Predicting European Union Recessions in the Euro Era: The Yield Curve as a Forecasting Tool of Economic Activity

Several studies have established the predictive power of the yield curve for the U.S. and various European countries. In this paper we use data from the European Union (EU15), from 1994:Q1 to 2008:Q3. We use the European Central Bank’s euro area yield spreads to predict European real GDP deviations from the long-run trend. We also augment the models tested with non monetary policy variables: the unemployment and a composite European stock price index. The methodology employed is a probit model of the inverse cumulative distribution function of the standard distribution using several formal forecasting and goodness of fit evaluation tests. The results show that the yield curve augmented with the composite stock index has significant forecasting power in terms of the EU15 real output.     

Intra-Industry Growth Dynamics in the Greek Services Sector: Firm-Level Estimates for ICT-Producing,ICT-Using,and Non-ICT Industries

The stochastic patterns of firm growth are examined with the use of a data set of 4,975 firms surviving in the Greek services sector over the 1995–2001 period. The analysis first takes into account the intensity of information and communication technologies (ICT) in the services industries and then, through a system dynamic panel data technique, investigates how initial size and past growth influence firm growth. The classification of industries as three ICT-related groups provides interesting results at both the aggregated group level and the disaggregated industrial level. In general, Gibrat’s Law is accepted for firms in ICT intensive industries, while it is rejected in non-ICT industries.     

Compliance with pension‐related mandatory disclosures and debt financing

Using hand‐collected data on the level of pension‐related mandatory disclosures required by International Accounting Standard 19 Employee Benefits, we test whether compliance levels with these disclosures convey information that affects firms’ access to the public instead of the private debt market, as well as the cost of their new debt issues. We document a higher tendency to access the public debt market for firms with higher levels of pension‐related disclosure. Furthermore, we find that firms with higher levels of pension‐related disclosure enjoy a lower cost in terms of issuance of public debt, but not a lower cost for private debt issues. Thus, the benefits of disclosure in reducing information risk are only realisable when creditors rely heavily on financial statements in their decision making, due to the limited access to private information. Additional tests reveal that high compliance levels effectively mitigate the negative effect of pension deficits on the cost of public debt. These findings provide novel evidence in the extant literature on the role of mandatory (and, in particular, pension‐related) disclosures on firms’ debt financing. They also have important policy implications.     

Bayesian Modelling of Outstanding Liabilities Incorporating Claim Count Uncertainty

Abstract

This paper deals with the prediction of the amount of outstanding automobile claims that an insurance company will pay in the near future. We consider various competing models using Bayesian theory and Markov chain Monte Carlo methods. Claim counts are used to add a further hierarchical stage in the model with log-normally distributed claim amounts and its corresponding state space version. This way, we incorporate information from both the outstanding claim amounts and counts data resulting in new model formulations. Implementation details and illustrations with real insurance data are provided.     

Measuring and Explaining Technical Efficiency in UK Potato Production

Technical efficiency in UK maincrop potato production is measured through the estimation of a stochastic frontier production function using cross section data for the 1992 crop year. Variations in the technical efficiency index across production units are explained through a number of managerial and farm characteristic variables following Battese and Coelli (1995). The technical efficiency index across production units ranges from 33 to 97 per cent. Irrigation of the potato crop and storage of potatoes after harvest are positively correlated with technical efficiency. Number of years of experience of growing potatoes, small scale farming practice and chitting of seed potatoes are all negatively correlated with technical efficiency.     

THE ECONOMICS OF HEALTH AND SAFETY AT WORK: AN INTERDICIPLINARY REVIEW OF THE THEORY AND POLICY

Abstract This paper engages in an interdisciplinary survey of the current state of knowledge related to the theory, determinants and consequences of occupational safety and health (OSH). It first describes the fundamental theoretical construct of compensating wage differentials, which is used by economists to understand the optimal provision of OSH in a perfectly competitive labour market. The plethora of incentives faced by workers and firms in job and insurance markets that determine the ultimate level of OSH are discussed in detail. The extensive empirical evidence from the hedonic wage and stated choice approaches used to assess the value of OSH is reviewed. The causes of inefficiency and inequity in the market for OSH, such as externalities, moral hazard in compensation insurance, systematic biases in individual risk perception/well‐being and labour market segregation are subsequently examined. The implications of government intervention and regulation for tackling the aforementioned inefficiencies in OSH are then considered. Finally, the survey identifies areas of future research interests and suggests indicators and priorities for policy initiatives that can improve the health and safety of workers in modern job markets.     

How Many Jobs Must We Provide for a Balanced Postwar Economy

This study investigates how unemployment and income influence the length of time an individual remains in good health. This is a complex relationship since unemployment or low income deteriorates health but poor health can become a barrier to obtaining higher income or gaining re-employment. Data are from the British Household Panel Survey, using two measures of physical health: an index of mobility problems and a measure of self-assessed health. The results show that unemployment, low income and poor education adversely affect the time that people remain in good health. These results have important implications for public policy, particularly in an age of austerity when social protection mechanisms are under threat. In fact, the results suggest that to improve health and reduce health inequality, more investment needs to be directed at policies that enhance labour force participation, improve education and reduce income inequality.     

A model of green bank marketing

In the light of current market conditions, the financial services industry has been reshaped, requiring new marketing knowledge to provide guidelines for successful practice. To that end, corporate social responsibility, green marketing and a green brand image (GBI) have attracted considerable interest in the banking sector, although no framework has yet been established relating these constructs to one another. In this article, the authors present exploratory research as a basis for developing a model of green bank marketing. The model was tested to confirm the dimensions of green bank marketing and investigate its impact on a GBI, thus providing statistical evidence of the relationship between the two variables.     

Sources of TFP growth in a framework of convergence-evidence from Greece

The main hypothesis tested in the paper is whether technology is a conduit of productivity growth for a country that falls behind the frontier. Although the current analysis focuses on a country growth narrative, the evidence represents a pair of countries (i.e. Greece and Germany) that admittedly form the periphery and the core of Europe. The first lesson taken from the study is that for more than two decades the speed of productivity adjustment was rather low in Greece, underlying a number of unobserved rigidities that exist both at the industry and the institutional level. Even though the speed of technology transfer is low, the adoption of foreign technology remains an important source of productivity growth. Other key findings are that productivity gains from trade exist but their full realization requires a substantial time lag. Additionally, the degree of trade openness improves absorptive capacity, confirming the dual role of trade as recently stressed in the productivity literature. R&D activity is another productivity growth contributor but only through higher rates of innovation.