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

Effects of drugs that potentiate GABA on extinction of positively-reinforced operant behaviour

Extinction following positively reinforced operant conditioning reduces response frequency, at least in part through the aversive or frustrative effects of non-reinforcement. According to J.A. Gray's theory, non-reinforcement activates the behavioural inhibition system which in turn causes anxiety. As predicted, anxiolytic drugs including benzodiazepines affect the operant extinction process. Recent studies have shown that reducing GABA-mediated neurotransmission retards extinction of aversive conditioning. We have shown in a series of studies that anxiolytic compounds that potentiate GABA facilitate extinction of positively reinforced fixed-ratio operant behaviour in C57B1/6 male mice. This effect does not occur in the early stages of extinction, nor is it dependent on cumulative effects of the compound administered. Potentiation of GABA at later stages has the effect of increasing sensitivity to the extinction contingency and facilitates the inhibition of the behaviour that is no longer required. The GABAergic hypnotic, zolpidem, has the same selective effects on operant extinction in this procedure. The effects of zolpidem are not due to sedative action. There is evidence across our series of experiments that different GABA-A subtype receptors are involved in extinction facilitation and anxiolysis. Consequently, this procedure may not be an appropriate model for anxiolytic drug action, but it may be a useful technique for analysing the neural bases of extinction and designing therapeutic interventions in humans where failure to extinguish inappropriate behaviours can lead to pathological conditions such as post-traumatic stress disorder.

Effects of chlordiazepoxide on extinction and re-acquisition of operant behaviour in mice

Relatively little is known about the role of the inhibitory neurotransmitter gamma-aminobutyric acid (GABA) in extinction of appetitively motivated tasks. The benzodiazepine (BZ) chlordiazepoxide (CDP) was administered during extinction and re-acquisition of lever pressing by mice following food reinforced discrete-trial fixed-ratio 5 (FR-5) training. Typical FR behaviour was established during baseline training and persisted for several extinction sessions. There were 15 extinction sessions in all, followed by six re-acquisition sessions where food reinforcement was re-introduced. In a 2x2x2 between-group design, CDP (15 mg/kg) or vehicle injections were given prior to either the last two food reinforcement sessions and the first 10 extinction sessions, or the final five extinction sessions, or the six re-acquisition sessions. Initially CDP had no effect on the rate of extinction, but after several extinction sessions it significantly facilitated it. Surprisingly, if CDP was administered only after several sessions of extinction, it immediately produced facilitation. Thus the delayed effects of CDP are not due to drug accumulation. These data suggest that some neural change must occur before CDP can affect extinction processes. In re-acquisition sessions, CDP facilitated the reinstatement of food-reinforced lever pressing. Implications for neural and behavioural accounts of operant extinction are discussed.

Subtype-selective GABAergic drugs facilitate extinction of mouse operant behaviour

Several recent studies have shown that reducing gamma-aminobutyric acid (GABA)-mediated neurotransmission retards extinction of aversive conditioning. However, relatively little is known about the effect of GABA on extinction of appetitively motivated tasks. We examined the effect of chlordiazepoxide (CDP), a classical benzodiazepine (BZ) and two novel subtype-selective BZs when administered to male C57Bl/6 mice during extinction following training on a discrete-trial fixed-ratio 5 (FR5) food reinforced lever-press procedure. Initially CDP had no effect, but after several extinction sessions CDP significantly facilitated extinction, i.e. slowed responding, compared with vehicle-treated mice. This effect was not due to drug accumulation because mice switched from vehicle treatment to CDP late in extinction showed facilitation immediately. Likewise, this effect could not be attributed to sedation because the dose of CDP used (15 mg/kg i.p.) did not suppress locomotor activity. The two novel subtype-selective BZ partial agonists, L-838417 and TP13, selectively facilitated extinction in similar fashion to CDP. The non-GABAergic anxiolytic buspirone was also tested and found to have similar effects when administered at a non-sedating dose. These studies demonstrate that GABA-mediated processes are important during extinction of an appetitively motivated task, but only after the animals have experienced several extinction sessions.

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.