Financing Unemployment Benefits: Dismissal versus Employment Taxes

Abstract. This paper investigates the effects of using dismissal taxes to finance unemployment benefits. We compare dismissal and employment taxes in a model with search frictions. Employment taxes give rise to externalities because firms do not take into account the effects their dismissal decisions have on others. These externalities can be tackled by using dismissal taxes to finance unemployment insurance. Taking into account the budget for unemployment insurance, employment taxes can be reduced by more than is necessary to offset the adverse effect of dismissal taxes on the value of the firm. The introduction of dismissal taxes leads to higher job creation and lower unemployment.     

Could Pronatalist Policies Discourage Childbearing?

This article builds on research in psychology, economics, and other fields, suggesting that, under certain conditions, extrinsic incentives could undermine intrinsic motivation, producing results opposite to those originally intended. It explores the relevance of these findings for population policies and particularly for pronatalist measures, and argues that reproductive behavior is intrinsically motivated, thus potentially subject to having the intrinsic motivation for childbearing adversely affected by policy interventions. Specifically, it examines whether, when, and how the contingency, universe, adequacy, and other aspects of pronatalist incentives could affect childbearing motivation. For example, parity‐targeted incentives seeking to compel higher fertility could be perceived as controlling and undermine that motivation. Conversely, policies seeking to facilitate combining work and family responsibilities could strengthen the intrinsic motivation for childbearing.     

The Capital City in the Context of accelerated Individualization. Reflections on the Bulgarian Experience

Privatization and competitive politics brought about accelerated individualization in Bulgarian society. Both the constructive and destructive effects of individualization are particularly concentrated in the country's capital city. It rapidly shifted its economic structure from industry to services and re-oriented its territorial morphology from north-west to south-east. These changes mostly took place in a spontaneous and often anomic way thus provoking the need for a new Master Plan of the capital city. Sociological studies supported its preparation. Below the surface of a relatively stable size of the capital's population they revealed substantial migration to Sofia during the 1990s together with continuing large-scale emigration of the young, best educated and entrepreneurial population cohorts. Recent studies confirm this trend despite of the fact that the capital city is economically in the best position in comparison with all other settlements in the country. The conclusion is that the economic, political and cultural re-integration of Bulgarian society is still incomplete and this may be noticed in all its structural levels, administrative and territorial units, the capital city including. Thus, new institutional strategies are needed for coping with the effects of accelerated individualization. In the capital city, the core of these strategies should be the strengthening of the economic, political and cultural basis of its communal integration.     

On Detecting the Dependence of Time Series

The author suggests a heuristic method for detecting the dependence of random time series that can be used in the case when this dependence is relatively weak, such that the traditional methods are not effective. The method requires comparison of some special functionals on the sample characteristic functions with the same functionals computed for the benchmark time series with a known degree of correlation. Some experiments for financial time series are presented.     

Mutual Fund Theorem for continuous time markets with random coefficients

The optimal investment problem is studied for a continuous time incomplete market model. It is assumed that the risk-free rate, the appreciation rates, and the volatility of the stocks are all random; they are independent from the driving Brownian motion, and they are currently observable. It is shown that some weakened version of Mutual Fund Theorem holds for this market for general class of utilities. It is shown that the supremum of expected utilities can be achieved on a sequence of strategies with a certain distribution of risky assets that does not depend on risk preferences described by different utilities.     

Volatility estimation from short time series of stock prices

We consider estimation of the historical volatility of stock prices. It is assumed that the stock prices are represented as time series formed as samples of the solution of a stochastic differential equation with random and time-varying parameters; these parameters are not observable directly and have unknown evolution law. The price samples are available with limited frequency only. In this setting, the estimation has to be based on short time series, and the estimation error can be significant. We suggest some supplements to the existing nonparametric methods of volatility estimation. Two modifications of the standard summation formula for the volatility are derived. In addition, a linear transformation eliminating the appreciation rate and preserving the volatility is suggested.     

A pathwise inference method for the parameters of diffusion terms

We consider inference of the parameters of the diffusion term for continuous time stochastic processes with a power-type dependence of the diffusion coefficient from the underlying process such as Cox–Ingersoll–Ross, CKLS, and similar processes. We suggest some original pathwise estimates for this coefficient and for the power index based on an analysis of an auxiliary continuous time complex-valued process generated by the underlying real-valued process. These estimates do not rely on the distribution of the underlying process and on a particular choice of the drift. Some numerical experiments are used to illustrate the feasibility of the suggested method.     

Efficient design of experiments in the Monod model

Summary. Estimation and experimental design in a non-linear regression model that is used in microbiology are studied. The Monod model is defined implicitly by a differential equation and has numerous applications in microbial growth kinetics, water research, pharmacokinetics and plant physiology. It is proved that least squares estimates are asymptotically unbiased and normally distributed. The asymptotic covariance matrix of the estimator is the basis for the construction of efficient designs of experiments. In particular locally D -, E - and c -optimal designs are determined and their properties are studied theoretically and by simulation. If certain intervals for the non-linear parameters can be specified, locally optimal designs can be constructed which are robust with respect to a misspecification of the initial parameters and which allow efficient parameter estimation. Parameter variances can be decreased by a factor of 2 by simply sampling at optimal times during the experiment.