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Articles 451 - 480 of 2768
Full-Text Articles in Social and Behavioral Sciences
Consequences Of The Clean Water Act And The Demand For Water Quality, David A. Keiser, Joseph S. Shapiro
Consequences Of The Clean Water Act And The Demand For Water Quality, David A. Keiser, Joseph S. Shapiro
Cowles Foundation Discussion Papers
Since the 1972 U.S. Clean Water Act, government and industry have invested over $1 trillion to abate water pollution, or $100 per person-year. Over half of U.S. stream and river miles, however, still violate pollution standards. We use the most comprehensive set of files ever compiled on water pollution and its determinants, including 50 million pollution readings from 170,000 monitoring sites, to study water pollution’s trends, causes, and welfare consequences. We have three main findings. First, water pollution concentrations have fallen substantially since 1972, though were declining at faster rates before then. Second, the Clean Water Act’s grants to municipal …
The Benefit Of Collective Reputation, Zvika Neeman, Aniko Öry (Oery), Jungju Yu
The Benefit Of Collective Reputation, Zvika Neeman, Aniko Öry (Oery), Jungju Yu
Cowles Foundation Discussion Papers
We study a model of collective reputation and use it to analyze the benefit of collective brands. Consumers form beliefs about the quality of an experience good that is produced by one firm that is part of a collective brand. Consumers’ limited ability to distinguish among firms in the collective and to monitor firms’ investment decisions creates incentives to free-ride on other firms’ investment efforts. Nevertheless, we show that collective brands induce stronger incentives to invest in quality than individual brands under two types of circumstances: if the main concern is with quality control and the baseline reputation of the …
Three Essays On The Theory Of Money And Financial Institutions Essay 3: The Economy With Innovation, Externalities And Context, Martin Shubik
Three Essays On The Theory Of Money And Financial Institutions Essay 3: The Economy With Innovation, Externalities And Context, Martin Shubik
Cowles Foundation Discussion Papers
This essay is the third of three. The first is nontechnical and in part autobiograhpical describing the evolution of my approach to developing a microeconomic theory of money and.financial institutions. The second essay was devoted to a more formal sketch of a closed economic exchange system with no other externalities beyond money and markets. This essay builds on the existence of monetary exchange but also context, and active government with nonsymmetric information and many externaties indicate that the views of Keynes, Hayek and Schumpeter are all consistent with the next stages of complexity as the logic requires many different arrays …
The Benefit Of Collective Reputation, Zvika Neeman, Aniko Öry (Oery), Jungju Yu
The Benefit Of Collective Reputation, Zvika Neeman, Aniko Öry (Oery), Jungju Yu
Cowles Foundation Discussion Papers
We study a model of reputation with two long-lived firms that sell their products under a collective brand or under two different individual brands. Firms face a moral hazard problem because their quality investments are not observed. Investments can only be sustained due to reputational concerns. In a collective brand, consumers cannot distinguish between the two firms. We show that in the long run, this makes it harder to establish a good reputation because of the incentives to free-ride on the other firm’s investments. But in the short run it mitigates the temptation to milk good reputation. Consequently, a collective …
Consequences Of The Clean Water Act And The Demand For Water Quality, David A. Keiser, Joseph S. Shapiro
Consequences Of The Clean Water Act And The Demand For Water Quality, David A. Keiser, Joseph S. Shapiro
Cowles Foundation Discussion Papers
Since the 1972 U.S. Clean Water Act, government and industry have invested over $1 trillion to abate water pollution, or $100 per person-year. Over half of U.S. stream and river miles, however, still violate pollution standards. We use the most comprehensive set of files ever compiled on water pollution and its determinants, including 50 million pollution readings from 240,000 monitoring sites and a network model of all U.S. rivers, to study water pollution’s trends, causes, and welfare consequences. We have three main findings. First, water pollution concentrations have fallen substantially. Between 1972 and 2001, for example, the share of waters …
A Note On Optimal Inference In The Linear Iv Model, Donald W.K. Andrews, Vadim Marmer, Zhengfei Yu
A Note On Optimal Inference In The Linear Iv Model, Donald W.K. Andrews, Vadim Marmer, Zhengfei Yu
Cowles Foundation Discussion Papers
This paper considers tests and confidence sets (CS’s) concerning the coefficient on the endogenous variable in the linear IV regression model with homoskedastic normal errors and one right-hand side endogenous variable. The paper derives a finite-sample lower bound function for the probability that a CS constructed using a two-sided invariant similar test has infinite length and shows numerically that the conditional likelihood ratio (CLR) CS of Moreira (2003) is not always very close to this lower bound function. This implies that the CLR test is not always very close to the two-sided asymptotically-efficient (AE) power envelope for invariant similar tests …
Weak Σ- Convergence: Theory And Applications, Jianning Kong, Peter C.B. Phillips, Donggyu Sul
Weak Σ- Convergence: Theory And Applications, Jianning Kong, Peter C.B. Phillips, Donggyu Sul
Cowles Foundation Discussion Papers
