The Falsification of Four Popular Hypotheses About the Asian Crisis

Various claims have been made about the causes of the Asian crisis and its spread. Here, we use data on the behaviour of capital flows during the crisis to test the strong forms of four such hypotheses, that portfolio investors and hedge funds played a dominant role in initiating and/or spreading the crisis; that moral hazard kept efficient markets from predicting the crisis; and, finally, the common lender hypothesis of Kaminsky and Reinhart. In the process we also test implications of the Calvo-Mendoza model of rational investor ignorance. All are falsified as monocausal explanations. For example, portfolio investments that could not have been subject to substantial moral hazard continued to flow into Asia until very shortly before the crisis. Likewise, banks were a much larger source of capital outflows during the crisis than were portfolio investors. While falsified in their strongest forms, several of these hypotheses in less strong forms should play a role in a more nuanced analysis. It is necessary to move past simple single-factor approaches in order to produce a more complete, synthetic explanation of this episode.     

Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis

This paper investigates the Granger-causality between exports, imports, and economic growth in Portugal over the period 1865–1998. The role of the import variable in the investigation of exports–output causality is emphasized, enabling one to test for the cases direct causality, indirect causality, and spurious causality between export growth and output growth. The empirical results do not confirm a unidirectional causality between the variables considered. There is a feedback effect between exports–output growth and imports–output growth. More interestingly, there is no kind of significant causality between import–export growth. Both results seem to support the conclusion that the growth of output for the Portuguese economy during that period revealed a shape associated with a small dual economy in which the intra-industry transactions were very limited.     

Income and religion: a heterogeneous panel data analysis

A recent empirical literature has addressed the relationship between income and religion, but most of the studies are based on microdata. Macroeconomic analysis of the issue has largely ignored the potential heterogeneity between countries. Using retrospective data on church attendance rates for a panel of countries between 1925 and 1990, we apply heterogeneous panel data estimators and reveal that the effect of participation in religious activities on income per capita is mostly non-significant. This is consistent with some of the recent research that casts doubt onto the influence of religion on income, once causality is taken into account.     

National levels of corruption and foreign direct investment

We model the relationship between bilateral foreign direct investment (FDI) and the level of corruption in multinational firms’ (MCNs’) home and host countries. We construct and test a model of bilateral FDI between countries that differ in their levels of corruption. FDI is affected negatively both by the level of corruption in the host country and by differences in home- and host-country corruption. Our model emphasizes that MNCs develop skills for dealing with home-country corruption, and these skills become a competitive advantage in similarly corrupt host countries. We test the model using data on bilateral FDI stocks among a large number of home and host countries, using a variety of specifications and estimation strategies to provide robustness. Our results show that the effects of host-country corruption and of differences in corruption levels between home and host countries are statistically and economically significant.     

Stylised features of consumer price setting behaviour in Portugal: 1992–2001

This paper identifies the empirical stylized features of consumer price setting behavior in Portugal using two micro-datasets underlying the consumer price index. The main conclusions are: one in every four prices change each month; there is a considerable degree of heterogeneity in price setting practices; prices of goods change more often than prices of services; price reductions are common, as they account to around 40% of total price changes; price changes are, in general, sizeable; finally, the price setting patterns seem to depend on the level of inflation as well as on the type of outlet.

Human capital composition, growth and development: an R&D growth model versus data

The effect of human capital composition on growth and development has been somewhat neglected in economic literature. However, evidence has suggested the importance of engineering and technical (high-tech) skills to economic growth, and international organizations have suggested their shortage in developed countries. Using a standard increasing variety growth model, we propose various measures of human capital composition that are related with economic growth and development. When compared to data, the model does well in explaining the rate of growth and the level of development as a function of these measures. “the British colonies had a better educated population (...). Education was secular with emphasis on pragmatic skills and yankee ingenuity (...). The 13 British colonies had nine universities in 1776 for 2.5 million people. New Spain, with 5 million, had only two universities (...) which concentrated on theology and law.” –(Maddison, 2001)     

Optimum allocation in multivariate stratified random sampling: stochastic matrix mathematical programming

The allocation problem for multivariate stratified random sampling as a problem of stochastic matrix integer mathematical programming is considered, minimizing the estimated covariance matrix of estimated means subject to fixed cost or fixed total sample size. With these aims the asymptotic normality of sample covariance matrices for each strata is established. Some alternative approaches are suggested for its solution. An example is solved by applying the proposed techniques.     

The impact of network configurations on value constellations in business markets — The case of an innovation network

A growing body of scholars are advocating a better understanding of how value is created in business networks, rather than merely in business relationships or at the level of single actors. Among such networks, innovation networks, i.e. the configurations of strategic entrepreneurial nets aimed at improving the effectiveness of innovation performance, have come under scrutiny in the business marketing literature. However, research that explicitly connects value considerations with innovation network configurations is still in its infancy, with empirical evidence being notably scarce. This study is aimed at identifying if and how network configurations affect value constellation aspects in business networks, in terms of value recipients and value outcomes. We interviewed key informants representing 46 high-technology entrepreneurial firms co-located in an innovation network (Daresbury Science and Technology Park — UK). Our study identifies that different network configurations can co-exist in the same overall network; these, nevertheless, are not alternative independent structures, but rather they interact with each other through actors spanning their boundaries. Our study thus provides an understanding of network configurations relating to specific value consequences, but also provides evidence relating to the interactions between different configurations. By doing this, we establish a bridge between a business marketing and a strategy perspective on value in networks. Important managerial implications and implications for policy makers also emerge from our study.     

Analysing job creation effects of scaling up infrastructure spending in South Africa

In a first for South Africa, this article draws on literature on infrastructure productivity to model dynamic economy-wide employment impacts of infrastructure investment funded with different fiscal tools. Using a dynamic computable general equilibrium model, the South African investment plan is modelled, given the infrastructure externality. Alternative fiscal scenarios to finance the policy are modelled in the article. In the long run, unemployment decreases for all types of workers under one of the scenarios. In the short run, only elementary occupation workers benefit from a decrease in unemployment; for the rest, unemployment rises.