Estimating the import demand function for China

This paper estimates the import demand elasticity for China using three fully efficient cointegrating regressions and the autoregressive distributed lag (ARDL) method. This paper is the first to accommodate the perception of global risk in an investigation of the information transmission mechanism between the relationship import demand and its determinants in China. The empirical results show that real imports are cointegrated with domestic economic activity, real effective exchange rate, and the perception of global risk. Domestic income is found to have a significantly positive effect on imports. Contrary to theory, the real effective exchange rate carries negative coefficients, which suggests that a decrease in external competitiveness (appreciation) will decrease the level of imports in the case of China. One of the reasons for this may be the tied anti-dumping duty on some import items. Since the perception of global risk adversely affects China's aggregated imports, policy-makers should consider the degree to which the perception of global risk affects the implementation of trade policies.     

Bertrand versus Cournot competition in a downstream mixed oligopoly with foreign ownership

Focusing on foreign ownership in the private firm, we examine the Cournot-Bertrand comparison in a mixed oligopolistic market with vertical market structure. We have found that if public and private firms were charged with uniform price for their inputs, then Cournot-Bertrand ranking in market outcomes confirms those obtained by Ghosh and Mitra (2010). This implies that under uniform pricing in the upstream sector, the vertical market structure does not have substantial influences on Cournot-Bertrand ranking. However, if discriminatory pricing is adopted, firm's profits, output, and social welfare are often reversed to those obtained from uniform pricing in the upstream sector. Given the closeness of products, if the share of foreign ownership is sufficiently low, social welfare in Cournot competition can exceed that of Bertrand competition, contrasting with the standard welfare ranking that Bertrand welfare is strictly higher than Cournot. This implies that Cournot competition can be more socially desirable than Bertrand in mixed oligopoly with vertical market structure if discriminatory pricing scheme is adopted by foreign upstream monopolists.     

EMPIRICAL PERFORMANCE OF GARCH MODELS WITH HEAVY‐TAILED INNOVATIONS

We introduce a new type of heavy‐tailed distribution, the normal reciprocal inverse Gaussian distribution (NRIG), to the GARCH and Glosten‐Jagannathan‐Runkle (1993) GARCH models, and compare its empirical performance with two other popular types of heavy‐tailed distribution, the Student's t distribution and the normal inverse Gaussian distribution (NIG), using a variety of asset return series. Our results illustrate that there is no overwhelmingly dominant distribution in fitting the data under the GARCH framework, although the NRIG distribution performs slightly better than the other two types of distribution. For market indexes series, it is important to introduce both GJR‐terms and the NRIG distribution to improve the models’ performance, but it is ambiguous for individual stock prices series. Our results also show the GJR‐GARCH NRIG model has practical advantages in quantitative risk management. Finally, the convergence of numerical solutions in maximum‐likelihood estimation of GARCH and GJR‐GARCH models with the three types of heavy‐tailed distribution is investigated.     

Taxation of Mobile Factors as Insurance under Uncertainty

This paper considers the effects of the taxation of mobile factors, i.e., capital, under uncertainty. The wages earned by residents of a jurisdiction are uncertain due to random shocks. Since the uncertain wages in a jurisdiction depend on the amount of mobile capital employed in the jurisdiction, and since taxation alters the quantity of capital employed, taxation affects the riskiness of uncertain wages. In particular, the taxation of capital moderates the fluctuation of uncertain wages, thereby providing insurance. For this reason, jurisdictions use distortionary capital taxation even if lump‐sum taxation is available. In addition, this insurance effect counteracts the tendency toward too low tax rates on capital arising from tax competition, and possibly improves the efficiency of tax competition.     

DOES SIZE MATTER? THE INFLUENCE OF FIRM SIZE ON WORKING CONDITIONS,JOB SATISFACTION AND QUIT INTENTIONS

Using a detailed survey on Spanish workers, this paper investigates the relationship between firm size and working conditions, the extent to which firm size differences in workers' job satisfaction can be accounted for by differences in their work environment and the impact of firm size on workers' quit intentions. The results indicate that: (1) employees in larger firms face a worse work environment; (2) working in large firms significantly reduces job satisfaction when no controls for working conditions are included, but taking them into account makes differentials across size categories statistically insignificant; and (3) no systematic differences exist in intentions to quit across firm size categories, irrespective of conditioning on wages.     

Resolving the impasse on hospital scale economics: a new approach

The existence of scale economies in hospitals in important for both public and managerial policy, yet production and cost function studies have found conflicting evidence. More recently, more sophisticated studies have typically found scale diseconomies, which is inconsistent with the views of industry participants and observers. In the early 1980s. California deregulated both private and public health insurance (Medical), which provides a natural laboratory for examining hospital efficiency. Using Stigler's original and multivariate survivor analysis, we resolve the conflict in favour of scale economies, and reconcile the controversy. The survivorship methodology in simple to apply, and a useful tool in conjunction with statistical cost and production studies.     

The Quality of Insurance Intermediary Services—Empirical Evidence for Germany

Competing insurance intermediaries provide heterogeneous services that are difficult for incompletely informed consumers to assess. Transaction cost economics, search theory, and principal‐agent theory provide arguments on product quality differences between exclusive agents and independent intermediaries. This article uses a sample of 927 insurance intermediaries in Germany. By performing OLS estimations, we test the impact of the different distribution channels and other factors on intermediaries’ service quality. Depending on the proxies used for service quality, we find mixed evidence for the product quality hypothesis. Service quality depends to a large extent on the information‐gathering and processing activities of the individual intermediaries, independent of the respective distribution channel.     

THE TIMING OF SIGNALING: TO STUDY IN HIGH SCHOOL OR IN COLLEGE?*

American students study harder in college than in high school, whereas East Asian students study harder in high school than in college. This article proposes a signaling explanation. Signaling may occur over time both in high school and in college, and societies may differ in the timing of signaling. Students work harder in the signaling stage determined by the society as a whole. A testable implication is that high ability workers in East Asia are more concentrated among a few colleges than their U.S. counterparts. This implication is confirmed by top CEO education profile data in the United States and Korea.