Are CGE Models still useful in economic policy making?

This paper develops background considerations to help better framing the results of a CGE exercise. Three main criticisms are usually addressed to CGE efforts. First, they are too aggregate, their conclusions failing to shed light on relevant sectors or issues. Second, they imply huge data requirements. Timeliness is frequently jeopardised by out-dated sources, benchmarks referring to realities gone by. Finally, results are meaningless, as they answer wrong or ill-posed questions. Modelling demands end up by creating a rather artificial context, where the original questions lose content. In spite of a positive outlook on the first two, crucial questions lie in the third point. After elaborating such questions, and trying to answer some, the text argues that CGE models can come closer to reality. If their use is still scarce to give way to a fruitful symbiosis between negotiations and simulation results, they remain the only available technique providing a global, inter-related way of capturing economy-wide effects of several different policies. International organisations can play a major role supporting and encouraging improvements. They are also uniquely positioned to enhance information and data sharing, as well as putting people from various origins together, to share their experiences. A serious and complex homework is however required, to correct, at least, the most dangerous present shortcomings of the technique.

Response surface models to predict broiler performance and applications for economic analysis

A study was carried out to elaborate response surface models using broiler performance data recovered from literature in order to predict performance and elaborate economic analyses. Nineteen studies published between 1995 and 2005 were retrieved using the systematic literature review method. Weight gain and feed conversion data were collected from eight studies that fulfilled the pre-established inclusion criteria, and a response surface model was adjusted using crude protein, environmental temperature, and age as independent variables. The models produced for weight gain (r² = 0.93) and feed conversion (r² = 0.85) were accurate, precise, and not biased. Protein levels, environmental temperature and age showed linear and quadratic effects on weight gain and feed conversion. There was no interaction between protein level and environmental temperature. Age and crude protein showed interaction for weight gain and feed conversion, whereas interaction between age and temperature was detected only for weight gain. It was possible to perform economic analyses to determine maximum profit as a function of the variables that were included in the model. It was concluded that the response surface models are effective to predict the performance of broiler chickens and allow the elaboration of economic analyses to optimize profit.

Evaluation of economic impact of external eauivalent models used in reactive OPF studies for interconnected systems

Reactive-optimisation procedures are responsible for the minimisation of online power losses in interconnected systems. These procedures are performed separately at each control centre and involve external network representations. If total losses can be minimised by the implementation of calculated local control actions, the entire system benefits economically, but such control actions generally result in a certain degree of inaccuracy, owing to errors in the modelling of the external system. Since these errors are inevitable, they must at least be maintained within tolerable limits by external-modelling approaches. Care must be taken to avoid unrealistic loss minimisation, as the local-control actions adopted can lead the system to points of operation which will be less economical for the interconnected system as a whole. The evaluation of the economic impact of the external modelling during reactive-optimisation procedures in interconnected systems, in terms of both the amount of losses and constraint violations, becomes important in this context. In the paper, an analytical approach is proposed for such an evaluation. Case studies using data from the Brazilian South-Southeast system (810 buses) have been carried out to compare two different external-modelling approaches, both derived from the equivalent-optimal-power-flow (EOPF) model. Results obtained show that, depending on the external-model representation adopted, the loss representation can be flawed. Results also suggest some modelling features that should be adopted in the EOPF model to enhance the economy of the overall system.

Economic design of (X)over-bar and R charts under Weibull shock models

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

Are CGE models still useful for economic policymaking?

