THE ROLE OF LAW IN ECONOMIC GROWTH: A LITERATURE REVIEW

Abstract Compared with other explanatory variables, such as capital accumulation, technological innovations, geographical endowments, economic openness, and cultural factors, institutions, especially legal institutions have been regarded as a crucial condition for economic growth in recent years. The importance of legal rules is systematically revealed by a series of cross‐country econometric studies conducted by La Porta et al., who claim that legal origins are central to understanding the divergence in living standards across the regions and countries of the world and, compared with civil law countries, especially those countries with French civil law tradition, common law countries have enjoyed superior economic outcomes. The controversies set off by La Porta et al.'s proposition indicate that there are a number of questions that are difficult to explain by La Porta et al.'s theory, and hence call for more work on comparative analysis of different legal families before a consensus can be reached.     

FORTY YEARS OF STATISTICS AND OPERATIONS RESEARCH IN THE NETHERLANDS

In 1985 we commemorate the fortieth anniversary of the V"VS, the Netherlands Society for Statistics and Operations Research. In this paper the contributions in our country during the post–war period to the theory of quantitative methods and to their applications are reviewed briefly.     

THE ECONOMICS OF NETWORKS: A SURVEY OF THE EMPIRICAL LITERATURE

Abstract.  Network effects, the increase in value of consuming a product if many other consumers use the same product, are a feature of many markets and in particular of many high-technology products. This paper surveys the burgeoning empirical literature that has developed especially during the last years. After theoretical work dominated the earlier years of research in this area, newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy, marketing and company strategies. Furthermore, insights from the study of social networks have been applied to analyse how consumers interact with each other. The paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate.     

THE ECONOMICS OF MOVIES: A LITERATURE SURVEY

Abstract The film industry provides a myriad of interesting problems for economic contemplation. From the initial concept of an idea through production, distribution and finally exhibition there are many aspects to the film project and the film industry that present new and interesting puzzles worthy of investigation. Add to this the high level of data availability, and it is little wonder that an increasing number of researchers are being attracted to this industry. To date, however, there are no comprehensive surveys on the contribution of economists to this literature. This paper attempts to fill this void and unify what is known about the industry. It also identifies and discusses potential areas for new research.     

PATENT ENFORCEMENT: A REVIEW OF THE LITERATURE

Without the confidence that patent rights can be enforced quickly and efficiently, when needed, the patent system will not stimulate innovation. For this reason, governments, academics, international institutions and the private sector have poured significant resources into gathering and analysing statistics on patent enforcement over the last two decades. This paper reviews these studies and finds that while infringement is relatively common, much enforcement occurs informally and less than 1–2% of patents incur litigation. New strategic uses of the enforcement system, especially by nonpracticing entities, are the major emerging enforcement issue, especially in the United States. While the old problem of litigation costs attracts the lion's share of empirical attention, it has produced remarkably few solutions to date.     

MODELS OF BANKING INSTABILITY: A PARTIAL REVIEW OF THE LITERATURE

Abstract. This paper critically examines the theoretical literature on banking instability that has followed Diamond and Dybvig (1983). It explores the extent to which it (a) explains banking instability within a theoretical context in which financial intermediaries improve on unintermediated markets, and (b) justifies government involvement in the financial intermediation industry. It suggests that the literature has yet to provide a satisfactory theoretical basis for banking instability as such since the intermediaries which arise from it are peculiar mutual funds that bear little resemblance to real-world banks. In addition, the paper challenges the widespread belief that this literature provides a sound foundation for government involvement in the industry. It suggests that arguments for government intervention are open to objection on various grounds, the most important one being that they are inconsistent with the existence of properly motivated financial intermediation in these models.     

DELEGATED PORTFOLIO MANAGEMENT: A SURVEY OF THE THEORETICAL LITERATURE

Abstract.  This paper provides a selective review of the theoretical literature on delegated portfolio management as a principal–agent relationship. The main focus of the paper is to review the analytical issues raised by the peculiar nature of the delegated portfolio management relationship within the broader class of principal–agent models. In particular, the paper discusses the performance of linear versus nonlinear compensation contracts in a single-period setting, the possible effects of limited liability of portfolio managers, the role of reputational concerns in a multiperiod framework, and the incentives to noise trading. In addition, the paper deals with some general equilibrium dimensions and asset pricing implications of delegated portfolio management. The paper also suggests some directions for future research.     

