Productivity and efficiency analysis of Shinkin banks: Evidence from bootstrap and Bayesian approaches

This paper analyzes the productivity and efficiency of Shinkin banks and the various prefectures in Japan, over the period from 2000 to 2006. We obtain estimates of efficiency growth and productivity growth, using the bootstrapped Malmquist index, and estimates of efficiency using the Bayesian distance frontier approach. We confirm that the efficiency growth and productivity growth of Shinkin banks did not improve significantly over the period of this study. In addition, we show that the efficiency of Shinkin banks is homogenous, with little variation across the banks analyzed. Methodologically, we also prove that a failure to impose theoretical regularity on the distance function could lead to false conclusions about the average efficiency or efficiency ranking of Shinkin banks. The study also includes an analysis of the correlates of productivity and efficiency growth, and provides efficiency and productivity estimates of the prefectures in which the banks are located.     

Bootstrapped Malmquist indices of Australian airports

This study uses the Malmquist bootstrapped methodology to assess the extent of productivity, efficiency, scale and technological changes at the major Australian airports. The analysis focuses on the post-privatisation period of Australian airports, using panel data on three outputs and three inputs. Results show that most Australian airports have experienced significant total factor productivity increase between 2002 and 2007, while few airports have recorded productivity and efficiency decline over the same period. Using a bootstrapped second-stage regression, the results also highlight the direct impact of environmental factors such as market share and airport hub on the productivity variations between airports. Other potentially affecting factors are: privatisation, oil price increase and price regulation.     

FDI Flows and Domestic Investment: Overview

The paper surveys theories of FDI and supporting evidence. Anew theory flashes out a unique feature of FDI: hands on managementstyle that enables investors to react in real time to changingeconomic environments. Equipped with superior intangible knowhow in screening firms, foreign direct investors can out bidportfolio equity investors for the top productivity firms. Theimplications of the theory are that investment is both moreefficient (namely, made dependent on the firm-specific productivity)and, in plausible cases, also larger. The theory can explainboth two way flows of FDI among developed economies, and oneway flows between developed and developing economies. Thesepredictions of the theory are consistent with panel data: largerFDI coefficients in domestic investment and output growth regressions,than those of the debt and portfolio equity coefficients. Theyare also consistent with gravity equations which explain FDIinflows by informational variables and degree of corporate transparencyin the host country.(JEL F2)     

Capital income taxation under majority voting with aging population

An old person typically has a mixed attitude toward the welfare-state benefits, when they are financed by capital taxes, because her income derives mostly from capital. We develop a majority-voting model which focuses on the effect of aging on this dilemma. Surprisingly, the theory predicts that tax rates on capital income could actually rise as the population ages, even though older individuals would be expected to own more capital than the young and thus vote against higher taxes. We then confront the key prediction of the model with panel data for ten European Union countries, over the period 1970–1996. We investigate the asymmetric effect of aging on the taxation of capital and labor. The implications of the model are shown to be consistent with panel data. JEL no. H0, H5, P1     

Trade openness, investment instability and terms-of-trade volatility

In the presence of economies of scale in the investment technology, trade openness may have non-conventional effects on the level of investment, its cyclical behavior, and the volatility of the terms of trade. Trade openness may lead to boom-bust cycles of investment supported by self-fulfilling expectations. The economy may oscillate between ‘optimistic’ expectations, ‘good’ terms-of-trade and investment boom to ‘pessimistic’ expectations, ‘bad’ terms-of-trade and investment bust. We also suggest that the likelihood of such oscillations is higher for developing than for developed economies, because the former may typically incur higher setup costs of investment. This phenomenon may help to explain the excessive volatility of the terms of trade of developing countries, relative to industrial countries.     

Welfare Leakage and Immigration Policy

This paper analyzes the interaction between the welfare stateand immigration policy. We establish a negative relationshipbetween the number of dependents and the extent of the welfarestate due to the leakage of benefits. We also explain the determinationof immigration policy as the outcome of a lobbying game betweendomestic interest groups and the government. Our results indicatethat there is evidence for welfare leakage and for lobbyingas a determinant of immigration policy. In our baseline specification,a 10 percentage points increase in the share of dependents leadsto a 7–10 percentage point decrease in the labor tax rate.Furthermore, an increase by 10 percentage points in union densityleads to a decrease of one percentage point in the share ofimmigrants in the population. In the context of EU enlargementand the ensuing migration flows, our model predicts a reductionin the size of the welfare state in the old member countries.(JEL H5, J1, J61)     

An Information-Based Model of Foreign Direct Investment: The Gains from Trade Revisited

Foreign direct investment (FDI) is observed to be a predominant form of capital flows to emerging economies, especially when they are liquidity-constrained internationally during a global financial crisis. The financial aspects of FDI are the focus of this paper. We analyze the problem of channelling domestic savings into productive investment in the presence of asymmetric information between the managing owners of firms and other portfolio stakeholders. We explore the role played by FDI in reviving equity-financed capital investment for economies plagued by such information problems. In the presence of information asymmetry, the paper identifies, however, how FDI gives rise to foreign overinvestment as well as domestic undersaving. The gains from trade argument (applied to intertemporal trade) is re-examined in this case of informational-asymmetry-driven FDI. We show that the gains could be sizable when the domestic credit market is either under-developed or failing as a result of a financial crisis. But with a well-functioning domestic credit market, the gains turn into losses. Surprisingly, capital may flow into the country even when the autarkic marginal productivity of capital in the domestic economy falls short of the world rate of interest. In such a situation, capital should have efficiently flown out rather than in, and FDI is a social loss-generating phenomenon.     

Performance of French destinations: Tourism attraction perspectives

In this paper, we assess and compare the performance of French tourism destinations, using the Data Envelopment Analysis (DEA) two-stage procedure, where in the first stage the efficiency score are calculated, and then followed in the second stage by a bootstrapped truncated regression model. In the context of France such analysis takes an additional importance, especially as the country is expected to face a decrease in its tourism competitiveness. A discussion in terms of D-attraction and E-attraction is also proposed and policy recommendations are derived.