ZERO NOMINAL INTEREST RATES,UNEMPLOYMENT, EXCESS RESERVES AND DEFLATION IN A LIQUIDITY TRAP

We present a dynamic monetary model that consistently explains various phenomena such as unemployment, deflation, zero nominal interest rates and excess reserves held by commercial banks. These phenomena were observed during the Great Depression in the USA, the recent long‐run stagnation in Japan and the recent depression triggered by the subprime loan problem in the USA. We show that an excessive liquidity preference leads to a liquidity trap and thereby generates the phenomena.     

Economic assumptions and choice of functional forms: comparison of top down and bottom up approaches

Two alternative model building approaches are analyzed and compared. The general to specific modeling (top down approach) starts with a general model and subjects it to a sequence of restrictions to determine an acceptable specific model. This approach can start with a series expansion and the concavity or homotheticity conditions can be imposed to modify it into a cost or a production function. The simple to general modeling (bottom up approach) starts with a well known simple model and extends it until a complete system is formed. This approach can start with a Cobb-Douglas function (which satisfies the concavity and homogeneity conditions) and extends it to include the desired complexity. Relative advantages and disadvantages of the two approaches are discussed and tabulated. The electricity generation data is applied to compare the performance of these two approaches.

The underlying mechanism of self-regulatory focus impact on compromise choice

The current research examines the psychological process underlying the differential sensitivity to the compromise effect associated with a distinct self-regulatory focus. In particular, we test two competing hypotheses: one based on the different weights assigned to decision components, and the one that draws on biased perception. This issue is explored via the statistical derivation of decision weights (Study 1), manipulation of the temporal frame of choice (Study 2), and altering the risks associated with decision-making (Study 3). The results of these three studies consistently support the differential weight account: Promotion-focused participants assign greater weight to the desirability (or hedonic value) of the choice outcome, whereas prevention-focused participants place greater weight on the likelihood (or risk) of achieving that outcome. However, perceptions regarding the desirability and the risk of the given choice are similar among those with a distinct self-regulatory focus.     

How Rousseau read Hume’s Political Discourses: hints of unexpected agreement in their views of money and luxury

Despite mounting scholarship on the Rousseau–Smith connection, the possibility of overlap between the Humean and Rousseauian views of commercial society has not been explored. This is due to opposing views held by these two thinkers on this issue. However, Rousseau in the Confessions recorded a brief, but shrewd impressions on Hume’s Political Discourses, which he held before meeting Hume. In these comments, Rousseau, unlike his other French contemporaries, noted some republican aspects lurking in Hume’s political and economic essays. Moreover, after his two Discourses, Rousseau composed several other important works in which he revealed his more ‘mature’ economic arguments. Careful readings of these textual clues indicate that, in striking parallel with Hume, Rousseau conducts a thought experiment on the drastic change in the quantity of money and elaborates on the significance of industry and a certain type of luxury. Our purpose here is not to prove that Hume’s Political Discourses directly influenced Rousseau’s later writings, but to measure the extent to which Rousseau could share the Scot’s economic ideas by considering that the former may well have read the latter.     

Factors of determining long-term orientation in interfirm relationships

Marketers have witnessed a paradigm shift in which establishing, maintaining, and forging long-term buyer–seller relationships are considered the core of marketing activities. Accordingly, investigating a long-term orientation (LTO) has become a steady research stream in the marketing literature. Building on this on-going research stream, this study confirms that an essential precursor of a manufacturer's LTO is trust that, in turn, is formed by relational norms and satisfaction with supplier performance. Interestingly, however, the seemingly strong trust–LTO path is moderated by both power asymmetry and environmental uncertainty in buyer–seller relationships. The empirical findings suggest that regardless of emerging relationship marketing where buyer and seller are portrayed as parts of a team, power is still in use to control suppliers. In addition, a manufacturer facing uncertainty is less likely to form LTO toward its supplier for fear of losing flexibility in the time- and quality-based competition.     

Predicting Tourists' Intention to Try Local Cuisine Using a Modified Theory of Reasoned Action: The Case of New Orleans

The purpose of the present study was to examine the utility of the modified theory of reasoned action (TRA) in predicting tourists' behavioral intention to try the local cuisine in New Orleans. The results indicated that the proposed model had strong predictive ability regarding tourists' intention to try the local cuisine. Attitude and past behavior were significant predictors of tourists' behavioral intention. In addition, the interdependence between attitudinal and normative components was partly supported. Gender had a significant moderating role in the relationships between attitude/past behavior and behavioral intention to experience the local cuisine. Theoretical and practical implications of the findings are discussed.     

