Noise and aggregation of information in large markets

We study the relation between noise (liquidity traders, endowment shocks) and the aggregation of information in financial markets with large number of agents. We show that as long as noise increases with the number of agents, the limiting equilibrium is well-defined and leads to non-trivial information acquisition, even when per-capita noise tends to zero. In such equilibrium risk sharing and price revelation play different roles than in the standard limiting economy in which per-capita noise is finite. We apply our model to study information sales by a monopolist, and information acquisition in multi-asset markets, showing that it leads to qualitatively different results with respect to those in the existing literature. Our conditions on noise are shown to be necessary and sufficient to have limiting economies with perfectly competitive behavior consistent with endogenous information acquisition.     

Grocery Store Attributes in Recovering Economies: An Empirical Investigation of Their Importance,Using Three-Component Contour Plotting

The authors share results of a study conducted to measure the attributes of grocery stores that are the most important for consumers in a market recovering from war and transitioning to a market economy. Applying a trilinear coordinate plot, the authors develop a model that consists of those attributes. The findings led to conclusions that services and location, rather than the historically favored attribute of price, increasingly are key factors affecting store choice. Managerial implications are discussed and future research directions are suggested.     

The Glass Ceiling Puzzle,Legal Institutions,and the Shadow Economy

ABSTRACT

Scholarly studies in economics, sociology, psychology, and management emphasize the low number of women in management as one of the main indicators of gender discrimination in the labor market. This study investigates the differences in the percentage of women in senior management across forty-five countries. The results of the regression analysis show that women are more represented in senior management in developing countries than in so-called “liberal Western democracies.” Women also participate more in senior management in countries in which prejudice and discrimination against women are greater. The study presents empirical evidence for two economic explanations for these puzzling results: the weak functioning of the legal system and the large size of the shadow economy.     

Free trade versus strategic trade as a choice between two ‘second best’ policies: A symmetric versus asymmetric information analysis

Abstract

We analyse the following policy dilemma: strategic trade policy versus free trade when the domestic government is bound to intervene only after the domestic firm's strategic variable in the form of R&D investment is chosen, and when the information can be either symmetric or asymmetric. The novel feature of our model is that the information asymmetry stems from the assumption that the government may not a priori know the true mode of competition. The intervention in the above set-up allows the domestic firm to manipulate the domestic government and results in a socially inefficient choice of the strategic variable. However, commitment to free trade leads to forgoing the benefits from profit-shifting. Yet, from the social point of view, free trade may be optimal even under the assumption of symmetric information. Due to costly signalling, this result is reinforced in the case of asymmetric information.     

Book review article In search of an alternative theory: a critique of Dosi et al.'s Technical change and economic theory

In this article the author discusses the main contributions and controversial issues raised in an important bookTechnical change and economic theory. The book represents a cornerstone in theorizing technical change. The main features of the book are summarized and the author discusses a number of controversial issues, such as: the evolutionary perspective; the notion of a technoeconomic paradigm; the analysis of firms' technological behaviour; the notion of institutions; the problem of ‘catching up’ in technology; the treatment of formal modelling and policy implications; and treatment of social aspects of technical change. The author concludes that the book should be treated as a work in progress and not as a fully developed and comprehensive approach. However, the critical mass of findings, gathered in this book, is important reading, and represents an important step forward in the exploration of a new approach to economic theory.     

Exchange-rate Regimes and the Transition Process in the Western Balkans

Although the importance for successful transition of a monetary policy aiming at a sustainable price level has often been stressed in the academic literature, there is still ample room for further research into the choice of the exchange-rate system throughout the different phases of the transition process. This article deals with the question of how the choice of a specific exchange-rate system affects the economic success of a country in transition and, above all, its gradual integration into the European Union (EU) and European Monetary Union (EMU). It focuses on the transition process in five South-Eastern European countries (SEECs). The authors are grateful for valuable comments received from participants in the EUROFRAME 2006 Conference in Berlin, Germany, the ICMAIF 2007 Conference in Rethymno, Greece, and the EEFS 2007 Conference in Sofia, Bulgaria.     

On optimal choice of order statistics in large samples for the construction of confidence regions for the location and scale

Given a large sample from a location-scale population we estimate the unknown parameters by means of confidence regions constructed on the basis of two order statistics. The problem of the best choice of those statistics to obtain good estimates, as $n\rightarrow \infty ,$ is considered.     

Analysis of fatal injuries in Serbian underground coal mines – 50 years review

Abstract

The study presented here analyzes mining accidents and fatal injuries in Serbian underground coal mines over a period of 50?years, in order to assess the effectiveness of legislation changes in the overall safety of work environment. Two distinct periods, prior to 2000 and after 2000 were compared. The data from the period after 2000 were further analyzed to provide better understanding of the results. In order to assess the overall state of safety in Serbian mines, the data on fatal injuries were also compared to the international data. It was found that the legislative changes are more easily accepted by the common workers than by the mine management. Consequently, the key recommendation for the safety of coal mine companies in Serbia is the investment in the new technology. Additionally, mine management should be in the focus of the mining inspection with a stronger penal policy regarding mine safety neglect.     

When do neoliberal economic reforms cause democratic decline? Evidence from the post-communist Southeast Europe

Do neoliberal reforms (notably, austerity policy) facilitate democratic decline and the gradual deconstruction of democratic institutions? I examine the democratic development of the Western Balkan countries since 2008 by focusing on the two most recent cases of democratic rollback in Macedonia and Serbia. Neoliberal reforms may create a preference to shut down democratic institutions, because such reforms are socially costly and politically risky. However, democratic backsliding is not possible without opportunity. I illustrate this with reference to the examples of Hungary and Croatia. Croatia implemented some neoliberal policies after 2015, but did not see a drop in its democracy score. By contrast, Hungary moved towards centrally planned capitalism, nationalisation and state interventionism (all opposed to the neoliberal concept of reform), and yet saw a significant democratic decline after 2010. The opportunity to dismantle democratic institutions was a consequence of an electoral gap (a difference in vote share between former and new incumbents), which enabled the rise of authoritarian leaders in Macedonia, Hungary and Serbia.     

The long-run effect of economic disasters

This article investigates the long-run consequences of economic disasters. The results suggest the negative long-run effect of economic disasters on output growth and the limited empirical importance of the investment channel.