Macroeconomic effects of an indirect tax substitution

We study an indirect tax reform in a general equilibrium model with imperfect competition for both the Cournot and the Free entry equilibria. We show that it is possible to attain a positive balanced budget multiplier by means of a substitution of specific by ad valorem taxation. Moreover, although any tax substitution causes higher prices and the flow up of firms in the long-run, the Free entry equilibrium output can increase with respect to that of the Cournot equilibrium. Finally, in contrast with the partial equilibrium, welfare decreasing tax reforms are likely to occur even when the balanced budget multiplier is positive.      

Modeling Cyclical Asymmetries in GDP: International Evidence

This paper models asymmetric behavior in GDP growth in the USA, Germany, France, and Japan. It develops smooth transition autoregressive models and interprets nonlinear dynamics in terms of cyclical asymmetries. A procedure for defining data-based, qualitative cyclical regimes from the estimated models is proposed, and generalized impulse response functions are computed to assess to what extent the response to a shock changes over different phases of the cycle.     

TECHNICAL CHANGE AND EC-US AGRICULTURAL TRADE LIBERALISATION

The paper aims to investigate the biases produced by assessing the effects of partial liberalisation of EC and US farm policies through comparative-static simulations, when a more adequate approach would require time, or more precisely technical change, to be explicitly accounted for. Three points are underlined: taking into account technical change (i) alters the trade-off between farm income and budgetary expenditures, (ii) has different effects according to the policy instruments used, and (iii) may reverse the sign of cross-effects, particularly on the budget, in the case of large price-support reductions which result in trade reversal. The relatively limited fall in farm income losses in scenarios corresponding to full harmonisation makes the associated support-price cuts more acceptable, both politically and socially.     

Export Barriers and Problems Associated With Exporting Icelandic Marine Products Under Conditions of Export or Die

We have examined perceived barriers to the export of Icelandic marine products and how they have changed over a period of nearly 20 years. We used qualitative and quantitative information from two different surveys conducted in 1993 and 2011. We identified nine main barriers to export that existed in both 1993 and 2011, plus an additional seven factors that prevailed only in 1993 or only in 2011. Further, we distinguished whether these factors were internal or external to the decision area of the Icelandic export firms. This report details the outcome of each survey, compares them quantitatively, and explains the patterns observed using the survey interviews of exporters.     

Noncentral bimatrix variate generalised beta distributions

In this paper, we determine the density functions of nonsymmetrised doubly noncentral matrix variate beta type I and II distributions. The nonsymmetrised density functions of doubly noncentral and noncentral bimatrix variate generalised beta type I and II distributions are also obtained.     

Private equity leveraged buyouts in European telecoms: The case of Eircom

Highly leveraged buyouts (LBOs) of former state owned telecoms operators by private equity groups have occurred in a number of countries in recent years. This paper examines the case of Eircom in Ireland which has experienced five changes in ownership since full privatisation in 1999, two of which were LBOs. Enormous increases in Eircom’s debt levels as a result of the LBOs resulted in the company’s bankruptcy in 2012. This paper argues that this outcome was largely attributable to the short-termist strategies adopted by the private equity groups that assumed ownership of the enterprise. These strategies included high leverage, cash extraction and underinvestment in the fixed-line network which contributed to the demise of the enterprise and had wider economic and social effects. The Eircom case demonstrates the risks attendant to ownership of important network infrastructure by private equity groups and the need for regulatory safeguards to protect the public interest.     

Assessing Systemic Importance With a Fuzzy Logic Inference System

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network; and (iii) asset value of core financial services. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macroprudential perspective of financial stability. Copyright © 2015 John Wiley & Sons, Ltd.     

An application of two-stage quantile regression to insurance ratemaking

Two-part models based on generalized linear models are widely used in insurance rate-making for predicting the expected loss. This paper explores an alternative method based on quantile regression which provides more information about the loss distribution and can be also used for insurance underwriting. Quantile regression allows estimating the aggregate claim cost quantiles of a policy given a number of covariates. To do so, a first stage is required, which involves fitting a logistic regression to estimate, for every policy, the probability of submitting at least one claim. The proposed methodology is illustrated using a portfolio of car insurance policies. This application shows that the results of the quantile regression are highly dependent on the claim probability estimates. The paper also examines an application of quantile regression to premium safety loading calculation, the so-called Quantile Premium Principle (QPP). We propose a premium calculation based on quantile regression which inherits the good properties of the quantiles. Using the same insurance portfolio data-set, we find that the QPP captures the riskiness of the policies better than the expected value premium principle.     

Co-creation with clients of hotel services: the moderating role of top management support

Hotels can strengthen their competitiveness by expanding their innovation process beyond the boundaries of the firm to exploit the valuable knowledge and skills of their customers. This study examines the effects of new service (NS) co-creation with customers in the hotel industry on NS performance, as well as the moderating role of top management support. The research also explores the main barriers faced by hotels to co-create service innovations. Partial least squares structural equation modelling results indicate that Customer co-creation exerts a direct impact on NS market outcomes and NS development (NSD) speed, which in turn favours NS quality. NS quality translates into better NS customer-related outcomes as well as in improved NS market outcomes. Top management support enhances the effect of Customer co-creation on the NSD speed. The main barrier to NS co-creation in hotels is to find customers interested in devoting time to this activity or with the appropriate knowledge and experience.