On the need to compensate the compensating variation in CGE modeling

The message of this research is that in the standard calibrated setting of Computational General Equilibrium (CGE) models, the welfare measures typically used to compare benchmark with counterfactuals are numéraire dependent. This evaluation bias affects the compensating variation and the Konüs index of cost of living. We show that the equivalent variation is neutral regarding the choice of value units in calibrated models but would be affected as well in uncalibrated CGE models. We illustrate with a simple example and propose an even simpler theoretical solution to overcome these biases; all that is required to have correct welfare estimates is to compensate normalizing with a suitable price index. This type of correction is necessary to overcome the sometimes blind implementation of welfare measures in numerical general equilibrium analysis. We show that the induced quantitative errors may be substantial providing biased welfare estimates and misleading results.     

REVISITING THE ORIGINAL GHOSH MODEL: CAN IT BE MADE MORE PLAUSIBLE?

We reconsider in this paper the alleged implausibility of Ghosh's model and we do so reformulating the model to incorporate an alternative closure rule. Our proposed closure rule is in line with the original allocation rules defined by A. Ghosh. The closure solves, to some extent, the implausibility problem that was pointed out by Oosterhaven, for then value-added is correctly computed and responsive to allocation changes resulting from supply shocks. Some numerical examples illustrate the sectoral and aggregate consistency of the allocation equilibrium.     

Gordon Tullock and the Virginia School of Law and Economics

In 1999 Gordon Tullock became Professor at the George Mason University Law School. Tullock’s arrival at George Mason brought the economics department and the law school close together. The work that resulted during those years consolidated the methodological foundations for a different way of thinking about the economic analysis of law—the “functional” approach to law and economics. The functional law and economics approach espoused by the Virginia School was not attacking any of the results of the Chicago School or the Yale School, but rather proposing a methodological shift. This paper presents some of the results developed by this school and illustrates Tullock’s controversial positions on trials and on the common law system, through anecdotes, Tullock’s own work and related scholarly contributions.     

Effect of Production Process and Attitudes on the Intent to Buy Sustainable Beef

Abstract

Previous studies on food consumption explore limited dimensions of the sustainable food production process. A model of consumer concern over the agricultural production process was developed to assess the influence of environmental attitudes, product involvement, and brand equity on the intent to buy sustainable beef. Interviews with experts, two focus groups, and a literature review were used to propose a scale for production process concerns. A survey of 725 beef consumers was conducted to test eight hypotheses. Results suggest that product involvement and concerns over the production process are related to attitude towards the environment and intent to buy sustainable beef. Moreover, as a result, the consumer bears a positive attitude towards sustainable consumption and is more likely to buy a sustainable product. Meanwhile, the rejected hypothesis refers to the relationship between brand equity and purchase intention. This new conceptual model may be validated with other food commodities.     

Re‐Thinking Territorial Cohesion in the European Planning Context

The socio‐economic dimensions of cohesion have long been considered an integral part of Europeanization. However, recently a third dimension has been added to the Europe 2020 cohesion policy debate: territorial cohesion. Consequently this term is as yet undeveloped, resulting in a lack of consensus on how to define and interpret it. Such ambiguity represents a theoretical and empirical challenge to regional actors needing to respond to European Union (EU) directives while operationalizing the concept within their national and/or regional agendas. This article uses Portugal as a case study to examine how the concept of territorial cohesion is being interpreted and transposed from EU‐based to territorial‐based instruments and policy documents. First, we conducted a qualitative content analysis (QCA) of a selection of European and regional publications to compare their intrinsic discourses. This was followed by around 60 structured qualitative interviews, conducted with leading actors who had been instrumental in writing or implementing regional policy documents. On the basis of this dual analysis we conclude that, as a whole, the writers of the Portuguese strategic documents successfully transposed this concept, although perceptible differences exist between regions, as local actors have selectively redefined it to better suit their strategic priorities. These differences are debated with the aim of contributing to the design of effective public policies that facilitate inclusion, cohesion and Europeanization.     

Dynamic complex hedging in additive markets

In general, geometric additive models are incomplete and the perfect replication of derivatives, in the usual sense, is not possible. In this paper we complete the market by introducing the so-called power-jump assets. Using a static hedging formula, in order to relate call options and power-jump assets, we show that this market can also be completed by considering portfolios with a continuum of call options with different strikes and the same maturity.     

The stability–concentration relationship in the Brazilian banking system

In this article, the relation between non-performing loans (NPL) of the Brazilian banking system and macroeconomic factors, systemic risk, and banking concentration is empirically tested. In evaluating this relation, we use a dynamic specification with fixed effects, while using a panel data approach. The empirical results suggest that the banking concentration has a statistically significant impact on NPL, suggesting that more concentrated banking systems may improve financial stability. These results are important for the design of banking regulation policies.