The average consumer, the unfair commercial practices directive, and the cognitive revolution

This article examines the merit of the test of the average consumer as a basis for judicial and regulatory action. In the first part, we describe the origin of the test, its application in the Unfair Commercial Practices Directive and its possible developments. In the second part, we discuss the theoretical grounds of the average consumer test (i.e., information and rationality), drawing upon the studies of cognitive psychology and behavioural economics concerning consumers’ behaviour. The result of our analysis is that we call into serious question the practical workability of the test of the average consumer, which requires consumers an overly demanding standard of rationality and information without dedicating much attention to the real functioning of consumer behaviour. The average consumer may be described as an interesting, anti-paternalistic and, to some extent, useful notion. It is, however, an overly simplistic concept with little correspondence with the real world of individual consumer behaviour and should be reinterpreted more flexibly, or even abandoned to mirror consumer behaviour more effectively.

Modelling regional policy scenarios in the agri-food sector: a case study of a Spanish region

The agri-food industry has several features of great importance for sustainable economic growth in rural areas. The objective of this work is to evaluate the effects associated with different scenarios of growth, and changes in the regional agri-food industry. These scenarios simulate changes in exports and imports, changes in technology and changes in the level of industrial integration. We develop a computable general equilibrium model calibrated for the region. Our results indicate that policies trying to improve the competitiveness and dynamism of strategic sectors as the agro-industrial complex in this regional economy exert positive effects on its growth and income, having notable impacts on local job markets but also in other sectors and activities linked through the whole production chain.     

Assessing the effects of financial heterogeneity in a monetary union a DSGE approach

The aim of this article is to analyze how financial heterogeneity can accentuate the cyclical divergences inside a monetary union that faces technological, monetary, budgetary and financial shocks. To this purpose, this study relies on a two-country Dynamic Stochastic General Equilibrium model, where the two countries are supposed to be differently sensitive to the bank capital channel. The model allows us to demonstrate how a given symmetric shock causes cyclical divergences inside a heterogeneous monetary union. On this point, it allows reproducing some stylized facts recently observed in the Euro Area. Moreover, it appears that the more heterogeneous the union, the larger the effects of financial asymmetries on the transmission of shocks. Finally, we show that a common monetary policy contributes to worsen cyclical divergences, in comparison with monetary policies that would be nationally conducted.     

Brazilian OFDI Determinants

Recently, the global economy assumed a new setting in which emerging economies began to make substantial investments in the international market. This study aimed to investigate the determinants of outward foreign direct investment from Brazil from 2002–2011. The proposed models developed included attractiveness of the host country, characteristics of home country, and firms’ strategies. The results corroborate the existing argumentations concerning adaptation of mainstream theory with respect to the realities of emerging economies. Brazilian multinationals do not internationalize their activities in pursuit of cost reduction, efficiency, or to explore new markets or natural resources of the host countries. Results show that Brazilian investments were attracted by the availability of skilled labor, openness of the host market, geographic proximity, improved financial conditions of Brazilian companies, and national companies’ strategy of reaffirmation and consolidation as global players.     

An Evaluation of the Value Relevance of Consolidated versus Unconsolidated Accounting Information: Evidence from Quoted Spanish Firms

In this paper we investigate the value-relevance of consolidated versus parent company accounting information. In particular we investigate the value relevance of the minority interest components of net total assets and earnings as currently reported and under the full entity approach to consolidated reporting. An Edwards-Bell-Ohlson valuation framework is used to generate results. By this means we cast light on the suitability of accounting regulation being developed based upon the entity or parent company theories of consolidation. We carry out the analysis in the Spanish context and the sample contains 474 observations of non-financial firms quoted in the Madrid Stock Exchange for the period 1991–97. The results from this analysis not only have domestic relevance but provide guidance of a more international nature relating to the impact of group definition, concepts of control and the most value relevant method of consolidated disclosure. The results show that, from a valuation perspective, consolidated information dominates non-consolidated, or parent company, information. However, neither the currently reported minority interest components of net total assets and earnings, nor their values under the full equity method of consolidation, are found to be value relevant. These results raise the question of whether group definitions based on the equity theory of consolidation are the most useful to investors.     

Climate Change,Heterogeneities, and Stability of International Fiscal Harmonization

This paper analyzes the instability introduced into multilateral agreements by two types of heterogeneity: heterogeneity of countries (size and number of producing members) and heterogeneity of lobbies (asymmetric influence at the national versus the international level). The work extends theoretical prospective analyses on environmental taxation, as illustrated by the harmonization of fuel taxes. We show that the acceptability of the tax set at the multilateral level depends on the type of coalitions that participate in the multilateral negotiation (size and number of producing countries) and the asymmetry in the local (state-level) power of lobbies during negotiations.     

The impact of local and external university knowledge on the creation of knowledge-intensive firms: evidence from the Italian case

This paper investigates how far in space university knowledge goes to breed the creation of knowledge-intensive firms (KIFs), depending on the nature (either codified or tacit) and quality of this knowledge. We consider the impact of knowledge codified in academic patents and scientific publications and tacit knowledge embodied in university graduates on KIF creation in Italian provinces in 2010, while distinguishing between local university knowledge created by universities located in the same province and external university knowledge created by universities located outside the province. Our econometric estimates indicate that the positive effects of scientific publications and university graduates are confined within the boundaries of the province in which universities are located. Conversely, the creation of new KIFs in a focal province is positively affected by both local and external university knowledge codified in academic patents, even though the positive effect of this external knowledge rapidly diminishes with geographic distance. Furthermore, the above effects are confined to high-quality universities; low-quality universities have little effect on KIF creation.