Exchange market pressure: some caveats in empirical applications

The Exchange Market Pressure (EMP) index, developed by Eichengreen et al. (1994 Eichengreen, B, Rose, AK and Wyplosz, C. 1994. Speculative attacks on pegged exchange rates: an empirical exploration with special reference to the European monetary system, NBER Working Paper No. 4898  [Google Scholar]), is widely used as a tool to signal whether pressure on a currency is softened or warded off through monetary authorities’ interventions or, rather, a currency crisis has originated. In this article we show how the index is sensitive to some assumptions behind the aggregation of the information available (exchange rates, interest rates and reserves), especially when emerging countries are involved. Specifically, we address the way exchange rate variations are computed and the impact of different definitions of the reserves, and we question the constancy of the weights adopted. These issues compound with the choice of a fixed threshold when crisis episodes are identified through the EMP index. As a result, one should exert caution in subsequent econometric analyses where a dependent binary variable is built to identify crisis periods.     

The mediating role of work engagement on the relationship between job involvement and affective commitment

This study examines job involvement and work engagement as predictors of affective commitment. Specifically, we test the proposal of Hallberg and Schaufeli (2006) that work engagement is a mediator of the relationship between job involvement and affective commitment using a survey of 405 Italian working adults. To test the model, mediation effects technique and structural equation modelling were applied to the collected data. Our hypothesis that work engagement fully mediates the relationship between job involvement and affective commitment was supported. This is the first study to demonstrate the importance of job involvement in promoting affective commitment via three dimensions of work engagement. We therefore assert that HR managers should direct their available resources to promoting job involvement and work engagement in their employees.     

Age and firm growth: evidence from three European countries

This article provides new insights into the dependence of firm growth on age along the entire distribution of growth rates, and conditional on survival. Using data from the European firms in a global economy survey, and adopting a quantile regression approach, we uncover evidence for a sample of French, Italian and Spanish manufacturing firms with more than ten employees in the period from 2001 to 2008. We find that: (1) young firms grow faster than old firms, especially in the highest growth quantiles; (2) young firms face the same probability of declining as their older counterparts; (3) results are robust to the inclusion of other firms’ characteristics such as labor productivity, capital intensity and the financial structure; (4) high growth is associated with younger chief executive officers and other attributes that capture the attitude of the firm toward growth and change. The effect of age on firm growth is rather similar across countries.     

Coase (1937) revisited: Endogenous fiat in firms and markets

Coase (Economica 4:386–405, 1937) observed that, within firms, employees are directed by fiat. Ever since it has been argued that hierarchical control and fiat are institutional attributes of firms. In contrast with this view, there is evidence that the organizational structure of many interfirm relations, from supply networks to franchising, is also hierarchical. To reconcile Coase’s insight with the evidence, I develop a model where the obligations of both a firm’s contractors and its employees cannot be enforced by courts, so they must be self-enforcing. I show that fiat, in the form of relational contracts where the agent obeys the principal in equilibrium, occurs both when the agent is an employee—so the principal owns all the assets—and when she is a contractor—so the agent owns some assets. However, the principal can give more orders to an employee (contractor) when decisions sufficiently above (close to) those that maximize the value of the contractor’s assets are optimal—for instance, because there are strong positive externalities between the assets. The model has several implications for the theory of the firm, the distinction between markets, hybrids and hierarchies, and the choice between in-house provision and outsourcing of public services.     

