Published by De Gruyter Oldenbourg

Volume 62 Issue 3

Issue of Review of Economics

Contents
Journal Overview

April 19, 2016

US Financial Debt Crisis: A Stochastic Optimal Control Approach

Jerome L. Stein

Page range: 197-217

Abstract

The financial crisis was precipitated by the mortgage crisis. A whole structure of financial derivatives was based upon the ultimate debtors, the mortgagors. Insofar as the mortgagors were unable to service their debts, the values of the derivatives fell. The financial intermediaries whose assets and liabilities were based upon the value of derivatives were very highly leveraged. Changes in the values of their net worth were large multiples of changes in asset values. A cascade was precipitated by the mortgage defaults. In this manner, the mortgage debt crisis turned into a financial crisis. The crucial variable is the optimal debt of the real estate sector, which depends upon the capital gain and the interest rate. I apply the Stochastic Optimal Control (SOC) analysis to derive the optimal debt. Two models of the stochastic process on the capital gain and interest rate are presented. Each implies a different value of the optimal debt/net worth. I derive an upper bound of the optimal debt ratio, based upon the alternative models. An empirical measure of the excess debt: actual less the upper bound of the optimal ratio, is shown to be an early warning signal (EWS) of the debt crisis.

April 19, 2016

Ersetzt die Neue Ökonomische Geographie Außenwirtschaftstheorie und Raumwirtschaftstheorie?

Klaus Schöler

Page range: 218-231

Abstract

The New Economic Geography has two advantages in comparison with the traditional Theory of International Trade. On the one hand, the transport costs are included into the respective models. On the other hand, the factor endowment in the regions or countries is not given in the same way as in the traditional Trade Theory, but it is a result of different transport costs. The New Economic Geography has also great advantages in the field of Regional Economics. It is possible to explain the phenomenon of agglomerations by means of a total microeconomic model with economies of scale in one industry, monopolistic competition and heterogeneous goods. The New Economic Geography completes the traditional theories - Trade Theory and Regional Economics - in important aspects, but does not yet replace these approaches.

April 19, 2016

Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung

Christian Pfarr, Volker Ulrich

Page range: 232-262

Abstract

As in most industrialized countries, the inequality regarding the distribution of household incomes in Germany has steadily increased. By collecting taxes and granting monetary transfers, the government tries to affect the personal distribution of incomes. Whereas the supply of redistribution is relatively easy to determine, it is rather difficult to identify the determinants of the citizens′ demand for redistribution. Most of the literature concerning the individuals′ preferences for redistribution relies on survey based analysis. A shortcoming of these studies is the failure of imposing a budget constraint. Discrete-Choice-Experiments (DCE) solve this problem by forcing individuals to take the consequences of their decisions with respect to their own income into account. This study aims at developing a theory based approach to elicit individuals′ preferences for redistribution using DCEs. For the specific case of Germany, we show how to design and implement such a DCE. In particular, we discuss how the price attribute in a DCE should be specified and which levels adequately define the price an individual is willing to pay for redistribution. We are able to demonstrate that even for a highly complex topic such as redistribution a correctly applied DCE can provide authoritative results. This allows deriving policy implications on how to design redistributive policies which are in line with citizens’ preferences.

April 19, 2016

Do men slow down faster than women?

Wolfgang Maennig, Michael Stobernack

Page range: 263-278

Abstract

This paper tests on differences between age-related reductions in the performance of men and women. The assumption that men age faster is obvious, because men′s life expectancy is generally lower. In addition to other studies on age-related reduction in human performance, this paper examines the data taken from competitions on rowing machines, which have been standardized worldwide. Furthermore, this study looks for any potential ageing processes specific to physique. Finally, fractional polynomials have been added to the testing methodology. Contrary to intuition, we find evidence that women are affected by faster age-related reductions in performance.

April 19, 2016

A cooperative game theory of town walls

Harald Wiese

Page range: 279-291

Abstract

This paper is a contribution to economic geography that leans on cooperative game theory. In particular, we envision towns (that are protected by walls) versus countryside where such protection is missing. An extension also provides a basic theory of when trading routes will be protected.

About this journal

Welcome! As of 2016 the Review of Economics as well as all other journals of Lucius and Lucius Verlagsgesellschaft are published by De Gruyter Oldenbourg.

Aims and Scope
The Review of Economics (Jahrbuch für Wirtschaftswissenschaften) is a peer-reviewed general interest journal and publishes articles from all fields of economics.
Only articles with a strong policy focus are considered for publication. The Review of Economics will consider papers that are based on (i) a well defined theoretical model (ii) an empirical analysis or (iii) an experimental or (iv) an evidence-based framework.
The Review of Economics is also highly interested in survey articles on important policy issues.
Since the Review of Economics intends to deliver a forum for policy contributions and to influence the public debate we guarantee a quick and efficient referee process (the initial publication decision will be made within a maximum of 90 days). The editors may decide to publish papers without a referee process whenever authors send their submissions together with the referee reports and the decision letter of the previous submission and explain how they reacted to the reports. Accepted articles will be pre-published on the internet page of the journal as soon as they are accepted. Because the Review of Economics is not an e-Journal all articles also appear in a regular print version with some delay.

Partner Journal
Czech Journal of Economics and Finance

The Czech Journal of Economics and Finance (ISSN 0015-1920) is an English-language, double-blind refereed academic journal published in Prague since 1951. It devotes special attention to monetary economics, public finance, financial economics, and international economics, but it is open to high-quality papers from all fields of modern economics. The editors prefer empirically oriented papers, but do not exclude review articles or theoretical contributions provided that they are of high quality and relevant to the journal's aims.