Fiscal regime shifts in Portugal

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978–2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal framework prompted temporary consolidation, but did not permanently change the budgeting process.     

A comparative analysis of security pricing using factor, macrovariable and arbitrage pricing models

This study compares and contrasts the single factor, three factor, macrovariable and APT models, using industry portfolios of all available firms on CRSP from 1980 to 1992. Comparatively, the APT is best, macrovariable second best and single factor model worse in pricing securities. Consistently, the market variable is cross sectionally priced in all models, and two of four APT factors capture the majority of variance in industry returns. In the latter case, factor three is ***DIRECT SUPPORT *** A00DH002 00002 consistently related to market returns, and factors two and three are also associated with risk premiums and exchange rates after 1987. Factor four is not related to any macrovariable, and term structure and production are never related to any risk factor.     

The relationship between machistic tendencies and budgeting: A cross-cultural study

Increasing globalization in business heightens the importance of understanding cultural differences and their effects on business practice. In this light, an empirical cross-cultural study comparing U.S. and Latin American respondents was made to determine the relationship between machistic tendencies and budgeting. Though difficulty was experienced in defining the machism variable, three stereotypes, Chauvinist, Classic, and Aggressive, were identified. These stereotypes are associated with one's cultural orientation (Latin American or U.S.) and predicted budgetary behavior in terms of budget procedural attitude, culpability, and risk attitude.     

On the determinants of national saving: An extreme-bounds analysis

On the Determinants of Saving: An Extreme-Bounds Analysis. — We use extreme-bounds analysis to examine the reliability of estimates of various determinants of national saving. Results from the cross-sectional data are discouraging, for few of the standard determinants identified in the theoretical and empirical saving literature can pass robustness tests. However, our panel analysis is much more encouraging. We found agricultural share in total output, public saving, budget balance, and the current account balance are indeed robust. Furthermore, when we applied a modified form of sensitivity analysis, we found that seven variables are very robust. Generally, the most commonly specified determinants of saving provide limited guidance in understanding and predicting saving behavior.     

The Effect of a Market Orientation on Business Performance: A Study of Small-Sized Service Retailers Using MARKOR Scale

Conventional marketing wisdom holds that a market orientation provides a company with a better understanding of its customers, competitors, and environment, which subsequently leads to superior firm performance. While researchers have explored the relationship between market orientation and business performance in different organizations, such studies in small-sized service retailers are scarce. This study investigates potential influences of market orientation on small-sized service retailer performance. Data for this study were collected through personal interviews, and Kohli, Jaworski, and Kumar's market orientation scale was used to specify the dimensions of a market-oriented organization. Results indicated that Kohli, Jaworski, and Kumar's market orientation scale provided a good measure of market orientation in this setting. Also, the results of analyses indicated a significant link between market orientation and small-sized service retailer performance. The managerial implications are discussed.     

Comparing Exchange Market Pressure across Five African Countries

This paper compares the credibility of exchange rate arrangements for the five African countries which are members of the Community of Portuguese Speaking Countries and will be referred to as Afro-Luso. Our working hypothesis is that credibility necessarily implies low mean exchange market pressure (EMP), low EMP conditional volatility and low-severity EMP crises under financial-market integration. In addition, economic fundamentals must account for EMP dynamics. We also seek evidence of a risk–return relationship for mean EMP and of “bad news” (negative shocks) having a greater impact on EMP volatility than “good news” (positive shocks). Using our econometric models, we are able to rank Afro-Luso countries’ conditional volatility in ordinal terms. Our main conclusion is that countries with currency pegs, such as Guinea-Bissau (GB) and Cape Verde (CV), clearly have lower volatility when compared to those with managed floats and are therefore more credible. Moreover, EMP crises episodes under pegs are much less severe. We find that economic fundamentals correctly account for mean EMP in all countries and that the risk–return relationship is much more favourable for investors under currency pegs, as the increase in volatility is lower for the same rate of return. The exception to this finding is Mozambique (MOZ), which apparently has a risk–return profile akin to that enjoyed by countries with pegs. A plausible reason is that MOZ has the only managed float in our sample implementing monetary and exchange rate policy within the confines of an IMF framework, which establishes floors for international reserves and ceilings for the central bank’s net domestic assets. This intuition needs to be tested, however. EMP conditional volatility, meanwhile, is generally driven by changes in domestic credit (lowers it) and foreign reserve changes (raises it). The first effect is more pronounced under currency pegs, but also under MOZ’s managed float. “Bad news” increases volatility more that “good news” only in the case of CV’s currency peg, which we take to be another sign of its credibility. A few striking cross-country comparisons also emerge in our analysis. Among countries with managed floats, Angola (ANG) has the most severe EMP crises, MOZ the least severe and São Tomé &; Príncipe (STP) lies between the two extremes but closer to MOZ.     

The Price Relevance of Fiscal Developments

We use Seemingly Unrelated Regressions Estimation methods to assess the link between prices, bond yields and the fiscal behavior. A first equation determines the country-specific cost of government financing via the long-term government bond yield, as a function of budget balance positions. A second equation links the price level to the cost of government financing. Our results for 15 EU countries in the period 1980Q1–2013Q4 show that improvements in the fiscal stance lead to persistent falls in sovereign yields; higher sovereign yields are reflected in upward price movements; improvements in the fiscal stance in recession times lead to short-term decreases in yields and better fiscal stance in expansions induce downward movement in bond yields only after 8 quarters.     

Manufacturing Skill‐biased Wage Inequality,Natural Resources and Institutions

We use an extensive dataset on occupational wages to measure the manufacturing skill premium and assess, for the first time, the influence of natural resources and institutional quality—in addition to traditional drivers—for advanced and less‐advanced countries and the full sample. The new findings, regarding 21 countries between 1988 and 2008 in the main panel estimations, suggest the premium of advanced countries rises with tertiary enrollment, net foreign direct investment (FDI) and institutional quality, and falls with centralized wage negotiations and geographically diffuse natural resource activities, mainly re‐exportation related. In less‐advanced countries, the premium rises with net FDI, scale effects, centralized wage negotiations and geographically concentrated natural resource activities (absorbing scarce skilled workers), and falls with trade, diffuse natural resource exploration (using mainly unskilled workers) and high‐technology exports, as emerging national low‐end technology industrial exporters may lower skill pay compared with foreign industrial exporters. In the full sample, the premium rises with scale effects, trade, institutional quality and concentrated natural resources, and falls with the relative skilled‐labor supply, centralized wage negotiations and diffuse natural resources. The results account for a wider diversity of situations compared with the previous studies.     

Endogenous Growth and Intellectual Property Rights: A North–South Modelling Proposal with Population Ageing

This paper studies the effect of intellectual property rights (IPR) on economic growth, in the light of population ageing, i.e., in a more realistic context. The analysis is motivated by the implications of population ageing on economic growth. Moreover, this study analyses this relationship in a north–south framework where there is a healthcare sector. We conclude that population ageing has no impact on the sign of the IPR effect on economic growth. However, it positively affects the steady‐state growth rate. Finally, under some conditions, the presence of the healthcare sector also increases the steady‐state growth rate.