New evidence on the robust identification of news shocks: Role of revisions in utilization‐adjusted TFP series and term structure data

Data revisions and selections of appropriate forwarding‐looking variables have a major impact on true identification of news shocks and quality of research findings derived from structural vector autoregression (SVAR) estimation. This paper revisits news shocks to identify the role of different vintages of total factor productivity (TFP) series and term structure of interest rates as major prognosticators of future economic growth. There is a growing strand of literature regarding the use of utilization‐adjusted TFP series, provided by Fernald (Federal Reserve Bank of San Francisco, Working Paper Series, 2014) for identification of news shocks. We reestimate Barsky and Sims' (Journal of Monetary Economics, 2011, 58, 273–289) empirical analysis by employing 2007 and 2015 vintages of TFP data. We find substantial quantitative as well as qualitative differences among impulse response functions when using 2007 and 2015 vintages of TFP data. Output and hours initially decline, followed by quick reversal of both variables. In sharp contrast to results achieved by the 2007 vintage of TFP data, results achieved by the 2015 vintage of TFP data depict that output and hours will increase in response to positive TFP shock. By including term structure data in our VAR specification, total surprise technology shock and news shock account for 97% and 92% of the forecast error variance in total TFP and total output respectively. We find that revisions in TFP series over time ultimately impact the conclusion regarding news shocks on business cycles. Our results support the notion that term structure data help in better identification of news shock as compared to other forward‐looking variables.     

A state space approach to forecasting the final vintage of revised data with an application to the index of industrial production

There is considerable interest in the index of industrial production (IIP) as an indicator of the state of the UK's industrial base and, more generally, as a leading economic indicator. However, this index, in common with a number of key macroeconomic time series, is subject to revision as more information becomes available. This raises the problem of forecasting the final vintage of data on IIP. We construct a state space model to solve this problem which incorporates bias adjustments, a model of the measurement error process, and a dynamic model for the final vintage of IIP. Application of the Kalman filter produces an optimal forecast of the final vintage of data.     

Short‐term forecasts of euro area real GDP growth: an assessment of real‐time performance based on vintage data

Forecasters commonly predict real gross domestic product growth from monthly indicators such as industrial production, retail sales and surveys, and therefore require an assessment of the reliability of such tools. While forecast errors related to model specification and unavailability of data in real time have been assessed, the impact of data revisions on forecast accuracy has seldom been evaluated, especially for the euro area. This paper proposes to evaluate the contributions of these three sources of forecast error using a set of data vintages for the euro area. The results show that gains in accuracy of forecasts achieved by using monthly data on actual activity rather than surveys or financial indicators are offset by the fact that the former set of monthly data is harder to forecast and less timely than the latter set. These results provide a benchmark which future research may build on as more vintage datasets become available. Copyright © 2008 John Wiley & Sons, Ltd.     

A stochastic proportional hazard model for the force of mortality

In order to avoid ‘frailty’ in deterministic assumptions concerning survival law, in this paper stochastic volatility in the force of mortality is considered. In particular, mortality rates are studied by means of a stochastic model of CIR type. A method for estimating its parameters is presented and an example of application, based on simulations of the process, is shown. Empirical results and comparison with a traditional model illustrate predictive performance and the flexibility of the model. Copyright © 2006 John Wiley & Sons, Ltd.     

Proposition II (Book I) of Newton’s <Emphasis Type="Italic">Principia</Emphasis>

After preparing the way with comments on evanescent quantities and then Newton’s interpretation of his second law, this study of Proposition II (Book I)— Proposition II Every body that moves in some curved line described in a plane and, by a radius drawn to a point, either unmoving or moving uniformly forward with a rectilinear motion, describes areas around that point proportional to the times, is urged by a centripetal force tending toward that same point. —asks and answers the following questions: When does a version of Proposition II first appear in Newton’s work? What revisions bring that initial version to the final form in the 1726 Principia? What, exactly, does this proposition assert? In particular, what does Newton mean by the motion of a body “urged by a centripetal force”? Does it assert a true mathematical claim? If not, what revision makes it true? Does the demonstration of Proposition II persuade? Is it as convincing, for example, as the most convincing arguments of the Principia? If not, what revisions would make the demonstration more persuasive? What is the importance of Proposition II, to the physics of Book III and the mathematics of Book I?     

