Business strategy and firm location decisions: testing traditional and modern methods

Business Economics - For nearly a century, economists have relied upon the neoclassical principle of a “profit-maximizing firm.” Two modern challenges to this principle have arisen: the...     

Forecasting GDP over the Business Cycle in a Multi‐Frequency and Data‐Rich Environment

This paper merges two specifications recently developed in the forecasting literature: the MS‐MIDAS model (Guérin and Marcellino, 2013) and the factor‐MIDAS model (Marcellino and Schumacher, 2010). The MS‐factor MIDAS model that we introduce incorporates the information provided by a large data set consisting of mixed frequency variables and captures regime‐switching behaviours. Monte Carlo simulations show that this specification tracks the dynamics of the process and predicts the regime switches successfully, both in‐sample and out‐of‐sample. We apply this model to US data from 1959 to 2010 and properly detect recessions by exploiting the link between GDP growth and higher frequency financial variables.     

Above and beyond? How businesses can drive sustainable development by promoting lasting pro-environmental behaviour change: An examination of the IKEA Live Lagom project

Current global changes require new business approaches driving sustainable development on all fronts. To date, most business approaches have focused on sustainable marketing and corporate social responsibility initiatives. In this field study, we examine IKEA's Live Lagom project, a 3-year behaviour change initiative that aimed to explore how to go above and beyond conventional approaches demonstrating how businesses could support sustainable development by supporting their customers' attempts to live more sustainable lifestyles. We examined the effectiveness of the project involving multifaceted behaviour change interventions, testing for behavioural changes both during and after the project period. In addition, we explored changes in participants' attitudes towards the company. Findings show that the extensive set of interventions led to changes in pro-environmental behaviours across all three participant groups with potentially positive impacts on the customer–company relationship. The article thus provides a call for further businesses to engage in similar behaviour change projects that would allow citizens to engage in more sustainable lifestyles and behaviours across contexts.     

Disentangling types of liquidity and testing limits-to-arbitrage theories in the CDS–bond basis

We disentangle asset-specific, market, and funding liquidity in the CDS–bond basis outside and during the 2007–9 global financial crisis. Our findings stress the importance of separating different types of liquidity, since all three measures have independently negative impacts on the basis. Funding liquidity emerges as the economically most important liquidity metric. While asset-specific liquidity is cross-correlated in both the cash and derivative markets, funding and market liquidity only matter for the cash market. We exploit the decomposition of the basis to test predictions of limits-to-arbitrage theories. We find strong evidence in favor of margin-based asset pricing and flight-to-quality effects.     

The power of the pen: Handwritten fonts promote haptic engagement

Consumers are increasingly bombarded with merchandise and offers, making clear the need for visually distinctive and sensorially engaging product packaging design. The current research demonstrates that the use of handwritten fonts on product packaging elicits an approach tendency and enhances haptic engagement, which influences product evaluation and choice likelihood. A pilot study quantifies the use of handwritten fonts in four grocery product categories to establish that the study of handwritten fonts as a packaging design element is a worthy one with managerial significance. Four experiments are then presented. Studies 1 and 2 use real products to show that a product label with a handwritten (vs. typewritten) font elicits haptic engagement and, enhanced product evaluations (Study 2). Study 3 identifies a boundary condition such that the focal effect is observed only for benign (safe and enjoyable) product categories, but not for risky (unsafe and dangerous) ones. Study 4 relies on a simulated store setup with actual products to illustrate the differential preference for products with a handwritten (vs. typewritten) font when choosing between brands in a benign (vs. risky) product category.     

Is There a Causal Effect of Working Part‐Time on Current and Future Wages?

In this paper, I study the causal effects of part‐time work on current and future wages. To estimate these effects, I use a random effects model with a wage equation capturing the employment history and a dynamic multinomial probit component for the choice of employment status. Exclusion restrictions from the institutional context are exploited to support identification. The results suggest that working part‐time with few hours has a large causal effect on current wages, but more extensive part‐time work does not reduce current wages. However, both types of part‐time work lead to negative long‐term wage effects.     

In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area

This paper applies the DSGE‐VAR methodology to assess the size of fiscal multipliers in the data and the relative contributions of two transmission mechanisms of government spending shocks, namely hand‐to‐mouth consumers and Edgeworth complementarity. Econometric experiments show that a DSGE model with Edgeworth complementarity is a better representation of the transmission mechanism of fiscal policy as it yields dynamic responses close to those obtained with the flexible DSGE‐VAR model (i.e. an impact output multiplier larger than one and a crowding‐in of private consumption). The estimated share of hand‐to‐mouth consumers is too small to replicate the positive response of private consumption. Copyright © 2016 John Wiley & Sons, Ltd.