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Towards a Variety of Family Models: Economic Contributions of Spouses and Family Power

In Western societies the increase in female employment (especially among married women) is seen as having brought about the crisis of the traditional model of the family, reinforcing the position of the "modern" model - the egalitarian family with two working spouses and a "dual-career" family. In contrast, the transitional situation in the post-communist countries during the 1990s is producing a crisis of the family with two working spouses (the basic type of the communist period) and leading to new power relations within the family. While the growth of dual-earner households in this century has implied modification of family models towards greater symmetry of responsibility for breadwinning and homemaking, there is considerable evidence that women's increased employment does not necessarily lead to a more egalitarian approach to gender roles within the family. The group set out to investigate the economic situation of families and economic power within the fame as a crucial factor in the transformation of families with two working spouses in order to reveal the specific patterns of gender contracts and power relations within the family that are emerging in response to the current political and economic transformation. They opted for a comparative approach, selecting the Czech Republic as a country where the very similar tendencies of a few years ago (almost 100% of women employed and the family as a realm of considerable private freedom where both women's and men's gender identities and the traditional distribution of family responsibilities were largely preserved) are combined with a very different experience in terms of economic inequalities during the 1990s to that of Russia. In the first stage of the study they surveyed 300 married couples (150 in each country) on the question of breadwinning. They then carried out in-depth interviews with 10 couples from each country (selected from among the educated layers of the population), focusing on the process of the social construction of gender, using breadwinning and homemaking as gender boundaries which distinguish men from women. By analysing changes in social position and the type of interpersonal interaction of spouses they distinguished two main types of family contracts: the neo-traditional "communal sharing" (with male breadwinner, traditional distribution of family chores and negotiated family power) and the modern one based on negotiated agreement. The most important pre-conditions of husband-wife agreement about breadwinning seemed to imply their overall gender ideology rather than the economic and/or family circumstances. In general, wives were more likely to express egalitarian views, supporting the blurring or even elimination of many gender boundaries. Husbands, on the other hand, more often gave responses calling for the continued maintenance of gender boundaries. The analysis showed that breadwinning is still an important gender boundary in these cultures, one that is assumed unless it is explicitly questioned and that is seen as part of what makes a man a "real man". The majority of respondents seemed to be committed to egalitarian ideology on gender roles and the distribution of family tasks, including decision making, but this is contradicted by the persistent idea of the husband as the breadwinner. This contradiction is more characteristic of the Russian situation than of the Czech. The quantitative study showed a difference in prevailing family models between the two countries, with a clearer shift towards the traditional family contract in the Russian case. The Czechs were more likely to consider their partnerships as based on negotiated agreement, while the Russians saw theirs as based on egalitarian contract, in both cases seeing this as the norm. The majority of couples said they felt satisfied with their marriage, although in both countries wives seemed to be less satisfied. There was however a difference in the issues that aroused dissatisfaction, with Czech women being more sensitive to issues such as self-realisation, personal independence, understanding and recognition in the family, and Russians to issues of love, understanding and recognition. The most disputed area for the majority of families was chores in the home, presumably because in many families both husband and wife were working hard outside the home and because a number of partners had differing views as to the ideal distribution of chores within the family. The distribution of power in the family seems to be linked to the level of well being. The analysis showed that in the dominant democratic model there is still an inverse connection between family leadership and well being: the more prominent the wife's position as head of the family is, the lower the level of family income. This may reflect both the husband's refusal to play the leading role in the family and even his rejection of any involvement in family issues in such a family. The qualitative research revealed that both men and women see the breadwinning role to be an essential part of masculine identity, a role which the female partner would take on temporarily to assist the male but not permanently since this would threaten the gender boundaries and the man's identity. At the same time, few breadwinners expressed a sense of job satisfaction and all considered their choice as imposed on them by the circumstances (i.e. having a family in difficult times). The group feel that family orientation and some loss of personal involvement in their profession is partly reflected in the fact that many of the men felt more comfortable and self-confident at home than at work. Women's work, on the other hand, was largely seen as a source of personal and self-realisation and social life. Eight out of ten of the Russian women interviewed were employed, although only two on a full-time basis, but none saw their jobs as adding substantially to the family budget. Both partners see the most important factor as the wife's wish to work or stay at home, and do not think it wise for the wife to work at the expense of her part of the "family contract", although husbands from the "egalitarian" relationships expressed more willingness to compromise. The analysis showed clearly that wives and husbands did not construct gender boundaries in isolation, with the interviews providing clear evidence of negotiation. At the same time, husbands' interpretations of their wives' employment were less susceptible to the influence of negotiation than were their gender attitudes and norms about breadwinning. One of the most interesting aspects of the spouses' negotiations was the extent to which they disagreed about what they seemed to have agreed upon. Most disagreements about the breadwinning boundaries, however, were over norms and were settled by changes in norms rather than in behavioural interpretation. Changes in norms were often a form of peace offering or were in response in changes in circumstances. The study did show, however, that many of the efforts at cooperation and compensation were more symbolic than real and the group found the plasticity of expressed gender ideology to be one of the most striking findings of their work. They conclude that the shift towards more traditional gednder distributions of incomes and domestic chores does not automatically mean the reestablishment of a patriarchal model of family power. On the contrary, it seems to be a compromise formation, relatively unstable, temporary and containing self-defeating forces as the split between the personal and professional value of work and its social value expressed in a money equivalent cannot be maintained for generations.

