Targeted transfers and the fiscal response to the great recession

Between 2007 and 2009, government expenditures increased rapidly across the OECD countries. While economic research on the impact of government purchases has flourished, in the data, most of the increase in expenditures was in government transfers. After documenting this fact, we argue that future research should focus on the positive impact of transfers. Towards this, we present a model in which there is no representative agent and Ricardian equivalence does not hold because of uncertainty, imperfect credit markets, and nominal rigidities. Targeted lump-sum transfers are expansionary both because of a neoclassical wealth effect and because of a Keynesian aggregate demand effect.     

Applying the Theory of Recreation Specialization to Better Understand Recreationists’ Preferences for Value-Added Service Development

This study examined recreationists’ preferences for the development of value-added recreation products and services using the theory of recreation specialization. A choice modeling method was employed to evaluate the value-added products and services in the for-hire fishing boat industry. Data were collected through a mail survey using Florida saltwater fishing license holders as a study population. Study results indicated that anglers were interested in experiencing new attributes of boat fishing trips besides traditionally fishing-oriented aspects. Further, the results also provided evidence that heterogeneous preferences existed by level of recreation specialization. Study findings generally supported the proposition that as anglers become more involved in fishing activity, their focus expands from activity-specific to activity-general fishing experiences; thus, high specialization anglers likely attach high importance to nonfishing attributes. Managerial implications pertaining to the development of effective recreation products and services are discussed.     

Comparison of Effects from Different Institutions: Public Credit Guarantee in Korea*

We aim to compare the activities of the two main credit guarantee institutions in Korea. There has been mounting criticism that although these institutions were mandated to play different roles in financing small and medium‐sized enterprises (SME), their operations are, in fact, similar, and many SME receive overlapping support from both institutions. Using the propensity score matching method (allowing for multiple, mutually exclusive support scenarios) to compare the effects of PCG on different institutions, the present study provides suggestions to help the government make decisions regarding the consolidation of PCG funds. The results suggest that the institutions function differently and target different SME. However, overlapping support enables firms to expand their sales only, indicating the existence of inefficiency in the case of overlapping support to firms.     

The linkage between the US and Korean stock markets: the case of NASDAQ, KOSDAQ, and the semiconductor stocks

This paper examines the interrelationship between stock prices in the US and Korea by applying the vector autoregression (VAR) model to the daily stock prices at three different level of aggregation – the national aggregate index level, the high-tech industry level and the semiconductor firm level – for the period of July 1996 through February 2001. The major findings of this study are as follows. First, the US stock market plays a leading role over the Korean market at every level of aggregation. The reverse direction of influence, from Korea to the US, was found to be minimal. Second, the evidence also suggests that the speed of transmission of innovation from the US to Korea is swift and finished for the most part within a 24-h period, although it takes three or four days to complete the whole process. Third, the influence of the US stock prices on Korean stock prices, which is measured by the innovation transmission using the impulse–response function (IRF) analysis, seems to be somewhat stronger in the composite national stock price indices and the tech-laden indices than high-tech firms. Fourth, at the firm level, the influence of Micron Technology on the leading semiconductor manufacturers in Korea is shown to be strong and persistent by passing about 34 percent of its innovations to the Korean firms within the three-day period. The impact of IBM and Intel on the Korean chip makers seems to be relatively smaller. Finally, stock prices in Korea, national stock price indices and individual high-tech stocks alike, have become much more responsive to innovations in the US stock prices after the 1997 financial crisis. The implications of the main findings in this paper are also discussed.     

The role of co-managers in reducing flotation costs: Evidence from seasoned equity offerings

We examine the effect on expected flotation costs of including co-managers in the underwriting syndicate. We consider five components of SEO flotation costs: announcement returns, underpricing, the probability of withdrawals, offering delays, and underwriting spreads. The results show that the characteristics of co-managers participating in syndicates have significant effects on flotation costs, while the effect of the number of co-managers is largely insignificant. Our results are consistent with the notion that highly reputable underwriters and commercial banks serving as co-managers serve a certification role, reducing information asymmetries and, as a result, lowering SEO flotation costs.     

Inter‐state dynamics of invention activities, 1930–2000

We study the dynamics of the cross‐section distribution of patents per capita for the 48 continental US states from 1930 to 2000 using a discrete‐state Markov chain. We test for and find evidence in favor of the (knowledge) convergence hypothesis. The distribution of patents is converging to a limiting distribution that is significantly more concentrated than its initial distribution. States in the extreme are more mobile than states in the middle of the cross‐sectional distribution and are likely to move to the middle. However, the rate of convergence to the limiting distribution is ‘slow’. Copyright © 2006 John Wiley & Sons, Ltd.     

Citizens’ trust in government and their willingness-to-pay

We employ the Hicksian compensating variation and a citizen’s subjective perspective on trustworthiness of government, and draw a positive association between citizens’ trust in government and their willingness-to-pay. Our finding suggests that public projects can be hindered by prevailing distrust toward government.     

Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency

Internet portals serve as platforms for coordinating advertisements, content, and user markets. We model portal structure with South Korean market data to explain network effects and other competition factors. We also analyze network effects on profit and market efficiency. The results indicate a negative network effect from banner advertisements in the user market, which is countered by a network effect from content provision. In the advertising market, the network effect from user demand is positively identified, which explains profit making through increased user visits. Furthermore, we show that network effects due to market concentration result in increases in consumer surplus.     

Determinants of consumers’ intentions to use smartphones apps for flight ticket bookings

This study examines customers’ adoption and acceptance of smartphone apps to book their flight tickets. By integrating customers’ innovativeness, involvement and perceived trust as additional variables, this study extends the Unified Theory of Acceptance and Use of Technology (UTAUT) and proposes a theoretical model that includes seven explanatory variables of the customers’ behavioural intentions: performance expectancy, effort expectancy, social influence, facilitating conditions, customers’ innovativeness, customers’ involvement and perceived trust. Data were collected from 369 customers who had booked their flight tickets via smartphone apps and was further analysed by employing partial least squares (PLS). Findings suggest that performance expectancy, facilitating conditions, customer innovativeness and perceived trust are positive and significant determinants of customers’ intentions to book their flight tickets on smartphone apps. Accordingly, several important implications for academics and industry decision makers are formulated.     

Do hedge funds time market tail risk? Evidence from option-implied tail risk

This paper focuses on an unexplored dimension of fund managers’ timing ability: Market-wide tail risk implied by information in options markets. Constructing the option-implied tail risk, we investigate whether hedge fund managers can strategically time the tail risk through adjusting their exposure to changes of it. Using an extensive sample of equity-oriented hedge funds, we find strong evidence of tail risk timing ability of hedge fund managers. Furthermore, tail risk timing ability brings significant economic value to investors. Top-ranked funds outperform bottom-ranked funds by 5–7% annually after adjusting for risk factors. Our results are robust to various robustness checks.