Frontiers of economic research

Jon Danielsson, 13 February 2018

Cryptocurrencies are supposedly a new and superior form of money and investments – the way of the future. The author of this column, however, does not see the point of cryptocurrencies, finding them no better than existing fiat money or good investments.

Domenico Giannone, Michele Lenza, Giorgio Primiceri, 08 February 2018

The availability of large datasets has sparked interest in predictive models with many possible predictors. Using six examples of data from macroeconomics, microeconomics, and finance, this column argues that it is not usually possible to identify sparse models by selecting a handful of predictors from these larger pools. The idea that economic data are informative enough to identify sparse predictive models might be an illusion.

Jonathan Parker, Nicholas S Souleles, Aaron Goodman, 04 February 2018

The most accurate way to determine how people respond to an economic policy is to observe how they did in fact respond to that policy, but this approach is not always possible. This column uses a 2008 tax rebate in the US to compare the traditional revealed preference approach and a reported preference approach where people are simply asked how they would, or did, behave. The results suggest that reported spending data are valuable in predicting behaviour and in estimating population aggregates, but are not sufficiently accurate to provide reliable quantitative measurements of household-level spending responses.

Alessandro Iaria, Carlo Schwarz, Fabian Waldinger, 26 January 2018

Access to existing knowledge fuels basic scientific progress and is key to the development of new technologies. This column studies how the decline in scientific cooperation that occurred during and after WWI affected science and innovation. The interruption of international knowledge flows led to stark declines in both the volume and quality of scientific production. This points to the merits of opening up access to scientific journals and of discerning what constitutes frontier research.

Thomas Dohmen, Armin Falk , Bart Golsteyn, David Huffman, Uwe Sunde, 21 January 2018

Many developed countries have ageing populations, with potentially major economic, political, and social consequences in the near future. Using Dutch and German panel data to control for cohort and period effects, this column investigates the relationship between age and risk attitudes. The results suggest that willingness to take risks declines with age, implying that societies may become more risk-averse as their population ages.

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