Economics

New submissions

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New submissions for Mon, 29 Apr 24

[1]  arXiv:2404.16961 [pdf, ps, other]

Title: On the testability of common trends in panel data without placebo periods

Authors: Martin Huber

Subjects: Econometrics (econ.EM)

We demonstrate and discuss the testability of the common trend assumption imposed in Difference-in-Differences (DiD) estimation in panel data when not relying on multiple pre-treatment periods for running placebo tests. Our testing approach involves two steps: (i) constructing a control group of non-treated units whose pre-treatment outcome distribution matches that of treated units, and (ii) verifying if this control group and the original non-treated group share the same time trend in average outcomes. Testing is motivated by the fact that in several (but not all) panel data models, a common trend violation across treatment groups implies and is implied by a common trend violation across pre-treatment outcomes. For this reason, the test verifies a sufficient, but (depending on the model) not necessary condition for DiD-based identification. We investigate the finite sample performance of a testing procedure that is based on double machine learning, which permits controlling for covariates in a data-driven manner, in a simulation study and also apply it to labor market data from the National Supported Work Demonstration.

[2]  arXiv:2404.17049 [pdf, ps, other]

Title: Overidentification in Shift-Share Designs

Authors: Jinyong Hahn, Guido Kuersteiner, Andres Santos, Wavid Willigrod

Subjects: Econometrics (econ.EM)

This paper studies the testability of identifying restrictions commonly employed to assign a causal interpretation to two stage least squares (TSLS) estimators based on Bartik instruments. For homogeneous effects models applied to short panels, our analysis yields testable implications previously noted in the literature for the two major available identification strategies. We propose overidentification tests for these restrictions that remain valid in high dimensional regimes and are robust to heteroskedasticity and clustering. We further show that homogeneous effect models in short panels, and their corresponding overidentification tests, are of central importance by establishing that: (i) In heterogenous effects models, interpreting TSLS as a positively weighted average of treatment effects can impose implausible assumptions on the distribution of the data; and (ii) Alternative identifying strategies relying on long panels can prove uninformative in short panel applications. We highlight the empirical relevance of our results by examining the viability of Bartik instruments for identifying the effect of rising Chinese import competition on US local labor markets.

[3]  arXiv:2404.17227 [pdf, other]

Title: Trust Dynamics and Market Behavior in Cryptocurrency: A Comparative Study of Centralized and Decentralized Exchanges

Authors: Xintong Wu, Wanling Deng, Yuotng Quan, Luyao Zhang

Subjects: General Economics (econ.GN)

In the evolving landscape of digital finance, the transition from centralized to decentralized trust mechanisms, primarily driven by blockchain technology, plays a critical role in shaping the cryptocurrency ecosystem. This paradigm shift raises questions about the traditional reliance on centralized trust and introduces a novel, decentralized trust framework built upon distributed networks. Our research delves into the consequences of this shift, particularly focusing on how incidents influence trust within cryptocurrency markets, thereby affecting trade behaviors in centralized (CEXs) and decentralized exchanges (DEXs). We conduct a comprehensive analysis of various events, assessing their effects on market dynamics, including token valuation and trading volumes in both CEXs and DEXs. Our findings highlight the pivotal role of trust in directing user preferences and the fluidity of trust transfer between centralized and decentralized platforms. Despite certain anomalies, the results largely align with our initial hypotheses, revealing the intricate nature of user trust in cryptocurrency markets. This study contributes significantly to interdisciplinary research, bridging distributed systems, behavioral finance, and Decentralized Finance (DeFi). It offers valuable insights for the distributed computing community, particularly in understanding and applying distributed trust mechanisms in digital economies, paving the way for future research that could further explore the socio-economic dimensions and leverage blockchain data in this dynamic domain.

[4]  arXiv:2404.17412 [pdf, ps, other]

Title: Characterizing Public Debt Cycles: Don't Ignore the Impact of Financial Cycles

Authors: Tianbao Zhou, Zhixin Liu, Yingying Xu

Subjects: General Economics (econ.GN)

Based on the quarterly data from 26 advanced economies (AEs) and 18 emerging market economies (EMs) over the past two decades, this paper estimates the short- and medium-term impacts of financial cycles on the duration and amplitude of public debt cycles. The results indicate that public debt expansions are larger than their contractions in duration and amplitude, aligning with the "deficit bias hypothesis" and being more pronounced in EMs than in AEs. The impacts of various financial cycles are different. Specifically, credit cycles in EMs significantly impact the duration and amplitude of public debt cycles. Notably, short- and medium-term credit booms in EMs shorten the duration of public debt contractions and reduce the amplitude. Fast credit growth in AEs prolongs the duration of public debt expansions and increases the amplitude. However, credit cycles in AEs show no significant impact. For house price cycles, the overall impact is stronger in EMs than in AEs, differing between short- and medium-term cycles. Finally, the impact of equity price cycles is significant in the short term, but not in the medium term. Equity price busts are more likely to prolong the expansion of public debt in EMs while increasing the amplitude of public debt contractions in AEs. Uncovering the impacts of multiple financial cycles on public debt cycles provides implications for better debt policies under different financial conditions.

