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21. Procedurally Justifiable Strategies: Integrating Context Effects into Multistage Decision Making

Author:
Fynn Kemper and Philipp Wichaardt
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper proposes a simple framework to model contextual influences on procedural decision making. In terms of utility, we differentiate between monetary payoffs and contextual psychological ones, e.g. deriving from the subjects’ normative frame of reference. Monetary payoffs are treated as common knowledge while psychological payoffs are treated as partly unforeseeable. Regarding behaviour, we assume that players act optimal given their local perception of the game. As perceptions may be incorrect, we do not consider common equilibrium conditions but instead require strategies to be procedurally justifiable. As we will argue, various common inconsistencies considered in behavioural economics can be understood as procedurally justifiable behaviour. With the present framework, we add an abstract tool to the discussion which allows to consider also the behavioural implications of players foreseeing the corresponding behavioural effects ̶ which is often not considered in the respective original models.
Topic:
Economics, Monetary Policy, and Models
Political Geography:
Global Focus

22. The dynamic impact of FX interventions on financial markets

Author:
Lukas Menkhoff, Malte Rieth, and Tobias Stöhr
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Evidence on the effectiveness of FX interventions in the prevailing higher frequency approaches leaves a gap at horizons going beyond a few days. This is addressed by identifying a structural vector autoregressive model for the daily frequency with an external instrument. Using Japanese data, we find that FX interventions significantly affect exchange rates, although the effect is smaller than in emerging markets, and this impact persists for up to a year. There is no major effect on interest rates, but stock prices increase in line with currency devaluation, in particular those of large (exporting) firms. The results qualitatively hold for US and UK interventions.
Topic:
International Political Economy, Exports, Data, and Models
Political Geography:
United States, Japan, and United Kingdom

23. Macroeconomic Determinents of Crime in South Asian Countries: A Panal Data Approach

Author:
Rana Hazma Gull, Kauser Perveen, and Amber Bakhsh Basit
Publication Date:
07-2020
Content Type:
Journal Article
Journal:
South Asian Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
This research explores the economic determinants of crime in case of a panel of South Asian countries (Pakistan, India, Sri Lanka and Bangladesh). To empirically determine the relationship between crime and its determinants, data for the concerned variables are collected for the period of 2003 to 2017 from different sources like World Development Indicator (WDI), National Police Survey and UNESCO. In this study, education, economic growth, population and unemployment are used as the determinants of crime. To find out the relationship Random Effect Model (REM) and Fixed Effect Model (FEM) models are constructed. After applying diagnostic test, it is found that Fixed Effect Model is appropriate. But the FEM model violates the assumptions of classical linear regression model (CLRM) because there is hertoscedasticity and autocorrelation problem in the data. To robust these problems, feasible generalized least square (FGLS) model has been applied. The results of FGLS revealed that education has negative and significant impact on crime. Contrary, population, economic growth and unemployment have positive and significant impact on crime. The study recommends that government should give preference to education sector. On the other hand, government should control the population growth and unemployment rate.
Topic:
Crime, Education, Economic Growth, Economic Theory, Macroeconomics, and Models
Political Geography:
South Asia and Asia

24. A Question of Delivery

Author:
Ahmed Taher
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
Cairo Review of Global Affairs
Institution:
School of Global Affairs and Public Policy, American University in Cairo
Abstract:
The success of Egyptian higher education depends on far more than reforming content and curricula. Cherry-picking the best from the American model is one place to start.
Topic:
Education, Reform, Higher Education, and Models
Political Geography:
Africa, North America, Egypt, and United States of America

25. Explaining How Washington and the Election Works

Author:
Sean David Hobbs
Publication Date:
09-2020
Content Type:
Journal Article
Journal:
Cairo Review of Global Affairs
Institution:
School of Global Affairs and Public Policy, American University in Cairo
Abstract:
In 2016, all predictions about the U.S. elections were wrong. Will Washington insiders get it right this time?
Topic:
Elections, Domestic Politics, Voting, and Models
Political Geography:
North America and United States of America

