Lessons from the recent economic crisis: the Australian household stimulus package

This paper provides an impact evaluation analysis of the 2009 Australian Household Stimulus Package, which was composed by three main cash payments: the Back to School Bonus, the Single Income Family Bonus and the Tax Bonus for Working Australians. Using panel data from the 2008 and 2009 HILDA surveys, the results show that these cash payments reduced the risk of poverty and stimulated consumption expenditure. Nonetheless, only the Back to School Bonus and the Single Income Family Bonus were really important in achieving these goals, while the Tax Bonus for Working Australians did not contribute to stimulate consumption and failed to reduce the risk of poverty. Thus, the analysis confirms the crucial role of governments to protect the most vulnerable groups avoiding a dramatic deterioration of social outcomes and favoring a fast economic recovery when interventions are timely and well-targeted.     

The political economy of pricing and capacity decisions for congestible local public goods in a federal state

This paper studies the political economy of pricing and investment for excludable and congestible public goods in a federal state. Although the model applies to many local congestible public facilities (such as libraries, museums and public swimming facilities), our main motivation is the problem of providing and pricing road infrastructure in federal states. The two-region model we develop allows for spill-overs between regions, it takes into account congestion, and it captures demand heterogeneity both between and within regions. Regional decisions are taken by majority voting; federal decisions are taken by a minimum winning coalition in a legislature of regionally elected representatives. We have the following results. First, when users form the majority in at least one region, decentralized decision making performs certainly better than centralized decision making if spill-overs are not too large. Centralized decisions may yield higher welfare than decentralization only if users have a large majority and the infrastructure in a given region is intensively used by both local and outside users. Second, if non-users form a majority in both regions, centralized decision making and decentralized decision making yield the same socially undesirable outcome, with prices that are much too high. Third, the performance of decentralized supply is strongly enhanced by local self-financing rules; this prevents potential exploitation of users within regions.     

An Alternative Post-Keynesian Framework for Understanding Capital Flows to Emerging Markets

This article contributes to the establishment of a framework for the analysis of international capital flows, with a specific focus on emerging markets. It is based on a “monetary” analysis of the economy, as well as on the works of Hyman Minsky and Jan Toporowski in particular. The key aspects of such an approach are the following. First, in a monetary economy, capital flows need to be understood as “flows of funds” that pertain to the realm of financial choices, as opposed to the traditional understanding of capital flows as based on “real” variables, such as saving and investment. A consequence of this is the need to focus on gross flows rather than capital flows. Second, liquidity preference considerations also apply at the international level, particularly in relation to the liquidity of emerging-market currencies that, in turn, depends on context-specific “Keynesian fundamentals.” Third, the rise of institutional investors is the key historical development in the financial system, shaping the current reality of cross-border capital flows, including to emerging markets. I argue that institutional investors’ liabilities, in light of the theories of Minsky and Toporowski, are one of the most important variables in determining these investors’ portfolio choices. I synthesize these elements by defining capital flows to emerging markets as the demand for emerging-market assets by institutional investors. I propose a framework to categorize the various channels that guide this demand.     

Happiness of economists

We study the importance of economists’ professional situation towards their life satisfaction based on a unique survey of mostly academic economists. On average, economists report to be highly happy with life. Satisfaction is positively related to spending more time on doing research. The lack of a tenured position decreases satisfaction. However, the extent to which the uncertainty created by the tenure system affects satisfaction varies with the contract terms. The effect is stronger if the contract expires in the near future or cannot be extended. Publication success has no effect if it is controlled for academic rank and the contract duration. The finding suggests that publications are rather a means to an end, for example, to acquire a tenured position. While the perceived level of external pressure also has no impact, the perceived change of pressure in recent years is positively related to economists’ life satisfaction. An explanation is that economists have accepted a high level of pressure when entering academia but are not willing to cope with the recent increase.     

Social media? Get serious! Understanding the functional building blocks of social media

Traditionally, consumers used the Internet to simply expend content: they read it, they watched it, and they used it to buy products and services. Increasingly, however, consumers are utilizing platforms—such as content sharing sites, blogs, social networking, and wikis—to create, modify, share, and discuss Internet content. This represents the social media phenomenon, which can now significantly impact a firm's reputation, sales, and even survival. Yet, many executives eschew or ignore this form of media because they don’t understand what it is, the various forms it can take, and how to engage with it and learn. In response, we present a framework that defines social media by using seven functional building blocks: identity, conversations, sharing, presence, relationships, reputation, and groups. As different social media activities are defined by the extent to which they focus on some or all of these blocks, we explain the implications that each block can have for how firms should engage with social media. To conclude, we present a number of recommendations regarding how firms should develop strategies for monitoring, understanding, and responding to different social media activities.     

Composite commodities, housing characteristics and the Hicksian surplus measures of welfare change

The purpose of this paper is to elaborate on previous research that deals with the implications of alternative housing concepts for the estimation of the welfare effects of housing programs. We compare one housing concept, which defines housing in terms of a composite good housing services with an alternative in which housing is treated as a bundle of attributes. We extend the analysis in the literature by concentrating on welfare measures that are applicable to a much broader class of government programs than those that have been discussed before. We focus in the Hicksian surplus measures which are particularly suited to handle structure in which constraints on quantity are impused. In the theoretical sections we rigorously show that the Hicksian surplus measures of welfare change based on the composite good housing services will be biased whenever a housing program imposes restrictions on the consumption of attributes. The direction of the bias depends on the nature of the program. Empirical work confirms the predictions of the theoretical analysis.     

International portfolio diversification: Currency,industry and country effects revisited

We examine the relative importance of country, industry, world market and currency risk factors for international stock returns. Our approach focuses on testing the mean-variance efficiency of the various factor portfolios. An unconditional analysis does not show significant differences between country, industry and world portfolios, nor any role for currency risk factors. However, when we allow expected returns, volatilities and correlations to vary over time, we find that equity returns are mainly driven by global industry and currency risk factors. We propose a novel test to evaluate the relative benefits of alternative investment strategies and find that including currencies is critical to take full advantage of the diversification benefits afforded by international markets.     

AHP-based approaches for supplier evaluation: Problems and perspectives

Supplier evaluation has assumed a strategic role in determining competitiveness of large manufacturing companies. An increasing number of researches have been devoted to the development of different kind of methodologies to cope with this problem. Nevertheless, while the number of applications is growing, there is little empirical evidence of the practical usefulness of such tools with a dichotomy between theoretical approaches and empirical applications. Considering this evidence, the goal of this paper is to contribute to understand the above dichotomy by implementing, in a corporate environment, a model for supplier evaluation based on the Analytical Hierarchical Process (AHP), one of the most prominent methodologies used to address the problem. The analysis of the implementation process of the methodology allows the identification of strengths and weaknesses of using formalized supplier selection models to tackle the supplier evaluation problem, also highlighting potential barriers preventing firms to adopt such methods. Relevant issues arising from the application and managerial implications for both customer and suppliers are discussed.