Checking Assumptions in Latent Class Regression Models via a Markov Chain Monte Carlo Estimation Approach: An Application to Depression and Socio-Economic Status

Latent class regression models are useful tools for assessing associations between covariates and latent variables. However, evaluation of key model assumptions cannot be performed using methods from standard regression models due to the unobserved nature of latent outcome variables. This paper presents graphical diagnostic tools to evaluate whether or not latent class regression models adhere to standard assumptions of the model: conditional independence and non-differential measurement. An integral part of these methods is the use of a Markov Chain Monte Carlo estimation procedure. Unlike standard maximum likelihood implementations for latent class regression model estimation, the MCMC approach allows us to calculate posterior distributions and point estimates of any functions of parameters. It is this convenience that allows us to provide the diagnostic methods that we introduce. As a motivating example we present an analysis focusing on the association between depression and socioeconomic status, using data from the Epidemiologic Catchment Area study. We consider a latent class regression analysis investigating the association between depression and socioeconomic status measures, where the latent variable depression is regressed on education and income indicators, in addition to age, gender, and marital status variables. While the fitted latent class regression model yields interesting results, the model parameters are found to be invalid due to the violation of model assumptions. The violation of these assumptions is clearly identified by the presented diagnostic plots. These methods can be applied to standard latent class and latent class regression models, and the general principle can be extended to evaluate model assumptions in other types of models.

Impact attribution models to evaluate drought effects: economic impacts, risk analyses and management strategies in Spain and Chile

