Competing-destinations gravity model applied to trade in intermediate goods

The competing-destinations formulation of the gravity model ensues from the fact that unlike the classic version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative countries. This article applies the competing-destinations gravity model to the analysis of trade in intermediate goods. The results of the model were then tested empirically with an international input–output data set and using the Poisson pseudo-maximum-likelihood estimator. The empirical results suggest that the analytical model can explain trade in intermediate goods. Indeed, as predicted, import of intermediate goods is increasing in the importing country’s demand for inputs, in the competitiveness of the exporting country, and decreasing in distance and competition posed by alternative countries.     

The gravity model analysis: an application on MERCOSUR trade flows

This paper explores the determinants of bilateral trade flows between Mercosur countries. To this aim, a gravity model is applied to annual bilateral exports between 75 countries in 1980–2008. The model is augmented with variables that are relevant in determining the volume and direction of international trade using two alternative estimation methods; pooled ordinary least squares and panel fixed effects. The results reveal that the influence of the agreement on trade has been positive but moderate. As a whole, Mercosur has had positive effects, and this agreement can be reinforced with the deepening of their relationships and the entry of new members.     

The interdependence between FDI and R&D: an application of an endogenous switching model to Taiwan's electronics industry

Foreign direct investment (FDI) and research & development (R&D) are mutually dependent and should be treated as endogenous variables in empirical studies. An endogenous switching regression model is used to examine the mutual effect of FDI and R&D in Taiwan's electronics industry. The empirical results show that FDI and R&D are positively related and do reinforce each other. Unbiased coefficients are obtained as they are compared to those estimates if FDI and R&D are treated as exogenous variables. The results have a strong public policy implication for Taiwan's foreign direct investment and can be further used to estimate the difference in R&D expenditures between FDI and non-FDI firms.     

The timing and probability of FDI: an application to US multinational enterprises

An ‘option-pricing’ model is employed to analyse the timing of FDI. Assuming that the firm's profits are determined by the attractiveness of both the home and foreign countries, and that attractiveness follows a Brownian motion, an optimal trigger value of FDI is derived. The model shows that, contrary to the NPV rule, FDI entry should be delayed the greater the uncertainty of attractiveness in both locations. Another important result is that MNEs do not regard FDI as a risk-diversification tool. The results of the model were then tested empirically with US FDI data, using labour costs as a proxy for (the reciprocal of) attractiveness. The results support the findings of the analytical model.     

Exchange rate uncertainty and US bilateral fresh fruit and fresh vegetable trade: an application of the gravity model

In order to analyse the effect of exchange rate uncertainty, we apply an empirical gravity equation to two sets of US bilateral trade data: fresh fruit over the period 1976–1999 for a panel of 26 countries; and fresh vegetables over the period 1976–2006 for a panel of nine countries. Based on panel estimation methods, and using both a moving SD measure and the Perée and Steinherr (1989) measure of exchange rate uncertainty, the results show that US bilateral fresh fruit trade has been negatively affected by exchange rate uncertainty. We also find some evidence that the exchange rate between the US dollar and the currencies of Latin American trading partners accounts for most of the negative impact of exchange rate uncertainty on bilateral trade flows in fresh fruit. In contrast, when using panel estimation methods and both measures of exchange rate uncertainty, we find no statistically significant evidence for any negative effect of exchange rate uncertainty on US bilateral fresh vegetable trade. However, we do find a statistically significant negative effect for exchange rate uncertainty when we estimate a US export gravity equation for fresh vegetables using the same panel of countries.     

Technology, demand and distribution: a cumulative growth model with an application to the Dutch productivity growth slowdown

This paper argues that the case for real wage growth restraint,and the consequent restoration of profitability, which the mainstreamconsensus regards as a necessary condition for sustained outputand productivity growth, is based on weak foundations, becauseit neglects the negative impact of wage moderation on productivitygrowth. Using a general Keynesian growth model, which integratesa (wage-led or profit-led) demand regime and a productivityregime (incorporating the productivity-growth enhancing effectsof higher demand and higher real wages), the conditions areidentified under which real wage restraint fails to raise outputand productivity growth. The model is applied empirically tothe Netherlands (1960–2000).     

