This note proposes the Burr utility function. Burr utility is a flexible two-parameter family that behaves approximately power-like (CRRA) remote from the origin, while exhibiting exponential-like (CARA) features near the origin. It thus avoids the extreme behavior of the power family near the...

Economic motives are not the only reasons for committing a (small) crime. People consider social norms and perceptions of fairness before judging a situation and acting upon it. If someone takes a bundle of printing paper from the office for private use at home, then a colleague who sees this...

Two model averaging approaches are used and compared in estimating and forecasting dynamic factor models, the well-known BMA and the recently developed WALS. Both methods propose to combine frequentist estimators using Bayesian weights. We apply our framework to the Armenian economy using...

Prediction under model uncertainty is an important and difficult issue. Traditional prediction methods (such as pretesting) are based on model selection followed by prediction in the selected model, but the reported prediction and the reported prediction variance ignore the uncertainty from the...

The well-known transformation theorem (or change-of-variables theorem) is difficult to prove, requiring knowledge of theorems in advanced analysis. For this reason, it is stated without proof in all the statistics textbooks we know of. Here, we provide a new and much simpler proof, by exploiting...

Sensitivity analysis is important for its own sake and also in combination with diagnostic testing. We consider the question how to use sensitivity statistics in practice, in particular how to judge whether sensitivity is large or small. For this purpose we distinguish between absolute and...

This paper studies the interplay between climate, health, and the economy in a stylized world with four heterogeneous regions, labeled ‘West' (cold and rich), ‘China' (cold and poor), ‘India' (warm and poor), and ‘Africa' (warm and very poor). We introduce health impacts into a simple...

This paper studies the interplay between climate, health, and the economy in a stylized world with four heterogeneous regions, labeled ‘West' (cold and rich), ‘China' (cold and poor), ‘India' (warm and poor), and ‘Africa' (warm and very poor). We introduce health impacts into a simple...

Many statistical and econometric learning methods rely on Bayesian ideas, often applied or reinterpreted in a frequentist setting. Two leading examples are shrinkage estimators and model averaging estimators, such as weighted-average least squares (WALS). In many instances, the accuracy of these...

Empirical growth research faces a high degree of model uncertainty. Apart from the neoclassical growth model, many new (endogenous) growth models have been proposed. This causes a lack of robustness of the parameter estimates and makes the determination of the key determinants of growth...