[5]  arXiv:2404.17551 [pdf, ps, other]

Title: The Role of Marketing in Public Policy Decision Making: The Case of Fuel Subsidy Removal in Nigeria

Authors: Salome O. Ighomereho, Ifeoma E. Ezeabasili

Comments: 9 Pages

Journal-ref: IOSR Journal of Humanities and Social Science, 6(5): pp 7-15 (2013)

Subjects: General Economics (econ.GN)

Public policy decision making has become more complex and complicated in recent times. Some authors have attributed this to the fact that public policy decision makers now have more variables to consider in every decision more than ever before. Others have argued that the rate of civilization, globalization and information technology has made the public to be more enlightened and abreast with the activities of government and so can oppose government decisions if they are unfavourable. This tends to increase government need for more and better information in order to satisfy the public. Consequently, this paper examined the issue of fuel subsidy removal in Nigeria, the impact of the policy on the public as well as the country and the role marketing principles would have played if the Nigerian government had taken some time to investigate what should be done, how it should be done and when it should be done. It also proposed a roadmap for future policies that have direct implications for the general public.

Cross-lists for Mon, 29 Apr 24

[6]  arXiv:2404.16056 (cross-list from cs.GT) [pdf, ps, other]

Title: Intelligent Machines and Incomplete Information

Authors: Sujata Goala, Mridu Prabal Goswami, Surajit Borkotokey

Comments: 35 pages

Subjects: Computer Science and Game Theory (cs.GT); Theoretical Economics (econ.TH)

The distribution of efficient individuals in the economy and the efforts that they will put in if they are hired, there are two important concerns for a technologically advanced firm. wants to open a new branch. The firm does not have information about the exact level of efficiency of an individual when she is hired. We call this situation incomplete information. The standard principal agent models assume that employees know their efficiency levels. Hence these models design incentive-compatible mechanisms. An incentive-compatible mechanism ensures that a participant does not have the incentive to misreport her efficiency level. This paper does not assume that employees know how efficient they are. This paper assumes that the production technology of the firm is intelligent, that is, the output of the machine reveals the efficiency levels of employees. Employees marginal contributions to the total output of the intelligent machine, the probability distribution of the levels of efficiency and employees costs of efforts together define a game of incomplete information. A characterization of ex-ante Nash Equilibrium is established. The results of the characterization formalize the relationship between the distribution of efficiency levels and the distribution of output.

[7]  arXiv:2404.16061 (cross-list from cs.LO) [pdf, ps, other]

Title: Dynamic Many Valued Logic Systems in Theoretical Economics

Authors: Daniel Lu

Subjects: Logic in Computer Science (cs.LO); Theoretical Economics (econ.TH)

This paper is an original attempt to understand the foundations of economic reasoning. It endeavors to rigorously define the relationship between subjective interpretations and objective valuations of such interpretations in the context of theoretical economics. This analysis is substantially expanded through a dynamic approach, where the truth of a valuation results in an updated interpretation or changes in the agent's subjective belief regarding the effectiveness of the selected action as well as the objective reality of the effectiveness of all other possible actions (i.e. consequence realization). Complications arise when the economic agent is presented with a set of actions that render ambiguous preference, or when the effectiveness of an action cannot be perceived upon its selection, thereby necessitating a different theory of choice and consequence realization.

[8]  arXiv:2404.17413 (cross-list from cs.GT) [pdf, ps, other]

Title: Voting with Partial Orders: The Plurality and Anti-Plurality Classes

Authors: Federico Fioravanti, Ulle Endriss

Subjects: Computer Science and Game Theory (cs.GT); Theoretical Economics (econ.TH)

The Plurality rule for linear orders selects the alternatives most frequently appearing in the first position of those orders, while the Anti-Plurality rule selects the alternatives least often occurring in the final position. We explore extensions of these rules to partial orders, offering axiomatic characterizations for these extensions.

