Antecedents of airline passenger loyalty: Low-cost versus traditional airlines

This study identifies the antecedents of airline user loyalty. A survey is administered to users of three airlines operating Barcelona–London flights. The results show that the principal antecedent of conative loyalty is affective loyalty. The main antecedents of affective loyalty are satisfaction and trust, the latter being revealed as a key variable for guaranteeing the success of relationships between the airline and its users, and also for understanding long term purchasing behavior.     

Simulation of alternative regulations in the Colombian electricity market

The deregulation of the Colombian electricity system took place in 1994 and the pool started operations in 1995. The Colombian system adopted a capacity charge mechanism to increase incentives to invest in new capacity. The capacity charge was showing strength, and apparently driving investments during the initial years. However, the mechanism started to exhibit weaknesses in terms of transparency and disincentives, causing a negative effect on investments. Different authors have presented alternative regulatory options to update the system. A non-standard system dynamics approach to evaluate alternative regulation schemes for the Colombian electricity market is proposed. A specific regulation problem is undertaken to illustrate the proposed methodology. It shows how the capacity charge mechanism, which has been used for reliability purposes, might be changed for alternative schemes. The proposed transformations to the actual regime seem to overcome some of its drawbacks. Simulation results indicate these alternatives improve the general system behaviour. In addition, the underlying model has been used afterwards for other energy policy purposes.     

Prediction intervals in conditionally heteroscedastic time series with stochastic components

Differencing is a very popular stationary transformation for series with stochastic trends. Moreover, when the differenced series is heteroscedastic, authors commonly model it using an ARMA-GARCH model. The corresponding ARIMA-GARCH model is then used to forecast future values of the original series. However, the heteroscedasticity observed in the stationary transformation should be generated by the transitory and/or the long-run component of the original data. In the former case, the shocks to the variance are transitory and the prediction intervals should converge to homoscedastic intervals with the prediction horizon. We show that, in this case, the prediction intervals constructed from the ARIMA-GARCH models could be inadequate because they never converge to homoscedastic intervals. All of the results are illustrated using simulated and real time series with stochastic levels.     

How effective are rewards programs in promoting payment card usage? Empirical evidence

Card issuers have mainly relied on rewards programs as their main strategy to increase usage. However, there is scarce evidence on the effectiveness of these programs. This paper is addressing two topics which could have important managerial and public policy implications: (i) it estimates the impact of rewards on the use of cards and (ii) it quantifies their economic effects in terms of the cash substitution. We find that rewards may significantly modify choice for card payments. Their economic impact also varies significantly across types of rewards and merchant activities. Additionally, rewards seem to be more effective for debit cards.     

Securitization,risk-transferring and financial instability: The case of Spain

The 2007–2010 financial crisis has hit a variety of countries asymmetrically. The case of Spain is particularly illustrative as it exemplifies in a vivid manner most of the core issues largely responsible for the crisis. This country experienced a pronounced housing bubble partly funded via spectacular developments in its securitization markets leading to looser credit standards and subsequent financial stability problems. We analyze the sequential deterioration of credit in Spain considering rating changes in securitized deals. Using a sample of 20,286 observations on securities and rating changes from 2000Q1 to 2010Q1 we build a model in which loan growth, on balance-sheet credit quality and rating changes are estimated simultaneously. Our results suggest that loan growth significantly affects on balance-sheet loan performance with a lag of at least two years. Additionally, loan performance is found to explain rating changes with a lag of four quarters. Importantly, bank characteristics (in particular, observed solvency, cash-flow generation and cost efficiency) also affect ratings considerably. Additionally, these other bank characteristics seem to a higher weight in the rating changes of securities issued by savings banks as compared with commercial banks.     

Foreign trade and its impact on employment: The Mexican case

This paper discusses the relationship between foreign trade and employment in a small open economy, and carries out some empirical work using Mexican data. It is argued that employment multipliers are not stable if intermediate inputs are imported. Actual employment multipliers will be given by the relationship between effective demand and installed capacity in each sector, and will depend strongly on whether quotas or tariffs are in operation. It is also found that Mexican exports are capital intensive relative to its imports.     

Implications of Basel II for Different Bank Ownership Patterns in Europe

This paper explains that Basel II has different implications for stakeholder-owned (mutual) and stockholder banks in the European Union. Some strategic paths for stakeholder-owned banks are proposed as a response to the Stockholder Value Maximization goals Basel II implicitly advances. Even though empirical evidence indicates that capital strength and risk-taking exposures do not differ across bank ownership structures, SME lending and other characteristic specializations of stakeholder banks promise to generate high capital charges. However, improved corporate-governance practices and cooperative securitization and risk-management activities can reduce the compliance costs and risk-taking constraints mutual banks might experience from shifting to a Stakeholder Value Maximization Model. For all EU banks irrespective of their ownership structure, the analysis stresses that establishing an incentive-compatible cross-country safety-net scheme poses a critical challenge.

A multiple time-series analysis of labor supply and earnings in economic development

Using multivariate time-series techniques, the dynamics of male and female labor supply and earnings in Puerto Rico are examined during a period of rapid economic developemnt, 1953–1978. The temporal analysis suggests that aggregate male and female labor force participation rates are exogenous to male and female earnings. In addition, continous declines in male participation have been partly responsible for increases in both male and female earnings and a narrowing of relative earnings differentials. The study also finds that the advent of the Food Stamp Program in 1975 has resulted in a small reduction in male labor force participation. Moreover, the inclusion of food stamps as an intervention component is quite useful in forecasting the male participation rate. The forecasting accuracy of univariate and multivariate models is assessed with the result that, in every instance, the multivariate transfer functions prove superior. Overall, the results support the incorporation of multiple time-series in econometric studies of developing countries and provide evidence of its usefullness for development planning and policy.     

Strategic Behavior and Efficiency in the Common Property Extraction of Groundwater

Externalities that arise from privateexploitation of groundwater are analyzed by comparing socially optimal and privateextraction. Open-loop Nashequilibrium and stationary Markov feedbackequilibrium in nonlinear strategieshave been computed to characterize privateextraction. The use of thesetwo equilibrium concepts allows us todistinguish between cost andstrategic externalities as long as the open-loop solutioncaptures only the cost externality, and the feedback solution capturesboth. The results show thatstrategic behavior increases theoverexploitation of the aquifer. However, ifthe groundwater storage capacity is large, thedifference between the sociallyoptimal and private extraction is negligible.