La sequía es un fenómeno natural que se origina por el descenso de las precipitaciones con respecto a una media, y que resulta en la disponibilidad insuficiente de agua para alguna actividad. La creciente presión que se ha venido ejerciendo sobre los recursos hídricos ha hecho que los impactos de la sequía se hayan visto agravados a la vez que ha desencadenado situaciones de escasez de agua en muchas partes del planeta. Los países con clima mediterráneo son especialmente vulnerables a las sequías, y, su crecimiento económico dependiente del agua da lugar a impactos importantes. Para reducir los impactos de la sequía es necesaria una reducción de la vulnerabilidad a las sequías que viene dada por una gestión más eficiente y por una mejor preparación. Para ello es muy importante disponer de información acerca de los impactos y el alcance de este fenómeno natural. Esta investigación trata de abarcar el tema de los impactos de las sequías, de manera que plantea todos los tipos de impactos que pueden darse y además compara sus efectos en dos países (España y Chile). Para ello se proponen modelos de atribución de impactos que sean capaces de medir las pérdidas económicas causadas por la falta de agua. Los modelos propuestos tienen una base econométrica en la que se incluyen variables clave a la hora de evaluar los impactos como es una variable relacionada con la disponibilidad de agua, y otras de otra naturaleza para distinguir los efectos causados por otras fuentes de variación. Estos modelos se adaptan según la fase del estudio en la que nos encontremos. En primer lugar se miden los impactos directos sobre el regadío y se introduce en el modelo un factor de aleatoriedad para evaluar el riesgo económico de sequía. Esto se hace a dos niveles geográficos (provincial y de Unidad de Demanda Agraria) y además en el último se introduce no solo el riesgo de oferta sino también el riesgo de demanda de agua. La introducción de la perspectiva de riesgo en el modelo da lugar a una herramienta de gestión del riesgo económico que puede ser utilizada para estrategias de planificación. Más adelante una extensión del modelo econométrico se desarrolla para medir los impactos en el sector agrario (impactos directos sobre el regadío y el secano e impactos indirectos sobre la Agro Industria) para ello se adapta el modelo y se calculan elasticidades concatenadas entre la falta de agua y los impactos secundarios. Por último se plantea un modelo econométrico para el caso de estudio en Chile y se evalúa el impacto de las sequías debidas al fenómeno de La Niña. iv Los resultados en general muestran el valor que brinda el conocimiento más preciso acerca de los impactos, ya que en muchas ocasiones se tiende a sobreestimar los daños realmente producidos por la falta de agua. Los impactos indirectos de la sequía confirman su alcance a la vez que son amortiguados a medida que nos acercamos al ámbito macroeconómico. En el caso de Chile, su diferente gestión muestra el papel que juegan el fenómeno de El Niño y La Niña sobre los precios de los principales cultivos del país y sobre el crecimiento del sector. Para reducir las pérdidas y su alcance se deben plantear más medidas de mitigación que centren su esfuerzo en una gestión eficiente del recurso. Además la prevención debe jugar un papel muy importante para reducir los riesgos que pueden sufrirse ante situaciones de escasez. ABSTRACT Drought is a natural phenomenon that originates by the decrease in rainfall in comparison to the average, and that results in water shortages for some activities. The increasing pressure on water resources has augmented the impact of droughts just as water scarcity has become an additional problem in many parts of the planet. Countries with Mediterranean climate are especially vulnerable to drought, and its waterdependent economic growth leads to significant impacts. To reduce the negative impacts it is necessary to deal with drought vulnerability, and to achieve this objective a more efficient management is needed. The availability of information about the impacts and the scope of droughts become highly important. This research attempts to encompass the issue of drought impacts, and therefore it characterizes all impact types that may occur and also compares its effects in two different countries (Spain and Chile). Impact attribution models are proposed in order to measure the economic losses caused by the lack of water. The proposed models are based on econometric approaches and they include key variables for measuring the impacts. Variables related to water availability, crop prices or time trends are included to be able to distinguish the effects caused by any of the possible sources. These models are adapted for each of the parts of the study. First, the direct impacts on irrigation are measured and a source of variability is introduced into the model to assess the economic risk of drought. This is performed at two geographic levels provincial and Agricultural Demand Unit. In the latter, not only the supply risk is considered but also the water demand risk side. The introduction of the risk perspective into the model results in a risk management tool that can be used for planning strategies. Then an extension of the econometric model is developed to measure the impacts on the agricultural sector (direct impacts on irrigated and rainfed productions and indirect impacts on the Agri-food Industry). For this aim the model is adapted and concatenated elasticities between the lack of water and the impacts are estimated. Finally an econometric model is proposed for the Chilean case study to evaluate the impact of droughts, especially caused by El Niño Southern Oscillation. The overall results show the value of knowing better about the precise impacts that often tend to be overestimated. The models allow for measuring accurate impacts due to the lack of water. Indirect impacts of drought confirm their scope while they confirm also its dilution as we approach the macroeconomic variables. In the case of Chile, different management strategies of the country show the role of ENSO phenomena on main crop prices and on economic trends. More mitigation measures focused on efficient resource management are necessary to reduce drought losses. Besides prevention must play an important role to reduce the risks that may be suffered due to shortages.

