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on Economics of Strategic Management |
| By: | Paolo Giorgio GARELLA; Martin PEITZ |
| Abstract: | Alliances between competitors in which established firms provide access to proprietary resources, e.g. their distribution channels, are important business practices. We analyze a market where an established firm, firm A, produces a product of well-known quality, and a firm with an unknown brand, firm B, has to choose to produce high or low quality. Firm A observes firm B's quality choice but consumers do not. Hence, firm B is subject to a moral hazard problem which can potentially be solved by firm A. Firm A can accept or reject to form an alliance with firm B, which is observed by consumers. If an alliance is formed, firm A implicitly certificies the rival's product. Consumers infer that firm B is a competitor with high quality, as otherwise why would the established firm accept to form an alliance? The mechanism we discover allows for an economic interpretation of several types of business practices |
| Keywords: | alliances, brand sharing, asymmetric information, signaling, exclusion, moral hazard, entry assistan |
| JEL: | L15 L13 L24 L42 M21 M31 D43 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:mil:wpdepa:2006-41&r=cse |
| By: | G. Buenstorf; D. Fornahl |
| Abstract: | This article studies entrepreneurial activities emerging out of one of Germany’s most prominent dot.com firms: Intershop, a maker of e-commerce software. We show that Intershop spawned at least 30 spin-offs. The majority entered locally, giving rise to a small but growing software cluster and counteracting the job losses accompanying the parent firm’s drastic downsizing after 2000. We trace the knowledge transfer from Intershop to the spin-offs and relate it to recent theorizing on the spin-off process as well as spin-off-based cluster formation. The Intershop case suggests that temporarily successful dot.coms could exert lasting effects on regional development. Length 30 pages |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2006-20&r=cse |
| By: | Hans Jarle Kind; Tore Nilssen; Lars Sørgard |
| Abstract: | We consider a model of a TV oligopoly where TV channels transmit advertising and viewers dislike such commercials. We show that advertisers make a lower profit the larger the number of TV channels. If TV channels are sufficiently close substitutes, there will be underprovision of advertising relative to social optimum. We also find that the more viewers dislike ads, the more likely it is that welfare is increasing in the number of advertising financed TV channels. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than private TV channels. It may even have advertising in cases where advertising is wasteful per se. |
| Keywords: | television industry, advertising |
| JEL: | L82 M37 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1862&r=cse |
| By: | Enrico Santarelli (University of Bologna, Max Planck Institute of Economics Jena, ENCORE Amsterdam, and IZA Bonn); Marco Vivarelli (Università Cattolica Piacenza, CSGR Warwick, Max Planck Institute of Economics Jena, and IZA Bonn) |
| Abstract: | This survey paper aims at critically discussing the recent literature on firm formation and survival and the growth of new-born firms. The basic purpose is to single out the microeconomic entrepreneurial foundations of industrial dynamics (entry and exit) and to characterise the founder’s ex-ante features in terms of likely ex-post business performance. The main conclusion is that entry of new firms is heterogeneous with innovative entrepreneurs being found together with passive followers, over-optimist gamblers and even escapees from unemployment. Since founders are heterogeneous and may make "entry mistakes", policy incentives should be highly selective, favouring nascent entrepreneurs endowed with progressive motivation and promising predictors of better business performance. This would lead to the least distortion in the post-entry market selection of efficient entrepreneurs. |
| Keywords: | entrepreneurship, new firm, survival, post-entry performance |
| JEL: | L10 M13 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2475&r=cse |
| By: | Meenu Tewari (Indian Council for Research on International Economic Relations) |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:167&r=cse |
| By: | Filippo VERGARA CAFFARELLI (Bank of Italy) |
| Abstract: | Vertical integration followed by quantity competition is studied. In the first stage of the game downstream firms simultaneously decide whether to integrate with one of the upstream suppliers. If firms are not able to observe whether their vertically integrated competitor enters the intermediate-good market then they are indifferent about vertical integration. If the entry choice of the integrated firm is observable then the unique equilibrium involves vertical integration and in-house production of the intermediate good. The importance of entry observability sheds light on the strategic importance of information exchange institutions such as the internet and business fairs. |
