nep-bec New Economics Papers
on Business Economics
Issue of 2012‒06‒13
28 papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Does Culture Affect Corporate Governance? By Pascal Gantenbein; Christophe Volonté
  2. Task Allocation and Corporate Performance: Is There a First-Mover Advantage? By Kathrin Armbruster; Michael Beckmann; Dieter Kuhn
  3. Industry Effects on Firm and Segment Profitability Forecasting: Do Aggregation and Diversity Matter? By Yim, Andrew; Schröder, David
  4. Flexibility vs. screening: The performance effects of temporary agency work strategies By Michael Beckmann; Dieter Kuhn
  5. The Tenuous Relationship between Effort and Performance Pay By Kvaløy, Ola; Olsen, Trond
  6. Foundations of Corporate Governance By Christophe Volonté
  7. The few leading the many: foreign affiliates and business cycle comovement By Jörn Kleinert; Julien Martin; Farid Toubal
  8. Progression of HR Practices in Danish Firms during Two Decades By Eriksson, Tor
  9. Multinationals and the High Cash Holdings Puzzle By Lee Pinkowitz; René M. Stulz; Rohan Williamson
  10. Estimating productivity with multi-product firms, pricing heterogeneity and the role of international trade By Smeets, Valérie; Warzynski, Frédèric
  11. The effect of foreign competition on product switching activities: A firm level analysis By Nakhoda, Aadil
  12. Investment in customer recognition and information exchange By Oz Shy; Rune Stenbacka
  13. Organizing the Global Value Chain By Pol Antras; Davin Chor
  14. Internal Rent Seeking, Works Councils, and Optimal Establishment Size By Michael Beckmann; Matthias Kräkel
  15. Who Is in Charge? A Property Rights Perspective on Stakeholder Governance By Klein, Peter G.; Mahoney, Joseph T.; McGahan, Anita M.; Pitelis, Christos N.
  16. Are predictable improvements in TFP contractionary or expansionary? implications from sectoral TFP By Deokwoo Nam; Jian Wang
  17. Towards a Stakeholder Theory of Strategic Management By Mahoney, Joseph T.
  18. Outsourcing, occupational restructuring, and employee well-being: Is there a silver lining? By Petri Böckerman; Mika Maliranta
  19. Explaining Changes in Earnings and Labour Costs During the Recession By Bergin, Adele; Kelly, Elish; McGuinness, Seamus
  20. How frequently firms export? Evidence from France By G bor B‚k‚s; Lionel Fontagn‚; Murak”zy Bal zs; Vincent Vicard
  21. Forecasting national recessions using state-level data By Owyang, Michael T.; Piger, Jeremy; Wall, Howard J.
  22. Foreign Direct Investment Relationship and Plant Exit: Evidence from the United States By Marilyn Ibarra-Caton
  24. Spatial competition in the French supermarket industry By Stéphane Turolla
  25. Les déterminants du reporting sociétal interne et externe en PME : une étude empirique quantitative By Sophie Giordano-Spring; Fabienne Villesèque-Dubus; Jean-Marie Courrent
  26. Moral Hypocrisy, Power and Social Preferences By Aldo Rustichini; Marie-Claire Villeval
  27. Bridging DSGE models and the raw data By Fabio Canova
  28. Fishing in the same pool: Export strengths and competitiveness of China and CESEE at the EU-15 Market By Christian Schitter; Maria Silgoner; Katharina Steiner; Julia Wörz

  1. By: Pascal Gantenbein; Christophe Volonté (University of Basel)
    Keywords: Corporate governance, Culture, Law, Board of directors, Ownership structure
    JEL: G30 G32 G34 G38 Z10
    Date: 2012
  2. By: Kathrin Armbruster; Michael Beckmann; Dieter Kuhn (University of Basel)
    Keywords: Task Allocation, First Mover, Late Adopter, Firm Performance, Switzerland
    JEL: C21 C24 D24 M12
    Date: 2012
  3. By: Yim, Andrew; Schröder, David
    Abstract: Abstract. A recent study shows that industry-specific analysis has no incremental advantage over economy-wide analysis in forecasting firm profitability. This result seems puzzling because some earlier studies have documented the importance of industry effects in explaining firm profitability. We reconcile the apparent inconsistency by showing that industry effects on profitability forecasting exist at the more refined business segment level, but are obscured by aggregated reporting at the firm level. Using segment-level analysis as well as firm-level analysis that also utilizes segment-level information, we provide consistent evidence supporting that industry-specific analysis is more accurate than economy-wide analysis in predicting the profitability of business segments and the profitability of single-segment firms.
