The Persistence of Inflation in OECDCountries: a Fractionally Integrated Approach

The statistical properties of inflation and, in particular, its degree of persistence and stability over time is a subject of intense debate and no consensus has been achieved yet. The goal of this paper is to analyze this controversy using a general approach, with the aim of providing a plausible explanation for the existing contradictory results. We consider the inflation rates of 21 OECD countries which are modelled as fractionally integrated (FI) processes. First, we show analytically that FI can appear in inflation rates after aggregating individual prices from firms that face different costs of adjusting their prices. Then, we provide robust empirical evidence supporting the FI hypothesis using both classical and Bayesian techniques. Next, we estimate impulse response functions and other scalar measures of persistence, achieving an accurate picture of this property and its variation across countries. It is shown that the application of some popular tools for measuring persistence, such as the sum of the AR coefficients, could lead to erroneous conclusions if fractional integration is present. Finally, we explore the existence of changes in inflation inertia using a novel approach. We conclude that the persistence of inflation is very high (although non-permanent) in most post-industrial countries and that it has remained basically unchanged over the last four decades.

Strategic Delegations in Monetary Unions

In monetary unions, monetary policy is typically made by delegates of the member countries. This procedure raises the possibility of strategic delegation - that countries may choose the types of delegates to influence outcomes in their favor. We show that without commitment in monetary policy, strategic delegation arises if and only if three conditions are met: shocks affecting individual countries are not perfectly correlated, risk-sharing across countries is imperfect, and the Phillips Curve is nonlinear. Moreover, inflation rates are inefficiently high. We argue that ways of solving the commitment problem, including the emphasis on price stability in the agreements constituting the European Union are especially valuable when strategic delegation is a problem.

Asessing public policies. The case of education in Europe and the interaction between personal and institutional factors

The paper deals with the comparative study of European citizens' satisfaction with the state of education in their respective countries. Individual and contextual effects are tested applying multilevel analysis. The results show that educational public policies (level of decentralization, degree of comprehensiveness and public spending) as well as the students' social environment (socioeconomic and cultural status) have a sound impact on the opinions about the state of education.

Measures of fit in multiple correspondence analysis of crisp and fuzzy coded data

When continuous data are coded to categorical variables, two types of coding are possible: crisp coding in the form of indicator, or dummy, variables with values either 0 or 1; or fuzzy coding where each observation is transformed to a set of "degrees of membership" between 0 and 1, using co-called membership functions. It is well known that the correspondence analysis of crisp coded data, namely multiple correspondence analysis, yields principal inertias (eigenvalues) that considerably underestimate the quality of the solution in a low-dimensional space. Since the crisp data only code the categories to which each individual case belongs, an alternative measure of fit is simply to count how well these categories are predicted by the solution. Another approach is to consider multiple correspondence analysis equivalently as the analysis of the Burt matrix (i.e., the matrix of all two-way cross-tabulations of the categorical variables), and then perform a joint correspondence analysis to fit just the off-diagonal tables of the Burt matrix - the measure of fit is then computed as the quality of explaining these tables only. The correspondence analysis of fuzzy coded data, called "fuzzy multiple correspondence analysis", suffers from the same problem, albeit attenuated. Again, one can count how many correct predictions are made of the categories which have highest degree of membership. But here one can also defuzzify the results of the analysis to obtain estimated values of the original data, and then calculate a measure of fit in the familiar percentage form, thanks to the resultant orthogonal decomposition of variance. Furthermore, if one thinks of fuzzy multiple correspondence analysis as explaining the two-way associations between variables, a fuzzy Burt matrix can be computed and the same strategy as in the crisp case can be applied to analyse the off-diagonal part of this matrix. In this paper these alternative measures of fit are defined and applied to a data set of continuous meteorological variables, which are coded crisply and fuzzily into three categories. Measuring the fit is further discussed when the data set consists of a mixture of discrete and continuous variables.

Financial Repression in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714

If financial deepening aids economic growth, then financial repression should be harmful. We use a natural experiment – the change in the English usury laws in 1714 – to analyze the effects of interest rate restrictions. We use a sample of individual loan transactions to demonstrate how the reduction of the legal maximum rate of interest affected the supply and demand for credit. Average loan size and minimum loan size increased strongly, and access to credit worsened for those with little ‘social capital.’ While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this highly likely. We conclude that financial repression can undermine the positive effects of financial deepening.

Catholic Confession of Sins as Third-Party Moral Enforcement

Catholicism has built up a legalistic religion based on two pillars: salvation by works and 'auricular' confession of sins to a priest with judicial functions. Since the Reformation, many consider auricular confession inferior to less institutional and more individual conceptions of faith. This article analyzes how all these historical solutions trade off specialization advantages against exchange costs to produce moral enforcement. After showing the behavioral foundations of confession and the adaptiveness of its historical evolution, it tests hypotheses on its efficacy, exploitation and opportunity cost. Econometric evidence supports the efficacy but not the exploitative character of Catholic confession. It also explains its secular decline as a consequence of two factors. First, the rise in education, which makes moral self-enforcement less costly. Second, the productivity gap suffered by confession, given its necessarily interpersonal nature.