[9]  arXiv:2404.17497 (cross-list from cs.CR) [pdf, ps, other]

Title: Merchants of Vulnerabilities: How Bug Bounty Programs Benefit Software Vendors

Authors: Esther Gal-Or, Muhammad Zia Hydari, Rahul Telang

Subjects: Cryptography and Security (cs.CR); Computer Science and Game Theory (cs.GT); General Economics (econ.GN)

Software vulnerabilities enable exploitation by malicious hackers, compromising systems and data security. This paper examines bug bounty programs (BBPs) that incentivize ethical hackers to discover and responsibly disclose vulnerabilities to software vendors. Using game-theoretic models, we capture the strategic interactions between software vendors, ethical hackers, and malicious hackers. First, our analysis shows that software vendors can increase expected profits by participating in BBPs, explaining their growing adoption and the success of BBP platforms. Second, we find that vendors with BBPs will release software earlier, albeit with more potential vulnerabilities, as BBPs enable coordinated vulnerability disclosure and mitigation. Third, the optimal number of ethical hackers to invite to a BBP depends solely on the expected number of malicious hackers seeking exploitation. This optimal number of ethical hackers is lower than but increases with the expected malicious hacker count. Finally, higher bounties incentivize ethical hackers to exert more effort, thereby increasing the probability that they will discover severe vulnerabilities first while reducing the success probability of malicious hackers. These findings highlight BBPs' potential benefits for vendors beyond profitability. Earlier software releases are enabled by managing risks through coordinated disclosure. As cybersecurity threats evolve, BBP adoption will likely gain momentum, providing vendors with a valuable tool for enhancing security posture and stakeholder trust. Moreover, BBPs envelop vulnerability identification and disclosure into new market relationships and transactions, impacting software vendors' incentives regarding product security choices like release timing.

Replacements for Mon, 29 Apr 24

[10]  arXiv:2312.05985 (replaced) [pdf, other]

Title: Fused Extended Two-Way Fixed Effects for Difference-in-Differences with Staggered Adoptions

Authors: Gregory Faletto

Comments: 87 pages, 9 figures

Subjects: Econometrics (econ.EM); Statistics Theory (math.ST); Methodology (stat.ME); Machine Learning (stat.ML)

[11]  arXiv:2402.12200 (replaced) [pdf, ps, other]

Title: The matching problem with linear transfers is equivalent to a hide-and-seek game

Authors: Alfred Galichon, Antoine Jacquet

Subjects: Theoretical Economics (econ.TH)

[12]  arXiv:2403.05743 (replaced) [pdf, ps, other]

Title: Forecasting Electricity Market Signals via Generative AI

Authors: Xinyi Wang, Qing Zhao, Lang Tong

Subjects: Signal Processing (eess.SP); Machine Learning (cs.LG); General Economics (econ.GN)

[13]  arXiv:2404.11794 (replaced) [pdf, other]

Title: Automated Social Science: Language Models as Scientist and Subjects

Authors: Benjamin S. Manning, Kehang Zhu, John J. Horton

Subjects: General Economics (econ.GN)

[14]  arXiv:2101.00009 (replaced) [pdf, other]

Title: Adversarial Estimation of Riesz Representers

Authors: Victor Chernozhukov, Whitney Newey, Rahul Singh, Vasilis Syrgkanis

Subjects: Econometrics (econ.EM); Machine Learning (cs.LG); Machine Learning (stat.ML)

[15]  arXiv:2107.05936 (replaced) [pdf, other]

Title: Testability of Reverse Causality Without Exogenous Variation

Authors: Christoph Breunig, Patrick Burauel

Subjects: Econometrics (econ.EM)

[16]  arXiv:2305.13956 (replaced) [pdf, ps, other]

Title: Nash implementation in a many-to-one matching market

Authors: Noelia Juarez, Paola B. Manasero, Jorge Oviedo

Subjects: Theoretical Economics (econ.TH)

[17]  arXiv:2309.15983 (replaced) [pdf, other]

Title: What To Do (and Not to Do) with Causal Panel Analysis under Parallel Trends: Lessons from A Large Reanalysis Study

Authors: Albert Chiu, Xingchen Lan, Ziyi Liu, Yiqing Xu

Subjects: Methodology (stat.ME); Econometrics (econ.EM); Applications (stat.AP)

[18]  arXiv:2402.03922 (replaced) [pdf, other]

Title: Competitive advantage of URLLC vs. eMBB for supporting timeliness-relevant services

Authors: Luis Guijarro, Jose-Ramon Vidal, Vicent Pla

Subjects: Networking and Internet Architecture (cs.NI); Theoretical Economics (econ.TH)

• New submissions
• Cross-lists
• Replacements