical relevance of a long-run perspective on EOp, we exploit a unique panel data from Norway on individuals' incomes over their working life span. This allows us to examine how well analysis of opportunity inequality based on snapshots of income approximate the results based on permanent income

Clusters in weighted macroeconomic networks : the EU case. Introducing the overlapping index of GDP/capita fluctuation correlations

GDP/capita correlations are investigated in various time windows (TW), for the time interval 1990-2005. The target group of countries is the set of 25 EU members, 15 till 2004 plus the 10 countries which joined EU later on. The TW-means of the statistical correlation coefficients are taken as the weights (links) of a fully connected network having the countries as nodes. Thereafter we define and introduce the overlapping index of weighted network nodes. A cluster structure of EU countries is derived from the statistically relevant eigenvalues and eigenvectors of the adjacency matrix. This may be considered to yield some information about the structure, stability and evolution of the EU country clusters in a macroeconomic sense.Comment: 6 pages, 8 figures, 1 table, 17 references, submitted to Physica A; proceedings of APFA