Trapped in the Logic of the Modern State System? European Integration in the Wake of the Financial Crisis

In the wake of the Single European Act of the mid-1980s and a series of follow-on initiatives aimed at fostering greater integration in Europe, a number of commentators began describing Europe as a truly novel political-territorial arrangement. By the middle of the 1990s, however, the adoption of a common currency came to dominate the European integration agenda. The embrace of monetary union reflected a view of European integration that was firmly embedded in the logic of the modern territorial state system. That logic led many commentators to view the success or failure of integration in terms of the degree to which powers were being transferred from state governmental and economic institutions to the central decision-making bodies of the European Union. Such an approach cast the EU as a super-state rather than as a new type of political-institutional entity. As a result, the integration project was less subversive of the state system than it might otherwise have been – bolstering the view of the European Union as a distant bureaucracy not adequately attuned to the needs of everyday Europeans and fueling nationalist sentiments: a social force with deep roots in the modernist territorial order. Moving the European integration process forward will likely require embracing conceptions of progress that are less tethered to modernist territorial ideas and assumptions.     

Allowances for Corporate Equity in Practice

This article provides an overview of full and partial allowancefor corporate equity (ACE) tax systems in practice. In the recentpast, ACE systems existed in Austria, Croatia and Italy. Brazilstill applies a variant of such a system and Belgium introducedone in 2006. This article summarizes the empirical literatureon past ACE systems, and provides a theoretical and empiricalassessment of the Brazilian ACE variant. The main finding isthat the Brazilian reform introduced an ACE system for a minorityof firms only, with the majority instead having a system ofdividend deductibility. Despite the reduction in the tax preferencefor debt finance, capital structures have not changed much,but dividends have increased. Investment appears to have benefitedfrom the reform, although the extent to which this was due tothe new structure rather than the tax cut is unclear. (JEL codes:H25, H21, C33)     

Heterogeneity of consumer preferences and trade patterns in a monopolistically competitive setting

The paper considers a two-sector two-country trade model of monopolistic competition featuring the heterogeneity of consumer preferences and incomes within and across countries. The incorporation of heterogeneity into a monopolistic competition setting is achieved by assuming a nested Cobb–Douglas and CES utility function exhibiting both country and sector-specific consumer tastes and expenditure shares on manufacturing and traditional goods. The key question analyzed in the paper is how consumer heterogeneity affects the home bias of trade in different countries. The key finding here is that the heterogeneity in tastes and incomes of consumers can provide a substantial influence on degree of home bias in trade but only in combination with high transportation costs.     

Uniqueness conditions for strongly point-rationalizable solutions to games with metrizable strategy sets

This paper introduces the iterative solution concept of strong point-rationalizability as a strengthening of standard point-rationalizability by stipulating that any two players have identical beliefs about the strategy choices of their common opponents. By adopting and generalizing the contraction-property approach of Moulin [Moulin, H., 1984. Dominance solvability and cournot stability. Mathematical Social Sciences 7, 83–102] and Bernheim [Bernheim, B.D., 1984. Rationalizable strategic behavior. Econometrica 52, 1007–1028] we derive sufficient conditions for the existence of unique strongly point-rationalizable strategies in strategic games with best response functions. These uniqueness results are derived under fairly general assumptions and are especially useful for complete and bounded, as well as finite strategy sets. For games with monotonic individual best response functions, equivalence between a unique strongly point-rationalizable and a unique point-rationalizable solution in the standard sense is established. Furthermore, the existence of unique fixed points is proven under conditions that generalize for bounded metric spaces an established fixed point theorem by Bonsall [Bonsall, F.F., 1962. Lectures on Some Fixed Point Theorems of Functional Analysis. Tata Institute of Fundamental Research, Bombay] and Smart [Smart, D.R., 1974. Fixed Point Theorems. Cambridge University Press, Cambridge, London]. Possible extensions of our findings to games with multi-valued best response correspondences are discussed.     