EXCHANGE RATE TARGET ZONES: A SURVEY OF THE LITERATURE

This work selectively reviews the literature on exchange rate target zones and their theoretical and empirical methodologies and examines whether they can be used to clarify to what extent this type of exchange rate regime could contribute to greater exchange rate stability. We discuss the main contributions of the first and second generations of exchange rate target zone models. In an attempt to reconcile the poor empirical performance of the Krugman model with the reality of exchange rate target zone regimes, this line of research integrates target zones with alternative underlying economic models, such as imperfect credibility, intra‐marginal interventions and sticky price models. It was thus possible to understand the correlations observed between the exchange rate, its fundamentals determinants and the interest rate differential, and to explain the fact that the statistical distribution of the exchange rate is hump shaped rather than U shaped. This implies that the initial emphasis of target zone models on nonlinearities, ‘honeymoon effect’, ‘smooth pasting’ and marginal interventions has vanished. Exchange rate target zones are better described as similar to managed floating regimes with intra‐marginal interventions, with some marginal interventions when the exchange rate reaches the edges of the floating band.     

CORPORATE SOCIAL RESPONSIBILITY: A MICROECONOMIC REVIEW OF THE LITERATURE

This paper provides a review of the theoretical and empirical literature on Corporate Social Responsibility (CSR). Depending on whether an individual can be considered as selfish, or whether she has also social preferences, motives for CSR, can be explained in different ways. Furthermore, we explicitly highlight the influence of different Corporate Governance System on CSR as well as the relationship between firms' size and social commitment. Because it is difficult to distinguish between different theories in empirical studies, we argue that an experimental approach might be suitable to test theories of CSR.     

PRODUCTIVITY AND STRUCTURAL CHANGE: A REVIEW OF THE LITERATURE

Abstract.  This paper is a survey of the existing research on structural change at various levels of aggregation with a special focus on the relation to productivity and technological change. The exposition covers the research concerning the development of the three main sectors of the private economy, multisector growth models and recent evolutionary theories of structural change. Empirical studies of the reallocation of market or sector shares as a result of differential productivity developments are also discussed. The synthesis emphasizes the crucial interaction of supply- and demand-side forces in shaping structural change.     

THE EVOLUTION OF STOCK MARKET EFFICIENCY OVER TIME: A SURVEY OF THE EMPIRICAL LITERATURE

Abstract This paper provides a systematic review of the weak‐form market efficiency literature that examines return predictability from past price changes, with an exclusive focus on the stock markets. Our survey shows that the bulk of the empirical studies examine whether the stock market under study is or is not weak‐form efficient in the absolute sense, assuming that the level of market efficiency remains unchanged throughout the estimation period. However, the possibility of time‐varying weak‐form market efficiency has received increasing attention in recent years. We categorize these emerging studies based on the research framework adopted, namely non‐overlapping sub‐period analysis, time‐varying parameter model and rolling estimation window. An encouraging development is that the documented empirical evidence of evolving stock return predictability can be rationalized within the framework of the adaptive markets hypothesis.     

PEASANTS AGAINST PRIVATE PROPERTY RIGHTS: A REVIEW OF THE LITERATURE

Land is the main – if not the only – asset for a majority of people in developing countries. The definition and allocation of rights over land are thus naturally essential aspects of individuals’ daily lives, as well as critical determinants of social and economic development. The privatization of land rights has long been seen as a necessary process, enhancing both efficiency and equity. However, privatized land rights have not always emerged endogenously, while exogenously driven programs of land privatization have not always been successful nor popular. This has raised questions about the expected benefits of land rights privatization. This paper aims at summarizing the main arguments and studies, both theoretical and empirical, on this issue, with a specific focus on the factors that can make privatization inefficient or detrimental for the most concerned individuals.     

EMBODIED CARBON IN TRADE: A SURVEY OF THE EMPIRICAL LITERATURE

This paper critically reviews the literature on embodied carbon in trade and evaluates our present empirical understanding of these flows. A careful comparison of quantitative results from this literature exposes significant inconsistencies. For instance, estimates for emission embodied in world trade in 2004 range between 4.4 Gt and 6.2 Gt CO2, the difference corresponding to around half of Europe's annual emissions. A few consistent themes do nevertheless emerge from the literature. Most importantly, emissions in trade constitute a large and growing share of global emissions. Uncertainty about country‐level embodied emissions remains large, however, which presents severe limitations for the practical application of embodied carbon principles in climate policy.     