Student-t distribution based VAR-MGARCH: an application of the DCC model on international portfolio risk management

Significant second-moment transmission effects and obvious time-varying patterns of correlation coefficients among major equity and currency markets in the US, Japan and the UK are found to exist. Such observations inspire the time-varying setting of dynamic conditional correlation coefficients in MGARCH models. On the other hand, the multivariate Student-t distribution is suitable for analysing the visible leptokurtosis that is common in financial markets. Both are important for international portfolio risk management. Thus, a comparison on the hedging efficiency of hypothetical portfolios consisting of stock and currency future positions is conducted in order to justify the multivariate Student-t distribution based on the DCC-MGARCH model.     

Social distance between workers: An application to Italian geographic areas

This paper is concerned with the measurement of social distance, clustering, or polarization between workers of a given society. This concept is fundamentally different from that of inequality and thus cannot be measured by any Lorenz consistent index. Similarly, it cannot be additively decomposed into within - and between -group components using classical techniques. A new decomposition method is proposed and applied to Italian workers. The method provides an index that can be used both to calculate the distance between social groups classified according to worker characteristic and to track changes across time. The new method also reveals the factors that are reshaping the wage distribution and allows us to identify precisely where these effects are having their greatest impact.
JEL classification: D30, D63, I32.     

The geographic distribution of environmental inspections

Models of the enforcement of environmental regulations regarding point source pollution suppose that the probability of inspection or audit is independent across facilities. However, there are a number of reasons why regulators may choose to inspect many sites in a particular geographic area at one time. If the probability a site is inspected also depends on its compliance behavior, the expected payoff from choosing to violate will depend upon the compliance decisions of neighboring sites, creating a game of strategic interdependence between firms. In this paper, we use a dataset of inspections at petroleum storage sites in Manitoba between 1981 and 1998 to consider to what extent inspections are spatially correlated and whether inspection probabilities are a function of the inspection and violation history of the site and its neighbors. Further, we examine to what extent firms take into account whether their neighbors have been previously found in violation in determining compliance.     

Welfare distribution of collective in-kind transfers in education: an application to the extended schools programme

In this study, we employ the distributional characteristics approach to analyse the welfare distribution of the Extended Schools Programme, a social programme that fights inequality in Northern Ireland’s public schools. Our main result is that increasing funding to schools as their size increases penalizes the most deprived students. This is because the school size, although related to the educational supply, does not reflect the distribution of deprivation within schools. Thus, although in the Northern Irish context the largest welfare gains are possible if funds are redistributed among middle-size schools, our general result indicates an excessive support of small-size schools at the expenses of large-size schools.     

Testing the dynamic specification of an econometric model with an application to Belgian data

In this paper, we analyze the Final Equation and Transfer Function form associated with a linear dynamic simultaneous equation model and use the empirical findings as a guidance to a structural form specification in accordance with the information in a sample of monthly Belgian data.     

Hedonic price indexes and the distribution of buyers across the product space: an application to mainframe computers

In this article we present the Silverman multimodality test and mixture distributions methodology, applying both approaches to the Survey of Economic Expectations of the Central Bank of Chile. The main results reflect the importance of a permanent monitoring of the complete distributions and not just central tendency meausures as is the practice in many central banks currently. We find that the forecasts of the private professional forecasters have systematically been in line with the inflation targeting range, although during episodes where the effective inflation proved to be outside the target range.     

Violent crime and punishment: an application of the LISREL model

Public anxiety over violent crime has forged a broad consensus to purchase more crime control. Recently, the President brought into law a federal anti-crime bill that will put an additional 100 000 police on the nation's streets. This paper presents empirical evidence on the deterrence effect of police presence. The principal finding is that police presence deters commission of violent crimes by increasing the risk of being punished for committing those crimes. This risk is modelled as a latent variable, because the probability and severity of punishment for committing a violent crime are generally communicated in an onconsistant fashion. The violent crime commission rate is also treated as a latent variable, because it is almost certainly afflicted with measurement error.     