    Keywords: Segment profitability; Earnings predictability; Earnings persistence; Aggregation; Diversity; Industry membership
    JEL: L25 M41 G00 M21
    Date: 2012–06–01
  4. By: Michael Beckmann; Dieter Kuhn (University of Basel)
    Keywords: Temporary agency work, firm performance, flexibility strategy, screening strategy
    JEL: C23 J24 J42 J82 M55
    Date: 2012
  5. By: Kvaløy, Ola (UiS); Olsen, Trond (NHH)
    Abstract: When a worker is offered performance related pay, the incentive effect is not only determined by the shape of the incentive contract, but also by the probability of contract enforcement. We show that weaker enforcement may reduce the worker's effort, but lead to higher-powered incentive contracts. This creates a seemingly negative relationship between effort and performance pay.
    Keywords: .
    JEL: A10
    Date: 2012–06–01
  6. By: Christophe Volonté (University of Basel)
    Keywords: Agency theory, Legal protection, Corporate goverance, Board of directors, Ownership
    JEL: G30 G32 G34 K00
    Date: 2012
  7. By: Jörn Kleinert; Julien Martin; Farid Toubal
    Abstract: This paper uses microdata on balance sheets, trade, and the nationality of ownership of firms in France to investigate the effect of foreign multinationals on business cycle comovement. We first show that foreign affiliates, which represent a tiny fraction of all firms, are responsible for a high share of employment, value added, and trade both at the national and at the regional levels. We also show that the distribution of foreign affiliates across regions differs with the nationality of the parent. We then show that foreign affiliates increase the comovement of activities between their region of location and their country of ownership. Moreover, we find greater comovement among French regions that have a more similar composition in terms of the nationality of foreign affiliates. These findings suggest that a non-negligible part of business cycle comovement is driven by a few multinational companies, and that the international transmission of shocks is partly due to linkages between affiliates and their foreign parents.
    Date: 2012
  8. By: Eriksson, Tor (Department of Economics, Aarhus School of Business)
    Abstract: This paper describes the spread of new work and pay practices in Danish private sector firms during the last two decades. The data source is two surveys directed at firms and carried out ten years apart. The descriptive analysis shows that large changes in the way work is organized in firms have occurred during both decades, whereas the progression of pay practices predominantly took place in the nineties. There is considerable firm heterogeneity in the frequency of adoption of the practices. In particular, the prevalence of both incentive pay and work practices is higher in multinational companies and firms engaged in exporting
    Keywords: High performance work practices; Pay practices; Performance pay
    JEL: M52
    Date: 2012–06–07
  9. By: Lee Pinkowitz; René M. Stulz; Rohan Williamson
    Abstract: Defining as normal cash holdings the holdings a firm with the same characteristics would have had in the late 1990s, we find that the abnormal cash holdings of U.S. firms after the crisis represent on average 1.86% of assets. While U.S. firms held less cash than comparable foreign firms in the late 1990s, by 2010 they hold more. However, only U.S. multinational firms experience an increase in abnormal cash holdings during the 2000s. U.S. multinational firms had cash holdings similar to those of purely domestic firms in the late 1990s, but they hold over 3% more assets in cash than comparable purely domestic firms after the crisis. Further, U.S. multinationals increased their cash holdings since the late 1990s relative to foreign multinationals by roughly the same percentage as they increased their cash holdings relative to U.S. domestic firms. A detailed analysis shows that the increase in cash holdings of multinational firms cannot be explained by the tax treatment of profit repatriations, that it is intrinsically linked to their R&D intensity, and that firms that become multinational do not increase their abnormal cash holdings after they become multinational. There is no evidence that poor investment opportunities, regulation, or poor governance can explain the abnormal cash holdings of U.S. firms after the crisis.
