Is export diversification good for profitability? First evidence for manufacturing enterprises in Germany

This article uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between export diversification over destination countries and goods on the one hand and the profitability of the exporting firms on the other hand. We find that profits tend to be larger in firms with less diversified export sales over goods and in firms with more diversified export sales over destination countries.     

Adaptation and Mitigation in Global Pollution Problems: Economic Impacts of Productivity, Sensitivity, and Adaptive Capacity

This paper studies the influence of productivity, pollution sensitivity, and adaptive capacity on optimal mitigation and adaptation in a two-country global pollution model. We investigate the effects of changes of these parameters on the allocation of emissions, adaptation expenditures, and welfare. In our analysis we distinguish between cooperative and non-cooperative behavior. Our findings imply that unilateral improvements in productivity and adaptive capacity have strategic significance and do not necessarily lead to mutual welfare improvements. They raise the emissions not only in the country where the technological improvement takes place, but also globally. An improvement in global welfare is guaranteed only under cooperative behavior with respect to emission and adaptation choices.     

Budget Incidence Reconsidered

The paper develops a theoretical framework for analyzing budget incidence. The welfare gain of consuming a public good is determined by the benefit approach. On this basis the incidence of taxation, benefits and net benefits is investigated. Measures of progression are proposed. It is shown that the joint incidence of governmental taxation and expenditure can be related to residual progression and the income elasticity of the marginal willingness to pay for the public good. An example demonstrates that progressive taxation can be overcompensated by a distribution of benefits which favors the rich.     

Die Zuschussrente: Eine falsche Therapie bei richtiger Diagnosestellung

Das Bundessozialministerium hat zur Abwendung einer prognostizierten Altersarmut die Zuschussrente vorgeschlagen. Dieses Instrument soll Beziehern von Niedrigeinkommen Anreize geben, eine rentenversicherungspfl ichtige Besch?ftigung zu suchen. Sie sollen gleichzeitig davor bewahrt werden, im Alter auf Fürsorgeleistungen angewiesen zu sein, wenn ihre Rentenansprüche zu gering sind. Die Autoren fürchten, dass mit der Zuschussrente Fehlanreize verbunden sind. Sie halten die Ausgestaltung des Systems darüber hinaus für zu kompliziert und schlagen daher eine Freibetragsl?sung vor.     

Sequential Generalized Lorenz Dominance and Transfer Principles*

In an important contribution in 1987, Atkinson and Bourguignon proposed dominance criteria which allow us to compare income distributions for heterogeneous populations. They are defined by the unanimous preference of the dominating distribution by a set of welfare functions which satisfy some conditions on the derivatives of utility‐of‐income functions. This paper contributes to an understanding of some of the orderings considered. In particular it provides a characterization of the sequential generalized Lorenz ordering by transfer principles. The axiomatization illuminates the criterion.     

Estimating multiple equation hybrid models with endogenous dummy regressors*

Estimating multiple equation hybrid models with endogenous dummy regressors is burdensome if the number of dummies and equations is large. Therefore, after clarifying model structure and identification issues the paper presents a generalization of the Amemiya principle. The new estimator reduces the computational costs and is flexible with regard to different types of variables. Furthermore, it is consistent and asymptotically normal distributed.     

What Drives CEOs to Take on More Risk? Some Evidence from the Laboratory of REITs

Many have pointed to excessive risk‐taking by the CEOs of financial firms as a contributor to the recent worldwide economic crisis. The same observers often blame questionable corporate governance structures and compensation practices for that risk‐taking. But is this perception correct? And what is the relationship between CEO incentives and risk‐taking outside of the financial industry, where the government guarantees provided by deposit insurance could have distorted incentives? In an attempt to answer these questions, the authors analyze the relationship between CEO incentives and corporate risk‐taking by 101 U.S. REITs during the period 2003 to 2007. Their main finding is that corporate risk‐taking, as measured by the growth rate in corporate debt (the only measure of risk that is completely under the control of the CEO), is inversely related to CEO stock ownership—that is, the larger the CEO's equity ownership stake, the slower the growth in debt financing and financial risk‐taking. At the same time, the authors find that financial risk‐taking is positively related to large cash bonuses for the CEOs and to situations in which the CEO is also chairman of the board of directors. Finally, the authors also report that CEOs who are relatively new to the job grow more slowly and borrow less, suggesting that boards of directors can temporarily contain risky expansion plans by the CEO. These results provide support for those corporate governance reformers who wish to cut cash bonus payments for CEOs in favor of long‐term stock ownership.