Reflections on the Euro Area Fiscal Stance

Avoiding the mistakes of the past, when the good times were not used to build buffers, will be crucial to avoid countries again being forced to engage in a pro-cyclical fiscal tightening in the next downturn.     

Assessing performance and value-creation capabilities in Lean healthcare: insights from a case study

ABSTRACT

Lean thinking is increasingly being applied worldwide. Yet its actual impact is still a puzzle, particularly when a ‘full-implementation approach’—which entails the adoption of a strategic approach to Lean dissemination on policy deployment procedures—is used. Focusing on the healthcare sector, this paper presents and tests a comprehensive measurement framework for Lean interventions. The paper explains how Lean testing can help decision-makers to solve managerial issues related to Lean initiatives.     

ETHNIC DIVERSITY,PROPERTY RIGHTS,AND NATURAL RESOURCES

Countries rich in natural resources constitute both development failures and successes depending on their underlying socioeconomic fundamentals. Recent empirical evidence and theoretical work provide support for a resource-curse hypothesis based on ethnic fractionalization. There is also increasing empirical evidence suggesting that ethnic heterogeneity based on polarization is a strong deterrent of economic growth. In this paper, we explore the interlinkages between natural resource abundance and both measures of ethnic heterogeneity. In a two–simultaneous equation system, we assess the effects of fractionalization and polarization on property-rights protection, and thereby on growth, both directly as well as in interaction with our resource-abundance proxy. We find that ethnic polarization is more likely to have a direct negative impact on the effectiveness of property rights in a resource-rich context, which as we explain may suggest that different ethnic groups treat the contestable resource base as a semi-public good.     

The first five years of the EU Impact Assessment system: a risk economics perspective on gaps between rationale and practice

In 2003, the European Commission (EC) started using Impact Assessment (IA) as the main empirical basis for its major policy proposals. The aim was to systematically assess ex ante the economic, social and environmental impacts of European Union (EU) policy proposals. In parallel, research proliferated in search for theoretical grounds for IAs and in an attempt to evaluate empirically the performance of the first sets of IAs produced by the EC. This paper combines conceptual and evaluative studies carried out in the first five years of EU IAs. It concludes that the great discrepancy between rationale and practice calls for a different theoretical focus and a higher emphasis on evaluating empirically crucial risk economics aspects of IAs, such as the value of statistical life, price of carbon, the integration of macroeconomic modelling and scenario analysis.     

Welfare-optimal trade and competition policies in small open oligopolistic economies

Standard trade theory claims that free trade is welfare-enhancing. We show that this is not the case if at least one sector of the economy is a Cournot oligopoly. In a simple small open economy with one oligopolistic and one competitive sector, welfare is an inverted U-shaped function of tariffs. Hence, an optimal tariff rate can be determined. The optimal rate depends on the number of firms in the oligopolistic sector. Below the optimal level, the competitive sector overproduces, i.e. oligopolistic good have a higher marginal effect on welfare. Increasing tariff rates stimulate the production of the oligopolistic sector by dampening imports. Under balanced trade, this reduces exports and production in the competitive sector, thus shifting resources to oligopolistic goods production. We also find that given certain levels of protection, perfect competition is not welfare maximal and, hence, not desirable. The finding explains why developing economies with imperfect competition are often reluctant to embrace trade liberalization and why, conversely, countries with high levels of external protection may be unenthusiastic about competition theory.     

Robust calibration and arbitrage-free interpolation of SSVI slices

Decisions in Economics and Finance - We describe a robust calibration algorithm of a set of SSVI maturity slices (i.e., a set of 3 SSVI parameters $$\theta _t, \rho _t, \varphi _t$$...     

Approximating exact expected utility via portfolio efficient frontiers

Expected utility theory is nowadays accepted as the standard for rational choice among risky assets. However, as Harry Markowitz recently pointed out, the problem of how the maximum expected utility along the risk–return portfolio efficient frontiers approximates the exact maximum expected utility is still open. This paper shows that some popular risk–return models are actually able to approximate expected utility maximization with respect to classical and new distance measures. It also analyzes the ability of the whole risk–return efficient frontiers to approximate the exact one. Our empirical analysis is based on recent publicly available real-world data sets.