Growth and Productive Dynamism of Business Services: EU-15, Spain and the Region of Madrid

This study evaluates the structure and dynamism of business services in the Region of Madrid compared to the EU-15 countries. It focuses on the comparative analysis of productivity and its components, as well as a specific geographical and locational study of these services in the Region of Madrid. The sector productivity structure of countries and regions is similar. From this, it may be deduced that productivity units of the different countries, within the same branch, use fairly similar productivity methods and technologies. Through the analysis of the relative size of the different branches rendering business services, important discrepancies regarding processes of economic organisation between the regions studied may be deduced.     

Urban supply–demand interrelations in business services

Business services are mainly concentrated in major urban economic areas, and affect the way in which supply and demand interact at urban level. Firstly, this article explains the corresponding impact for location and use, given a set of possible explanatory factors. Secondly, we test hypotheses within the Madrid region: a specific econometric model (a 3-steps Probit) tested upon an ad hoc survey covering 32 services in 14 cities. The results confirm the expected limited impact of local supply on demand behaviour, but show differences depending on the type of services.     

The Role of Spiritual Well-Being and Materialism in Determining Consumers’ Ethical Beliefs: An Empirical Study with Australian Consumers

A survey was conducted to investigate the relationship of Australian consumers’ lived (experienced) spiritual well-being and materialism with the various dimensions of consumer ethics. Spiritual well-being is composed of four domains—personal, communal, transcendental and environmental well-being. All four domains were examined in relation to the various dimensions of consumers’ ethical beliefs (active/illegal dimension, passive dimension, active/legal dimension, ‘no harm, no foul’ dimension and ‘doing good’/recycling dimension). The results indicated that lived communal well-being was negatively related to perceptions of the active/illegal dimension and the passive dimension and was positively related to perceptions of the ‘no harm, no foul’ dimension and the ‘doing good’/recycling dimension. Lived personal well-being was negatively related to perceptions of the active/illegal dimension and was positively related to perceptions of the ‘no harm, no foul’ dimension and the ‘doing good’/recycling dimension. Lived transcendental well-being was negatively related to perceptions of the passive dimension, the active/legal dimension and the ‘no harm, no foul’ dimension. Lived environmental well-being was negatively related to perceptions of the active/legal dimension and the ‘no harm, no foul’ dimension. The findings also indicated that materialism was positively associated with perceptions of actively benefiting from illegal actions, passively benefiting at the expense of the seller, actively benefiting from questionable but legal actions and benefiting from ‘no harm, no foul’ actions. Public policy implications of the findings and opportunities for future research are discussed.     

Differences in growth with international capital markets and financial innovation

This paper presents a model in which technological progress affects the productivity of the financial sector. When technological progress moves quicky, the financial intermediation costs are low, which increases the incentives to invest in new technology. This feedback process involves two types of long-run equilibria: one with low financial intermediation costs and high growth, and the other with high financial intermediation costs and low growth. These divergences in growth rates among countries hold even in the presence of international capital markets with free capital mobility, a very unusual result in the endogenous growth literature.     

Choosing between Time and State Dependence: Micro Evidence on Firms' Price‐Reviewing Strategies

Because of recent findings based on survey data, it is now well known that firms differ from each other with respect to their price‐reviewing strategies. While some firms review their prices at fixed intervals of time, others prefer to perform price revisions in response to changes in economic conditions. Some theories have been suggested to explain this. However, empirical evidence on the relative importance of the factors that determine the different strategies of firms is virtually non‐existent. In this paper, we help to fill this gap by investigating the factors that explain why firms follow time‐dependent, state‐dependent, or both time‐ and state‐dependent price‐reviewing rules. We find that the strategies of firms vary with firm characteristics that have a bearing on the importance of information costs, with the variability of the optimal price, and with the sensitivity of profits to non‐optimal prices.     

