Stochastic non-smooth envelopment of data for multi-dimensional output

The proposed method of Stochastic Non-smooth Envelopment of Data (StoNED) for measuring efficiency has to date mainly found application in the analysis of production systems which have exactly one output. Therefore, the objective of this paper is to examine the applicability of StoNED when a ray production function models a production technology with multi-dimensional input and output. In addition to a general analysis of properties required by a ray production function for StoNED to be applicable, we conduct a Monte Carlo simulation in order to evaluate the quality of the frontier and efficiencies estimated by StoNED. The results are compared with those derived via Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). We show that StoNED provides competitive estimates in regard to other methods and especially in regard to the real functional form and efficiency.     

MEASURING RICHNESS AND POVERTY: A MICRO DATA APPLICATION TO EUROPE AND GERMANY

In this paper, we define a new class of richness measures. In contrast to the often used headcount, these new measures are sensitive to changes in rich individuals' incomes and, therefore, allow for a more sophisticated analysis of richness. We demonstrate the application of these new measures in analyzing the development of poverty and richness over time in Germany. Moreover, we compare Germany to many other European countries and investigate the impact of tax reforms on poverty and richness. Using these examples, we show the importance of taking the intensity of changes into account and not only the number of people beyond a given richness line (headcount). We propose to use the new measures in addition to the headcount index for a more comprehensive analysis of richness.     

Valuation Implications of Investment Opportunities and Earnings Permanence

This study investigates the value-relevance of accounting earnings in the presence of investment (growth) opportunities after making two theoretical and methodological research design refinements. First, we test for the incremental effect of growth on firms earnings response coefficients after controlling for the extent of transitory earnings under the assumption that the value-relevance of earnings with respect to growth should be stronger when earnings are more permanent. Second, we perform comprehensive factor analysis using market-based and accounting-based measures to construct a composite proxy for investment opportunities. We find that firms investment opportunities and the relative permanence of current earnings affect the value-relevance of those earnings. Additionally, we find that the interaction between permanent earnings and investment opportunities produces an even stronger price response to earnings.     

Basel II and bank lending to emerging markets: Evidence from the German banking sector

This paper investigates whether the new Basel Accord will induce a change in bank lending to emerging markets using a comprehensive new data set on German banks’ foreign exposure. We test two interlinked hypotheses on the conditions under which the change in the regulatory capital would leave lending flows unaffected. This would be the case if (i) the new regulatory capital requirement remains below the economic capital and (ii) banks’ economic capital to emerging markets already adequately reflects risk. On both accounts the evidence indicates that the new Basel Accord should have a limited effect on lending to emerging markets.     

Do demographics have an impact on country of origin effects?

The article discusses the potential impact of consumers' age, socio‐economic group, and sex on the magnitude of country of origin effects for lager and sparkling wine and presents the results of an empirical study into the subject. It is found that older consumers show stronger country of origin effects, which may be due to a generally stronger reliance of older people on broader mental categories, in order to compensate for a decrease in working memory. Socio‐economic groups AB are found to show stronger country of origin effects for sparkling wine, whereas socio‐economic groups C1C2 show stronger country of origin effects for lager. This may be related to relative differences in consumption patterns and expertise for the studied products between the two groups. Sex is not found to have any impact on the magnitude of country of origin effects in this study.     

The Environmental Impact of European Farming: How Legitimate Are Agri-Environmental Payments?

Offering agri-environmental payments to address the various positive and negative environmental nonmarket effects of European Union agriculture might be an efficient way of dealing with market imperfections. However, the complex interaction between farming practices and agri-environmental effects makes it difficult to assess what level of payments is justified under World Trade Organization's Green Box provisions. In reviewing the literature on positive and negative externalities of European farming on the environment, we find evidence to suggest that paying for agri-environmental improvements may be appropriate under the Green Box provisions, even if the payments have a positive production effect.