A growing body of literature reports evidence of social interaction effects in survey expectations. In this note, we argue that evidence in favor of social interaction effects should be treated with caution, or could even be spurious. Utilizing a parsimonious stochastic model of expectation formation and dy- namics, we show that the existing sample sizes of survey expectations are about two orders of magnitude too small to reasonably distinguish between noise and interaction effects. Moreover, we argue that the problem is com- pounded by the fact that highly correlated responses among agents might not be caused by interaction effects at all, but instead by model-consistent beliefs. Ultimately, these results suggest that existing survey data cannot facilitate our understanding of the process of expectations formation.
Several empirical studies are concerned with measuring the effect of currency and current
account crises on economic growth. Using different empirical models this paper serves two
aspects. It provides an explicit assessment of country specific factors influencing the costs of
crises in terms of economic growth and controls via a treatment type model for possible sample
selection governing the occurrence of crises in order to estimate the impact on economic
growth correctly. The applied empirical models allow for rich intertemporal dependencies
via serially correlated errors and capture latent country specific heterogeneity via random
coefficients. For accurate estimation of the treatment type model a simulated maximum
likelihood approach employing efficient importance sampling is used. The results reveal significant
costs in terms of economic growth for both crises. Costs for reversals are linked
to country specific variables, while costs for currency crises are not. Furthermore, shocks
explaining current account reversals and growth show strong significant positive correlation.
Macedonia's economy was not left behind by the global economic crisis as the
country's macroeconomic policymakers had hoped! Certainly, an economy open at
all and with a high degree of direct dependence on European and global economies
in general should not be saved by the crisis in financial top and then the global
economic. Transmission of negative effects but came a little late economic shocks
in the periphery are often stronger than the epicenter. In these circumstances
macroeconomic policymakers should be more proactive, coherent and dynamic
design of the following measures and economic policies increasingly based on
relevant research and analysis (decision making based on research and analysis).
Therefore, this analysis aims to develop and study in detail the measures in terms of
economy, Science and Technology of Macedonia in order to suggest a more
effective policy in accordance with business cycles, always comparing the
economic measures in other states with which the country has advanced reports on
economic but referring to specific local economic conditions. Accordingly the
specific activities recommended for further action.
We develop a novel financial market model in which the stock markets of two countries
are linked via and with the foreign exchange market. To be precise, there are domestic
and foreign speculators in each of the two stock markets which rely either on linear
technical or linear fundamental trading strategies to determine their orders. Since
foreign stock market speculators require foreign currency to conduct their trades, all
three markets are connected. Our setup entails a natural nonlinearity which may cause
persistent endogenous price dynamics. Moreover, we analytically show that market
interactions can destabilize the model’s fundamental steady state.
The paper proposes an elementary agent-based asset pricing model that, invoking the
two trader types of fundamentalists and chartists, comprises four features: (i) price determination
by excess demand; (ii) a herding mechanism that gives rise to a macroscopic
adjustment equation for the market fractions of the two groups; (iii) a rush towards fundamentalism
when the price misalignment becomes too large; and (iv) a stronger noise
component in the demand per chartist trader than in the demand per fundamentalist
trader, which implies a structural stochastic volatility in the returns. Combining analytical
and numerical methods, the interaction between these elements is studied in the
phase plane of the price and a majority index. In addition, the model is estimated by
the method of simulated moments, where the choice of the moments reflects the basic
stylized facts of the daily returns of a stock market index. A (parametric) bootstrap
procedure serves to set up an econometric test to evaluate the model’s goodness-of-fit,
which proves to be highly satisfactory. The bootstrap also makes sure that the estimated
structural parameters are well identified.
In the framework of small-scale agent-based financial market models, the paper starts
out from the concept of structural stochastic volatility, which derives from different noise
levels in the demand of fundamentalists and chartists and the time-varying market shares
of the two groups. It advances several different specifications of the endogenous switching
between the trading strategies and then estimates these models by the method of simulated
moments (MSM), where the choice of the moments reflects the basic stylized facts
of the daily returns of a stock market index. In addition to the standard version of MSM
with a quadratic loss function, we also take into account how often a great number of
Monte Carlo simulation runs happen to yield moments that are all contained within their
empirical confidence intervals. The model contest along these lines reveals a strong role
for a (tamed) herding component. The quantitative performance of the winner model is
so good that it may provide a standard for future research.
The paper enlightens popular part of the budget policy – deficit finance. In the
process of securing economic conditions to surpass the current economic crises,
the governments all over the world incline towards debt deficit finance. The
intention is to describe the implications such as multiplier effect, crowding out
effect, correlation between budget and trade deficit. One of them are positive, they
increase the aggregate demand and national income, other negative in term that
they crowd out the private sector from the capital market under increased demand
for loanable funds.
The economic crisis has brought a new situation also for the Hungarian economic
policy, as neoliberalism as the main trend in economic thought is no
longer valid. This phenomenon cannot be reduced to be a mere macroeconomic
course shift, as an entire economic philosophy and approach has lost its relevance.
One consequence of this is the need for a thorough revision of the theory
and practice of business management, along with the re-evaluation of the notion
and position of the corporation.
Our study aims to contribute to this theoretical reformation, presenting that social
values derived from psychological and sociological findings such as human
motivational theories or trust are fundamental elements of the 21st century corporate
model. To point to this, we use the ideological correspondences, while
proving that our national research on corporate theory and even rather its application
are far behind the 21st century requirements and lack even the Western
view of the 20th century.