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Tension has long existed in the social sciences between quantitative and qualitative approaches on one hand, and theory-minded and empirical techniques on the other. The latter divide has grown sharper in the wake of new behavioural and experimental perspectives which draw on both sides of these modelling schemes. This book works to address this disconnect by establishing a framework for methodological unification: empirical implications of theoretical models (EITM). This framework connects behavioural and applied statistical concepts, develops analogues of these concepts, and links and evaluates these analogues. The authors offer detailed explanations of how these concepts may be framed, to assist researchers interested in incorporating EITM into their own research. They go on to demonstrate how EITM may be put into practice for a range of disciplines within the social sciences, including voting, party identification, social interaction, learning, conflict and cooperation to macro-policy formulation.

In this paper we adopt the Selten–Pool [Selten, R., Pool, J., 1991. The distribution of foreign language skills as a game equilibrium. In: Selten, R. (Ed.), Game Equilibrium Models, vol. 4. Springer-Verlag, Berlin, pp. 64–84] framework of language acquisition based on "communicative benefits" derived from the ability to communicate with other speakers of an acquired language, and "learning costs" incurred by acquiring a foreign language. We show that, under some mild conditions, there exists a unique interior linguistic equilibrium. We then derive demand functions for foreign languages, that we estimate for English, French, German and Spanish in 13 European countries and demonstrate that the properties of these functions are consistent with our theoretical results. ; Ortuno-Ortin is grateful for financial support from Spanish Ministerio de Educacion y Ciencia (SEJ2004- 00968) and Fundacion BBVA ; Publicado

"In Europe, the subsidiarity principle has been enjoying renewed consensus in recent years. This book offers an insight on the original meaning of subsidiarity, particularly the horizontal dimension of subsidiarity, which challenge traditional patterns of government. Prominent international scholars and experts from various fields "read" the distinctive wealth of government experience accumulated in Lombardy and the experience of governing in their own various countries. This book is for anyone willing to add a new perspective, that of subsidiarity, to the debate on governance reform"--Provided by publisher

Part of a symposium on the future direction of political science research begins by citing some problems with formal models, case studies, & applied statistical modeling despite the fruit they have borne. In this light, the initiative to link formal & empirical analysis -- empirical implications of theoretical models (EITM) -- is described. The lax manner in which researchers typically operationalize their concepts & establish causation is addressed in terms of the scientific & social impacts of common political science research practices. Examples of EITM-type research include party identification, policy making & the Phillips curve, strategic interaction in international relations, & regulatory policy delay. 1 Appendix, 45 References. J. Zendejas

