Can sticky consumption cause business cycles?

Sticky aggregate consumption is a demonstrable phenomenon in economies throughout the world, but to our knowledge it has not yet been incorporated into capital structure macroeconomics. Doing so suggests an explanation for business cycles. On the heels of a technological advance, sticky consumption facilitates increased savings and lower real interest rates. These lower rates lead to accelerating elongations in the capital structure. Even though such elongations facilitate more rapid economic growth, if duplicative overinvestment in research and development occurs, economic contraction will follow the exposure of such error.     

Which business model for e-book pricing?

We characterize and compare equilibrium pricing strategies in a marketing channel in two scenarios. In the first scenario, the manufacturer chooses the wholesale prices of the two versions of a product, i.e., tangible and digital. and the retailer their prices to consumer. In the second scenario, the players use a revenue-sharing contract for only the digital version, while the competing version is managed by a wholesale price contract. The problem is inspired from a pricing controversy in the e-book industry.     

Is the Austrian business cycle theory still relevant?

We compile econometric evidence from the latest available time series data on US savings, consumption, interest rates, and gross domestic product (GDP) to test a reduced form model of the Austrian Business Cycle Theory (ABCT). We build indexes that mimic the gap between the market and natural rates of interest and, using this gap as a proxy for expansionary policy, uncover evidence that changes in reserves lead to changes in real GDP in the manner predicted by ABCT. In addition, we establish that the pattern of endogenous changes in output, from positive to negative, also conforms to the predictions of ABCT. Thus, by incorporating improvements with regard to data and methods over the few other examples of econometric work in this area, we provide more distinctive evidence on ABCT relative to competing theories of the business cycle than has been done previously.

Do national business cycles have an international origin?

This paper analyses a set of output data for 113 countries and identifies common sources of fluctuations, to estimate a world business cycle. We also analyze the multiplier effects of worldwide or global shocks and their implications for the persistence and amplitude of cyclical fluctuations. We find that a higher relative importance of global shocks leads to lower persistence and greater volatility. Finally, we compare some regional integration agreements and find that the EC emerges as the most integrated block. The analytical framework used is that of Forni, Hallin, Lippi and Reichlin (1999). First version: November 1999/Final version accepted: November 2001 RID="*" ID="*"  Université Libre de Bruxelles, DULBEA – CP 140, 50 av. Franklin Roosevelt, 1050 Bruxelles, Belgium. We are grateful towards two anonymous referees for their really helpful remarks. We also wish to express our deepest gratitude towards Lucrezia Reichlin for her very precious advice. We also would like to thank Jorge Rodigez and Marco Lippi for providing large pieces of code and Khalid Sekkat, Christophe Croux, Frederic Pivetta, and Francois Rycx for helpful comments and discussions.     

Is pharmaceutical expenditure related to the business cycles?

Recent research is focused on the study of health care expenditure and fiscal sustainability. In order to facilitate the understanding of this issue, we centre our interest on the Spanish pharmaceutical expenditure. Specifically, using data for the period 1995–2012, in the article we analyse if economic cycles affect pharmaceutical expenditures. Our results support that there is a positive relationship between pharmaceutical expenditure and economic development. Therefore, we conclude that pharmaceutical expenditures are pro cyclical over the last years.     

Developing business ethics theory and integrating economic analysis into business ethics teaching – a conceptualization based on externalities and diminishing marginal utility

Contrary to understandings that treat ethical considerations and economic thinking as separate if not antagonistic issues, we advocate a holistic view that links business ethics to consequentialist economic concepts and their concern about how scarce means should be used for the attainment of (given) ends. We believe that business ethics students will profit from a development of business ethics theory that facilitates an outcome-based evaluation of business strategies anchored in the economic concepts of externalities, game theory, equilibria, efficiency, transaction costs, and diminishing marginal utility. We outline how moral judgments about (socially irresponsible) business behaviors, which often lack theoretical grounding and self-critical examination, can be made both more consistent and transparent through a systematic application of these theoretical concepts. We furthermore point out that, in this evaluative exercise, business ethics analysts should make all assumptions explicit to meet their task of facilitating informed public debates and informed moral choices.     

Assessing economic activities – an example from central business districts

The Central Business District (CBD) is a dynamic part of the city that changes drastically over time, and responds to forces and demands for activities from within and from other countries. However, it is extremely difficult to quantify the various propositions put forward for measuring economic activities in the CBD due to the paucity of statistical data. Planning intervention thus becomes extremely difficult as other forces beyond the control or knowledge of the planner play crucial roles in determining what activities will locate in the CBD and where they will locate. This study, attempts to explore a view of how to measure and assess central business district economic activities for planning purposes. It follows a critical discussion of the nature of the CBD by pointing to empirical studies, including examples from the New York metropolitan region and the city of London. Moreover, it discusses indicators could be used to measure and assess economic activities in the CBD by highlighting planning purposes covering the entire issue.     

Crime during the business cycle: urban–rural differences

Despite the abundant literature on how crime evolves over the business cycle, no consensus has arisen whether crime increases or decreases during recessions. The literature provides both positive and negative associations between the crime rate and the unemployment rate, a commonly used proxy for the business cycle. This study revisits this issue and uses county-level data from 1990 to 2013. It allows for differences as to how unemployment relates to both property crime and violent crime depending on the size of the counties. We find evidence of a positive association between unemployment and property crime that strengthens with county size. The results show the same pattern for violent crime but are statistically weaker. Our findings suggest that the positive association between property crime and unemployment that others have found is largely driven by more populous areas.     

