Beliefs regarding fundamental value and optimal investing

Standard optimal portfolio selection models take no account of the special information that active investors believe they possess. For example, active investors who believe they can place bounds on the price of a security will want to use that information when assessing risk and expected return in order to construct an optimal portfolio. In this paper, we use two continuous-time models to analyze how placing boundaries on the price of a stock affects assessed risk, expected returns, and the optimal holdings of an active investor, and how those vary as a function of the relation between the stock price and the boundaries. In particular, the optimal strategy takes significant long/short positions as the price nears its lower/upper boundary.     

The accomplishment of the Maastricht criteria with respect to initial debt

The reduction of government debt to 60% of the GDP in order to satisfy the requirements of the Maastricht Treaty for participation in the European Monetary Union is one of the primary economic-policy goals for most of the European Union countries. The first aim of the present paper is to characterize the optimal path of the primary surplus that leads to the achievement of this Maastricht target. Using optimal-control theory we are able to determine an upper bound of the public-debt-to-GDP ratio above which no retrenchment policy becomes effective. The second issue taken up is that of the sensitivity analysis with respect to the initial level of the debt-to-GDP ratio, the growth rate of the economy, the interest rate, the inflation rate, and the inverse of the velocity of the monetary base circulation.     

Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008

In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008 using two long aggregate time series on the distribution of income. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from socialism to capitalism. We find that income inequality between groups rose moderately post-transformation, while overall inequality increased more sharply. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.     

Wine Tourism as an Opportunity for Tourism Development: Examples of Good Practice in Slovenia

The authors discuss wine tourism activities in the context of general tourism development in Slovenia. The country’s winegrowing areas have developed traditionally important viticulture, a relatively intensive production of typical grape varieties and in some cases also a distinct entrepreneurial spirit, which consequently reflects in tourism and regional development, based on diverse cultural heritage and natural values. Three Slovene wine regions are divided into nine wine districts with their own identities and more or less distinct terroirs. Despite a several centuries’ long tradition and a rich wine culture, it is evident that in national tourism strategies and development plans, wine tourism still does not occupy the position that it probably deserves, although most of the documents stress its potential for local or regional development. On the other hand, the authors recognize a significant interest among winemakers and tourism professionals for strategic cooperation and systematic approach to develop wine tourism in the selected destinations. The authors therefore focus on some paradoxes and emphasize examples of good practice at the national, regional, and local levels.     

Advertising Decision Makers' and Consumers' Perceptions of Media Substitutability

The purpose of this article is to assess the perceptions of advertising media substitutability among consumers, media planners, and media providers. Data were collected from three different samples using structured questionnaires and CATI interviewing. The results suggest that some degree of substitution does indeed exist in all three groups. This means that if first media choices are unavailable all groups are likely to consider others as possibly providing the best buying information. This study adds to the scarce literature that focuses on perceptions of media substitutability and provides results for both demand and supply side of the media market. It also suggests that such perceptual studies may be helpful in a re-examination of current policy and advertising management decisions.     

Competitive Advantage and Human Resource Management in SMEs in a Transitional Economy

The article is based on data of the study of 151 small companies in Slovenia by J. Pranikar and others. The study is the first investigation of small firms in slovenia with a sufficiently large number of cases to enable conclusions about the ways in which SMEs are managing to cope with new opportunities and problems. The aim of this article is to investigate a link between competitive advantage and human resource management in SMEs in a transitional economy. Results indicate that a link indeed exists in that human resource efforts in SMEs to a certain degree contribute to the competitive advantage of companies.     

Estimating persistent and transient technical efficiency and their determinants in the presence of heterogeneity and endogeneity

We develop an estimation procedure that generates consistent estimates of the technology parameters, long-run (persistent) and short-run (transient) technical inefficiencies and the marginal effects of their determinants for the stochastic frontier model developed by Colombi et al. (2014, Journal of Productivity Analysis 42, 123) and Kumbhakar et al. (2014, Journal of Productivity Analysis 41, 321). Our approach accounts for three sources of potential endogeneity: (i) unobserved heterogeneity; (ii) simultaneity of input use with both types of technical efficiency; (iii) potential correlation of the noise term with the regressors. Using this approach we examine the effect of direct payments and farm size on the persistent and transient technical efficiency of French crop farms before and after the European Union's Common Agricultural Policy decoupling reform of 2003. Our results show that subsidy payments per hectare of utilised agricultural land had a significant positive effect on persistent technical efficiency and a significant negative effect on transient technical efficiency during the period before decoupling. For the period after the reform, the effect of subsidies is found to be significantly negative for persistent technical efficiency and insignificant for transient technical efficiency. The overall effect of subsidies on technical efficiency is found to be negative in both periods, albeit substantially lower in the period after decoupling. The effect of farm size on technical efficiency is found to be significant only for the period prior to the reform: it reduced persistent technical inefficiency but increased transient technical inefficiency during that period.     

The Status of Lobbying in Croatia

The positions of lobbying and the lobbyist, well established in developed democratic societies, are far less clear in transitional countries. The aim of this paper is to present the current status of lobbying in Croatia through a discussion of its reputation in the media, citizens’ attitudes and the perceptions of business sector representatives. For that purpose, three groups of research results are presented. (1) In order to characterize the reputation of lobbying in the media, the results of a quantitative content analysis of information published in daily and weekly newspapers, magazines and on Internet portals are given. (2) To understand the attitudes of citizens to lobbying, the views of the young are considered. (3) Finally, to define perceptions of lobbying in the public sector and business, the results of a survey conducted among 50 employees in government institutions and 50 in the enterprise sector are presented and analyzed.     

Comparison of Mean-Risk Efficient Portfolios in Asia-Pacific Capital Markets

In order to analyze the performance of mean-risk efficient portfolios, several methods of portfolio comparison have been developed. In this paper we analyze the second-order stochastic dominance efficiency of portfolios on the mean-risk efficient frontier assuming that the risk is represented by standard deviations and concordance matrices set up on the basis of Pearson's linear correlation, Spearman's rho, or Kendall's tau. Empirical analysis of the market returns of selected Asia-Pacific stock markets is carried out considering both the U.S. dollar and euro as reference currencies, and different periods: before and during the subprime crisis. Measures and portfolios on the mean-risk efficiency frontier that should be of interest to at least one risk-averse investor are empirically documented.