In this paper we construct thirteen different types of composite indices by linear combination of indicator variables (with and without outliers/data corruption). Weights of different indicator variables are obtained by maximization of the sum of squared (and, alternatively, absolute)...

The Sennian capability approach has facilitated to capture poverty in its multi-dimensional incidence and thus to raise a new aggregate poverty index – the UNDP’s Human Poverty Index (HPI). The UNDP has found power mean of order α 1 as possessing some of the most desirable properties in...

The classical canonical correlation analysis is extremely greedy to maximize the squared correlation between two sets of variables. As a result, if one of the variables in the dataset-1 is very highly correlated with another variable in the dataset-2, the canonical correlation will be very high...

L'objet de ce papier n'est pas tant de présenter les principaux algorithmes utilisés en modélisation économique - nombre de manuels font des présentations de meilleure qualité et plus exhaustives - que d'en proposer une vision critique. Les modèles économiques, et plus particulièrement...

On many occasions we need to construct an index that represents a number of variables. Cost of living index, general price index, human development index, index of level of development, etc are some of the examples that are constructed by a weighted (linear) aggregation of a host of variables....

Rank-ordering of individuals or objects on multiple criteria has many important practical applications. A reasonably representative composite rank ordering of multi-attribute objects/individuals or multi-dimensional points is often obtained by the Principal Component Analysis, although much...

In this paper, I will examine the problems created by incorrectly using a simple sum monetary aggregate to measure the monetary stock. Specifically, I will show that simple sum monetary aggregate confounds the current stock of money with the investment stock of money and that this confounding...

The European Union’s center-piece of economic policy making is the Lisbon process, which tries to make Europe the most competitive economic region in the world economy by 2010. EU Commission President Jose Manuel Durao Barroso recently presented a Centre for European Reform (CER) study that...

This paper demonstrates that if we intend to optimally rank order n objects (candidates) each of which has m attributes or rank scores awarded by m evaluators, then the ordinal ranking of objects by the conventional principal component based factor scores turns out to be suboptimal. Three...

The current financial crisis followed the “great moderation,” according to which the world’s central banks had gotten so good at countercyclical policy that the business cycle no longer existed. As more and more economists and media people became convinced that the risk of recessions had...