26. Modeling Myths: On the Need for Dynamic Realism in DICE and other Equilibrium Models of Global Climate Mitigation

Author:
Claudia Wieners and Michael Grubb
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
We analyze and critique how optimizing Integrated Assessment Models, and specifically the widely-used DICE model, represent abatement costs. Many such models assume temporal independence –abatement costs in one period are not affected by prior abatement. We contrast this with three dimensions of dynamic realism in emitting systems: inertia, induced innovation, and path dependence. We extend the DICE model with a stylized representation of such dynamic factors. By adding a transitional cost component, we characterize the resulting system in terms of its capacity to adapt in path-dependent ways, and the transitional costs of accelerating abatement. We formalize a resulting metric of the pliability of the system, and the characteristic timescales of adjustment. With the resulting DICE-PACE model, we show that in a system with high pliability, the optimal strategy involves much higher initial investment in abatement, sustained at roughly constant levels for some decades, which generates an approximately linear abatement path and emissions declining steadily to zero. This contrasts sharply with the traditional formulation. Characteristic transition timescales of 20-40 years result in an optimum path which stabilizes global temperatures around a degree below the traditional DICE behavior; with otherwise modest assumptions, a pliable system can generate optimal scenarios within the goals of the Paris Agreement, with far lower long run combined costs of abatement and climate damages. We conclude that representing dynamic realism in such models is as important as – and far more empirically tractable than – continued debate about the monetization of climate damages and ‘social cost of carbon’.
Topic:
Climate Change, Economics, Paris Agreement, and Models
Political Geography:
Global Focus

27. Greater than the Sum of its Parts?: How does Austria Profit from a Widening Network of EU Free Trade Agreements?

Author:
Julia Grübler and Oliver Reiter
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Political debates and economic analyses often focus on single free trade agreements and their potential economic effects on participating trading partners. This study contributes to the literature by shedding light on the significance of trade agreements in the context of countries’ positions in worldwide trade agreement networks, by combining network theory with gravity trade modelling. We illustrate, both numerically and graphically, the evolution of the global web of trade agreements in general, and the network of the European Union specifically, accounting for the geographical and temporal change in the depth of agreements implemented. Gravity estimations for the period 1995-2017 distinguish the direct bilateral effects of trade agreements from indirect effects attributable to the scope of trade networks and countries’ positions therein.
Topic:
Economics, International Political Economy, International Trade and Finance, Treaties and Agreements, Profit, and Models
Political Geography:
Europe and Austria

28. Does Asymmetric Nonlinear Approach Explain the Relationship Between Exchange Rate and Trade of Iran?

Author:
Mahdi Ghodsi, Mohammad Sharif Karimi, and Robert Stehrer
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Until 2012, the Central Bank of Iran (CBI) used its policy rate to stabilise the rial’s exchange rate and, given a persistent current-account surplus, had accumulated sizeable currency reserves. In 2012, however, international sanctions against Iran intensified and the value of the rial halved against the US dollar. Since then Iran has followed a dual interest rate policy, with both a market rate and an official rate applied by the CBI to major imports. In recent years, as sanctions have cut access to foreign reserves, the gap between the two rates has widened substantially. Given these important changes in the exchange rate regime, this paper investigates the impact of the real exchange rate on the trade balance in Iran over the period 1997-2017. For this purpose, an asymmetric model is used, as the speed of the effects of changes in the exchange rate can be asymmetric. The results of the nonlinear autoregressive distributed lag model (NARDL) indicate that this is indeed the case. Results are generally consistent with the Marshall-Lerner condition: an exchange rate depreciation improves the trade balance, whereas an appreciation worsens it. However, the trade balance reacts more strongly in the short run to depreciations of the rial than to appreciations. Although the government could easily improve the trade balance in the short run through currency depreciation, policymakers should in the longer run promote non-oil exports to reduce dependency on oil and to diversify the economy.
Topic:
Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Central Bank, and Models
Political Geography:
Europe and Iran

