The size and growth of banks: evidence from four European countries

This paper tests for mimicry in local tax setting, by using a panel data set of the English non-metropolitan districts in the 1980s — when property tax rate variability across districts was highest. The results confirm the presence of large and significant spatial interactions among districts. Even after allowing for district-specific and time effects, a district appears to be significantly affected by its neighbours' policies. A 10% increase in the local property tax rate of a district's neighbours leads to an increase of 4–5% in its own property tax rate. On the other hand, the absence of correlation in tax rates between lower tier (district) authorities and upper tier (county) authorities suggests that the spatial pattern in district tax rates is not simply driven by spatially auto-correlated shocks.     

The spatial distribution of innovation: evidence on the role of academic quality for seven European countries

The quality of academic research and research undertaken at public laboratories is an important determinant of successful technology transfer. Corporate innovativeness may benefit considerably from scientific discoveries at universities or public laboratories and from the availability of locally well-trained scientists and graduates. The extent to which quality matters is investigated for 86 European regions in seven countries between 1997 and 2007. We find that regions hosting research departments at the forefront of science produce significantly more inventions and more innovations, whereas the mere presence of R&D personnel in universities has no significant impact. The production of patents in high-technology domains instead does benefit from the presence of R&D personnel in public laboratories. These results complement the existing evidence on the relationship between public research and spatial distribution of innovation.     

Industrial structure and innovation - evidence from European regions

Whether the composition of industrial activity influences innovation is the key question of this paper. The analysis is based on a model that integrates different kinds of diversity measures aiming at capturing Jacobs externalities, a production specialisation measure aiming at capturing Marshall-Arrow-Romer (MAR) externalities and regions as well as sector specific variables. Tested with an extended sample of 153 European regions and 16 manufacturing sectors, the estimates suggest that both kinds of externalities significantly influence innovation, although the influence of Jacobs externalities is more important in the context of high density regions as well as for high tech sectors.JEL Classification: R00, O18, O31Lydia Greunz: The author wishes to thank Henri Capron and two anonymous referees for their useful comments and suggestions. An earlier version of this paper was presented at Eindhoven Centre for Innovation Studies, January 2004, Eindhoven, The Netherlands.     

The establishment-size wage premium: evidence from European countries

This study examines the magnitude and determinants of the establishment-size wage premium in five European countries using a unique harmonised matched employer–employee data set (the 1995 European Structure of Earnings Survey). This data set enables to test the validity of various traditional explanations of the size wage gap (i.e. the labour quality hypothesis, the theory of compensating wage differentials, the role of monitoring and institutions) and of more recent hypotheses (i.e. size differences in job stability and in the concentration of skilled workers). We find some support for traditional explanations, but there remains a significant wage premium for workers employed in large establishments. Further results indicate that the magnitude of this premium fluctuates substantially across countries and appears to be negatively correlated with the degree of corporatism.     

Technological and geographical proximity effects on knowledge spillovers: evidence from the US patent citations

The purpose of this paper is to investigate the pattern of knowledge flows as indicated by the patent citations in three areas: USA, Japan and Europe. In each economic area, we use information from United States Patent and Trademarks Office data to assess empirically the impact of the technological and geographical proximities for 530 international firms. In particular, the contribution to the existing literature is twofold: first, we use an international sample in such a way that we may compare the empirical results among different economic markets; second, we extend the analysis of the determinants of knowledge spillovers, taking into account the time dimension of the effects of the proximities. In order to compute the technological proximity, we follow the methodology developed by A.B. Jaffe (1986 Jaffe, A. B. 1986. Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits and market value. American Economic Review, 76(5): 984–1001. [Web of Science ®] , [Google Scholar]. Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits and market value. American Economic Review 76, no. 5: 984–1001), where a technological vector is based on the distribution of patents of each firm across technology classes. As far as the geographic proximity is concerned, we use the latitude and the longitude coordinates of the city in which each firm is situated to obtain the distance, in miles, between the firms. The empirical results, in line with results from previous studies, indicate that there is a statistically significant relationship between the knowledge flows, proxied by the patent citations, and the proximities, but the effects are rather differentiated according to the proximity type.     