| Keywords: | Vertical integration, Cournot competition, Market entry |
| JEL: | L13 L22 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_608_06&r=cse |
| By: | Fredrik Andersson; Elizabeth E. Davis; Matthew L. Freedman; Julia I. Lane; Brian P. McCall; L. Kristin Sandusky |
| Abstract: | This paper uses matched employer-employee data from the Longitudinal Employer Household Dynamics database to investigate the contribution of worker and firm reallocation to within industry changes in wage inequality between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker "skills" are important determinants of changes in industry earnings distributions over time. Our results suggest that the underlying dynamics of earnings inequality are complex and are due to factors that cannot be measured in standard crosssectional data. |
| URL: | http://d.repec.org/n?u=RePEc:hrr:papers:0106&r=cse |
| By: | Arvind Virmani (Indian Council for Research on International Economic Relations) |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:175&r=cse |
| By: | Auriol, Emmanuelle; Picard, Pierre M |
| Abstract: | The paper analyses governments’ trade-off between fiscal benefits and consumer surplus in privatization reforms of noncompetitive industries in developing countries. Under privatization, the control rights are transferred to private interests so that public subsidies decline. This benefit for tax-payers comes at the cost of price increases for consumers. In developing countries, tight budget constraints imply that privatization may be optimal for low profitability segments. For highly profitable public utilities, the combination of allocative inefficiency and critical budgetary conditions may favour public ownership. Finally, once a market segment gives room for more than one firm, governments prefer to regulate the industry. In the absence of a credible regulatory agency, regulation is achieved through public ownership. |
| Keywords: | developing countries; government budget constraint; infrastructure; privatization; public utilities; regulation |
| JEL: | H54 L33 L43 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6018&r=cse |
| By: | Eijffinger, Sylvester C W; Rossi, Alberto |
| Abstract: | The paper focuses on labor and product market deregulations, as fundamental elements in the passage from an investment to an innovation-based economy. The approach undertaken is prominently empirical. After a very brief description of the regulatory levels on the two sides of the Atlantic, we take two cornerstone theoretical models: one developed by Robert Gordon (1997), the other developed by Blanchard and Giavazzi (2003) and we observe how well their theoretical predictions are supported by hard data. We conclude with an independent study on the accuracy of the IMD competitiveness index in predicting the overall economic performance of countries close to the technological frontier. |
| Keywords: | employment; growth; IMD competitiveness index; productivity; regulation; unemployment; wages |
| JEL: | D24 E24 J50 L16 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5988&r=cse |
| By: | Galor, Oded; Michalopoulos, Stelios |
| Abstract: | This research suggests that the evolution of entrepreneurial spirit played a significant role in the process of economic development and the evolution of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, the rise in income generated an evolutionary advantage to entrepreneurial, growth promoting traits and their increased representation accelerated the pace of technological advancements and the process of economic development. Natural selection therefore had magnified growth promoting activities in relatively wealthier economies as well as within the upper segments of societies, enlarging the income gap within as well as across societies. In mature stages of development, however, non-entrepreneurial individuals gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to the convergence of the intermediate level economies to the advanced ones. |
| Keywords: | evolution; growth; natural Selection; risk Aversion; technological progress |
| JEL: | J11 J13 O11 O14 O33 O40 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6022&r=cse |
| By: | Thomas H. Klier; Daniel McMillen |
| Abstract: | Using nonparametric descriptive tools developed by Duranton and Overman (2005), we show that both new and old auto supplier plants are highly concentrated in the eastern United States. Conditional logit models imply that much of this concentration can be explained parametrically by distance from Detroit, proximity to assembly plants, and access to the interstate highway system. New plants are more likely to be located in zip codes that are close to existing supplier plants. However, the degree of clustering observed is still greater than implied by the logit estimates. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-20&r=cse |
| By: | Matilde Alonso (ECONOMIA, TREBALL I TERRITORI - Economia Aplicada - Grup d'Investigació Nº 19 - [Universitat de Valencia]); Elies Furio Blasco (ECONOMIA, TREBALL I TERRITORI - Economia Aplicada - Grup d'Investigació Nº 19 - [Universitat de Valencia]) |