29. Why, When, and How to Teach the Fundamentals of Inequality in Principles

Author:
Can Erbil and Geoffrey Sanzenbacher
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
The continued rise of economic inequality in the U.S. has been on the radar of economists and policymakers for the last few years. New initiatives and platforms like EfIP (Economics for Inclusive Prosperity) have emerged, where economists work on creating fresh and useful policy ideas to promote more “inclusive” models of generating prosperity. Yet, students still face a lot of confusion, “noise,” and disagreement when it comes to the topic of inequality.[1] Especially in the age of easy access to information online, students not fully literate in economics struggle to sift through the literature and separate rigorous scientifically based research from opinion pieces. This article discusses a way to introduce some recent trends in U.S. inequality to students, and then delve into a specific topic (e.g., racial inequality) in a two-lecture module at the end of an introductory economics course. After all, it is not that the students are not interested in this topic. But, left alone, many of them become confused. Students do not make distinctions between different broad types of inequalities, such as income inequality, wealth inequality, or inequality of opportunity. They do not understand differences in the underlying causes of inequality, which vary depending on whether the topic is inequality across educational groups, gender-based groups, or racial/ethnic groups. And, they make basic mistakes in reading articles or viewing data, such as mixing-up correlation with causation or looking at graphs with different scales. Fortunately, introductory economics courses have a chance to reach students early in their careers, and correct many of these deficiencies. Indeed, recent events in the US compel us to cover inequality and its consequences in our introductory classes. The economic impact of the COVID-19 epidemic falls significantly more on minorities, women, people with lower income levels and people of color.[2] And, the disparities in poverty and opportunity rates between black and non-black populations is at the root of racial discrimination which re-ignited the BLM movement.[3] Indeed, economic inequality is also related to other disciplines in Social Sciences, such as Sociology, Political Science and even Liberal Arts courses such as History and English. However, Economics faculty are well-equipped to cover the empirical outcomes and the underlying economic models – and lay out their strengths as well as short-comings. Given that teaching about economic inequality is an important task, this article will first discuss when it makes sense to teach it. The article will then spend the majority of its time providing some tips for covering the material, as well as some suggested assignments.
Topic:
Economics, Education, Inequality, Economic Inequality, Macroeconomics, and Models
Political Geography:
United States

30. Implementing the Mop Barrier Assessment Methodology With the Zambia Police Service

Author:
Geneva Centre for Security Sector Governance
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Geneva Centre for Security Sector Governance (DCAF)
Abstract:
In the context of the Canadian-led Elsie Initiative aiming to reduce barriers for uniformed women in UN Peace Operations, DCAF has developed the Measuring Opportunities for Women in Peace Operations (MOWIP) methodology, in partnership with Cornell University and research institutions in eight troop- and police contributing countries across the world. The MOWIP methodology aims to provide institutions with the evidence base necessary to design effective interventions which substantially increase the number of women who deploy. While it is currently being piloted in 7 other countries, the MOWIP methodology was successfully implemented in Zambia with the Zambia Police Service (ZPS) between May 2019 and March 2020, in partnership with the Southern African Centre for the Constructive Resolution of Disputes (SACCORD). This resource highlights the key takeaways from the process of implementing the MOWIP methodology in Zambia along with good practices and lessons learned at each stage, including the preparation phase, the data collection phase, the data analysis phase and the validation phase. It aims to provide guidance to TPCCs or security institutions interested in implementing the MOWIP methodology themselves regarding the resources and time commitment required, and outlines the outcomes and benefits of undergoing the Barrier Assessment for the ZPS.
Topic:
Security, Defense Policy, Police, and Models
Political Geography:
Africa and Zambia