    JEL: F23 G32
    Date: 2012–06
  10. By: Smeets, Valérie (Department of Economics, Aarhus School of Business); Warzynski, Frédèric (Department of Economics, Aarhus School of Business)
    Abstract: In this paper, we analyze the relationship between exports, imports and firm productivity. We use a rich product-firm-level dataset providing both revenue and quantities of all products for a large panel of Danish manufacturing firms over the period 1998-2008 and link it to firms’ international trade transactions by product. We use our detailed product level information to compute a firm level deflator and avoid the criticism of biased estimates due to the use of industry level deflator. We find that both importing and exporting behaviours are strongly associated with productivity, but firms involved in both importing and exporting are the most productive. We also find evidence of a self-selection into importing and exporting but no learning effect. Finally, we try to distinguish between cost effect and product quality effect by analyzing the importance of the origin of imports and the destination of exports. We find that both imports from countries with abundant and cheap labor like China and from countries with similar level of development matter, although the mechanism through which productivity is affected is likely to be different. In addition, exporting to more distant OECD economies is more strongly associated to productivity than exporting to neighboring or other EU countries, especially when controlling for the price specific effect.
    Keywords: No; keywords
    JEL: A10
    Date: 2011–06–01
  11. By: Nakhoda, Aadil
    Abstract: Pressure from foreign competition on the decision to introduce new products or on production costs may influence firms to particpate in product switching activities. Firms switch products if they either add or drop products within their product range. I test whether pressure from foreign competition is likely to influence firms that concurrently add and drop (churn) products rather than firms that i) do not undertake any product switching activity, ii) add products only, or iii) drop products only. Firms pay substantial fixed costs to switch products and their productivity levels are likely to determine such ability. I consider whether firms that invest in research and development activities and export their final products are likely to churn products as they are able to generate greater productivity levels than firms that undertake either one of the two activities. As firms constrained by the lack of adequately educated workers may have workers who cannot adapt to different set of skills necessary for product switching activities, I consider whether such firms are likely to churn products as they are exposed to pressure from foreign competition in comparison to firms not constrained by the lack of adequately educated workers. In addition, the contract-intensive nature of an industry can also dictate whether firms exposed to foreign competition can churn products as they may be constrained due to their contract obligations with their buyers and suppliers. The results indicate that pressure from foreign competition is likely to influence the decision of firms to churn products rather than add products only or undertake neither product switching activities. There is little evidence that firms facing pressure from foreign competition will churn products rather than drop products only, except for the most productive firms that invest in research and development activities and export participation.
    Keywords: Foreign competition; product switching; trade liberalization; corporate strategies
    JEL: D21 M11 F13
    Date: 2012–05–31
  12. By: Oz Shy; Rune Stenbacka
    Abstract: We investigate how costly acquisition and exchange of customer-specific information affects industry profit and consumer welfare. Consumers differ in their preferences for competing brands and in their switching costs between brands. Brand-producing firms use their acquired knowledge of customer-specific preferences to differentiate prices. We show that consumers are worse off when firms acquire information about their preferences and that information sharing between firms further magnifies their losses. No information sharing supports a subgame perfect equilibrium that is also efficient. Finally, equilibrium investments in customer information may be excessive if firms bear low costs of acquiring customer-specific information.
    Keywords: Consumers' preferences
    Date: 2012
  13. By: Pol Antras; Davin Chor (School of Economics, Singapore Management University)
    Abstract: We develop a property-rights model of the firm in which production entails a continuum of uniquely sequenced stages. In each stage, a final-good producer contracts with a distinct supplier for the procurement of a customized stage-specific component. Our model yields a sharp characterization for the optimal allocation of ownership rights along the value chain. We show that the incentive to integrate suppliers varies systematically with the relative position (upstream versus downstream) at which the supplier enters the production line. Furthermore, the nature of the relationship between integration and “downstreamness” depends crucially on the elasticity of demand faced by the final-good producer. Our model readily accommodates various sources of asymmetry across final-good producers and across suppliers within a production line, and we show how it can be taken to the data with international trade statistics. Combining data from the U.S. Census Bureau’s Related Party Trade database and estimates of U.S. import demand elasticities from Broda and Weinstein (2006), we find empirical evidence broadly supportive of our key predictions. In the process, we develop two novel measures of the average position of an industry in the value chain, which we construct using U.S. Input-Output Tables.
