Latin American earnings inequality in the long run

This paper traces between-group earnings inequality for six Latin American countries over two centuries based on wage and income series compiled from a large array of primary and secondary sources. We find that inequality varied substantially by country and by period, questioning the notion that colonial legacies largely dominated the evolution of inequality. There is a broader inequality trajectory over the long run in the form of an “m” pattern with peaks around 1880 and the 1990s and a trough around 1920/1930s. Export-led growth does not necessarily imply a rise in inequality, while the import-substitution industrialisation efforts did not translate into a more egalitarian distribution of income. More notably, Latin America’s experience does not exhibit the great inequality levelling as seen in the North Atlantic economies from the 1930s to the 1970s.     

Likelihood evaluation of models with occasionally binding constraints

Applied researchers interested in estimating key parameters of dynamic stochastic general equilibrium models face an array of choices regarding numerical solution and estimation methods. We focus on the likelihood evaluation of models with occasionally binding constraints. We document how solution approximation errors and likelihood misspecification, related to the treatment of measurement errors, can interact and compound each other.     

Subterranean Commodification: Informal Housing and the Legalization of Basement Suites in Vancouver from 1928 to 2009

This article draws on Margaret Radin's theorization of ‘contested commodities' to explore the process whereby informal housing becomes formalized while also being shaped by legal regulation. In seeking to move once‐informal housing into the domain of official legality, cities can seldom rely on a simple legal framework of private‐law principles of property and contract. Instead, they face complex trade‐offs between providing basic needs and affordability and meeting public‐law norms around living standards, traditional neighbourhood feel and the environment. This article highlights these issues through an examination of the uneven process of legal formalization of basement apartments in Vancouver, Canada. We chose a lengthy period—from 1928 to 2009—to explore how basement apartments became a vital source of housing often at odds with city planning that has long favoured a low‐density residential built form. We suggest that Radin's theoretical account makes it possible to link legalization and official market construction with two questions: whether to permit commodification and how to permit commodification. Real‐world commodification processes—including legal sanction—reflect hybridization, pragmatic decision making and regulatory compromise. The resolution of questions concerning how to legalize commodification are also intertwined with processes of market expansion.     

Be bad but (still) look good: Can controversial industries enhance corporate reputation through CSR initiatives?

Even though the link between perceived corporate social responsibility fit (PCSR‐fit) and corporate reputation has received much attention from scholars, this tradition has ignored that the underpinnings of this association vary depending on the particular characteristics of each industry under study. To delve into this matter, we investigate in the increasingly relevant context of controversial industries (CIs) how PCSR‐fit could enhance corporate reputation and which are the mediating mechanisms of this association. Our academic contribution is twofold. First, we find that controversial sectors indeed can increase corporate reputation through CSR activities. However, we find that to achieve this goal, the nature of PCSR‐fit should be different than what extant literature indicates, because companies in these settings should directly focus on avoiding or reducing their inherent controversial harm or impact. Second, we evidence that “CSR initiatives' legitimacy” and “situational skepticism” mediate the PCSR‐fit and corporate reputation relationship in CIs. Therefore, we further unravel the underpinnings of this association to advance what we know on the matter and aid practitioners in this particular context.     

Distinctive Features of Environmental Innovators: An Econometric Analysis

This paper analyzes the main determinants influencing environmental innovators (i.e. firms developing or adopting environmental innovations) in Spain with respect to non‐environmental innovators. Similarly to other contributions in the literature, our results show that Spanish environmental innovators respond to regulatory stimulus in the form of demand‐pull and technology‐push instruments. They have a high internal technological capability and combine internal and external information sources, mostly in cooperation with knowledge institutions. Environmental innovators are more concentrated in mature, traditionally highly polluting sectors, but new firms are not more environmentally innovative than incumbents. Most importantly, in contrast to other environmental innovation studies, mostly carried out in a German context, we have not found evidence of a market pull from either the domestic or international markets. Furthermore, cost savings are not found to be a distinctive driver for environmental innovators. These differential results are possibly related to the special features of Spain regarding its national innovation system and the degree of stringency of environmental regulation and environmental consciousness of its consumers. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

When is escalation of commitment unstoppable in group settings? An iterative economic modeling approach to unveil the dark side of group decision-making

Escalation of commitment (EOC) has been usually studied from a psychological lens, and only recently have scholars approached EOC from an economic perspective. We contribute to this by focusing on iterative decision-making in group settings with a game theory approach. We study how the group members' strategic interaction may result in continuing failing courses of action. Drawing on the Byzantine generals' problem, our model considers an iterative decision-making process where committee participants vote based on private information to escalate or not. Our article demonstrates that if decision-makers reset their beliefs based on the committee's previous decision, then EOC becomes perpetual.     

Military casualties and exchange rates during the First World War: did the Eastern Front matter?

Although the First World War was ultimately decided in the west, historians have emphasized the importance of the often ‘forgotten’ Eastern Front in understanding its complex evolution. This article examines the perception of contemporary foreign exchange traders concerning the relative importance of the Eastern Front over time. Using a newly compiled dataset on prisoners of war and on soldiers killed and wounded, we show that traders were concerned with casualties on both fronts, recognizing the significance of the two‐front war in the early war years. From the autumn of 1916 onwards, traders seemed to believe the key to winning the war lay in the west only.     

The effect of capital requirement regulation on the transmission of monetary policy: evidence from Austria

This paper analyzes the role of banks’ regulatory capitalization in the transmission of monetary policy. We use a confidential dataset for Austrian banks spanning from the first quarter of 1997 to the fourth quarter of 2003. We find evidence that Austrian banks react in an asymmetric way to monetary policy depending on their regulatory excess capitalization, i.e. low capitalized banks react more restrictively to a monetary tightening than their highly capitalized peers.

The curious case of Panama

A small country in Central America offers some interesting ideas on how the insurance industry can handle the COVID‐19 pandemic and crisis.