Do banks crowd in business ethics? An indirect evolutionary analysis

Trustworthiness as a major aspect of business ethics can evolve when it can be signaled. If this is impossible, only opportunistic traders will survive. For the institution of banks, which can guarantee payment, it is investigated whether they can crowd in trustworthiness. The crucial feature is the bank's ability to discriminate between trustworthy and unreliable debtors which, in our model, is formally captured by the probability difference of accepting their respective credit applications.     

Are professional forecasts of growth in US business investment rational?

Utilizing comparable time-series forecasts as benchmarks, we document the “weak” and “stronger” rationality of professional forecasts of growth in business investment for 1982-2009. Consistent with these findings, the forecasts are directionally accurate and imply symmetric loss.     

Does trade creation by social and business networks hold in services?

Recent literature on the border effect has shown that the intensity of trade in goods is positively correlated with the migration stocks between any pair of countries/regions. The number of references for business networks is more limited, but they are also related with a reduction on information costs. In this article we investigate whether such a relation holds also for Spanish domestic trade flows in consumer services. To this end, we use a gravity model rooted in the Dixit–Stiglitz–Krugman theoretical framework and a unique data set on interregional trade flows for some of the main tourism service sectors, namely, accommodations and restaurants. Our industry-specific analysis finds a large positive effect for restaurants but a more limited effect for accommodations. Forces driving the demand in each sector explain this result and suggest the idea that although social networks can act as a substitute of firms in some sectors at the same time they can enhance trade flows in other sectors. We perform the same kind of analysis with a data set (obtained by a similar method) for domestic trade in goods and discover a different response to social and business networks. Finally, we treat the potential endogeneity by taking the instrumental-variable approach of the Poisson pseudo-maximum likelihood estimator and thus obtain consistent results.     

A rigorous approach to business services offshoring and North–North trade

Advances in information and communication technologies (ICTs) have gained economy-wide importance and raised concerns that even within North–North trade neither services nor high-skilled labour may be sheltered from international competition. Rather, both may be increasingly susceptible to offshoring. We present a novel theoretical framework for analysing offshoring with a focus on skilled labour in managing value-added chains. Thoroughly modelling demand and supply allows to explicitly track cause and effects. Accordingly, effects of business service offshoring are completely different and more diverse than those of material offshoring, with the effects inter alia depending on whether triggered by trade integration or ICT.     

Unemployment and new business formation – new insights into a complex relationship

The article analyses the interrelation between unemployment and new business formation using panel data for a large cross-section of countries. We find robust evidence for a positive influence of unemployment, domestic credit to the private sector and business-friendly regulation on new business formation. Our examination does, however, indicate no support for the view that new business formation significantly reduces national unemployment rates.     

Euro Area business cycles in turbulent times: convergence or decoupling?

We study the business cycle properties of the four largest European economies in the wake of the recent recession episodes. The analysis is based on the factors estimated from a multi-country and multi-sector data-rich environment. We measure alikeness of business cycles by studying the synchronization of up and down phases, the convergence properties of country fluctuations towards the Euro Area (EA) cycles and the contribution of the EA factor to national GDP volatilities. While the economic fluctuations of the four EA member states were similar before the global financial turmoil, we gather compelling evidence of an asymmetric behaviour of Spanish fluctuations relative to the EA one.     

China's sloping land conversion program: Institutional innovation or business as usual?

China's Sloping Land Conversion Program (SLCP) is the largest land retirement/reforestation program in the developing world, having the goal of converting 14.67 million hectares of cropland to forests by 2010 (4.4 million of which is on land with slopes greater than 25°) and an additional “soft” goal of afforesting a roughly equal area of wasteland by 2010. Pending successful completion it could represent a 10-20% increase in China's national forest area and a 10% decrease in current cultivated area. In contrast to China's other forest-sector policies, SLCP uses a public payment scheme that directly engages millions of rural households as core agents of project implementation, and has the stated principals of volunteerism. Thus, insofar as current or future de facto program implementation involves decentralized, voluntary grassroots participation, SLCP represents an important departure from “business as usual” in how China manages its forest resources. This work draws upon current available research of the program and uses a 2003 household and village-level survey conducted by the Center for Chinese Agricultural Policy, CAS, to examine program design, implementation and outcomes to date. Results indicate that significant problems in design and implementation exist, with these including shortfalls in subsidies delivered, lack of respect of the principals of volunteerism, and insufficient technical support and budgeting for local implementation costs. More fundamentally, some program goals appear to be based on common misperceptions regarding the linkages between forests and watershed services. Overall, SLCP contains both innovative elements (volunteerism and the direct engagement of farmers) as well as components that hark back to policies and mindsets of decades past (the program's top-down, simplified contract structure, lack of sufficient consultation with local communities and rural households, and campaign-style mobilization). The paper concludes by providing four main suggestions to improve the program: 1) Increase local community input in design and implementation, and ensure that households have full autonomy in participation choice; 2) improve technical support and budgeting for local administrative costs and capacity building; 3) clarify the environmental services targeted and verify the measures needed to acquire these services; and 4) integrate SLCP into an overall package of complementary policies aimed at the rural sector.     

Women business owners: a source of stability during the great recession?

During the period of the Great Recession, previous research has found that women-owned firms were less likely to lay-off workers than were firms owned by men. Given that the individual firm behaviour has a cumulative effect on regional economic performance, we expect greater stability across those regions with a larger share of women-owned and managed businesses. We test this hypothesis using US county data during the period from 2007 to 2013 at the US county level. Consistent with the findings of Matsa and Miller, our results suggest that regional economic stability increases with the share of women-owned and managed establishments.