News and sovereign default risk in small open economies

This paper builds a unified model of sovereign debt, default risk, and news shocks. News shocks improve the quantitative performance of the sovereign default model in a number of empirically-relevant dimensions. First, with news shocks, not all defaults occur during downturns. Second, the news shocks help account for key differences between developing and more developed economies: as the precision of news improves, the model predicts lower variability of consumption, less countercyclical trade balance and interest rate spreads, as well as a higher level of debt in line with more developed economies. Third, the model captures the hump-shaped relationship between default rates and the precision of news obtained from the data. Finally, the news shocks have a nonmonotonic effect on welfare.     

Does tourism influence economic growth? A dynamic panel data approach

On average, tourism-specialized countries grow more than others. This is not consistent with the core of modern economic growth theory that suggests that economic growth is linked to sectors with high-tech intensity and large scale. In this article, we use appropriate panel data methods to study the relationship between tourism and economic growth. In general, we show that tourism is a positive determinant of economic growth both in a broad sample of countries and in a sample of poor countries. However, contrary to previous contributions, tourism is not more relevant in small countries than in a general sample.     

Profitability in Portuguese service industries: a panel data approach

Based on various panel models, we study the profitability determinants of Portuguese service industries. The results obtained show that profitability is persistent over time, and that for larger companies with greater growth, a lower level of debt and lower level of fixed assets are more profitable. Considering the results obtained, we can conclude that diversification of activities and motivation as well as the tendency to innovate contribute positively to increased profitability in Portuguese service industries, whereas the need to pay off debt charges periodically harms profitability. The government would be well advised to create special credit channels that would permit the greater growth of Portuguese service industries, especially those most inclined to innovate.     

The influence of age on SMEs’ growth determinants: empirical evidence

This paper seeks to investigate whether age is a fundamental characteristic of the relationships between determinants and growth. The empirical evidence obtained allows us to conclude that: (1) age and size are restrictive factors of the growth of young SMEs, but they are not important for the growth of old SMEs; (2) cash flow and debt are of greater relative importance for growth in young SMEs than for growth in old SMEs; (3) R&D intensity and labour productivity are of greater relative importance for growth in old SMEs than for growth in young SMEs; (4) interest on debt is of greater relative importance for diminished growth in young SMEs than for diminished growth in old SMEs; and (5) R&D intensity in situations of financial deficit is of greater relative importance for diminished growth in young SMEs than for diminished growth in old SMEs, but only in context of high-tech SMEs.     

Influence of Information on the Acceptance and Purchase Intention of an Irradiated Food: A Study With Brazilian Consumers

This study investigated the effect of information on the acceptability and purchase intention of an irradiated watercress salad and its non-irradiated counterpart among Brazilian consumers (N = 236). Both the irradiated and the non-irradiated products were fairly accepted (ratings about 6.0–7.0 in the hedonic scale). Significant effects (p ≤ 0.05) of gender, education, and age were also observed: acceptance and purchase intention was lower among male participants who received both information and an identified irradiated product, and higher among female participants who received only information about the process. Adults (30–39 years old) were more critical, and the higher the educational level, the lower the acceptability and purchase intention ratings. Brazil is one of the major irradiators in the world, but there is still a lack of consumer studies focusing the acceptability of irradiated foods. So the findings presented herein would favor Brazilian producers and regulators to develop effective communication strategies and to promote the irradiation technology.     

PRICING SWAPTIONS UNDER MULTIFACTOR GAUSSIAN HJM MODELS

Several approximations have been proposed in the literature for the pricing of European‐style swaptions under multifactor term structure models. However, none of them provides an estimate for the inherent approximation error. Until now, only the Edgeworth expansion technique of Collin‐Dufresne and Goldstein is able to characterize the order of the approximation error. Under a multifactor HJM Gaussian framework, this paper proposes a new approximation for European‐style swaptions, which is able to set bounds on the magnitude of the approximation error and is based on the conditioning approach initiated by Curran and Rogers and Shi. All the proposed pricing bounds will arise as a simple by‐product of the Nielsen and Sandmann setup, and will be shown to provide a better accuracy–efficiency trade‐off than all the approximations already proposed in the literature.     

Pecking Order Theory versus Trade-Off Theory: are service SMEs�� capital structure decisions different?

This paper seeks to analyse if the capital structure decisions of service small and medium-sized enterprises (SMEs) are different from those of other types of firm. To do so, we consider four research samples: (i) 610 service SMEs; (ii) 126 service large firms; (iii) 679 manufacturing and construction SMEs; and (iv) 132 manufacturing and construction large firms. Using the two-step estimation method, the empirical evidence obtained in this study shows that the capital structure decisions of service SMEs are different from those of other types of firm. Service SMEs’ capital structure decisions are closer to the assumptions of Pecking Order Theory and further removed from those of Trade-Off Theory compared with the case of other types of firm.     

Assessing forest management strategies using a contingent valuation approach and advanced visualisation techniques: A Portuguese case study

The assessment of alternative forest management strategies should account not only for the private benefits to forest landowners but also for the ecological, environmental and economic benefits valued by society. There are a number of empirical valuation methods that may contribute to that assessment. These methods involve several steps: data acquisition, model specification and estimation. In this paper, this approach is illustrated in the context of a survey regarding alternative management strategies for a forest area in Central Portugal by implementing a contingent valuation experiment where an advanced landscape visualisation technique is employed to generate the visual information conveyed in the valuation scenarios. Several econometric model specifications are considered as well as alternative approaches to handle zero willingness to pay values and protest responses. The results obtained suggest the potential of the proposed approach for an effective comparison of alternative forest management strategies.     

Economic Assessment of Forest Ecosystem Services Losses: Cost of Policy Inaction

This paper presents a bottom-up methodological framework for estimating some of the key ecosystem services provided by forests biomes worldwide. We consider the provision of wood and non-wood forest products, recreation and passive use services, and carbon sequestration. The valuation framework derives per hectare estimates by applying meta-analysis, value-transfer and scaling-up procedures in order to control for the existing heterogeneities across world regions and forest biomes. The first part of the study estimates stock values per hectare for each forest ecosystem service in the baseline year 2000 and in the year 2050. Results differ per geographical region and biome. Carbon stocks represent, on average, the highest value per hectare, followed by provisioning services, passive use and recreational values respectively. The second part provides an estimation of the welfare loss (or gain) associated with policy inaction in the period 2000–2050 leading to a change in the forest area. Welfare results are mixed and require a careful interpretation, ranging from a worldwide annual benefit of + 0.03% of 2050 GDP to an annual loss of −0.13%. The highest damage is expected in Brazil due to the increasing deforestation taking place in tropical natural forests, which is causing a considerable loss of carbon stocks.