Moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership

Nascent entrepreneurship and new business ownership are subsequent stages in the entrepreneurial process. We illustrate how information from the largest internationally harmonized database on entrepreneurship, the Global Entrepreneurship Monitor project, can be used to approximate the entrepreneurial process. We make a methodological contribution by computing the ratio of new business ownership to nascent entrepreneurship in a way that reflects the transition from nascent to new business ownership and provides cross-nationally comparable information on the efficiency of the entrepreneurial process for 48 countries. We report evidence for the validity of the transition ratio by benchmarking it against transition rates obtained from longitudinal studies and by correlating it with commonly used entrepreneurship indicators and macro-level economic indices. The transition ratio enables future cross-national research on the entrepreneurial process by providing a reliable and valid indicator for one key transition in this process.     

Environmental Impact of Foreign vs. Domestic Capital Investment in China

We compare environmental impacts associated with incoming foreign direct investment vs. domestic capital in China. We use aggregate data on Chinese provinces’ economic and pollution indicators to explore the effects of the financial origin of fixed capital. Our simultaneous models consider three prime channels through which these effects work: economic scale, sectoral composition and pollution intensity. Results show that emissions associated with foreign‐financed capital are lower than with domestically financed capital for some but not all of the considered types of pollution.     

Allocative efficiency measurement revisited—Do we really need input prices?

The traditional approach to measuring allocative efficiency exploits input prices, which are rarely known at the firm level. This paper proves allocative efficiency can be measured as a profit-oriented distance to the frontier in a profit-technical efficiency space. This new approach does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment providing evidence that the estimates of allocative efficiency employing the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical manufacturing industry in Germany.     

The Value Relevance of Greenhouse Gas Emissions Allowances: An Exploratory Study in the Related United States SO2 Market

This paper examines the valuation implications of greenhouse gas (GHG) emissions allowances. We posit that the value of a firm's bank of emission allowances has two components that are likely to be positively valued by the capital market: (1) an asset value component; and (2) a real option value component. Since the necessary data to examine this research hypothesis in the setting of GHG emission allowances is not yet available, we test our conjecture by examining the value relevance of sulfur dioxide (SO₂) emission allowances held by US electric utilities. Empirical results reveal that the capital market assigns a positive price to a firm's bank of SO₂ emission allowances, consistent with the argument that emission allowances have, at least, an asset value component that is assigned a positive price by the market. We also find weak evidence consistent with the market assigning a real option value to the allowance banks.     

Does foreign aid promote recipient exports to donor countries?

This paper uses the gravity model of trade to investigate the effect of foreign aid on exports of aid recipients to donor countries. Most of the theoretical work emphasises the possible negative impact of aid on recipient countries’ exports, primarily due to exchange rate appreciation, disregarding possible positive effects of aid in overcoming supply bottlenecks and promoting bilateral trade relations. Using non-stationary panel (cointegration) estimators to control for omitted variable and endogeneity bias, we find that the net effect of aid on recipient countries’ exports is insignificant, both for our sample (of 123 countries) as a whole and for important regional sub-samples. This finding is in line with the small or insignificant macroeconomic impact of aid found in earlier studies and also suggests that exporters in recipient countries are not benefiting from improved trade relations with donors.     

Investigating business cycle asymmetry for the G7 countries: Evidence from over a century of data

In this paper we test for asymmetric behaviour of business cycles for the G7 countries, using the entropy-based test for asymmetry suggested by Racine and Maasoumi [Racine, J.S., & Maasoumi, E. (in press-a). A versatile and robust metric entropy test of time-reversibility, and other hypotheses, Journal of Econometrics; Racine, J.S., & Maasoumi, E. (in press-b). A robust entropy based test for asymmetry. Econometric Reviews.]. We find overwhelming evidence of symmetry. In only 14% of the cases, we find some evidence of asymmetric behaviour of GDP and per capita GDP. More importantly, the period marked by the flexible exchange rate regime, over which much of the empirical work for the G7 countries has been conducted, evidence suggests that the two GDP series are symmetric.     

Why Farmers Quit: A County-Level Analysis

We identify the effects of alternative explanatory variables on the propensity of U.S. farmers to cease farming, with a particular emphasis on understanding the roles of off-farm employment and federal farm program payments. Conventional ordinary least squares analysis using all counties suggests that off-farm employment has no statistical effect on the (net) number of farmers quitting between 1987 and 1997, ceteris paribus . A more refined analysis, which separates counties losing farmers from those that gained farmers, reveals subtle and less clear-cut effects of off-farm employment (and federal program payments) on farm exits.     

Portfolio optimization based on GARCH-EVT-Copula forecasting models

This study uses GARCH-EVT-copula and ARMA-GARCH-EVT-copula models to perform out-of-sample forecasts and simulate one-day-ahead returns for ten stock indexes. We construct optimal portfolios based on the global minimum variance (GMV), minimum conditional value-at-risk (Min-CVaR) and certainty equivalence tangency (CET) criteria, and model the dependence structure between stock market returns by employing elliptical (Student-$t$ and Gaussian) and Archimedean (Clayton, Frank and Gumbel) copulas. We analyze the performances of 288 risk modeling portfolio strategies using out-of-sample back-testing. Our main finding is that the CET portfolio, based on ARMA-GARCH-EVT-copula forecasts, outperforms the benchmark portfolio based on historical returns. The regression analyses show that GARCH-EVT forecasting models, which use Gaussian or Student-$t$ copulas, are best at reducing the portfolio risk.     

Incentives and disincentives for diversified agroforestry systems from different actors’ perspectives in Bolivia

Even though diversified agroforestry systems can provide sustainable livelihoods and a resilient production of different goods, adoption remains limited in Bolivia. We examine major obstacles to agroforestry adoption and possible incentives proposed by farmers and civil-society organizations, and relate them to governance and international mechanisms that might play a role in agroforestry adoption. Market access for produce from diversified agroforestry remains difficult, as does its processing and transport. Moreover, farmers have difficulties in achieving the quantities and homogenous quality demanded by markets in the major cities. But most importantly, farmers and civil-society organizations saw little government support, although ‘ecological production in harmony with Mother Earth’ is prescribed by law and the constitution. Agroforestry farmers needed support most urgently in the initial phase, when investment costs are high and returns low. They suggested affordable credits, subsidies for diversified farming systems, and insurance against fire. We identified important albeit small steps towards developing markets for agroforestry products, but government support – mostly in the form of diesel subsidies, materials, and infrastructure – mainly benefitted large-scale monocultures and cattle ranching. In response to this, interviewees opted for strengthening farmers’ organizations, for demanding support with the help of civil-society organizations, and for disseminating best practices.     

Effects of scale economies and production seasonality on optimal hub locations: the case of regional fresh produce aggregation

Interest in supporting local and regional food systems is rising and food hubs have attracted considerable attention among Federal, State, and local policymakers. This study explores the problem of endogenous hub location in fresh produce value chains in the Northeastern United States. To overcome limitations in the literature, we incorporate the effects of economies of scale and production seasonality into our models. Three experimental models are designed to examine the effects of alternatively applying yearly, quarterly, and monthly data on model solutions. We explicitly assess how interactions of scale economies and seasonality influence the structure and spatial attributes of an optimal regional produce aggregation hub system. The three models generate marketed different solutions and in many respects they lead to different conclusions about developing local/regional supply chains. The monthly model allows for production seasonality and actual hub operation cycle frequency and thus leads to more efficient hub solution with rich policy implications.