An empirical assessment of the effects of trade in innovative tasks on innovation output

Multinational firms are increasingly sending their innovative tasks abroad. This article examines whether offshoring research and development, design, and engineering activities provides any gains in terms of firm‐level innovation output. The effects of trade in innovative tasks on the probability of firms being innovative and the share of innovative product sales in total turnover are examined using an instrumental variable approach. The data in use come from a recent survey, which provides cross‐section observations for more than 14,750 firms in seven European countries. The results suggest that those firms that offshore their innovative activities are 60% more likely to successfully innovate. Also, offshoring innovative activities increases the share of innovative product sales in total turnover up to 35%. Furthermore, firms in this sample appear to gain from trade in innovative tasks when such trade is in product innovation but not when such trade is in process innovation.     

The Persistence of Dominant‐Firm Market Share: Raising Rivals' Cost on the New York Stock Exchange

To explain the persistence of dominant New York Stock Exchange (NYSE) market share in stock trading of listed securities from 1992 to 2002, we develop a dominant‐firm price leadership model and hypothesize that NYSE specialists raised the costs of rival market makers. The model predicts that natural and induced cost advantages will determine the NYSE's market share vis‐à‐vis the regional exchanges, electronic trading systems, and NASDAQ dealers. Empirically, NYSE market share increases with economies of scale and scope, abnormal price volatility, high asymmetric information, and with trading practices that raise rivals' costs, such as failure to display limit orders that bettered the existing quotes.     

Changing Sources of Household Income,Poverty, and Sectoral Inequality in Sri Lanka, 1990–2006

Comparing dynamic changes in household income and poverty among urban, rural, and estate sectors in Sri Lanka from 1990 to 2006, this study finds that a shift of household income away from farm to nonfarm sources is accompanied by a significant improvement in household income and reduction in poverty, particularly in the rural sector. Major contributing factors are the rise in returns to labor, in general, and educated labor, in particular, due to the development of the nonfarm labor market. Persistently low income among estate households can be explained primarily by the limited availability of nonfarm employment opportunities and the low education levels of working members.     

Firm Heterogeneity and Export Pricing in India

We examine export pricing by Indian manufacturing firms in the early 2000s using a unique data set that matches firm characteristics with product and destination‐level trade data. We find that, in contrast to China and other countries, firm productivity is negatively associated with export prices, and export prices are negatively associated with distance while positively associated with remoteness. Our conjecture is that Indian innovation costs, which are higher than China's, drive down the scope for quality differentiation causing a negative association between productivity and prices. To the best of our knowledge, this is the first empirical evidence consistent with heterogenous goods and short quality ladders, a theoretical possibility noted in the study by Antoniades (2012), an outcome that arises here because of domestic Indian economic and regulatory features.     

Heading for the Hills? Effects of Community Flood Management on Local Adaptation to Flood Risks

The Community Rating System (CRS) program was implemented by the U.S. Federal Emergency Management Agency (FEMA) in 1990 as an optional program to encourage communities to voluntarily engage in flood mitigation initiatives. This article uses national census tract‐level data from 1980 to 2010 to estimate whether CRS participation and flood risk affect a community's local patterns of population change. We employ an instrumental‐variables strategy to address the potential endogeneity of CRS participation, based on community‐scale demographic factors that predict when a tract's host community joins the CRS. The results find significant effects of the CRS program and flood risk on population change. Taken together, the findings point to greater propensity for community‐scale flood management in areas with more newcomers and programs such as CRS stabilizing population, though not especially in flood‐prone areas. We observe the CRS neither displacing population toward lower‐risk areas nor attracting more people to flood‐prone areas.     

Equity Risk Premium Puzzle: Evidence from Indonesia and Sri Lanka

This paper investigates the equity risk premium puzzle in the Indonesian and Sri Lankan stock markets in order to identify the relationship between the volatility of excess returns and the equity risk premium. The asymmetric impact of negative shocks on the equity risk premium is also examined using threshold and exponential GARCH-M models. We analyse data on the excess returns of the Indonesian and Sri Lankan stock markets from 2004 to 2013, and we find that the impact of the conditional volatility of excess returns on the equity risk premium is not significant in either country. Instead, we find an impact from negative return shocks on the equity risk premium only in Sri Lanka. Therefore, we conclude that investors are not compensated for the conditional volatility of the excess returns in these two markets, while Sri Lankan investors are compensated for the risk of negative shocks.     

Forecasting the dynamic and structural development characteristics of the common economic space

The paper describes a complex of forecasting-analytical support for the activity of the Common Economic Space (CES), presents computational results made on its basis, and substantiates the comprehensive approach to economic decisions within the CES.     

Managing the Monetary Consequences of Reserve Accumulation in Emerging Asia

Abstract

The huge increase in international reserve holdings by Asian countries since the 1997 crisis has been one of the most important recent developments on the international financial scene. These buildups have contributed substantially to concerns about the creation of excessive global liquidity. How justified these concerns are depends heavily on the extent to which the reserve accumulating countries have been able to sterilize the effects on their domestic monetary aggregates. We use a unified theoretical framework to undertake dynamic estimations of the magnitude of sterilization and offset coefficients (which measure the degree of capital mobility) for a large set of Asian economies. We find that despite substantial capital mobility there has been a high degree of effective sterilization to date.     

Modelling the impact of the ‘fast track’ land reform policy on Zimbabwe's maize sector

Zimbabwe has recently gone through a widely criticised land reform process that is argued to be the cause of subdued agricultural production. This paper attempts to present a counterfactual picture of the maize market in Zimbabwe had land reform been managed appropriately. The counterfactual is developed through a partial equilibrium framework in order to quantify the impact of the land reform programme. This, to our knowledge, is the first attempt at applying a partial equilibrium framework to an analysis of the impact of land reform. The results of the post-2000 land reform policy simulation showed that actual total maize output was lower than what could have been produced if it was under a pre-2000 land reform system. The study validates the assertion that land reforms contributed to the contraction of output. These results suggest the need for a well planned and executed land reform process, which can still play an important role in output growth and food security.