Exploring different views of exchange rate regime choice

The empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions. Which factors may induce a de facto peg? Why do countries enforce a peg but do not announce it? Why do countries “break their promises”? We show that a stable socio-political environment and an efficient political decision-making process are a necessary prerequisite for choosing a peg and sticking to it, challenging the view that sees the exchange rate as a commitment device. Policymakers seem rather concerned with regime sustainability in the face of adverse economic and socio-political fundamentals.     

Fragility of competitive equilibrium with risk of default

We study competitive equilibrium in sequential economies under limited commitment. Default induces permanent exclusion from financial markets and endogenously determined solvency constraints prevent debt repudiation. Our analysis shows that such an enforcement mechanism is essentially fragile, leading to equilibrium multiplicity. We accomplish this by establishing Welfare Theorems under a weaker notion of constrained efficiency, inspired by Malinvaud, corresponding to the absence of welfare improving feasible redistributions over finite (though indefinite) horizons. A Negishi?s Method permits to show that, for any arbitrary value of social welfare in between autarchy and constrained optimality, there exists an equilibrium attaining that value. Thus, competitive equilibria might differ dramatically in terms of volumes of trade, asset price volatility, individuals? ability to insure against idiosyncratic risk and consumption inequality.     

Reinterpreting social pacts: Theory and evidence

We investigate the empirical determinants of social pacts over the 1970–2004 period. We adopt a political economy approach, showing that governments are more likely to sign a pact when the cost of a conflict with trade unions is relatively larger. Such a cost depends on macroeconomic variables and on measures of social conflict and union strength. These findings are remarkably stable across sub-periods, in apparent contrast with previous contributions that emphasised differences between first- and second-generation pacts. Our interpretation is that pacts were different across periods because the policy issues changed, but the incentives to seek union consensus did not.     

A probabilistic projection of beneficiaries of long-term care insurance in Germany by severity of disability

Quality & Quantity - Demographic aging puts social insurance systems under immense pressure as frailty risks increase with age. The statutory long-term care insurance in Germany (GPV), whose...     

Municipal Auditing in Germany and Italy: Explosion,Change, or Recalcitrance?

Abstract: By analysing two countries that have recently undergone NPM reform at the municipal level (Germany and Italy), our investigation challenges two popular notions: (1) that an audit explosion occurs as a result of reform, and (2) that reform causes change, i.e., that actors within a changing institutional context automatically adapt. Our empirically‐derived observations are of (1) an audit implosion, and (2) institutional, cultural, and political conditions that trump any automatic adaptation to change. Indeed, these conditions – not audit reform per se – can shape the process and determine the direction of change. Recalcitrance, the stubborn resistance to and defiance of authority or guidance, is an interesting characteristic of some institutions. German auditors illustrate this nicely; our Italian case study demonstrates a mandatory dismantling of institutional inertia. By analysing the causal relationship between public management reforms and auditing, our research highlights the factors that prevent auditors from adapting to contextual change and factors that render obedience. We test Power's audit explosion theory by operationalising it into five key components which are then evaluated within the landscapes of recent German and Italian municipal reform.     

Assessing the Impact of Ethnocentrism in the Food Buying Decisions of International University Students

This study assesses the influence of ethnocentrism on food buying decisions by a specific group of sojourners—namely, international university students—by distinguishing the results observed in relation to gender differences from those detected without any consideration of gender differences. On the basis of an exhaustive review of relevant literature, this study offers several research hypotheses pertaining to the influence of ethnocentrism on evaluations of alternatives, choices, and post-purchase stages. To test these hypotheses, the authors collected data from a sample of university foreign students enrolled in a Spanish university, and then submitted these data to diverse principal components factorial analyses and linear parametric regressions. The results show that a consideration of gender makes a great difference, in that the influence of ethnocentrism is much greater in the food buying decision process for male sojourners. These results have major implications for key stakeholders such as food manufacturers, importers, retailers, and universities.     

The evaluation of public investments under uncertainty

In this paper we revise and extend the theory of the evaluation of public investments under uncertainty. Precisely, we argue that the value of the investments that the public sector would be willing to undertake is never below its market value, and that it can be higher if it provides social insurance.