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This paper finds that participants in the European Central Bank's Survey of Professional Forecasters have submitted forecasts that are consistent with a (mostly forward-looking) empirical version of the New Keynesian Phillips Curve for the euro area. The estimation technique takes advantage of the panel nature of the Survey of Professional Forecasters' dataset to exploit both its time series and cross-section dimensions, and to control for unobservable individual heterogeneity across forecasters. The estimation results suggest that euro-area inflation forecasts have reacted less to unemployment forecasts after the start of the financial crisis but another cost measure (energy inflation) remains significant. This finding is consistent with a flatter Phillips Curve in the euro area after 2007. However, the reasons suggested by the International Monetary Fund for this finding, namely a better anchoring of inflation expectations and increases in structural unemployment do not seem to find support in the survey data. Instead, the expectations for compensation per employee submitted by professional forecasters are consistent with the existence of downward real-wage rigidities in euro-area labour markets. [ABSTRACT FROM AUTHOR]

In this paper, we extend field experiments of real money prediction markets to the problem of forecasting the success of a new product. We collect forecasts using a traditional survey mechanism and a market mechanism. Our results suggest that market prices summarize the information contained in survey forecasts and improve those forecasts by reducing the variability of the forecast. However, we find no evidence of a 'crystal ball' equilibrium. Our markets have considerable variability and predict only as well as the public signal provided by the HSX movie market game. [ABSTRACT FROM AUTHOR]

Open Source Software (OSS) has become an increasingly important knowledge asset in modern economies. However, the economic impact of OSS on countries' GDP is ambivalent due to its public good character. Using a cross-country panel from 2000 to 2018, including 25 of the largest EU countries plus the USA, Japan, Korea, Canada, China, Norway, and Switzerland, matching OSS commits to GitHub to macroeconomic data provided by the OECD, our results confirm the dual nature of OSS. On the one hand, the open-access character creates great learning potential by providing a commonly accessible productive resource for all countries. On the other hand, it creates outward-directed spillovers associated with own OSS contributions. Accordingly, on average, we find that countries experience an increase in GDP when the world stock of OSS grows. However, smaller countries experience a decline in GDP resulting from their own contributions due to knowledge spillovers. The net effect is nonetheless positive. If no country contributed to OSS development, GDP for the average country would be 2.2% lower in the long run. Moreover, the losses associated with unintended spillovers are lower for countries with a higher R&D and patenting intensity. Based on our findings, we derive implications for policies and regulations concerning OSS. [ABSTRACT FROM AUTHOR]

Are all countries in Sub-Saharan Africa equally benefiting from the deployment of Information and Communications Technology and economic globalization? In order to provide an answer to this question, the present study examined the impacts of Information and Communications Technology and economic globalisation on the growth of per capita GDP in 44 countries of the Sub-Saharan Africa region during 2004–2019. This study uses the neoclassical Aggregate Production Function, which incorporates a comprehensive measure of Information and Communications Technology infrastructure and economic globalization. In general, Moments Quantile methods indicate that despite economic globalization and Information and Communications Technology services having statistically significant positive effects on growth, the effects are negligible. A more important finding is that the impact of Information and Communications Technology and economic globalization on growth diminished as per capita GDP increased. Comparatively to countries with relatively higher growth rates in the Sub-Saharan Africa region, countries with lower growth rates will benefit more from expanding their Information and Communications Technology sector and globallyizing their local economies. Accordingly, countries with relatively lower per capita GDP growth in the Sub-Saharan Africa region need to allocate more resources to develop their Information and Communications Technology sector and continue to integrate their local economies with global markets. [ABSTRACT FROM AUTHOR]

The question underlying the research problem addressed by this study concerns various factors, including uncertainty, that could affect forecast errors. Previous works, focusing mainly on world-leading economies, are inconclusive on how economic agents form inflation forecasts or why forecast errors occur. There is a gap in the empirical literature that needs to be filled. The analysis covers the 2016–2020 period and seven economies: Albania, Czechia, Hungary, Poland, Romania, Serbia, and Turkey. We verify whether forecast errors are driven by production, inflation, exchange rates, interest rates, oil prices, changes in the tone of the central bank's releases and their uncertainty. We assess whether economic agents can process available information to present accurate inflation forecasts. The results suggest that neither consumers nor professionals do—they present inaccurate forecasts regularly. The results suggest that exchange rate volatility is the most important variable that positively affects forecast errors, followed by inflation and its volatility. This confirms (in most cases) a theoretical assumption that a stable environment is better for long-term development as lower inflation forecast errors allow for the optimization of economic decisions. The study implies that mechanisms supporting forecasting during turbulent times must be strengthened. It presents the set of variables that should be analyzed more carefully by consumers and professionals. In addition, central banks could provide more precise communication regarding the evolution of error drivers. Our results build on existing literature by explicitly linking macroeconomic uncertainty with forecast errors including for small open economies from Eurasia. [ABSTRACT FROM AUTHOR]

