Country terms of trade: trends,unit roots,over-differencing,endogeneity, time dummies,and heterogeneity

The debate about the Prebisch-Singer thesis has focused on primary commodities with some extensions to manufactures. We analyse trends in country terms-of-trade for goods and services rather than those for commodities according to the World Bank income classification. We find that the natural logarithm of the terms of trade for all groups except for the poorest has common unit roots, but none has individual unit roots. As low-income countries have no unit roots over-differencing is inefficient and biases significance levels in first differences against the fall in the terms of trade. For the low-income countries the terms of trade of goods and services are falling at a rate that is significantly negative without and with endogeneity treatment by system GMM. A comprehensive analysis of the effects of time dummies supports the result of falling terms of trade for low-income countries. When all coefficients are country-specific 50% of all low-income countries have falling terms of trade in a simultaneous equation estimation using the SUR method. Food and financial crisis have no effect on the number of countries with falling terms of trade, but (dis-)improve the terms of trade or the significance of the results for a very small number of countries.     

An Introduction to the Patstat Database with Example Queries

This article provides an introduction to the Patstat patent database. It offers guided examples of 10 popular queries that are relevant for research purposes and that cover the most important data tables. It is targeted at academic researchers and practitioners who are willing to learn the basics of the database.     

Ist die EU-Agrarpolitik ihr Geld wert?

Expenditure for the Common Agricultural Policy (CAP) has been in the centre of recent policy debate in the preparation of the Financial Framework for the period 2014–2020. Expenditure has generally been considered as the necessary costs for the achievement of the CAP objectives. The authors of this article argue that expenditure is not equal to the economic costs of a policy. Moreover, they claim that the main part of CAP expenditure is not well targeted for the achievement of the CAP’s objectives. The bulk of expenditure is for direct payments tied to agricultural land and, hence, contributes little if anything to CAP’s objectives as laid down in the treaties of the European Union or officially articulated elsewhere.     

Validating new product creativity in the eastern context of Malaysia

This paper examines the etic vs. emic nature of the new product creativity (NPC) construct often used in the strategic marketing and management literatures. The current study compares the NPC measure developed by Im and Workman (2004) in the West in an Eastern context by utilizing data from 172 Malaysian companies. The results show that NPC, which is the combination of new product (NP) novelty and NP meaningfulness, has a different connotation in Malaysia. The findings demonstrate that from the novelty perspective NPC is an emic phenomenon. After the construct validation process, the Western claim that NPC is a seed of firm performance is tested. The results verify NPC's relationship with NP performance as a source of competitive advantage for Malaysian firms and thus suggest that this relationship is etic in nature. These findings have significant implications for firms' global innovation strategies.     

The default heuristic in strategic decision making: When is it optimal to choose the default without investing in information search?

Many studies have shown that decision makers have a tendency to choose the default or standard action among several possible actions. The article develops a model to explore under what conditions it is optimal for a firm facing a strategic decision problem to choose the default action without investing in obtaining more information that allows a more accurate decision. The model shows that the strategy to follow the default without additional information (“the default heuristic”) is more likely to be optimal when the cost of obtaining information is higher, and when the variation in possible outcomes is lower. The model also analyzes the optimal level of information search, showing that if the firm chooses to obtain information at all, it will invest in more accurate information when the cost of obtaining information is lower and when the variation in possible outcomes is lower.     

Practice makes perfect: Entrepreneurial-experience curves and venture performance

This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience–performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee–employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.     

A Structuralist Inflation Curve

This paper presents a structuralist model of inflation and applies it to the US economy. The model uses a mark‐up rule to specify inflation as a function of income distribution and capacity utilization, as usual in structuralist macroeconomics, but it also includes inflation expectations, the government's inflation target and cost pressures from non‐labor inputs as explaining variables. The model shows how inflation and income distribution, measured by the wage share of income, are connected through an inflation curve in the long run.     

From academic research to marketing practice: Exploring the marketing science value chain

We aim to investigate the impact of marketing science articles and tools on the practice of marketing. This impact may be direct (e.g., an academic article may be adapted to solve a practical problem) or indirect (e.g., its contents may be incorporated into practitioners' tools, which then influence marketing decision making). We use the term “marketing science value chain” to describe these diffusion steps, and survey marketing managers, marketing science intermediaries (practicing marketing analysts), and marketing academics to calibrate the value chain.     

Elections,political competition and bank failure

We exploit exogenous variation in the scheduling of gubernatorial elections to study the timing of bank failure in the US. Using hazard analysis, we show that bank failure is about 45% less likely in the year leading up to an election. Political control (i.e., lack of competition) can explain all of this average election year fall in the hazard rate. In particular, we show that the reduction in hazard rate doubles in magnitude for banks operating in states where the governor has simultaneous control of the upper and lower houses of the state legislature (i.e., complete control) heading into an election.     

Business Cycle Synchronization of Turkey with the Eurozone and the United States: What Has Changed Since 2001?

Using wavelet methodology, we make a detailed spectral analysis of the business cycle synchronization of the Turkish economy with the eurozone and the United States. We take into account the dramatic change in the main economic indicators in the Turkish economy after the 2001 financial crisis. We find that the correlation of Turkish cycles with the cycles of the eurozone and the United States increased substantially after 2001. Moreover, the correlation of the Turkish cycles with the U.S. cycles is not lower than that with the euro cycles after 2001. Accordingly, analyzing the effect of international developments should not be confined to the trade channel. We submit that capital flows offer a reasonable explanation for the high correlation with the United States.