ERRATUM

• Author: Holger Sieg
• Date: 01 August 2016
• Published date: 01 August 2016
• DOI: http://doi.org/10.1111/iere.12158

INTERNATIONAL ECONOMIC REVIEW

Vol. 57, No. 3, August 2016

ERRATUM

In the May issue of International Economic Review (IERE), DOI: 10.1111/iere.2015.56.issue-

2, the Introduction article was inadvertently not published in the issue. It should have been

included as the first article of the issue.

Here is the actual Introduction article.

ESTIMATION OF DYNAMIC STOCHASTIC MODELS IN EMPIRICAL

MICROECONOMICS: IN HONOR OF KENNETH I. WOLPIN

BYHOLGER SIEG

In 1984, Ken Wolpin published a paper in the Journal of PoliticalEconomy titled “An Estimable

Dynamic Stochastic Model of Child Fertility and Mortality.” The abstract states “the paper

develops a finite-horizon dynamic stochastic model of discrete choice with respect to life-cycle

fertility within an environment where infant survival is uncertain. The model yields implications

for the number, timing, and spacing of children. A tractable estimation method is developed for

the linear constraint-quadratic utility case that is intimately tied to the dynamic optimization

problem, and the method is applied to Malaysian household data. Estimation is based on

integrating the numerical solution of the dynamic programming model of behavior with a

maximum likelihood procedure.”

The simple idea that economic modeling, estimation, and empirical analysis should be inter-

nally consistent was not widely accepted in the 1980s. Earlier research, by Daniel McFadden,

James Heckman and others, had demonstrated the power of estimating behavioral models.

However, few researchers thought that it was feasible to estimate complicated dynamic stochas-

tic models. Even fewer researchers believed that these types of models would be rich enough to

avoid rejection by conventional specification tests. Almost no one expected that these models

could be used to answer real-world policy questions. One of Ken’s greatest research accom-

plishments was proving all of the skeptics wrong.

Since the publication of that paper, much has changed in economics. What was once con-

sidered to be the domain of a few mavericks has become the most compelling methodological

approach in empirical microeconomics. This special edition in honor of Ken Wolpin focuses

on recent advances in structural estimation of behavioral models in microeconomics. Some of

the articles in this volume are revised versions of papers presented at a conference that was

organized by Petra Todd and Christopher Ferrall, held at the University of Pennsylvania, on

September 21–22, 2012. Other articles were submitted by Ken’s former and current colleagues,

coauthors, and students.

There are 12 papers included in this special volume of the International Economic Review.

We ranked the papers by the length of time Ken has known the authors. The papers reflect the

broad impact that Ken had on empirical microeconomics and econometrics. Some papers focus

on methodological issues in the estimation of dynamic models. Others explore new models or

new computational algorithms for existing models. Most importantly, most papers included in

this special edition focus on serious empirical applications and study important policy issues

covering a diverse set of topics such as the design of social security systems, the impact of

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(2016) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social

and Economic Research Association