Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Volume 20, Issue 2 (June 2009)




Strategic Voting and Multinomial Choice in US Presidential Elections, Pages 1–32

Myoung-jae Lee, Sung-jin Kang

Abstract | PDF (563 kilobytes)

Ross Perot was a relatively viable third party candidate in the 1992 US presidential election, but he was not any more in the 1996 election. This provides a good opportunity to analyze strategic voting behavior–voting for a candidate not most preferred by the voter–in the US presidential elections with panel data drawn from NES (National Election Studies). First, the 1992 election is analyzed with multinomial choice estimators. Second, using the estimates, each individual’s choice is predicted for the 1996 election. Third, those who were predicted to vote for Perot in 1996 but did not are identified as strategic voters and their profile is drawn. In addition to the main task of analyzing the strategic voting behavior, this paper does two additional tasks. First, analyzing the 1992 data with multinomial choice estimators, it is found that the following variables mattered significantly for the US presidential election: respondent and candidate ideology, personal finance, age, education, income, sex, abortion stance, health insurance policy, and welfare program policy. Second, critical mistakes in the literature in applying multinomial probit to election data are pointed.


Long-term Forecast of Korean real GDP using Non-linear Trend Model, Pages 33–64

Insong Jang

Abstract | PDF (1086 kilobytes)

Long-term forecast on the size of future economy measured by real GDP is essential to planning and evaluation of long-term fiscal policy as well as pension reform and design of welfare system. The most widely used method for the forecast is production function approach which often depends upon noisy measurement of capital stock as well as ad-hoc assumptions for future productivity growth. In this paper, we avoid using them by fitting AR(1) model with non-linear deterministic trend. The problem of testing unit root while determining the order of trend polynomial at the same time is taken care of by applying sequential unit root test. We find that Korean real GDP data has quadratic deterministic trend instead of the often assumed stochastic trend. Iterative PW-GLS forecast shows that Korean GDP growth rate will fall to 2.35% in 2050 while it drops further to 0.66% when the effect of population ageing is incorporated.


Predicting Exchange Rates by Support Vector Regression, Pages 65–81

Shiyi Chen, Kiho Jeong

Abstract | PDF (456 kilobytes)

In recent years, support vector regression (SVR), a novel neural network technique, has been successfully used for financial forecasting. This paper deals with the application of SVR in exchange rate forecasting. Based on SVR, a nonparametric autoregressive (AR) model is applied to forecasting the daily exchange rates of two currencies (South Korea Won and Singapore Dollar) against the US dollar. The empirical results show that under various forecasting horizons, SVR performs better than the random walk model, parametric AR model and the nonparametric AR model estimated by neural network, based on the criteria of two evaluation metrics and three encompassing tests. No structured way being available to choose the free parameters of SVR, the sensitivity of the forecasting performance is also examined to the free parameters.


Welfare Effect of Labor Union in a General Equilibrium Efficient Contract Model, Pages 82–93

Hyung Bae, Noh-Sun Kwark

Abstract | PDF (499 kilobytes)

This paper analyzes the effects of labor union in the steady state of an overlapping generation economy when a union and a firm determine wage and employment through an efficient contract. We find that when the wage set in the bargaining is the same as the competitive level, the steady state equilibrium through the efficient contract is the same as the steady state of competitive equilibrium. We also find that an increase in the bargaining power of the union improves the welfare of the representative generation in the new steady state with a sacrifice of the current old generation. Moreover, the command optimum maximizing the welfare of the representative generation in the steady state can be achieved with the efficient contract when the bargaining power of the union is maximal so that profit of the firm becomes zero.

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