Export-output causality: The Irish case 1953–93

Despite proposed theoretical relationships, recent empirical research has found no conclusive support for a causal relationship between exports and output. Using the methodological approach based on the statistical theory of cointegration and Granger causality tests, the causal relationship between exports and output is examined here using Irish data. The Johansen technique is used and error-correction modeling is incorporated into the Granger causality tests. Results suggest that exports and GDP are cointegrated. Augmented Granger causality tests indicate support for the export-led growth hypothesis since there is evidence of short-run and long-run causality from exports to output.An earlier version of this paper was presented at the Forty-First International Atlantic Economic Conference in Paris, France, March 13–18, 1996. The author would like to thank Liam Gallagher and Van Newby for helpful comments.     

Informational externalities,strategic delay,and optimal investment subsidies

Abstract This paper examines optimal government policy when private investment generates information, but investors cannot internalize the informational value their actions have to others. Equilibrium exhibits inefficient delay, as investors adopt a wait‐and‐see approach. The government can alter incentives via an investment subsidy, but complications arise, since future subsidies may induce investors to disregard current policy initiatives. The paper shows that the government achieves its desired outcome only when the the investment subsidy is financed by a non‐distortionary, lump‐sum tax. When taxation is distortionary, the government faces a time inconsistency problem that may prevent effective policy.     

Why Markets Need Referees

In this first article in our new series on research by the London Business School Regulation Initiative, the author uses the metaphor of a football game to illustrate why regulation is in the interests of most companies as well as of consumers. He sets out twelve criteria which should characterise credible regulation and concludes that once effective competition is firmly in place, less rather than more regulation ought to be needed.     

THE DISTRIBUTIONAL CONSEQUENCES DURING THE EARLY STAGES OF RUSSIA'S TRANSITION

We consider the distributional consequences at a national level in Russia during the initial phase of market reforms between the mid-1980s and the early 1990s. Although the incomes of many individuals changed favourably under the reforms during this period, average real household per capita income declined between 1985 and 1992. In particular during the first year of major reform in 1992 households at the lower end of the income distribution seemed to incur the largest fall in income. As a consequence there was a rise in measured income inequality. The Gini coefficient, estimated by various researchers to have been around 27 percent between the late 1960s and early 1990s. we estimate to have increased to 32.2 percent by the end of 1992. We also estimate that poverty increased with 18.5 percent of the population on incomes lying below the official subsistence level at the end of 1992.     

Cartelization Through Buyer Groups

Retailers may enjoy stable cartel rents in their output market through the formation of a buyer group in their input market. A buyer group allows retailers to commit credibly to increased input prices, which serve to reduce combined final output to the monopoly level; increased input costs are then refunded from suppliers to retailers through slotting allowances or rebates. The stability of such an ‘implied cartel’ depends on the retailers’ incentives to source their inputs secretly from a supplier outside of the buyer group arrangement at lower input prices. Cheating is limited if retailers sign exclusive dealing or minimum purchase provisions. We discuss the relevancy of our findings for antitrust policy.     

Ethics in Tax Practice: A Study of the Effect of Practitioner Firm Size

While much of the empirical accounting literature suggests that, if differences do exist, Big Four employees are more ethical than non-Big Four employees, this trend has not been evident in the recent media coverage of Big Four tax practitioners acting for multinationals accused of aggressive tax avoidance behaviour. However, there has been little exploration in the literature to date specifically of the relationship between firm size and ethics in tax practice. We aim here to address this gap, initially exploring tax practitioners’ perceptions of the impact of firm size on ethics in tax practice using interview data in order to identify the salient issues involved. We then proceed to assess quantitatively whether employer firm size has an impact on the ethical reasoning of tax practitioners, using a tax context-specific adaptation of a well-known and validated psychometric instrument, the Defining Issues Test.     

The wandering weekday effect in major stock markets

This paper reports a wandering weekday effect: the pattern of day seasonality in stock market returns is not fixed, as assumed in the Monday or weekend effects, but changes over time. Analysing daily closing prices in eleven major stock markets during 1993–2007, our results show that the wandering weekday is not conditional on average returns in the previous week (the “twist” in the Monday effect). Nor does it diminish through the period of analysis. The results have important implications for market efficiency, and help to reconcile mixed findings in previous studies, including the reported disappearance of the weekday effect in recent years.     

Chinese Investment in Advanced Economies: Opportunities and Challenges

With an increasing importance of outward foreign direct investment (OFDI) by multinationals (MNCs) from China in advanced economies, there is a need for deepening our knowledge of these Chinese MNCs not simply regarding their benefits and concerns, but more importantly regarding their dynamic and complex contexts. In this article, we investigate challenges that Chinese investors face in managing multiple embeddedness across heterogeneous contexts and why this multiple contextual embeddedness is particularly evident when Chinese firms acquire Western firms for competitive catch‐up. We contend that the interaction of Chinese investors with various local contexts depends on the extent to which these contexts are not only interrelated, but also overlain by temporal and spatial dimensions of context. Accordingly, contextualizing globalization of Chinese companies temporally and spatially will allow us to better understand their international expansion. More generally, we stress the need to place Chinese OFDI research in its broader context, temporally and spatially, and go beyond the mere institutional or cultural distance variables. Finally, we outline the key contributions from the six articles in this special issue and discuss the future research agenda stimulated by the issues raised in these articles. © 2017 Wiley Periodicals, Inc.