Exploring the relationship between university and innovation: evidence from the Italian food industry

This study provides empirical evidence on the role of universities’ technological transfer (TT) activities in the Italian manufacturing sector, with particular attention to the food industry. Using the UniCredit-Capitalia database (2008 UniCredit-Capitalia. 2008. Decima Indagine Sulle Imprese Manifatturiere Italiane. Rapporto Corporate. [Google Scholar]) for firms and data from the Ministry of Education, University and Research (MIUR) to obtain the university TT indicator, we estimate a probit model to assess the effect of universities’ TT activities on a firm’s likelihood to innovate. The role of proximity in knowledge spillovers from TT activities is also investigated. Results show that university TT activities seem to stimulate food industry firms innovation and the impact appears significantly higher than for the manufacturing sector. Moreover, the effect of TT activities on innovation appears to be geographically bounded. As regards policy implications, this study provides two insights which may help promote innovation in the food sector. First, the factors that influence innovative capability in the food sector are different from those in other sectors, suggesting the need for sector specific instruments for promoting innovation. Second, science is important in the food industry and this raises questions about the policy of mainly considering high-tech industries when promoting a closer relationship between firms and universities.     

Spillovers of volatility index: evidence from U.S., European,and Asian stock markets

We investigated the cross-market relations of volatility indexes with U.S. and non-U.S. stock market returns. We found that the pervasive VIX influence at both U.S. and non-U.S. stock markets. The VSTOXX and VKOSPI capture the major shocks to the global economy and show movements similar to the VIX. The empirical findings indicate that volatility index changes are important in explaining stock returns. We also examined spillover effects across volatility indexes. The VIX is a main transmitter, and the VKOSPI the main receiver, of these spillovers. The results point to a leading role for the VIX in the international market.     

Open technology innovation activity and firm value: evidence from Korean firms

Despite the importance of Open Technology Innovation Activity (OTIA) for firm value, the literature investigating effects of OTIA announcements of developing country firms is not known in international academic circles. Our study using an event study approach examines the effects of OTIA (technology import and joint R&D) announcements of firms in Korea, one of the leading developing and highly innovative countries. We find that the announcements of OTIA produce positive average abnormal returns. Interestingly, unlike the prior studies on developed country firms, OTIA with firms in the homogenous industry leads to greater firm value than that involving firms in heterogenic industries. This implies an importance of a technological fusion with external firms in different industries for value of developing country firms. In addition, this article finds no home bias that a nationality of partner firms is not essential for the relation between OTIA and value of firms.     

Knowledge technological proximity: evidence from US and European patents

The purpose of this paper is to explore the correlation between the technological proximity measures in three areas: USA, Japan and the Europe. In each economic area, we use information from two international patent systems to construct the technological proximity for 240 large international firms. In particular, we select firms’ patents from United States Patent and Trademarks Office data and European Patent Office data. In order to compute the technological proximity, we follow the methodology developed by Jaffe [1986. “Technological Opportunity and Spillovers of R&D: Evidence from Firms’ Patents, Profits and Market Value.” American Economic Review 76 (5): 984–1001], where a technological vector is based on the distribution of patents of each firm across technology classes. Since the Jaffe distance assumes that spillovers only occur within the same technology class, but rules out spillovers between different classes, we develop also a distance measure which exploits the Mahalanobis norm to identify the distance between different technology classes based on the frequency that patents are taken out in different classes by the same firm. The contribution to the existing literature is to investigate the robustness of the technological proximity measure and the extent to which it may be affected by patent system features.     

International knowledge spillovers in the wind power industry: evidence from the European Union

The purpose of this paper is to analyze the presence of international knowledge spillovers in the wind power sector. Specifically, the paper investigates whether successful invention efforts in one country, measured by way of granted wind power patent counts, have had positive effects on the neighboring countries’ abilities to generate patents of the same category. Data on the number of patents granted at the European Patent Office during the period 1978–2008 are used for the eight national technological leaders in the western European wind power sector. The few comprehensive wind power studies that exist have only found limited evidence of international knowledge spillovers. However, in this paper, we find that international spillovers are statistically significant determinants of a country’s wind power patenting outcomes. Geographical distance is also taken into consideration, and the knowledge spillover effects are shown to become stronger with decreases in this distance. The results should have important policy implications, for example, for a national government when it comes to applying an investment strategy in wind power or, alternatively, free-riding on other countries’ invention efforts.     

