Correction to: Improving decisions with market information: an experiment on corporate prediction markets

Experimental Economics - A correction to this paper has been published: https://doi.org/10.1007/s10683-021-09711-0     

Ecosystem Service Valuation for National Accounting: A Reply to Obst,Hein and Edens (2016)

While recent experimental frameworks for national ecosystem service accounting have shown substantial progress, in our view some crucial methodological issues remain that deserve further consideration before setting final standards. In response to the landmark work of Obst et al. (Environ Resour Econ 64:1–23, 2016. doi: 10.1007/s10640-015-9921-1), we provide arguments with regard to the suitability of particular valuation approaches. Generally, we agree that respective valuation methods need to produce values that are consistent with national accounting standards such as representing exchange values. However, we disagree with their conclusions regarding specific valuation techniques. Firstly, the circumstance that methods used for estimating shadow prices can also be used to derive consumer surplus does not justify the general exclusion of all shadow pricing methods for valuation of ecosystem services for national accounts, especially for public ecosystem services. Secondly, that preference-based methods can also be used to assess welfare changes does not imply that cost-based methods are generally better suited for ecosystem accounting. To the contrary, we see an essential need for preference information in accounting contexts. Thirdly, that accounting standards use a written-down replacement cost approach, does not mean ecosystem accounting requires to employ a replacement cost approach. To the contrary, we argue that assessing ecosystem degradation through restoration costs would be in line with writing down depreciation, but we also point to its limits.     

Rational expectations and fixed-event forecasts: An application to UK inflation

This paper tests a version of the rational expectations hypothesis using ‘fixed-event’ inflation forecasts for the UK. Fixed-event forecasts consist of a panel of forecasts for a set of outturns of a series at varying horizons prior to each outturn. The forecasts are the prediction of fund managers surveyed by Merrill Lynch. Fixed-event forecasts allow tests for whether expectations are unbiased in a similar fashion to the rest of the literature. But they also permit the conduct of particular tests of forecast efficiency - whether the forecasts make best use of available information - that are not possible with rolling-event data. We find evidence of a positive bias in inflation expectations. Evidence for inefficiency is much less clear cut.First version received: June 2002/ Final version received: November 2003We would like two anonymous referees and an editor for comments that have significantly improved the paper. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Bank of England.     

Prospective in Brazil: The power to build the future

This paper looks at prospective in Brazil for the past 30 years. The prospective approach and methods, with their myriad tools, were adopted by Brazilian governmental bodies and companies in a process of progressive maturation of concepts and models. They brought about major changes for the country and for the companies and governmental bodies in which they were adopted. The following examples stem from the application of the prospective process, with the participation of employees and the population. We chose to highlight results applicable to practical life and visible today: 1) the opening up of the Brazilian economy (BNDES, 1984-90); 2) the anticipation of the global warming issue (ELETRONORTE, 1987-1998); 3) the preparation of a monopolistic oil and gas company to work in a competitive environment (PETROBRAS, 1989-2010); 4) the creation of a highly successful strategic state plan (Minas Gerais state, 2002-2010, and 5) the drafting of a strategic municipal plan (Belo Horizonte Municipal Government, 2009).     

Incentives and disincentives to drug innovation: evidence from recent literature

Aim: Drug innovation is strongly driven by economic incentives. How these incentives work in determining or changing the level of activity of innovators and the direction of their innovation remains understudied. We seek to address these issues in reviewing recent literature on drug innovation, which offers one major unifying theme of pharmacoeconomic scholarship presented at the 2019 AEA-ASSA annual convention.

Methods: Drawn from three AEA-ASSA convention panel sessions, papers were reviewed for newly charted research terrains and new research trajectories, and their theoretical and practical implications on efficiency, effectiveness, and value in the production and utilization of pharmaceutical products.

