An economic analysis of cooperative research

The U.S. government's most recent policy initiative to increase industrial research activity is the National Cooperative Research Act of 1984. Since its passage much attention has been given to this new organizational research form, but to date there has not been any systematic investigation of the participants in cooperative research. This paper is an initial attempt to fill that void. First, a classification scheme is presented to describe the research activity of firms currently engaged in cooperative endeavors, as evidenced by mandated filings reported in the Federal Register. Then, a model of inter-firm differences in cooperative research activity is posited and tested using survey-based data for a sample of R&D active firms in the U.S. manufacturing sector. We conclude that market power is the principal determinant of involvement in cooperative research.     

On the Equivalence between the APV and the wacc Approach in a Growing Leveraged Firm

While in a steady state framework the choice between the wacc approach ( Modigliani‐Miller, 1963 ) and the adjusted present value (APV) approach ( Myers, 1974 ) is irrelevant since the two approaches provide the same result, however, in a growing firm context the wacc equation seems to be inconsistent with the APV result. In this paper we propose a simple model to evaluate the tax savings in a growing firm in order to show under which assumptions the two approaches lead to the same results. We demonstrate that the use of the wacc model in a steady‐growth scenario gives rise to some unusual assumptions with regard to the discount rates to be used in calculating tax shields. We show that the widely used wacc formula, if used, as it is in most cases, in a growth context, implies that a) debt tax shield related to already existing debt are discounted using k_d; b) debt tax shield related to new debt, due to company's growth, are discounted, according to a mixed procedure, using both k_u and k_d. We discuss the inconsistency of such a discounting procedure and the preferred features of the APV approach.     

Insiemi invarianti globalmente attrattivi nell'interazione fra il “mercato dei beni” ed il “mercato della moneta”

Si studia il comportamento dinamico locale e globale di un modello macroeconomico che si rappresenta con un sistema nonlineare di due equazioni alle differenze (sistema dinamico discreto, o mappa). Si mostra come l'uso di un nuovo strumento di analisi, le linee critiche, consenta di studiare molte delle proprietà globali (quali i bacini di attrazione di insiemi invarianti) e delle biforcazioni globali, che si verificano in mappe del piano con inversa non unica. Si prova che il punto fisso localmente attrattivo è anche globalmente attrattivo, mentre in regimi di instabilità del punto fisso esistono curve chiuse, o altri insiemi invarianti (regolari o caotici) di attrazione, in aree assorbenti globalmente attrattive.

---

Summary The local and global dynamical behaviour of a macroeconomic model, represented by a nonlinear system of two difference equations (discrete dynamical system or map), is studied. It is shown how several properties (as basins of attraction of invariant sets) and global bifurcations occurring in two-dimensional maps with a non-unique inverse can be studied by use of a new analytical tool, the critical curves. It is proven that the locally attractive fixed point is globally attractive, while closed invariant curves or other attractive invariant sets (regular or chaotic) exist in globally attractive absorbing areas, when the fixed point is repulsive.

     

Corporate Financing Decisions and Non-Debt Tax Shields: Evidence from Italian Experiences in the 1990s

Between 1995 and 1999, Italy experienced three episodes of fiscal reform during which different categories of non-debt tax shields were introduced, including a classical investment tax credit, a system of dual income taxation, and an investment tax credit restricted to equity financed investments. Using the balance sheets of a large sample of Italian companies, we construct a data set which allows us to evaluate the impact of the different fiscal interventions. We apply MacKie-Mason's (1990) method to study incremental financing decisions using discrete choice analysis. The analysis shows that the measures introduced were successful in reducing the advantage of debt financing relative to equity financing. We relate the findings to the current literature on the determinants of capital structure. JEL Code: G32, H25     

Motives for sharing in social networks

What motivates people in rural villages to share? We first elicit a baseline level of sharing using a standard, anonymous dictator game. Then using variants of the dictator game that allow for either revealing the dictator's identity or allowing the dictator to choose the recipient, we attribute variation in sharing to three different motives. The first of these, directed altruism, is related to preferences, while the remaining two are incentive-related (sanctions and reciprocity). We observe high average levels of sharing in our baseline treatment, while variation across individuals depends importantly on the incentive-related motives. Finally, variation in measured reciprocity within the experiment predicts observed ‘real-world’ gift-giving, while other motives measured in the experiment do not predict behavior outside the experiment.     