‘Language,Truth and Reason’ 30 years later

This paper traces the origins of the styles project, originally presented as ‘styles of scientific reasoning’. ‘Styles of scientific thinking & doing’ is a better label; the styles can also be called genres, or, ways of finding out. A. C. Crombie’s template of six fundamentally distinct ones was turned into a philosophical tool, but with a tinge of Paul Feyerabend’s anarchism. Ways of finding out are not defined by necessary and sufficient conditions, but can be recognized as distinct within a sweeping, anthropological, vision of the European sciences. The approach is unabashedly whiggish. The emergence of these styles is part of what Reviel Netz calls cognitive history, and is to be understood in an ecological way. How did a species like ours, on an Earth like this, develop a few quite general strategies for finding out about, and altering, its world? At a more analytical level, the project invokes Bernard Williams’ notion of truthfulness to explicate the idea that these styles are ‘self-authenticating’ and without foundations. The paper concludes with open questions. What role (for example) have these few fundamentally distinct genres of inquiry played in the formation of the anomalous Western idea of Nature apart from Man?     

The emergence of objectivity: Fleck,Foucault, Kuhn and Hacking

The analytical notions of ‘thought style’, ‘paradigm’, ‘episteme’ and ‘style of reasoning’ are some of the most popular frameworks in the history and philosophy of science. Although their proponents, Ludwik Fleck, Thomas Kuhn, Michel Foucault, and Ian Hacking, are all part of the same philosophical tradition that closely connects history and philosophy, the extent to which they share similar assumptions and objectives is still under debate. In the first part of the paper, I shall argue that, despite the fact that these four thinkers disagree on certain assumptions, their frameworks have the same explanatory goal – to understand how objectivity is possible. I shall present this goal as a necessary element of a common project -- that of historicising Kant's a priori. In the second part of the paper, I shall make an instrumental use of the insights of these four thinkers to form a new model for studying objectivity. I shall also propose a layered diagram that allows the differences between the frameworks to be mapped, while acknowledging their similarities. This diagram will show that the frameworks of style of reasoning and episteme illuminate conditions of possibility that lie at a deeper level than those considered by thought styles and paradigms.     

A common model approach to macroeconomics: using panel data to reduce sampling error

Is there a common model inherent in macroeconomic data? Macroeconomic theory suggests that market economies of various nations should share many similar dynamic patterns; as a result, individual country empirical models, for a wide variety of countries, often include the same variables. Yet, empirical studies often find important roles for idiosyncratic shocks in the differing macroeconomic performance of countries. We use forecasting criteria to examine the macrodynamic behaviour of 15 OECD countries in terms of a small set of familiar, widely used core economic variables, omitting country‐specific shocks. We find this small set of variables and a simple VAR ‘common model’ strongly support the hypothesis that many industrialized nations have similar macroeconomic dynamics. Copyright © 2005 John Wiley & Sons, Ltd.     

Hybrid Forecasting with Estimated Temporally Aggregated Linear Processes

We introduce a new strategy for the prediction of linear temporal aggregates; we call it ‘hybrid’ and study its performance using asymptotic theory. This scheme consists of carrying out model parameter estimation with data sampled at the highest available frequency and the subsequent prediction with data and models aggregated according to the forecasting horizon of interest. We develop explicit expressions that approximately quantify the mean square forecasting errors associated with the different prediction schemes and that take into account the estimation error component. These approximate estimates indicate that the hybrid forecasting scheme tends to outperform the so‐called ‘all‐aggregated’ approach and, in some instances, the ‘all‐disaggregated’ strategy that is known to be optimal when model selection and estimation errors are neglected. Unlike other related approximate formulas existing in the literature, those proposed in this paper are totally explicit and require neither assumptions on the second‐order stationarity of the sample nor Monte Carlo simulations for their evaluation. Copyright © 2014 John Wiley & Sons, Ltd.     

Sources of error in forecasts and expectations: U.K. economic models, 1984–8

This paper presents a comparative analysis of the sources of error in forecasts for the UK economy published over a recent four-year period by four independent groups. This analysis rests on the archiving at the ESRC Macroeconomic Modelling Bureau of the original forecasts together with all their accompanying assumptions and adjustments. A method of decomposing observed forecast errors so as to distinguish the contributions of forecaster and model is set out; the impact of future expectations treated in a ‘model-consistent’ or ‘rational’ manner is specifically considered. The results show that the forecaster's adjustments make a substantial contribution to forecast performance, a good part of which comes from adjustments that bring the model on track at the start of the forecast period. The published ex-ante forecasts are usually superior to pure model-based ex-post forecasts, whose performance indicates some misspecification of the underlying models.     

