Independent electoral management bodies and international election observer missions: any impact on the observed level of democracy? A conceptual framework

What kind of institutions are needed to stabilize and foster democracy? Clearly elections are crucial and much of the institutional and legal surrounding of elections has been subject to research. Two institutional variables have been neglected though, specifically in empirical research: Electoral Management Bodies (EMBs) and International Observer Missions (EOMs). Can EMBs and EOMs foster free and fair elections? If yes, under what conditions? And what kind of competences are needed for them? We hypothesize that both can become crucial institutions for free and fair elections. Whereas independent central banks or audit courts control special issue areas in order to take certain decision out of the realm of politics, EMBs control the moment of the set-up of government—the election, when conflicts of interest of politicians are at its peak. Although other kinds of independent administrative agencies have been the subject of political science and economic research, EMBs and EOMs have also been neglected here. This article undertakes to outline a conceptual framework for testing various hypotheses on the institutional set-up of EMBs. Hypothesizing that de iure and de facto independence of EMBs foster fair elections, the detailed institutional set-up of EMBs as independent variable is outlined in order to test for the level of democracy as a dependent variable. Furthermore, the importance of EOMs as well as their interaction effect with EMBs is analyzed. Although by now EOMs are sent to almost any country with elections, their impact has not been analyzed in an encompassing way in spite of that the mission have intensified in their work, have become more costly and their verdicts are gaining ever more publicity.     

Gender pairing and bargaining—Beware the same sex!

We study the influence of gender and gender pairing on economic decision making in an experimental two-person bargaining game where the other party’s gender is known to both actors. We find that (1) gender per se has no significant effect on behavior, whereas (2) gender pairing systematically affects behavior. In particular, we observe much more competition and retaliation and, thus, lower efficiency when the bargaining partners have the same gender than when they have the opposite gender. These findings are consistent with predictions from evolutionary psychology. Implications of our results for real-world organizations are discussed.     

A new approach to bad news effects on volatility: the multiple-sign-volume sensitive regime EGARCH model (MSV-EGARCH)

In this paper, using daily data for six major international stock market indexes and a modified EGARCH specification, the links between stock market returns, volatility and trading volume are investigated in a new nonlinear conditional variance framework with multiple regimes and volume effects. Volatility forecast comparisons, using the Harvey-Newbold test for multiple forecasts encompassing, seem to demonstrate that the MSV-EGARCH complex threshold structure is able to correctly fit GARCH-type dynamics of the series under study and dominates competing standard asymmetric models in several of the considered stock indexes.

Conditional ordering extensions

We produce a solution to the problem of extending a quasiordering conditional on a finite list of ex-ante comparisons between pairs. This constitutes yet another extension of the classical Szpilrajn’s theorem. Some examples of use of our result follow.     

Linking global economic dynamics to a South African-specific credit risk correlation model

In order to address practical questions in credit portfolio management it is necessary to link the cyclical or systematic components of firm credit risk with the firm's own idiosyncratic credit risk as well as the systematic credit risk component of every other exposure in the portfolio. This paper builds on the methodology proposed by Pesaran, Schuermann, and Weiner [Pesaran, M.H., Schuermann, T., and Weiner, S.M., (2004), Modeling regional interdependencies using a global error correcting macroeconometric model, Journal of Business and Economic Statistics, 22, 2, 129–169.] and supplemented by Pesaran, Schuermann, Treutler and Weiner [Pesaran, M.H., Schuermann, T., Treutler, B., and Weiner, S.M., (2006), Macroeconomic dynamics and credit risk: a global perspective, Journal of Money, Credit, and Banking, Volume 38, Number 5, August 2006, 1211–1261.] which has made a significant advance in credit risk modelling in that it avoids the use of proprietary balance sheet and distance-to-default data, focusing on credit ratings which are more freely available.In this paper a country-specific macroeconometric risk-driver engine which is compatible with and could feed into the GVAR model and framework of PSW (2004) is constructed, using vector error-correcting (VECM) techniques. This allows conditional loss estimation of a South African-specific credit portfolio but also opens the door for credit portfolio modelling on a global scale, as such a model can easily be linked to the GVAR model. The set of domestic factors is extended beyond those used in PSW (2004) in such a way that the risk-driver model is applicable for both retail and corporate credit risk. As such, the model can be applied to a total bank balance sheet, incorporating the correlation and diversification between both retail and corporate credit exposures.Assuming statistical over-identification restrictions, the results indicate that it is possible to construct a South African component for the GVAR model that can easily be integrated into the global component. From a practical application perspective the framework and model is particularly appealing since it can be used as a theoretically consistent correlation model within a South African-specific credit portfolio management tool.     

Respondent uncertainty in a contingent market for carbon offsets

The main objective of this paper is to provide additional empirical evidence of what explains respondent uncertainty in contingent valuation (CV) and how this in turn affects stated willingness to pay (WTP). Air travelers asked to pay a carbon travel tax to offset carbon emissions from flying were asked how likely it is that they will actually pay if the tax is voluntary. When changing the market compliance imperative from a mandatory carbon tax to a voluntary contribution, a third of all air travelers consider it unlikely they will actually pay their stated WTP amount. An ordered probit estimation approach is applied to identify the sources of respondent uncertainty. Besides the bid price, respondent sense of responsibility and belief in the effectiveness of the voluntary carbon market are among the main reasons for the experienced uncertainty.     

Organizational design of R&D after mergers and the role of budget responsibility

We consider an innovation contest between n firms in the presence of knowledge leakages from an innovating firm to its rivals. Our analysis focuses on the effects of these knowledge spillovers on merger activities between firms. In particular, we are interested in how different organizational designs of R&D after mergers affect profits of firms taking part in a merger and profits of their non-merging rivals. Three organizational arrangements are analyzed: first, a fusion of R&D departments in which the newly merged firm decides to close down one of the previously two R&D departments. Second, a profit center arrangement in which the newly merged firm keeps the old R&D departments as fully functional entities with a sovereign budget responsibility at each of the two departments. Third, a multisubsidiary organizational form in which the newly merged firm still keeps the old R&D departments but with restricted budget responsibility in the sense that they are forced to determine cooperatively their R&D budgets in order to maximize overall firm’s profits. It turns out that the different organizational designs of R&D after the merger and the budget responsibilities have major impacts on merger outcomes.     

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