We investigate the sustainability of Italy’s public finances from 1862 to 2012 adopting a non-linear perspective. Specifically, we employ the smooth transition regression approach to explore the scope for non-linear fiscal adjustments of primary surpluses in response to the accumulation of...

I investigate whether the ‘granular’ behaviour of aggregate outcomes suggested by Gabaix (2011) is present in country exports by product. Using data for 11 EU countries over the 1988–2011 period, the results show that the idiosyncratic shocks to the main products may have significant...

The KPSS unit root test with lags is asymptotically valid and the fixed-b asymptotic distribution predicts its critical values well. A small positive number of lags improves the size of the test, without much loss in power.

This paper proposes to decompose non-linear models deduced from a latent regression framework using the latent dependent outcome as dependent variable and the Oaxaca–Blinder decomposition technique. Values of the unobserved latent outcome are obtained using simulated residuals.

This paper extends previous results on the equality of OLS and GLS. We give conditions under which GLS based on two different variance matrices gives the same estimate, and also conditions under which GLS equals a GMM estimator.

Using a two-stage quantile regression framework, we uncover significant asymmetries across quantiles for all coefficients in an otherwise standard New Keynesian Phillips Curve (NKPC) for the euro area. A pure NKPC specification accurately captures inflation dynamics at high inflation quantiles.

Two alternatives to Enders and Lee’s (2012a,b) Fourier unit root testing strategy, which incorporates pretesting for nonlinearity, are considered. One is based on the union of rejection (UR) approach, and the other is a hybrid strategy that combines the UR approach with the use of extra...

We present a detailed decomposition method and provide a Stata estimator to assess relative changes between two groups over time in a synthetic cohort analysis. Using the convergence of black–white wage gap between 1960 and 1970 as an example, we show that education accounts for 73% of the...

Standard macroeconomic models possess the undesirable feature that people stop working in the long run. Assuming standard parameters, the neoclassical model predicts that 2% of annual productivity growth leads to a 99% decline in the labor supply after 624 years. Yet, this contradicts the fact...