11 results
Search Results
2. Per Capita Income Convergence and the Role of International Trade.
- Author
-
Slaughter, Matthew J.
- Subjects
INTERNATIONAL trade ,ECONOMICS ,PER capita ,INCOME ,ECONOMIC convergence ,COUNTERTRADE ,SAVINGS - Abstract
The article focuses on some basic relationships between per capita income convergence and international trade. In recent years most papers analyzing cross-country convergence of per capita incomes have ignored international trade. The reason might be perspective. Most convergence papers frame the analysis in a "Solow world" in which countries exist independently of one another. Convergence arises from cross-country differences in rates of capital accumulation financed entirely by domestic savings. International linkages do not contribute to the process. Most international-trade economists have a very different perspective of a world in which countries exchange goods, factors, and ideas. Here, international linkages are precisely what drive any convergence process. Free trade in goods can equalize factor prices across countries according to the factor-price-equalization theorem; international flows of factors can lead to convergence of endowments and factor prices; and international flows of technology can cause convergence of factor prices as well. From the usual "Solow perspective" international linkages do not matter, but from the trade perspective they are everything.
- Published
- 1997
3. The empirical nature of Taylor-Series approximations to expected utility.
- Author
-
Hlawitschka, Walter
- Subjects
MATHEMATICAL models of investments ,TAYLOR'S series ,EXPECTED utility ,APPROXIMATION theory ,ECONOMIC convergence ,UTILITY theory ,ECONOMISTS ,EXPECTED returns - Abstract
The first few terms of Taylor-series expansions frequently are used to approximate expected-utility functions. However, it would appear, as economist Otto Loistl suggests, that when the infinite Taylor series does not converge, approximations based on the series may be erroneous. When the Taylor series converges, it would appear that approximations based on more terms from the series would be much better than approximations based on fewer terms. In this paper the author presents empirical evidence, which strongly refutes both of these conjectures. Specifically, the author shows, first, when a Taylor series of expected utility diverges, then truncated Taylor series, particularly second-order expansions, may provide excellent approximations to expected utility for the purpose of portfolio selection, and second, when a Taylor series does converge, adding more terms may worsen the approximation. Indeed, the author's contention here is that the usefulness of Taylor-series approximations is strictly an empirical issue unrelated to the convergence properties of the infinite series.
- Published
- 1994
4. Declining Mortality Inequality within Cities during the Health Transition†.
- Author
-
Costa, Dora L. and Kahn, Matthew E.
- Subjects
COMMUNICABLE diseases ,MORTALITY ,HISTORY of Philadelphia, Pennsylvania ,NEW York City history ,NEIGHBORHOODS -- History ,ECONOMIC convergence ,DEATH rate ,HISTORY - Abstract
In the United States in the late 19th and early 20th century, large cities had extremely high death rates from infectious disease. Within major cities such as New York City and Philadelphia, there was significant variation at any point in time in the mortality rate across neighborhoods. Between 1900 and 1930 neighborhood mortality convergence took place in New York City and Philadelphia. We document these trends and discuss their consequences for neighborhood quality of life dynamics and the economic incidence of who gains from effective public health interventions. [ABSTRACT FROM AUTHOR]
- Published
- 2015
- Full Text
- View/download PDF
5. Industrial Development and the Convergence Question.
- Author
-
Goodfriend, Marvin and McDermott, John
- Subjects
INDUSTRIALIZATION ,ECONOMIC convergence ,ECONOMIC development ,LEARNING ,ECONOMICS ,INTERNATIONAL trade - Abstract
This paper studies endogenous world balanced-growth equilibria in which national learning productivity differentials govern relative per capita products. Learning productivities depend on the national share of world specialized-goods production, national and world scale, and familiarity with the foreign economy. Familiarity indexes the extent to which imported specialized goods enhance learning productivity. The authors find that mutual familiarization causes per capita products to converge. Unfamiliar economies diverge substantially and persistently. Unilateral familiarization of a less-developed country (LDC) with the leading economy causes the LDC to catch up to, and even overtake, the leader. (JEL F12, F43, N1, 011) [ABSTRACT FROM AUTHOR]
- Published
- 1998
6. Credibility and Policy Convergence in a Two-Party System with Rational Voters.
- Author
-
Alesina, Alberto
- Subjects
POLICY sciences ,POLITICAL parties ,POLITICAL campaigns ,VOTING ,TRUTHFULNESS & falsehood ,ECONOMIC convergence ,COMPETITION - Abstract
This article analyzes credibility and policy convergence in a two-party system with rational voters. This paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forward-looking agents and parties do not care exclusively about being elected, but also about which policy to implement, once elected. The dynamic inconsistency arises as follows: the parties have an incentive to announce convergent platforms to increase their chances of election. However, if the elected party is not committed to its electoral platform, it has an incentive to follow its most preferred policy rather than the policy announced in its platform. If voters are rational, they account for this incentive. Thus, in general, in a one-shot electoral game the only time-consistent equilibrium is one in which no convergence is possible, the two parties follow their most preferred policies, and the voters rationally expect this outcome. Full convergence of parties' platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election.
- Published
- 1988
7. The Fate of Systems With "Adaptive" Expectations.
- Author
-
Marcet, Albert and Sargent, Thomas J.
