INDIVIDUAL DETERMINANTS OF SELF‐EMPLOYMENT ENTRY: WHAT DO WE REALLY KNOW?

The analysis of the decision to enter into self‐employment is a hot topic in the economic literature. Among the elements that most directly influence this decision, individual factors are central. This study produces a comprehensive survey of the impact of these factors, covering both the theoretical arguments and the main conclusions emerging from the empirical studies. We analyze 12 critical determinant factors of the entry into self‐employment grouped into seven categories: (1) basic individual characteristics (gender, age, marital status, and children); (2) family background (parents and spouse); (3) personality characteristics; (4) human capital (education and experience); (5) health condition; (6) nationality and ethnicity; and (7) access to financial resources. While for some of the factors solid conclusions can be found, for others additional research is still needed in order to shed further light on their influence.     

TRADE DIVERSIFICATION,INCOME, AND GROWTH: WHAT DO WE KNOW?

This paper surveys the empirical literature on export and import diversification and its linkages with growth. We review widely used measures of diversification and the evidence about their evolution focusing on how export diversification relates to trade liberalization and economic development. We also discuss the linkages between trade diversification and productivity at the firm and industry level, highlighting new advances on the linkages between import diversification and productivity.     

WHY DO WE LIE? A PRACTICAL GUIDE TO THE DISHONESTY LITERATURE

Over the last decade, a massive body of research has been devoted to uncovering human dishonesty. In the present paper, we review more than a hundred papers from this literature and provide a comprehensive overview by first listing the existing theoretical frameworks, and then covering the common empirical approaches, synthesizing the demographic and personal characteristics of those who cheat, identifying the behavioural mechanisms found that affect dishonesty and finally we finish by discussing how the empirical evidence fit theory. Overall, the review concludes that many people behave dishonestly, but also that it is a highly malleable behavior sensitive to elements such as decision contexts, behaviour of others, state of mind and depletion. The review can be used as an overview of the dishonesty literature or as a guide or work of reference for selected topics of interest.     

A SURVEY OF JEL CODES: WHAT DO THEY MEAN AND ARE THEY USED CONSISTENTLY?

The use and prevalence of JEL code categorization is wide in the field of economics, but what do JEL code classifications actually tell us? And are they used with consistency by academics in the field? Utilizing a data set of articles published in the American Economic Review from 1990 to 2008, we investigate whether there is heterogeneity in JEL codes assignments between authors and editors. We find that there is. A secondary goal of this paper is to survey overall thematic trends in JEL code usage over the past four and a half decades. One result is that JEL category M: Business Economics, in particular, appears to be thematically and spatially distinct from much of the rest of the published literature in the top general interest journals in the field.     

HIGH‐FREQUENCY ANALYSIS OF FOREIGN EXCHANGE INTERVENTIONS: WHAT DO WE LEARN?

Abstract.  The high-frequency analysis of foreign exchange dynamics is helpful in order to better identify the impact of central bank interventions. Evidence robustly shows that interventions do indeed move the exchange rate level in the desired direction. Interventions increase volatility in the short run as they are regarded as information; but they can reduce volatility overall. Ways of transmission may reach beyond the signalling channel and also include the portfolio balance and a damping channel. Finally, interventions are more successful if they obey certain conditions, such as being coordinated among central banks and going with the market and fundamentals.     

U.S. STATE AND LOCAL FISCAL POLICY AND ECONOMIC ACTIVITY: DO WE KNOW MORE NOW?

Early reviews of the academic literature on the economic effects of state and local taxes and expenditures suggested that not enough was known upon which to base policy. The reviews called for better data and improvements in empirical methodology. This paper reviews studies conducted since the early literature reviews to assess our current state of knowledge. The conclusion of the study is that we know more now. But our knowledge is unlikely to ever be sufficient to provide universal policy guidance. Rather, we suggest that more research is needed on specific state and local policies for specific circumstances, consistent with the general principles that guide place-based policy.     

HOW DO CONSUMERS MAKE CHOICES? A SURVEY OF EVIDENCE

Abstract In this paper, we review the evidence about the purchase behaviour of consumers. We concentrate on the characteristics of the choice process, choice of the external information source and nature of the information obtained from these sources. The impact of important systematic differences among consumers and products on choice behaviour is also discussed.     

