Sunspot-like equilibria in an overlapping generations economy with strategic interactions

In this paper I analyze the effect of market uncertainty in an overlapping generations economy with strategic interactions among agents. I demonstrate the existence of sunspot-like equilibria, in which arbitrarily small amounts of intrinsic uncertainty in agents’ offers generate large fluctuations in equilibrium bids and prices. I would like to express my gratitude to Stephen Spear for his guidance during the realization of this project. I thank an anonymous referee for providing insightful comments and suggestions. I have benefited from comments by Alexander Elbittar, Cesar Guerrero, and Vivek Ramachandran.     

The Successful Product Pioneer: Maintaining Commitment while Adapting to Change

Introducing pioneering products is an important entrepreneurial activity and the lifeblood of small businesses, yet previous literature on pioneering and performance in small firms has been inconclusive. Based on data gathered from entrepreneurs in 51 small computer firms, the study found that commitment (entrepreneurial confidence) and adaptability (corporate entrepreneurship and environmental dynamism) were especially beneficial to pioneers. The other three variables (product championing, marketing emphasis, and technological newness) contributed to performance across all new product introductions but did not have modifying effects on pioneering introductions in particular.     

State,war, and land dispossession: The multiple paths to land concentration

We focus on the role of the state in land dispossession during war. State agencies promote land accumulation not only through coercive paths, but also by combining political and market mechanisms. Each mechanism may link the state with different actors and coalitions. We illustrate how this worked in Tibú, a Colombian municipality in which violence against civilians and land accumulation took place in more or less distinct phases. The case highlights the fact that land accumulation during war is not only achieved through coercion. At the same time, it shows the importance of identifying the specific coalitions through which states establish their presence in contested territories during war. We explain such variation as resulting from the types of alliances and coalitions that the state establishes with different sets of stakeholders, and the aims pursued by coalition actors.     

European Parliament elections in times of crisis

In May 2014, EU citizens will vote in the most important European Parliament elections to date. With the new powers allocated to it by the Lisbon Treaty, the new European Parliament will shape EU policies in many important areas and will elect the President of the Commission. However, public confi dence in the EU has fallen to historically low levels — to a great extent due to the fi nancial crisis and its aftermath — and the participation rate in European Parliament elections has dropped steadily since the fi rst call for a direct vote in 1979. This raises fundamental questions about its political and democratic legitimacy. This Forum examines the economic agendas of the main political parties vying for power and the potential outcome of the May elections, including the role that radical and anti-euro parties are likely to play in the campaign and in the next Parliament.     

Uncertainty and insurance in strategic market games

Summary. For perfectly competitive economies under uncertainty, there is a well-known equivalence between a formulation with contingent goods and one with state-specific securities followed by spot markets for goods. In this paper, I examine whether this equivalence carries over to a particular form of imperfect competition. Specifically, I look at three Shapley-Shubik strategic market games: one with contingent commodities, one with Arrow securities traded under imperfect competition and one with Arrow securities traded under perfect competition. First I compare the feasibility constraints of these three games. Then I compare their equilibrium sets. As in Peck and Shell (1989), the only common equilibria between the first and the second game are those which involve no transfer of income across states. However, if the securities markets are competitive, then the set of equilibria of the contingent commodities game and the securities game coincide. Received: June 16, 1997; revised version: April 30, 1998     

Governance with multiple objectives: Evidence from top executive turnover in China

We examine the relationship between Chief Executive Officer (CEO) turnover and the performance of listed Chinese firms and obtain two results. First, we find a negative relationship between the level of pre-turnover profitability and CEO turnover when firms are incurring financial losses, but no such relationship when they are making profits. Second, there is an improvement in post-turnover profitability in loss-making firms, but no such improvement in profit-making firms. These results indicate the existence of a time-varying objective function, whereby shareholders have a greater incentive to discipline their CEOs on the basis of financial performance when their firms are incurring financial losses rather than profits.     

Is Child Work Necessary?*

This article investigates the hypothesis that child labour is compelled by poverty. It shows that a testable implication of this hypothesis is that the wage elasticity of child labour supply is negative. Using a large household survey for rural Pakistan, labour supply models for boys and girls in wage work are estimated. Conditioning on non-labour income and a range of demographic variables, the article finds a negative wage elasticity for boys and an elasticity that is insignificantly different from zero for girls. Thus, while boys appear to work on account of poverty compulsions, the evidence for girls is ambiguous.     

Application of factor models for the identification of countries sharing international reference-cycles

Using the methodology developed in Stock and Watson (2002a), this paper proposes to exploit the information that contains the factor loading to identify the countries sharing common factors. The proposal is illustrated by analyzing the relation with the international reference-cycle of a large sample of advanced countries from 1950 until 2006.     

Testing for structural breaks in factor loadings: An application to international business cycle

This paper proposes the implementation of the SupWald test of Andrews (1993) to detect structural breaks in the loadings of a static factor model. The procedure is illustrated by testing for structural breaks in the common factors of GDP growth series for a sample of advanced countries from 1950 until 2006.     

Facilitative Leadership and the Challenge of Renewing Local Democracy in Italy

Participatory arrangements have become a popular way of addressing modern challenges of urban governance but in practice face several constraints and can trigger deep tensions. Facilitative leadership can play a crucial role in enabling collaboration among local stakeholders despite plural and often conflictual interests. Surprisingly, this style of leadership has received limited attention within debates linking urban governance and participatory democracy. We summarize the main insights of the literature on facilitative leadership and empirically develop them in the context of participatory urban governance by comparing recent participatory processes in two Italian cities. Whereas in one city facilitative leadership gradually emerged and successfully transformed a deep conflict into consensual proposals, in the other city, participatory planning further exacerbated pre‐existing antagonism, and local democratic culture was only later slowly reinvigorated through bottom‐up initiative. These diverging pathways explain how facilitative leadership is: (1) important for making things happen; (2) best understood as situated practices; (3) an emergent property of the practices and interactions of a number of local actors and (4) a democratic capacity for dealing with continuous challenges. Key to this style of leadership is understanding participatory urban governance as an ongoing democratic process.