TO MY PARENTS, FOR MAKING THE LAST THIRTY YEARS POSSIBLE AND TO KAROLIN, FOR MAKING THE LAST THREE THE BEST. Acknowledgements

would like to thank my supervisor Gerhard Illing for his ongoing support during my Ph.D. studies. I am especially indebted to my co-supervisor and co-author of chapter 2, Theo Eicher, for his guidance, inspiration, patience and support during the process of writing this dissertation and for the fun I had working with him. I am grateful to him and Chris Papageorgiou for familiarizing me with the Bayesian model averaging methodology. I greatly bene\u85tted from numerous discussions about this methodology with them and Adrian Raftery provided helpful comments and clari\u85cations on it during my stay at the University of Washington. I thank the whole Department of Economics there for the hospitality during the summer of 2005 and Theo Eicher for extending the invitation. I feel honoured and privileged to have been a member of the rst class of the Munich Graduate School of Economics and thank many of my fellow students for insightful discussions and comments on my work. Special thanks go t