Factors affecting the take-off of innovative technologies: evidence from digital cameras

While technological innovations are important for many industries, take-off sales for innovative products can have long lead times due to a variety of factors. This article identifies the main parameters affecting digital camera take-off sales in the US between 2001 and 2004. The study constructs an empirical model for film and digital camera shipments and finds that digital cameras primarily served as a substitute for low-end film compacts rather than high-end film Single-Lens Reflex (SLR) cameras. Also, growth in household PC ownership and Windows XP market share were the main contributing factors to the decline of film cameras, with PC penetration rate as the most important factor for digital camera diffusion.     

How do income and education affect health inequality: evidence from four developing countries

Using household survey data from four countries ? Albania, Nepal, Tajikistan and Tanzania ? this article calculates income-related inequality in health care utilization. We measure health disparity separately for generally and chronically ill individuals by constructing two models: one for the probability of a visit to a physician and another for the number of visits. Following model-based measurements, we decompose inequality into two major parts: one accounted for by identity-related factors and another by socioeconomic and other factors such as education, geography and distance to a clinic. We propose a new method to quantify the effect of changes in income and education on health disparity. One of our important findings suggests that health disparity is pro-rich in all our sample countries. The pro-rich disparity is prevalent among generally ill as well as chronically ill patients, in both visit probability and visit frequency models. Health inequality seems primarily driven by income differences followed by nonidentity factors. Further, the principle of equal treatment for equal need is not fulfilled in any of our countries. Among policy implications, increasing average income and education in a way that also reduces disparity in income and education, respectively, will substantially shrink inequality in health care utilization.     

Asymmetric spillover effects between the Shanghai and Hong Kong stock markets: evidence from quantile lagged regression

This article surveys the asymmetric spillover effects between the mainland China-based Shanghai Composite Index (SCI) and the Hong Kong based Hang Seng Index (HSI) using a quantile lagged regression model. Compared to previous studies, this article, based on data before and after the 2008 global financial crisis, presents a more detailed analysis, as we investigate the spillovers in terms of returns, volatilities and exchange rates between the renminbi (RMB) and the Hong Kong dollar (HKD) throughout the entire conditional return distribution, including the central quantiles, which are closely related to the normal circumstances, and the extreme quantiles, which correspond to the bear and bull markets. First, we find that the return spillovers from its lagged returns or from the other index not only vary across time but also depend on stock state. Second, while return volatility may boost the stock market in a bull market, it accelerates the decline in a bear market. Third, the depreciation of the RMB relative to the HKD does not significantly affect current returns for the HSI, while it negatively affects current returns for the SCI in a bad state after the crisis. The findings presented in this article will facilitate investors’ understanding of the two stock markets.     

Co-movement and spillovers: empirical evidence from BRIC equity markets

A higher degree of co-movement and spillover effects among different asset classes undermine portfolio diversification benefits. In this regard, the present study attempts to capture dynamic co-movement and return-volatility spillover effects among the most promising emerging equity markets, i.e. Brazil, Russia, India and China in a multivariate framework by employing VAR-ABEKK and VAR-DCC-AGARCH (1,1) models. To further comprehend the behaviour of the correlation coefficients during the global financial crisis period (2007–2009), heat map and Markov regime switching model (two regimes with a switch at ‘mean’ level only) have been used. The results report that the BRIC equity markets do not share a common stochastic trend in the long run. There is strong evidence of market shocks to volatility, volatility to volatility and negative shocks to volatility spillover effects among the BRIC markets. Overall, the BRIC markets are partially integrated with each other, thereby making them stronger investment candidates.     

