Testing oligopoly theory in the lab

Previous literature is reviewed to account for the existing experimental tests of standard oligopoly-theoretic models.

Business cycle asymmetries: characterisation and testing based on Markov-switching autoregressions

Tests for business cycle asymmetries are developed for Markov-switching autoregressive models. The tests of deepness, steepness, and sharpness are Wald statistics, which have standard asymptotics. For the standard two-regime model of expansions and contractions, deepness is shown to imply sharpness (and vice versa), whereas the process is always nonsteep. Two and three-state models of U.S. GNP growth are used to illustrate the approach, along with models of U.S. investment and consumption growth. The robustness of the tests to model misspecification, and the effects of regime-dependent heteroscedasticity, are investigated.

Testing the expectations theory of the term structure in threshold models

We test the expectations theory of the term structure of U.S. interest rates in nonlinear systems. These models allow the response of the change in short rates to past values of the spread to depend upon the level of the spread. The nonlinear system is tested against a linear system, and the results of testing the expectations theory in both models are contrasted. We find that the results of tests of the implications of the expectations theory depend on the size and sign of the spread. The long maturity spread predicts future changes of the short rate only when it is high.

Fire history and the Global Charcoal Database: a new tool for hypothesis testing and data exploration

Version 1 of the Global Charcoal Database is now available for regional fire history reconstructions, data exploration, hypothesis testing, and evaluation of coupled climate–vegetation–fire model simulations. The charcoal database contains over 400 radiocarbon-dated records that document changes in charcoal abundance during the Late Quaternary. The aim of this public database is to stimulate cross-disciplinary research in fire sciences targeted at an increased understanding of the controls and impacts of natural and anthropogenic fire regimes on centennial-to-orbital timescales. We describe here the data standardization techniques for comparing multiple types of sedimentary charcoal records. Version 1 of the Global Charcoal Database has been used to characterize global and regional patterns in fire activity since the last glacial maximum. Recent studies using the charcoal database have explored the relation between climate and fire during periods of rapid climate change, including evidence of fire activity during the Younger Dryas Chronozone, and during the past two millennia.

Testing the Revised Hierarchical Model: evidence from word associations

The main purpose of the work described in this paper is to examine the extent to which the L2 developmental changes predicted by Kroll and Stewart's (1994) Revised Hierarchical Model (RHM) can be understood by word association response behaviour. The RHM attempts to account for the relative “strength of the links between words and concepts in each of the bilingual's languages” (Kroll, Van Hell, Tokowicz & Green, 2010, p. 373). It proposes that bilinguals with higher L2 proficiency tend to rely less on mediation, while less proficient L2 learners tend to rely on mediation and access L2 words by translating from L1 equivalents. In this paper, I present findings from a simple word association task. More proficient learners provided a greater proportion of collocational links, suggesting that they mediate less when compared to less proficient learners. The results provide tentative support for Kroll and Stewart's model

Testing for bubbles in indirect property price cycles

Speculative bubbles are generated when investors include the expectation of the future price in their information set. Under these conditions, the actual market price of the security, that is set according to demand and supply, will be a function of the future price and vice versa. In the presence of speculative bubbles, positive expected bubble returns will lead to increased demand and will thus force prices to diverge from their fundamental value. This paper investigates whether the prices of UK equity-traded property stocks over the past 15 years contain evidence of a speculative bubble. The analysis draws upon the methodologies adopted in various studies examining price bubbles in the general stock market. Fundamental values are generated using two models: the dividend discount and the Gordon growth. Variance bounds tests are then applied to test for bubbles in the UK property asset prices. Finally, cointegration analysis is conducted to provide further evidence on the presence of bubbles. Evidence of the existence of bubbles is found, although these appear to be transitory and concentrated in the mid-to-late 1990s.

Testing for non-linearity in daily sterling exchange rates

A number of tests for non-linear dependence in time series are presented and implemented on a set of 10 daily sterling exchange rates covering the entire post Bretton-Woods era until the present day. Irrefutable evidence of non-linearity is shown in many of the series, but most of this dependence can apparently be explained by reference to the GARCH family of models. It is suggested that the literature in this area has reached an impasse, with the presence of ARCH effects clearly demonstrated in a large number of papers, but with the tests for non-linearity which are currently available being unable to classify any additional non-linear structure.

Testing for unit roots in bounded time series

Many key economic and financial series are bounded either by construction or through policy controls. Conventional unit root tests are potentially unreliable in the presence of bounds, since they tend to over-reject the null hypothesis of a unit root, even asymptotically. So far, very little work has been undertaken to develop unit root tests which can be applied to bounded time series. In this paper we address this gap in the literature by proposing unit root tests which are valid in the presence of bounds. We present new augmented Dickey–Fuller type tests as well as new versions of the modified ‘M’ tests developed by Ng and Perron [Ng, S., Perron, P., 2001. LAG length selection and the construction of unit root tests with good size and power. Econometrica 69, 1519–1554] and demonstrate how these tests, combined with a simulation-based method to retrieve the relevant critical values, make it possible to control size asymptotically. A Monte Carlo study suggests that the proposed tests perform well in finite samples. Moreover, the tests outperform the Phillips–Perron type tests originally proposed in Cavaliere [Cavaliere, G., 2005. Limited time series with a unit root. Econometric Theory 21, 907–945]. An illustrative application to U.S. interest rate data is provided

Automated determination of auroral breakup during the substorm expansion phase using all sky imager data

