Liberty and the Post‐utilitarian Society

Utilitarian foundations for limited government are shaky insofar as they assume rational and consistent individuals. Recently economists’ assumption of rational actors has come under sustained attack. Behavioural economics has suggested that people are plagued by irrational biases and inconsistencies. These developments have led to a post‐utilitarianism which is held to justify paternalistic interventions by the state via ‘sin taxes’, direct bans or new obligations. Individual responsibility is seriously undermined, as is faith in markets. Supporters of individual freedom need to move away from utilitarian reasoning, reassert core values of autonomy and responsibility, and define strict limits on the scope of government intervention.     

Green not (only) for profit: An empirical examination of the effect of environmental-related standards on employees’ recruitment

Thanks to an original database on French firms we investigate the impact of environmental-related standards on employees’ recruitment. Using a bivariate probit model, we show that voluntary environmental-related standards (i.e., ISO 14001 standard, organic labeling, fair trade, etc.) improve the recruitment of professional and non-professional employees. This finding suggests that, beyond environmental considerations, human resources management can drive registration.     

Persistent misalignments of the European exchange rates: some evidence from non-linear cointegration

The asymmetric and persistent adjustment of the European real exchange rates is investigated using the framework of non-linear cointegration. The episodes of slow mean-reversion dynamics over the period from 1979 to 1999 are explained. A test of unit root against STAR cointegration is proposed and some complete estimations and stochastic simulations of ESTAR models are presented. The presence of effective non-linear adjustment during the moving of the currencies to their long-run fundamental equilibrium exchange rate value is discussed.     

Too much of a good thing? Why altruism can harm the environment?

Success of eco-labeling schemes, broadly defined, varies among products and across countries. Based on a simple theoretical framework, we show that the nature of environmental attributes among products (i.e., private versus public) and the consumer type (i.e., egoist versus altruist) shape the overall performance of such schemes. In addition, we demonstrate that altruistic consumers exhibiting a too high willingness to pay for the eco-labeled product can inadvertently prevent egoistic consumers from purchasing it, leading to a sub-optimal outcome in terms of environmental performance. Several policy and managerial implications are drawn.     

Research cycles

This paper studies the dynamics of fundamental research. We develop a simple model where researchers allocate their effort between improving existing fields and inventing new ones. A key assumption is that scientists derive utility from recognition from other scientists. We show that the economy can be either in a regime where new fields are constantly invented, and then converges to a steady state, or in a cyclical regime where periods of innovation alternate with periods of exploitation. Our analysis provides a rigorous foundation to the Kuhnian theory of scientific evolution. We show that scientists' care for reputation has a strong impact on research dynamics and tends to favor innovation. Especially, innovation fads may emerge. We also study welfare and find that the academic reputational reward system can help align scientists' short-term incentives with society's long-term interests.     

Is the division of labour limited by the extent of the market? Evidence from French cities

This paper provides supportive evidence to the notion that the division of labour is limited by the extent of the (local) market. We first propose a theoretical model. Its main prediction is that scarce specialists occupations are over-represented in large cities. Using census data for French cities, we find strong empirical support for this prediction.     

Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Sub‐Saharan Africa

The paper examines the monetary policy actions through which central banks in sub‐Saharan Africa have tried to eliminate the negative impacts of the shocks facing their economies. We compare two different monetary policy regimes: a currency board regime (in the CFA zone) and an inflation targeting policy regime (Ghana and South Africa) when central banks respond to demand, supply, and fiscal shocks. We extend the usual forecasting and policy analysis system models to replicate the economic features of these economies during the period 2002–12 and to evaluate the impact of several policies in response to these shocks. We find that both policies are inappropriate in helping the economies escape from the effects of negative demand shocks, both are essential when negative shocks to primary balance occur, while inflation targeting dominates the currency board regime as a strategy to cope with positive shocks to inflation.     

How trading activity scales with company size in the FTSE 100

This paper investigates the scaling dependencies between measures of ‘activity’ and of ‘size’ for companies included in the FTSE 100. The ‘size’ of companies is measured by the total market capitalization. The ‘activity’ is measured with several quantities related to trades (transaction value per trade, transaction value per hour, tick rate), to the order queue (total number of orders, total value), and to the price dynamic (spread, volatility). The outcome is that systematic scaling relations are observed: (1) the value exchanged by hour and value in the order queue have exponents of less than 1, respectively 0.90 and 0.75; (2) the tick rate and the value per transaction scale with the exponents 0.39 and 0.44; (3) the annualized volatility is independent of the size, and the tick-by-tick volatility decreases with the market capitalization with an exponent of ?0.23; (4) the spread increases with the volatility with an exponent of 0.94. A theoretical random walk argument is given that relates the volatility exponents to the exponents in points 1 and 2.