Factor Analysis/ Principal Component Analysis

Factor Analysis （因子分析）

観測データから原因となる因子を見つける手法

因子→観測値

Principal Component Analysis （主成分分析）

観測データから新たな総合指標（主成分）を作成する手法

観測値→主成分

http://www.sigmath.es.osaka-u.ac.jp/~kano/research/seminar/30BSJ/kano.pdf

http://www.geisya.or.jp/~mwm48961/statistics/syuseibun1.htm

Sunspots

サンスポット

技術や選好など経済のファンダメンタルズとは無関係な不確実性

三野(2003)「マクロ経済動学と均衡の不決定性」

 http://www.lib.kobe-u.ac.jp/repository/00055877.pdf

経済のファンダメンタルズとは全く無関係なショック(extrinsic uncertainty)の代名詞

福田(2001)「マクロ経済動学における期待の役割」

http://www.mof.go.jp/pri/publication/financial_review/fr_list3/r59/r_59_004_027.pdf

サンスポット均衡

 「サン・スポット均衡」の特徴は、均衡において価格などの経済変数の動きが人々が抱く期待に左右される点である。

経済のファンダメンタルズとは必ずしも関係のない心理の変化が、人々の経済環境に関する期待や経済行動に影響を与え、それが結果として価格などの経済変数を実際に変動させる。

期待が人々の行動を変化させ、結果的にそれが期待した通りに経済変数を変化させている。このような期待のあり方は、「自己実現的(self-fulfilling)期待」と呼ばれており、予想が完全に的中するという意味で、合理的期待の1つとも考えられている。

福田(2001)「マクロ経済動学における期待の役割」

http://www.mof.go.jp/pri/publication/financial_review/fr_list3/r59/r_59_004_027.pdf

http://en.wikipedia.org/wiki/Sunspots_%28economics%29

Blanket Gurantee

A declaration by the government that all deposits and perhaps other financial instruments will be protected.

http://www.bankingglossary.net/definition/57-Blanket_Guarantee

Near/ Close to

Nearは基本前置詞なしで使う。

前置詞をつけるならfromではなくtoを使う。

http://tottocobkhinata.cocolog-nifty.com/bizieizakkicho/2006/01/nearclose_to__c956.html

Superscript/ Subscript

Superscript 上付き文字

Subscript 下付き文字

UIP Puzzle

 The uncovered interest rate parity (UIP) puzzle states that high interest rate currencies appreciate over time and therefore pay a positive expected excess return.

This empirical finding is consistently confirmed by numerous studies

Gavazzoni, 2008, "Uncovered Interest Rate Parity Puzzle: An Explanation based on Recursive Utility and Stochastic Volatility"

https://server1.tepper.cmu.edu/seminars/docs/uip_puzzle_federico_gavazzoni.pdf

Bertrand Duopoly with Imperfect Substitute Goods

Demand Function of Firm 1

q1=a-bp1+dp2

Profit Function of Firm 1

π1=p1(a-bp1+dp2)-c(a-bp1+dp2)

FOC ⇒ Reaction Function of Firm 1

∂π1/∂p1=0 ⇒ p1=r1(p2)=(a+cb)/2b+(d/2b)p2

Demand Function for Firm 2

q2=a-bp2+dp1

Profit Function of Firm2

π2=p2(a-bp2+dp1)-c(a-bp2+dp1)

FOC ⇒ Reaction Function of Firm 2

∂π2/∂p2=0 ⇒ p2=r2(p1)=(a+cb)/2b+(d/2b)p1


Nash Equilibrium

p1*=p2*=(a+cb)/(2b-d)





p1=p, R*=r1, p2=q, R=r2, x=q1, y=q2

If p1 and p2 increase along the reaction function of firm 1, then the production of firm 1 will increase. In addition, if p1 and p2 increase along the reaction function of firm 2, then the production of firm 2 will increase.

Proof
Reaction function of firm1 ⇒ dp1/dp2=d/2b
Demand function of firm1 ⇒ dq1/dp1=-b+d(dp2/dp1)
From these equations we have
dq1/dp1=b>0 (or dq1/dp2=d/2>0)

http://www.econ.kobe-u.ac.jp/~myojo/io/io11.pdf

生産関数の推定

参考資料

http://www.econ.kobe-u.ac.jp/~myojo/advanced_empirical_io/production.pdf

Trade Creation/ Trade Diversion

Trade Creation

A situation where two countries within the customs union begin to trade with each other, whereas formerly they produced the good in question for themselves.

Trade Diversion

A situation where two countries begin to trade within the union, but one of these countries had formerly imported the good from outside the union.

