Leading Indicators for Euro‐area Inflation and GDP Growth*

In this paper, we evaluate the role of a set of variables as leading indicators for Euro‐area inflation and GDP growth. Our leading indicators are taken from the variables in the European Central Bank's (ECB) Euro‐area‐wide model database, plus a set of similar variables for the US. We compare the forecasting performance of each indicator ex post with that of purely autoregressive models. We also analyse three different approaches to combining the information from several indicators. First, ex post, we discuss the use as indicators of the estimated factors from a dynamic factor model for all the indicators. Secondly, within an ex ante framework, an automated model selection procedure is applied to models with a large set of indicators. No future information is used, future values of the regressors are forecast, and the choice of the indicators is based on their past forecasting records. Finally, we consider the forecasting performance of groups of indicators and factors and methods of pooling the ex ante single‐indicator or factor‐based forecasts. Some sensitivity analyses are also undertaken for different forecasting horizons and weighting schemes of forecasts to assess the robustness of the results.     

A re‐interpretation of the linear quadratic model when inventories and sales are polynomially cointegrated

Estimation of the linear quadratic model, the workhorse of the inventory literature, traditionally takes inventories and sales to be first‐difference stationary series, and the ratio of the two variables to be stationary. However, these assumptions do not always match the properties of the data for the last two decades in the United States. We propose a model that allows for the non‐stationary characteristics of the data, using polynomial cointegration. We show that the closed‐form solution has other recent models as special cases. The resulting model performs well on aggregate and disaggregated data. Copyright © 2006 John Wiley & Sons, Ltd.     

Information Acquisition Under Uncertainty in Credit Markets

This article studies information acquisition through investmentin improved risk assessment technology in competitive creditmarkets. A technology has two attributes: its ability to screenin productive borrowers, and its ability to screen out unproductiveborrowers. The two attributes have fundamentally different effectson acquisition incentives and the structure of equilibrium informationalexternalities between lenders. The article also studies howuncertainty associated with the quality of superior technologyaffects information acquisition incentives. Uncertainty influencesinformation acquisition even with risk-neutral banks. Increaseduncertainty may raise or dampen incentives, depending on whetheruncertainty is, respectively, about screening out or screeningin quality.     

How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur

This paper studies the effect of community identity on investment behaviour in the knitted garment industry in the South Indian town of Tirupur. We document very large and systematic differences in both levels of capital stock and the capital intensity of production in firms owned by people from two different community groups. We argue that the differences in investment cannot be explained by productivity differences alone. We suggest that the most likely explanation is that the two communities differ in their access to capital.     

Market value,market share,and mergers: Evidence from a panel of U.S. firms

Improving shareholder value has often been cited as a merger determinant. Because mergers create larger firms and less competition, they may increase shareholder value through higher market share and stock‐market value. We investigate merger impacts on firms' stock‐market value and market share. We construct panel data from 4 different data sources on public merging and non‐merging U.S. manufacturing firms for 1980–2003. Instrumental variables and factors such as R&D, patents, and citations control for endogeneity. We find that mergers are positively correlated with stock‐market value and market share.     

Capital flows to Asia and Latin America: Does institutional quality matter?

Using a sample of 28 emerging market economies from Asia and Latin America spanning 1990–2013, we show that the marginal effect of capital flows on growth is positive and contingent on the threshold level of institutional quality (IQ). The conditional effect of capital flows holds for both the income per capita growth and total factor productivity (TFP) growth. We also determine the different threshold levels of IQ at which the marginal effect of capital flows is positive. The overall level of IQ in the Asian countries is superior to the Latin American countries and requires a lower threshold level to exert any positive effect. While the same conditional effect of IQ holds in Latin America for TFP growth, this effect is reversed in Asia. For very high levels of IQ (91st percentile), the marginal effect of capital flows on TFP growth in Asia is almost negligible. The marginal effects also vary based on the composition of capital flows in each region.     

Impact of Food Brand Controversy on Consumers’ Attitude Toward Brand and Company

It is critical to understand the impact of controversy on the consumer. There is a scarcity of research measuring post-controversy consumer attitude on both product and corporate brand during a controversy. The study is based on a recent brand controversy linked with instant noodle brand “Maggi” in India. The study examines impact on brand perceived quality, credibility, trust and loyalty, and attitude about brand and company. Data have been collected during July–October 2015 when the brand Maggi was banned in India due to quality-related controversy. Results indicate that respondents, with higher post-controversy brand loyalty, hold positive attitudes about brand. The interaction effect reveals that the relationship is significant and positive. During controversy, consumers’ attitude about brand and company is not identical. For a strong brand, consumers may have positive attitude but they become quite negative about company.     

Contribution to a public good under subjective uncertainty

This paper examines how voluntary contributions to a public good are affected by the contributors' heterogeneity in beliefs about the uncertain impact of their contributions. It assumes that contributors have Savagian preferences that are represented by a two‐state‐dependent expected utility function and different beliefs about the benefit that will result from the sum of their contributions. We establish general comparative statics results regarding the effect of specific changes in the distribution of beliefs on the (unique) Nash equilibrium provision of the public good, under certain conditions imposed on the preferences. We specifically show that the equilibrium public good provision is increasing with respect to both first‐ and second‐order stochastic dominance changes in the distribution of beliefs. Hence, increasing the contributors' optimism about the uncertain benefit of their contributions increases aggregate public good provision, as does any homogenization of these beliefs around their mean.     

Binge watching: An exploration of the role of technology

Watching television shows in quick succession on the Netflix and Amazon Prime platforms is on the rise. Although widespread, this binge watching behavior has received limited attention from marketing academics. The current study conceptualizes binge watching needs and examines their effect on the gratifications obtained from binge watching. We apply the lens of uses and gratifications (U&G) theory for model development and test the model empirically, using data from two cities in India. We add a new category of needs, namely technology-related needs, to the existing psycho-sociological-related needs (named as content-related needs in this paper) present in plain-old-television studies (POTS). We find that a technology-related need—that is, modal experience (the presence of media content in various formats leading to superior experience)—significantly impacts gratification from binge watching. We also find a strong moderating effect of self-control, used in previous studies of binge-eating and binge-shopping, in which the effect of modal experience, navigability and parasocial interaction need gratification is heightened for consumers who have low levels of self-control. We build on these findings to suggest implications for marketers, advertisers, and consumer-advocacy groups.