    Date: 2012–05
  14. By: Michael Beckmann; Matthias Kräkel (University of Basel)
    Keywords: establishment size; rent-seeking; works council
    JEL: J51 J52 J53 L25
    Date: 2011
  15. By: Klein, Peter G. (University of MO); Mahoney, Joseph T. (University of IL); McGahan, Anita M. (University of Toronto and Institute for Strategy and Competitiveness, Harvard University); Pitelis, Christos N. (University of Cambridge)
    Abstract: Debates on "shareholder" and "stakeholder" approaches to corporate governance often get bogged down in competing normative claims about economic rent streams, entitlements of different group members, fairness, and similar distributional issues. These concerns are important, but core economic issues in shareholder-stakeholder debates revolve around the positive analysis of property rights, transaction costs, ownership, and control. Going beyond the stylized assumptions of neoclassical economics, which assume away co-investment by the firm's transactional and contractual partners, we show how theories of implicit and explicit contracting help us understand better joint investments and the creation of joint value. We call on scholars of Strategic Organization to embrace more robust theories of the firm and interfirm relations that take seriously the complex web of investments and residual claims that characterize team production and co-created value.
    Date: 2012–05
  16. By: Deokwoo Nam; Jian Wang
    Abstract: We document in the US data: (1) The dominant predictable component of investment-sector TFP is its long-run movements, and a favorable shock to predictable changes in investmentsector TFP induces a broad economic boom that leads actual increases in investment-sector TFP by almost two years, and (2) predictable changes in consumption-sector TFP occur mainly at short forecast horizons, and a favorable shock to such predictable changes leads to immediate reductions in hours worked, investment, and output as well as an immediate rise in consumption-sector TFP. We argue that these documented differences in the responses to shocks to predictable sectoral TFP changes can reconcile the seemingly contradictory findings in Beaudry and Portier (2006) and Barsky and Sims (2011), whose analyses are based on aggregate TFP measures. In addition, we find that shocks to predictable changes in investment-sector TFP account for 50% of business cycle fluctuations in consumption, hours, investment, and output, while shocks to predictable changes in consumption-sector TFP explain only a small fraction of business cycle fluctuations of these aggregate variables.
    Date: 2012
  17. By: Mahoney, Joseph T. (University of IL)
    Abstract: This paper suggests that due to the changing nature of the firm, viewing shareholders as the sole residual claimants is an increasingly tenuous description of the actual relationships among a corporation's various stakeholders. Examining the corporation from a (team production) property rights perspective of incomplete contracting and implicit contracting provides a foundation for the revitalization of a stakeholder theory of the firm in the strategic management discipline.
    Date: 2012–05
  18. By: Petri Böckerman; Mika Maliranta
    Abstract: This paper explores the effects of outsourcing on employee well-being through the use of the Finnish linked employer-employee data. The direct negative effect of outsourcing is attributable to greater job destruction and worker outflow. In terms of perceived well-being, the winners in international outsourcing are those who are capable of performing interactive tasks (i.e., managers, professionals and experts), especially when offshoring involves closer connections to other developed countries.