If there is a country which is a member of the union and imported a good from outside the union because the price was the lowest, after the union, the country switches its purchases from the lowest-price to a higher-price country.

In this case the country could lose from joining the union because of a negative efficiency effect.

What is the Desirability of Customs Unions?

Kemp and Wan 1976 Theorem

Suppose that the customs union keeps the world price p* fixed, or equivalently, keep the purchases from the rest of the world x* fixed.

If each country within the customs union receives the transfers -t1'(mi1-mi0) from the rest of the union, then there is a pattern of lump sum transfers within each country such that no individual is worse off, and the government budget in each country is nonnegative.

What is the Desirability of FTAs?

The Difference between Customs Unions and FTAs

Producer prices must be equalized within the area, but by virtue of their differing tariffs on outside countries, consumer prices can differ within the area.

Krishna and Panagariya 2002 Theorem

Suppose every FTA member import and export the same quantity with the rest of the world as it did before the free-trade area.

Then there is a pattern of lump sum transfers within each country such that no individual is worse off, and the government budget in each country is nonnegative.

Note

To ensure welfare gains, we need to rule out transshipment of goods not produced in the FTA.

In practice, restrictions on such transshipment within FTAs are know as rules of origin.

Within NAFTA, for example, each and every good must be certified as "North American Made" before it can be shipped freely between Mexico, the United States, and Canada.

R. Feenstra, 2004, "Advanced International Trade," p.192-196

Speak/ Talk/ Say/ Tell

Speak

話すという”行為”。　聞き手はいらない。

Talk

話すという"行為"。　聞き手が必要。

Say

話す"何か"に重点。　聞き手はいらない。

Tell

話す"何か"に重点。　聞き手が必要。

http://www.englishcafe.jp/answer/and-1g.html

Two Key Conditions for Monopolistic Competition

1) Marginal Revenue (MR) = Marginal Cost (MC)

2) Price (P) = Average Cost (AC)

Compensation Principle

If tariff reform combined with lump sum transfers could make everyone better off, then we accept the tariff reform itself as a worthwhile policy, even when the transfers are not made.

This criterion for evaluating a reform is called the "compensation principle" (Chapman 1987).

Theorem (Grinols and Wong 1991; Ju and Krishna 2000)

When the prices changes from p0=p*0+t0 to p1=p*1+t1, suppose that the government transfers the following amount to each individual:

.
Provided that
,
then no individual is worse off and the government budget is balanced.

Two Key Sources of Welfare Improvements

(1) Terms of Trade

(2) Efficiency (Tariff Revenue)


Corollary

(1) Starting in autarky and moving to trade with tariffs and subsidies makes no one worse off provided that the tariffs and subsidies raise nonnegative revenue (t1'm1≥0). ("self-financing" tariffs condition, Ohyama 1972)

(2) For a small country with constant world prices, p*0=p*1, a change in tariffs and subsidies makes no one worse off provided that t1'(m1-m0)≥0.

Corollary (1) implies that free trade is better than autarky (Samuelson 1962; Kemp 1962, check the case where t1=0)

Corollary (2) implies that free trade is better than restricted trade for a small country (check the case where t1=0).


R. Feenstra, 2004, "Advanced International Trade," p.188-191

Gains from Trade

Dixit and Norman (1980) Model

Proposition

Suppose a country moves from autarky to free-trade. If the government ensures that each individual can still afford her autarky choices by lump sum transfers and taxes, then the total government revenue is greater than or equal to zero: the lump sum taxes collected from those gaining from trade are more than enough to cover the subsidies to those harmed by trade.

Two Sources of Gains

(1) Consumption Gains
From consuming at a point different from autarky.

(2) Efficiency Gains
From producing at a point different from autarky.

Examples

(1) The United States during December 1807 to March 1809

Congress imposed a nearly complete embargo on international trade at the request of President Jefferson.

Irwin (2001) calculates that the welfare cost to the United States was some 8% of GDP.

(2) Japan during 1639 to 1859

Bernhofen and Brown (2002) calculate an upper bound to the gains from trade for Japan of 4 to 5% of GDP.

Memo

The idea of using lump sum transfers is not realistic.

[Reason 1] Requires too much information

Needs the knowledge of each individual's autarky consumption and factor supplies.

[Reason 2] Incentive compatibility problem

The attempt to implement a policy would lead individuals to not truthfully report the information needed.

Two Possible Solutions

(1)Commodity Taxes and Subsidies

Dixit and Norman, 1980, Dixit, 1986

Allow good and factor prices for producers to move to their free-trade levels, but hold good and factor prices for consumers fixed at their autarky levels.

Pros

Only requires information on the goods and factor prices.