Autocorrelation and masked heterogeneity in panel data models estimated by maximum likelihood

In a panel data model with random effects, when autocorrelation in the error is considered, (Gaussian) maximum likelihood estimation produces a dramatically large number of corner solutions: the variance of the random effect appears (incorrectly) to be zero, and a larger autocorrelation is (incorrectly) assigned to the idiosyncratic component. Thus heterogeneity could (incorrectly) be lost in applications to panel data with customarily available time dimension, even in a correctly specified model. The problem occurs in linear as well as nonlinear models. This article aims at pointing out how serious this problem can be (largely neglected by the panel data literature). A set of Monte Carlo experiments is conducted to highlight its relevance, and we explain this unpleasant effect showing that, along a direction, the expected log-likelihood is nearly flat.     

Diversity and Communication in Teams: Improving Problem-Solving or Creating Confusion?

Despite the rich and interdisciplinary debate on the role of diversity and communication in group problem-solving, as well as recognition of the interactions between the two topics, they have rarely been treated as a joint research issue. In this paper, we develop a computational approach aimed at modeling problem-solving agents and assess the influence of various levels of diversity and communication in teams on agents’ performance in problem-solving. By communication, we intend a conversation on the persuasiveness of the features characterizing problem-setting. By diversity, we mean differences in how agents build problem representations which allow them to access various solutions. We deploy the concept of diversity along two dimensions: knowledge amplitude, which accounts for the level of available knowledge allowing access to poorer or richer problem representations (compared with complete problem representations), and knowledge variety, which pertains to the differences in the constituents of agents’ representations. We define performance as the frequency with which diverse agents choose the same alternative representation of an agent displaying complete representations of the problem. Our results indicate that communication is more effective when agents elaborate from relatively richer problem representations, as this provides a basis for integrating the variously diverse beliefs of their teammates. Conversely, poorer diverse representations may lead to worse performance when knowledge variety also applies. Lastly, we show that the influence of communication is not monotonically positive, as increasing communication intensity performance may worsen at any level of knowledge availability and knowledge variety.     

Environmental evaluation of agri-environment schemes using participatory approaches: Experiences of testing the Agri-Environmental Footprint Index

The Agri-Environment Footprint Index (AFI) has been developed as a generic methodology to assess changes in the overall environmental impacts from agriculture at the farm level and to assist in the evaluation of European agri-environmental schemes (AES). The methodology is based on multi-criteria analysis (MCA) and involves stakeholder participation to provide a locally customised evaluation based on weighted environmental indicators. The methodology was subjected to a feasibility assessment in a series of case studies across the EU. The AFI approach was able to measure significant differences in environmental status between farms that participated in an AES and non-participants. Wider environmental concerns, beyond the scheme objectives, were also considered in some case studies and the benefits for identification of unintentional (and often beneficial) impacts of AESs are presented. The participatory approach to AES evaluation proved efficient in different environments and administrative contexts. The approach proved to be appropriate for environmental evaluation of complex agri-environment systems and can complement any evaluation conducted under the Common Monitoring and Evaluation Framework. The applicability of the AFI in routine monitoring of AES impacts and in providing feedback to improve policy design is discussed.     

Short-term wholesale funding and systemic risk: A global CoVaR approach

We use the CoVaR approach to identify the main factors behind systemic risk in a set of large international banks. We find that short-term wholesale funding is a key determinant in triggering systemic risk episodes. In contrast, we find weaker evidence that either size or leverage contributes to systemic risk within the class of large international banks. We also show that asymmetries based on the sign of bank returns play an important role in capturing the sensitivity of system-wide risk to individual bank returns. Since short-term wholesale funding emerges as the most relevant systemic factor, our results support the Basel Committee’s proposal to introduce a net stable funding ratio, penalizing excessive exposure to liquidity risk.