Általános egyensúlyi modellek alkalmazása gazdaságpolitikai elemzésekre (Application of general equilibrium models to economic policy analyses)

A szerző az alkalmazott többszektoros modellezés területén a lineáris programozási modellektől a számszerűsített általános egyensúlyi modellekig végbement változásokat tekinti át. Egy rövid történeti visszapillantás után a lineáris programozás módszereire épülő nemzetgazdasági szintű modellekkel összevetve mutatja be az általános egyensúlyi modellek közös, illetve eltérő jellemzőit. Egyidejűleg azt is érzékelteti, hogyan lehet az általános egyensúlyi modelleket a gazdaságpolitikai célok konzisztenciájának, a célok közötti átváltási lehetőségek elemzésére és általában a gazdaságpolitikai elképzelések érzékenységi vizsgálatára felhasználni. A szerző az elméleti-módszertani kérdések taglalását számszerűsített általános egyensúlyi modell segítségével illusztrálja. _______ The author surveys the changes having taken place in the field of multi-sector modeling, from the linear programming models to the quantified general equilibrium models. After a brief historical retrospection he presents the common and different characteristic features of the general equilibrium models by comparing them with the national economic level models based on the methods of linear programming. He also makes clear how the general equilibrium models can be used for analysing the consistency of economic policy targets, for the investigation of trade-off possibilities among the targets and, in general, for sensitivity analyses of economic policy targets. The discussion of theoretical and methodological quuestions is illustrated by the author with the aid of a quantified general equilibrium model.

Nemlineáris dinamika klasszikus növekedési modellekben (Nonlinear dynamics in classical economic growth models)

Ebben a tanulmányban a klasszikus Harrod növekedési modellt nemlineáris kiterjesztéssel, keynesi és schumpeteri tradíciók bevezetésével reprezentatív ügynök modellbe alakítjuk. A híres Lucas kritika igazolásaként megmutatjuk, hogy az intrinsic gazdasági növekedési ütemek trajektóriái vagy egy turbulens káoszba szóródnak szét, vagy egy nagyméretű rendhez vezetnek, ami elsődlegesen a megfelelő fogyasztási függvény típusától függ, s bizonyos paraméterek piaci értékei, pedig csak másodlagos szerepet játszanak. A másik meglepő eredmény empirikus, ami szerint külkereskedelmi többlet, a hazai valuta bizonyos devizapiaci értékei mellett, különös attraktorokat generálhat. _____ In this paper the classical Harrodian growth model is transformed into a representative agent model by its nonlinear extensions and the Keynesian and Schumpeterian traditions. For the proof of the celebrated Lucas critique it is shown that the trajectories of intrinsic economic growth rates either are scattered into a turbulent chaos or lead to a large scale order. It depends on the type of the appropriate consumption function, and the market values of some parameters are playing only secondary role.Another surprising result is empirical: the international trade su±cit may generate strange attractors under some exchange rate values.

A review on degradation models in reliability analysis

With increasingly complex engineering assets and tight economic requirements, asset reliability becomes more crucial in Engineering Asset Management (EAM). Improving the reliability of systems has always been a major aim of EAM. Reliability assessment using degradation data has become a significant approach to evaluate the reliability and safety of critical systems. Degradation data often provide more information than failure time data for assessing reliability and predicting the remnant life of systems. In general, degradation is the reduction in performance, reliability, and life span of assets. Many failure mechanisms can be traced to an underlying degradation process. Degradation phenomenon is a kind of stochastic process; therefore, it could be modelled in several approaches. Degradation modelling techniques have generated a great amount of research in reliability field. While degradation models play a significant role in reliability analysis, there are few review papers on that. This paper presents a review of the existing literature on commonly used degradation models in reliability analysis. The current research and developments in degradation models are reviewed and summarised in this paper. This study synthesises these models and classifies them in certain groups. Additionally, it attempts to identify the merits, limitations, and applications of each model. It provides potential applications of these degradation models in asset health and reliability prediction.

Yield-factor volatility models

The term structure of interest rates is often summarized using a handful of yield factors that capture shifts in the shape of the yield curve. In this paper, we develop a comprehensive model for volatility dynamics in the level, slope, and curvature of the yield curve that simultaneously includes level and GARCH effects along with regime shifts. We show that the level of the short rate is useful in modeling the volatility of the three yield factors and that there are significant GARCH effects present even after including a level effect. Further, we find that allowing for regime shifts in the factor volatilities dramatically improves the model’s fit and strengthens the level effect. We also show that a regime-switching model with level and GARCH effects provides the best out-of-sample forecasting performance of yield volatility. We argue that the auxiliary models often used to estimate term structure models with simulation-based estimation techniques should be consistent with the main features of the yield curve that are identified by our model.

