Trade and business cycle synchronization in OECD countries—A re-examination

This paper re-examines the relationship between trade intensity and business cycle synchronization for 21 OECD countries in the period 1970-2003. Instead of using instrumental variables, we estimate a multivariate model including variables capturing specialization and similarity of economic policies. We confirm that trade intensity affects synchronization, but the effect is much smaller than previously reported. Other factors, like specialization and convergence in monetary and fiscal policies, have a similar impact on business cycle synchronization as trade intensity. The effect of trade on synchronization is not driven by outliers. However, the impact of trade on synchronization is not robust across deciles.     

Efficient propagation of shocks and the optimal return on money

We study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals. Because the economy features aggregate preference shocks, we apply a notion of implementability that allows for allocations with non-trivial business-cycle dynamics for the propagation of shocks. We show that history dependence is predicted by the theory of second best and becomes necessary for optimality when the degree of patience is neither too low nor too high. Our analysis concludes with a discussion of whether there is a role for the propagation of shocks in alternative economic environments.     

Evaluating the economy embedded in the Brazilian ethanol–gasoline flex-fuel car: a Real Options approach

The introduction of the flex-fuel cars in the Brazilian market in 2003 changed considerably the consumer decision-making process. Prior to this date, it was necessary to choose the automobile type only by gasoline or by ethanol fuel; today it is possible to choose a car type with both fuel options. This flexibility generates economic advantages for his owner, but what are the financial benefits of a flex-fuel car in comparison with a car using only gasoline? Geographically, where is the owner of the benefits from this flexibility located? This article presents an empirical application of the Real Options Theory in the analysis of the flex-fuel car option for five geographic Brazilian regions: Northern, Northeastern, Central-Western, Southeastern and Southern. The regional price differences as well as the consumer preferences of these regions were met. For this purpose, historical fuel prices were considered stochastic and following a Mean Reverting Stochastic process. The prediction and option values were generated by a Monte Carlo simulation. The results indicated that the option embedded on the Brazilian flex-fuel car adds considerable value to the owner in all regions and car models considered, with the Southeastern Region receiving most benefits by the flex option.     

Eco-Frontier and Place-Making: The Unexpected Transformation of a Sustainable Settlement Project in the Amazon

An important issue today is the compatibility of agricultural frontiers, which are driven by economic objectives, with conservationist views. In the Amazon, family farmers are concerned with this issue since they are at the same time actors of the agricultural frontier and considered as potential actors of the preservation of the forest. Through the study of a highly symbolic settlement project in the State of Pará, this paper focuses on the role that family farmers can play in meeting sustainability goals. The central argument which is developed in this paper is that this objective may be achieved when projects do not presuppose social and spatial relationships; rather, it advocates an approach which is attentive to place-making processes.     

Supply chain risk analysis: a shipbuilding industry case

A lack of empirical studies on Supply Chain Risk Management (SCRM) is observed, especially in the industries of large projects. Therefore, this paper conducts a risk analysis on the Brazilian Shipbuilding Industry by generating an initial risk profile. A panel was conducted with executives from major shipyards, and the primary risks were identified, assessed, and evaluated. Findings corroborate the academic literature, reinforcing that companies recognise the importance of SCRM, but the concept is incipient and far from being successfully implemented in real life. Despite the fact that the shipyards identified important risks, the focus was on internal factors. Because the industry was exposed to risks from the external environment, no risk mitigation actions existed, resulting in the bankruptcy of many shipbuilders. This research is an initial step toward investigating SCRM techniques, offering academics a novel empirical approach that can serve as a systematic risk management tool for supply chain planning.     

Are patent fees effective at weeding out low‐quality patents?

The paper investigates whether patent fees are an effective mechanism to deter the filing of low‐quality patent applications. The study analyzes the effect on patent quality of the Patent Law Amendment Act of 1982, which resulted in a substantial increase in patenting fees at the U.S. Patent and Trademark Office. Results from a series of difference‐in‐differences regressions suggest that the increase in fees led to a weeding out of low‐quality patents. About 10% of patents in the lowest quality decile were filtered out, with the effect concentrated in the patents of firms whose overall patent portfolio was medium to large (more than 20 patents). The study has strong policy implications in the current context of concerns about declines in patent quality.     

Central bank disclosure as a macroprudential tool for financial stability

The Basel Capital Accord (pillar 3) states that disclosure of information (transparency) is essential to financial stability. This study analyzes, through inflation reports, the disclosure of information from the Central Bank of Brazil concerning the credit market. We consider credit risk and capital buffers as measures of financial stability in this analysis. Furthermore, in order to measure the perception of the monetary authority on the credit market, we built two indices based on the central bank’s communication on credit development. We performed a panel data analysis based on a sample of 125 banks for the period from June 1999 to September 2014 (7000 observations). The findings suggest that central bank communication regarding expectations concerning the credit market contributes to financial stability. Therefore, this kind of communication of central banks (about credit development) may constitute an important macroprudential tool to improve financial stability.     

Augmenting the eye of the beholder: exploring the strategic potential of augmented reality to enhance online service experiences

Driven by the proliferation of augmented reality (AR) technologies, many firms are pursuing a strategy of service augmentation to enhance customers’ online service experiences. Drawing on situated cognition theory, the authors show that AR-based service augmentation enhances customer value perceptions by simultaneously providing simulated physical control and environmental embedding. The resulting authentic situated experience, manifested in a feeling of spatial presence, functions as a mediator and also predicts customer decision comfort. Furthermore, the effect of spatial presence on utilitarian value perceptions is greater for customers who are disposed toward verbal rather than visual information processing, and the positive effect on decision comfort is attenuated by customers’ privacy concerns.     

The Myth of Fair Prices: A Graphical Analysis

The issues of fair trade and in particular fair price policies, have been neglected in most international trade courses. The authors show how the latter can be explained to undergraduate students applying the simple graphical methods normally used in general equilibrium trade theory. They show that fair pricing strategies can be looked upon as a suboptimal device for redistributing the gains from trade as compared with a transfer of funds.