| Abstract: | El objetivo de este trabajo es analizar las aplicaciones que Internet tiene en el sector turístico. Para su desarrollo se ha partido de una serie de cuestiones. En primer lugar, qué es Internet y cuáles son sus aplicaciones y sus implicaciones para la actividad económica y el mundo de la empresa. En segundo lugar, se ha pasado a ver sus aplicaciones al sector turísticos, las cuales se estudian tanto desde la perspectiva de los servicios de Internet como desde el punto de vista de las aplicaciones que Internet ofrece a los actores que participan en el negocio turístico. Desde el primer punto de vista, destaca el análisis de los portales turísticos o de Internet y la TV interactiva. Desde la perspectiva de los actores, cabe destacar el análisis relativo a las cadenas hoteleras, las compañías aéreas y las agencias de viajes. |
| Keywords: | Internet; Turismo |
| Date: | 2006–12–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00119439_v1&r=cse |
| By: | Garcia Pires, Armando José |
| Abstract: | Contrary to what has been standard in the international trade literature, we argue that firms' access to international markets should not be just reduced to exogenous factors such as trade costs. Instead, we defend that market access can also be endogenous, since firms can affect international trade patterns by acting strategically against rivals. In particular, we endogenize firms' competitiveness through commitment power advantages of R&D. In this setting we show that: (1) higher efficiency of R&D (like low trade costs) makes trade more easy (given that R&D increases the profitability of exports); (2) firms with higher commitment power in R&D are more competitive (since they have larger incentives to innovate) and as a result these firms also have better access to export markets. |
| Keywords: | commitment power; endogenous asymmetric firms; market access; R&D investment |
| JEL: | F12 L13 L25 O31 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5980&r=cse |
| By: | Diana Hancock; Andreas Lehnert; Wayne Passmore; Shane M. Sherlund |
| Abstract: | Basel II bank capital regulations are designed to be substantially more risk sensitive than the current regulations. In the United States, only the largest banks would be required to adopt Basel II; other depositories could choose to adopt such standards or to remain under the Basel I capital standards. We consider possible effects of this two-pronged or "bifurcated" approach on the market for residential mortgages. Specifically, we analyze whether those institutions that adopt Basel II will enjoy lower costs than nonadopters and whether they have an incentive to retain mortgages in their own portfolios. We find that (1) despite the large differences in regulatory capital requirements between adopters and nonadopters, it is unlikely that there will be any measurable effect of Basel II implementation on most mortgage rates and, consequently, any direct impact on the competition between adopters and nonadopters for originating or holding residential mortgages; (2) the most significant competitive impact may be felt among mortgage securitizers; and (3) adopters might have increased profits from some mortgages relative to nonadopters because they will capture some of the deadweight losses that occur under the current regulatory regime, but nonadopters would likely retain their market shares. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2006-46&r=cse |
| By: | Marcos Gallacher; Alfredo Sesé |
| Abstract: | The provision of airport services results in a web of contractual relationships between the main contractor and other firms. The existence of multiple services offered in airports allows several contractual alternatives to be chosen. In particular, the main contractor may choose to carry out these under his own management (“vertical integration”) or alternatively transfer them so they are under the control of another firm (“dis-integration”). The advantages of either alternatives depends on a host of factors. This paper analyzes the impact on vertical integration of: (a) difficulties in controlling labor and (b) the need for specialized knowledge on specific business processes. The paper shows that, in general, the decision to integrate a process is inversely related to the above two factors. The paper also analyzes the relevance of dis-integration as a tool for the reduction of business risks. We find that – for this industry – decisions relative to dis-integration do not appear to be justified as a tool for managing risks (income variability) of the firm. |
| JEL: | L2 D2 L8 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:336&r=cse |
| By: | Fiorenza BELUSSI; Luciano PILOTTI; Silvia Rita SEDITA |