In a nutshell, price cap regulation is meant to establish a quid pro quo: regulators are obliged by law to intervene only at rare, previously defined points in time, and only by imposing an upper bound on prices; firms are meant to justify regulatory restraint by adopting socially beneficial innovations. In the policy debate, a potential downside of the arrangement has featured less prominently: the economic environment is unlikely to be stable while the cap is in place. If regulators take this into account, they have to decide under uncertainty and also anticipate how regulated firms will react. In a lab experiment, we manipulate the degree of regulatory uncertainty. We compare a baseline when regulators have the same information as firms about demand with treatments wherein they receive only a noisy signal and another when they know only the distribution from which demand realizations are taken. In the face of uncertainty, regulators impose overly generous price caps, which firms exploit. In the experiment, the social damage is severe, and does not disappear with experience. [ABSTRACT FROM AUTHOR]

Ensemble methods can be used to construct a forecast distribution from a collection of point forecasts. They are used extensively in meteorology, but have received little direct attention in economics. In a real-time analysis of the ECB's Survey of Professional Forecasters, we compare ensemble methods to histogram-based forecast distributions of GDP growth and inflation in the Euro Area. We find that ensembles perform very similarly to histograms, while being simpler to handle in practice. Given the wide availability of surveys that collect point forecasts but not histograms, these results suggest that ensembles deserve further investigation in economics. [ABSTRACT FROM AUTHOR]

This paper explores whether and how political biases arise in an institutional setting where revenue forecasting is delegated to a body that includes experts from institutions neither part of nor controlled by the government. The empirical analysis focuses on the performance of German federal tax revenue forecasts, in the preparation of which the advice of external experts has a long tradition as an institutional safeguard. While, on average, revenue forecasts turn out to be unbiased, the results show that the government exerts an influence. In particular, optimism/pessimism in the government's GDP forecast helps to explain why the revenue forecast turns out too optimistic/pessimistic. In addition, governmental estimates of the revenue effects of tax-law changes are found to contribute to forecast errors. [ABSTRACT FROM AUTHOR]

This paper analyzes forecasts, for ten key annually observed economic variables for the Netherlands, created by the Netherlands Bureau for Economic Policy Analysis (CPB) for 1971-2007. These CPB forecasts are all manually modified model forecasts, where the model is a (very) large multi-equation macro model. The CPB forecasts are held against real-time forecasts obtained from simple autoregressive time series models, and for seven of the ten cases, CPB's forecasts are significantly more accurate. Combining CPB's forecasts with the real time autoregressive forecasts shows that four of the ten combined forecasts are significantly better than CPB's forecasts, and seven of the ten are better than the time series forecasts. This suggests that CPB's manual adjustment efforts could perhaps be directed to modifying simple model forecasts and not the forecasts from the own large macro model. [ABSTRACT FROM AUTHOR]

This paper re-examines the interaction between population growth and income per capita in pre-industrial England. Our results suggest that, as early as two centuries preceding the Industrial Revolution, England had already escaped the Malthusian Epoch and entered a post-Malthusian regime, where income per capita continued to spur population growth but was no longer stagnant. Our formulation of a post-Malthusian hypothesis implies cointegration between vital rates (birth- and death rates) and income and builds explicitly on a simple model of Malthusian stagnation. We show that this hypothesis can be interpreted as an extension of the latter model where the negative Malthusian feedback effect from population on income, as implied by diminishing returns to labor, is offset by a positive Boserupian and/or Smithian scale effect of population on technology. [ABSTRACT FROM AUTHOR]

