Tick size,market structure,and market quality

Large tick sizes imposed on high-priced stocks on the Korea Stock Exchange (KSE) are significant binding constraints on bid-ask spreads. Nearly 60% of quoted spreads are equal to the tick size for stocks with the largest tick size and more than 87% of quoted spreads are equal to the tick size for stocks in the largest size portfolio. We also show that the average spread of KSE stocks with large tick sizes is greater than that of matched NYSE stocks, whereas the average spread of KSE stocks with the smallest tick size is smaller than the corresponding figure for the matched NYSE stocks. We interpret these results as evidence that traders on the KSE are paying large trading costs because of the artificially imposed large tick sizes.     

Solving the multi-country Real Business Cycle model using a perturbation method

This paper solves the multi-country RBC model described in den Haan et al. (this issue) and Juillard and Villemot (this issue), using a perturbation method. We explain how to apply first- and second-order versions of the gensys2.m algorithm to this model. The perturbation method is computationally cheap and can easily be applied to large models with possibly hundreds of state variables.     

Spatial Correlation in Household Choices in Rural Indonesia*

Many household choices in developing economies are correlated with choices of nearby households, because nearby locations have unobserved factors in common and households and their neighbors interact. However, models recognizing these spatial correlations are rarely used because few surveys give exact household locations. In the present paper, we use unusual data from rural Indonesia, where distances between households can be measured, to examine spatial effects in equations for non‐farm enterprises' share of household incomes and food's share of total household budgets. Our results indicate that ignoring spatial correlations in household choices might cause bias and inferential errors and could distort recommended policy interventions aiming to raise living standards in rural Asia.     

Inter-regional endogenous growth under the impacts of demographic changes

This article attempts to project the economic paths for the individual Midwest states (Illinois, Indiana, Michigan, Ohio and Wisconsin, as well as the rest of the US) in the near future when the population ageing becomes more pronounced. To accomplish this task, a dynamic general equilibrium model is developed so that it could incorporate the inter-regional transactions and endogenous growth mechanisms within the framework of an Overlapping Generations (OLG) model. Key parameter values associated with the regional interconnections were assigned using a multi-regional Social Accounting Matrix (SAM) of the Midwest states. Two different steady-state results were presented with two different age-cohort population structures corresponding to year 2007 and 2030. These steady-state results imply that the rate of declining of per-capita output is projected to be heterogeneous across the regions due to different developments of age-cohort population structures and consequently different levels of endogenously determined educational investment of workers. Also, two steady-state simulation results revealed that the development of output price in a certain region reflects the dynamics of demographics of every region. Meanwhile, the dynamic simulation results reveal that the per-capita output of every region is projected to grow positively in the near future when the population ageing will be pronounced. However, the growth rate of the per-capita output is projected to be heterogeneous across the regions: the regions with high-skilled workers hold the potential threat that population ageing could give more negative impacts on the economy due to the relatively sluggish growth of human capital stock. Also, the dynamic simulation results show that certain regions in the Midwest will experience their terms of trade deterioration in the near future, implying that careful attention should be given to their future trade conditions.     

The effect of strategic alliances on firm productivity in South Korea

Using a rich firm-level data set from South Korea, this article analyses the impact of strategic alliances on firm performance, focusing on how firm productivity is affected by alliance types such as joint venture, joint technical development, technical alliance, joint marketing and coproduction as well as alliance structures such as intra- and inter-industry alliances. Total factor productivity (TFP) is estimated through the semi-parametric method suggested by Levinsohn and Petrin (2003). In addition, a two-stage least-squares (2SLS) method is applied to reduce the potential endogenous problem between productivity and strategic alliance choices. The empirical results found in this article indicate that the engagement in joint ventures positively affects firm productivity and that the formation of international intra-industry alliances has a positive impact on firm productivity.     

The dependence structure of income distribution

This article investigates the dependence structure of income distribution in the US by providing two approaches – one regression-based and the other copula-based – to reveal new information about income dependence. The system of Seemingly Unrelated Regressions (SUR) is estimated for both quintile income shares and mean income growth by controlling for macroeconomic variables, and Kendall's tau statistics are derived for income dependence. Results from less restrictive copula models corroborate the regression-based results. However, income growth models do not support the common claim that the rich are getting richer while the poor are getting poorer. Income dependence patterns do not appear to be affected by business cycles, but Democratic and Republican presidential administrations have drastically different income dependence results.     

An Alternative View of Citation Patterns of Quantitative Literature Cited by Business and Economic Researchers

Using nationally representative data, the authors examine the effects of preprofessional education on the earnings of lawyers. They specify and estimate a statistical earnings function on the basis of well-established theory and principles. Along with standard control variables, categorical variables are included to represent graduate degrees in addition to the law degree and an assortment of undergraduate major fields. Holding a Ph.D. or M.B.A. degree, with the law degree, is associated with significantly higher earnings in some sectors. Lawyers with undergraduate training in economics earn more than other lawyers, ceteris paribus, and economics is the only undergraduate field associated with earnings that differ significantly. The available evidence supports the hypothesis that economics training increases a lawyer's human capital compared with other undergraduate majors.     

The Effects of Korean Pop Culture on Hong Kong Residents' Perceptions of Korea as a Potential Tourist Destination

The goal of this study is to assess the influences that Korean pop culture has on Hong Kong residents' perceptions of Korea as a potential tourist destination. Among the 500 distributed questionnaires, 456 were collected. Finally, 440 usable surveys were used for data analysis after eliminating 16 questionnaires with multiple missing answers that were deemed unusable. Data analyses produced many meaningful results. For example, respondents who were less educated and tended to spend more on Korean cultural products had a higher intention to visit Korea after they tasted Korean food. Expenditures on Korean cultural products were a significant contributor to Hong Kong residents' intention to visit Korea after experiencing the three types of Korean pop culture used in this study. Results of this study confirm those of previous studies, which found that the media had a significant influence on a person's choice of tourist destination.     

Exploring competitive hotel selection attributes among guests: An importance-performance analysis

This study aimed to explore the hotel selection attributes among local guests in the competitive hotel industry in Korea and to test the role of these explored attributes in building behavioral intentions. A total of seven dimensions, which involved 17 intangible and 16 tangible attributes, were identified. The findings indicated that intangible attributes are relatively more important but offer less satisfaction, whereas tangible attributes provide a higher level of satisfaction than perceived importance. Moreover, the importance-performance analysis grid visually depicted the importance and satisfaction ratings of each attribute demonstrating its strengths and weaknesses. All intangible attributes were significantly associated with intentions.     

Traveling to your match? Assessing the predictive potential of Plog’s travel personality in destination marketing

This study revisits .Plog’s travel personality model in a true experimental setting and tests the model’s predictive power. The specific aim is to examine whether attitudinal and behavioral responses toward a destination vary as a function of the congruity between the tourist’s travel personality and the characteristics of the destination as perceived from an advertising message. The concept of self-congruity serves as a foundation for the theoretical framework. Results indicate message-personality congruity had a significant influence on visit intention via attitudes as mediators. This study provides theoretical implications for the predictive potential of Plog’s model as well as strategic marketing implications for destinations.