| Abstract: | The work offers an integrated view on how knowledge is developed in localised systems of specialised firms (industrial districts - IDs), through informal social networks (communities of practice - CoPs), and firms networks, in an osmotic process between the internal to the district knowledge and the external to the district knowledge. Contrary to the Marshallian consolidated tradition, we describe the functioning of the modern industrial district emphasising not just the role of the local “industrial atmosphereâ€, but the modern aspect of “learning at the boundariesâ€, where local actors mix sources of knowledge located inside the district (exploitation of local resources) with external sources (exploration of global knowledge). Our empirical work, based on the analysis of three Italian industrial districts, shows that, in relation to the aspect of exploitation of local resources, the investment (both direct and indirect) of firms in augmenting their capabilities is juxtaposed to the activity organised by the district meta-organisers of cultivating local resources; furthermore, in relation to the exploration of global knowledge, internal/external switchers allow the exploration of global knowledge flows. It is a process that combines forms of localised learning with learning at the boundaries, through the access to pipelines (FDI, firms networks, distant KIBS) and boundary spanning actors (external CoPs). |
| Keywords: | Industrial Districts, Learning, Communities of Practice, Networks |
| JEL: | D83 M54 R12 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:mil:wpdepa:2006-40&r=cse |
| By: | Arvind Virmani (Indian Council for Research on International Economic Relations) |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:170&r=cse |
| By: | Tojerow, Ilan; Rycx, François; Plasman, Robert; Gannon, Brenda |
| URL: | http://d.repec.org/n?u=RePEc:dul:ecoulb:2013-779&r=cse |
| By: | Ferrett, Ben; Wooton, Ian |
| Abstract: | Intuition suggests that the international distribution of firm ownership ought to affect tax/subsidy competition for mobile plants. One might expect that the greater the share of a firm owned within a potential host country that offers a relatively profitable production location, the more that nation will be prepared to pay to attract the firm's production facility. We show this intuition to be false. In equilibrium, both plant location and the tax/subsidy offers are independent of the international distribution of ownership. The reason is that the tax/subsidy competition equalises the firm's post-tax profits across countries, making owners of capital indifferent towards the location of production. |
| Keywords: | foreign direct investment; international distribution of firm ownership; tax/subsidy competition |
| JEL: | F12 F23 H25 H73 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5984&r=cse |
| By: | Schmidt, Klaus M. |
| Abstract: | In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non- integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties than their vertically integrated counterparts. The results of this paper are of special relevance for the analysis of competition in CDMA and WCDMA technology licensing, where some IP holders are not vertically integrated into handset and infrastructure manufacturing, while others are. |
| Keywords: | complementary patents; IP rights; licensing; vertical integration |
| JEL: | D43 L15 L41 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5987&r=cse |
| By: | Rajeev Ahuja (Indian Council for Research on International Economic Relations); Basudeb Guha-Khasnobis (Indian Council for Research on International Economic Relations) |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:162&r=cse |
| By: | Jaap H. Abbring; Jeffrey R. Campbell |
| Abstract: | This paper considers the effects of raising the cost of entry for potential competitors on infinite-horizon Markov- perfect industry dynamics with ongoing demand uncertainty. All entrants serving the model industry incur sunk costs, and exit avoids future fixed costs. We focus on the unique equilibrium with last- in first-out expectations: a firm never exits before a younger rival does. When an industry can support at most two firms, we prove that raising barriers to a second producer’s entry increases the probability that some firm will serve the industry and decreases its long-run entry and exit rates. In numerical examples with more than two firms, imposing a barrier to entry stabilizes industry structure. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-29&r=cse |
| By: | Meenu Tewari (Indian Council for Research on International Economic Relations) |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:173&r=cse |
| By: | Ruud de Mooij; Gaetan Nicodème |
| Abstract: | In Europe, declining corporate tax rates have come along with rising tax-to-GDP ratios. This paper explores to what extent income shifting from the personal to the corporate tax base can explain these diverging developments. We exploit a panel of European data on firm births and legal form of business to analyze income shifting via increased entrepreneurship and incorporation. The results suggest that lower corporate taxes exert an ambiguous effect on entrepreneurship. The effect on incorporation is significant and large. It implies that the revenue effects of lower corporate tax rates – possibly induced by tax competition -- partly show up in lower personal tax revenues rather than lower corporate tax revenues. Simulations suggest that between 10% and 17% of corporate tax revenue can be attributed to income shifting. Income shifting is found to have raised the corporate tax-to-GDP ratio by some 0.2%-points since the early 1990s. |
