Mixed Causal–Noncausal Autoregressions: Bimodality Issues in Estimation and Unit Root Testing1

This paper stresses the bimodality of the likelihood function of the Mixed causal–noncausal AutoRegressions (MAR), and it is shown that the bimodality issue becomes more salient as the causal root approaches unity from below. The consequences are important as the roots of the local maxima are typically interchanged, attributing the noncausal component to the causal one and vice-versa. This severely changes the interpretation of the results, and the properties of unit root tests of the backward root are adversely affected. To circumvent the bimodality issue, this paper proposes an estimation strategy which (i) increases noticeably the probability of attaining the global MLE; and (ii) selects carefully the maximum used for the unit root test against a MAR stationary alternative.     

Distributive trade and regional productivity growth

The paper aims to investigate the relationship between distributive trade (wholesale and retail trade) and productivity growth across Italian provinces. In most studies, the potential determinants of productivity in the distributive trade have been investigated, while the impact of these activities on economic growth of the whole system has received less attention. By using panel data during the time period 2000–2013, the paper tests if the increase in the share of employees in distributive trade over the given period has promoted the productivity growth. This study applies both a random-effects model and, among the dynamic panel data estimators, a generalized method of moments estimator (GMM). In order to control both the issue of endogeneity, due to the presence of some potentially endogenous variables among the explanatory variables, and the problem of instrument proliferation, the GMM estimator is implemented together with a statistical method, which reduces the number of instruments when the set of endogenous variables is wide. The findings show that the distributive trade has a strong positive impact on the productivity growth. Moreover, this link is reinforced when we control the potential endogeneity. The results also support the idea that distributive trade can promote provincial convergence.     

Tripping the Light Fantastic: A Comparative Analysis of the European Commission's Proposals for New and Interim Financing of Insolvent Businesses

The European Commission published a Draft Directive in November 2016, with the aim of ensuring that all Member States have in place an effective mechanism for dealing with viable, but financially distressed, businesses. The Draft Directive includes provisions designed to encourage financing for the debtor company, both interim financing to ‘keep the lights on’ for a brief period while the debtor negotiates with its creditors for a resolution to its financial distress, and, where possible, to finance implementation of a restructuring plan, called ‘new financing’ in the Draft Directive. Creating such a financing regime is a complex and difficult issue, as the law's intervention in this area often involves constraints on the rights of existing creditors, requiring that a careful balance is maintained between existing creditors' rights and the rights of the interim financier. This article examines the underlying policy rationale and benefits of having new and interim financing available to financially distressed debtor companies and discusses the risks involved. It examines the EU Commission's proposals in light of the experience of jurisdictions that have already tackled these issues, notably the USA and Canada, or have developed a market‐based solution to this problem, such as the UK. While the European Commission's wish to include such measures in its restructuring proposals is laudable, the measures as drafted raise concerns, particularly regarding risks associated with priority for the grantors of such finance. The authors suggest that there are four fundamental aspects of such financing on which the Directive could give guidance to Member States, namely, effective notice to pre‐filing creditors, thresholds for the debtor to qualify, a menu of relevant criteria to balance benefit and prejudice, and a role for the court in resolving disputes, ensuring fairness to stakeholders, and serving as an accountability check on interim financing arrangements, all aimed at maintaining the integrity of the insolvency process. Copyright © 2018 INSOL International and John Wiley & Sons, Ltd.     

Northern Lights,Canada's version of the UNCITRAL Model Law on Cross‐Border Insolvency

Statute of Canada Chapter 47, when it is proclaimed in force, will largely adopt the UNCITRAL Model Law on Cross‐border Insolvency. The current and proposed cross‐border provisions could be considered Canada's “Northern Lights”, evolving constantly, but aligning with the objectives and scope of the UNCITRAL Model Law. While Chapter 47 is a modified version of the Model Law, it continues Canada's regime as one of modified universalism, with a strong commitment to comity and coordination. There are likely to be contests for control over the scope of foreign proceedings, although arguably, no more so than under the language of the Model Law. The most critical issues to resolve in the short term are definitions of COMI where corporate groups are involved, and the issue of the scope and extent of possible concurrent main proceedings, both areas left to the discretion of the courts in their interpretation of the legislation's domestic, as well as cross‐border, provisions. Copyright © 2007 John Wiley & Sons, Ltd.     

Exploring additional determinants of fixed broadband adoption: policy implications for narrowing the broadband demand gap

Using data from the survey ‘Aspects of daily life’ conducted on Italian individuals in 2014 by the Italian Institute of Statistics, we propose new evidence on the factors that encourage the adoption of fixed broadband, a topic relevant for the reduction of the so-called broadband demand gap. We estimate a probit model through the two-step Heckman procedure for the selection bias, and find that, besides the already studied socio-demographic determinants, Internet-capable devices other than personal computers, as well as recreational (essentially video contents) and cloud-related uses of the Internet, have a relevant positive role. Policies aimed at fostering the diffusion of smart homes and more generally of the Internet of things at the residential level might be very effective in favouring fixed broadband adoption, provided that the network be neutral, not discriminating between data based on their contents and/or the destination device, and that possible foreclosing behaviours in the access to (premium) contents be properly and promptly addressed.     

Prudential,Pragmatic, and Prescient,Reform of Bank Resolution Schemes

This article examines current initiatives in respect of bank financial distress in response to the 2008‐2009 financial crisis, suggesting that there is considerably more work to be undertaken before bank regulatory oversight, bank corporate governance, and bank resolution regimes have the appropriate preventive safeguards, governance, and timely, efficient and fair responses to bank financial distress. The corporate governance of banks and other financial institutions differs from the governance of corporations because of prudential regulation, banks' significance to the financial system, the different nature of stakeholders with investments at risk, and the existence of deposit insurance. The article offers a number of policy options in respect of how banks and other financial institutions could enhance their prudential, prescient, and pragmatic oversight and governance in a way that protects creditors, deposit holders, and other stakeholders, as well as the public interest in a healthy and sustainable financial sector. Copyright © 2012 John Wiley & Sons, Ltd.     

Domestic regulation,import penetration and firm-level productivity growth

This paper shows that the impact of import penetration on firms’ productivity growth depends on firms’ distance to the efficiency frontier and on product market regulation. Using firm-level data for a substantial number of OECD countries from the late 1990s to late 2000s, the analysis reveals nonlinear effects of both sectoral import penetration and de jure product market regulation measures, depending on firms’ positions along the global distribution of productivity. Close to the technology frontier, import penetration has a strongly positive effect on firm-level productivity growth, with less stringent domestic regulation enhancing this effect substantially. However, far from the frontier, the effect of import penetration on firm-level productivity growth is much smaller and often not significant. Its interaction with domestic regulation generally has no statistically significant effect either. The heterogeneous effects of import penetration and domestic product market regulation on firm-level productivity growth are consistent with a neo-Schumpeterian view of trade and regulation.