Results: While high and continuously rising drug prices are typically claimed as the price of scientific innovation, the reviewed literature finds that this link only partially accounts for the problem. High risk aversion owing to information asymmetries and vastly intractable uncertainties is prevalent among innovating firms. Predatory business models abound. Reverse predatory strategies also exist to maintain product exclusivity without much added clinical benefits, and to constrain generic competition. CEO compensation practices contribute to rising drug prices. Finally, the US government’s hands-off policy on drug list prices leave the forces of supply and demand to allocate them and reward innovation (at times perversely), even as the government extensively regulates or over-regulates practically every other aspect of innovation.

Conclusions: Price-elasticity of demand is critical in drug innovation. The drug value chain is price-sensitive to the balance of incentives and disincentives to innovation. American health policy should consider charting a middle course that introduces some form of regulatory price control, while stimulating and sustaining the benefits of market competition. That should incentivize stakeholders to take into account both resources and value for money in making decisions based on best-quality, clinical-economic evidence.     

The Political Power of Big Business: A Response to Bell and Hindmoor

There has been a recent resurgence of interest in debates about the power of business (Culpepper 2011 Culpepper, P. (2011). Quiet Politics and Business Power: Corporate Control in Europe and Japan, Cambridge: Cambridge University Press. [Google Scholar]; Bell 2012 Bell, S. (2012). The Power of Ideas: The Ideational Mediation of the Structural Power of Business. International Studies Quarterly, 56(4), 661–73. doi: 10.1111/j.1468-2478.2012.00743.x[Crossref], [Web of Science ®] , [Google Scholar]) and Bell and Hindmoor (2013 Bell, S., Hindmoor, A. (2013). The Structural Power of Business and the Power of Ideas: The Strange Case of the Australian Mining Tax. New Political Economy, ,forthcoming. Available from: http://dx.doi.org/10.1080/13563467.2013.796452 [19 (3), pp. 470–486, cross-references updated] [Google Scholar]) make an important, theoretically informed, but empirically rooted, contribution to that debate. In this response, we address both aspects of their contribution, arguing that their treatment of Lindblom is partial and, consequently, so is their explanation of the case. As such, we largely rely on their narrative of the evolution of the Australian mining tax, focusing first on critically examining Bell and Hindmoor's theoretical position, before turning to their analysis of the case.     

James M. Buchanan’s 1981 visit to Chile: Knightian democrat or defender of the ‘Devil’s fix’?

Nobel Prize winning economist James M. Buchanan has repeatedly argued that the “political economist should not act as if he or she were providing advice to a benevolent despot” (Boettke Constitutional Political Economy, 25, 110–124, 2014: 112), but an increasingly influential body of scholarship argues that Buchanan provided a wealth of early 1980s policy advice to Augusto Pinochet’s military dictatorship in Chile (e.g., Fischer 2009; Maclean 2017). In particular, Buchanan reportedly provided an analytical defense of military rule to a predominantly Chilean audience when he visited the country in late 1981. This paper draws upon largely ignored archival evidence from the Buchanan House Archives and Chilean primary source material to assess whether Buchanan provided a defense of Pinochet’s “capitalist fascism” (Samuelson 1983) or whether he defended democracy when he visited Chile in 1981. Aside from the importance of this for assessing Buchanan’s own legacy, his constitutional political economy arguments presented in Chile also provide an interesting and distinct perspective on the connection between democracy and growth, which remains highly relevant to current debates. Despite a general agreement about the desirability of democracy, the view that authoritarian regimes can spur “growth miracles”, or might even be a necessary stage in political-economic development, still has prominent supporters (e.g. Sachs 2012).

     

Price Discovery and Efficiency of Indian Agricultural Commodity Futures Market: An Empirical Investigation