| Keywords: | corporate tax, personal tax, entrepreneurship, incorporation, income shifting |
| JEL: | H25 M13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1883&r=cse |
| By: | JAVIER CARRILLO (Instituto de Empresa) |
| Abstract: | This paper shows how the uncertainty associated to the absence of a post-Kyoto regime regarding Greenhouse Gas mitigation is affecting investments in mitigation activities in the EU electricity sector and, thus, future emissions levels. Based on a wide survey of EU power companies, the paper identifies the most likely post-Kyoto scenarios considered by these firms and how they are coping with such uncertainty in their current investment decisions. The major conclusion is that the non-existence of a post-Kyoto regime is having a negative effect on current business investment decisions in mitigation activities, increasing risk premiums and financing costs. |
| Keywords: | Investment decisions, Post-Kyoto scenarios |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp06-26&r=cse |
| By: | Elijah Brewer, III; William E. Jackson, III; Larry D. Wall |
| Abstract: | This paper investigates the impact of the target chief executive officer’s (CEO) postmerger position on the purchase premium and target shareholders’ abnormal returns around the announcement of the deal in a sample of bank mergers during the period 1990–2004. We find evidence that the target shareholders’ returns are negatively related to the postmerger position of their CEO. However, these lower returns are not matched by higher returns to the acquirer’s shareholders, suggesting little or no wealth transfers. Additionally, our evidence suggests that the target CEO becoming a senior officer of the combined firm does not boost the overall value of the merger transaction. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2006-28&r=cse |
| By: | Christian Groth (Department of Economics, University of Copenhagen) |
| Abstract: | This article reviews issues related to the incorporation of non-renewable resources in the theory of economic growth and development. As an offshoot of the new growth theory of the last two decades a series of contributions have studied endogenous technical change in relation to resource scarcity. We discuss the main approaches within this literature and consider questions like: How is the new literature related to the wave of resource economics of the 1970s? What light is thrown on the limits-to-growth issue? Does the existence of non-renewable resources have implications for the controversies within new growth theory? |
| Keywords: | endogenous growth; innovation; non-renewable resources; knife-edge conditions; robustness; limits to growth |
| JEL: | O4 Q3 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0626&r=cse |
| By: | Paolo Pasquariello; Clara Vega |
| Abstract: | We study the role played by private and public information in the process of price formation in the U.S. Treasury bond market. To guide our analysis, we develop a parsimonious model of speculative trading in the presence of two realistic market frictions -- information heterogeneity and imperfect competition among informed traders -- and a public signal. We test its equilibrium implications by analyzing the response of two-year, five-year, and ten-year U.S. bond yields to order flow and real-time U.S. macroeconomic news. We find strong evidence of informational effects in the U.S. Treasury bond market: unanticipated order flow has a significant and permanent impact on daily bond yield changes during both announcement and non-announcement days. Our analysis further shows that, consistent with our stylized model, the contemporaneous correlation between order flow and yield changes is higher when the dispersion of beliefs among market participants is high and public announcements are noisy. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:874&r=cse |
| By: | Tanya Araujo; R. Vilela Mendes |
| Keywords: | agent-based models, innovation, artificial societies |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp312006&r=cse |
| By: | Volodymyr Bilotkach; Yuriy Gorodnichenko; Oleksandr Talavera; Igor Zubenko |
| Abstract: | Using a sample of fare quotes for non-stop travel from New York to London, this paper investigates the dynamics of offered fares as the departure date nears. We find that the general trend is toward fare increase at an accelerated rate as the departure date approaches. Clear differences in price-setting strategies among the carriers competing on a particular route are documented. |
| Keywords: | airline industry, price dynamics |
| JEL: | L93 D21 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp645&r=cse |
| By: | Franco Malerba; Richard Nelson; Luigi Orsenigo; Sidney Winter |