In this paper we examine the effect of tax policy on the relationship between inequality and growth in a two-sector non-scale model. With non-scale models, the longrun equilibrium growth rate is determined by technological parameters and it is independent of macroeconomic policy instruments. However, this fact does not imply that fiscal policy is unimportant for long-run economic performance. It indeed has important effects on the different levels of key economic variables such as per capita stock of capital and output. Hence, although the economy grows at the same rate across steady states, the bases for economic growth may be different. The model has three essential features. First, we explicitly model skill accumulation, second, we introduce government finance into the production function, and we introduce an income tax to mirror the fiscal events of the 1980's and 1990's in the US. The fact that the non-scale model is associated with higher order dynamics enables it to replicate the distinctly non-linear nature of inequality in the US with relative ease. The results derived in this paper attract attention to the fact that the non-scale growth model does not only fit the US data well for the long-run (Jones, 1995b) but also that it possesses unique abilities in explaining short term fluctuations of the economy. It is shown that during transition the response of the relative simulated wage to changes in the tax code is rather non-monotonic, quite in accordance to the US inequality pattern in the 1980's and early 1990's. More specifically, we have analyzed in detail the dynamics following the simulation of an isolated tax decrease and an isolated tax increase. So, after a tax decrease the skill premium follows a lower trajectory than the one it would follow without a tax decrease. Hence we are able to reduce inequality for several periods after the fiscal shock. On the contrary, following a tax increase, the evolution of the skill premium remains above the trajectory carried on by the skill premium under a situation with no tax increase. Consequently, a tax increase would imply a higher level of inequality in the economy ; - En aquest article s'examina l'efecte de la política impositiva en la relació entre desigualtat i creixement en el marc d'un model non-scale amb dos sectors. Amb models del tipus non-scale, l'equilibri de llarg termini ve determinat pels paràmetres tecnològics i és independent dels instruments de política macroeconòmica. Ara bé, aquesta situació no implica que la política fiscal no intervingui en l'activitat econòmica en el llarg termini. De fet, té importants efectes en els nivells de variables econòmiques tals com l'estoc de capital i la producció. Així doncs, tot i que l'economia creixi a la mateixa taxa en els diferents estats estacionaris, les bases pel creixement econòmic poden diferir. El model té tres aspectes essencials que el caracteritzen. En primer lloc, hem modelat l'acumulació d'habilitats; en segon, hem introduït el govern a la funció de producció; finalment, hem incorporat un impost sobre la renda per tal de reproduir els canvis fiscals que es produiren als Estats Units durant els anys vuitanta i noranta. El fet que els models non-scale es trobin associats amb dinàmiques d'ordre elevat ens permet replicar la naturalesa de la desigualtat americana de manera força acurada. Així, els resultats obtinguts en aquest article ens mostren com el nostre model no només capta l'evolució en el llarg termini (Jones, 1995b), sinó que també és capaç d'explicar les fluctuacions econòmiques en el curt termini. De fet, es mostra com durant la transició, la resposta del skill premium simulat envers els canvis impositius és no-monotònica, seguint el patró de la desigualtat americana dels anys vuitanta i noranta. Més concretament, hem analitzat amb un cert detall la dinàmica fruit de la simulació d'un increment i d'una reducció impositives aïllades, tot i comprovant que després d'una davallada impositiva, el skill premium segueix una trajectòria inferior a la seguida sense el decrement impositiu. Vist això, es pot dir que la desigualtat minva durant els períodes que segueixen el canvi fiscal. Per altra banda, després d'un increment impositiu, el skill premium roman per sobre de la trajectòria prèvia a l'augment. Per tant, un increment impositiu implicaria un nivell de desigualtat superior a l'existent fins aleshores a l'economia.

This dissertation presents two chapters on empirical models of macroeconomics and finance, and one chapter on a theoretical model for conducting monetary policy. The first chapter applies machine learning algorithms to construct non-parametric, nonlinear predictions of mortgage loan default. I compile a large dataset with over 20 million loan observations from Fannie Mae and Freddie Mac, for the period 2001-2016 at the quarterly frequency. Different machine learning algorithms are applied to predict in sample (training sample), and to forecast out-of-sample (testing data). I find that the forecast performance of nonlinear and non-parametric algorithms are substantially better than the traditional logit model. Additionally, machine learning algorithms allow identification of the predictive power of specific variables. The results indicate that loan age is the most important predictor of loan default before and after the 2008 financial crisis. However, I find that market loan- to-value is the most effective predictor of mortgage loan default during the recent financial crisis. Finally, I use machine learning to formulate risk-based capital stress tests for Fannie Mae and Freddie Mac under different scenarios. I forecast their mortgage credit losses and associated capital needs during the financial crises. The results obtained are more accurate than those from the Federal Housing Enterprise Oversights (OFHEO), and other existing stress test studies. In the second, and third chapters, I tested the effectiveness of Monetary policy by empirical, and theoretical models. With the severity of the 2008 financial crisis, and apparent inefficacy of traditional monetary and fiscal policies, the Federal Reserve together with the U.S. government introduced unconventional policy measures. The Large Scale Asset Purchase (LSAP) and Troubled Asset Relief Program (TARP) are some of these policies introduced by the Federal Reserve and Department of Treasury. While these policies may have been important in preventing a deepening of the financial crisis and laying the foundation for the economic recovery, there were collateral effects on bank profitability. In this chapter, I study the impact of both the LSAP and TARP programs on banks? profit and risk taking using a large panel. The results indicate that these programs had a positive effect on banks? profit (Chapter 2). In chapter three ,I use a small-scale DSGE model for the economy of Iran to analyze monetary policy. The model is extended to include housing and oil sectors. The model is adapted for the peculiarities of Iran?s Central Bank, which uses money supply as a function of oil income and production growth. I study the reaction function of the model to technology, oil, and monetary shocks in this specific Iranian monetary policy framework. The results show that monetary shocks has only nominal effect on inflation but not on the real sector such as investment, consumption, or production. Also, positive oil income shocks lead to an increase in inflation instead of an increase in production.