Investigation of MEMS inertial sensors and aircraft dynamic models in global positioning system integrity monitoring for approaches with vertical guidance

An Approach with Vertical Guidance (APV) is an instrument approach procedure which provides horizontal and vertical guidance to a pilot on approach to landing in reduced visibility conditions. APV approaches can greatly reduce the safety risk to general aviation by improving the pilot’s situational awareness. In particular the incidence of Controlled Flight Into Terrain (CFIT) which has occurred in a number of fatal air crashes in general aviation over the past decade in Australia, can be reduced. APV approaches can also improve general aviation operations. If implemented at Australian airports, APV approach procedures are expected to bring a cost saving of millions of dollars to the economy due to fewer missed approaches, diversions and an increased safety benefit. The provision of accurate horizontal and vertical guidance is achievable using the Global Positioning System (GPS). Because aviation is a safety of life application, an aviation-certified GPS receiver must have integrity monitoring or augmentation to ensure that its navigation solution can be trusted. However, the difficulty with the current GPS satellite constellation alone meeting APV integrity requirements, the susceptibility of GPS to jamming or interference and the potential shortcomings of proposed augmentation solutions for Australia such as the Ground-based Regional Augmentation System (GRAS) justifies the investigation of Aircraft Based Augmentation Systems (ABAS) as an alternative integrity solution for general aviation. ABAS augments GPS with other sensors at the aircraft to help it meet the integrity requirements. Typical ABAS designs assume high quality inertial sensors to provide an accurate reference trajectory for Kalman filters. Unfortunately high-quality inertial sensors are too expensive for general aviation. In contrast to these approaches the purpose of this research is to investigate fusing GPS with lower-cost Micro-Electro-Mechanical System (MEMS) Inertial Measurement Units (IMU) and a mathematical model of aircraft dynamics, referred to as an Aircraft Dynamic Model (ADM) in this thesis. Using a model of aircraft dynamics in navigation systems has been studied before in the available literature and shown to be useful particularly for aiding inertial coasting or attitude determination. In contrast to these applications, this thesis investigates its use in ABAS. This thesis presents an ABAS architecture concept which makes use of a MEMS IMU and ADM, named the General Aviation GPS Integrity System (GAGIS) for convenience. GAGIS includes a GPS, MEMS IMU, ADM, a bank of Extended Kalman Filters (EKF) and uses the Normalized Solution Separation (NSS) method for fault detection. The GPS, IMU and ADM information is fused together in a tightly-coupled configuration, with frequent GPS updates applied to correct the IMU and ADM. The use of both IMU and ADM allows for a number of different possible configurations. Three are investigated in this thesis; a GPS-IMU EKF, a GPS-ADM EKF and a GPS-IMU-ADM EKF. The integrity monitoring performance of the GPS-IMU EKF, GPS-ADM EKF and GPS-IMU-ADM EKF architectures are compared against each other and against a stand-alone GPS architecture in a series of computer simulation tests of an APV approach. Typical GPS, IMU, ADM and environmental errors are simulated. The simulation results show the GPS integrity monitoring performance achievable by augmenting GPS with an ADM and low-cost IMU for a general aviation aircraft on an APV approach. A contribution to research is made in determining whether a low-cost IMU or ADM can provide improved integrity monitoring performance over stand-alone GPS. It is found that a reduction of approximately 50% in protection levels is possible using the GPS-IMU EKF or GPS-ADM EKF as well as faster detection of a slowly growing ramp fault on a GPS pseudorange measurement. A second contribution is made in determining how augmenting GPS with an ADM compares to using a low-cost IMU. By comparing the results for the GPS-ADM EKF against the GPS-IMU EKF it is found that protection levels for the GPS-ADM EKF were only approximately 2% higher. This indicates that the GPS-ADM EKF may potentially replace the GPS-IMU EKF for integrity monitoring should the IMU ever fail. In this way the ADM may contribute to the navigation system robustness and redundancy. To investigate this further, a third contribution is made in determining whether or not the ADM can function as an IMU replacement to improve navigation system redundancy by investigating the case of three IMU accelerometers failing. It is found that the failed IMU measurements may be supplemented by the ADM and adequate integrity monitoring performance achieved. Besides treating the IMU and ADM separately as in the GPS-IMU EKF and GPS-ADM EKF, a fourth contribution is made in investigating the possibility of fusing the IMU and ADM information together to achieve greater performance than either alone. This is investigated using the GPS-IMU-ADM EKF. It is found that the GPS-IMU-ADM EKF can achieve protection levels approximately 3% lower in the horizontal and 6% lower in the vertical than a GPS-IMU EKF. However this small improvement may not justify the complexity of fusing the IMU with an ADM in practical systems. Affordable ABAS in general aviation may enhance existing GPS-only fault detection solutions or help overcome any outages in augmentation systems such as the Ground-based Regional Augmentation System (GRAS). Countries such as Australia which currently do not have an augmentation solution for general aviation could especially benefit from the economic savings and safety benefits of satellite navigation-based APV approaches.