The concept of relative convergence, which requires the ratio of two time series to converge to unity in the long run, explains convergent behavior when series share commonly divergent stochastic or deterministic trend components. Relative convergence of this type does not necessarily hold when series share common time decay patterns measured by evaporating rather than divergent trend behavior. To capture convergent behavior in panel data that do not involve stochastic or divergent deterministic trends, we introduce the notion of weak σ-convergence, whereby cross section variation in the panel decreases over time. The paper formalizes this concept and proposes a simple-to-implement …
Uniform Inference In Panel Autoregression, John C. Chao, Peter C.B. Phillips
Uniform Inference In Panel Autoregression, John C. Chao, Peter C.B. Phillips
Cowles Foundation Discussion Papers
This paper considers estimation and inference concerning the autoregressive coefficient (ρ) in a panel autoregression for which the degree of persistence in the time dimension is unknown. The main objective is to construct confidence intervals for ρ that are asymptotically valid, having asymptotic coverage probability at least that of the nominal level uniformly over the parameter space. It is shown that a properly normalized statistic based on the Anderson-Hsiao IV procedure, which we call the M statistic, is uniformly convergent and can be inverted to obtain asymptotically valid interval estimates. In the unit root case confidence intervals based on this …
Narrative Economics, Robert J. Shiller
Narrative Economics, Robert J. Shiller
Cowles Foundation Discussion Papers
This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political-economic situation of today, are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human …
Informationally Robust Optimal Auction Design, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Informationally Robust Optimal Auction Design, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
A single unit of a good is to be sold by auction to one of two buyers. The good has either a high value or a low value, with known prior probabilities. The designer of the auction knows the prior over values but is uncertain about the correct model of the buyers’ beliefs. The designer evaluates a given auction design by the lowest expected revenue that would be generated across all models of buyers’ information that are consistent with the common prior and across all Bayesian equilibria. An optimal auction for such a seller is constructed, as is a worst-case …
Belief-Free Rationalizability And Informational Robustness, Dirk Bergemann, Stephen Morris
Belief-Free Rationalizability And Informational Robustness, Dirk Bergemann, Stephen Morris
Cowles Foundation Discussion Papers
We propose an incomplete information analogue of rationalizability. An action is said to be belief-free rationalizable if it survives the following iterated deletion process. At each stage, we delete actions for a type of a player that are not a best response to some conjecture that puts weight only on profiles of types of other players and states that that type thinks possible, combined with actions of those types that have survived so far. We describe a number of applications. This solution concept characterizes the implications of equilibrium when a player is known to have some private information but may …
(Non)Randomization: A Theory Of Quasi-Experimental Evaluation Of School Quality, Yusuke Narita
(Non)Randomization: A Theory Of Quasi-Experimental Evaluation Of School Quality, Yusuke Narita
Cowles Foundation Discussion Papers
In centralized school admissions systems, rationing at oversubscribed schools often uses lotteries in addition to preferences. This partly random assignment is used by empirical researchers to identify the effect of entering a school on outcomes like test scores. This paper formally studies if the two most popular empirical research designs successfully extract a random assignment. For a class of data-generating mechanisms containing those used in practice, I show: One research design extracts a random assignment under a mechanism if and almost only if the mechanism is strategy-proof for schools. In contrast, the other research design does not necessarily extract a …
Projections And Uncertainties About Climate Change In An Era Of Minimal Climate Policies, William D. Nordhaus
Projections And Uncertainties About Climate Change In An Era Of Minimal Climate Policies, William D. Nordhaus
Cowles Foundation Discussion Papers
Climate change remains one of the major international environmental challenges facing nations. Yet nations have to date taken minimal policies to slow climate change. Moreover, there has been no major improvement in emissions trends as of the latest data. The current study uses the updated DICE model to present new projections and the impacts of alternative climate policies. It also presents a new set of estimates of the uncertainties about future climate change and compares the results will those of other integrated assessment models. The study confirms past estimates of likely rapid climate change over the next century if there …
Homogeneity Pursuit In Panel Data Models: Theory And Applications, Peter C.B. Phillips, Liangjun Su, Wuyi Wang
Homogeneity Pursuit In Panel Data Models: Theory And Applications, Peter C.B. Phillips, Liangjun Su, Wuyi Wang
Cowles Foundation Discussion Papers