- Subjects
ECONOMIC convergence ,LEAST squares ,ECONOMIC equilibrium ,MACROECONOMICS ,AUTOREGRESSION (Statistics) ,ECONOMICS ,ECONOMIC forecasting ,RATIONAL expectations (Economic theory) ,MATHEMATICAL statistics - Abstract
This paper provides an informal summary of recent results from the literature on convergence of least squares learning schemes to rational expectations equilibria in dynamic self-referential environments. This literature answers how will a system eventually behave in which agents make forecasts with recursively updated least squares estimates of vector autoregressions and in which agents' forecasts influence the law of motion of the whole system. This literature provides mixed comfort. It is remarkable that the "adaptive" least squares learning schemes are attracted to rational expectations equilibria, and that, naive and backward-looking as they are, they provide promising leads on superior ways for economists to compute rational expectations equilibria. It is also comforting that these adaptive mechanisms seem not to be attracted to "bad" bubble equilibria as limit points. Heuristically, the reason that these bad equilibria are excluded as limit points seems to be that to support them requires extraordinary foresight on the parts of agents, and that the adaptive schemes analyzed cannot accommodate such foresight.
- Published
- 1988
8. Just Starting Out: Learning and Equilibrium in a New Market.
- Author
-
Doraszelski, Ulrich, Lewis, Gregory, and Pakes, Ariel
- Subjects
ELECTRIC utilities ,ELECTRICITY ,ECONOMIC equilibrium ,ECONOMIC convergence ,INDUSTRIAL organization (Economic theory) - Abstract
We document the evolution of the new market for frequency response within the UK electricity system over a six-year period. Firms competed in price while facing considerable initial uncertainty about demand and rival behavior. We show that prices stabilized over time, converging to a rest point that is consistent with equilibrium play. We draw on models of fictitious play and adaptive learning to analyze how this convergence occurs and show that these models predict behavior better than an equilibrium model prior to convergence. (JEL D22, D83, L13, L94, L98) [ABSTRACT FROM AUTHOR]
- Published
- 2018
- Full Text
- View/download PDF
9. When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting.
- Author
-
Yan Chen and Gazzale, Robert
- Subjects
ECONOMIC equilibrium ,ECONOMIC convergence ,LEARNING ,EXTERNALITIES ,GAMES ,GAME theory - Abstract
This study clarifies the conditions under which learning in games produces convergence to Nash equilibria in practice. We experimentally investigate the role of supermodularity, which is closely related to the more familiar concept of strategic complementarities, in achieving convergence through learning. Using a game from the literature on solutions to externalities, we find that supermodular and "near-supermodular" games converge significantly better than those far below the threshold of supermodularity. From a little below the threshold to the threshold, the improvement is statistically insignificant. Increasing the parameter far beyond the threshold does not significantly improve convergence. [ABSTRACT FROM AUTHOR]
- Published
- 2004
- Full Text
- View/download PDF
10. OECD Comparative Economic Growth 1950-85: Catch-Up and Convergence.
- Author
-
Dowrick, Steve and Duc-Tho Nguyen
- Subjects
COMPARATIVE economics ,ECONOMETRICS ,ECONOMIC development ,ECONOMIC convergence ,ECONOMIC indicators ,FACTORS of production ,MATHEMATICAL models ,ECONOMICS ,ECONOMETRIC models - Abstract
The apparent convergence of OECD income levels since 1950 is subjected to rigorous testing which suggests that there has occurred a systematic process of catching up in levels of total factor productivity. An econometric model of relative economic growth exhibits parameter stability over three decades, including the period after 1973, and statistical robustness, particularly with respect to sample selection. A reassessment is made of OECD comparative economic growth performance. [ABSTRACT FROM AUTHOR]
- Published
- 1989
11. Interpreting Recent World Inflation.
- Author
-
Teigen, Ronald L.
- Subjects
PRICE inflation ,ECONOMIC convergence ,STANDARD deviations ,CONSUMER price indexes ,GROSS national product ,BRETTON Woods System - Abstract
The article presents the author's opinion on the proposition that the national inflation rates is converging in recent years. Northern European countries, are plotted annually over the period 1956-73. The downward-sloping trend line is the basis for the Organization for Economic Cooperation & Development's view that world inflation rates are converging. If a reduction over time in the coefficient of variation caused by a rising mean inflation rate and a constant dispersion of individual country rates is interpreted as signifying a convergence of these rates, it is implied that this dispersion, as measured by the standard deviation, should normally change proportionately to the mean. I have calculated the means and standard deviations for the rates of change of the consumer price index and the gross national product deflator over the three subperiods 1954-65, 1965- 71, and 1971-73. The points of demarcation are somewhat arbitrary, but are meant to correspond roughly to the beginning of the acceleration of the Vietnam conflict and the breakdown of the fixed exchange rate system. I believe that much of the observed acceleration of inflation rates in these years was due to two causes. One, which is difficult to quantify, is the increased freedom to pursue domestic goals made possible for trading countries by the collapse of the Bretton Woods system. The other is the food shortage and consequent sharp rise in food prices beginning in 1972-73.
- Published
- 1975
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