Human resource management for learning through knowledge exploitation and knowledge exploration: Pharmaceuticals in Mexico

This paper investigates the influence of human resource management practices on the likelihood that a firm performs in-house R&D. R&D is broadly interpreted as learning—a mechanism promoting absorptive capacity and supporting technology capability-building. Firms can choose between two learning strategies: they can exploit existing knowledge, or perform more complex explorations and acquire new knowledge. Different knowledge requirements associate with distinct R&D outcomes with varying degrees of novelty for the firm. Findings are supported with evidence from the pharmaceutical industry in Mexico. The analysis reveals positive linkages between human resource management practices and learning at firm level. The relationship is contingent on factors such as expected R&D outcomes, or the novelty of the knowledge required by the firm. The provision of training revealed the more consistent, positive influence on the likelihood that pharmaceuticals firms perform R&D in Mexico.     

Learning from accidents: Updates of the European regulation on the investigation and prevention of accidents and incidents in civil aviation

Civil aviation has a longstanding tradition of investigating accidents and reporting incidents, which contributes to making aviation one of the safest forms of transport.To make flying safer, independent investigation into accidents is essential as it the surest way of identifying the causes of an accident and answering the fundamental questions “What really happened?” and “What can be done to prevent similar incidents in the future?”.The obligation to investigate accidents is enshrined in the Chicago Convention of 1944. Recognizing the importance of accident investigation, the European Union adopted Council Directive 94/56/EC establishing the fundamental principles governing the investigation of civil aviation accidents and incidents and later on Directive 2003/42/EC on occurrence reporting. They both significantly contributed to harmonization of accident prevention.But with air traffic steadily increasing, accidents do happen despite the best efforts of regulators and industry. The organization of the air transport sector is much more complex now than it was a decade ago. Today there is significant divergence in the investigating capacity of the EU Member States compared to 1994. Furthermore nowadays investigating air accidents take new kinds of expertise and more resources than a decade ago. At the same time there is a new legal and institutional environment in Europe derived from the adoption of European aviation safety rules. Also the organizational set-up has changed substantially with the establishment of the European Aviation Safety Agency (EASA), which is now responsible for certifying aircraft in the EU. The EU rules on investigating air accidents need to be updated to reflect the current realities of Europe's aviation market and the complexity of the global aviation industry.Accordingly, over the last few years the European Commission has been working on a Regulation on the investigation and prevention of accidents and incidents in civil aviation, with the intention of updating and replacing the existing Directive. With this new regulation the Commission aims to promote more efficient and independent inquiries into the causes of air accidents and also expects to strengthen the rights of the victims of air accidents.Today the end is in sight, once that the Commission and European Parliament have reached an agreement about the content and text of this new regulation. Reasons behind this new regulation are presented in this paper together with a detailed explanation of its main contents, an assessment of their impact and their expected benefits.     

Copula‐Based Formulas to Estimate Unexpected Credit Losses (The Future of Basel Accords?)

The model used to estimate the capital required to cover unexpected credit losses in financial institutions (Basel II) has some drawbacks that reduce its ability to capture potential joint extreme losses in downturns. This paper suggests an alternative approach based on Copula Theory to overcome such flaws. Similarly to Basel II, the suggested model assumes that defaults are driven by a latent variable which varies as a response to an unobserved factor. On the other hand, the use of copulas allows the identification of asymmetric dependence between defaults which has been registered in the literature. As an example, a specific copula family (Clayton) is adopted to represent the association between the latent variables and a formula to estimate potential unexpected losses at a certain level of confidence is derived. Simulations reveal that, in most of the cases, the alternative model outperforms Basel II for portfolios with right‐tail‐dependent probabilities of default (supposedly, a good representation for real loan portfolios).     

Firms' price and wage adjustment in Europe: Survey evidence on nominal stickiness

This paper presents new evidence on the patterns of price and wage adjustment in European firms and on the extent of nominal rigidities. It uses a unique dataset collected through a firm-level survey conducted in 17 European countries and covering various sectors. Several conclusions are drawn from this evidence. Firms adjust wages less frequently than prices, on average every 15 and 10 months, respectively. Price and, especially, wage adjustment exhibit a substantial degree of time-dependence. In particular, wage changes tend to cluster at a specific time of the year, mostly January in the majority of countries. The results of a multivariate analysis indicate that prices are more flexible when competitive pressures in product markets are strong and when labor costs account for a lower fraction of firms' total costs, whereas wages are more flexible when bargaining is decentralized and when the coverage of collective bargaining and the stringency of employment protection legislation are low. Price rigidities are higher in firms with a larger share of high-skilled/white-collar workers.