    JEL: J28 F23
    Date: 2012–04–19
  19. By: Bergin, Adele; Kelly, Elish; McGuinness, Seamus
    Abstract: This paper utilises data from the National Employment Surveys to analyse movements in both earnings and labour costs during the period 2006 through to 2009. It finds that, despite an unprecedented fall in output and rise in unemployment, both average earnings and average labour costs increased marginally over the period. Although some factors, such as a rise in the incidence of part-time working and falls in construction employment, served to depress wages, these influences were more than outweighed by increases in both the share of and returns to graduate employment and a rising return to large firm employment. This analysis suggests that a good deal of the downward wage rigidity observed within Irish private sector employment since the onset of the recession has largely been driven by factors consistent with continued productivity growth. Nevertheless, particularly within the male labour market, a substantial proportion of the movements in wages cannot be explained by changes in either labour market composition or the returns to individual/job characteristics. The large unexplained component in the data is attributed to a general reluctance of firms to cut wages in order to avoid productivity losses associated with worker dissatisfaction or higher rates of labour turnover. In support of this view, the study demonstrates that firms will adopt strategies such as reducing staff numbers, hours worked and bonus payments, in preference to reducing wages.
    Keywords: cost/recession/data/employment/unemployment/wages/Productivity/growth/labour market
    Date: 2012–04
  20. By: G bor B‚k‚s (Institute of Economics, Research Center for Economic and Regional Studies, Hungarian Academy of Sciences); Lionel Fontagn‚ (Professor of Economics at the Paris School of Economics, University of Paris 1, Panth‚on-Sorbonne, Part-time Professor - European University Institute); Murak”zy Bal zs (Institute of Economics, Research Center for Economic and Regional Studies, Hungarian Academy of Sciences); Vincent Vicard (Banque de France)
    Abstract: This paper proposes studying export frequency of firms. While extensive margins of products and destination define the scope of firm's export, export shipment frequency is determined by sale method choice and cost structure of the trade technology. Exporters optimize the frequency of international trade transactions to save on costs and gain maximum exposure to clients. Their decisions can be related to a more general problem a la Baumol (1952), where the choice is about the optimal number of transactions in presence of a fixed cost and variable transportation costs. This opens an additional margin of trade: the number of shipments of a firm to a given market in a year. While extensive margins of products and destination define the scope of firm's export, export shipment frequency is determined by sale method choice and cost structure of the trade technology. This paper both presents a framework to think about shipment frequency and analyzes its behavior on French data. We argue that given the decision to export and the anticipated demand, the decision on the number of shipments is guided by the trade technology. In line with the Baumol-Tobin model, the optimal number of shipments will be positively afiected by demand (controlling for distance to destination) and inventory costs and negatively affected by the fixed cost of shipment. Using monthly firm-productdestination level export data from France, we show that key predictions of the model are validated in a gravity model setting that also allows for comparing various margins of trade. During the recent trade collapse, our results point to a strong resilience of export ows despite the drop in demand, which was mainly absorbed at the intensive margin.
    Keywords: Gravity, transport costs, frequency of trade, Baumol-Tobin model, customs data
    JEL: D40 F12 R40
    Date: 2012–03
  21. By: Owyang, Michael T.; Piger, Jeremy; Wall, Howard J.
    Abstract: A large literature studies the information contained in national-level economic indicators, such as nancial and aggregate economic activity variables, for forecasting U.S. business cycle phases (expansions and recessions.) In this paper, we investigate whether there is additional information regarding business cycle phases contained in subnational measures of economic activity. Using a probit model to predict the NBER expansion and recession classification, we assess the forecasting benets of adding state-level employment growth to a common list of national-level predictors. As state-level data adds a large number of variables to the model, we employ a Bayesian model averaging procedure to construct forecasts. Based on a variety of forecast evaluation metrics, we find that including state-level employment growth substantially improves short-horizon forecasts of the business cycle phase. The gains in forecast accuracy are concentrated during months of national recession. Posterior inclusion probabilities indicate substantial uncertainty regarding which states belong in the model, highlighting the importance of the Bayesian model averaging approach.