The pricing of firms with expected losses/profits: The role of January

We examine the role of January in the relation between expected losses/profits and future stock returns. We predict and find that the relation between expected losses/profits and future returns reverses from the usual positive relation in non‐January months to a negative one in January. The reverse January relation is consistent across sample years, is observed in the United States and international markets, and is incremental to other variables associated with January returns. At least part of the reverse January relation is explained by tax‐loss selling. Further analysis shows that the reverse January relation results in a temporary price drift away from fundamental value. In other words, we find that abnormal positive (negative) future returns do not always indicate past under(over)valuation. Overall, our results illustrate the importance of controlling for the effect of January when examining how investors price expected losses/profits.     

OVERVALUED: SWEDISH MONETARY POLICY IN THE 1930s

The article discusses Sweden's monetary policy in the 1930s, which has been hailed as the first and only example of successful price‐level targeting. Our contribution is twofold. First, we argue that the crucial measure that immediately ended deflationary expectations and enabled a swift recovery was a strong and involuntary devaluation of the currency, not the adoption of a new monetary policy framework. Second, starting from the recent literature on monetary policy at the zero‐lower bound, we conclude that Sweden's exchange rate policy is more relevant for the current discussion than its tentative experience with price‐level targeting.     

Goals for global society: Third generation project for the club of Rome

This paper attempts to describe informally the subject and overall methodology of a new Club of Rome project. So far as the problématique of the project may be seen as the opening of a new field of inquiry, the research assumptions and methods may be taken as tentative. The authors outline the history of the origin of the project and its overall aims. Next we attempt to state the strategy of the project as we see it. Since the project focuses around the topic of human values and their representability in world models and policy planning, areas too vast to be definitively covered in the space alloted, we simply state in general terms what is proposed and how we are thinking about handling the topic. The authors do not allege to speak for the whole research group, although we do believe that the views, as far as they go, contained herein are held in some similar form by most (if not all) the research associates. Undoubtedly this paper introduces some conjectures that require a defense more lengthy and detailed than has been provided here. Indeed, in advance of research it is likely that some of our suppositions cannot be supported at all except by appeals to intuition. In this light we expect this paper to simply introduce the topic of the project and its ambitions, leaving the bulk of supporting material and arguments for a later, more detailed paper in this journal.     

Why is TFP growth sectorally concentrated?

Research shows that total factor productivity (TFP) growth is weak in European countries. This is inter alia attributed to the fact that substantial TFP growth is limited to a few industries. Because TFP growth is typically understood as technological progress, it is concluded that technology diffusion between sectors in Europe is hampered. We use EU KLEMS data sets to decompose sectoral TFP for nine European countries by means of a Malmquist approach in order to identify potential sources besides technical progress. Applying Harberger diagrams, we describe the sectoral distribution of TFP growth, efficiency gains and losses, economies of scale and technological progress. The analysis reveals that technological progress is quite evenly distributed across sectors in most European countries. The wide scattering of TFP growth is explained by deviating efficiency developments and the unused economies of scale. We conclude that the technology transfer between sectors in most European countries seems to work. Therefore, Europe in general does not need a new technology policy, but a further integration of the markets and a reduction of national market entry barriers. This requires further unification of pan-European standards in fields like trade and crafts codes or consumer protection policies.     

Output‐Based Performance Pay,Performance‐Support Bias,and the Racial Pay Gap within a Large Retail Stock Brokerage

We measure sources of racial inequality in stockbroker pay. Pay differences arise from sales differences. We measure the extent to which sales differences are due to performance‐support bias, whereby African American brokers receive weaker firm supports, or to forces outside the firm, including client access, selection, and consumer discrimination. Data on firm policies are matched to sales results. Data on self‐generation of accounts measure access to wealthy clients. Sales generated from accounts with sales histories show racial differences in sales arising from selection or consumer discrimination.