Detecting structural change with heteroskedasticity

The hypothesis of structural stability that the regression coefficients do not change over time is central to all applications of linear regression models. It is rather surprising that existing theory as well as practice focus on testing for structural change under homoskedasticity – that is, regression coefficients may change, but the variances remain the same. Since structural change can, and often does, involve changes in variances, this is a puzzling gap in the literature. Our main focus in this paper is to utilize a newly developed test (MZ) by Maasoumi et al. (2010 Maasoumi, E., Zaman, A., Ahmed, M. (2010). Tests for structural change, aggregation, and homogeneity. Econ Model. 27(6):1382–1391.[Crossref], [Web of Science ®] , [Google Scholar]) that tests simultaneously for break in regression coefficients as well as in variance. Currently, the sup F test is most widely used for structural change. This has certain optimality properties shown by Andrews (1993 Andrews, D.W.K. (1993). Test for parameter instability and structural change with unknown change point. Econometrica. 61(4):821–856.[Crossref], [Web of Science ®] , [Google Scholar]). However, this test assumes homoskedasticity across the structural change. We introduce the sup MZ test which caters to unknown breakpoints, and also compare it to the sup F. Our Monte Carlo results show that sup MZ test incurs only a low cost in case of homoskedasticity while having hugely better performance in case of heteroskedasticity. The simulation results are further supported by providing a real-world application. In real-world datasets, we find that structural change often involves heteroskedasticity. In such cases, the sup F test can fail to detect structural breaks and give misleading results, while the sup MZ test works well. We conclude that the sup MZ test is superior to current methodology for detecting structural change.     

Economic Adversity and Voter Turnout: Evidence from Turkish Parliamentary Elections

Social Indicators Research - This paper investigates the relationship between economic adversity and voter participation in Turkish parliamentary elections. We employ a dynamic model of voter...     

A Study of the Relationship Between Innovation and Performance Among NPOs in Pakistan

Abstract

Innovation has become a core driver for the success and survival of organizations regardless of their size and nature. A plethora of literature has discussed the importance of innovation in profit-based organizations, while nonprofit organizations (NPOs) have generally been ignored in research. This study examines the influence of the sub-dimensions of innovation on the performance of NPOs. Data were collected through structured questionnaires using a sample size of 309 NPOs operating in the emerging market Pakistan. The hypotheses were tested through structural equation modeling (SEM) in AMOS.21. The results indicate that process innovation and organization innovation have significant positive influence on the performance of NPOs, while product innovation and marketing innovation have insignificant influence on the performance of NPOs. NPOs are advised to give enough attention to process and organization innovation in order to boost their performance. Future researchers are encouraged to test the model in other environmental settings. Implications for practice were discussed.     

The Corporate Governance Effects of Audit Committees

Arguments associated with the promotion of audit committees in many countries are premised on their potential for alleviating weaknesses in corporate governance. This paper provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution.A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is argued that there is only limited and mixed evidence of effects to support claims and perceptions about the value of audit committees for these elements of governance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behaviour.It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members' independence and expertise as the means of correcting past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest (i) greater consideration of the organizational and institutional contexts in which audit committees operate; (ii) explicit theorization of the processes associated with audit committee operation; (iii) complementing extant research methods with field studies; and (iv) investigation of unintended (behavioural) as well as expected consequences of audit committees.     

The multiple traveling salesman problem: an overview of formulations and solution procedures

The multiple traveling salesman problem (mTSP) is a generalization of the well-known traveling salesman problem (TSP), where more than one salesman is allowed to be used in the solution. Moreover, the characteristics of the mTSP seem more appropriate for real-life applications, and it is also possible to extend the problem to a wide variety of vehicle routing problems (VRPs) by incorporating some additional side constraints. Although there exists a wide body of the literature for the TSP and the VRP, the mTSP has not received the same amount of attention. The purpose of this survey is to review the problem and its practical applications, to highlight some formulations and to describe exact and heuristic solution procedures proposed for this problem.     

Social Health Indicators and Economic Growth: Evidence from East Asia and Pacific,Middle East and North Africa,South Asia,and Sub-Saharan Africa

The objective of this study is to empirically investigate a two-way statistical relationship between the social health indicators and economic growth in the context of four major regions of the world i.e., East Asia and Pacific, Middle East and North Africa (MENA), South Asia and Sub-Saharan Africa. To recognize the relationship between the two variables, a time series, co-integration and Granger causality tests have been employed. Aggregate secondary data pertaining to these four regions from 1975 to 2011 on economic growth and social health indicators i.e., infant mortality, child abuse, child poverty, unemployment, weekly wages, health insurance coverage, teenage suicide, teenage drug abuse, high school dropouts, poverty, out-of-pocket health costs, homicides, alcohol related traffic fatalities, food insecurity, income inequality, HIV/AIDS, tuberculosis, basic health units and rural health centers has been used for analysis. This study evaluates four alternative but equally plausible hypotheses, each with different policy implications. These are: (1) social health indicators Granger cause economic growth, (2) economic growth Granger cause social health indicators (the conventional view), (3) There is a bi-directional causality between the two variables and (4) Both variables are causality independent (although highly correlated). The empirical results only moderately support the conventional view that economic growth has significant long run casual effect on social health indicators in East Asia and Pacific, MENA, South Asia and Sub-Saharan Africa. The present study find evident of unidirectional causality running towards economic growth to social health indicators, although, there are some bidirectional causality also exists between the variables. The percentage of unidirectional causality between economic growth and social health indicators is larger than bidirectional or neutrality hypothesis.     

A Cooperative Savings Game Approach to a Time Sensitive Capacity Allocation and Scheduling Problem

We consider a competitive scheduling setting with arbitrary number of agents each having the option to utilize two parallel resources to satisfy its demand: (i) an in‐house resource dedicated to process only the tasks of each specific agent, and (ii) a flexible resource capable of processing all agents' workloads. In a noncooperative setting, each agent would determine how much of its demand it will subcontract to the flexible resource with the objective to deliver its entire demand as quickly as possible subject to the priority rules set by the owner of the flexible resource (i.e., third‐party). In this study, we also allow for agents to coalesce with other agents and update their initial subcontracting decisions to attain rescheduling savings. Evidently, a grand coalition of all agents can coordinate to achieve the maximum savings possible, but the resulting schedule may yield individual losses for a subset of agents (which we refer to as “losers”), thus necessitating a transfer payment scheme to distribute the rescheduling savings among the agents in an equitable way. We model the rescheduling interactions among the agents as a cooperative savings game, and propose savings distribution schemes that invoke the core allocation concept.