Russia, EU enlargement and the euro

This paper reviews selected aspects of economic relations between the EU and Russia, focusing on the impact that the last two waves of EU enlargement have had on Russia, as well as the role of the euro in Russia. The analysis suggests that if EU enlargement has had any diversion effects on trade between the EU and Russia at all, they have been minimal, while robust growth in both the EU and Russia, as well as high oil and gas prices, has boosted trade. Likewise, FDI to and from Russia has increased, with the direct impact of enlargement again difficult to disentangle from other factors. Use of the euro by Russian residents and authorities in international transactions has increased, albeit at an uneven pace. While, in general, the US dollar remains the major foreign currency used by Russian residents, the euro has gained importance as an anchor and reserve currency in Russian exchange rate policies. This has happened in the context of an overall monetary policy strategy aiming at a gradual shift from an exchange rate-oriented monetary policy to inflation targeting. JEL Classification: F14, F15, F21, F36.Economic integration, trade diversion, foreign direct investment, international currencies.

Efficient Evaluation of Multidimensional Time-Varying Density Forecasts with an Application to Risk Management

We propose two simple evaluation methods for time varying density forecasts of continuous higher dimensional random variables. Both methods are based on the probability integral transformation for unidimensional forecasts. The first method tests multinormal densities and relies on the rotation of the coordinate system. The advantage of the second method is not only its applicability to any continuous distribution but also the evaluation of the forecast accuracy in specific regions of its domain as defined by the user’s interest. We show that the latter property is particularly useful for evaluating a multidimensional generalization of the Value at Risk. In simulations and in an empirical study, we examine the performance of both tests.Multivariate Density Forecast Evaluation, Probability Integral Transformation, Multidimensional Value at Risk, Monte Carlo Simulations

Dynamic Density Forecasts for Multivariate Asset Returns

We propose a simple and flexible framework for forecasting the joint density of asset returns. The multinormal distribution is augmented with a polynomial in (time-varying) non-central co-moments of assets. We estimate the coefficients of the polynomial via the Method of Moments for a carefully selected set of co-moments. In an extensive empirical study, we compare the proposed model with a range of other models widely used in the literature. Employing a recently proposed technique to evaluate multivariate forecasts, we conclude that the augmented joint density provides highly accurate forecasts of the negative tail of the joint distribution.Time-varying higher co-moments, Joint Density Forecasting, Method of Moments, Multivariate Value-at-Risk.

Dynamic Multilateral Markets

We study dynamic multilateral markets, in which players’ payoffs result from coalitional bargaining. In this setting, we establish payoff uniqueness of the stationary equilibria when players exhibit some degree of impatience. We focus on market games with different player types, and derive under mild conditions an explicit formula for each type’s equilibrium payoff as market frictions vanish. The limit payoff of a type depends in an intuitive way on the supply and the demand for this type in the market, adjusted by the type-specific bargaining power. Our framework may be viewed as an alternative to the Walrasian price-setting mechanism. When we apply this methodology to the analysis of labor markets, we can determine endogenously the equilibrium firm size and remuneration scheme. We find that each worker type in a stationary market equilibrium is rewarded her marginal product, i.e. we obtain a strategic underpinning of the neoclassical wage. Interestingly, we can also replicate some standardized facts from the search-theoretical literature such as positive equilibrium unemployment.Multilateral Bargaining, Dynamic Markets, Labor Markets

Shelbyville man\u27s military tattoos on display at EIU

https://thekeep.eiu.edu/lib_exhibits_designsofduty_press/1002/thumbnail.jp

Military tattoos on display at EIU

https://thekeep.eiu.edu/lib_exhibits_designsofduty_press/1001/thumbnail.jp

Recreational Marijuana in Ohio: A Cost Benefit Analysis

This study aims to analyze the cost and benefits of legalizing recreational marijuana in Ohio by estimating the monetary value of major cost and benefit items caused by legal recreational marijuana being implementing in Ohio. Key areas that are used in the analysis to give an accurate picture of the costs and benefits of marijuana are the areas of: tax revenue, the labor market, the criminal justice system, public health and safety, and educational attainment. By focusing on changes experienced in other states that have legalized, a realistic estimation of what will happen in Ohio can be made. Data shows that implementing legalized marijuana in Ohio will result in a positive social net benefit for the state. The estimated social net benefit that will be experienced by the state has a value of more than $444 million. The biggest benefits that the state will experience come from the tax revenue, jobs, and lower DUI arrest rates that will be created by legalization. The biggest cost to the state will come in the form of increased drug rehabilitation admittance and car insurance claims. The positive social net benefit derived from variables used in this analysis implies that it will be economically beneficial for Ohio to legalize recreational marijuana