WHAT DO WE KNOW ABOUT THE IMPACT OF INTELLECTUAL PROPERTY RIGHTS ON THE FOREIGN DIRECT INVESTMENT LOCATION (COUNTRY) CHOICE? A REVIEW AND RESEARCH AGENDA

Despite a longstanding debate, at both a theoretical and empirical level, research on the relationship between foreign direct investment (FDI) and intellectual property rights (IPRs) remains scant and ambiguous. As a result, the link between IPR strength and multinational enterprises’ (MNEs) propensity to invest is unproven and seemingly dependent on a number of factors. We critically review the theory and evidence of the influence of IPRs on FDI and MNEs’ investment location (country) decisions both to ‘take stock’ of existing knowledge of this relationship and, by identifying gaps in, and shortcomings of prior work, develop a fruitful research agenda. We find that existing empirical work on the IPR–FDI nexus, though skewed in favour of a positive relationship between IPR protection and FDI, is fragmented, inconclusive and unable to square the conflicting theoretical predictions on how the strength of IPRs can affect MNEs’ FDI location decisions. Several issues and challenges are highlighted to explain the difficulties of the collective body of past empirical work to provide a definite answer to the question of the impact of IPRs on FDI, from which valuable recommendations are proposed to guide future applied research.     

DOES STUDENT WORK REALLY AFFECT EDUCATIONAL OUTCOMES? A REVIEW OF THE LITERATURE

We review the theories put forward, methodological approaches used and empirical conclusions found in the multidisciplinary literature on the relationship between student employment and educational outcomes. A systematic comparison of the empirical work yields new insights that go beyond the overall reported negative effect of more intensive working schemes and that are of high academic and policy relevance. One such insight uncovered by our review is that student employment seems to have a more adverse effect on educational decisions (continuing studies and enrolment in tertiary education) than on educational performance (test and exam scores).     

DO WATER-RICH REGIONS HAVE A COMPARATIVE ADVANTAGE IN FOOD PRODUCTION? IMPROVING THE REPRESENTATION OF WATER FOR AGRICULTURE IN ECONOMIC MODELS

With growing demand for fresh water and uncertain supplies, there is an increasing concern about future water scarcity. Since most freshwater withdrawals are for agriculture, reliance on water embodied in imported food (trade in ‘virtual water’) is a possible strategy to provide food to water-stressed regions while conserving their scarce supply for other purposes. To evaluate this proposition, we extend a model of interregional trade by (1) defining endowments of water that cannot be exceeded, (2) allowing simultaneous operation of rainfed and irrigated agriculture, and (3) distinguishing sub-regional endowments within a larger economic region. An application to the Mexican economy compares region-specific water abundance with economic comparative advantage under alternative scenarios. We conclude that the water-rich regions of Mexico are relatively high-cost producers of food and that they do not pick up the slack even when the lowest-cost Mexican regions are constrained by binding water constraints.     

WHO REALLY WANTS TO BE A MILLIONAIRE? ESTIMATES OF RISK AVERSION FROM GAMESHOW DATA

This paper estimates the degree of risk aversion from one of the most popular TV gameshows ever. The format of the show is straightforward; it involves no strategic decision making; we have a large number of observations; and the prizes are cash, which is paid immediately and covers a large range: from £100 up to £1 million. We provide non‐parametric estimates of the utility function and then we test some parametric restrictions. We find that, although the restriction to CRRA utility is statistically rejected, a log function approximates the utility function quite well over a large range of potential winnings. Copyright © 2013 John Wiley & Sons, Ltd.     

WHY EUROPE? A CRITIQUE OF INSTITUTIONALIST AND CULTURALIST ECONOMICS

Abstract Economists have recently started to discuss the roles of institutions and cultural beliefs in explaining the performance of civilizations. This paper investigates two views, ‘institutionalist economics’ and ‘culturalist economics’, with regard to the question of why Europe rose economically a few centuries ago, while other regions of the world lagged behind. These two views share a common platform raised on two pillars. First, both regard institutions/beliefs as extra‐economic – as primordial entities that ultimately stand independent of economic performance. Second, both regard economic performance as fully determined by institutions/beliefs – i.e. normative causality in the sense that institutions/beliefs determine performance. Douglass North's (2005) analysis of economic performance, for example, is based on both pillars. Concerning the primordial pillar, he attributes ‘the mystery’ of the rise of Europe to primordial beliefs, viz. ‘Christian dogma’ and English ‘individualism’. Concerning the normative pillar, he presumes that such beliefs have almost one‐to‐one correspondence with economic performance. This paper, though, maintains that the two pillars (primordial analysis and normative causality) are rather fragile: Advocates of the first pillar fail to recognize that institutions/beliefs are endogenous. Advocates of the second pillar fail to recognize that institutions/beliefs can give rise to diverse economic performances.     

