Too dynamic to fail: empirical support for an autocatalytic model of Minsky’s financial instability hypothesis

Solomon and Golo (Account Econ Law 3(3):167–260, 2013) have recently proposed an autocatalytic (self-reinforcing) feedback model which couples a macroscopic system parameter (the interest rate), a microscopic parameter that measures the distribution of the states of the individual agents (the number of firms in financial difficulty) and a peer-to-peer network effect (contagion across supply chain financing). In this model, each financial agent is characterized by its resilience to the interest rate. Above a certain rate the interest due on the firm’s financial costs exceeds its earnings and the firm becomes susceptible to failure (ponzi). For the interest rate levels under a certain threshold level, the firm loans are smaller then its earnings and the firm becomes ‘hedge.’ In this paper, we fit the historical data (2002–2009) on interest rate data into our model, in order to predict the number of the ponzi firms. We compare the prediction with the data taken from a large panel of Italian firms over a period of 9 years. We then use trade credit linkages to discuss the connection between the ponzi density and the network percolation. We find that the ‘top-down’–‘bottom-up’ positive feedback loop accounts for most of the Minsky crisis accelerator dynamics. The peer-to-peer ponzi companies contagion becomes significant only in the last stage of the crisis when the ponzi density is above a critical value. Moreover the ponzi contagion is limited only to the companies that were not dynamic enough to substitute their distressed clients with new ones. In this respect the data support a view in which the success of the economy depends on substituting the static ‘supply-network’ picture with an interacting dynamic agents one.     

The convergence in domestic value-added of exports in the EU

Difficulties in measuring domestic value-added in exports (DVA) have led to the development of alternative measures of trade in value-added terms. These new measures have enabled more accurate estimates that reveal that the EU countries from Central and Eastern Europe (CEE10) exhibit an approximately five percentage points lower DVA share of exports compared with other EU countries (EU15). The lag is on average the highest in knowledge-intensive manufacturing sectors (eight percentage points) and the lowest in knowledge-intensive services (0.3 percentage points). However, this article argues that the CEE10 economies have acquired new knowledge by participating in GVCs and thus have gradually started increasing their level of DVA. Based on EU trade data, this article presents evidence of convergence of DVA in manufacturing and especially in the services sector. It is also shown that a negative relationship exists between participation in GVCs and DVA in the CEE10 economies that is declining over time in both manufacturing and services exports.     

Temperatures,cleanliness and food storage practises in domestic refrigerators in Serbia,Belgrade

Consumers’ knowledge about proper household practises during food handling and storage are deemed insufficient. Therefore, the aim of our study was to investigate the conditions of food storage in refrigerators (temperature, hygienic and storage conditions) and consumer knowledge about good practises. This study included 100 households from the Belgrade area. All participants were interviewed using a standardized questionnaire. The internal temperature of refrigerators was measured at three points: the top and bottom shelves and the refrigerator door. The average temperature in the refrigerators was 9.3°C. The average temperature recorded in the refrigerator doors was significantly higher (P < 0.01) than temperatures recorded on the top or bottom shelves. The age and design of refrigerators, and potential heat source near refrigerator can impact the refrigerator temperature. In 50% of the surveyed refrigerators, food storage practises were incorrect. More than a half (56%) of the surveyed consumers were aware of the recommended refrigerator temperature, but measured temperature in their refrigerators was considerably higher. The results from our study indicate that knowledge of recommended behaviour about good food safety practise do not always translate into practise in the home.     

Website Communication and Business Relationships – Matches and Mismatches

Drawing upon the interaction approach, the internet marketing literature, and qualitative case studies, the paper depicts website communication strategies that match and mismatch different stages of business-to-business relationships. To achieve the match, the more the relationship is developed, the more individualized website communication should be employed. Mismatch situations that hinder a relationship can occur not only when websites are underdeveloped but also when websites are overdeveloped and too individualized, falling short to utilize sellers’ investments.