An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness

This paper examines the effect of memory loss on the continuity of behavior. We consider a player (individual or firm) who remembers previous actions but not underlying rationales. In a stable environment, relative to a full-recall scenario, memory loss increases the probability of following old policies (inertia). In a volatile environment, memory loss can decrease this probability (impulsiveness). The model provides a memory-loss explanation for some documented psychological biases, implies that inertia and organizational routines should be more important in stable environments than in volatile ones, and provides empirical implications relating memory and environmental variables to economic decisions.     

Building a knowledge-based society: The case of South East Europe

Dangers, threats and challenges facing South East European countries are analyzed in the context of the salient features of the contemporary world and of the development program of the European Union (EU). This analysis leads to the conclusion that building a knowledge-based society is an imperative for each country. A roadmap of tasks to be done during the next few decades is outlined.     

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992–2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size.     

The Global Determinants of Direct Office Real Estate Returns

We investigate the determinants of direct office real estate returns by analyzing rents, capital appraisals, and total returns. A recently compiled global database of major cities in Asia, Europe, and the United States provides a unique opportunity to give a macro-view on the effects of economic growth and supply and demand factors on nominal real estate returns. The global database provides quarterly observations from 1986 to 1999. To address the smoothness problem of appraisal-based price data and regulated rents, we employ the Generalized Method of Moments to estimate a dynamic panel-data model. The model allows us to combine the cross-sectional and time-series dimension in our quarterly data. We find that gross domestic product, inflation, unemployment, vacancy rate, and the available stock all have an effect on real estate returns.     

Relationships among healthy lifestyle beliefs and body mass index in urban China

Consumption is a major driving force in China's economy. The consumer society is particularly emerging in the more urbanized and affluent regions in China. Given the rise of consumerism on the one hand, and the rise of overweight and obesity on the other, this study explored whether the proliferating consumer culture is a threat to the traditional health culture in China. The lifestyle‐oriented approach used in this study does not confirm a straightforward relationship between an upward trend in Chinese with (economic) assets to join the consumer society and a downward trend in health interest among urban Chinese. The result that the rise of the consumer society is not directly accompanied by a devaluation of health issues does not imply that lifestyle research is of no use. On the contrary, this paper successfully identified four dimensions of health‐related lifestyle for urban China, namely Food‐health Belief, Perceived Knowledge, Health Careless and Group Conformity. This result is informative with respect to the complexity of sociocultural factors influencing the increasing prevalence of overweight and obesity.     

Earnings Management and the Long-Run Market Performance of Initial Public Offerings

Issuers of initial public offerings (IPOs) can report earnings in excess of cash flows by taking positive accruals. This paper provides evidence that issuers with unusually high accruals in the IPO year experience poor stock return performance in the three years thereafter. IPO issuers in the most "aggressive" quartile of earnings managers have a three-year aftermarket stock return of approximately 20 percent less than IPO issuers in the most "conservative" quartile. They also issue about 20 percent fewer seasoned equity offerings. These differences are statistically and economically significant in a variety of specifications.     

Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008

In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008 using two long aggregate time series on the distribution of income. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from socialism to capitalism. We find that income inequality between groups rose moderately post-transformation, while overall inequality increased more sharply. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.     

Migration and Americanization: The special case of Belgian economics*

One of the distinguishing features of Belgian economics is that, from the early 1920s, so many of Belgium's best economists pursued postgraduate studies at top American universities, a case of ‘temporary’ migration. This was made possible by the fellowships granted by the Commission for Relief in Belgium, a legacy of the First World War. After a stay in the US of a few years, most returned to Belgium. However, they maintained strong links with the US. Also, they tried to recreate in Belgium the most valuable elements of their American experience. It would lead to a strong and early Americanization of Belgian economics. Moreover, they were at the forefront of several initiatives to organize economics on a European scale, such as the European Economic Review and the European Economic Association.     

Can pure play internet banking survive the credit crisis?

This paper positions the pure-play internet banking model (PPI) as a hybrid business model that combines features of both relationship and transaction banking. Although in terms of customer orientation PPI banks may partly resemble relationship banks, they lack their comparative advantage in generating borrower-specific information. Instead, the characteristic features of PPI banks are low costs and easy scalability. While the latter may enable PPI banks to quickly capture market share, it may also generate overexposure in risky markets. We present a case study on ING Direct, one of the leading global PPI banks and address the sustainability of the PPI business model by comparing the ING Direct foreign operations. The findings for ING Direct are validated using data for E-Trade Bank. We conclude that managing growth appears to be the prime challenge to PPI banks.