| Abstract: | In this paper we present a history-friendly model of the changing vertical scope of computer firms during the evolution of the computer and semiconductor industries. The model is "history friendly", in that it attempts at replicating some basic, stylized qualitative features of the evolution of vertical integration on the basis of the causal mechanisms and processes which we believe can explain the history. The specific question addressed in the model is set in the context of dynamic and uncertain technological and market environments, characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. The model illustrates how the patterns of vertical integration and specialization in the computer industry change as a function of the evolving levels and distribution of firms’ capabilities over time and how they depend on the co-evolution of the upstream and downstream sectors. Specific conditions in each of these markets - the size of the external market, the magnitude of the technological discontinuities, the lock-in effects in demand - exert critical effects and feedbacks on market structure and on the vertical scope of firms as time goes by. Length 32 pages |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2006-19&r=cse |
| By: | Amita Batra (Indian Council for Research on International Economic Relations); Zeba Khan (Indian Council for Research on International Economic Relations) |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:168&r=cse |
| By: | Marika Karanassou (Queen Mary, University of London and IZA Bonn); Hector Sala (Universitat Autònoma de Barcelona and IZA Bonn); Dennis J. Snower (Institute for World Economics, University of Kiel, CEPR and IZA Bonn) |
| Abstract: | We distinguish and assess three fundamental views of the labor market regarding the movements in unemployment: (i) the frictionless equilibrium view; (ii) the chain reaction theory, or prolonged adjustment view; and (iii) the hysteresis view. While the frictionless view implies a clear compartmentalization between the short and long run, the hysteresis view implies that all the short-run fluctuations automatically turn into long-run changes in the unemployment rate. We assert the problems faced by these conceptions in explaining the diversity of labor market experiences across the OECD labor markets. We argue that the prolonged adjustment view can overcome these problems since it implies that the short, medium, and long runs are interrelated, merging with one another along an intertemporal continuum. |
| Keywords: | unemployment, interactive labor market dynamics, interplay of lags and shocks, frictional growth, growth drivers |
| JEL: | E22 E24 J21 J30 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2480&r=cse |
| By: | Neary, J Peter |
| Abstract: | This paper reviews alternative approaches to measuring an economy's cost competitiveness and proposes some new measures inspired by the economic theory of index numbers. The indices provide a theoretical benchmark for estimated real effective exchange rates, but differ from standard measures in that they are based on marginal rather than average sectoral shares in GDP or employment. The use of the new indices is illustrated by some simple calculations which highlight the potential exposure of the Irish economy to fluctuations in the euro-sterling exchange rate. |
| Keywords: | competitiveness; economic theory of index numbers; European Monetary Union (EMU); real effective exchange rates (REERs) |
| JEL: | C43 F40 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5982&r=cse |
| By: | Rashmi Banga (Indian Council for Research on International Economic Relations) |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:171&r=cse |
| By: | Rashmi Banga (Indian Council for Research on International Economic Rela) |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:159&r=cse |
| By: | David Jamieson Bolder |
| Abstract: | Modelling term-structure dynamics is an important component in measuring and managing the exposure of portfolios to adverse movements in interest rates. Model selection from the enormous term-structure literature is far from obvious and, to make matters worse, a number of recent papers have called into question the ability of some of the more popular models to adequately describe interest rate dynamics. The author, in attempting to find a relatively simple term-structure model that does a reasonable job of describing interest rate dynamics for risk-management purposes, examines two sets of models. The first set involves variations of the Gaussian affine term-structure model by modestly building on the recent work of Dai and Singleton (2000) and Duffee (2002). The second set includes and extends Diebold and Li (2003). After working through the mathematical derivation and estimation of these models, the author compares and contrasts their performance on a number of in- and out-of-sample forecasting metrics, their ability to capture deviations from the expectations hypothesis, and their predictions in a simple portfolio-optimization setting. He finds that the extended Nelson-Siegel model and an associated generalization, what he terms the "exponential-spline model," provide the most appealing modelling alternatives when considering the various model criteria. |
