nep-bec New Economics Papers
on Business Economics
Issue of 2011‒06‒04
thirteen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Commodity Price Shocks and the Business Cycle: Structural Evidence for the U.S. By Matthias Gubler; Matthias S. Hertweck
  2. Delayering and Firm Performance: Evidence from Swiss firm-level Data By Dieter Kuhn
  3. Productivity Dynamics and Japan's Economic Growth: An empirical analysis based on the Financial Statements Statistics of Corporations by Industry (Japanese) By INUI Tomohiko; KIM Young Gak; KWON Hyeog Ug; FUKAO Kyoji
  4. Do Work-Life Balance Policies Increase a Firm's Total Factor Productivity?: Evidence from panel data of Japanese firms (Japanese) By YAMAMOTO Isamu; MATSUURA Toshiyuki
  5. Firm Dynamics and Changes in Firm Size Distribution: Non-parametric analysis of the effects of technological and other conditions (Japanese) By GOTO Yasuo
  6. Why Has the Fraction of Contingent Workers Increased?: A case study of Japan (Japanese) By ASANO Hirokatsu; ITO Takahiro; KAWAGUCHI Daiji
  7. British Relative Economic Decline Revisited By Crafts, Nicholas
  8. The Time-to-Build Tradition in Business Cycle Modelling By N. Dharmaraj; K. Vela Velupillai
  9. Internal Hierarchy and Stable Coalition Structures By Massimo Morelli; In-Uck Park
  10. Can New Nuclear Power Plants be Project Financed? By Taylor, S.
  11. Welfare Analysis of Free Entry in a Dynamic General Equilibrium Model By Koichi Futagami; Tatsuro Iwaisako; Makoto Okamura
  12. Ireland’s Sovereign Debt Crisis By Karl Whelan
  13. Financial Cycles: What? How? When? By Claessens, Stijn; Kose, Ayhan; Terrones, Marco E

  1. By: Matthias Gubler; Matthias S. Hertweck (University of Basel)
    Keywords: business cycles, commodity price shocks, structural VAR
    JEL: C32 E32 E52 Q43
    Date: 2011
  2. By: Dieter Kuhn (University of Basel)
    Date: 2011
  3. By: INUI Tomohiko; KIM Young Gak; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: Using unique Japanese firm-level data for the <i>Financial Statements Statistics of Corporations by Industry</i> for 1982-2007, we observed TFP trends in both the manufacturing and non-manufacturing industries. Our results can be summarized as follows. First, TFP growth in the non-manufacturing industry was lower than that of the manufacturing industry. Second, there was productivity dispersion and it persists in both the manufacturing and non-manufacturing industries. Third, our results, which are based on productivity dynamics, show that the acceleration of TFP growth rate mainly occurred in the manufacturing industry.
    Date: 2011–03
  4. By: YAMAMOTO Isamu; MATSUURA Toshiyuki
    Abstract: This paper examines how firms' policies for workers' work-life balance (WLB) affect total factor productivity (TFP) in the long run, by using panel data of Japanese firms from the 1990s. Although we observed a positive correlation between firms' WLB policies and their TFP, once controlling for unobserved firm heterogeneity, we found no causal relationship where WLB policies increase a firm's TFP in the long run. Under the following conditions, however, WLB policies would likely improve a firm's long-run TFP: (1) firms with more than 300 workers, (2) manufacturing firms, (3) firms incurring large fixed costs of labor, or (4) firms practicing an equal employment policy for both men and women. We also found that the following WLB policies tend to increase a firm's TFP: (1) establishing a particular department that promotes an WLB policy, (2) making systematic efforts to reduce long work hours, or (3) introducing a system to promote temporary workers to permanent workers. Furthermore, focusing on small and medium firms with 100-300 workers, we found mixed effects in terms of how WLB policies affect a firm's TFP, which indicates that careful considerations are important when promoting WLB policies at such firms. These results tell us that WLB policies would not unconditionally increase a firm's TFP, but it is likely that certain firms that satisfy several conditions would likely benefit as shown in an increase in their TFP following the introduction of proper WLB policies. Considering the fact that the adoption rates of WLB policies for those firms satisfying the conditions are more or less the same as the rates for those that do not, we believe that the more such firms understood what effect WLB policies could have on their TFP, the more these firms are likely to introduce WLB policies autonomously.
    Date: 2011–03
  5. By: GOTO Yasuo
    Abstract: We present an empirical analysis of changes in firm size distribution (FSD), using micro-data for Japanese firms. Two major viewpoints are adopted for the analysis. One is how FSD changes in response to firm dynamics, namely, firm exit and growth. The other is how economic conditions such as financial constraints and technological conditions influence changes in FSD. Non-parametric analysis reveals that economic constraints have different impacts on FSD, even when there seems to be little effect on the total change of distribution. Relaxing financial constraints or increasing minimum efficient scale (MES) attenuate the changes in FSD through exits, but also enhance changes due to growth. These two effects therefore partially cancel out, reducing the overall impact on FSD. On the other hand, the trade ratio significantly affects FSD, because the effects of exit and growth act in the same direction. The relative impact of exit and growth on FSD also differs depending on firm attributes, such as number of years of operation. This result suggests that further empirical analysis using more comprehensive and multifaceted data is needed for studying the effects of economic conditions, such as financial constraints, on changes in firm size distribution.