Testing for fiscal sustainability: New evidence from the G-7 and some European countries

Whether or not a government deficit is sustainable has important implications for policy. If the debt of a nation is sustainable, then it implies that the government should have no incentive to default on its internal debt. In this article we examine whether or not the debt-GDP ratios of the G-7 and some European countries can be characterized by a unit root process with the non-linear trend and asymmetric adjustment. The econometric methodology allows us to determine whether the stationarity holds for the government's debt–GDP ratio after considering the non-linear trend. Among the main results, it is found that it is very likely that the debt–GDP ratios of Canada, Germany, the US and Italy are stationarity after taking account of the non-linear trend in the long run. Nevertheless, it is model-dependent for the debt–GDP ratios of these countries to be asymmetrically adjusted after taking the non-linear trend into consideration.     

Threshold,smooth transition and mean reversion in inflation: New evidence from European countries

Knowing the absence or presence of a unit root in inflation is helpful not only in distinguishing between different economic hypotheses but is also important to monetary authorities in implementing the policies of disinflation. Using data for fourteen European countries, this study investigates the issue of nonstationarity in inflation by considering the possibility of nonlinearity. In particular, we consider the properties of a threshold, smooth transition and structural break in testing for a unit root in the inflation rates. By and large, the results support the view that the inflation rates of the European countries are characterized by a unit root process based on the conventional linear unit root tests. However, the results of the nonlinear unit root tests show that the inflation rates are characterized by nonlinear mean reversion after considering the nonlinear properties of the threshold, smooth transition and structural break. The mean reversion in inflation favors the hypothesis of, for example, the natural rate of inflation and the sticky-price model and implies that shocks only have transitory effects.     

The role of innovation in venture capital: empirical evidence from European Union and EFTA countries

This article investigates the effects of innovation attempts on the venture capital and investment activity in the cases of the selected European Union plus European Free Trade Agreement countries using annual panel data and by controlling for real income growth and business sophistication. Our findings suggest that innovation has positively significant effects on venture capital in the cases without opt-out countries (United Kingdom and Denmark); however, these effects become negative in the cases with opt-out countries. Policy implications are provided in the conclusion section of this study.     

Volatility spillovers and macroeconomic announcements: evidence from crude oil markets

The paper applies an event study methodologyaims to investigate the macroeconomic announcements effects on Standard&Poor’s500 and oil prices. Our results provide evidence for a significant impact of the US macroeconomic news on oil prices. This impact is split into two components, namely the direct effect (common response) and indirect effect (volatility transmission). Altogether our results show that the volatility transmission is bidirectional. Not only a significant volatility transmission from the oil market to the US stock market is revealed, but also a high volatility transmission is recorded from the oil market to the stock market especially after the release of consumption indicators.     

How does public spending affect technical efficiency? Some evidence from 15 European countries

The relationship between government size and economic growth has been widely debated. Revisiting the subject from a distinct angle with respect to the mainstream approach, we provide an empirical analysis of the impact of government size on technical efficiency. The aim of this paper is to estimate the impact of public sector's size and of public expenditure components on 15 European countries’ technical efficiency from 1996 to 2014 by using a True Random Effect model. Using the total public expenditure as a proxy for the government size we estimate simultaneously national optimal production function and technical efficiency by controlling for income distribution and institutional quality. Our main findings show that the effect of public sector's size on efficiency is positive while the type of public expenditures may have both positive and negative impact. In more details, results suggest that education and health expenditures have a positive effect on technical efficiency, while others have a negative impact.     

Revisiting measure of R&D spillovers: empirical evidence on OECD countries and industries

Using data for 17 Organisation for Economic Co-operation and Development (OECD) countries over 29 years for 28 industries, this paper estimates industry-wise research and development (R&D) spillovers from the largest R&D investors and the most R&D-intensive industries that contribute 80% of global R&D. In doing so, it tests several assumptions made in the literature, and data rejecting them, proposes a methodology on R&D return estimation devoid of these assumptions. Results show that R&D has substantial spillovers, justifying R&D support policy. Each dollar of R&D generates about 29 cents in spillovers domestically and 4 cents in foreign countries. However, both intra- and inter-industry spillovers vary by industries, implying that the policy of supporting each R&D dollar uniformly across industries is suboptimal. Contrary to industry heterogeneity, the R&D spillovers from an industry do not vary substantially across countries, suggesting that optimal R&D policy across OECD countries might be uniform. An industry-by-industry technology matrix shows that sometimes an idea generates a greater impact on other industries than where it is generated.