Spatial random utility model with an application to recreation demand

The paper examines the relevance of unobserved spatial dependence between individual decision-makers in the analysis of discrete choices. To incorporate spatial interdependencies in the behavioral analysis, we propose a spatial random utility model of recreation demand. The model combines the set-theoretic concept of spatial neighborhood, endogeneity of spatial interdependencies, and unobservable individual preferences. Our estimation procedure uses an efficient pseudo maximum likelihood estimator. We apply the model to the study of recreational travel demand in Iowa and evaluate the significance of unobserved spatial interdependencies between individual households in recreational travel choices.     

发展中国家对发达国家直接投资模式探索

随着经济全球化下企业竞争优势来源的转变,发展中国家企业特有优势的局限性导致单一资产利用型的"南南"投资不能达到生产要素高层次合理化配置的效果.而本文所提出的创造性资产与市场寻求型对外直接投资对于改善这一问题具有很大的参考价值,在深入分析的基础上,本文进一步提出"SDAP优势论"作为创造性资产与市场寻求型对外直接投资模式的理论框架,用来阐述发展中国家企业实行这种投资模式所需要的四个关键因素,并以中国企业的实践为例证实了该理论的可行性.     

Estimating endogenous switching regression model with a flexible parametric distribution function: application to Korean housing demand

This study introduces Johnson's S_U -normal distribution which can accommodate the flexibility of true error distribution to obtain consistent estimates in an endogenous switching regression model. Simulation results indicate that the S_U -normal model outperforms the normal model for the consistency of estimators when the error distribution is nonnormal. Korean housing demand model estimated by the S_U -normal model also outperforms the normal model in terms of parameter estimates and graphical predictions.     

The J-curve dynamics of Turkey: an application of ARDL model

This article seeks an empirical evidence for the existence of the J-curve phenomenon both in the short-run and long-run for Turkey over the period 1980-2005. The bounds testing cointegration approach is employed to estimate the trade balance model. An augmented form of Granger causality analysis is implemented between trade balance, real effective exchange rates, foreign income and domestic income. The stability of the short-run as well as long-run coefficients in the trade balance model is tested too. The empirical results that the J-curve phenomenon is supported only in the short-run. Whilst causality tests reveal mix results, the parameter stability tests seem to be inconclusive.     

Does good governance matter for FDI? New evidence from emerging countries using a static and dynamic panel gravity model approach

This paper assesses the impact of institutional factors on foreign direct investment (FDI) attractiveness using a pool of 25 emerging host countries (ECs) for the period 1996–2012. In particular, the paper aims to examine whether higher institutional quality and good governance do improve FDI attractiveness, and thereby to identify which institutional factors are the main drivers of FDI in ECs. Using a static and dynamic panel gravity model with various estimation techniques, we find that FDI is positively and significantly influenced by political stability, government effectiveness and regulatory quality. The remaining set of governance indicators is found to be statistically significant and negatively linked to FDI. Our findings also show that factors like a larger GDP per capita difference between investing partner and ECs, higher degree of trade openness and better infrastructure have positive and significant effects on FDI attractiveness. These results have important policy implications for ECs. Fostering FDI inflows into these countries requires policymakers to improve the quality of their institutions and business climate through implementing sound economic policies and regulations.     

The shadow of death model revisited with an application to French firms

This article provides an empirical model of the shadow of death in which the exit probability of a firm depends on the firm’s productive performance and the firm’s level of sunk costs, which are viewed as barriers to exit. The shadow of death effect is treated by assuming a relationship between the propensity to exit and both the contemporaneous and lagged values of efficiency and sunk costs. To estimate the unobserved productive efficiency, we use the Ackerberg et al. (2006) estimator extended by the addition of a correction for selection bias. We use an unbalanced sample of approximately 100 000 French firms over the period 1997 to 2002. Our results indicate that the probability of exit is negatively affected by unobserved individual efficiency and the level of sunk costs. The shadow of death effect applies mainly in manufacturing, where both productive efficiency and sunk costs decrease during several years before exit. In service sectors, the exit process seems to occur more suddenly.