Main effects as a by-product in a fixed effect 2 × 2 design,analyzed with ANOVA

To study interaction effects, two sets of data are created for fixed effect ANOVA, both with combinatory effects of the two factors. In the first, both factors and their interaction contribute independently and directly to the dependent variable. In the second, each factor contributes indirectly to the dependent score. Data created with the first model can be analyzed flawlessly. The second often show relatively large main effects and relatively small interaction effects, and as a consequence the interaction effect may be rejected. Even when the dependent variable results solely from the multiplication of both factor scores, highly significant main effects can be obtained, while the interaction effect remains insignificant. Although mathematically correct, the relative contributions of the main effects are in that case difficult to interpret.     

Economic Theory and Econometric Practice: Parametric Efficiency Analysis

Parametric efficiency analysis is one of the most investigated areas in applied production economics. Nevertheless, the vast majority of empirical studies are not accompanied by a thorough theoretical interpretation of the underlying functional form and the obtained estimates. The robustness of policy suggestions based on inferences from efficiency measures nevertheless crucially depends on theoretically well-founded estimates. This research contribution adresses parametric efficiency measurement by critically reviewing the theoretical consistency of recently published technical efficiency estimates. The theoretical concerns are verified by empirical applications confirming the need for a posteriori checking the regularity of the estimated frontier by the researcher and, if necessary, the a priori imposition of the theoretical requirements. Bootstrapping based stochastic simulations of a simple parametric efficiency model by using different flexible functional forms confirmed the severeness of the theoretical concerns especially with respect to the merely locally restrictable translog specification.     

Simultaneous inter- and intra-group conflicts

This paper models the trade-off between production and appropriation in the presence of simultaneous inter- and intra-group conflicts. The model exhibits a ‘group cohesion effect’: if the contest between the groups becomes more decisive, the players devote fewer resources to the intra-group conflict. Moreover, there is also a ‘reversed group cohesion effect’: if the intra-group contests become less decisive, the players devote more resources to the inter-group contest. The model also sheds new light on normative questions. I derive exact conditions for when dividing individuals into more groups leads to more productive and less appropriative activities. Moreover, I show that there is an optimal size of the organization which is determined by a trade-off between increasing returns to scale in production and increasing costs of appropriative activities. I want to thank Paul Heidhues, Kai Konrad, Thomas Kittsteiner, Klaas Staal, an anonymous referee, and in particular Dan Kovenock for very helpful comments and suggestions. Any remaining errors are mine. Financial support from the Deutsche Forschungsgemeinschaft through SFB/TR 15 is gratefully acknowledged.     

Forecasting recoveries in debt collection: Debt collectors and information production

Recent theoretical work suggests that debt collection agencies play an important role in gathering and processing debtor information. We study a comprehensive data set with information provided by original creditors and information gathered in third‐party debt collection. In line with the theoretical results, the initial information is sparse and the gathered information is essential for better‐informed predictions.     

Optimal tax policy when firms are internationally mobile

The standard tax theory result that investment should not be distorted is based on the assumption that profits are locally bound. In this paper, we analyze the optimal tax policy in a model where firms are internationally mobile. We show that the optimal policy response to increasing firm mobility may be taxation, subsidization, or non-distortion of the marginal investment, depending on whether the mobile firms are more or less profitable than the average firm in the economy. Our findings may contribute to understanding recent tax policy developments in many OECD countries.     

The impact of teacher subject knowledge on student achievement: Evidence from within-teacher within-student variation

Teachers differ greatly in how much they teach their students, but little is known about which teacher attributes account for this. We estimate the causal effect of teacher subject knowledge on student achievement using within-teacher within-student variation, exploiting a unique Peruvian 6th-grade dataset that tested both students and their teachers in two subjects. Observing teachers teaching both subjects in one-classroom-per-grade schools, we circumvent omitted-variable and selection biases using a correlated random effects model that identifies from differences between the two subjects. After measurement-error correction, one standard deviation in subject-specific teacher achievement increases student achievement by about 9% of a standard deviation in math. Effects in reading are significantly smaller and mostly not significantly different from zero. Effects also depend on the teacher-student match in ability and gender.     

Interplay of computer and paper-based sketching in graphic design

The purpose of this study is to investigate student designers’ attitude and choices towards the use of computers and paper sketches when involved in a graphic design process. 65 computer graphic technology undergraduates participated in this research. A mixed method study with survey and in-depth interviews was applied to answer the research questions. This result shows that sketches and computers as design tools help students generate ideas in the early stage of design. Students’ preferences to use sketches or computers differ, since each tool has its own advantages and disadvantages.     

The taxation of foreign profits — The old view,the new view and a pragmatic view

The increasing importance of multinational firms raises the question as to whether and how governments should tax repatriated profits, i.e. affiliate profits returned to the headquarters. The answer to this question is especially relevant for profit repatriations within the European Union where multinational firm investment is substantial and tax competition is supposed to be of rising intensity. This paper reviews the criticism of the standard view (the “old view”) of foreign profit taxation, which goes back to Peggy Musgrave. The “new view” of international taxation is based on recent empirical studies and favours a system in which foreign profits are exempt from tax. The debate between old view and new view proponents is critically discussed and, finally, the two are confronted with a “pragmatic view” on foreign profit taxation which crucially incorporates compliance and tax administration costs.