Giorgio d'Agostino, J. Paul Dunne, and Luca Pieroni
The earlier literature regarding the effects of military expenditures on economic growth had initially shown a positive relationship between the two variables. This article examines this topic, taking account of more recent models of growth. The second section considers the alternative general economic theories that inform the development of models to undertake empirical analyses. The third section considers estimation issues. The fourth section considers the alternative formal models that are common in the literature: the Feder–Ram model, the modified Solow model, and the endogenous growth models. The fifth section presents some empirical results to illustrate the issues involved in estimating the models and to compare their performance. The estimation of more sophisticated models indicates, contrary to the early studies, that the effect of military expenditures on growth is negative.
Minglian Li and Justin Tobias
This article is of two-fold interest with the goal of providing an overview of the field and aims at discussing the most recent research in the relevant field. It shows how the computational methods and modelling ideas are being used by Bayesian econometricians. It also discusses linear models and presents a review of the normal linear regression model, deriving marginal, conditional, and predictive posterior densities of interest. This article proceeds further to discuss hierarchical linear models and review approaches to handle endogeneity problems. It presents applications and posterior simulation strategies for nonlinear latent variable models and considers the analysis of treatment effects models and multinomial and multivariate probit models. This article briefly reviews basic Bayesian approaches to the analysis of duration data.
Roger Finke and Christopher D. Bader
Over the past twenty years, there has been a surge in the use of economic theory to understand religion. The earliest work was developed both by economists and sociologists, and interest in applying economic theory to religion remains strong in several disciplines. A welcome by-product of this interdisciplinary interest has been the collection of data addressing questions posed by economic theory. This article reviews various sources of data, including surveys of religious congregations, religion censuses, and the growing number of cross-national collections. Much of the discussion focuses on the free and readily accessible data collections available from the online Association of Religion Data Archives. After reviewing the data sources, the article considers issues related to the use and refinement of the data, focusing in particular on measurement issues, such as the construction of indexes. Finally, it highlights a few online research tools that are readily available for researchers and discusses the potential for developing additional online options for data generation, data refinement, and theory testing.
Marco Costanigro and Jill J. Mccluskey
This article presents the basic theory of hedonic modeling, its empirical application and relevance, and the principal limitations and challenges. Agricultural economists have long utilized the hedonic price relationship, and the hedonic price technique has been utilized to estimate the implicit prices of attributes for numerous food products. It provides a framework of the hedonic models that can be used to quantify the long-term effects of exogenous shocks on quality, or implementation of regulatory policies. This article discusses the whole armamentarium of econometric models and methods familiar to applied economists, including parametric, semi-parametric, and non-parametric approaches. The objective is to describe briefly each econometric model within the hedonic context and provide an understanding of the implications and trade-offs inherent to the choice of each alternative. This is a fruitful area of research with increased customization of products and the increasing availability of large data sets.
This article analyzes informational issues that emerge in a contest model of conflict, a model in which the outcome of open conflict depends on the relative military capabilities of the adversaries using a traditional Bayesian game-theoretic approach. It provides an introduction to the topic along with insights into how conflict can emerge in settings with informational asymmetries. The article deals with issues of asymmetric information about players' utility from winning; their costs of producing effort; abilities; and what private information about aggressive potential implies for the probability of outbreak of outright conflict instead of peaceful settlement.
Walter Enders and Eric Olson
Analyses of the costs and consequences of conflict usually focus on either civil wars or interstate conflict. The 9/11 attacks, however, have heightened interest regarding the costs of terrorism, a specific form of conflict in which violence is directed toward noncombatants or civilians who generally are not related to the political target of the perpetrating group. While terrorism can be seen as a specific tactic employed in internal and external conflicts, the effects of such violence have been studied separately. This article surveys the existing evidence of the costs of those terrorist acts that are perpetrated by nonstate parties or subnational groups, and discusses the various methodological issues involved. It differentiates between macroeconomic and microeconomic consequences of terrorism, and examines their consequences across different economies.
Over the post-World War II period, civil wars have become more common than international wars, affecting more than 70 countries. As most of the affected countries could be considered poor, the hypothesis of a self-reinforcing spiral between poverty and war would sound reasonable. This article provides an overview of the theory and empirics of the causes and correlates of civil war. Although there is already a considerable body of empirical research on the topic, much of which has been done in recent years, it argues that little has been settled and suggests useful directions which research might take.
John A. Fox
This article examines some of the risks intrinsic to food and discusses how those risks are perceived, or misperceived, by both consumers and the experts. It then discusses risk preferences and examines the literature that attempts to connect those preferences to food consumption choices. It also deals with constructed preferences—the idea that individuals might not have stable, well-defined preferences but instead that their preferences are constructed as needed and readily influenced by characteristics of the decision environment. Furthermore, the insights from that literature provide useful guidance for researchers studying food consumption choices and the inclusion of measured risk preferences improves model performance in the sense of painting a better picture of how consumers respond to food risk.
There is wide scope for reliance on automated “robot” market makers in prediction markets and market simulation games in experimental economics and behavioral finance. The market maker presented here is an alternative to the well-known but less easily understood Hanson market maker. It has the advantage of being easy to derive and makes a good mathematical introduction to the logic of automated bid and ask price–setting in prediction markets. Its main advantage is that the opening security price can be set arbitrarily between zero and one, so as to match the market maker’s prior beliefs. A weakness of the Hanson market maker is that it opens automatically with a uniform prior distribution. In many real-world applications, this is unrealistic and prone to cause the market maker unnecessary trading losses (on average). Common practice, such as in betting markets and over-the-counter financial markets for binaries, is to set opening prices based on expert subjective probabilities.