Cyclicality of fiscal policy and the shadow economy

A survey of recent literature on cyclical properties of fiscal policy reveals that fiscal policy is procyclical in many developing countries whereas it is countercyclical in developed ones. However, there is no consensus on what drives the difference in this specific cyclical property of fiscal policy. Using cross-section and panel data sets for 78 countries we document that procyclicality of fiscal policy is more pronounced in countries with a larger size of the shadow economy. We also show that policies reducing the size of the shadow economy lead to a less (more) procyclical (countercyclical) fiscal response to shocks.     

The Problem of the Monetary Realization of Profits in a Post Keynesian Sequential Financing Model: Two solutions of the Kaleckian option

In a Post Keynesian theoretical framework with sequential financing, two solutions to the problem of the monetary realization of profits are presented. Both of these are consistent with the Kaleckian view, according to which actual profits arise from the present expenditure of their anticipated amount. These two solutions form the basis for a theoretical reconsideration of the relationships among the creation of money, consumption, savings and investment.     

Segmenting the market through the determinants of involvement: The case of fair trade

The fair trade market includes several types of actors, ranging from world shops to supermarkets, and from restaurants to clothing stores, involving a heterogeneous clientele. An analysis of fair trade consumers must be sufficiently granular to capture their different expectations, attitudes, and motivations; hence the need to segment the market. Through the concept of involvement, the objective of this research is to analyze and compare by segments the determinants of behavior of fair trade consumers. The research consists of three phases: segment identification, behavioral analysis by segment, and synthesis of the managerial implications. Two out of four hypothesized criteria prove to be effective in segmenting the fair trade market, namely age and distribution channel preference (whereas gender and education are not significant criteria). The analysis shows that the drivers of the involvement in the decision to buy fair trade products vary by segment. Thus, the article concludes with the development of communication axes that can trigger or strengthen the desired behaviors in each segment. It provides fair trade marketers with an efficient communication content that can be used for fair trade advertising, product packaging, branding, or merchandising. © 2011 Wiley Periodicals, Inc.     

Core-stable rings in second price auctions with common values

In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy et al. [Einy, E., Haimanko, O., Orzach, R., Sela, A., 2002. Dominance solvability of second-prices auctions with differential information. Journal of Mathematical Economics 37, 247–258], describe a cooperative games in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism. An example shows that, if the bidders’ information partitions are not connected, rings may no longer be core-stable.     

THE MONEY DEMAND FUNCTION FOR THE EURO AREA: SOME EMPIRICAL EVIDENCE

This paper sets out to re‐examine the money demand function for the euro area. Traditional specifications often yield unsatisfactory results: instability of short and long‐term coefficients; relatively large differences between estimated and actual value of variables; and significant changes in the number of long‐term relationships, etc. Using a standard Vector Error Correction Model, we find that the usual specification is indeed unstable. However, introducing a European equity price gives rise to a more stable system. Furthermore, recursive estimates confirm the relative stability of long‐term coefficients. Estimates of the real money gap, based on the money demand equation including equity prices, point to moderate, albeit persistent, excess liquidity in the euro area in recent years. The real money gap contains information about future inflation but this content may have diminished since 2001.     

Globalization and flattening of Phillips Curve in Turkey between 1987 and 2007

In the last two decades, there have been important changes in inflation dynamics in Turkey. While average inflation rate, inflation volatility and inflation persistence declined, the prices of tradable goods have shown an increase less than prices of non-tradable goods. The aim of this paper is to inquire whether the globalization has an effect on this change and to test whether and how it affected the slope of the Phillips Curve. The findings point out that global activity did have an effect on domestic inflation rate and that Phillips Curve got flatter.     

So Whaddya Think? Consumers Create Ads and Other Consumers Critique Them

With the availability of online creative tools, consumers create ad-like communications on their own or in response to company contests. These consumer-generated ads (CGA) are like word-of-mouth (WOM) in that they are consumer-to-consumer communications, yet they have the look and feel of traditional advertising. We examine consumer responses to both contest and unsolicited CGA and company ads using data gathered from consumers via netnography and depth interviews. Content analysis is used to compare the three ad types and reveals that the contest rules frame CGA so that they resemble company ads while unsolicited CGA differ from both ad types. Findings show that consumers respond to both types of CGA by engaging with the ad rather than the brand, much like an ad critic, while company ads elicit brand associations. Unsolicited CGA are seen as authentic, but not credible, while contest ads are seen as credible, but not authentic, revealing a boundary condition to the conventional view that authenticity leads to credibility.