The ability of economic thinking : the “nature” versus “nurture” debate

In their studies, Eley and Meyer (2004) and Meyer and Cleary (1998) found that there are sources of variation in the affective and process dimensions of learning in mathematics and clinical diagnosis specific to each of these disciplines. Meyer and Shanahan (2002) argue that: General purpose models of student learning that are transportable across different discipline contexts cannot, by definition, be sensitive to sources of variation that may be subject-specific (2002. p. 204). In other words, to explain the differences in learning approaches and outcomes in a particular discipline, there are discipline-specific factors, which cannot be uncovered in general educational research. Meyer and Shanahan (2002) argue for a need to "seek additional sources of variation that are perhaps conceptually unique ... within the discourse of particular disciplines" (p. 204). In this paper, the development of an economics-specific construct (called economic thinking ability) is reported. The construct aims to measure discipline-sited ability of students that has important influence on learning in economics. Using this construct, economic thinking abilities of introductory and intermediate level economics students were measured prior to the commencement, and at the end, of their study over one semester. This enabled factors associated with students' pre-course economic thinking ability and their development in economic thinking ability to be investigated. The empirical findings will address the 'nature' versus 'nurture' debate in economics education (Frank, et aI., 1993; Frey et al., 1993; Haucap and Tobias 2003). The implications for future research in economics education will also be discussed.

Teaching the economic way of thinking : a new approach to teaching introductory economics in a business degree

In teaching introductory economics there has been a tendency to put a lot of emphasis on imparting abstract models and technical skills to students (Stilwell, 2005; Voss, Blais, Greens, & Ahwesh, 1986). This model building approach has the merit of preparing the grounding for students 10 pursue further studies in economics. However, in a business degree with only a small proportion of students majoring in economics, such an approach tend to alienate the majority of students transiting from high school in to university. Surveys in Europe and Australia found that students complained about the lack of relevance of economics courses to the real world and the over-reliance of abstract mathematical modelling (Kirman, 2001; Lewis and Norris, 1997; Siegfried & Round, 2000). BSB112 Economics 1 is one of the eight faculty core units in the Faculty of Business at QUT, with over 1000 students in each semester. In semester I 2008, a new approach to teaching this unit was designed aiming to achieve three inter-related objectives: (1) to provide business students with a first insight into economic thinking and language, (2) to integrate economic analysis with current Australian social, environmental and political issues, and (3) to cater for students with a wide range of academic needs. Strategies used to achieve these objectives included writing up a new text which departs from traditional economics textbooks in important ways, integrating students' cultures in teaching and learning activities, and devising a new assessment format to encourage development of research skills and applications rather than reproduction of factual knowledge. This paper will document the strategies used in this teaching innovation, present quantitative and qualitative evidence to evaluate this new approach and suggest ways of further improvement.