The Penn Effect revisited: New evidence from Latin America

In this paper, we examine the role of relative productivity growth in real misalignment of exchange rates in Latin American countries. Specifically, we verify the validity of the Penn Effect for selected countries in this region. Our sample consists of 15 countries for the period 1951 to 2010. We employ both short‐ and long‐panel data techniques, which allow us to experiment with estimators suitable for short and long time dimensions of panel data. The Penn Effect is found to be supported for the entire sample, and for subsamples. Relative productivity growth is dominant in the real exchange rate movement during periods of mild or weak speculative attacks, as compared with periods of severe speculative attacks. To correct for real misalignment of currencies in Latin America under speculative attacks, relative productivity growth must be sizeable.     

Technology spillover effects within Spanish communities

The article uses panel data for the period 1990–2010 to estimate technology spillover effects on 17 Spanish communities. Accounting for nonstationarity and cointegration, we use the dynamic OLS estimator to estimate the impact of domestic and non-domestic R&;D capital stock on labour productivity of Spanish communities, taking into account trade-, migration- and foreign direct investment (FDI)-related technology diffusion channels. We find significant trade-related spillover effects within Spanish communities and from EU countries. On average, an increase in the non-domestic R&;D stock of 1% increases their labour productivity between 0.02% and 0.12% if related to bilateral trade pattern. Moreover, migration within Spanish communities has a negative impact ranging between ?0.07% and ?0.16% on labour productivity as the impact of inward migration is dominated by outward migration. There is no robust impact from FDI inflows of OECD countries in general or EU countries in particular. Finally, the domestic R&;D stock, physical capital and human capital are shown to be significant drivers for labour productivity in Spain no matter if non-domestic (local or foreign) spillover effects are trade-, migration- or FDI-related.     

Principles versus principal: Reconciling norm compliance and shareholder value

This paper considers situations where an agent (say, a polluting firm's CEO) must allocate his nonobservable effort across two distinct tasks (say, revenue/market share enhancement and environmental stewardship), and where two principals (say, the firm's shareholders and an external stakeholder) hold diverging viewpoints on what the best allocation should be. Both characteristics of this context—multitasking and conflicting principals—are normally seen as obstacles to strengthening the agent's incentives. This paper proposes a simple arrangement, based on contingent monitoring and clawbacks, that can overcome these obstacles. Under this arrangement, the principals would end up coordinating their respective incentive schemes so that the agent considers his two tasks as complementary utility‐increasing activities. Applications to regulatory compliance, corporate social responsibility, and innovation management are briefly sketched.     

How international nonprofits build brand equity

This paper describes an empirical model of brand equity for international nonprofit organizations and offers nonprofit managers suggestions for the management of their brands. The main areas of interest include:

• A review of the importance of branding for nonprofits, the lack of a brand equity models specifically for nonprofits, and the key differences between for‐profits and nonprofits.
• A proposed nonprofit brand equity model, based on a grounded theory and system dynamics approach.
• A series of specific managerial recommendations, for building nonprofit brand equity.

Copyright © 2008 John Wiley & Sons, Ltd.     

The US Wage Phillips Curve across Frequencies and over Time*

Although widely used in many areas of applied sciences, wavelet analysis has not fully entered the economic discipline yet. In this article we apply wavelet analysis to one of the most investigated relationships is in empirical macroeconomics: the relationship between wage inflation and unemployment. Using US postwar data we find a frequency‐dependent relationship of a sort that is consistent with Phillips’ original insights. It also turns out that this relationship is remarkably stable over the 1948–93 period, but not in the aftermath, as a consequence of a process of adaption of the wage formation process to a low inflation environment.     

Arbitrage and equilibrium with portfolio constraints

We consider a multiperiod financial exchange economy with nominal assets and restricted participation, where each agent’s portfolio choice is restricted to a closed, convex set containing zero, as in Siconolfi (Non-linear Dynamics in Economics and Social Sciences, 1989). Using an approach that dates back to Cass (CARESS Working Paper, 1984; J Math Econ 42:384–405, 2006) in the unconstrained case, we seek to isolate arbitrage-free asset prices that are also quasi-equilibrium or equilibrium asset prices. In the presence of such portfolio restrictions, we need to confine our attention to aggregate arbitrage-free asset prices, i.e., for which there is no arbitrage in the space of marketed portfolios. Our main result states that such asset prices are quasi-equilibrium prices under standard assumptions and then deduces that they are equilibrium prices under a suitable condition on the accessibility of payoffs by agents, i.e., every payoff that is attainable in the aggregate can be marketed through some agent’s portfolio set. This latter result extends previous work by Martins-da-Rocha and Triki (Working Paper, University of Paris 1, 2005).     

Uncertain Pension Income and Household Saving

This paper investigates the relationship between household saving and pensions, and estimates both the displacement effect of pensions on private saving and the precautionary saving effect due to uncertainty in pension income. I estimate the savings equation implied by a simple life‐cycle model featuring income uncertainty using survey data for Dutch households, with subjective expectations on pension benefits and uncertainty. Exploiting exogenous variation due to pension fund performance, I find that households save significantly more due to uncertainty in pension income. Not controlling for uncertainty biases the estimated displacement effect of pensions on private savings towards zero.     

Products and Productivity*

When firms make decisions about which product to manufacture at a more disaggregated level than observed in the data, measured firm productivity reflects both characteristics of the firm and attributes of the products that are non‐randomly chosen by the firm. This paper develops a model of industry equilibrium in which firms endogenously sort across products and characterizes the resulting bias in measured firm and aggregate productivity. Calibrating the model's parameters, we show that endogenous product selection can have quantitatively important effects on measured firm and aggregate productivity and their response to changes in parameter values.     

Screening risk-averse agents under moral hazard: single-crossing and the CARA case

Principal-agent models of moral hazard have been developed under the assumption that the principal knows the agent's risk-aversion. This paper extends the moral hazard model to the case when the agent's risk-aversion is his private information, so that the model also exhibits adverse selection. We characterize the optimal menu of contracts; while its detailed properties depend on the setting, we show that some of them must hold for all environments. In particular, the power of incentives always decreases with risk-aversion. We also characterize the relationship between the outside option and the optimal contracts. We then apply our results to testing for asymmetric information in insurance markets.The authors thank P.A. Chiappori, D. de Mezza, R. Myerson, C. Prendergast, the late S. Rosen, D. Webb and an anonymous referee for helpful discussions or comments, as well as seminar participants in Berkeley, Chicago, Montré al, Northwestern, Rome, Stanford and Wisconsin. Bruno Jullien gratefully acknowledges financial support from the Fédération Francaise des Sociétés d'Assurance; Bernard Salanié thanks the University of Chicago for its hospitality.     

Allowing for inefficiency in parametric estimation of production functions for urban transit firms

Efficient versus inefficient observations are first identified and evaluated numerically by the nonparametric free disposal hull (FDH) method. Next, parametric production frontiers are obtained by means of estimating translog production functions through OLS applied to the subset of efficient observations only. Technical progress is included at both stages. Monthly data from three urban transit firms in Belgium, to which this two-stage technique is applied, show widely varying degrees of efficiency over time and across firms, and much less technical progress than standard (i.e., non frontier) econometric estimates suggest.