Exact and approximate stepdown methods for multiple hypothesis testing

Consider the problem of testing k hypotheses simultaneously. In this paper,we discuss finite and large sample theory of stepdown methods that providecontrol of the familywise error rate (FWE). In order to improve upon theBonferroni method or Holm's (1979) stepdown method, Westfall and Young(1993) make eective use of resampling to construct stepdown methods thatimplicitly estimate the dependence structure of the test statistics. However,their methods depend on an assumption called subset pivotality. The goalof this paper is to construct general stepdown methods that do not requiresuch an assumption. In order to accomplish this, we take a close look atwhat makes stepdown procedures work, and a key component is a monotonicityrequirement of critical values. By imposing such monotonicity on estimatedcritical values (which is not an assumption on the model but an assumptionon the method), it is demonstrated that the problem of constructing a validmultiple test procedure which controls the FWE can be reduced to the problemof contructing a single test which controls the usual probability of a Type 1error. This reduction allows us to draw upon an enormous resamplingliterature as a general means of test contruction.

Experiencing simulated outcomes

Whereas much literature has documented difficulties in making probabilistic inferences, it hasalso emphasized the importance of task characteristics in determining judgmental accuracy.Noting that people exhibit remarkable efficiency in encoding frequency information sequentially,we construct tasks that exploit this ability by requiring people to experience the outcomes ofsequentially simulated data. We report two experiments. The first involved seven well-knownprobabilistic inference tasks. Participants differed in statistical sophistication and answered withand without experience obtained through sequentially simulated outcomes in a design thatpermitted both between- and within-subject analyses. The second experiment involvedinterpreting the outcomes of a regression analysis when making inferences for investmentdecisions. In both experiments, even the statistically naïve make accurate probabilistic inferencesafter experiencing sequentially simulated outcomes and many prefer this presentation format. Weconclude by discussing theoretical and practical implications.

Unemployment vs. mismatch of talents: Reconsidering unemployment benefits

We develop an equilibrium search-matching model with risk-neutral agentsand two-sided ex-ante heterogeneity. Unemployment insurance has thestandard effect of reducing employment, but also helps workers to get a suitable job. The predictions of our simple modelare consistent with the contrasting performance of the labor market in Europeand US in terms of unemployment, productivity growth and wage inequality.To show this, we construct two fictitious economies with calibratedparameters which only differ by the degree of unemployment insurance andassume that they are hit by a common technological shock which enhancesthe importance of mismatch. This shock reduces the proportion of jobs whichworkers regards as acceptable in the economy with unemployment insurance(Europe). As a result, unemployment doubles in this economy.In the laissez-faire economy (US), unemployment remains constant,but wage inequality increases more and productivity grows less due to largermismatch. The model can be used to address a number of normative issues.

Measuring the stability of histogram appearance when the anchor position is changed

Although the histogram is the most widely used density estimator, itis well--known that the appearance of a constructed histogram for a given binwidth can change markedly for different choices of anchor position. In thispaper we construct a stability index $G$ that assesses the potential changesin the appearance of histograms for a given data set and bin width as theanchor position changes. If a particular bin width choice leads to an unstableappearance, the arbitrary choice of any one anchor position is dangerous, anda different bin width should be considered. The index is based on the statisticalroughness of the histogram estimate. We show via Monte Carlo simulation thatdensities with more structure are more likely to lead to histograms withunstable appearance. In addition, ignoring the precision to which the datavalues are provided when choosing the bin width leads to instability. We provideseveral real data examples to illustrate the properties of $G$. Applicationsto other binned density estimators are also discussed.

Skill-biased technological change and the business cycle

Over the past two decades, technological progress in the United States hasbeen biased towards skilled labor. What does this imply for business cycles?We construct a quarterly skill premium from the CPS and use it to identifyskill-biased technology shocks in a VAR with long-run restrictions. Hours fallin response to skill-biased technology shocks, indicating that at least part of thetechnology-induced fall in total hours is due to a compositional shift in labordemand. Skill-biased technology shocks have no effect on the relative price ofinvestment, suggesting that capital and skill are not complementary in aggregateproduction.