Cons

The factor prices is not always available (ex: in a case where the factor prices need to be measured per unit of effort).

Individuals have moving costs. If u(c, v) is strictly quasi-concave, individuals have a unique choice of where to work and are unwilling to shift between locations at the autarky wages (the production point cannot move from the autarky one).

Examples

Unification of East and West Germany

Feenstra and Lewis, 1994

Moving subsidies can restore Pareto gains through subsidizing workers to move.

Examples

Trade Adjustment Assistance (US)

(2)Building into a policy an incentive to tell the truth (Feenstra, McMillan, and Lewis, 1990)


Imperfect Competition and Increasing Returns to Scale

Corollary of Grinols 1991 Theory

A sufficient condition for Pareto gains from trade is that the output of every industry subject to increasing returns to scale or imperfect competition does not fall when going from autarky to free trade, and at least one such industry expands.

Markusen 1981

For two countries that are identical except size, the smaller country will experience an increase in the imperfect competitive industry, but not the larger country.

Helpman and Krugman 1985

In a monopolistic competition model, suppose that the world output of each differentiated goods industry does not contract, then the opening trade will lead to at least as many goods, and at least as much output of each.


R. Feenstra, 2004, "Advanced International Trade," pp.179-187

Customs Union/ Free-Trade Area

There are instances where a group of countries will decide to completely eliminate all tariffs between them, without eliminating tariffs on goods imported from the rest of the world.

This is called a regional agreement or preferential agreement between the  countries involved.

In the case where this group of countries also unify their tariffs against the rest of the world, with zero tariffs internally, this is called a customs union.

The European Economic Community (EEC) is one example of a customs union, and another is MERCOSUR, established in 1995, which includes Argentina, Brazil, Paraguay and Uruguay.

In contrast, if the group of countries maintains their own tariffs against the rest of the world, with zero tariffs internally, then this is called a free-trade area.

Examples of free-trade areas are the Canada-U.S. Free Trade Agreement (CUSFTA) of 1989, which later led to the North American Free Trade Agreement (NAFTA) of 1994, which consists of Canada, the United States, and Mexico.


R. Feenstra, 2004, "Advanced International Trade," pp.175-179 

World Trade Organization

The goal of World Trade Organization (WTO): to reduce barriers to trade among its member countries, which include more than 140 countries.

Among the newest members are the People's Republic of China, accepted into the WTO on November 10, 2001, with Taiwan joining the next day.

The WTO was known befor 1994 as the General Agreement on Tariff and Trade (GATT), and was set up after World War II along with other international institution such as the International Monetary Fund and the World Bank.

The GATT has made great progress in reducing trade barriers world wide through "rounds" of discussion, which included the Uruguay Round lasting from 1986 to 1994, and the agreement in Doha, Qatar, on November 14, 2001, to launch a new round of negotiations.

R. Feenstra, 2004, "Advanced International Trade," p.175

特徴と訳す英単語の違い

Characteristic
最も一般的な単語。ある物と他の物を区別するときに使う。

Quality
重要な特徴を強調。人の性格の特徴について話すときにもよく使う。

Property
学術的。物質の性質を語るときなど。

Feature
（視覚的に）目立つ特徴を示すときに使う。

Attribute
人の性格の特徴について話すときによく使う。

http://www.eigowithluke.com/2012/03/characteristics/

Social Darwinism

"Man, like every other animal, has no doubt advanced to his present high condition through a struggle for existence consequent on his rapid multiplication; and if he is to advance still higher, it is to be feared that he must remain subject to a severe struggle." Darwin

Darwin's insight that, as long as population was regulated by Malthusian mechanisms, mankind would be subject to natural selection was profoundly correct.

Preindustrial England in the  years 1250-1800
Economic success translated powerfully into reproductive success, with the richest individuals having more than twice the number of surviving children at death as the poorest.

Clark (2007) A Farewell to Alms Ch.6 p.112

Time Preference

Definition
Time preference is simply the idea that, everything else being equal, people prefer to consume now rather than later.

Characteristics
・Time preference rates are very high in young children and decline as they age.
・Time preference rates are higher among the poor and less educated. Children with high time preference rates in preschool in California did less well academically later and had lower SAT scores.

Clark (2007) A Farewell to Alms Ch.9 p.171

Malthusian Model

The Malthusian model supplies a mechanism to explain the long-run population stability before 1800. There are three assumptions:

1. Each society has a birth rate, determined by customs regulating fertility, but increasing with material living standards.

2. The death rate in each society declines as living standards increase.

3. Material living standards decline as population increases.

Clark (2007) A Farewell to Alms Ch.2