This paper studies estimation of a panel data model with latent structures where individuals can be classified into different groups where slope parameters are homogeneous within the same group but heterogeneous across groups. To identify the unknown group structure of vector parameters, we design an algorithm called Panel-CARDS which is a systematic extension of the CARDS procedure proposed by Ke, Fan, and Wu (2015) in a cross section framework. The extension addresses the problem of comparing vector coefficients in a panel model for homogeneity and introduces a new concept of controlled classification of multidimensional quantities called the segmentation net. We …
Selling To Intermediaries: Optimal Auction Design In A Common Value Model, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Selling To Intermediaries: Optimal Auction Design In A Common Value Model, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
We characterize revenue maximizing auctions when the bidders are intermediaries who wish to resell the good. The bidders have differential information about their common resale opportunities: each bidder privately observes an independent draw of a resale opportunity, and the highest signal is a sufficient statistic for the value of winning the good. If the good must be sold, then the optimal mechanism is simply a posted price at which all bidders are willing to purchase the good, and all bidders are equally likely to be allocated the good, irrespective of their signals. If the seller can keep the good, then …
(Non)Randomization: A Theory Of Quasi-Experimental Evaluation Of School Quality, Yusuke Narita
(Non)Randomization: A Theory Of Quasi-Experimental Evaluation Of School Quality, Yusuke Narita
Cowles Foundation Discussion Papers
Many centralized school admissions systems use lotteries to ration limited seats at oversubscribed schools. The resulting random assignment is used by empirical researchers to identify the effect of entering a school on outcomes like test scores. I first find that the two most popular empirical research designs may not successfully extract a random assignment of applicants to schools. When do the research designs overcome this problem? I show the following main results for a class of data-generating mechanisms containing those used in practice: One research design extracts a random assignment under a mechanism if and practically only if the mechanism …
Causal Change Detection In Possibly Integrated Systems: Revisiting The Money-Income Relationship, Shu-Ping Shi, Stan Hurn, Peter C.B. Phillips
Causal Change Detection In Possibly Integrated Systems: Revisiting The Money-Income Relationship, Shu-Ping Shi, Stan Hurn, Peter C.B. Phillips
Cowles Foundation Discussion Papers
This paper re-examines changes in the causal link between money and income in the United States for over the past half century (1959 - 2014). Three methods for the data-driven discovery of change points in causal relationships are proposed, all of which can be implemented without prior detrending of the data. These methods are a forward recursive algorithm, a recursive rolling algorithm and the rolling window algorithm all of which utilize subsample tests of Granger causality within a lag-augmented vector autoregressive framework. The limit distributions for these subsample Wald tests are provided. The results from a suite of simulation experiments …
Sequentially Testing Polynomial Model Hypotheses Using Power Transforms Of Regressors, Jin Seo Cho, Peter C.B. Phillips
Sequentially Testing Polynomial Model Hypotheses Using Power Transforms Of Regressors, Jin Seo Cho, Peter C.B. Phillips
Cowles Foundation Discussion Papers
We provide a methodology for testing a polynomial model hypothesis by extending the approach and results of Baek, Cho, and Phillips (2015; Journal of Econometrics; BCP) that tests for neglected nonlinearity using power transforms of regressors against arbitrary nonlinearity. We examine and generalize the BCP quasi-likelihood ratio test dealing with the multifold identification problem that arises under the null of the polynomial model. The approach leads to convenient asymptotic theory for inference, has omnibus power against general nonlinear alternatives, and allows estimation of an unknown polynomial degree in a model by way of sequential testing, a technique that is useful …
Iv And Gmm Estimation And Testing Of Multivariate Stochastic Unit Root Models, Offer Lieberman, Peter C.B. Phillips
Iv And Gmm Estimation And Testing Of Multivariate Stochastic Unit Root Models, Offer Lieberman, Peter C.B. Phillips
Cowles Foundation Discussion Papers
Lieberman and Phillips (2016; Journal of Econometrics; LP) introduced a multivariate stochastic unit root (STUR) model, which allows for random, time varying local departures from a unit root (UR) model, where nonlinear least squares (NLLS) may be used for estimation and inference on the STUR coefficient. In a structural version of this model where the driver variables of the STUR coefficient are endogenous, the NLLS estimate of the STUR parameter is inconsistent, as are the corresponding estimates of the associated covariance parameters. This paper develops a nonlinear instrumental variable (NLIV) as well as GMM estimators of the STUR parameter which …
Structural Inference From Reduced Forms With Many Instruments, Peter C.B. Phillips, Wayne Yuan Gao
Structural Inference From Reduced Forms With Many Instruments, Peter C.B. Phillips, Wayne Yuan Gao
Cowles Foundation Discussion Papers
This paper develops exact finite sample and asymptotic distributions for structural equation tests based on partially restricted reduced form estimates. Particular attention is given to models with large numbers of instruments, wherein the use of partially restricted reduced form estimates is shown to be especially advantageous in statistical testing even in cases of uniformly weak instruments and reduced forms. Comparisons are made with methods based on unrestricted reduced forms, and numerical computations showing finite sample performance of the tests are reported. Some new results are obtained on inequalities between noncentral chi-squared distributions with different degrees of freedom that assist in …
