The trade-off between real wages and employment in an open economy (Belgium)

The purpose of this paper is twofold. First, we discuss the nature and quantitative order of magnitude of the trade-off between real wages and employment in the small open economy Belgium. Second, we draw policy conclusions from our positive analysis, and compare income policies with alternative approaches to employment stimulation (including shorter working hours and currency depreciation).To study the trade-off between real wages and employment, we treat external balance as a binding constraint on demand management. An exogenous increase in real wages, affecting adversely the competitiveness of domestic producers on the export and import markets, impairs external balance. The impact of the wage increase on output and employment is evaluated through the reduction in domestic demand required to restore external balance.At the empirical level, we endeavour to evaluate separately the influence on exports and imports of domestic costs at unchanged capacity levels, and of capacity levels themselves. And we endeavour to evaluate the influence of real wages on capacity levels through scrapping and investment. All evaluations rely on the foreign trade equations of econometric models of the Belgian economy.The conclusions from our empirical investigation are first that estimates of the trade-off between real wages and employment in Belgium are subject to considerable imprecision; second that the short-run elasticity of employment with respect to real wages keeping capacity constant is probably quite small (like -0.2), and definitely less than unity in absolute value; third that the corresponding medium-run elasticity taking into account capacity adjustments is probably sizeable (like -2), and definitely larger than unity in absolute value; and fourth that exchange rate adjustments might not make too much difference, in either the short run or the medium run.Turning to a discussion of policy, we shall argue that these conclusions give support to a policy of constant real labour incomes, of comprehensive efforts to redistribute work through shorter working hours or related schemes, and of selective efforts to slow down capacity scrapping.     

The demand for money in the Italian economy: 1867–1965

This paper conducts an empirical analysis of the demand for money in Italy using data for the period 1867–1965. It finds that during this time this demand was a stable function of two key variables: permanent income and the rate of interest.     

The evolution of the pharmaceutical industry

This article provides an overview of the main traits of the historical development of the pharmaceutical industry, using the lenses of the evolutionary approach to economic and industrial change. After a brief overview of the main evolutionary concepts which guide the subsequent discussion, our presentation identifies four main eras: from the formative stages (from the late 1800s to War World II) to the so-called Golden Age (the 1940s to the mid-1970s), the biotechnology revolution (the 1970s to the new millennium, approximately) and what we label the ‘Winter of Discontent?’ (the first decade of the new century). Within all these epochs, we discuss the main trends in technology, firms' strategies and structures, patterns of competition, demand, regulation and institutional developments. Section 6 concludes the article, briefly discussing some main implications for the present and future of the industry on the one hand and for the relevance of an evolutionary approach to the analysis of corporate and industrial change on the other.     

Do multinational banks create or destroy shareholder value? A cross‐country analysis

We question whether the international diversification of multinational banks creates or destroys shareholder value. Based on a sample of 384 listed banks from 56 countries we provide new and robust evidence that bank cross‐border activities create shareholder value, as shown by an economically and statistically significant premium for international diversification. Our results are confirmed controlling for bank fixed effects, time‐varying bank characteristics, reverse causality, functional diversification, and instrumenting for the choice to expand abroad. The increase in shareholder value is slightly larger for banks in the middle range of international diversification and in the case of expansion towards less developed countries.     

Martingale applicate alla teoria del rischio: Processi di guadagno a submartingala e aggiustabilità

Viene formalizzata e studiata l'attività di una compagnia che opera in un mercato assicurativo non vita. Si ipotizza che il guadagno realizzato sulla generica polizza sia una submartingala. Si danno disuguaglianze significative per la probabilità di rovina all'infinito ed entro l'n-mo periodo nel caso in cui il rendimento di portafoglio della compagnia sia “aggiustabile”. I risultati vengono discussi nel caso in cui il mercato sia stratificato in classi di rischio nell'ipotesi di indipendenza; si accenna al caso particolare di rischi poissoniani e all'ipotesi di correlazione interna alle classi di rischio.     

Convergence in per-capita GDP across European regions: a reappraisal

This paper studies convergence in per-capita GDP across European regions over the period 1980–2000. We use median unbiased estimators of the rate of convergence to the steady-state growth path, while allowing for unrestricted patterns of heterogeneity and spatial correlation across regions. By permitting the model parameters to be completely different across regions, not only we avoid imposing strong a priori assumptions but we are also able to analyze the spatial patterns in the estimated coefficients. Our results differ from those found using conventional estimators. The main differences are: i) the mean rate of convergence is much lower; ii) for most regions this rate is zero; iii) the number of regions for which we reject equality in trend growth rates is substantially lower. We also find significant evidence of correlation of growth rates across neighbor regions and across regions belonging to the same country.     

Modeling extended manufacturing processes with service-oriented entities

The architectural style of next generation technological platforms intended to support design, deployment, and execution of extended business processes inside organizational networks, must be guided by interoperability principles at the processes, services, or data level. Service-oriented architectures, these being design patterns, and not merely technology, attempt to address these issues. Yet we believe that some of their underlying concepts (i.e., service providers, interfaces, and instances) must still be included at the business models level. This study attempts to show that how by introducing the Abstract and Concrete Service Entities concept at the extended business process models level, it could be possible to address most of the current interoperability issues inside a manufacturing network.     

Competition and risk‐taking in investment banking

How does competition affect the investment banking business and the risks individual institutions are exposed to? Using a large sample of investment banks operating in seven developed economies over 1997–2014, we apply a panel VAR model to examine the relationships between competition and risk without assuming any a priori restrictions. Our main finding is that investment banks’ higher risk exposure, measured as a long‐term capital‐at‐risk and return volatility, was facilitated by greater competitive pressures for both boutique investment banks and full‐service investment banks. Overall, we find some evidence that more competition leads to more fragility before and during the recent financial crisis.     

Outward Foreign Direct Investment Patterns of Italian Firms in the European Union's Emission Trading Scheme*

We consider the role played by the European Union's Emissions Trading System (EU ETS) as a possible driver of outward foreign direct investment (FDI) for Italian manufacturing firms. Using a panel dataset of about 22,000 firms covering the first two phases of the EU ETS and the period before the EU ETS, we measure the patterns of FDI towards countries not covered by the EU ETS. The results show that the EU ETS had a weak effect on the number of new subsidiaries abroad (extensive margin), while it had a larger impact on production taking place in foreign subsidiaries (intensive margin), especially in trade-intensive sectors.