A characterization of inefficiency in stochastic overlapping generations economies

In this paper, we provide a characterization of interim inefficiency in stochastic economies of overlapping generations. With respect to the established body of results in the literature, we allow for sequentially incomplete markets and we remove the hypothesis of two-period horizons, by considering longer, though uniformly bounded, horizons for generations. The characterization exploits a suitably Modified Cass Criterion, based entirely on observable prices and independent of the length of the horizons of generations. For sequentially incomplete markets, we introduce a notion of unambiguous inefficiency, separating the inefficient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous inefficiency reduces to inefficiency when markets are sequentially complete. Furthermore, our analysis shows that the hypothesis of two-period horizons is purely heuristic in establishing a criterion for inefficiency.     

Who are the champions? (An analysis of football and architecture)

Association Football is a highly competitive business. In this article Filippo dell'Osso and Stefan Szymanski ask how Liverpool FC the most successful team in the English Football League of the last 20 years have achieved their record. They identify four general categories of distinctive capability which can create competitive advantage: monopoly, reputation, technology and architecture. Nottingham Forest derives its performance by monopolising a unique input: Brian Clough. Manchester United survive on the basis of its reputation. Liverpool's success derives from the club's "architecture", the structure of contracts and relationships which makes the whole greater than the sum of its parts.     

The dynamics of US inflation: Can monetary policy explain the changes?

We investigate the relationship between monetary policy and inflation dynamics in the US using a medium scale structural model. The specification is estimated with Bayesian techniques and fits the data reasonably well. Policy shocks account for a part of the decline in inflation volatility; they have been less effective in triggering inflation responses over time and qualitatively account for the rise and fall in the level of inflation. A number of structural parameter variations contribute to these patterns.     

Credit and liquidity components of corporate CDS spreads

This paper investigates the role of credit and liquidity factors in explaining corporate CDS price changes during normal and crisis periods. We find that liquidity risk is more important than firm-specific credit risk regardless of market conditions. Moreover, in the period prior to the recent “Great Recession” credit risk plays no role in explaining CDS price changes. The dominance of liquidity effects casts serious doubts on the relevance of CDS price changes as an indicator of default risk dynamics. Our results show how multiple liquidity factors including firm specific and aggregate liquidity proxies as well as an asymmetric information measure are critical determinants of CDS price variations. In particular, the impact of informed traders on the CDS price increases when markets are characterised by higher uncertainty, which supports concerns of insider trading during the crisis.     

Study of Consumer Preferences in Regard to the Blonde Orange Cv. Washington Navel “Arancia Di Ribera PDO”

Consumers’ attitude and preferences in regard to food ingredients, country of origin, social corporate responsibility toward the environment, and work conditions have changed over the last 10 years. Consumers are getting more educated and therefore more sensitive around cultivation practices in agriculture and food processing, which increases concerns in regard to production practices in agriculture. Several studies have been conducted on consumers’ preferences about quality food, but not with regard to blonde oranges cv. Washington Navel cultivated in southern Italy. This quality fruit is a niche product that achieved the Protected Designation of Origin (PDO) certification for high organoleptic properties and fine taste. In this study, by a survey of 400 Italian consumers, we discovered preferences in regard to the cv. Washington Navel PDO (Riberella) attributes and revealed variables that may influence consumers’ purchasing behavior. Cluster analysis, based on respondents’ rates on 20 attributes, revealed preference segmentation. Freshness, taste, and origin were the most important attributes for consumers, following visual appearance and quality/price ratio. In responding to the demands of consumers for quality fresh fruit, information about quality standards and about the Riberella PDO is poor. Therefore, there may be potential to develop specific policies and marketing strategies to product the position in the international market.     

Inflation Differentials in a Currency Area: Facts,Explanations and Policy

The determinants of inflation differentials in a currency area are analyzed both from an empirical and a theoretical perspective. The empirical analysis shows that a sizeable dispersion of HICP inflation rates across euro-area countries arises mostly in the components based on non-traded goods. There is also a significant cross-country heterogeneity in the response to changes in a common latent factor which accounts for a large fraction of the dispersion in national inflation rates. A stylized model of a currency area is used to understand the interrelation among shocks, structures and policies in driving the data generating process. The model shows that the dynamic of the inflation differentials is largely driven by the variability of productivity in the non-tradable sector of the more flexible economy. Conversely, the output differentials is largely driven by the variability in the productivity of the tradable sector, also of the more flexible economy. Optimal policy is investigated together with an analysis of the optimal adjustment to adopting a common currency with initial incorrect real exchange rate parity.     

The Political and Economic Dimension of Monetary Unions

This paper investigates the relationship between the political and economic aspects of monetary unions. After illustrating the recent change in approach to the theory of optimum currency areas (section 2), the paper analyzes the momentous implications of union members maintaining political sovereignty (section 3) for the notion of currency area optimality and the viability of monetary unions (section 4).     

Euro Area business cycles in turbulent times: convergence or decoupling?

We study the business cycle properties of the four largest European economies in the wake of the recent recession episodes. The analysis is based on the factors estimated from a multi-country and multi-sector data-rich environment. We measure alikeness of business cycles by studying the synchronization of up and down phases, the convergence properties of country fluctuations towards the Euro Area (EA) cycles and the contribution of the EA factor to national GDP volatilities. While the economic fluctuations of the four EA member states were similar before the global financial turmoil, we gather compelling evidence of an asymmetric behaviour of Spanish fluctuations relative to the EA one.     

Capital structure of SMEs in Spanish regions

This article examines whether the capital structure of small and medium-sized enterprises (SMEs) and its firm-factor determinants are different across regions belonging to a single country. This subject is relatively innovative in capital structure research, since the majority of the studies carried out in a single country have neglected to take into account the region in which firms operate to explain leverage. To this end, we study whether the capital structure and its firm-factor determinants—size, asset structure, profit, growth, and age—differ depending on the region in which the SMEs are located. For the empirical analysis, panel data methods are applied to a sample of firms from all regions of Spain for the period 2004–2007. Our results not only suggest that there are regional differences in the SMEs capital structure but also confirm that the impact of firm-factor determinants on leverage differs across regions in terms of signs, magnitudes and significance levels.