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2011 Working Papers

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Title/Author(s) Abstract Number

Pricing in inflationary times- the penny drops

Ratula Chakraborty, Paul Dobson, Jonathan S. Seaton and Michael Waterson

We investigate micro pricing behaviour in groceries (the UK’s most important consumer market) over eight years including the inflationary period of early 2008. We find behaviour sharply distinguished from most previous work, namely that overall basket prices rise but more individual prices fall than rise! [read more] 975

Is Anonymity the Missing Link Between Commercial and Industrial Revolution?

Stephen Broadberry , Sayantan Ghosal and Eugenio Proto

The Industrial Revolution is often characterized as the culmination of a process of commercialisation; however, the precise nature of such a link remains unclear. This paper models and analyses one such link : the impact of a higher degree of anonymity of market transactions on relative factor prices. [read more] 974

Context and Decision: Utility on a Union of Mixture Spaces

Patrick O’Callaghan

Suppose a decision-maker is willing to make statements of the form : I prefer to choose alternative a when in context p, than to choose alternative b when in context q”. Contexts p and q may refer to given probability distributions over a set of states, and b and c to alternatives such as: “turn left” or “turn right” at a junction. [read more] 973

Credibility and Strategic Learning in Networks

Kalyan Chatterjee and Bhaskar Dutta

This paper studies a model of diffusion in a fixed, finite connected network. There is an interested party that knows the quality of the product or idea being propagated and chooses an implant in the network to influence other agents to buy or adopt. [read more] 972

Which Impulse Response Function?

David Ronayne

This paper compares standard and local projection techniques in the production of impulse response functions both theoretically and empirically. Through careful selection of a structural decomposition, the comparison continues to an application of US data to the textbook ISLM model. [read more] 971

Maternal Autonomy and the Education of the Subsequent Generation : Evidence from three contrasting states in India

Marco Alfano, Wiji Arulampalam and Uma Kambhampati

This paper makes a significant contribution on both conceptual and methodological fronts, in the analysis of the effect of maternal autonomy on school enrolment age of children in India. [read more] 970

Laboratory Games and Quantum Behaviour: The Normal Form with a Separable State Space

Peter J Hammond

The subjective expected utility (SEU) criterion is formulated for a particular four-person “laboratory game” that a Bayesian rational decision maker plays with Nature, Chance, and an Experimenter who influences what quantum behaviour is observable by choosing an orthonormal basis in a separable complex Hilbert space of latent variables. [read more] 969

False Consensus in Economic Agents

Eugenio Proto and Daniel Sgroi

In an incentivized experiment we identify a powerful and ubiquitous bias: individuals regard their own characteristics and choices as more common than is the case. [read more] 968

A Rough Examination of the value of gas storage

Monica Giulietti, Luigi Grossi and Michael Waterson

This paper studies the impast of a fire in 2006 which removed the possibility of access to the Rough gas storage facilities covering 80% of total UK storage, at a time when major withdrawals from storage would likely have taken place. [read more] 967

Knocking on Heaven’s Door? Protestantism and Suicide

Sascha O. Becker and Ludger Woessmann

We model the effect of Protestant vs. Catholic denomination in an economic theory of suicide, accounting for differences in religious-community integration, views about man’s impact on God’s grace, and the possibility of confessing sins. [read more] 966

Wage Inequality, Minimum Wage Effects and Spillovers

Mark B. Stewart

This paper investigates possible spillover effects of the UK minimum wage. The halt in the growth in inequality in the lower half of the wage distribution (as measured by the 50:10 percentile ratio) since the mid 1990s, in contrast to the continued inequality growth in the upper half of the distribution, suggests the possibility of a minimum wage effect and spillover effects on wages above the minimum. [read more] 965

Classroom Games in Economics : A Quantitative Assessment of the `Beer Game'

Michael McMahon

Using an experiment, I compare the use of the 'Beer Distribution' classroom game with the more traditional 'chalk and talk' approach to teach students about inventories and the macroeconomy. [read more] 964

How Experts Decide : Identifying Preferences versus Signals from Policy Decisions

Stephen Hansen and Michael McMahon

A large theoretical literature assumes that experts differ in terms of preferences and the distribution of their private signals, but the empirical literature to date has not separately identified them. [read more] 963

The role of worker flows in the dynamics and distribution of UK unemployment

Michael W. L. Elsby, Jennifer C. Smith and
Jonathan Wadsworth

Unemployment varies substantially over time and across subgroups of the labour market. Worker flows among labour market states act as key determinants of this variation. [read more] 962

Nonclassical Measurement Error in a Nonlinear (Duration) Model

Daniel Gutknecht

In this paper, we study nonclassical measurement error in the continuous dependent variable of a semiparametric transformation model. The latter is a popular choice in practice nesting various nonlinear duration and censored regression models. [read more] 961

Incentive Schemes for Local Government : Theory and Evidence from Comprehensive Performance Assessment in England (updated)

Ben Lockwood and Francesco Porcelli

This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous effect on the efficiency of service provision. [read more] 960

Understanding the macroeconomic effects of working capital in the United Kingdom

Emilio Fernandez-Corugedo, Michael McMahon,
Stephen Millard and Lukasz Rachel

In this paper we first document the behaviour of working capital over the business cycle stressing the large negative effect of the recent credit contraction on UK firms working capital positions. [read more] 959

Quantile estimates of counterfactual distribution shifts and the impact of minimum wage increases on the wage distribution

Mark B. Stewart

This paper presents a method for estimating the effects of a policy change on an outcome distribution that uses a comparator quantile rather than a control group and provides methods for estimating the variances of the estimators. [read more] 958

Individual Welfare and Subjective Well-Being : Commentary Inspired by Sacks, Stevenson and Wolfers

Peter J. Hammond, Federica Liberini and Eugenio Proto

Sacks, Stevenson and Wolfers (2010) question earlier results like Easterlin's showing that long-run economic growth often fails to improve individuals' average reports of their own subjective well-being (SWB). [read more] 957

Do Professional Forecasters Pay Attention to Data Releases?

Michael P. Clements

We present a novel approach to assessing the attentiveness of professional forecasters to news about the macroeconomy. We find evidence that professional forecasters, taken as a group, do not always update their estimates of the current state of the economy to reflect the latest releases of revised estimates of key data. [read more] 956