Is the KOSPI 200 Options Market Efficient? Parametric and Nonparametric Tests of the Martingale Restriction

A number of studies on the S&P 500 index options market claim that the no‐arbitrage assumption cannot be rejected for this market because either the martingale restriction defined in Longstaff (1995) cannot be rejected by the data, or, even when it is rejected, a large proportion of the violation can be explained by market friction factors. The present study singles out the effect of market inefficiency from market friction by testing the martingale restriction for the KOSPI 200 index options market, which is the most liquid and active options market in the world. Not only using the parametric methods adopted in previous studies but also using the nonparametric methods that enable us to avoid the model misspecification problem, we empirically present clear evidence of a violation of the martingale restriction. In addition, in contrast to the S&P 500 options market, regression analyses and robustness tests indicate that market friction factors can explain only a small portion of the percentage differences between option‐implied and market‐observed index prices. Overall, the results do not support the basic no‐arbitrage assumption or the market efficiency in the KOSPI 200 options market.     

Moderating Effects of Nationality and Product Category on the Relationship between Innovation and Customer Equity in Korea and China

Innovation has become a key concept in recent decades. Truly innovative products can create value for consumers, extend the product category, generate higher margins, and strengthen the brand. Simply speaking, relationships may form between product innovation and each driver of customer equity. However, for different product categories and nationalities, this relationship may differ. This paper not only identifies the relationships between innovation and customer equity, but also examines the moderating effects of product category and nationality. In total, 409 consumers from Korea (n = 200) and China (n = 209) were surveyed by questionnaire in this study. The stimuli of the degree of innovation (i.e., radical or incremental) included Nike+Ipod and Adidas 1, and Nike Air Max and Adidas Team Series from the shoe industry, while H&M designer label and Nano material, and H&M seasonal collection and cycle material from the clothing industry. Structural equation modeling was used to test the hypotheses. The results show that the degree of innovation exerts positive influences on value equity and brand equity, which can be drivers of customer equity. Thus, the reason firms launch innovative products is not only to boost sales by increasing customer value, but also to improve brand image, which can influence the customers’ purchase decision. The relationship between innovation and customer equity can be moderated by product category and nationality. Managers should develop different innovation strategies based on different product categories and customer nationalities.     

Organizational characteristics and the CRM adoption process

The purpose of this study is to identify the status of Customer Relationship Management (CRM) adoption and explore the influence of organizational characteristics on the CRM adoption process in the Korean fashion industry. Using Rogers' [Rogers EM. Diffusion of innovation. New York: Free Press; 1995] innovation decision process model as the conceptual basis, this study surveyed 94 Korean fashion companies to investigate the persuasion, decision, and implementation stages of CRM adoption. Organizational variables included firm characteristics (size, strategy, maturity of information system), product characteristics (category, fashion position, seasonality), and CEO characteristics (age, education). The most frequently used CRM technology is the development of a customer database, whereas the mostly frequently mentioned benefits of CRM are encouraging repurchase. Moreover, respondents' perceptions of CRM benefits affect CRM adoption, influencing the use of various CRM technologies. Organizational strategy, maturity of information system, and product category all significantly influence the adoption process. Empirical findings provide further support for the innovation decision process model developed by Rogers [Rogers EM. Diffusion of innovation. New York: Free Press; 1995] and the CRM adoption model can be used when fashion companies do strategic planning and evaluate the possibility of adopting CRM strategies.     

When higher prices increase sales: How chronic and manipulated desires for conspicuousness and rarity moderate price's impact on choice of luxury brands

This study examines the impact of low, medium, and high prices on luxury brand choices by consumers very high versus very low in chronic desire for conspicuousness (CC) on selection of a luxury brand, namely, as well as the combination of very high versus very low chronic desire for rarity (CR). The research design tests and confirms the nomological validity of a system of relationships among chronic and manipulated conditions. High versus low manipulated desire for conspicuousness (MC) and manipulated desire for rarity (MR) conjoined with high versus low chronic desire for conspicuousness (CC) and chronic desire for rarity (CR) moderates the typically hypothesized negative main effect of price on demand and may cause a positive main effect of price on luxury brand choice across a relevant range of price-points. These findings confirm the applied theory that for some consumers, chronic psychological states in combination with manipulated related states allow for—perhaps demand that—merchants to charge higher prices to increase sales of luxury brands.