Exchange rates dynamics revisited: a panel data test of the fractional integration order

We test the possibility that exchange rates from nine developed countries have a unit root against the alternate possibility that they are fractionally integrated. Theoretically, exchange rates are only expected to follow a random walk under restrictive assumptions. However, most traditional unit root tests cannot reject a unit root in exchange rates, and time series tests that allow for fractional integration have given inconclusive results. To increase the power of the test of the integration order we develop two panel data tests of the fractional integration order. Monte Carlo simulations show that these tests are correctly sized and have relatively high power compared to other similar tests. Moreover, our empirical results show that we can reject a unit root in exchange rates with a high probability, but the integration order is close to one. This indicates that exchange rates are mean-reverting, although the reversion is slow, resulting in long swings.     

Willingness to pay for improved air quality in Sweden

The aim of the paper is to quantify individual willingness-to-pay measures of improved air quality in Sweden by using the Contingent Valuation Method (CVM). Such measures are important for policy makers when deciding about public investments and policy instruments in order to regulate environmental impacts, e.g. from road transportation and industry. The mean willingness to pay (WTP) for a 50% reduction of harmful substances where the respondents live and work was about 2000 SEK/year, which is of the same order of magnitude as earlier stated preference studies in Nordic countries. Most parameters in the econometric analysis had the expected sign. WTP was increasing in income, wealth and education; it was larger for men, members of environmental organizations, people living in big cities (which are on average more polluted), and people who own their house or apartment. It was lower for retired people. However, the additional WTP for people in big cities, although significantly higher than for other people, was lower than expected, indicating a possible insensitivity-to-scope effect.     

Pay inequality and firm performance: evidence from matched employer–employee data

A large matched employer–employee data set for Sweden is used to test several predictions from tournament theory. For white-collar workers a positive and significant effect of intra-firm wage dispersion on profits and average pay is found, using various measures of wage dispersion. This result is robust for controlling for firm differences in human capital and firm fixed-effects as well as for instrumenting the wage dispersion variable to take into account endogeneity of wage dispersion. Using data on around 10?000 managers, a positive and significant association between pay dispersion and profits is also found for executives. Further results include a positive relationship between market demand volatility and wage dispersion, measured as coefficient of variation in managerial pay, and a negative effect of the number of managers (contestants) on managerial pay spread. The first two results are in accordance with predictions from tournament theory, while the last one is not.     

Foreign Firms and Chinese Employment

This paper examines the effect of foreign direct investment (FDI) on employment in the Chinese manufacturing sector. As one of the world's largest recipients of FDI, China has arguably benefited from foreign multinational enterprises in various respects. However, one of the main challenges for China, and other developing countries, is job creation, and the effect of FDI on employment is uncertain. The effect depends on the amount of jobs created within foreign firms as well as the effect of FDI on employment in domestic firms. We analyse FDI and employment in China using a large sample of manufacturing firms for the period 1998–2004. Our results show that FDI has positive effects on employment growth. The relatively high employment growth in foreign firms is associated with their firm characteristics and their high survival rate. Employment growth is also relatively high in private domestic Chinese firms. There also seems to be a positive indirect effect of FDI on employment in private domestically‐owned firms, presumably caused by spillovers.     

Some problems connected with the calculation of stop loss premiums for large portfolios

Abstract

Experience will not, as a rule, be sufficient to permit a direct empirical determination of the premium rates of a Stop Loss Cover when the portfolio to be reinsured is a large one, and when the treaty runs on such terms that there is only a small probability of the total amount of claims exceeding a stipulated limit. In such cases we have to fall back upon mathematical models from the theory of probability—especially the collective theory of risk—and upon such assumptions as—insofar as they cannot be empirically grounded —may be considered reasonable with regard to the nature of the problem.     

Entry into Swedish Retail and Wholesale Trade Markets

This paper examines, using a zero-inflated negative binomial regression model, what determined entry into the Swedish retail and wholesale trade markets between 1990 and 1996. According to the results, high returns on equity and low sunk costs seemed to attract more entry into retail trade industries, while recent entry and higher total industry sales were associated with more entry into both retail and wholesale trade local markets.     

Identifying intraorganisational and interorganisational alliance conflicts—A longitudinal study of an alliance pilot project in the high technology industry

The extant literature on alliances tends to neglect the effects of intraorganisational relationships within each alliance partner on the implementation of the alliance. To address this gap, this paper investigates both interorganisational and intraorganisational conflicts occurring during the implementation of a service alliance and aims at developing categories of conflicts as well as analysing how these conflict categories affect the implementation of the alliance. Thus, the overall purpose is to contribute to our understanding of implementation issues in alliances for the delivery of services. In order to do so, one case of a high-technology alliance has been studied longitudinally, with the researcher acting as a participant observer. Three interrelated categories of conflicts are developed through an analysis of the data: 1) the scope of the alliance, 2) the customer relationship, and 3) the implementation process. One important conclusion of this study is that the perspectives of several of the stakeholders, including the customers indirectly involved in the alliance, should be included when implementing service alliances.     

Globalization and imperfect labor market sorting

This paper focuses on the ability of the labor market to efficiently match heterogeneous workers to jobs within a given industry and the role that globalization plays in that process. Using matched worker–firm data from Sweden, we find strong evidence that openness improves the matching between workers and firms in industries with greater comparative advantage. This suggests that there may be significant gains from globalization that have not been identified in the past — globalization may improve the efficiency of the matching process in the labor market. These results remain unchanged after adding controls for technical change at the industry level or measures of domestic anti-competitive regulations and product market competition. Our results are also robust to alternative measures of the degree of matching, openness, and the trade status of an industry.     

Employment Protection Reform,Enforcement in Collective Agreements and Worker Flows

We analyze a reform of notice periods for employer‐initiated separations in Sweden, which reduced the notice periods for newly hired older workers substantially but implied minor or no changes in the advance notices for younger workers. The reform was initiated at different times depending on collective agreement. These circumstances provide ample opportunity for the identification of its effects. Our findings indicate heterogeneous effects on hirings and separations across collective agreements.