Individual vocal signatures in barn owl nestlings: does individual recognition have an adaptive role in sibling vocal competition?

To compete over limited parental resources, young animals communicate with their parents and siblings by producing honest vocal signals of need. Components of begging calls that are sensitive to food deprivation may honestly signal need, whereas other components may be associated with individual-specific attributes that do not change with time such as identity, sex, absolute age and hierarchy. In a sib-sib communication system where barn owl (Tyto alba) nestlings vocally negotiate priority access to food resources, we show that calls have individual signatures that are used by nestlings to recognize which siblings are motivated to compete, even if most vocalization features vary with hunger level. Nestlings were more identifiable when food-deprived than food-satiated, suggesting that vocal identity is emphasized when the benefit of winning a vocal contest is higher. In broods where siblings interact iteratively, we speculate that individual-specific signature permits siblings to verify that the most vocal individual in the absence of parents is the one that indeed perceived the food brought by parents. Individual recognition may also allow nestlings to associate identity with individual-specific characteristics such as position in the within-brood dominance hierarchy. Calls indeed revealed age hierarchy and to a lower extent sex and absolute age. Using a cross-fostering experimental design, we show that most acoustic features were related to the nest of origin (but not the nest of rearing), suggesting a genetic or an early developmental effect on the ontogeny of vocal signatures. To conclude, our study suggests that sibling competition has promoted the evolution of vocal behaviours that signal not only hunger level but also intrinsic individual characteristics such as identity, family, sex and age.

Are Chileans equally supportive? Analysis of the individual differences in money donations

In the public discourse it is commonly assumed that Chile is a solidary country, an assumption that is mixed with the idea of homogeneity in the country as far as helping behavior and solidarity values is concerned. The present paper is aimed at challenging this homogeneity assumption by proposing that helping behavior is associated to personal resources, which at the same time are linked to the position in the stratification structure. Using data from the Solidarity Survey implemented by the assessment center MIDE UC of the Pontificia Universidad Católica de Chile in 2009, the paper focuses on a specific type of helping behavior: money donations. The analysis centers on the influence of personal resources such as income, education and networks on this kind of donations. Results indicate that individuals with greater resources are more given to donate, whereby the educational level plays a key role.

Els aspectes ètics en l’assessorament tècnic de menors

La feina dels assessors tècnics de menors se sotmet a un posicionament ètic i/o moral individual, que és el que regeix la nostra manera de fer i de viure en el món. A l’articulat s’acostuma a regular l’activitat, la conducta professional respecte als drets humans generals, a la institució, als usuaris, als clients, als altres professionals, etc., però no s'aprofundeix gaire en l'ètica del col·lectiu. Aquest treball garanteix una conducta ètica comuna i promou instruments per jutjar-la. Els codis i normes de bona pràctica per als professionals, investeixen d’autoritat i reconeixement la professió i ofereixen independència i autorregulació sobre com han d’actuar els professionals.

Guia d’activitats de lleure per a centres de justícia juvenil

El temps lliure és molt important per als joves perquè els permet construir i desenvolupar la seva identitat personal i de grup, des de la presa de decisions personals, la llibertat individual (autonomia, desvincular-se dels adults), i fomentar les relacions interpersonals; per tant, és un factor de socialització que a més, ben invertit, contribueix al benestar personal. Aquest temps lliure és per gaudir, dedicar-lo a fer el que realment els agrada, deixant de banda les obligacions i responsabilitats, però alhora genera noves responsabilitats, triades pels mateixos joves. Els ajuda a conèixer-se i descobrir quines activitats els fan sentir millor, a prendre decisions amb relació a com i en què invertir aquest el temps, en un oci passiu, veure la TV, xatejar, etc., o bé, un oci actiu (relacionat amb les activitats de lleure). Per això, els centres educatius han d’oferir diferents opcions d’activitats de lleure (esportives, artístiques...) perquè el jove pugui experimentar diferents tipus d’activitats i participar-hi, que han de ser adients a la seva edat, inquietuds i realitat social, sempre en constant evolució. La manera en què un jove inverteix el seu temps lliure l’ajuda a donar-se a conèixer als altres. És, doncs, un moment per desenvolupar-se personalment, definir la seva personalitat i les seves preferències. L’ús que en fa, d’aquest temps, pot condicionar aspectes de la seva vida com les relacions amb els altres o la pertinència o integració a un grup. Interrelacionar-se amb altra gent els permet el contacte amb altres persones i identitats, i els possibilita la identificació dels seus trets singulars i positius. La nostra societat, basada en el control, la velocitat i la satisfacció immediata, ofereix alternatives de lleure de tot tipus, però són aquelles que aporten una satisfacció més immediata les que més ens atreuen i més usem. Diu Jaume Trilla, catedràtic de la Facultat de Pedagogia de Barcelona, que «el vertader temps d’oci no és el que esconsumeix sinó el que es construeix», i molts joves fan de la construcció part de la seva vida. Les necessitats dels joves són les que han de determinar moltes de les característiques de les activitats de lleure. Aquestes necessitats s'han de veure cobertes en la mesura del possible amb les activitats de lleure que els centres educatius ofereixin. Però, quines són aquestes necessitats realment? Aquestes activitats pretenen fer sortir de la quotidianitat el menor i/o jove i que visqui experiències noves i intenses, i enriquir el seu procés de creixement personal, ja que en estar desproveït de la seva llibertat (per la mesura d'internament), pot caure en una espiral de negativitat i de passivitat. Es tracta d'oferir-los una mica de diversió, desconnexió del ritme habitual de la dinàmica del centre, tot des d'una vessant educativa, amb vivències que afavoreixen el desenvolupament de la seva autonomia personal i social, sent d'aquesta manera el lleure una important font de transmissió de valors i hàbits saludables.