Re-examining the impact of European astronomy in seventeenth-century China: a study of Xue Fengzuo’s system of thought and his integration of Chinese and Western knowledge

ABSTRACT

During the late Ming and early Qing period, Jesuit missionaries introduced European science into China, and thereby profoundly influenced the later development of Chinese astronomy. Not only did European astronomy become the official system of the Qing dynasty, but the traditional way to ‘attain up above’ by connecting the study of astronomy and Yi learning gradually fell into disuse. However, the astronomers in this period expressed different views on these two processes. As one of the most important early Qing astronomers, Xue Fengzuo’s case presents a distinctive and important example. Firstly, under the influences of both Chinese tradition and European science, Xue Fengzuo rebuilt the way to ‘attain up above’ based on his three-fold ‘calendrical learning’, i.e. calendrical astronomy, astrology and related pragmatic applications, through which he could realize the highest Confucian ideal. Secondly, he integrated Chinese and Western knowledge for all three aspects of his ‘calendrical learning’, instead of ceding the dominant position to Western methods. From Xue Fengzuo’s example, many of the complex effects of the encounter between different cultures and the process of knowledge transfer can be revealed.     

Types of experiments and causal process tracing: What happened on the Kaibab Plateau in the 1920s

In a well-cited book chapter, ecologist Jared Diamond characterizes three main types of experiment performed in community ecology: laboratory experiment, field experiment, and natural experiment. Diamond argues that each form of experiment has strengths and weaknesses, with respect to, for example, realism or the ability to follow a causal trajectory. But does Diamond's typology exhaust the available kinds of cause-finding practices? Some social scientists have characterized something they call “causal process tracing.” Is this a fourth type of experiment or something else? I examine Diamond's typology and causal process tracing in the context of a case study concerning the dynamics of wolf and deer populations on the Kaibab Plateau in the 1920s, a case that has been used as a canonical example of a trophic cascade by ecologists but which has also been subject to controversy. I argue that ecologists have profitably deployed causal process tracing together with other types of experiment to help settle questions of causality in this case. It remains to be seen how widespread the use of causal process tracing outside of the social sciences is (or could be), but there are some potentially promising applications, particularly with respect to questions about specific causal sequences.     

Knowledge Management to Exploit Agrarian Resources as Part of Late-eighteenth-century Cultures of Innovation: Friedrich Casimir Medicus and Franz von Paula Schrank

Summary

This essay contributes to a recent strain of research that questions clear-cut dichotomies between ‘scientists’ and ‘artisans’ in the early modern period. With a focus on the exploitation of agrarian resources, it argues for the appreciation of a more complex panorama of intersecting knowledge systems spanning from botany as part of natural history, over administrational and teaching expertise, to various sorts of practical experience in agriculture. With this aim, the essay investigates the careers of two protagonists of the ‘economic enlightenment’ in Southern Germany in the late eighteenth century, Friedrich Casimir Medicus and Franz von Paula Schrank. Financed mostly by territorial powers to which they remained closely related throughout their lives, their careers were characterized by ‘scientific’ investigations as well as by engaging in higher education and extensive publication for diverse audiences. According to the argument set forth here, the panorama of the activities of these two figures can best be understood when seen in the light of early modern cultures of innovation aiming to stimulate economic growth by collecting, testing and distributing advanced technical knowledge. Against a position advocated for most recently in a monograph by Andre Wakefield on German cameralism, the final section argues for a long-term perspective on this development with regard to the emergence of technical sciences in the nineteenth and twentieth centuries as more appropriate than a focus on the ‘failure’ of such actors to turn their aims immediately into practice.     

A robust neural network filter for electricity demand prediction

This paper is concerned with one-day-ahead hourly predictions of electricity demand for Puget Power, a local electricity utility for the Seattle area. Standard modelling techniques, including neural networks, will fail when the assumptions of the model are violated. It is demonstrated that typical modelling assumptions such as no outliers or level shifts are incorrect for electric power demand time series. A filter which removes or lessens the significance of outliers and level shifts is demonstrated. This filter produces ‘clean data’ which is used as the basis for future robust predictions. The robust predictions are shown to be better than non-robust counterparts on electricity load data. The outliers identified by the filter are shown to correspond with suspicious data. Finally, the estimated level shifts are in agreement with the belief that load growth is taking place year to year.     