| Keywords: | Interest rates; Econometric and statistical methods; Financial markets |
| JEL: | C0 C6 E4 G1 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:06-48&r=cse |
| By: | Juan J. Dolado (Universidad Carlos III de Madrid, CEPR and IZA Bonn); Eduardo Morales (Harvard University) |
| Abstract: | This paper analyses the determinants of grades achieved in three core subjects by first-year Economics undergraduate students at Universidad Carlos III de Madrid, over the period 2001-2005. Gender, nationality, type of school, specialization track at high school and the grades at the university entry exam are the key factors we examine. Our main findings are that those students who did a technical track at high school tend to do better in mathematics than those who followed a social sciences degree and, that the latter do not perform significantly better than the former in subjects with less degree of formalism and more economic content. Moreover, students from public schools are predominant in the lower (with social sciences or humanities tracks) and upper (with a technical track) parts of the grade distribution, and females tend to perform better than males. |
| Keywords: | grade achievement, school type, gender, multinomial logit, quantile regressions |
| JEL: | I21 I29 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2491&r=cse |
| By: | Zakolyukina Anastasia |
| Abstract: | The project examines the performance of the external management procedure on the data set from the arbitration court of the Udmurt Republic and the unique data set of politically connected firms that went bankrupt 1995–2004 in Russia. We use a narrow definition of political connections: a CEO or a member of an executive board being a member of par-liament or a top executive at the federal, regional, or municipal level. We show that political connections matter for the timing of bankruptcy procedures. Also, political connections do not result in efficiency-enhancing bankruptcies; in line with a politicians-and-firms story, politically connected firms preserve employment rather than increase productivity. Based on the court level data, we find that debt concentration increases likelihood of external management initiation, whereas external management itself decreases the share of total debt repaid. However, there is no evidence of adminis-trative expenses inflation in favor of a particular unsecured creditor under the assumption of a tradeoff between inflation of administrative expenses and main debt repayment. |
| Keywords: | Russia, bankruptcy, external management, liquidation, political connections |
| JEL: | G33 G38 P16 |
| Date: | 2006–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:eer:wpalle:06-09e&r=cse |
| By: | Svensson, Mikael (Department of Business, Economics, Statistics and Informatics) |
| Abstract: | Several recent papers in the literature have documented a pro-cyclical effect between business cycles and mortality: increased mortality in short-term economic upturns. In this paper I explore the relationship between business cycles and mortality in Sweden. The sample consists of 21 Swedish regions during the period 1976 to 2003. Results from the fixed effects panel data estimations indicate that the business cycle effect is insignificant on overall rates of mortality. However, robust results indicate that ischemic heart disease mortality decreases during short-term economic upturns. A one percentage point increase in the employment rate is predicted to decrease ischemic heart disease mortality with approximately 0.8 percent. And the medium-term effects indicates that a one percentage point increase in the average employment rate during the last five years is predicted to decrease ischemic heart disease mortality with approximately 2 percent, which implies an economic value of the decreased mortality from this of about $1,690 million. |
| Keywords: | Determinants of Health; Mortality; Business cycles |
| JEL: | E32 I12 |
| Date: | 2006–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2006_009&r=cse |
| By: | Ralitza Dimova (Brunel University and IZA Bonn); Ira N. Gang (Rutgers University and IZA Bonn); John Landon-Lane (Rutgers University) |
| Abstract: | With the use of panel data constructed from the 1995 and 1997 Bulgarian Integrated Household Surveys, this paper explores the sectoral reallocation of labour by gender. In Bulgaria, men and women started the transition on an almost equal standing, allowing us to concentrate our attention on the impact of individual and household characteristics in explaining gender differences in the labour market. We find that household characteristics, rather than alternative explanations such as differences in individual characteristics or pure gender discrimination, better explain the observed gender differences in labour market outcomes. |
