Von der Staatsverschuldung zum Staatsbankrott?

The increase of sovereign debt and the crisis in the Eurozone led to a public discussion about the possibility and the causes of a sovereign default. This paper shows by looking at the development in the Eurozone that for a government defaulting on its debt the amount of sovereign debt is not crucial; the essential question is whether a government is able to borrow in its own currency and — if that is not the case — the amount of international debt of the whole country. This leads to important conclusions for European economic policy.     

Strategic Trade Policy through the Tax System

If conventional instruments of strategic trade policy are unavailable, the system of foreign profit taxation and transfer price guidelines may serve as surrogate policy instruments. In this paper, I consider a model where firms from two countries compete with each other on a market in a third country. Both firms have affiliates in the third country where (part of) the production takes place. I analyse optimal policy choices of the firms' residence countries aiming at strategically manipulating the competitiveness of their firms. I show that, first, countries prefer the tax exemption system over the tax credit system if there is no intra‐firm trade. Second, if the headquarters provide inputs for production in the affiliate, countries prefer the tax exemption system if the transfer price for these inputs is close to the headquarters' variable cost and if the residence country's tax rate is high. However, if transfer prices are high and the residence country's tax rate is low, I show that the tax credit system is an optimal tax policy choice for both countries. From a policy perspective, the view that the tax exemption system is generally the best policy response if domestic firms' competitiveness is a policy goal has to be qualified.     

Updating Poverty Maps with Panel Data

This paper extends the methodology of Elbers, C., Lanjouw, J. O., & Lanjouw, P. (2003). Micro level estimation of poverty and inequality. Econometrica 71(1), 355–364 and presents a low cost approach to arriving at small area welfare estimates for non-census years. The approach requires panel data and the estimation of a relation between per capita consumption from the year of interest and household characteristics from the census year. The method is illustrated for Uganda. It is shown that with the exception of the North progress in rural poverty reduction was broadly shared during 1992–99. Areas with high initial levels of poverty appear to have benefited less from growth.     

Leaders as Moral Role Models: The Case of John Gutfreund at Salomon Brothers

The paper describes and discusses unethical behavior in organizations, as a result of (interacting) disputable leadership and ethical climate. This paper presents and analyzes the well-known bond trading scandal at Salomon Brother to demonstrate the development of an unethical organizational culture under the leadership of John Gutfreund. The paper argues that leaders shape and reinforce an ethical or unethical organizational climate by what they pay attention to, how they react to crises, how they behave, how they allocate rewards, and how they hire and fire individuals.     

Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions

Abstract. This paper exploits the significant reduction in impediments to labor mobility in the process of German re-unification in order to identify labor supply shocks in the West German labor market. The focus is on the quasi-experiment of the border removal in the regions situated at the German–German border that faced a massive increase of cross-border labor supply. The results indicate that despite a gain in employment, the border removal was accompanied by a decline in wages and an increase in unemployment relative to other West German regions.     

Improving logistics performance in cross-border 3PL relationships

This paper proposes guidelines for improving logistics performance in terms of cost efficiency and on-time delivery in shipper–third-party logistics (3PL) provider relationships within an offshore outsourcing context. A conceptual framework is constructed based on a thorough literature review. Empirical data are collected through semi-structured interviews in a single-case study with a dyadic perspective, examining the 3PL relationship between Ericsson of Sweden and Aramex of Saudi Arabia. Accordingly, a revised framework is proposed after illustrating the case and merging the literature with practice. The findings highlight the impact of communication, trust, culture, system compliance, work agreements, and standardisation on cost efficiency and on-time delivery performance. The developed framework illustrates a sequential order for working on these factors to achieve performance improvement. This research is one of the first to propose guidelines for performance improvements within offshore outsourcing of 3PL services.     

Techno-ökonomische Bewertung von Energie-Autarkie für die Energieversorgung von Einfamilienhäusern

Many consumers currently follow the idea of energy self-sufficiency and try to contribute to meet their energy needs in order to become independent and self-sufficient from the central power supply system. In order to achieve load-oriented energy self-sufficiency the provision of energy must cover the full energy demand at any time. Against this background, in this paper the costs and potentials of a load-oriented energy self-sufficiency of single-family homes are analysed. Thereby it is differentiated between electricity-, heat- and energy self-sufficiency. The modelling is carried out with the simulation environment ?Polysun Designer“ which allows a high temporal dynamic simulation of the annual energy demand and supply.The results show that, within the investigated supply variations, the highest levels of energy self-sufficiency can be achieved by an energy supply system completely based on electricity using a combination of PV; heat pump and battery storage. Depending on the building standard, a maximum of 45 (existing buildings) and 71?% (new buildings) of the building’s energy demand can be covered with renewable energy. The economic evaluation however has shown that under present conditions, none of the investigated supply variants can compete with conventional energy supply (public grid connection + gas condensing boiler).     

A Rational Expectations Consistent Measure of Risk: Using Financial Market Data from a Middle Income Context*

Although economic theory assumes that risk is of central importance in financial decision making, it is difficult to measure the uncertainty faced by investors. Commonly used empirical proxies for risk (such as the moving standard deviation of the returns on an asset) are not firmly grounded in economic theory. Risk measures have been developed by other studies, but these are often based on subjective weights attaching to a range of objective component indicators, are difficult to replicate and are not strictly consistent with underlying theory. The contribution of this article is to develop a methodology to construct rational expectations consistent empirical risk measures. It has the advantages of being explicitly consistent with economic theory and easily replicable. We illustrate this methodology by specific application to the South African context. The time‐varying risk measure developed in this article is consistent with a rational expectations application of the expectations hypothesis. The constructed measure is a broad one (it includes political risk and peso problems for instance) and reflects investors’ perceptions of systematic risk.     

Unawareness and indifference to economic reform among the public: evidence from India’s power sector reform

Although economic reform generates winners and losers, many people have no opinion whatsoever about it. Because most empirical research ignores these non-responses, the conventional wisdom on the determinants of support for economic reform ignores large groups of silent citizens. To correct this problem, we present a stylized model that accounts for support, opposition, indifference, and unawareness about reform. We argue that informed people and those who perceive the status quo as dysfunctional will form an opinion more readily than others. For evidence, we examine public opinion about electricity privatization from a large field survey in rural India. We find that information and perceived inefficiency have much larger effects on the likelihood of forming an opinion than on the direction of that opinion (yes or no), emphasizing the importance of accounting for opinion formation process. In this case, information and perceived inefficiency make reform a salient issue to a passive public, most of whom become vocal opponents of reform.     

Political market failure? The effect of government unity on energy technology policy in industrialized democracies

When do governments implement technology policies that allow society to solve social problems at a lower cost? Focusing on the case of energy, we argue that in industrialized democracies, severe social problems provoke an effective technology policy response when the government is unified. A unified government can easily strike the bargains required to secure political support for new technology programs. We test this theory against data on public energy research and development (R&D) in 22 OECD countries, 1980–2006. We find that as government fractionalization increases in a country, the sensitivity of public energy R&D to wasteful energy use, which presents economic and environmental difficulties to the society, declines. The analysis reveals a new reason for ineffective technology policies and contributes to the broad literature on political market failure.