Getting there and being there in the cerebral cortex

The mammalian neocortex is composed of functional areas that are specified to process particular aspects of information. How is this specification achieved during development? Since cells migrate to their final positions in the developing nervous system, a central issue is the relation between cellular migration and positional information. This review combines evidence for early positional specification in the developing cortex with evidence for cellular dispersion during migration. A model is suggested whereby stable cues provide positional information and minorities of ‘displaced’ cells are respecified accordingly. Comparison with other parts of the CNS reveals that cellular dispersal is ubiquitous and has to be included in any mechanism relaying positional specification. Ontogenetic and phylogenetic considerations suggest that radial glial cells might provide the positional information in the developing nervous system.     

‘Soup’ vs. ‘Sparks’: Alexander Forbes and the Synaptic Transmission Controversy

During the twentieth century, a controversy raged over the role of electrical forces and chemical substances in synaptic transmission. Although the story of the ‘main’ participants is well documented, the story of ‘lesser’ known participants is seldom told. For example, Alexander Forbes, who was a prominent member of the axonologists, played an active role in the controversy and yet is seldom mentioned in standard accounts of the controversy. During the 1930s, Forbes incorporated chemical substances into his theory of synaptic transmission, advocating a complementarity model for the role of electrical forces and chemical substances. By focusing on Forbes and the axonologists, the controversy is simply more than a debate over ‘soup’ vs. ‘sparks’ but also involves the relative roles of electrical forces and chemical substances in synaptic transmission. The implications of this case study for the nature of scientific controversies are also discussed.     

Duncan F. Gregory,William Walton and the development of British algebra: ‘algebraical geometry’, ‘geometrical algebra’, abstraction

This paper provides a detailed account of the period of the complex history of British algebra and geometry between the publication of George Peacock's Treatise on Algebra in 1830 and William Rowan Hamilton's paper on quaternions of 1843. During these years, Duncan Farquharson Gregory and William Walton published several contributions on ‘algebraical geometry’ and ‘geometrical algebra’ in the Cambridge Mathematical Journal. These contributions enabled them not only to generalize Peacock's symbolical algebra on the basis of geometrical considerations, but also to initiate the attempts to question the status of Euclidean space as the arbiter of valid geometrical interpretations. At the same time, Gregory and Walton were bound by the limits of symbolical algebra that they themselves made explicit; their work was not and could not be the ‘abstract algebra’ and ‘abstract geometry’ of figures such as Hamilton and Cayley. The central argument of the paper is that an understanding of the contributions to ‘algebraical geometry’ and ‘geometrical algebra’ of the second generation of ‘scientific’ symbolical algebraists is essential for a satisfactory explanation of the radical transition from symbolical to abstract algebra that took place in British mathematics in the 1830s–1840s.     

Some observations of Leonardo,Galileo, Mariotte and others relative to size effect

A letter in which astronomer John Flamsteed expounded his unusual views about the causes of earthquakes survives in a number of drafts and copies. Though it was compiled in response to shocks felt in England in 1692 and Sicily in 1693, its relationship to the wide range of comparable theories current in the later seventeenth century must be considered. Flamsteed's suggestion that an ‘earthquake’ might be an explosion in the air was linked with contemporary thinking about the roles of sulphur and nitre in earthquakes underground, and in combustion, respiration, and other processes. It reveals his concern with subjects other than astronomy and the influence of his continuing contact with members of the Royal Society; it also offers an early example of how seventeenth-century work on sulphur and nitre prepared the way for ‘airquake’ and electrical theories associated with the London earthquake of 1750.     

The Philosopher's conception of Mathesis Universalis from Descartes to Leibniz

In Descartes, the concept of a ‘universal science’ differs from that of a ‘mathesis universalis’, in that the latter is simply a general theory of quantities and proportions. Mathesis universalis is closely linked with mathematical analysis; the theorem to be proved is taken as given, and the analyst seeks to discover that from which the theorem follows. Though the analytic method is followed in the Meditations, Descartes is not concerned with a mathematisation of method; mathematics merely provides him with examples. Leibniz, on the other hand, stressed the importance of a calculus as a way of representing and adding to what is known, and tried to construct a ‘universal calculus’ as part of his proposed universal symbolism, his ‘characteristica universalis’. The characteristica universalis was never completed—it proved impossible, for example, to list its basic terms, the ‘alphabet of human thoughts’—but parts of it did come to fruition, in the shape of Leibniz's infinitesimal calculus and his various logical calculi. By his construction of these calculi, Leibniz proved that it is possible to operate with concepts in a purely formal way.