    Date: 2011–03
  6. By: ASANO Hirokatsu; ITO Takahiro; KAWAGUCHI Daiji
    Abstract: The fraction of contingent workers among all workers in Japan increased from 17% in 1986 to some 34% in 2008. This paper investigates the reason for this secular trend. Both demand and supply increases of contingent workers relative to regular workers are important, as evidenced by the stable relative wage to regular workers. The increase of female labor-force participation explains the supply increase, and the change of industrial composition explains the demand increase. These compositional changes explain about one quarter of the increase of contingent workers. Uncertainty surrounding product demand and the introduction of information and communication technologies increase firms' usage of contingent workers, but its quantitative effect is limited. These findings suggest that the declining importance of firm-specific human capital is a probable cause for the increase of contingent workers.
    Date: 2011–04
  7. By: Crafts, Nicholas
    Abstract: This paper examines the role of competition in productivity perfromance in Britain over the period from the late-nineteenth to the early twenty-first century. A detailed review of the evidence suggests that the weakness of competition from the 1930s to the 1970s undermined productivity growth but since the 1970s stronger competition has been a key ingredient in ending relative economic decline. The productivity implications of the retreat from competition resulted in large part from interactions with idiosyncratic British institutional structures in terms of corporate governance and industrial relations. This account extends familiar insights from cliometrics both analytically and chronologically.
    Keywords: competition; productivity; relative economic decline
    JEL: N13 N14 O52
    Date: 2011–05
  8. By: N. Dharmaraj; K. Vela Velupillai
    Abstract: An important frontier of business cycle theorising is the 'time-to-build' tradition that lies at the heart of Real Business Cycle theory. Kydland and Prescott (1982) did not acknowledge the rich tradition of 'time-to-build' business cycle theorising - except in a passing, non-scholarly, non-specific, reference to Böhm-Bawerk's classic on Capital Theory (Böhm-Bawerk [1899]), which did not, in any case, address cycle theoretic issues. The notion of ‘time-to-build’ is intrinsic to any process oriented production theory which is incorporated in a macrodynamic model. We provide an overview of this tradition, focusing on some of the central business cycle classics, and suggest that the Neo-Austrian revival should be placed in this class of dynamic macroeconomics, albeit ‘traverse dynamics’ is itself to be considered as a fluctuating path from one equilibrium to another.
    Date: 2011
  9. By: Massimo Morelli; In-Uck Park
    Abstract: When an agent decides whether to join a coalition or not, she must consider both i) the expected strength of the coalition and ii) her position in the vertical structure within the coalition. We establish that there exists a positive relationship between the degree of inequality in remuneration across ranks within coalitions and the number of coalitions to be formed. When coalition size is unrestricted, in all stable systems the endogenous coalitions must be mixed and balanced in terms of members' abilities, with no segregation. When coalitions must have a fixed finite size, stable systems display segregation by clusters while maintaining the aforesaid feature within clusters.
    Keywords: Stable Systems, Abilities, Hierarchy, Cyclic Partition
    JEL: C71 D71
    Date: 2011
  10. By: Taylor, S.
    Abstract: This paper considers the prospects for financing a wave of new nuclear power plants (NPP) using project financing, which is used widely in large capital intensive infrastructure investments, including the power and gas sectors, but has not previously been used for nuclear power. It argues that the first few NPPs will have to be financed on balance sheet by large corporations because these plants need to build a positive record on construction risk. If that record can be built there is no reason in principle why large scale project financing should be denied to NPPs. The projects will probably need to have a long term power offtake project, requiring a creditworthy electricity supplier, but this is feasible even in liberalised but relatively oligopolistic power markets like the UK. Interviews with practitioners in the project finance sector confirm that banks are interested, in principle, in lending for nuclear power stations. Project finance would also readily allow multiple shareholdings in individual plants. This in turn would provide the means for power companies to diversify their plant risk and for third party financial shareholders to invest in diversified portfolios. This last feature could open up a new route for significant equity investment in NPPs. The analysis concentrates on the UK but is potentially of wider application.
    JEL: Q4 Q42
    Date: 2011–05–30
  11. By: Koichi Futagami (Graduate School of Economics, Osaka University); Tatsuro Iwaisako (Graduate School of Economics, Osaka University); Makoto Okamura (Economics Department, Hiroshima University)
    Abstract: This paper presents a welfare analysis of free entry equilibrium in dynamic general equilibrium environments with oligopolistic competition. First, we show that a marginal decrease in the number of firms at the free entry equilibrium improves social welfare. Second, we show that if a government can control the number of entrants intertemporally so as to maximize the level of social welfare, the number of entrants under free entry may be less than the second-best number of entrants. Capital accumulation plays an important role in determining whether excess entry occurs.
    Keywords: Excess entry; Oligopolistic competition; Dynamic general equilibrium
    JEL: D43 L50 O41
    Date: 2011–05
  12. By: Karl Whelan (University College Dublin)
    Date: 2011–05–23
  13. By: Claessens, Stijn; Kose, Ayhan; Terrones, Marco E
    Abstract: This paper provides a comprehensive analysis of financial cycles using a large database covering 21 advanced countries over the period 1960:1-2007:4. Specifically, we analyze cycles in credit, house prices, and equity prices. We report three main results. First, financial cycles tend to be long and severe, especially those in housing and equity markets. Second, they are highly synchronized within countries, particularly credit and house price cycles. The extent of synchronization of financial cycles across countries is high as well, mainly for credit and equity cycles, and has been increasing over time. Third financial cycles accentuate each other and become magnified, especially during coincident downturns in credit and housing markets. Moreover, globally synchronized downturns tend to be associated with more prolonged and costly episodes, especially for credit and equity cycles. We discuss how these findings can guide future research on various aspects of financial market developments.
    Keywords: asset busts; credit booms; credit cycles; crunches; equity prices; house prices
    JEL: E32 F42 G12 G15
    Date: 2011–05

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