Stabilization versus insurance: Welfare effects of procyclical taxation under incomplete markets

We construct and calibrate a general equilibrium business cycle model with unemployment and precautionary saving. We compute the cost of business cycles and locate the optimum in a set of simple cyclical fiscal policies. Our economy exhibits productivity shocks, giving firms an incentive to hire more when productivity is high. However, business cycles make workers' income riskier, both by increasing the unconditional probability of unusuallylong unemployment spells, and by making wages more variable, and therefore they decrease social welfare by around one-fourth or one-third of 1% of consumption. Optimal fiscal policy offsets the cycle, holding unemployment benefits constant but varying the tax rate procyclically to smooth hiring. By running a deficit of 4% to 5% of output in recessions, the government eliminates half the variation in the unemployment rate, most of the variation in workers'aggregate consumption, and most of the welfare cost of business cycles.

Why do emerging economies borrow short term?

We argue that one reason why emerging economies borrow short term is that it is cheaperthan borrowing long term. This is especially the case during crises, as in these episodes therelative cost of long-term borrowing increases. We construct a unique database of sovereignbond prices, returns, and issuances at di¤erent maturities for 11 emerging economies from 1990to 2009 and present a set of new stylized facts. On average, these countries pay a higher riskpremium on long-term than on short-term bonds. During crises, the di¤erence between the tworisk premia increases and issuance shifts towards shorter maturities. To illustrate our argument,we present a simple model in which the maturity structure is the outcome of a risk sharingproblem between an emerging economy subject to rollover crises and risk averse internationalinvestors.

Multi-period vendor managed inventory systems

In this paper we develop two models for an inventory system in which the distributormanages the inventory at the retailers location. These type of systems correspondto the Vendor Managed Inventory (VMI) systems described ib the literature. Thesesystems are very common in many different types of industries, such as retailingand manufacturing, although assuming different characteristics.The objective of our model is to minimize total inventory cost for the distributorin a multi-period multi-retailer setting. The inventory system includes holdingand stock-out costs and we study the case whre an additional fixed setup cost ischarged per delivery.We construct a numerical experiment to analyze the model bahavior and observe theimpact of the characteristics of the model on the solutions.

Ambiguity in election games

We construct a model in which the ambiguity of candidates allows them toincrease the number of voters to whom they appeal when voters have intense preferences for one of the alternatives available. An ambiguous candidate may offer voters with different preferences the hope that their most preferred alternative will be implemented. We find conditions under which ambiguous strategies are chosen in equilibrium. These conditions include the case in which there is an outcome that is a majority winner against all other outcomes but is not the most preferred outcome for a majority of voters. It is shown that if the number of candidates or parties increases, ambiguity will not be possible in equilibrium, but a larger set of possible policies increases the chance that at least one candidate will choose to be ambiguous in equilibrium.

Negativity effect in multiparty electoral competition

We construct a dynamic voting model of multiparty competition in order to capture the following facts: voters base their decision on past economicperformance of the parties, and parties and candidates have different objectives. This model may explain the emergence of parties' ideologies,and shows the compatibility of the different objectives of parties and candidates. Together, these results give rise to the formation ofpolitical parties, as infinetely-lived agents with a certain ideology, out of the competition of myopic candidates freely choosing policy positions. We also show that in multicandidate elections held under the plurality system, Hotelling's principle of minimum differentiation is no longer satisfied.

Constant interest rate projections without the curse of indeterminacy

Constant interest rate (CIR) projections are often criticized on the grounds that they are inconsistent with the existence of a unique equilibrium in a variety of forward-looking models. This note shows howto construct CIR projections that are not subject to that criticism, using a standard New Keynesian model as a reference framework.

Price differentials in monetary unions: The role of fiscal shocks

We study the effect of regional expenditure and revenue shocks on price differentials for47 US states and 9 EU countries. We identify shocks using sign restrictions on the dynamicsof deficits and output and construct two estimates for structural price differentials dynamics which optimally weight the information contained in the data for all units. Fiscal shocks explain between 14 and 23 percent of the variability of price differentials both in the US and in the EU. On average, expansionary fiscal disturbances produce positive price differential responses while distortionary balance budget shocks produce negative price differential responses. In a number of units, price differential responses to expansionary fiscal shocks are negative. Spillovers and labor supply effects partially explain this pattern while geographical, political, and economic indicators do not.