    Keywords: turning points; probit; covariate selection
    JEL: C53 E32 C52
    Date: 2012–04–10
  22. By: Marilyn Ibarra-Caton (Bureau of Economic Analysis)
    Abstract: Previous research has shown that U.S. manufacturing plants belonging to U.S. multinational companies (MNCs) are more likely to shut down than other manufacturing plants, once plant and industry attributes have been controlled for (Bernard A. and Jensen B., 2007). This research has concentrated on the importance of plant characteristics and the role of the firm structure, while largely ignoring the impact of the U.S. MNCs’ foreign operations. This study extends that research in two ways. First, this study looks at inward direct investment-that is, the U.S. manufacturing plants of foreign MNCs and not just the U.S. manufacturing plants of U.S. MNCs. It uses enterprise data from BEA’s survey of inward direct investment on the U.S. operations of foreign-owned MNCs combined with establishment data from the Census Bureau’s 1997 and 2002 Census of Manufacturing (CMF). The data are used to demonstrate that U.S. manufacturing plants of foreign MNCs are more likely to shut down than non-MNC plants and less likely to shut down than U.S. MNC plants, thereby providing the first empirical evidence for the United States.
    Date: 2012–01
  23. By: Bratberg, Espen (University of Bergen,); Monstad, Karin (HEB-Uni Rokkansenteret)
    Abstract: Sickness absence has risen over the past years in Norway. One explanation put forward is that a tougher labor market represents a health hazard, while a competing hypothesis predicts that loss of job security works as a disciplinary device. In this analysis we aim to trace a causal impact of organizational turmoil or job insecurity on sickness absence, applying a difference-in-difference approach. Utilizing a negative financial shock that hit specific employers and workplaces, we find that sickness absence decreased considerably in the following year. The decrease is substantially larger among male than among female employees, and stronger for days of sickness absence than for its incidence. <p> Acknowledgements: The paper has benefited from comments at the 2011 Norwegian Social Insurance Research Meeting in Lillehammer and the 2012 HEB/HERO workshop in Geilo. We are also grateful for information from Ingvar Linde, Jan G. Myrvang, and chief executives of the eight municipalities impacted by the financial shock. Remaining errors are the authors’ sole responsibility. Financial support from the Norwegian Research Council (Grant 187912) is gratefully acknowledged.
    Keywords: Worker absenteeism; sickness absence; organizational schange; job security; difference-in-differences
    JEL: H53 I18 J22 J28 J45
    Date: 2012–04–30
  24. By: Stéphane Turolla
    Abstract: This paper challenges the conventional wisdom on the competitive grocery retail sector in France. To that end, I develop a structural model of spatial competition that accounts for (i) market geography on consumers' preferences, and (ii) differences in their shopping list. The demand estimates are used to recover stores' price-cost margin under alternative pricing strategies. I select the best pricing model by applying non-nested tests and show that retailers noticeably distort their offer in highly concentrated markets. Finally, I perform counterfactual experiments to quantify the expected gain of an additional store on consumer welfare and retail prices.
    Keywords: spatial competition, structural model, discrete choice model, differentiated products, supermarket industry
    JEL: C35 L13 L81
    Date: 2012
  25. By: Sophie Giordano-Spring (MRM - Montpellier Recherche en Management - Université Montpellier II - Sciences et Techniques du Languedoc : EA4557 - Université Montpellier I - Université Paul Valéry - Montpellier III - Groupe sup de Co Montpellier); Fabienne Villesèque-Dubus (CREGOR - Centre de Recherche sur la Gestion des Organisations - Université Montpellier II - Sciences et Techniques du Languedoc : EA731); Jean-Marie Courrent (ERFI - Université de Perpignan)
    Abstract: L'objectif de cette recherche est de s'interroger d'une part sur les pratiques de reporting sociétal interne et externe de la PME, et d'autre part d'identifier quels peuvent être les déterminants de ce reporting pour ce type d'entreprise. En particulier, nous cherchons à tester l'hypothèse que les déterminants du reporting sociétal en PME sont spécifiques et non identiques à ceux de la grande entreprise. Nous testons dans un premier temps une série d'hypothèses qui transposent celles vérifiées dans la littérature à l'égard des grandes entreprises (taille, secteur d'activité sensible, niveau de performance). Dans un second temps, nous complétons l'étude à l'aide d'hypothèses adaptées au fonctionnement de la petite et moyenne entreprise, formulées en vertu d'une littérature de référence. Les résultats montrent que les pratiques et facteurs du reporting sociétal interne et externe sont plus proches de ceux de la grande entreprise que ce que l'on pouvait attendre compte tenu des spécificités du fonctionnement en PME, mais complète également la littérature largement exploratoire à notre connaissance consacrée aux pratiques de reporting sociétal de la part des PME par l'identification de facteurs qui lui sont propres.
