Productivity and international competitiveness of agriculture in the European Union and the United States

This study looks at international competitiveness of agriculture in the European Union and the United States. The most intuitive concept is that of price competitiveness. We calculate relative prices for 11 member states of the European Union and the United States for the period 1973–2002. We assume that markets are perfectly competitive and in long‐run equilibrium, so that the observed price always equals average total cost, as measured by the cost dual to the production function. This assumption is used in our calculation of relative competitiveness and productivity gaps between the European Union and the United States and in our decomposition of relative price movements between changes in relative input prices and changes in relative productivity levels.     

Mean-Reversion in REITs Discount to NAV &; Risk Premium

REITs discount to NAV is a puzzling regularity. The sharp increase in volatility of REITs prices over the past few years has spurred a relatively new concern amongst academics, managers and investors about the consequences of, and causes of, property risk premium on discount to NAV. The two interrelated questions arising from the recent increase in volatility of REITs prices are: Is the increased volatility responsible for the observed widening in discount to NAV? What does the observed private and public risk premium tell us about discount to NAV? We attempt to address these questions by analysing risk premiums in private and public real estate markets. The analysis is conducted in the most recent years of high stock price volatility. Our analysis reveals two major results: a tendency for discount to NAV to revert to the long term mean value of 20% and, more significantly, a lower risk premium in equivalent yields in private market than in public market. These results suggest that investors in public market have a different conception of property risk and complexity of lease options than what is conveyed by private property valuation.     

Financialisation and Real Investment in the European Union: Beneficial or Prejudicial Effects?

This article presents an empirical analysis of the relationship between financialisation and real investment for non-financial corporations using panel data composed of 27 European Union countries over 19 years (1995 to 2013). On the one hand, financialisation leads to a rise in financial investments, diverting funds from real investments (‘crowding out’ effect); on the other, pressures from shareholders to intensify financial payments restrict the funds available for new real investments. We estimate an aggregate investment equation with the traditional variables (lagged investment, profitability, debt, cost of capital, corporate savings and output growth) and two further measures of financialisation (financial receipts and financial payments). The findings demonstrate that financialisation has damaged real investment in European Union countries, mainly through the channel of financial payments, either by interest or dividend payments. It is also found that the prejudicial effects of financialisation on investment were more severe in the pre-2007 crisis period. It is concluded that financialisation contributed to a slowdown of real investment by 1 to 8 per cent in the full and pre-crisis period, respectively. During the pre-crisis period, financialisation was the main driver of the slowdown of investment in the European Union.     

Returns to networking in academia

This paper examines effects of academic networks in a Stackelberg differential game between journal editors and authors. Authors choose research papers to maximize satisfaction, while editors determine research quality to maximize journal reputation. Verifying the system for stability, results show that academic networks neither affect the number of publications nor the quality of an author’s papers. Networks only affect the number of an author’s citations. Editors’ preferences for publishing an author because of her network membership seem irrelevant. This happens because editors compete to increase their journal’s reputation by publishing high quality papers. Consequently, there is little room for editorial bias. Further, increased journal competition has the potential to erode the citation gains. The equilibrium research quality is below the maximum possible quality. Increases in publication benefits are shown to leave citations unaffected, increase the number of publications, and decrease research quality. The results generally carry through when publishing markets tend to a monopoly.     

Abnormal returns before acquisition announcements: evidence from Europe

Acquisition announcements influence the stock price of target firms, providing an opportunity for insiders to obtain significant abnormal returns. We study the presence of positive abnormal returns before the announcement date, in target firms, quoted in Euronext markets (Belgium, France, The Netherlands and Portugal) from 2001 to 2007. We investigate whether the pre-announcement run-up of prices can be explained by rumours in the media and the percentage of capital previously owned by the bidding firm, among other factors. We examine cumulative abnormal returns in an event window of 60 days prior the acquisition announcement, with the event date adjusted for the previous disclosure of news about the acquisition, in the media. We compute a run-up index, and find that there are abnormal positive returns before the announcement date, confirming previous studies. We find that a significant part of the run-up is explained by: (i) market anticipation triggered by legitimate sources of information, namely, rumours in the media about the possibility of an acquisition bid and (ii) the percentage of capital previously owned in the target firm, by the bidding firm.     

The effects of monetary policy in a small open economy: the case of Portugal

In this article, I analyse the macroeconomic effects of monetary policy on the Portuguese economy. I show that a positive interest rate shock leads to: (i) a contraction of real GDP and a substantial increase of the unemployment rate; (ii) a quick fall in the commodity price and a gradual decrease of the price level and (iii) a downward correction of the stock price index. It also produces a ‘short-lived liquidity effect’ and helps explain the negative comovement between bonds and stocks. In addition, I find evidence suggesting the existence of a money demand function characterized by small output and interest rate elasticities. By its turn, the central bank’s policy rule follows closely the dynamics of the money markets. Finally, both the real GDP and the price level in Portugal would have been higher during almost the entire sample period if there were no monetary policy surprises.     

FISCAL POLICY AND ASSET PRICES

We analyse the impact of fiscal policy on asset prices using a panel vector auto‐regressive (PVAR) approach and quarterly data for ten industrialized countries. We find that positive fiscal shocks lead to a temporary fall in stock prices and a gradual and persistent decrease in housing prices. The empirical findings also point to: (i) a contractionary effect of fiscal policy on output in line with the existence of crowding‐out effects and the deterioration of credit conditions; (ii) a weakening of the effectiveness of fiscal policy in recent times; (iii) a more persistent response of asset prices for countries with a lower degree of openness; (iv) a larger impact of fiscal policy on asset prices for small countries; (v) a close link between the responsiveness of asset prices to fiscal policy and the government’s size; (vi) an increase of the sensitivity of asset prices to fiscal policy shocks following the process of financial deregulation and mortgage liberalization; and (vii) significant fiscal multiplier effects in the context of severe housing busts. Finally, the evidence suggests that changes in equity prices may help governments towards consolidation of public finances.     

Assessing performance in services: the travel agency industry

The aim of this article is to compare different approaches to the evaluation of economic performance in tourism. For the first time in tourism, this article simultaneously applies traditional productivity measures as well as parametric and non-parametric techniques to estimate efficiency and compares the results obtained. The empirical application is carried out on a sample of 567 travel agencies operating in Spain in 2004. The results reveal important differences depending on the methodology employed. Overall, none of the methodologies can be said to be better than the rest. These results highlight the importance of considering different approaches when evaluating performance in tourism.     

Different Approaches to the Evaluation of Performance in Retailing

Abstract

The aim of this article is to compare different approaches to the evaluation of economic performance in retailing. For the first time in retailing, this essay simultaneously applies traditional productivity measures as well as parametric and non-parametric techniques to estimate efficiency, and compares the results obtained. The empirical application is carried out on a sample of 491 retailers operating in Spain in 2004. The results reveal important differences depending on the methodology employed. Overall, none of the methodologies can be said to be better than the rest.