A characterization of the normalized restricted profit function

A duality theorem between production functions and normalized restricted profit functions is derived under the assumptions of joint biconvexity and independence of the production possibilities sets. Biconvexity is a natural generalization of the concept of convexity to the case of overall increasing returns which maintains at the same time the conventional property of diminishing marginal rates of transformation (substitution) amongst certain subsets of commodities.Specializing to the twice differentiable, locally strongly convex case, certain identities linking the Hessians of the production function and the normalized restricted profit function are derived. Using these identities, Le Chatelier's principle is demonstrated.     

Regime changes and the sustainability of fiscal imbalance in East Asian countries

The main purpose of this paper is to assess empirically the fiscal policy regimes in five Asian countries using a formal framework based on the government's intertemporal budget constraints (GIBC). To this end, we relied on an array of time-series methods and quarterly data of nearly three decades. Our conclusions are; first, the evidence indicates that the fiscal stance in Thailand and South Korea are on their sustainable path while the Philippines and Malaysia demonstrate only ‘weak sustainability’. Second, revenues are growing at a rate faster than government spending for Singapore, a country that has recorded large surpluses for most of the sample period. Third, the results show a one-way causation from expenditure to revenue for Korea, Singapore and Thailand. This finding indicates that reducing the size of government spending may improve fiscal budget deficits without having to undergo changes in the overall strategy. Fourth, we observed a long-run feedback causality in the revenue–expenditure nexus for the case of Malaysia and the Philippines, which may require fiscal synchronization instrument policies to moderate the post-crisis fiscal imbalances. Together, the results demonstrate diverse fiscal patterns but they should be useful to understand the complexities of economic integration in the region.     

Structural changes,competition and bank stability in Malaysia’s dual banking system

This paper assesses Malaysia’s competition landscape and its risk implications subsequent to conventional banking consolidation and Islamic banking penetration in the aftermath of the 1997/1998 Asian financial crisis. Employing a panel sample of conventional and Islamic commercial banks, it arrives at the following conclusions. First, the consolidation exercise, which has led to a significant reduction in the number of domestic commercial banks, has not stifled banking competition. Second, the paper provides empirical support for the competition-stability relationship, particularly for the conventional banking sector. Islamic banking sector risk appears to be neutral to market competition or market power, although there is limited evidence that it increases with overall market concentration. Finally, the analysis uncovers the risk-increasing effect of the Islamic banking market structure on the conventional banking sector. By contrast, conventional banking market concentration tends to reduce the credit risk of Islamic banks.     

Hat die Einführung der Abgeltungsteuer Aktienkurse beeinflusst?

This paper discusses findings of a current research project whose results indicate that the implementation of the German flat withholding tax on capital gains at the turn of the year 2008–09 led to a temporary but significant increase in trading volumes and share prices on the German stock market. As this capital gains tax reform had already been announced in 2007, corresponding market reactions imply a delayed dissemination of tax information. Hence, our results raise some doubt regarding the information-processing capacity of stock markets. This holds true especially in the following circumstances: 1) extensive trading activities of individual investors with limited information access and attention; 2) a strong focus by a large group of individual investors to a limited number of trading days (herd behaviour); and 3) limited liquidity in the market (e.g. stocks with a small market capitalisation).     

Corporate governance and chief executive officer dismissal following poor performance: Australian evidence

This paper investigates the association between corporate performance and the probability of chief executive officer (CEO) dismissal for large corporations in Australia. Consistent with prior US and UK studies, corporate performance is negatively related to the probability of CEO dismissal, using both accounting and market‐based performance measures. This paper also investigates whether key corporate governance characteristics affect the likelihood of CEO dismissal, by examining their effect on the strength of the negative association between corporate performance and CEO dismissal. The only significant variable is size of the board. Although its effect is opposite to that hypothesized, this paper provides a plausible explanation. Overall, the results are consistent with shareholder wealth considerations dominating board behaviour in Australia.     

Risk attitudes, randomization to treatment, and self-selection into experiments

Randomization to treatment is fundamental to statistical control in the design of experiments. However randomization implies some uncertainty about treatment condition, and individuals differ in their preferences towards taking on risk. Since human subjects often volunteer for experiments or are allowed to drop out of the experiment at any time if they want to, it is possible that the sample observed in an experiment might be biased because of the risk of randomization. On the other hand, the widespread use of a guaranteed show-up fee that is non-stochastic may generate sample selection biases of the opposite direction, encouraging more risk averse samples into experiments. We directly test these hypotheses that risk attitudes play a role in sample selection. Our results suggest that randomization bias does affect the overall level of risk aversion in the sample we observe, but that it does not affect the demographic mix of risk attitudes in the sample. We show that the common use of non-stochastic show-up fees can generate samples that are more risk averse than would otherwise have been observed.     

Adoption of e-government in three Latin American countries: Argentina,Brazil and Mexico

This paper discusses the adoption of e-government in three Latin American countries: Argentina, Brazil and Mexico. The study first presents a conceptual framework to examine the development and services of e-government, which is applied to assess its adoption in these leading Latin American economies. Study findings can shed some light on each nation as a model for successful development as well as the implementation of e-government in a non-industrialized, developing nation. The analysis also seeks to fill a void in the study of e-government in less developed nations, most of which are trying to catch up with their developed counterparts in this crucial aspect of digital governmental development.     

Economics at the FTC: Multi-level Marketing and a Coal Joint Venture

Review of Industrial Organization - Economists in the Federal Trade Commission’s Bureau of Economics support the Commission’s dual missions of protecting consumers and maintaining...