Cross-border exchanges and volatility forecasting

We test for the performance of a series of volatility forecasting models (GARCH 1,1; EGARCH 1,1; CGARCH) in the context of several indices from the two oldest cross-border exchanges (Euronext; OMX). Our findings overall indicate that the EGARCH (1,1) model outperforms the other two, both before and after the outbreak of the global financial crisis. Controlling for the presence of feedback traders, the accuracy of the EGARCH (1,1) model is not affected, something further confirmed for both the pre and post crisis periods. Overall, ARCH effects can be found in the Euronext and OMX indices, with our results further indicating the presence of significant positive feedback trading in several of our tests.     

Financial risk attitudes and aging in Australia

A number of empirical studies document that people tend to become more risk averse as they get older. But other studies find only little evidence that age matters for financial risk attitudes. This prompts a call for revisiting the relationship between age and risk attitude to better support policy recommendations. The current paper contributes to this effort by utilising large-scale population data to conduct a dynamic panel analysis. Care is taken to avoid the problem of endogeneity of lagged risk attitude in modelling its effects. Analysis reveals that individuals' past risk attitude has a positive effect on their current risk attitude. However, there is only little evidence that risk attitude and age are systematically related. Our results shed some light on the previous contradictory empirical findings in the literature and suggest that past risk attitude is potentially of greater relevance than chronological age in determining current risk attitude.     

The Short‐term Determinants of Capital Flows for a Small Open Economy: The Case of Greece

This paper presents the factors driving capital flows inwards and outwards of a small open economy such as Greece during the period 1983–2009. Apart from the determinants of capital flows the possibility of speculative attacks is also considered. Applying the ordinary least squares (OLS) method it is found that variables linked to external factors such as the differential of domestic and foreign interest rates and financial crises, such as the Asian and Russian financial turmoil of 1997 and 1998 respectively, are the main factors influencing capital inflows and outflows in Greece during the period 1983–2009. Additionally the results of probit analysis support that the same factors are significant in determining the probability of speculative attacks to the Greek economy.     

R&D Subsidies,Spillovers, and Privatization in Mixed Markets

We examine the use of subsidies to research and development (R&D) in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is increasing in the degree of spillovers, but it is lower in the private duopoly. The optimal R&D subsidy leads to an increase in total R&D and production; however, it does not lead to the equalization of per firm output and therefore to an efficient distribution of production costs. We also find that privatization of the public firm reduces R&D activity and welfare in the duopoly market. This result stands even when optimal R&D subsidies are provided.     

Middle Managers' Divergent Strategic Activity: An Investigation of Multiple Measures of Network Centrality

abstract    Using a sample of 89 mid-level managers in a US based urban hospital, this study investigates relationships among three measures of network centrality and managers' divergent strategic activity. While prior work has demonstrated a relationship between managers' boundary-spanning responsibilities and strategic activity, inadequate attention has been paid to managers' internal network position. Drawing from established theory, we consider expected network flows associated with three elements of the strategic renewal process. From this, we hypothesize and test relationships among managers' divergent activity and three measures of network centrality. Our findings suggest specific relationships between alternative forms of network centrality and particular elements of the strategic renewal process. Consistent with existing research, the findings also show boundary-spanning managers to be more strategically active than their non-boundary-spanning counterparts.     

Factors Favoring Greece’s Inward Foreign Direct Investment in the Aftermath of the Global Financial Crisis: An Exploratory Survey

Greece has suffered the worst from the late 2000s global financial crisis. Despite the completion of the economic adjustment program the rate of recovery in Greece is still weak. The liquidity constraints in the Greek economy imply that the investment shock, which will accelerate its recovery rate, will be an outcome of investment inflows by privatizations and/or other opportunities arising to foreign investors (inward FDI) due to the devaluation of the assets in Greece caused by the crisis. However, the level of attracted by the Greek economy has always been well below the European Union average. This paper investigates the factors favoring inward FDI in Greece after the crisis. A survey is made by the use of a questionnaire for the collection of primary data on the activity of multinationals in Greece and non-parametric methods are used for investigating the attractiveness of the Greek market and the decision to invest.     

HAPPY PEOPLE ARE LESS LIKELY TO BE UNEMPLOYED: PSYCHOLOGICAL EVIDENCE FROM PANEL DATA

There is a large literature showing that unemployment reduces people's well‐being. Yet little is known about the reverse possibility, namely that well‐being itself may influence unemployment propensity. Understanding the potentials of human well‐being in relation to unemployment is important as many developed countries are currently facing high unemployment rates. As well‐being is likely to be endogenous, we use British panel data and implement Lewbel's novel empirical approach for identification. We show that higher well‐being implies a negative causal effect on the probability of being unemployed. The result holds for two very different well‐being measures: life satisfaction and a 12‐item scale of mental health. As such, it provides new empirical evidence on the causal link between well‐being and unemployment propensity. (JEL D03, I31)     

Upstream and downstream horizontal R&D networks

The existing literature on R&D networks has focused on networks among firms who compete in the product market (downstream networks). This article develops the literature by casting the analysis in the context of a vertically related industry, where both downstream firms and their upstream suppliers can form horizontal R&D networks.     

The Causal Effect of Retirement on Health: Understanding the Mechanisms

This article examines the direct effects of retirement on health, as well as its indirect effects, through a mediation analysis. Using Australian panel data, analysis reveals that changes in retirement status and retirement duration imply positive causal effects on self‐assessed health as well as physical health and mental health. Gender plays an important role in shaping these relationships. For women, the positive relationship between retirement duration and health can be attributed to physical activity. In contrast, men appear to enjoy better health when staying retired for longer because they participate more in outdoor activities.     

Price or Quantity? A New Irrelevance Result for Mixed Markets

Earlier studies for mixed markets have established a series of so‐called irrelevance results. While previous results relate to the attainment of the first‐best allocation for welfare, we provide a new irrelevance result in terms of the choice of strategic variable in the product market. We show that regardless of whether a public or private firm is the market leader, the leader always chooses the price contract whereas the follower is indifferent between the price contract and the quantity contract. The identity of the leader and the follower firm is therefore irrelevant for the equilibrium mode of competition. Implications for economic models in mixed market settings emerge, which are also discussed.