Simple formulas for standard errors that cluster by both firm and time

When estimating finance panel regressions, it is common practice to adjust standard errors for correlation either across firms or across time. These procedures are valid only if the residuals are correlated either across time or across firms, but not across both. This paper shows that it is very easy to calculate standard errors that are robust to simultaneous correlation along two dimensions, such as firms and time. The covariance estimator is equal to the estimator that clusters by firm, plus the estimator that clusters by time, minus the usual heteroskedasticity-robust ordinary least squares (OLS) covariance matrix. Any statistical package with a clustering command can be used to easily calculate these standard errors.     

State appropriations and undergraduate borrowing: more debt,less money

When state appropriations decrease, public universities respond by raising tuition. Students borrow more in response to both tuition increases and appropriation cuts. This article investigates the feedback of how borrowing and tuition influence state appropriations. Using a panel data set of 450 four-year public universities from 1999 to 2012, we employ three-stage least squares techniques to control for the endogeneity between state appropriations, tuition and student borrowing. There is evidence that state policy-makers respond to increases in university tuition and student borrowing by decreasing future appropriation levels. After controlling for the effect of appropriations on tuition and borrowing, a one-dollar increase in student borrowing reduces state appropriations per student by $0.06, and a one-dollar increase in tuition results in a decrease of $0.45 in state appropriations per student. When universities increase tuition for reasons other than a reduction in state appropriations, policy-makers respond with a significant cut in future appropriations which could signal an incentive strategy.     

Applying the Theory of Small Economies and Competition Policy: The Case of Switzerland

The question whether optimal competition policy depends on the size of an economy has recently received considerable attention. In particular it has been argued that markets in small economies are often highly concentrated and protected by substantial entry barriers. Market forces may therefore not be strong enough to correct inefficient economic behaviour, i.e. inefficiencies may endure in small economies. This paper applies the theory of small economies and competition policy to the case of Switzerland. It finds that Switzerland cannot be rated as the prototype of a small economy as pertaining to competition policy. It further assesses whether the Swiss Cartel Act accounts for the potential efficiency problems of small economies and reveals that there is scope for a more efficiency enhancing legal competition framework within Switzerland.     

Basic Needs,Government Debt and Economic Growth

This paper investigates the relationships between basic needs and economic growth where the interactions between output, health, nutrition and education are explicitly simultaneous. We find a unidirectional relationship that improving basic welfare contributes strongly to labour productivity change, but a clear reverse causation only from growth to nutrition. There are substantial differences in the patterns of simultaneous interactions at different income and welfare levels. There are strong self‐reinforcing effects of literacy and debt service on poverty, making it difficult for poor countries to rectify their situation. Channelling resources towards improving health, education and nutrition could bring dramatic economic returns.     

Understanding the Solar Home price premium: Electricity generation and “Green” social status

This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels. Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect. Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium. This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.     

Supply Chain Management Competency and Firm Financial Success

Supply chain management (SCM) plays a major role in creating (or destroying) shareholder value by influencing the three major drivers of firm financial performance: revenue, operating costs, and working capital. Yet, the relationship between SCM competency and firm financial performance is not well‐established. Drawing on the resource‐based view of the firm, this study assesses this relationship using Delphi‐style opinion data from AMR Research’s Supply Chain Top 25 rankings to assess SCM competency and Altman’s (1968) Z‐score statistic as the measure of financial success. The study findings show that firms recognized by industry experts for SCM competency have significantly higher Z‐scores than their close competitors and industry averages.     

The Emptiness of Peasant “Rationality”: “Demirationality” as an Alternative

This article discusses consumption as a social process that is part of social provisioning and is in an evolutionary interplay with other social processes. The analysis provides grounds for a context-specific research that explores consumption in the context of a culture-nature life process, and draws on material from various disciplines. The article seeks to contribute to the literature on social provisioning as an organizing concept in heterodox economics. The first section explains what is meant by social process and delineates its elements. The second section formulates a categorization of social processes, and locates a consumption process within a system of culture-nature life processes. The rest of the article delineates the elements of the consumption process, providing illustrations based on literature from various disciplines. Specifically, the third section discusses consumption activities. The fourth section discusses institutions and systems of provision of goods and services. The fifth section applies the concept of habits of life and thought to the consumption process. Finally, the article concludes that the formulated analysis transcends dualisms such as social-economic, cultural-material, society-nature, and micro-macro, and draws implications for heterodox economics.     

Personal value systems of Japanese trainees and managers in a changing competitive system

A study of personal values held by Japanese and foreign students, trainees and managers showed recent Japanese trainees slightly more conservative than their 1979 cohorts. Foreign students and foreign managers held more pro-American work values than either Japanese managers or trainees. Finally, for the Japanese respondents, there was some evidence of specific shifts away from the Japanese employment system in the areas of thenenko compensation and promotion systems in their organisations.Roy J. Adams is a Professor of Industrial Relations in McMaster University; Richard B. Peterson is a Professor of Management and Organization in the University of Washington; Hermann F. Schwind is an Associate Professor in St. Mary's University.     

Applying financial portfolio and multiple criteria approaches to product line decisions

This article describes the application of decision rules from financial portfolio theory to the evaluation of product lines. The focus is on the risk/return implications of an “add” decision to the total portfolio versus the individual product. Multiple criteria approaches that aid product line evaluations are also presented.