NONSENSE REGRESSIONS BETWEEN INTEGRATED PROCESSES OF DIFFERENT ORDERS

Abstract Herein we develop an analytical study of the asymptotic distributions obtained when we run linear regressions in the levels of stochastically independent integrated time series when the orders of integration of the dependent and independent variables are different. These theoretical findings largely explain the Monte Carlo results recently reported in Banerjee et al. (1993).     

How do very open economies adjust to large immigration flows? Evidence from Spanish regions

We study the labor market effects of the large immigration wave in Spain between 2001 and 2006. In this period the foreign-born share increased from 6% to 13%, with a total inflow exceeding three million immigrants. Our analysis exploits the large variation in the size of immigration flows across Spain's regions. To identify causal effects, we take advantage of the fact that immigrants' location choices were strongly driven by early migrant settlements that arrived during the 1980s. We find that the relatively unskilled migration inflows did not affect the wages or employment rates of unskilled workers in the receiving regions. The growth of the unskilled labor force was absorbed mostly through increases in total employment. This increase did not originate in changes in the composition of regional output, but was instead driven by changes in skill intensity at the industry level. Regions that received a large inflow of unskilled immigrants increased the intensity of use of the now more abundant (unskilled) labor, relative to other regions. The key industries responsible for this absorption were retail, construction, hotels and restaurants and domestic services. These results are inconsistent with standard open economy models but are in line with recent empirical studies for the United States and Germany.     

Chinese banking reforms in perspective: towards global alignment or national specificity?

The reforms of the banking sector in China conducted so far have been seeking to accomplish, simultaneously, two conflicting goals. On the one hand, the objective was to prepare Chinese banks for international competition and put them at the pace with the transformations observed in its overall economy. On the other, there is a social-driven agenda concerning employment and regional inequalities. Using principal component analysis, this article explores the impact of the ongoing reforms in the Chinese banking sector on the performance of individual banks. The results show that despite identical regulation, business practices can be dissimilar at the individual level. Taken collectively, the results also show the increasing influence of Western management standards in the Chinese banking sector.     

HELPING BEHAVIOR IN LARGE SOCIETIES

This article investigates how helping behavior can be sustained in large societies in the presence of agents who never help. I consider a game with many players who are anonymously and randomly matched every period in pairs. Within each match, one player may provide socially optimal but individually costly help to the other player. I introduce and characterize the class of “linear equilibria” in which, unlike equilibria used in the previous literature, there is help even in the presence of behavioral players. Such equilibria are close to a tit‐for‐tat strategy and feature smooth help dynamics when the society is large.     

Disruptive technology adoption,particularities of clustered firms

ABSTRACT

This article explores to what extent the internal attributes of a clustered firm influence its capacity to adopt disruptive innovations. A multidimensional approach to the absorptive capacity (ACAP) model is used to distinguish between potential (acquisition and assimilation domains) and realized (transformation and exploitation domains) internal firm capabilities. Our evidence comes from an empirical analysis of the population of firms belonging to the Spanish ceramic tile cluster which have adopted a disruptive innovation – the so-called digital printing technology – on a massive scale. The econometric estimations suggest the relevance of the Exploitation dimension of ACAP for early adoption of a new technology. In contrast, the other dimensions do not seem to play a decisive role when it comes to adopting one novelty earlier than others. In conclusion, and contrary to what was expected for non-clustered firms, the results revealed an uneven effect of the potential and realized domains of ACAP of clustered firms regarding the rate of adoption of distant technologies.     

Telecom Regulation: Lessons from Independent Central Banks

Consumers do not choose their preferred central bank base rate in the way that they buy, say, telephone services from one of a number of competing companies: independent central banks (ICBs) and utility regulators have different tasks. However, those concerned with the emerging field of utility regulation can still learn much from research on ICBs, not least because, for historical reasons, there is much more of it. The authors of this article argue that the key to the success of both ICBs and utility regulators is proper governance arrangements. They reject the arguments for procedures that are totally rule-based with little or no discretion. Within clear rules, they say, both ICBs and regulators should be given discretion combined with high accountability.     

Symmetric Coalitional Binomial Semivalues

We introduce here a family of mixed coalitional values. They extend the binomial semivalues to games endowed with a coalition structure, satisfy the property of symmetry in the quotient game and the quotient game property, generalize the symmetric coalitional Banzhaf value introduced by Alonso and Fiestras and link and merge the Shapley value and the binomial semivalues. A computational procedure in terms of the multilinear extension of the original game is also provided and an application to political science is sketched.     

Innovative behavioral regulatory agencies as second generation commitment devices

ABSTRACT

This article analyzes how the commitment problem in economic regulation, and a solution based on strategic delegation, are affected by the non-standard rationality of agents that participate in the regulatory interaction. As a result, on the one hand, independent regulators are seen as part of a potentially more robust innovative regulatory system, and, on the other hand, their contribution to this system can be based on a wider range of instruments. Second generation commitment mechanisms that take this into account may be a key ingredient of reforms in the regulation of those industries that require a long run perspective.     

Near Observational Equivalence and Fractionally Integrated Processes

The aim of this paper is to study the presence of nearly observationally equivalence problems in fractionally integrated processes. In order to illustrate our results, by means of a Monte Carlo study, we analyze the finite sample behaviour of the usual Durbin-Watson statistic in a regression between two independent nonstationary fractionally integrated processes with MA (1) innovations.     

Transitional dynamics and the distribution of assets

Summary. We study the evolution of the distribution of assets in a discrete time, deterministic growth model with log-utility, a minimum consumption requirement, Cobb-Douglas technology, and agents differing in initial assets. We prove that the coefficient of variation in assets across agents decreases monotonically in a transition to the steady state from below, if (i) the consumption requirement is zero, or (ii) the consumption requirement is not too big and the initial capital stock is large enough. We also show how a positive consumption requirement or a small elasticity of substitution between capital and labor can generate non-monotonic paths for inequality.JEL Classification Numbers: D31, E21, O41.We would like to thank S. Chatterjee, M. Huggett, T. Keister, P. Krusell, M. Santos, S. Williamson, and an anonymous referee, for their valuable comments and suggestions. All remaining errors are ours. Urrutia aknowledges the support of Universidad Carlos III de Madrid, to which he was affiliated during early phases of this project.