Killing by lung cancer or by diabetes? The trade-off between smoking and obesity

As the prevalence of smoking has decreased to below 20%, health practitioners interest has shifted towards theprevalence of obesity, and reducing it is one of the major health challenges in decades to come. In this paper westudy the impact that the final product of the anti-smoking campaign, that is, smokers quitting the habit, had onaverage weight in the population. To these ends, we use data from the Behavioral Risk Factors Surveillance System,a large series of independent representative cross-sectional surveys. We construct a synthetic panel that allows us tocontrol for unobserved heterogeneity and we exploit the exogenous changes in taxes and regulations to instrumentthe endogenous decision to give up the habit of smoking. Our estimates, are very close to estimates issued in the 90sby the US Department of Health, and indicate that a 10% decrease in the incidence of smoking leads to an averageweight increase of 2.2 to 3 pounds, depending on choice of specification. In addition, we find evidence that the effectovershoots in the short run, although a significant part remains even after two years. However, when we split thesample between men and women, we only find a significant effect for men. Finally, the implicit elasticity of quittingsmoking to the probability of becoming obese is calculated at 0.58. This implies that the net benefit from reducingthe incidence of smoking by 1% is positive even though the cost to society is $0.6 billions.

The three horsemen of riches: Plague, war and urbanization in early modern Europe

How did Europe escape the "Iron Law of Wages?" We construct a simple Malthusian model withtwo sectors and multiple steady states, and use it to explain why European per capita incomes andurbanization rates increased during the period 1350-1700. Productivity growth can only explain a smallfraction of the rise in output per capita. Population dynamics changes of the birth and death schedules were far more important determinants of steady states. We show how a major shock to population cantrigger a transition to a new steady state with higher per-capita income. The Black Death was such ashock, raising wages substantially. Because of Engel's Law, demand for urban products increased, andurban centers grew in size. European cities were unhealthy, and rising urbanization pushed up aggregatedeath rates. This effect was reinforced by diseases spread through war, financed by higher tax revenues.In addition, rising trade also spread diseases. In this way higher wages themselves reduced populationpressure. We show in a calibration exercise that our model can account for the sustained rise in Europeanurbanization as well as permanently higher per capita incomes in 1700, without technological change.Wars contributed importantly to the "Rise of Europe", even if they had negative short-run effects. We thustrace Europe s precocious rise to economic riches to interactions of the plague shock with the belligerentpolitical environment and the nature of cities.

Voto dual y abstención diferencial. Un estudio sobre el comportamiento electoral en Cataluña

En este trabajo se presentan los resultados de un estudio empírico sobre los motivos del cambio sistemático de resultados electorales que se da en Cataluña según el ámbito de la convocatoria electoral de que se trate. La hipótesis, contrastada positivamente con datos del período 1982-1993, es que la victoria del partido nacionalista de centro derecha en las elecciones autonómicas en un territorio donde vencen siempre los socialistas en las elecciones legislativas se debe a la combinación de los fenómenos del voto dual y del abstencionismo diferencial. La aproximación metodológica de la elección racional permite construir grupos de electores que tienen distintas percepciones del espacio en el que se dirime la competición política, hecho que les induce a un comportamiento electoral diferenciado. Combinando estos resultados con los obtenidos del análisis con datos socioestructurales agregados, se establece un cierto perfil de los votantes duales y de los abstencionistas diferenciales. Finalmente, se realiza una interpretación de los resultados de las elecciones catalanas de 1995 y 1999 a la luz de los resultados de este estudio.This article presents the results of an empirical study about the reasons of the systematic change in the electoral results in Catalonia according to the type of elections. The hypothesis, positively tested with data from the period 1982-1993, is that the victory of the nationalist centre-right party in the autonomous elections in a region where always wins the socialist party in general elections, is due to the combination of the dual vote and differential abstention phenomena. The rational choice methodological approach allow to construct groups of electors with different perceptions about the space in which the political race takes place, fact that induces them different electoral behaviour. In combining these results with those obtained from the analysis with aggregated social and structural data, it is defined a certain the profile of the dual voters and the differential non-voters. Finally, it is given an interpretation of the Catalan election results in 1995 and 1999 using as a clue the results of this study.