Weak exogeneity in partially nonstationary models

This paper is dedicated to analysing the conditions for weak exogeneity in partially nonstationary models. After adopting a particular identification regime which is based on a triangularization of the parameters of the cointegration relations, we show that the conditions for weak exogeneity developed in the literature can be stated in terms of the parameters of the so-called structural form. This alternative presentation of the conditions permits new interpretations and provides fresh insights on how to test the exogeneity hypothesis.     

The Effectiveness of Capital Controls: Theory and Evidence from Chile

Selective capital controls tax only some components of capital flows. One of the rationales for such controls is that they increase the scope for an independent monetary policy, without taxing foreign direct investment and other long term flows. The first part of this paper offers a new framework to evaluate how selective capital controls might increase monetary autonomy, which considers two types of capital flows that coexist: the taxed and exempt flows. It is found that under free floating selective controls increase monetary autonomy, in the sense of allowing the authorities to set the path of the nominal exchange rate. But under predetermined exchange rate rules, the contribution of selective controls to monetary autonomy depends of the ability to reduce total inflows, which is an empirical matter. The second part describes the Chilean unremunerated reserve requirement (URR), a selective control introduced in June 1991 on a permanent basis, in a setting of predetermined exchange rates. This control collected substantial revenue, proving that it was relevant. An econometric model with data for 1987–1996 finds that substitution from the exempt short-term flows compensated reductions in taxed short-term flows, so the Chilean URR did not discourage total net short-term credit inflows to the private sector. This implies that the Chilean URR failed to contribute to monetary autonomy.     

Corporate identity management and employees’ responses

Main goals in this study are to analyse the effects of corporate identity management (CIM) on the employees’ responses, and the moderating effects of two employee personality traits: proactive personality and resistance to change. Two hundred and ninety-three branch managers in the banking sector in Spain participated in the study, and their responses were analysed through structural equation modelling. Results show that organizational identification is a key variable to explain the CIM effects on employees’ responses. Moreover, employees’ proactive personality and resistance to change exert a moderating influence on the way identification leads to extra-role behaviours. Human resource practices should take into account that proactive employees are more prone to externalize their identification by spreading positive WOM. Besides, identification with the organization will lead to loyalty, especially in employees with low resistance to change.     

Toward a conceptual framework of the harmonization of bank financial reporting standards in transition economies: The case of Mexico

In recent years banks in emerging and transition economies throughout the world have been compelled to change lending and financial reporting practices in response to the economic transition of their countries. Correspondingly, on the basis of the theory of soft budget constraints (SBC), economists have studied the relationship between economic development, banks' lending practices, and banks' penchant to overstate loans. However, very little research has been performed by accounting researchers regarding the nature of bank loan overstatement during times of financial crisis in emerging markets. Accordingly, this paper uses the theory of soft budget constraints to develop a four stage conceptual framework of the harmonization of bank financial reporting standards during times of economic transition. Emphasis is placed on using the theory of soft budget constraints to characterize the harmonization of standards and practices with respect to bank loan overstatement. The framework is applied to the harmonization of Mexican bank financial reporting during the country's economic transition of the late 1990s. The Mexican harmonization process during this period generally followed the framework.     

Technology transfer in Mexico: Past patterns and new problems related to the North American free trade agreement

As the Mexican economy prepares to transition from a relatively closed and protected market to a regionally integrated free market which is part of the proposed North American Free Trade Agreement (NAFTA), a change in its technology licensing environment will be needed to enable Mexican companies to compete for technology with firms from the other member countries of the NAFTA. This study identifies the national sources which have provided Mexico with technology and the Mexican industrial sectors which have been able to attract this technology in the 1980s. It further evaluates the current licensing environments in Canada, Mexico, and the U.S.A. as well as in the Latin American Integration Association (LAIA). The study provides recommendations for changes to the Mexican licensing environment and proposes strategies for attracting technology to Mexican industry under the changed conditions which would be introduced by the NAFTA. © 1993 John Wiley & Sons, Inc.     

Trade law and trade flows

This paper develops and estimates a model to study the effect of improving the quality of commercial trade law on trade flows. We focus on improvements aimed to privately resolve disputes among trading partners: international commercial arbitration and conciliation. The main novelty of the model is to explicit the balance between the contractual quality of importer and exporter (contractual distance) in an environment with informational frictions (contractual noise). Using a structural gravity estimation with high-dimensional fixed effects, the main contribution of the empirical exercise is to confirm previous results and unravel new traits that align with our theoretical results. Arbitration has a moderate and positive effect on exports that increases (decreases) with the contractual quality of the exporter (importer) and the remoteness of markets. The effects of conciliation are similarly positive, but only for similar trading partners with high levels of income. Results also suggest both domestic trade law reform and international treaties have a positive effect on trade, with a stronger effect of the latter.     

EMU and trade: A PPML re-assessment with intra-national trade flows

This paper examines the EMU effect on trade for the eleven early joiners and Greece relying for the first time on data that include both international and intra-national trade flows, in line with all the microfoundations of the structural gravity model of trade. We find that the overall EMU impact on trade is positive between its members and, specially, for trade between members and non-members. Interestingly, we further show that the effect of the EMU on bilateral trade remarkably differs across countries. For Ireland, Belgium–Luxembourg, Spain, Portugal and Austria, we find robust evidence that EMU has boosted trade both with other members and with third countries, while for Finland, France, Germany, Italy and the Netherlands, the results suggest that only trade with third countries has been enhanced by the EMU. Greece is the only country that shows a negative impact in trade with other EMU members and no effect in trade with non-members. Finally, the results across countries according to the direction of the trade flows (exports versus imports) do not show significant differences in any case.     

Implementability via protective equilibria

We present a notion of non-cooperative strategic equilibrium for games generated by social choice functions, and fully characterize the class of those functions which are directly implementable under this equilibrium concept. Correct preference revelation turns out to always be such an equilibrium for the games generated by this class of implementable functions.     

Incentive Regulation and Telecommunications Service Quality

We examine the impact of incentive regulation—price regulation and earnings sharing regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that incentive regulation is associated with significantly higher service quality on several dimensions (e.g., more rapid installation of new telephone service, fewer trouble reports, and increased customer satisfaction) but significantly lower quality on some dimensions (fewer installation commitments met and longer delays in resolving reported service problems)JEL Classification: L51, L96, L15We thank Michael Crew and two anonymous referees for helpful comments and suggestions. We are also grateful to Vanessa Cruz and Mircea Marcu for excellent research assistance.