Estimating the natural rates in a simple New Keynesian framework

The time-varying natural rate of interest and output and the implied medium-term inflation target for the US economy are estimated over the period 1983–2005. The estimation is conducted within the New Keynesian framework using Bayesian and Kalman-filter estimation techniques. With the model-consistent estimate of the output gap, we get a small weight on the backward-looking component of the New Keynesian Phillips curve—similar to what is obtained in studies which use labor share of income as a driver for inflation (e.g., Galí, Eur Econ Rev 45(7):1237–1270, 2001; Eur Econ Rev 47(4):759–760, 2003). The turning points of the business cycle are nevertheless broadly consistent with those of CBO/NBER. We find considerable variation in the natural rate of interest while the inflation target has been close to 2% over the last decade.     

Cost structures of banks grouped by strategic conduct

The hypothesis that the banking system consists of firms that use the same production technology is tested and rejected in this study. Six groupings of the population of commercial banks are identified using cluster analysis. The banks are grouped to reflect similar production technologies within groups but different technologies across groups as defined by the strategic conduct (i.e., activities) of the banks. The results suggest that banks in different clusters employ production processes that feature different degrees of substitutability between factors of production, and that the estimates of input substitutability for those groups look quite different from those estimated based on the full population of commercial banks. The impact of the homogeneity production technology assumption on the measurement of cost efficiency is also assessed. The results show that partitioning the industry by strategic conduct reduces the average inefficiency in the industry. These results support those found by others who used similar partitioning criteria but a more narrowly defined sample of banks.     

How interethnic marriages affect the educational attainment of children: Evidence from a natural experiment

The allocation of Moluccan immigrants across towns and villages at arrival in the Netherlands and the subsequent formation of interethnic marriages resemble a natural experiment. The exogenous variation in marriage formation allows us to estimate the causal effect of interethnic marriages on the educational attainment of children from such marriages. We find that children from Moluccan fathers and native mothers have a higher educational attainment than children from ethnic homogeneous Moluccan couples or children from a Moluccan mother and a native father.     

The impact of diversity and equality management on firm performance: Beyond high performance work systems

This article demonstrates that a diversity and equality management system (DEMS) contributes to firm performance beyond the effects of a traditional high‐performance work system (HPWS), which consists of bundles of work practices and policies used extensively in high‐performing firms. A DEMS typically includes diversity training and monitoring recruitment, pay, and promotion across minority or other disadvantaged groups. Our analysis of quantitative data from service and manufacturing organizations in Ireland confirms that HPWS practices are associated with positive business performance and finds specifically that DEMS practices are positively associated with higher labor productivity and workforce innovation and lower voluntary employee turnover. © 2010 Wiley Periodicals, Inc.     

Acquisitions in the biopharmaceutical IPO market: Collaboration,competition and co‐opetition

The present paper explores the little studied area concerning the acquisition of recent biopharmaceutical initial public offering firms. We examine the nature of the relationship between the acquiring firm and the acquired initial public offering firm prior to the acquisition and from the perspective of the resource‐based view. We find to some extent that firm specific‐resources affect the prospect that the firm will be acquired. Furthermore, our findings show that firms with more of these types of resources are likely to be acquired by firms engaged in co‐opetition rather than by firms engaged solely in collaboration, competition, or (to a limited extent) with no prior relationship.     

Asset pricing under quantile utility maximization

“Focus on the downside, and the upside will take care of itself” is a famous quote among professional investors. By considering an agent who follows this advice, we reproduce the first and second moments of stock returns, risk-free rate and consumption growth. The agent's behavior toward risk is analogous to a relative risk aversion of about 3 under expected utility, the elasticity of intertemporal substitution is about 0.5 and the time discount factor is below 1. In particular, the proposed model separates time and risk preferences in an innovative way.     

The broadband bonus: Estimating broadband Internet's economic value

How much economic value did broadband Internet create? Despite the importance of this question for national policy, no research has estimated broadband's incremental contribution to U.S. GDP by calibrating against historical adoption and incorporating counterfactuals. This study provides benchmark estimates for 1999 through 2006 and finds that broadband accounts for $28 billion of the $39 billion observed in 2006. Depending on the estimate, households generated $20-$22 billion of broadband revenue and approximately $8.3-$10.6 billion was additional revenue created between 1999 and 2006. Consumer surplus accounted for $4.8-$6.7 billion of this amount, which is not measured in GDP. An Internet-access Consumer Price Index would have to decline by 1.6-2.2% per year for it to reflect this unmeasured value. These estimates differ from existing benchmarks by an order of magnitude and relate to several policy debates.