Impact of Payment Technology on Seasonality of Currency in Circulation: Evidence from the USA and India

Journal of Quantitative Economics - This paper examines the impact of payment technology on seasonality in currency in circulation. We specify that total transaction in a period follows a Gompertz...     

Optimal monetary policy and economic growth

A question at the center of many analyses of optimal monetary policy is, why do central banks never implement the Friedman rule? To the list of answers to this question, we add neoclassical production (specifically, the Tobin effect) as one possible explanation. To that end, we study an overlapping generations economy with capital where limited communication and stochastic relocation create an endogenous transactions role for fiat money. We assume a production function with a knowledge externality (Romer style) that nests economies with endogenous growth (AK form) and those with no long-run growth (the Diamond model). The Tobin effect is shown to be always operative. Under CRRA preferences, a mild degree of social increasing returns is sufficient (but not necessary) for some positive inflation to dominate zero inflation and for the Friedman rule to be sub-optimal, irrespective of the degree of risk aversion.     

When customers are members: Customer retention in paid membership contexts

This article seeks to gain an understanding of how members’ characteristics relate to lapsing behavior in paid membership contexts. Literatures such as social identity theory are used to propose hypotheses that are tested using a hazard rate model on archival data pertaining to 7,798 members of an art museum. The results indicate that the hazard of lapsing is lowered with increasing duration, participation in special interest groups whose goals are related to those of the focal organization, gift frequency, and increasing interrenewal times. Conversely, members who have downgraded their membership level in the past, those who have participated in special interest groups whose goals are unrelated to those of the focal organization, and those who received their membership as a gift are more likely to lapse. C. B. Bhattacharya is an assistant professor of marketing at the Goizueta Business School of Emory University. His Ph.D. in marketing is from The Wharton School, University of Pennsylvania. His research interests include brand loyalty and brand health, customer retention, and organizational identification and disidentification. He has published in theJournal of Marketing, International Journal of Research in Marketing, Journal of Retailing and Consumer Services, Marketing Letters, and other journals. During the past few years, students in his marketing research course have addressed real problems for over 30 nonprofits. In 1995, he received The Emory Williams Distinguished Teaching Award, which is the highest teaching honor conferred by Emory University.     

Estimating the demand for reserve assets across diverse groups of countries

This paper takes a fresh look at the determinants of the holding of reserves with the aim of highlighting similarities and differences among emerging markets (EMs), advanced economies (AEs), and low‐income countries (LICs). We apply two panel estimation techniques: fixed effects (FE) and common correlated effects pooled mean group (CCEPMG). FE regression results suggest that precautionary savings’ motives, both current account‐ and capital account‐related, are generally the most important determinants of reserves’ holding for all country groups. Nonetheless, there is considerable heterogeneity across country groups and over time. The intertemporal motive, a novelty of this paper, has gained importance everywhere. The CCEPMG results confirm the importance of precautionary motives and suggest that current account motives matter only for EMs and LICs and capital account motives matter for all groups while being more relevant for EMs. The CCEPMG results also point to the importance of taking into account the heterogeneous impact of unobserved common factors that affect coefficient estimates and the dynamic process through which reserves adjust to changes.     

Social network and private provision of public goods

Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the standard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a social utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equilibrium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing an agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.     

On characterizing the probability of survival in a large competitive economy

We consider a Walrasian exchange economy in which an agent is characterized by a utility function, a random endowment vector, and a function that specifies the minimum expenditure necessary for survival at a given price system. If at any equilibrium price system, the income of the agent is no more than the minimum expenditure for survival, it is ruined. The main results characterize the probability of ruin when the number of agents is large. The implications of stochastic dependence among agents are explored.     

Do Japanese CEOs matter?

In a country where individualism is emphasized less than in Western countries, we ask whether the CEO (shacho) of a Japanese corporation positively affects firm performance. To answer this question, we construct a shacho-firm matched panel data set in the period 1990 through 2002 of all listed 1419 Japanese manufacturing firms and their 3520 shachos. Though we find a positive abnormal stock return on the date a shacho change is announced, especially when the shacho change is non-routine, we document that this effect is short-lived. There seems to be no long-run positive change in performance or policies after a shacho change, even when the shacho change is non-routine. Finally, in trying to explain firm performance or policies, we attempt to separate a firm-fixed effect from a shacho-fixed effect, and are unable to disentangle a shacho-fixed effect. We are thus left to conclude that shachos do not positively matter in the Japanese corporation in this decade of a stagnant economy.     

Market dynamics and dichotomy: evidence from Taiwanese manufacturing

In Taiwan, a dichotomous market structure is closely related to the progress of economic development. The purpose of the present article is to examine the market dynamics and dichotomous nature of Taiwanese manufacturing. A model of dynamic adjustment of industry structure is considered when both the speed of adjustment and the long-run market concentration are allowed to vary across industries. We use 118 four-digit manufacturing industries for empirical analysis of our models spanning between 1981 and 1991. Empirical findings show that both the speed of adjustment and long-run industry concentration are predominantly determined by minimum efficient scale. The speed of adjustment is much faster in a small open economy like Taiwan compared to mature economies like the US and Australia. In addition, the dichotomous nature of the market is supported in our findings for both periods, viz, 1981–1986 and 1986–1991, albeit weaker for the later period.     

Two-period supply chain coordination strategies with ambidextrous sustainable innovations

This study considers a manufacturer with ambidextrous sustainable innovation capability selling products in environmentally conscious market through an independent retailer in a two-period game setting. We design a two-period game theoretic and dyadic supply chain (SC) model considering exploitative and exploratory nature of environmental innovations. We study five different contract types, namely, wholesale price contract, vertical Nash game structure, cost sharing contract, revenue sharing contract and two-part tariff contract. We demonstrate the impact of market sensitivity towards sustainable innovation and cost parameters on optimal level of decision parameters. The equilibrium results reveal that a suitably designed two-part tariff contract can be used to achieve coordination in a fragmented SC. The equilibrium results assist managers to optimise the SC based on the two-period contract model. The results obtained in this study can help the decision-makers to take decisions on investment in the ambidextrous sustainable innovation under different types of contract structures.