This technique paper describes a novel method for quantitatively and routinely identifying auroral breakup following substorm onset using the Time History of Events and Macroscale Interactions During Substorms (THEMIS) all-sky imagers (ASIs). Substorm onset is characterised by a brightening of the aurora that is followed by auroral poleward expansion and auroral breakup. This breakup can be identified by a sharp increase in the auroral intensity i(t) and the time derivative of auroral intensity i'(t). Utilising both i(t) and i'(t) we have developed an algorithm for identifying the time interval and spatial location of auroral breakup during the substorm expansion phase within the field of view of ASI data based solely on quantifiable characteristics of the optical auroral emissions. We compare the time interval determined by the algorithm to independently identified auroral onset times from three previously published studies. In each case the time interval determined by the algorithm is within error of the onset independently identified by the prior studies. We further show the utility of the algorithm by comparing the breakup intervals determined using the automated algorithm to an independent list of substorm onset times. We demonstrate that up to 50% of the breakup intervals characterised by the algorithm are within the uncertainty of the times identified in the independent list. The quantitative description and routine identification of an interval of auroral brightening during the substorm expansion phase provides a foundation for unbiased statistical analysis of the aurora to probe the physics of the auroral substorm as a new scientific tool for aiding the identification of the processes leading to auroral substorm onset.

Automated identification and tracking of polar-cap plasma patches at solar minimum

A method of automatically identifying and tracking polar-cap plasma patches, utilising data inversion and feature-tracking methods, is presented. A well-established and widely used 4-D ionospheric imaging algorithm, the Multi-Instrument Data Assimilation System (MIDAS), inverts slant total electron content (TEC) data from ground-based Global Navigation Satellite System (GNSS) receivers to produce images of the free electron distribution in the polar-cap ionosphere. These are integrated to form vertical TEC maps. A flexible feature-tracking algorithm, TRACK, previously used extensively in meteorological storm-tracking studies is used to identify and track maxima in the resulting 2-D data fields. Various criteria are used to discriminate between genuine patches and "false-positive" maxima such as the continuously moving day-side maximum, which results from the Earth's rotation rather than plasma motion. Results for a 12-month period at solar minimum, when extensive validation data are available, are presented. The method identifies 71 separate structures consistent with patch motion during this time. The limitations of solar minimum and the consequent small number of patches make climatological inferences difficult, but the feasibility of the method for patches larger than approximately 500 km in scale is demonstrated and a larger study incorporating other parts of the solar cycle is warranted. Possible further optimisation of discrimination criteria, particularly regarding the definition of a patch in terms of its plasma concentration enhancement over the surrounding background, may improve results.

Prediction of Staphylococcus aureus antimicrobial resistance by whole-genome sequencing

Whole-genome sequencing (WGS) could potentially provide a single platform for extracting all the information required to predict an organism’s phenotype. However, its ability to provide accurate predictions has not yet been demonstrated in large independent studies of specific organisms. In this study, we aimed to develop a genotypic prediction method for antimicrobial susceptibilities. The whole genomes of 501 unrelated Staphylococcus aureus isolates were sequenced, and the assembled genomes were interrogated using BLASTn for a panel of known resistance determinants (chromosomal mutations and genes carried on plasmids). Results were compared with phenotypic susceptibility testing for 12 commonly used antimicrobial agents (penicillin, methicillin, erythromycin, clindamycin, tetracycline, ciprofloxacin, vancomycin, trimethoprim, gentamicin, fusidic acid, rifampin, and mupirocin) performed by the routine clinical laboratory. We investigated discrepancies by repeat susceptibility testing and manual inspection of the sequences and used this information to optimize the resistance determinant panel and BLASTn algorithm. We then tested performance of the optimized tool in an independent validation set of 491 unrelated isolates, with phenotypic results obtained in duplicate by automated broth dilution (BD Phoenix) and disc diffusion. In the validation set, the overall sensitivity and specificity of the genomic prediction method were 0.97 (95% confidence interval [95% CI], 0.95 to 0.98) and 0.99 (95% CI, 0.99 to 1), respectively, compared to standard susceptibility testing methods. The very major error rate was 0.5%, and the major error rate was 0.7%. WGS was as sensitive and specific as routine antimicrobial susceptibility testing methods. WGS is a promising alternative to culture methods for resistance prediction in S. aureus and ultimately other major bacterial pathogens.

Automated algorithms for multilayer thin film filter design using metamaterials

Currently, infrared filters for astronomical telescopes and satellite radiometers are based on multilayer thin film stacks of alternating high and low refractive index materials. However, the choice of suitable layer materials is limited and this places limitations on the filter performance that can be achieved. The ability to design materials with arbitrary refractive index allows for filter performance to be greatly increased but also increases the complexity of design. Here a differential algorithm was used as a method for optimised design of filters with arbitrary refractive indices, and then materials are designed to these specifications as mono-materials with sub wavelength structures using Bruggeman’s effective material approximation (EMA).

Testing substorm theories: The need for multipoint observations

The requirement for multipoint observations to test theories of magnetospheric substorms is reviewed. A wide variety of such theories have been proposed, but these cannot be properly evaluated because we do not understand how the various features of a substorm are causally linked. In terms of explaining certain substorm features, some theories may be mutually-exclusive rivals. But this is not always the case, making it possible that theories may be either combined into a synthesis model or loosely connected in a more modular view of substorms. Some key questions are defined which require multipoint in-situ measurements, combined with remote sensing observations, of the development and relationship of the major substorm features.