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We examine the effects of the Basic Elder Pension (BEP) in Korea on self-assessed health for the elderly of age 65 or higher, using two wave Korean panel data. As there could be innately healthy/optimistic individuals, it is important to allow for time-constant individual effects possibly related to regressors, which is, however, difficult as the dependent variable takes on four ordered categories. To overcome this difficulty, we transform the ordered discrete response into binary, and apply Panel Conditional Logit Estimator (PCLE) to the binary model. Since there are three ways to transform four ordered categories into binary, we obtain three PCLE’s in total. To impose the restriction that the same parameters are estimated in those PCLE’s, we use minimum distance estimator. We find that BEP has a small positive effect that is significant: 100% increment in BEP would result in an increment of 3–7% of ‘one standard deviation of the latent continuous health propensity’. Finding a small effect might be natural, as improving health for the elderly would be a hard thing to do.

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This paper studies quantitative properties of the models of Kiyotaki and Moore (2001, 2008, 2012) which investigate propagation mechanism through which asset market liquidity affects real economy. The distinct analytical focus in this paper is on the effects of redistribution of wealth between agents due to investment opportunities. Under binding liquidity constraints faced by investors, the impacts of liquidity crunch are propagated to real economy via investment shrinkage. Numerical analyses reveal that the effects of liquidity shocks are amplified when the redistribution of wealth are more prominent. However, liquidity shocks in the secondary market, i.e., in the resaleability of assets, do not seem to be quantitatively significant driving forces of business cycles, at least compared to the ones in the primary market. This study confirmed the negatively correlated responses to liquidity shocks between investment and asset prices, and between investment and consumption, which are already pointed out in the literature. More importantly, this study newly found that liquidity premium in the model positively responded not only to liquidity crunch but also to positive productivity shocks. This pro-cyclicality of liquidity premium needs careful considerations since it can be another arguable defect of the model.

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In this paper, we develop an efficient estimation method and an asymptotic chi-square testing procedure in regression models with errors having conditional heteroskedasticity generated by an integrated covariate in both stationary regression and cointegrating regression. In the presence of nonstationary volatility in the regression errors, it is known that the least squares estimator suffers from the second order biases generated by heteroskedasticity and endogeneity, and the standard chi-square test becomes invalid. It is shown that the efficient estimator proposed in the paper is asymptotically unbiased and follows a mixed normal distribution, and the test based on the estimator has chi-square limit distribution. Finite sample performances also confirm our theoretical findings.

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This paper studies a stag hunt game in which each player's payoff depends on the level of social norms in a community. First, we establish conditions under which without social norms, there exists a unique equilibrium regarding the cooperation level, but with social norms, there can be multiple equilibria. Second, we provide the comparative statics analysis such that for a statics framework, the local stability of an interior equilibrium works as a sufficient condition under which the cooperation level increases as the degree of social norms increases; and for a dynamic framework, the cooperation level always increases with social norms.