THE FOCAL POINT IN THE TRAVELLER'S DILEMMA: AN EXPERIMENTAL STUDY

This paper provides an experimental test of the traveller's dilemma. Our investigation aims to address the research hypothesis that introducing a reference point à la Schelling (set equal to the Pareto optimal solution) might drive people away from rationality even when the size of the penalty/reward is high. Experimental findings reported in this paper provide answers to this question showing that the reference point did not encourage coordination around the Pareto optimal choice.     

Excess Returns,Average Returns and the Adjustment Mechanism of the External Position of a Country

I provide a new decomposition of the external constraint of a country in which, in addition to the trade and valuation channel, adjustments in the stochastic discount factor and the spread between average international returns and risk‐free rate can offset a current debt position. The importance of these channels is empirically assessed using US data. A primary contribution of the discount factor and secondary effects of excess and average returns are found in the non‐detrended analysis, confirming the theoretical characterization of the valuation effects in previous literature. By using detrended data instead, the role of excess returns would be spuriously overestimated.     

Fiscal Policies and Credit Regimes: A TVAR Approach

This work investigates how the state of credit markets affects the impact of fiscal policies. We estimate a threshold vector autoregression (TVAR) model on US quarterly data for the period 1984–2010. We employ the spread between BAA‐rated corporate bond yield and 10‐year treasury constant maturity rate as a proxy for credit conditions. We find that the response of output to fiscal policy shocks is stronger and more persistent when the economy is in the ‘tight’ credit regime. Fiscal multipliers are significantly different in the two regimes: they are abundantly and persistently higher than one when firms face increasing financing costs, whereas they are feebler and often lower than one in the ‘normal’ credit regime. The results appear to be robust to different model specifications, fiscal foresight, alternative threshold variables, different measure of variables and sample periods. Copyright © 2014 John Wiley & Sons, Ltd.     

Morality, Ethics, and Values Outside and Inside Organizations: An Example of the Discourse on Climate Change

The public debate on climate change is filled with moral claims. However, scientific knowledge about the role that morality, ethics, and values play in this issue is still scarce. Starting from this research gap, we focus on corporations as central decision makers in modern society and analyze how they respond to societal demands to take responsibility for climate change. While relevant literature on business ethics and climate change either places a high premium on morality or presents a strong skeptical bias, our sociological model depicts morality as an indeterminate force: it can lead to both workable solutions or merely reinforce the status quo, depending on what different corporations make of it. We describe, on the one side, the diffusion of moral values in the media discourse on climate change and, on the other side, the specific responses of corporations. While the media discourse generates a pressure on corporations to act responsibly, their moral claims do not provide clear advice for action. As a result, morality becomes available to organizations as a medium that can be re-specified according to their internal dynamics. Corporations transform moral values into something compatible with their own structures through a variety of different responses: introducing formal ethical structures (e.g., codes of conduct), initiating value-oriented projects, or developing informal moral norms, and so on. In some occurrences, morality becomes a mere façade, while in others it serves as a decision-making criterion and deeply influences core activities in firms.     

Disentangling demand and supply in credit developments: A survey-based analysis for Italy

This paper combines qualitative information from the Eurosystem Bank Lending Survey with micro-data on loans for the participating Italian banks to assess the role of supply and demand factors in lending to enterprises developments, with a focus on the 2007-2009 financial crisis. Both demand and supply have played a relevant role, in the whole sample period and during the crisis. A counterfactual exercise shows that the effect of supply factors on the growth of lending was strongest after the Lehman collapse. On average, over the crisis period the negative effect on the annualized quarter-on-quarter growth rate of the panel banks’ lending to enterprises can be estimated in a range of 2.3-3.1 percentage points, depending on the specification. About one fourth of the total supply effect can be attributed to costs related to the banks’ balance sheet position, the rest to their perception of credit risk.