    Keywords: Reporting sociétal; PME; développement durable
    Date: 2012
  26. By: Aldo Rustichini (Department of Economics, University of Minnesota - University of Minnesota); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: We show with a laboratory experiment that individuals adjust their moral principles to the situation and to their actions, just as much as they adjust their actions to their principles. We first elicit the individuals' principles regarding the fairness and unfairness of allocations in three different scenarios (a Dictator game, an Ultimatum game, and a Trust game). One week later, the same individuals are invited to play those same games with monetary compensation. Finally in the same session we elicit again their principles regarding the fairness and unfairness of allocations in the same three scenarios. Our results show that individuals adjust abstract norms to fit the game, their role and the choices they made. First, norms that appear abstract and universal take into account the bargaining power of the two sides. The strong side bends the norm in its favor and the weak side agrees : Stated fairness is a compromise with power. Second, in most situations, individuals adjust the range of fair shares after playing the game for real money compared with their initial statement. Third, the discrepancy between hypothetical and real behavior is larger in games where real choices have no strategic consequence (Dictator game and second mover in Trust game) than in those where they do (Ultimatum game). Finally the adjustment of principles to actions is mainly the fact of individuals who behave more selfishly and who have a stronger bargaining power. The moral hypocrisy displayed (measured by the discrepancy between statements and actions chosen followed by an adjustment of principles to actions) appears produced by the attempt, not necessarily conscious, to strike a balance between self-image and immediate convenience.
    Keywords: Moral hypocrisy; fairness; social preferences; power; self-deception
    Date: 2012–05–30
  27. By: Fabio Canova
    Abstract: A method to estimate DSGE models using the raw data is proposed. The approach links the observables to the model counterparts via a flexible specification which does not require the model-based component to be solely located at business cycle frequencies, allows the non model-based component to take various time series patterns, and permits model misspecification. Applying standard data transformations induce biases in structural estimates and distortions in the policy conclusions. The proposed approach recovers important model-based features in selected experimental designs. Two widely discussed issues are used to illustrate its practical use.
    Keywords: DSGE models, Filters, Structural estimation, Business cycles
    JEL: E3 C3
    Date: 2012–05
  28. By: Christian Schitter; Maria Silgoner; Katharina Steiner; Julia Wörz
    Abstract: We investigate the impact of the emergence of China as a global competitor on the trade performance of Central, Eastern and Southeastern European (CESEE) countries at the EU-15 market. The paper takes a comprehensive approach in terms of empirical methods and data. We analyze export growth, export market shares, extensive and intensive margins and the number of trade links, applying highly disaggregated data at the 6 digit HS level over the period 1995 – 2010. We show that the most contested markets are those for capital goods and transport equipment, product categories where both regions have gained market shares and comparative advantage. We show that the number of trade links at the product level where both regions are active has increased substantially, indicating intensified competition. At the same time hardly any trade links were lost, which points against cut-throat competition between CESEE and China. The decomposition of export growth along the extensive versus the intensive margin shows that in line with the literature, the deepening of already existing trade relationships (i.e. the intensive margin) contributed most strongly export growth in both regions, whereas the contribution of new trade links (i.e. the extensive margin) had only a minor contribution, apart from the instance of EU accession which boosted the extensive margin considerably. We further decompose intensive margin growth into demand related structural effects and a supplier related competitiveness effect. Both the CESEE region and China successfully intensified their trade linkages above all as a result of their outstanding competitiveness as shown by the econometric shift-share analysis. While this suggests that both regions pursue a able export strategy, further diversification of production towards promising new industries and markets will become increasingly crucial for both, especially in face of projected slower EU-15 market growth in the longer run.
    Keywords: competitiveness, trade, sectoral market shares, shift-share analysis, Central, Eastern and Southeastern Europe, China
    JEL: F14 F15 O57
    Date: 2012–05

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