Causes of corruption: a survey of cross-country analyses and extended results

We survey and assess the empirical literature on the sources of corruption Thanks to the improved availability of data, we are able to produce an improved cross-country econometric model to test well-established and more recent hypotheses jointly. We do not find that the common law system, or a past as a British colony predicts corruption. Our results support cultural theories on the causes of corruption, and suggest that a medium-long exposure to uninterrupted democracy is associated with lower corruption levels, while political instability tends to raise corruption. Our results also suggest that the diffusion of newspapers helps to lower corruption levels.      

A tale of minorities: evidence on religious ethics and entrepreneurship

Does Protestantism favour entrepreneurship more than Catholicism does? We provide a novel way to answer this question by comparing Protestant and Catholic minorities using Swiss census data. Exploiting the strong adhesion of religious minorities to their denomination’ ethical principles and the historical determination of the geographical distribution of denominations across Swiss cantons, we find that Protestantism is associated with a significantly higher propensity for entrepreneurship. The estimated difference ranges between 1.5 and 3.2 % points, it is larger the smaller the size of the religious minority, it is mainly driven by prime age male entrepreneurs and it stands up to a number of robustness checks. No effects are found when comparing religious majorities, suggesting that the implications of religious ethical norms on economic outcomes emerge only when such norms are fully internalized.     

Trade Receivables Policy of Distressed Firms and Its Effect on the Costs of Financial Distress

This paper studies the trade receivables policy of distressed firms as the trade-off between the firm's willingness to gain sales and the firm's need for cash. We find that firms increase trade receivables when they have profitability problems, but reduce trade receivables when they have cash flow problems. We also find that a firm that significantly cuts its trade receivables when in financial distress will experience an additional drop of at least 13% in sales and stock returns over the previously documented 20% average drop for financially troubled firms. Moreover, the performance decline of a firm in financial distress is significantly higher if the firm cuts trade receivables than if it does not.     

State dependence and unobserved heterogeneity in the employment transitions of the over-50s

This paper examines employment transitions among men and women in the UK aged between 50 and the state pension age. We use a fourth order Markov model to estimate quarterly transitions while allowing for potential endogeneity of initial conditions. The results reject exogeneity of initial conditions and show the importance of state dependence. We compare the results to those obtained with a younger sample and find evidence of a sorting process over the life-cycle whereby men’s employment transitions are increasingly characterized by state dependence while, for women, unobserved heterogeneity becomes more important. We discuss some potential policy implications of the results.     

Economic burden of hospital malnutrition and the cost–benefit of supplemental parenteral nutrition in critically ill patients in Latin America

Abstract

Aim: Disease-related malnutrition (DRM) is a prevalent condition that significantly increases the risk of adverse outcomes in hospitalized patients, particularly those with critical illness. Limited data is available on the economic burden of DRM and the cost–benefit of nutrition therapy in high-risk populations in Latin America. The aims of the present study were to estimate the economic burden of DRM and evaluate the cost–benefit of supplemental parenteral nutrition (SPN) in critically ill patients who fail to receive adequate nutrient intake from enteral nutrition (EN) in Latin America.

Methods: Country-specific cost and prevalence data from eight Latin American countries and clinical data from studies evaluating outcomes in patients with DRM were used to estimate the costs associated with DRM in public hospitals. A deterministic decision model based on clinical outcomes from a randomized controlled study and country-specific cost data were developed to examine the cost–benefit of administering SPN to critically ill adults who fail to reach ≥60% of the calculated energy target with EN.

Results: The estimated annual economic burden of DRM in public hospitals in Latin America is $10.19 billion (range, $8.44 billion–$11.72 billion). Critically ill patients account for a disproportionate share of the costs, with a 6.5-fold higher average cost per patient compared with those in the ward ($5488.35 vs. $839.76). Model-derived estimates for clinical outcomes and resource utilization showed that administration of SPN to critically ill patients who fail to receive the targeted energy delivery with EN would result in an annual cost reduction of $10.2 million compared with continued administration of EN alone.

Limitations: The cost calculation was limited to the average daily cost of stay and antibiotic use. The costs associated with other common complications of DRM, such as prolonged duration of mechanical ventilation or more frequent readmission, are unknown.