EMPIRICAL STUDIES OF GASOLINE RETAILING: A GUIDE TO THE LITERATURE

Abstract This paper surveys the empirical literature on gasoline retailing, which has been growing rapidly over the last three decades, possibly in response to antitrust and regulatory concerns and increased availability of pricing data. Studies of both pricing and non‐price decision variables are considered. In general, it is found that crude oil prices are the primary driver of national price movements over time. However, market structure has been identified as playing a role in price dynamics, equilibrium selection and price differentials across markets and stations. The economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers. Several directions for future work are suggested, including the development of theory and demand estimation using high‐frequency station level data.     

THE DEMAND FOR BEER,WINE AND SPIRITS: A SURVEY OF THE LITERATURE

Abstract The demand for alcohol literature is vast and much conflicting information about the nature of the demand for alcoholic beverages has been published. This paper presents a survey of the literature, and then uses the technique of meta‐regression analysis to establish insights into the nature of the demand for beer, wine and spirits. Unlike previous meta‐studies of the demand for alcoholic beverages this study adjusts for the precision of each elasticity estimate. The analysis presented suggests reported elasticity estimates will be influenced by such factors as estimation technique, data frequency and time period under consideration. With respect to time, the findings suggest that the demand for alcoholic beverages has become less inelastic since the mid‐1950s and that the income elasticity has been falling since the mid‐1960s. The analysis also found support for the idea that alcohol as a commodity group is a necessity, and that consumers respond to price discounting with inventory behaviour rather than true substitution behaviour. Little support is found for the idea that the demand for alcoholic beverages varies fundamentally across most countries, although wine may be an exception.     

THE BENEFITS AND COSTS OF MONETARY UNION IN SOUTHERN AFRICA: A CRITICAL SURVEY OF THE LITERATURE

Abstract.  With the 14 members of the Southern African Development Community (SADC) having set the objective of adopting a common currency for the year 2018, an expanding empirical literature has emerged evaluating the benefits and costs of a common-currency area in Southern Africa. This paper reviews that literature, focusing on two categories of studies: (1) those that assume that a country's characteristics are invariant to the adoption of a common currency and (2) those that assume that a monetary union alters an economy's structure, resulting in trade creation and credibility gains. The literature reviewed suggests that a relatively small group of countries, typically including South Africa, satisfies the criteria necessary for monetary unification. The literature also suggests that, in a monetary union comprising all SADC countries and a regional central bank that sets monetary policy to reflect the average economic conditions (e.g. fiscal balances) in the region, the potential losses (i.e. higher inflation) from giving up an existing credible national central bank, a relevant consideration for South Africa, could outweigh any potential benefits of trade creation resulting from a common currency.     

INTERCHANGE FEES IN PAYMENT CARD SYSTEMS: A SURVEY OF THE LITERATURE

Abstract This paper surveys the recent literature about interchange fees in payment card systems. Interchange fees are used by payment platforms to allocate the total cost of a payment card transaction between the cardholder's bank, the issuer, and the merchant's bank, the acquirer. Each time a consumer pays by card, its bank receives an interchange fee from the merchants' bank. Banks argue that interchange fees are needed to encourage the use of electronic payment instruments, whereas merchants claim that they artificially inflate the cost of accepting cards. This paper sheds light on the ongoing debate that opposes banks to the regulatory institutions or the competition authorities in various countries, by reviewing the theoretical results of the literature and highlighting some unanswered issues.     

ALCOHOL CONSUMPTION AND HUMAN CAPITAL: A RETROSPECTIVE STUDY OF THE LITERATURE

Abstract Grossman proposed an individual's health can be viewed as one aspect of their human capital. Following this line of thought a number of recent papers have reported a positive impact of alcohol consumption on earnings. The rationale for the existence of such a relationship is the positive impact of alcohol on physical and mental health. We conduct a meta‐analysis to determine whether such factors as: the estimation technique, the presence of ex‐drinkers in the sample, possible sample selection bias and publication bias may all contribute to these findings. An additional suggestion for the positive relationship between alcohol and wages is the presence of a common set of personality traits that determines drinking behaviour and also leads to higher earnings. We examine this relationship by reviewing the literature that investigates if the personality influencing aspects of alcohol consumption influences measures of human capital. We also survey the significant body of research that has examined how alcohol consumption has been found to influence educational outcomes and the work force participation of problem drinkers.     

OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract.  This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries' labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high-skilled white-collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market-seeking foreign direct investments.