Intellectual property rights,imitation, and development. The effect on cross-border mergers and acquisitions

In this paper, we analyze whether the recent global process of strengthening and harmonization of intellectual property rights (IPRs) affects decisions of cross-border mergers and acquisitions (M&As). We investigate if IPRs have a differential effect across sectors of different technology content and for countries of different development level. Also, we study how imitation abilities of target countries interact with the tightening of IPRs. Using data for the post-TRIPS period (1995–2010), we estimate an extended gravity model to study the bilateral number of M&As, including a measure of the strength of IPRs systems on target countries and a set of control variables usually considered as determinants of M&As. The estimation results verify the gravity structure for M&As and show that IPRs –and enforcement– influence decisions of cross-border M&As in all sectors regardless of their technological content. However, IPRs are more important in countries with high imitation abilities and in sectors of high-technology content. Furthermore, a strengthening of IPRs leads to a larger increase of M&As in developing countries than in developed countries. These results call the attention on the possible implications for least developed economies and challenge the adequacy of a globally harmonized IPRs systems.     

The effects of upcoding,cream skimming and readmissions on the Italian hospitals efficiency: A population-based investigation

In this paper we analyze the effects of some distortions induced by the prospective payment system, i.e. upcoding, cream skimming and readmissions, on hospitals' technical efficiency. We estimate a production function using a population-based dataset composed by all active hospitals in an Italian region during the period 1998–2007. We show that cream skimming and upcoding have a negative impact on hospitals' technical efficiency, while readmissions have a positive effect. Moreover, the results indicate that private hospitals engage more in cream skimming than public and not-for-profit ones, while we observe no ownership differences regarding upcoding. Not-for-profit hospitals have the highest readmission index. Last, not-for-profit and public hospitals have the same efficiency levels, while private hospitals have the lowest technical efficiency.     

Cheating,emotions, and rationality: an experiment on tax evasion

The economics-of-crime approach usually ignores the emotional cost and benefit of cheating. In this paper, we investigate the relationships between emotions, deception, and rational decision-making by means of an experiment on tax evasion. Emotions are measured by skin conductance responses and self-reports. We show that the intensity of anticipated and anticipatory emotions before reporting income positively correlates with both the decision to cheat and the proportion of evaded income. The experienced emotional arousal after an audit increases with the monetary sanctions and the arousal is even stronger when the evader’s picture is publicly displayed. We also find that the risk of a public exposure of deception deters evasion whereas the amount of fines encourages evasion. These results suggest that an audit policy that strengthens the emotional dimension of cheating favors compliance.     

Did Okun’s law die after the Great Recession?

This paper estimates Okun’s law, focusing on piecewise non-linearity in the form of structural breaks and threshold dynamics, and obtains regime-dependent as well as threshold-dependent changes in the unemployment rate. We employ an autoregressive distributed lag version of Okun’s law in first differences, which allows for delayed reactions of the unemployment rate to output growth. Applied to U.S. data over 1949Q1–2015Q4, the empirical analysis characterizes Okun’s law as a three-regime relationship with the first structural break coinciding with the 1973 oil price shock, and the second structural break immediately following the end of the Great Recession. We find support for threshold dynamics in each regime, which suggests that Okun’s law follows complex non-linear dynamics. Okun’s law, as a linear and constant “rule of thumb,” breaks down in each of the three regimes. In each regime, the unemployment rate responds asymmetrically to changes in output. In sum, Okun’s law died during the Great Recession. Only time will tell whether resurrection is feasible.     

Selective Schools

This paper studies how schooling admission tests affect economic performance in an economy where individuals are endowed with both academic and non‐academic abilities and both abilities matter for labour productivity. We develop a simple model with schools run by the goverment, where individuals signal their abilities by taking an admission test and sort into low quality and high quality schools. When abilities are poorly correlated in the population, as documented in the literature, a standard test based only on academic abilities can be less efficient than a balanced test, which considers both ability types. We show that a sequential testing strategy, with schools testing academic abilities and firms testing non‐academic abilities on the sub‐sample of graduates of high quality schools, does not necessarily replicate the outcome of a balanced test.     

Culture and organizational control

The influence of socio-cultural processes on organizational control is explored. The concepts of external and internal control are developed and related to several key dimensions of socio-cultural analysis which vary cross-culturally. Ethnographic evidence is presented to illustrate these different relationships.