DO CRISES INDUCE REFORM? A CRITICAL REVIEW OF CONCEPTION,METHODOLOGY AND EMPIRICAL EVIDENCE OF THE ‘CRISIS HYPOTHESIS’

The notion that economic crises induce the adoption of reform ranks among the most widely accepted concepts in the political economics literature. However, the underlying mechanism of the so‐called ‘crisis hypothesis’ has yet to be fully understood. This paper provides a comprehensive survey of the relevant empirical evidence to date, and scrutinizes the operationalization of the hypothesis’ key concepts: crisis, reform and the political mediation of reform during crises. We argue that the social perception of both crises and the subsequent cost of reform requires consideration of how these concepts are operationalized. As a product of the broader economic and institutional environment, social perceptions largely determine the manner in which the political mediation of reform during crises works. Present‐day methodological approaches fail to adequately reflect social perceptions and consequently compromise the determination of what constitutes both crisis and the cost of reform in the context of the crisis hypothesis. Most notably, the identification of crises by fixed thresholds constructed around macroeconomic variables impedes the interpretation of the hypothesis’ underlying mechanism. A fuller treatment of social perception within the operationalization of the hypothesis’ key concepts can enhance our understanding of how economic crises influence political dynamics in bringing about reform.     

DO THE DIAMONDS OF FOREIGN COUNTRIES SHAPE THE COMPETITIVENESS OF FIRMS? A CASE STUDY OF THE SWEDISH ENGINEERING CONSULTING INDUSTRY

This research sought to explore the effect of foreign countries on firms’ competitiveness, using Porter’s Diamond as the framework for the empirical test. The empirical evidence was based on data collected from a sample of Swedish engineering consulting firms. The findings demonstrate that the Swedish Diamond has stronger impact on the competitiveness of Swedish engineering consulting firms than do the Diamonds of the host countries in which these firms are active. The effect of host countries’ Diamond tend to increase as firms mature in their international activity and was found to have weak relation to the psychic distance between Sweden and the host countries.     

HOW DO YOU CAPTURE LIQUIDITY? A REVIEW OF THE LITERATURE ON LOW-FREQUENCY STOCK LIQUIDITY

Researchers have various ways to measure liquidity but most of them come with both merits and demerits. This study provides a literature review of low-frequency liquidity measures with a primary focus on liquidity measurement as well as its implication on asset pricing. Based on the dimension it captures, a range of existing low-frequency measures are divided into four categories of liquidity proxies including transaction cost, volume, price impact, and multidimension-based measures. We review some well-established liquidity proxies, a new bid–ask spread estimator and price impact ratios proposed recently. Finally, we discuss how good low-frequency liquidity measures are at capturing standard liquidity benchmarks, which are constructed from high-frequency intraday data.     

A NUCLEAR FUTURE? UK GOVERNMENT POLICY AND THE ROLE OF THE MARKET

Nuclear power should be a feasible non‐carbon option in a liberalised market for electricity generation. However, if it is to be so, there needs to be a stable carbon price and a tax system which does not treat nuclear generation in a similar way to carbon‐based electricity generation. Further major reform of the electricity generating market will also be necessary.     

ARE WOMEN REALLY MORE RISK‐AVERSE THAN MEN? A RE‐ANALYSIS OF THE LITERATURE USING EXPANDED METHODS

While a substantial literature in economics and finance has concluded that ‘women are more risk averse than men’, this conclusion merits investigation. After briefly clarifying the difference between making generalizations about groups, on the one hand, and making valid inferences from samples, on the other, this essay suggests improvements to how economists communicate our research results. Supplementing findings of statistical significance with quantitative measures of both substantive difference (Cohen's d, a measure in common use in non‐Economics literatures) and of substantive overlap (the Index of Similarity, newly proposed here) adds important nuance to the discussion of sex differences. These measures are computed from the data on men, women and risk used in 35 scholarly works from economics, finance and decision science. The results are considerably more mixed and overlapping than would commonly be inferred from the broad claims made in the literature, with standardized differences in means mostly amounting to considerably less than one standard deviation, and the degree of overlap between male and female distributions generally exceeding 80%. In addition, studies that look at contextual influences suggest that these contribute importantly to observations of differences both between and within the sexes.