| Keywords: | employment, mobility, gender, household |
| JEL: | J21 J23 J31 J62 P2 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2476&r=cse |
| By: | Alessandra Guariglia; Sandra Poncet |
| Abstract: | Using data for 30 Chinese provinces over the period 1989-2003, this study examines the relationship between the level of financial intermediary development, and real GDP growth, physical capital accumulation, and total factor productivity (TFP) growth. We find that traditionally used indicators of financial development and China-specific indicators measuring the level of state interventionism in finance are generally negatively associated with growth and its sources, while indicators measuring the degree of market driven financing in the economy are positively associated with GDP and TFP growth, and capital accumulation. These effects have gradually declined over time and are weaker for high FDI recipients. |
| Keywords: | Financial intermediation; economic growth; capital accumulation; productivity growth; China |
| JEL: | E44 G21 N15 O16 O40 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2006-21&r=cse |
| By: | Niklas Potrafke |
| Abstract: | This paper examines the effects of political determinants on the allocation of public expenditures. Analyzing an OECD panel from 1990 to 2004, a SURE model controls for the contemporaneous correlation between the different expenditure categories (COFOG). I find that left governments set other priorities than right governments: In particular, they increase spending for "Environment protection", "Recreation; Culture and Religion" and "Education". The number of coalition partners as well as minority governments affects the allocation of public expenditures, too. In contrast, there are no election and pre-election year effects. |
| Keywords: | Allocation of public expenditures, partisan politics |
| JEL: | D72 E62 H50 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp653&r=cse |
| By: | Garima Malik (Indian Council for Research on International Economic Relations) |
| Abstract: | This paper attempts to examine the relationship between health and economic growth. The rate of growth is measured using gross national income [GNI] and health status is measured using infant mortality rate, life expectancy rate and crude health rate. The above relationships are measured using a multivariate framework controlling for other background variables. Thus we have modelled the macroeconomic impact of health. A theoretical framework has been developed to model this linkage between health and growth and this is further tested using a regression model which tests the causality between these variables of interest. These models are tested using pooled data. We have also assumed in this analysis that these variables are affected by state-specific unobservable fixed effects, since there are other cultural, political and social factors at work here. |
| Keywords: | Health, Economic Growth |
| JEL: | C21 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:185&r=cse |
| By: | Arvind Virmani (Indian Council for Research on International Economic Relations); Surabhi Mittal (Indian Council for Research on International Economic Relations) |
| Abstract: | The paper looks into the level of integration of commodity markets in India, across centres and states using consumer price data. It measures the extent to which domestic markets for goods in India are integrated, and recommends policy options to facilitate integration. The paper addresses questions: Are domestic markets for goods integrated across states? Has market integration increased over time? What are the policy options to facilitate integration? The paper tests the methodology proposed by Bradford and Lawrence (2004) on the consumer prices of goods in major states across India. This is then repeated using consumer price data at two points in time (1994 and 2004), allowing an assessment of whether Indian markets have integrated over time. Market integration is also tested for individual commodities across markets. The annual consumer prices for commodities were compiled from the Labour Bureau series of average monthly consumer prices of commodities for Industrial workers across 70 constituent centres in 18 states and monthly data was compiled from the Indian Labour Journal, a monthly publication from Labour Bureau, Ministry of Labour Government of India. Authors are thankful to Labour Bureau, Shimla for providing data on consumer prices at the disaggregated level. This study was commissioned by The World Bank as the background paper on market integration in The World Bank Development Policy Review: Inclusive Growth and Service Delivery: Building on India's Success. July 2006 |
| Keywords: | Market Integration, Consumer Prices, Primary Food, Manufactured Goods, India |
| JEL: | E3 L22 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:183&r=cse |
| By: | Anne Corbett |
| Keywords: | multilevel governance; institutionalism; Europeanization; educational policy |
| Date: | 2006–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:erp:arenax:p0226&r=cse |