Are Social Costs the Outcome of Struggles over Truth?

Abstract:

This article critically examines the institutional economics theory of social costs by way of reviewing The Dark Places of Business Enterprise: Reinstating Social Costs in Institutional-Economics (2019). In particular, the article assesses the proposal to re-root institutional economics in the theoretical synthesis of “Veblen-Kapp-Mirowski” to better understand the social costs of neoliberalism. One of the findings is that while such a synthesis seems justified on the grounds of significant commonalities and the merits of deeper insights, it nevertheless runs into difficulties due to divergent philosophical foundations. One of the conclusions is that further philosophic clarification is needed on how an alternative economy would understand the relationship between “social costs” and Truth.     

How do leaders' perceptions of organizational health climate shape employee exhaustion and engagement? Toward a cascading-effects model

Although researchers and practitioners increasingly focus on health promotion in organizations, research has been mainly fragmented and fails to integrate different organizational levels in terms of their effects on employee health. Drawing on organizational climate and social identity research, we present a cascading model of organizational health climate and demonstrate how and when leaders' perceptions of organizational health climate are linked to employee well-being. We tested our model in two multisource studies (N_{Study 1} = 65 leaders and 291 employees; N_{Study 2} = 401 leader–employee dyads). Results showed that leaders' perceptions of organizational health climate were positively related to their health mindsets (i.e., their health awareness). These in turn were positively associated with their health-promoting leadership behavior, which ultimately went along with better employee well-being. Additionally, in Study 1, the relationship between perceived organizational health climate and leaders' health mindsets was moderated by their organizational identification. High leader identification strengthened the relationship between perceived organizational health climate and leaders' health mindsets. These findings have important implications for theory and practice as they show how the dynamics of an organizational health climate can unfold in organizations and how it is related to employee well-being via the novel concept of health-promoting leadership.     

Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment

The discussion on which institutions determine entrepreneurial activity – and the role of institutions in the aggregated output for developing countries – is as yet unresolved. The extant literature about entrepreneurship recognizes new ventures as potential mechanisms for long-term development. Yet, there is a consensus on the lack of evidence, particularly for these countries. Drawing on institutional economics, this article explores the interrelationships among institutional environment, entrepreneurial activity, and economic growth. To this end, we use simultaneous-equation panel data models for a sample of 14 developing countries (78 observations) over the period of 2004–2012. The main findings suggest a causal chain running from institutions to opportunity entrepreneurship, which is linked to the economic growth of emerging economies. In particular, we find that institutional factors – such as the number of procedures to start a new business, private credit coverage ,, and access to communication– influence entrepreneurial activity driven by opportunity. Policy implications for developing countries could be derived in order to enhance their economic performance through entrepreneurial activity.

     

Modeling VXX under jump diffusion with stochastic long-term mean

We develop a model for the VXX, the most actively traded VIX futures exchange-traded note, using Duffie, Pan, and Singleton's affine jump diffusion framework, where the volatility process has jumps and a stochastic long-term mean. We calibrate the model parameters using the VIX term structure data and show that our model provides the theoretical link between the VIX, VIX futures, and the VXX. Our model can be used for pricing VIX futures, the VXX and other short-term VIX futures exchange-traded products (ETPs). Our model could be extended to price options on the VXX and other short-term VIX futures ETPs.     

How and when do prior international experiences lead to global work? A career motivation perspective

While research suggests a link between individuals' prior international experiences and their future participation in global work, we know little about how and the conditions under which this relationship occurs. Drawing on career motivation theory, we conceptualize global identity as a mediator between individuals' density of prior international experiences—defined as the extent to which time spent in culturally novel countries has provided individuals with developmental opportunities—and their global work aspirations, which in turn leads to their global work involvement. Further, this multi-stage mediation model holds mainly when individuals receive positive feedback regarding their intercultural competencies (i.e., cultural intelligence) from their peers. We test our model using a multi-wave multi-source dataset spanning 6 years. We discuss implications for the literatures on prior international experiences and global careers.     

Electoral uncertainty and financial volatility: Evidence from two‐round presidential races in emerging markets

We study how the predictability and the decisiveness of electoral outcomes affect financial volatility. We argue that traders’ optimal investment strategies depend on their ability to make accurate electoral forecasts and the prospective losses associated with placing a bet on the wrong candidate. Using a triple difference‐in‐difference approach and data from two‐round presidential elections in five Latin American countries between 1999 and 2018, we find that financial volatility is greatest in the days immediately following unpredictable, decisive, elections. Postelectoral volatility also occurs following predictable, indecisive elections. The effect of learning the identity of the winning candidate on financial volatility is null when the election is unpredictable and indecisive, as well as when the election is decisive, but the outcome is predictable. These findings offer insights into investors seeking to hedge price risk around elections. They also have important implications regarding the relationship between public opinion polls and postelectoral financial volatility.     

The Climate Policy of the European Union

There is now almost universal agreement that climate change, with potentially disastrous consequences, is happening and that it is contributed to by human activities. This Forum is dedicated to the discussion of various aspects of the European Union's climate policy, e.g. the EU's future role in the global effort to combat global warming, the efficiency of its climate strategy, the design of a new rule for sharing the corresponding burdens fairly among member states, and the interrelationships between the Union's climate policies, on the one hand, and its energy and transport policies, on the other. * and member of the German Advisory Council on Global Change (WBGU). The author wishes to thank Helen Bicknell (Mainz University of Applied Sciences), Oliver Deke (WBGU) and Jürgen Schmid (ISET, Department of Efficient Energy Conversion at the University of Kassel) for their helpful comments. ** This contribution is based on a Jean Monnet Lecture held at Aarhus University on 19 March 2007. The author would like to thank Harri Kalimo for valuable comments.     

Reforming the international monetary system: a stock-flow-consistent approach

Abstract:

The emergence and persistence of large trade imbalances as well as the volatility of financial flows among countries have been attributed, at least in part, to the inadequacy of the current international monetary system after the breakdown of Bretton Woods. From a different perspective, the current eurozone crisis is also the result, in our view, of a flawed institutional setting. These problems call for reforms to mitigate or avoid the recessionary bias that is the outcome of current systems, as Keynes predicted in the discussion preceding the Bretton Woods agreements. In this paper we briefly review the evidence on international imbalances, and survey the rapidly growing literature on the subject. We introduce a set of models based on the stock-flow-consistent approach pioneered by Godley (1999 Godley, W. “Open Economy Macroeconomics Using Models of Closed Systems.” Working Paper no. 281, Levy Economics Institute of Bard College, 1999. [Google Scholar]) and Lavoie and Godley (2003 Lavoie, M., and Godley, W. “Two-Country Stock-Flow Consistent Macroeconomics Using a Closed Model Within a Dollar Exchange Regime.” CERF Working Paper no. 10, University of Cambridge, 2003. [Google Scholar]). We discuss how to use these models to explore potential reform of the international monetary system.     

Does asymmetric information affect the premium in mergers and acquisitions?

We test the influence of information asymmetry on the premium paid for an acquisition. We analyze mergers and acquisitions as English auctions. The theory of dynamic auctions with private and common value predicts that more informed bidders may pay a lower price. We test that prediction with a sample of 1,026 acquisitions in the United States between 1990 and 2007. We assume that blockholders of the target's shares are better informed than other bidders because they possess privileged information on the target. Our empirical results show that blockholders pay a much lower premium than do other buyers