Conclusions: DRM imposes a substantial economic burden on Latin American countries, with critically ill patients accounting for a disproportionate share of costs. Cost–benefit analysis suggests that both improved clinical outcomes and significant cost savings can be achieved through the adoption of SPN as a therapeutic strategy in critically ill patients who fail to receive adequate nutrient intake from EN.     

Mixed tempered stable distribution

In this paper, we introduce a new parametric distribution, the mixed tempered stable. It has the same structure of the normal variance–mean mixtures but the normality assumption gives way to a semi-heavy tailed distribution. We show that, by choosing appropriately the parameters of the distribution and under the concrete specification of the mixing random variable, it is possible to obtain some well-known distributions as special cases. We employ the mixed tempered stable distribution which has many attractive features for modelling univariate returns. Our results suggest that it is flexible enough to accommodate different density shapes. Furthermore, the analysis applied to statistical time series shows that our approach provides a better fit than competing distributions that are common in the practice of finance.     

Early Evolution of the Assumption of Non-satiation

The paper explores the mostly tacit transmission of the assumption of non-satiation from the outset of classical political economy to the advent of marginal analysis in Great Britain. The evolution of the assumption is traced back to contributions to the philosophy of mind in the early British enlightenment, which provided scientific ground not only to the economic agent's insatiable nature but also to a delusional dynamic of association that challenges the causality between acquisitiveness and pleasure. The paper claims that, because there is evidence that such delusional aspect was known to the early political economists, the assumption of non-satiation might have become a mainstay in economics not only for its scientific status but also as a result of a strategic choice that can only be explained within the political, cultural, and social context in which it was made. Had this been the case, the exportability of the assumption through time and space must be further questioned. The consistent inclusion of non-satiation in economic theories, policies, and institutions may have had extraordinary consequences, and may have nurtured rational behaviors that in fact fulfill the assumption itself.     

Estimates of foreign exchange risk premia: a pricing kernel approach

The goal of this study is to measure market prices of risk and foreign exchange risk premia. Estimations of minimum variance pricing kernels permit to determine market prices of risk, which, in an international no-arbitrage framework, allow to measure foreign exchange risk premia. Market prices of risk are time-varying and surge during financial turmoils. Foreign exchange risk premia are on average small in comparison to interest rate differentials and exhibit significant variation from the early 1970s onwards, when the Bretton Woods exchange rate system collapsed. At times, foreign exchange risk premia dominate interest rate differentials. We are indebted to Baldev Raj, Robert Kunst, the associate editor of Empirical Economics and two anonymous referees for their valuable comments. We also thank seminar participants at the European Central Bank, the Bank of England and Queen Mary University of London. The views expressed in this paper are those of the authors and do not necessarily reflect those of the European Central Bank or the Eurosystem.     

Behavioral Pragmatism: President Obama’s Approach to Unemployment

However wide the ideological distance between positive and negative prognosticators of employment growth, the pragmatic center is where the White House preferences are likely to fall. Obama??s pragmatic center may be far from the ideological center between public-private program alternatives. Instead, it is closer to the pressure center of partisan and interest-group forces that normally participate in fiscal policy-making. As a behavioral pragmatist the moderate position for Obama is found at the center of ideologically separated political competitors whatever the content of their beliefs, since content is relatively uncritical in this perspective. Pressure groups?? numbers and organizational strength define the value of their diversity more than the substance of their beliefs. For the strong believers on both political left and right the outcomes will rarely look pragmatic because they will rarely fit the traditional standards for moderation     

Analytic derivatives and the computation of GARCH estimates

In the context of univariate GARCH models we show how analytic first and second derivatives of the log-likelihood can be successfully employed for estimation purposes. Maximum likelihood GARCH estimation usually relies on the numerical approximation to the log-likelihood derivatives, on the grounds that an exact analytic differentiation is much too burdensome. We argue that this is not the case and that the computational benefit of using the analytic derivatives (first and second) may be substantial. Furthermore, we make a comparison of various gradient algorithms that are used for the maximization of the GARCH Gaussian likelihood. We suggest the implementation of a globally efficient computation algorithm that is obtained by suitably combining the use of the estimated information matrix with that of the exact Hessian during the maximization process. As this would appear a straightforward extension, we then study the finite sample performance of the exact Hessian and its approximations (that is, the estimated information, outer products and misspecification robust matrices) in inference.