Trade Protection During the Crisis: Does it Deter Foreign Direct Investment?

This paper looks empirically at the implications that protectionist measures implemented during the current crisis may have had for a country’s ability to attract foreign direct investment. The research utilises data on such measures that are available from Global Trade Alert, combined with bilateral FDI data between OECD countries and a large number of partner countries for 2006 to 2009. This allows us to examine the short‐run effect that protectionist measures may have had on bilateral FDI flows. The verdict from this analysis is clear: a country that implements new protectionist measures may expect that this may result in lower foreign direct investment inflows into the economy. The point estimates from our preferred specifications suggest that, depending on the empirical model, the implementation of a trade protection measure is associated with about 40 to 80 per cent lower FDI inflows. Trade protection does not appear to have any implications for the country’s FDI outflows, however. The negative effect on FDI inflows does not appear to be due to direct investment measures but rather to actions related to intellectual property rights protection and other more trade‐related measures.     

American repatriate employees' retrospective assessments of the effects of cross-cultural training on their adaptation to international assignments

With 10 to 50 per cent of expatriates curtailing their assignments early, and the cost of foreign placement estimated at $500,000, training for expatriates needs to be improved. This study investigates different methods of training, and the results as perceived by repatriates. Repatriates were asked about the amount and type of cross-cultural training they had received and their effectiveness and productivity during the overseas assignment. Repatriates' responses included specific comments about their individual and familial experiences. It was hypothesized that managers who receive rigorous cross-cultural training before and during the assignment will not suffer intense culture shock and will become effective more rapidly than managers who have not had cross-cultural training. The results demonstrated that integrated cross-cultural training does reduce the time necessary to adjust and to achieve cultural proficiency and reduces the time necessary to become effective and productive in the assignment.     

External Imbalances and the US Current Account: How Supply‐Side Changes Affect an Exchange Rate Adjustment*

The influential work of Obstfeld and Rogoff argues that a closing‐up of the US current account deficit involves a large exchange rate adjustment. However, the Obstfeld–Rogoff model works exclusively via demand‐side channels and abstracts from possible supply‐side changes. We extend the framework to allow for endogenous supply‐side changes and show that this fundamentally alters the mechanism of the adjustment process. Allowing for such an extension attenuates quite significantly the implied exchange rate adjustment. The paper also provides some empirical evidence of variations in the supply‐side structure and correlations with the exchange rate and the current account. The policy implications are that measures to foster a supply‐side reaction would facilitate the external adjustment by alleviating an exclusive reliance on demand and exchange rate changes, with the latter being potentially destabilizing for the global financial system.     

Entrepreneurship and organization design

We model entrepreneurship and the emergence of firms as an outcome of simultaneous bidding for labor services among heterogeneous agents. What distinguishes our approach from prior work is that occupational choice and job matching are determined simultaneously, so that the opportunity costs of entrepreneurs are accounted for. Those who are relatively unmanageable, while possibly excellent managers themselves, become entrepreneurs. Entrepreneurs compete and create value by building efficient organizations and offering potentially well-paid jobs to others. While the entry of an additional entrepreneur typically reduces some individual wages, we show that it always raises the average wage and depresses the average income of incumbent entrepreneurs. This result may help explain the empirically low returns to entrepreneurship.     

The impact of high government debt on economic growth and its channels: An empirical investigation for the euro area

This paper investigates the average impact of government debt on per-capita GDP growth in twelve euro area countries over a period of about 40 years starting in 1970. It finds a non-linear impact of debt on growth with a turning point – beyond which the government debt-to-GDP ratio has a negative impact on long-term growth – at about 90–100% of GDP. Confidence intervals for the debt turning point suggest that the negative growth effect of high debt may start already from levels of around 70 to 80% of GDP. The channels through which government debt is found to have a non-linear impact on the economic growth rate are private saving, public investment and total factor productivity.     

Supporting Interactive Multi-Attribute Electronic Negotiations with ebXML

The inter-organizational character of electronic negotiations raises social, legal, organizational and technical research questions. One of the main weaknesses of electronic negotiation applications today is that they do not sufficiently take into consideration the integration requirements that stem from the latter two of these aspects. Our objective is to design and build an electronic negotiation application that complies with these requirements. A major task within this work is the modeling and specification of the negotiation process and negotiation objects. To meet the integration requirements, the use of standards is essential. In our paper, we apply the ebXML framework to the task of modeling interactive bilateral multi-attribute electronic negotiations. For this purpose, we introduce the negotiation process flow underlying our application scenario. We explain the significance of ebXML for standardized business transaction modeling. We develop ebXML process and object definitions and suggest modifications of and additions to the current ebXML standard. Finally, we discuss the scope and the limitations of our concept and prototype.     

Insider Privatisation and Restructuring Incentives

In the literature on privatisation and restructuring it is a generally held belief that manager owned firms will be restructured more rigorously than worker owned companies. This gives the clear recommendation that property rights and control rights should be allocated to managers in the process of (insider-) privatisation. One of the implied arguments is, that managers' career concerns will make them eager to prove their ability by improving company efficiency. The present model shows that in the transition context managers' career concerns might result in the opposite effect. If the bulk of job opportunities are in worker controlled firms, the managers of the few manager controlled firms will want to appear soft on excess labour capacity – hence, restructure less harshly – in order to improve their career opportunities.     

Deposits,Loans, and Banking: Clarifying the Debate

The relationship between banking deposits and loans is contentious. While the defense of a 100 percent reserve clause to eliminate fractional reserves has commonly been asserted on economic and ethical grounds, Huerta de Soto (2006) arguments are largely ignored. Rozeff (2010) is an example. We show that treating a loan and a deposit interchangeably is impermissible due to both established and a priori legal principles. At best, fractional reserves may be considered an aleatory contract but this is incompatible with the reason individuals hold money—mitigating uncertainty. Deposit and loan contracts are distinct, and may not be contractually melded together.