In this paper, we propose a quantitative measure for inflation expectations based on consumer survey data. Thereafter, we proceed to testing the rationality assumption. This issue is of noteworthy interest in its own as it is commonly assumed in the theoretical modelling literature that the rational expectations hypothesis holds. This analysis is conducted for the euro area as a whole, as well as for several member countries, using a sample covering the last two decades. Moreover, we also assess if the conclusions hold when one focuses on the post-euro introduction period. [ABSTRACT FROM AUTHOR]

The probability that economic actors break rules increases with the profits they thus expect to earn. It decreases with the probability and level of losses resulting from detection. It also decreases with social factors which shield actors from yielding to economic temptations. This article gives an accentuated description of major schools of thought concerned with economic misconduct. It emphasizes the need for a comprehensive behavioural economic analysis and outlines an analytical framework for this purpose. Understanding material incentives as major, albeit partial drivers of economic behaviour which need to be attacked, we develop a game-theoretic approach for reconstructing the economic incentives of profit-oriented actors. Using the approach to process expert estimates and approximating the incentives of actors in the poultry industries exposes many critical settings where temptations arise to breach production-related standards (crimes against consumers). [ABSTRACT FROM AUTHOR]

Simulation models have become increasingly popular in economics in the last two decades, because they can deal with a wide range of research questions. The set-up and analysis of simulation models can range from very specific to very general and can be underpinned by different combinations of theoretical considerations and empirical data. We offer a taxonomy of existing simulation approaches and show how their results can be used to explain observed economic features, examine economic systems and predict future economic processes. Moreover, we offer a new type of method that helps to better exploit empirical findings in simulation models. [ABSTRACT FROM AUTHOR]

The impact of foreign direct investment on host countries’ industrial sectors has received considerable attention. It is shown by many researchers that foreign plants are more productive than are domestic ones, but the empirical evidence regarding spillovers is not unambiguous. In this paper, we suggest that the impact of foreign direct investment on local industry hinges on the dynamics of foreign and domestic plants—i.e., on entry and selection (exit) processes. Our analysis of foreign investment and competition dynamics in Turkish manufacturing industry for the period 1983–2001 indicates that foreign plants have a better performance level than do domestic ones when they are first established in the local market, and, subsequently, are more likely to survive but; the difference in survival probabilities disappears when the industry and/or plant characteristics are controlled for. Moreover, foreign presence seems to have no long-term effect on the survival prospects of domestic plants. [ABSTRACT FROM AUTHOR]

Contingent valuation studies are often characterized by a considerable number of protest responses, which may cause selectivity bias on the final estimates for WTP. Sample selection models can detect and — if necessary — correct selectivity bias. In economic applications where the relevant dependent variable is continuous, sample selection models are generally estimated using Heckman's 2-step method rather than the FIML estimator. Either method has its own drawback: computational complexity for the FIML method, susceptibility to collinearity problems for the 2-step method. Using data on valuation of forest resources for recreational use, we analyse the performance of the two estimators. In this application, given the presence of some collinearity, the FIML is preferred to the 2-step method. A procedure is outlined to deal with selectivity problems in similar settings. [ABSTRACT FROM AUTHOR]

To explain which methods might win forecasting competitions on economic time series, we consider forecasting in an evolving economy subject to structural breaks, using mis-specified, data-based models. ‘Causal’ models need not win when facing deterministic shifts, a primary Factor underlying systematic forecast Failure. We derive conditional forecast biases and unconditional (asymptotic) variances to show that when the forecast evaluation sample includes sub-periods following breaks, non-causal models will outperform at short horizons. This suggests using techniques which avoid systematic forecasting errors, including improved intercept corrections. An application to a small monetary model of the UK illustrates the theory. [ABSTRACT FROM AUTHOR]

The German economy is usually assumed to take a leading position. In principle this gives smaller countries, which are dependent on Germany, the opportunity to predict their own economic future conditional on the state of the German economy. This paper uses this opportunity for The Netherlands by applying a Vector Auto Regressive model on Dutch and German series. Because the traditional VAR models appear to be overparameterized, their forecast performance can be improved significantly by using shrinkage estimators based on the so-called Minnesota prior. Such a Bayesian VAR forecasts well and confirms the interdependence between Germany and The Netherlands. Variance decomposition of forecast errors and impulse response simulations strengthen the impression that the BVAR model properties are plausible. [ABSTRACT FROM AUTHOR]