This study examines the price discovery process and relative efficiency of ten most liquid agricultural commodities’ futures contracts, traded on the largest agricultural commodity exchange of India (National Commodity and Derivative Exchange Limited). Three different common factor methodologies—component share method (Gonzalo and Granger in J Bus Econ Stat 13:27–35, 1995), information share method (Hasbrouck in J Financ 50:1175–1199, 1995), and modified information share method (Lien and Shrestha in J Futures Mark 29:377–395, 2009)—have been employed to determine the extent of price discovery contribution by spot and futures markets. The sample consists of daily data for the period from January 1, 2009 to October 20, 2015. Stationarity and Cointegration test results reveal that spot and futures prices are integrated and cointegrated for all commodities. The price discovery results show that the futures market leads the spot market in case of six commodities, i.e., castor seed, coriander, cottonseed oilcake, soy oil, sugarM and turmeric. Whereas, in the case of four commodities (chana (chickpea), guar seed, jeera, and mustard seed), price discovery takes place in the spot market. Therefore, it could be inferred that futures market is more efficient in price discovery of agricultural commodities. Policymakers could use these results to design futures contracts on other commodities or to plan concrete policies to curb speculation without hampering the efficiency of the agricultural commodity derivatives market.

     

Impediments to Exports in Small Transition Economies: The Case of Bulgaria

MOCT-MOST: Economic Policy in Transitional Economies -     

Financial Flows to Eastern Europe: Determinants,Volatility and Sustainability Issues

MOCT-MOST: Economic Policy in Transitional Economies -     

Endogenous Market Structures and International Trade: Theory and Evidence

Under constant elasticity of substitution (CES) preferences and Cournot (or Bertrand) competition, a larger market induces exits of domestic firms, lower prices, and larger production of surviving firms because of competition from more foreign firms, even without resorting to the selection effects of Melitz. The elasticity of the number of firms to population decreases with substitutability between goods, and it reaches 0.5 under Cournot competition with homogeneous goods: empirical evidence supports this structural relation against the unitary elasticity of monopolistic competition. The results hold also in a Heckscher–Ohlin model with imperfect competition generating inter‐ and intra‐industry trade due to comparative advantage or comparative preferences.     

From Universal to Targeted Social Assistance: An Assessment of the Uzbek Experience

MOCT-MOST: Economic Policy in Transitional Economies -     

Innovation and spillovers in regions: Evidence from European patent data

This paper estimates the effect of research externalities in generating innovation. We use R&D and patent data for European Regions in the 1977-1995 period. We find that spillovers are very localized and exist only within a distance of . The estimates are robust to simultaneity, omitted variable bias, different specifications of distance functions, country and border effects. However the size of these spillovers is small. Doubling R&D spending in a region would increase the output of new ideas in other regions within only by 2-3%, while it would increase the innovation of the region itself by 80-90%.     

Sensitivity of consumption to income and to government purchases: some specification and estimation issues

The paper derives a nonlinear error-correction model (ECM) for consumption and shows that existing models that are based on quadratic utility, combine permanent income and current-income consumption, and nest (or could nest) the hypothesis of substitutability between private consumption and government purchases are special cases of the ECM. The importance of some econometric issues that have not received proper attention in the literature is demonstrated by estimating the models using US aggregate quarterly data, 1953:1-1992:4. The evidence suggests that the ECM produces more reliable estimates than do the existing restrictive models.     

Cloud computing in high tech startups: evidence from a case study

ABSTRACT

This paper focuses on the implementation of cloud-based systems in startups to answer how and why hi-tech startups use cloud computing, an overlooked question to date. Thus, referring to an extended version of Ross and Blumenstein [2015. “Cloud Computing as a Facilitator of SME Entrepreneurship.” Technology Analysis & Strategic Management 27 (1): 87–101] framework, encompassing issues of context and culture following Spanò et al. [2019. “Context, Culture and Control: A Case Study on Accounting Change in an Italian Regional Health Service.” Journal of Management and Governance. doi:10.1007/s10997-019-09458-0], we analyse cloud adoption in startup firms and rely upon a case study of an Italian hi-tech startup. The case study allowed us to tap into the main issues relating to cloud implementation that is increased opportunities, reduced costs, scalability, access to global markets, and access to international venture capital. The results offer interesting insights to the literature on cloud computing, and also have some managerial implications in that they better unfold the effects played by context and culture.     

Vietnam's Accession to the Asean Free Trade Area: Effects on Trade and Industrial Competitiveness

MOCT-MOST: Economic Policy in Transitional Economies -