Attribution and reciprocity in a simulated labor market: An experimental investigation

While papers such as Akerlof and Yellen (1990) and Rabin (1993) argue that psychological considerations such as fairness and reciprocity are important in individual decision-making, there is little explicit empirical evidence of reciprocal altruism in economic environments. This paper tests whether attribution of volition in choosing a wage has a significant effect on subsequent costly effort provision. An experiment was conducted in which subjects are first randomly divided into groups of employers and employees. Wages were selected and employees asked to choose an effort level, where increased effort is costly to the employee, but highly beneficial to the employer. The wage-determination process was common knowledge and wages were chosen either by the employer or by an external process. There is evidence for both distributional concerns and reciprocal altruism. The slope of the effort/wage profile is clearly positive in all cases, but is significantly higher when wages are chosen by the employer, offering support for the hypothesis of reciprocity. There are implications for models of utility and a critique of some current models is presented.

Bundling and competition for slots: Sequential pricing

In this paper we study, as in Jeon-Menicucci (2009), competition between sellerswhen each of them sells a portfolio of distinct products to a buyer having limitedslots. This paper considers sequential pricing and complements our main paper (Jeon-Menicucci, 2009) that considers simultaneous pricing.First, Jeon-Menicucci (2009) find that under simultaneous individual pricing, equilibriumoften does not exist and hence the outcome is often inefficient. By contrast,equilibrium always exists under sequential individual pricing and we characterize it inthis paper. We find that each seller faces a trade-off between the number of slots heoccupies and surplus extraction per product, and there is no particular reason thatthis leads to an efficient allocation of slots.Second, Jeon-Menicucci (2009) find that when bundling is allowed, there alwaysexists an efficient equilibrium but inefficient equilibria can also exist due to purebundling (for physical products) or slotting contracts. Under sequential pricing,we find that all equilibria are efficient regardless of whether firms can use slottingcontracts, and both for digital goods and for physical goods. Therefore, sequentialpricing presents an even stronger case for laissez-faire in the matter of bundling thansimultaneous pricing.

Equilibrium asset prices and savings of heterogeneous agents in the presence of incomplete markets and portfolio constraints

We study the quantitative properties of a dynamic general equilibrium model in which agents face both idiosyncratic and aggregate income risk, state-dependent borrowing constraints that bind in some but not all periods and markets are incomplete. Optimal individual consumption-savings plans and equilibrium asset prices are computed under various assumptions about income uncertainty. Then we investigate whether our general equilibrium model with incomplete markets replicates two empirical observations: the high correlation between individual consumption and individual income, and the equity premium puzzle. We find that, when the driving processes are calibrated according to the data from wage income in different sectors of the US economy, the results move in the direction of explaining these observations, but the model falls short of explaining the observed correlations quantitatively. If the incomes of agents are assumed independent of each other, the observations can be explained quantitatively.

Network revenue management with product-specific no-shows

Revenue management practices often include overbooking capacity to account for customerswho make reservations but do not show up. In this paper, we consider the network revenuemanagement problem with no-shows and overbooking, where the show-up probabilities are specificto each product. No-show rates differ significantly by product (for instance, each itinerary andfare combination for an airline) as sale restrictions and the demand characteristics vary byproduct. However, models that consider no-show rates by each individual product are difficultto handle as the state-space in dynamic programming formulations (or the variable space inapproximations) increases significantly. In this paper, we propose a randomized linear program tojointly make the capacity control and overbooking decisions with product-specific no-shows. Weestablish that our formulation gives an upper bound on the optimal expected total profit andour upper bound is tighter than a deterministic linear programming upper bound that appearsin the existing literature. Furthermore, we show that our upper bound is asymptotically tightin a regime where the leg capacities and the expected demand is scaled linearly with the samerate. We also describe how the randomized linear program can be used to obtain a bid price controlpolicy. Computational experiments indicate that our approach is quite fast, able to scale to industrialproblems and can provide significant improvements over standard benchmarks.