Central Economics and Mathematics Institute

About: Central Economics and Mathematics Institute is a facility organization based out in Moscow, Russia. It is known for research contribution in the topics: Population & Foreign-exchange reserves. The organization has 297 authors who have published 580 publications receiving 6449 citations. The organization is also known as: Federal State Institution of Science Central Economics and Mathematics Institute of the Russian Academy of Sciences.

Non-classical Measurement Theory: a Framework for Behavioral Sciences ∗

Abstract: Instances of non-commutativity are pervasive in human behavior. In this paper, we suggest that psychological properties such as attitudes, values, preferences and beliefs may be suitably described in terms of the mathematical formalism of quantum mechanics. We expose the foundations of nonclassical measurement theory building on a simple notion of orthospace and ortholattice (logic). Two axioms are formulated and the characteristic state-property duality is derived. A last axiom concerned with the impact of measurements on the state takes us with a leap toward the Hilbert space model of Quantum Mechanics. An application to behavioral sciences is proposed. First, we suggest an interpretation of the axioms and basic properties for human behavior. Then we explore an application to decision theory in an example of preference reversal. We conclude by formulating basic ingredients of a theory of actualized preferences based in non-classical measurement theory. JEL: D80, C65, B41

Market Discipline and Deposit Insurance in Russia

Abstract: The paper presents a study of Russian banks' interest rates on household deposits during the formation period of the deposit insurance system. It is shown that market discipline weakened after deposit insurance was effectively in place.

On the Relation Between Two Approaches to Necessary Optimality Conditions in Problems with State Constraints

Abstract: We consider a class of optimal control problems with a state constraint and investigate a trajectory with a single boundary interval (subarc). Following R.V. Gamkrelidze, we differentiate the state constraint along the boundary subarc, thus reducing the original problem to a problem with mixed control-state constraints, and show that this way allows one to obtain the full system of stationarity conditions in the form of A.Ya. Dubovitskii and A.A. Milyutin, including the sign definiteness of the measure (state constraint multiplier), i.e., the nonnegativity of its density and atoms at junction points. The stationarity conditions are obtained by a two-stage variation approach, proposed in this paper. At the first stage, we consider only those variations, which do not affect the boundary interval, and obtain optimality conditions in the form of Gamkrelidze. At the second stage, the variations are concentrated on the boundary interval, thus making possible to specify the stationarity conditions and obtain the sign of density and atoms of the measure.

In discrete time a local martingale is a martingale under an equivalent probability measure

Abstract: 1 Result and Discussion We consider a discrete-time infinite horizon model with an adapted d-dimensional process S = (S t) given on a stochastic basis (Ω, F, F = (F t) t=0,1,... , P). The notations used: M(P), M loc (P) and P are the sets of d-dimensional martingales, local martingales and predictable (i.e. (F t−1)-adapted) processes; H · S t = j≤t H j ∆S j. To our knowledge, this result was never formulated explicitly. On the other hand, it is well-known that if the stopped process S T = (S t∧T), T ∈ N, belongs to M loc (P) then there exists˜P T ∼ P (and even with bounded density d ˜ P T /dP) such that S T ∈ M(˜ P T). This assertion is contained in the classical DMW criteria of absence of arbitrage, see the original paper [1] by Dalang– Morton–Willinger and more recent presentations in [3] and [4] with further references wherein. So, the news is: if S ∈ M loc (P) then the intersection of the sets of true martingale measures for the processes S T is non-empty. Theorem 1 can be extracted from the old paper [6] by Schachermayer which merits a new reading. The proof given here uses the same approach of geometric functional analysis as in [6]. It is based on separation arguments

Why the West Became Rich before China and Why China HasBeen Catching Up with the West since 1949: Another Explanation of the “Great Divergence” and “Great Convergence” Stories

Abstract: The goal of this paper is to offer a non-technical interpretation of the “Great Divergence” and “Great Convergence” stories. After reviewing existing explanations in the literature, I offer a different interpretation. Western countries exited the Malthusian trap by destroying traditional institutions, which was associated with an increase in income inequality and even a decrease in life expectancy, but allowed the redistribution of income in favor of savings and investment at the expense of consumption. When the same pattern was imposed on some developing countries (colonialism – Sub-Saharan Africa (SSA), Latin America (LA), and the Former Soviet Union (FSU)), it resulted in the destruction of traditional institutions, increase in income inequality, and worsening of starting positions for catch-up development. Other developing countries (East Asia (EA), South Asia (SA), and the Middle East and North Africa (MENA countries)) that were less affected by colonialism and managed to retain traditional institutions by the end of the twentieth century found themselves in a better starting position for modern economic growth. The slow-going technical progress finally allowed them to find another exit from the Malthusian trap – increased income that permitted the share of investment in GDP to rise without a major increase in income inequality or decrease in life expectancy. The roots of the impressive long-term performance of China lie in the exceptional continuity of the Chinese civilization – the oldest in the world – that managed to preserve its uniqueness and traditions without major interruptions. It is argued that institutional continuity (East Asia, India, and MENA) is more conducive to growth than attempts to replace existing institutions by allegedly more advanced institutions imported from abroad (Latin America, FSU, and SSA). Like Russia in 1917, China re-established collectivist institutions in 1949 as a response to the failure of Westernization. Unlike Russia after 1991, China in 1979-2009 managed to preserve “Asian values” institutions – priority of community interests over the interests of the individual. However, the rapid increase in income inequality since 1985 could be a sign of weakening of collectivist institutions, which is the single most important threat to the continuation of fast economic growth.