Free trade versus strategic trade as a choice between two ‘second best’ policies: A symmetric versus asymmetric information analysis

Abstract

We analyse the following policy dilemma: strategic trade policy versus free trade when the domestic government is bound to intervene only after the domestic firm's strategic variable in the form of R&D investment is chosen, and when the information can be either symmetric or asymmetric. The novel feature of our model is that the information asymmetry stems from the assumption that the government may not a priori know the true mode of competition. The intervention in the above set-up allows the domestic firm to manipulate the domestic government and results in a socially inefficient choice of the strategic variable. However, commitment to free trade leads to forgoing the benefits from profit-shifting. Yet, from the social point of view, free trade may be optimal even under the assumption of symmetric information. Due to costly signalling, this result is reinforced in the case of asymmetric information.     

Learning-by-Exporting: Continuous Productivity Improvements or Capacity Utilization Effects? Evidence from Slovenian Firms

Following along the lines of a growing literature on the causal link between exporting and productivity, this paper analyzes the existence of “learning-by-exporting” using firm-level data for Slovenian manufacturing enterprises between 1994 and 2002. We fail to find conclusive evidence of learning-by-exporting. By matching new exporting firms to “sufficiently” similar non-exporters and using the difference-in-differences method on the matched pairs it is revealed that productivity improvements, although present, are far from permanent and tend to dissipate shortly after initial entry. Confronting the data on factor accumulation with TFP measures indicates that the perceived learning effects may in fact only be a consequence of increased capacity utilization brought about by the opening of an additional market. JEL no. D24, F12, F14     

Short-term forecasting of GDP with a DSGE model augmented by monthly indicators

DSGE models are useful tools for evaluating the impact of policy changes, but their use for (short-term) forecasting is still in its infancy. Besides theory-based restrictions, the timeliness of data is an important issue. Since DSGE models are based on quarterly data, they suffer from the publication lag of quarterly national accounts. In this paper we present a framework for the short-term forecasting of GDP based on a medium-scale DSGE model for a small open economy within a currency area. We utilize the information available in monthly indicators based on the approach proposed by Giannone et al. (2009). Using Austrian data, we find that the forecasting performance of the DSGE model can be improved considerably by incorporating monthly indicators, while still maintaining the story-telling capability of the model.     

Working in the digitized economy: HRM theory & practice

In our introduction to this special issue on the gig economy, we provide some context to how and why this phenomenon should be studied, with a particular emphasis on Human Resource Management. We then describe the four articles that comprise the special issue, and we note some common themes. Our introduction concludes with some suggestions for future research on the gig economy.     

Optimal hedging with higher moments

This study proposes a utility‐based framework for the determination of optimal hedge ratios (OHRs) that can allow for the impact of higher moments on hedging decisions. We examine the entire hyperbolic absolute risk aversion family of utilities which include quadratic, logarithmic, power, and exponential utility functions. We find that for both moderate and large spot (commodity) exposures, the performance of out‐of‐sample hedges constructed allowing for nonzero higher moments is better than the performance of the simpler OLS hedge ratio. The picture is, however, not uniform throughout our seven spot commodities as there is one instance (cotton) for which the modeling of higher moments decreases welfare out‐of‐sample relative to the simpler OLS. We support our empirical findings by a theoretical analysis of optimal hedging decisions and we uncover a novel link between OHRs and the minimax hedge ratio, that is the ratio which minimizes the largest loss of the hedged position. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark 32:909–944, 2012     

Panel quantile regressions for estimating and predicting the value-at-risk of commodities

Using a flexible panel quantile regression framework, we show how the future conditional quantiles of commodities returns depend on both ex post and ex ante uncertainty. Empirical analysis of the most liquid commodities covering main sectors, including energy, food, agriculture, and precious and industrial metals, reveal several important stylized facts. We document common patterns of the dependence between future quantile returns and ex post as well as ex ante volatilities. We further show that the conditional returns distribution is platykurtic. The approach can serve as a useful risk management tool for investors interested in commodity futures contracts.     

Obtaining indirect internet access: An examination how reasons for internet non-use relate to proxy internet use

Internet non-use is increasingly concentrated in vulnerable groups of people, especially among ageing populations and those with low socio-economic status. As participation in society becomes largely dependent on use of internet-enabled technologies, internet non-users may seek alternative ways of using the internet. Proxy internet use (PIU), where internet non-users ask internet users to perform online activities on their behalf, is a strategy for obtaining (indirect) internet access. This study examines factors for engagement in PIU, focusing specifically on how non-users’ reasons for disengagement relate to their engagement in PIU. The results from multivariate analyses of survey data from a nation-wide representative sample show that 47% of internet non-users in Slovenia who report having someone available for PIU in fact engage in PIU. In analysing four types of reasons for internet non-use—those related to interest, access, costs and skills—the results show that access issues are negatively related to engagement in PIU. Conversely, reasons related to skills issues are positively related to engagement in PIU. Considering that access to online services through PIU offers an important degree of digital inclusion, the results of this study have important policy implications. Policy initiatives tackling digital inequalities should be sensible to access and skills issues resulting in disengagement. For example, policies directed at providing and maintaining internet access at a household level may result in non-users’ increased opportunities for PIU. In contrast, skills policies should be directed at creating opportunities for informal and person-centred learning of digital skills, considering that non-users who are more aware of their deficiency in skills might be more aware of online opportunities.     

Das Asset-Märchen der Federal Reserve

Die Federal Reserve ist laut dem Federal Reserve Act unter anderem dazu verpfl ichtet, stabile Preise zu gew?hrleisten. Das Erreichen dieses geldpolitischen Ziels wird offi ziell auf Ebene der Verbraucherpreise angesiedelt. Darüber hinaus bekr?ftigt die FED, dass kein explizites Asset Price Targeting betrieben wird. Dienen jedoch Verm?genspreise implizit als geldpolitisches Ziel?     

The Effect of Mandatory Agro‐Environmental Policy on Farm Fertiliser and Pesticide Expenditure

EU farmers are subject to mandatory cross‐compliance measures, requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for farmers to change their behaviour towards the environment. We apply quasi‐experimental methods to measure the causal relationship between cross‐compliance and some specific farm environmental performance. We find that cross‐compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro‐environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.     

Garden tourism: reasons for opening private gardens in the UK National Garden Scheme

As both private and public spaces, gardens are a major source of leisure activities in the UK and a way of life for many British citizens. As garden tourism is increasing in the country, there is an urgent need for more knowledge, particularly regarding the motivation of garden owners. Using a qualitative approach, this paper presents the owners’ perceptions of the garden and examines the role of the garden in garden opening during the open days. Although the significance of charity openings (in many cases with personal and local interests) is undoubtedly a manifestation of the success of the National Garden Scheme, this study reveals that participation in garden opening differs according to the person’s motivation, varying from charity support and community engagement to social reasons, community creation, age resistance or nostalgic reasons.