Change Detection And The Causal Impact Of The Yield Curve, Stan Hurn, Peter C.B. Phillips, Shu-Ping Shi
Change Detection And The Causal Impact Of The Yield Curve, Stan Hurn, Peter C.B. Phillips, Shu-Ping Shi
Cowles Foundation Discussion Papers
Causal relationships in econometrics are typically based on the concept of predictability and are established in terms of tests for Granger causality. These causal relationships are susceptible to change, especially during times of financial turbulence, making the real-time detection of instability an important practical issue. This paper develops a test for detecting changes in causal relationships based on a recursive rolling window, which is analogous to the procedure used in recent work on financial bubble detection. The limiting distribution of the test takes a simple form under the null hypothesis and is easy to implement in conditions of homoskedasticity, conditional …
Optimal Auction Design In A Common Value Model, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Optimal Auction Design In A Common Value Model, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
We study auction design when bidders have a pure common value equal to the maximum of their independent signals. In the revenue maximizing mechanism, each bidder makes a payment that is independent of his signal and the allocation discriminates in favor of bidders with lower signals. We provide a necessary and sufficient condition under which the optimal mechanism reduces to a posted price under which all bidders are equally likely to get the good. This model of pure common values can equivalently be interpreted as model of resale: the bidders have independent private values at the auction stage, and the …
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Cowles Foundation Discussion Papers
Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data-sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 45% lower than previous studies.
Three Essays On The Theory Of Money And Financial Institutions Essay 2: The Exchange Economy, Money, And Markets, Martin Shubik
Three Essays On The Theory Of Money And Financial Institutions Essay 2: The Exchange Economy, Money, And Markets, Martin Shubik
Cowles Foundation Discussion Papers
This essay is the second of three. The first is nontechnical and in part autobiographical describing the evolution of my approach to developing a micro economic theory of money and financial institutions. This essay is devoted to a mathematical sketch of a closed economic exchange system with general equilibrium GE and rational expectations RE viewed game theoretically. It squeezes the last drop out of statics and an illusory dynamics in the form of the RE extension of GE with no other externalities beyond money and markets. The third essay builds on process models adding uncertainty,innovation, an active government, nonsymmetric information …
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Cowles Foundation Discussion Papers
Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data - sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 30% lower than previous studies.
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Cowles Foundation Discussion Papers
Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data - sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 30% lower than previous studies.
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Product Variety, Across-Market Demand Heterogeneity, And The Value Of Online Retail, Thomas W. Quan, Kevin R. Williams
Cowles Foundation Discussion Papers
Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data-sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 45% lower than previous studies.
Cooperative And Noncooperative Solutions, And The 'Game Within A Game', Martin Shubik, Michael R. Powers
Cooperative And Noncooperative Solutions, And The 'Game Within A Game', Martin Shubik, Michael R. Powers
Cowles Foundation Discussion Papers
In a previous essay, we developed a simple (in)efficiency measure for matrix games. We now address the difficulties encountered in assessing the usefulness and accuracy of such a measure.
Aggregation Of Preferences And The Structure Of Decisive Sets, Donald J. Brown
Aggregation Of Preferences And The Structure Of Decisive Sets, Donald J. Brown
Cowles Foundation Discussion Papers
This is the manuscript for the talk that I presented at the Koerner Center’s Intellectual Trajectories Seminar in September 2016.
Nonlinear Tax Incidence And Optimal Taxation In General Equilibrium, Dominik Sachs, Aleh Tsyvinski, Nicolas Werquin
Nonlinear Tax Incidence And Optimal Taxation In General Equilibrium, Dominik Sachs, Aleh Tsyvinski, Nicolas Werquin
Cowles Foundation Discussion Papers
We study the incidence and the optimal design of nonlinear income taxes in a Mirrleesian economy with a continuum of endogenous wages. We characterize analytically the incidence of any tax reform by showing that one can mathematically formalize this problem as an integral equation. For a CES production function, we show theoretically and numerically that the general equilibrium forces raise the revenue gains from increasing the progressivity of the U.S. tax schedule. This result is reinforced in the case of a Translog technology where closer skill types are stronger substitutes. We then characterize the optimum tax schedule, and derive a …