Functionally Compatible Local Characteristics for the Local Specification of Priors in Graphical Models

Abstract.  The local specification of priors in non-decomposable graphical models does not necessarily yield a proper joint prior for all the parameters of the model. Using results concerning general exponential families with cuts, we derive specific results for the multivariate Gamma distribution (conjugate prior for Poisson counts) and the Wishart distribution (conjugate prior for Gaussian models). These results link the existence of a locally specified joint prior to the solvability of a related marginal problem over the cliques of the graph.     

THE ROLE OF MONITORING OF CORRUPTION IN A SIMPLE ENDOGENOUS GROWTH MODEL

This article analyzes the relationship between economic growth and the monitoring of corruption. In our theoretical model, we derive a nonlinear relationship between the level of monitoring and economic growth, as well as between corruption and economic growth. At low monitoring levels, the economy experiences widespread corruption and medium growth rates, whereas no corruption occurs at intermediate monitoring levels, but low growth rates are recorded. At high monitoring levels, no corruption takes place and high growth rates are observed. The model is estimated using a dynamic panel data approach for Italy. Empirical results support the theoretical model. (JEL C33, D73, K42)     

The economic sociology of markets,industries, and firms

Theory and Society -     

FINANCIAL RESTRAINTS AND PRIVATE INVESTMENT: EVIDENCE FROM A NONSTATIONARY PANEL

We employ recently developed panel data methods to estimate a model of private investment under financial restraints for 20 developing countries using annual data for 1972–2000. We show that the qualitative nature of the results varies depending on whether we take into account cross‐country effects. When we allow for cross‐sectional dependence, investment displays more sensitivity to world capital market conditions and exchange rate uncertainty. A perhaps even more surprising result is the finding that countries that managed to suppress domestic real interest rates without generating high inflation enjoyed higher levels of private investment than those that would have been obtained under liberalized conditions. (JEL O16, G18, G28)     

Uncertainty,flexibility and buffers in the management of the firm operating system

The role that buffers can assume in the management of uncertain situations that can occur in industrial firms is demonstrated. An outline is provided of the various types of buffers with regard to different types of uncertainty faced and to the characteristics of the production system. Although the prevalent scholarly trend is to evaluate buffers as factors which uselessly increase the complexity of the firms operating systems, this work tries to analyse the contributions they offer to the management process. Buffers are considered as alternative and complementary factors to technological flexibility. Technological flexibility is often considered the only competitive means able to face both external and internal uncertainties. The choice to use or not use buffers as a complementary resource or as an alternative to technological flexibility, depends on a comparison of the cost-benefits of the two solutions