The Evolution of the Distribution of Plant Size: Evidence from Luxemburg

In a recent paper, [Cabral, L. M. B. and J. Mata, 2003, American Economic Review, 93, 1075–1090] using Portuguese manufacturing data have shown for the first time that the plant size distribution is significantly right-skewed at the early part of the life cycle and then changes to become more log-normal. Using a similar proxy for plant age we compare this stylised fact for both Luxembourg manufacturing and services. Use of plants’ true age, however, reveals that the size distribution reverses back towards right-skewness for very old plants. We confirm the finding that the right-skewness is likely driven by financial constraints. The first author gratefully acknowledges financial support from the National Research Fund of Luxembourg. We are grateful for comments by an anonymous referee.     

Competition versus efficiency: What drives franchise values in European banking?

This paper investigates how stock market investors perceive the impact of market structure and efficiency on the long-run performance potential of European banks. To that end, a modified Tobin’s Q ratio is introduced as a measure of bank franchise value. This measure is applied to discriminate between the market structure and efficient-structure hypotheses in a coherent forward-looking framework, in which differences in banks’ horizontal and vertical differentiation strategies are controlled for. The results show that banks with better management or production technologies possess a long-run competitive advantage. In addition, bank market concentration does not affect all banks equally. Only the banks with a large market share in a concentrated market are able to generate non-competitive rents. The paper further documents that the forward-looking, long-run perspective and the noise-adjustment of the performance measure overcome most of the drawbacks associated with testing these hypotheses in a multi-country set-up. Finally, notwithstanding the international expansion of bank activities, the harmonization of regulation and the macroeconomic convergence in the European Union (EU15), we still find that country-specific macroeconomic variables have a significant impact on bank performance. The findings indicate that there is a trade-off between competition and stability that should be taken into account when assessing mergers or acquisitions.     

Psychological Points of Equilibrium in Asset Valuation During Market Bubbles

This paper presents the concept of psychological point of equilibrium (PPE), which is a mental state achieved by average investors when trying to make decisions during market bubble's inflationary stages. The PPE results from an interplay between agents acting in a volatile market that is characterized by predatory behaviors. Prior to the 2008 subprime crisis, average investors are assumed to have displaced their logical PPEs in large part as a consequence of their attraction towards predatory mortgages and teaser rates. A better understanding of average investor's vulnerabilities may help governments to implement more efficient measures aimed at curving predatory behaviors.     

Expenditure on children: A Rothbarth-type method consistent with scale economies and parents' bargaining

We suggest a new methodology to estimate the share of household income accruing to children. The household behavior is represented according to the collective approach. That is, each household member is characterized by specific preferences. Following the principle of the Rothbarth approach, the identification of the children's share requires the observation of adult-specific goods. Our method differs from this traditional approach in that it is compatible with economies of scale as well as with parents' bargaining. We illustrate the method with an application to the French Household Budget Survey.     

A Study of Mutual Insurance for Bank Deposits

This article displays a study on the mutual insurance of bank deposits. A system where deposits are first insured by a consortium then by the Government is envisaged. We wish to compute the fair premia due to both the consortium and the Government. Various types of covenants aiming at making banks reduce their risks are detailed. These provisions can be, as is the case in Chapter 11, of a Parisian type. This means that surveillance is based on the path followed by the assets or the leverage. We compare these various types of covenants and conclude on the proposal for new regulatory provisions. JEL Classification No: G13, G21     

Long-run Positions and Short-run Dynamics in a Classical Growth Model

The aim of this paper is to study the qualitative impact of short-run disequilibria on long-run positions. In this perspective, we refer to a classical framework. We underline that one-sector classical growth models only deal with perfectly adjusted situations (steady-state equilibria). Such models assume that short-run dynamics are neutral in the long run which means that the steady state is defined independently of the transient dynamics. In order to show that this situation is not always realized, we propose a modified version of Kurz's growth model (“Technical change, growth and distribution: a steady-state approach to ‘unsteady’ growth”, in Kurz H. D.: Capital Distribution and Effective Demand, Blackwell, Oxford, 1990, pp. 210–239) that integrates short-run disequilibria. We obtain dynamics that exhibit a multiplicity of equilibria. Therefore, short-run events can no longer be neglected, since they contribute to the emergence of the long-run equilibrium.     

Evolution of the market economy : The responsibility and contribution of business

The scale and seriousness of contemporary social problems require a new form of cooperation among governments, companies and non-governmental organizations (NGOs). The Business Association for the World Social Summit (BUSCO) has undertaken a consultation exercise among heads of companies in various sectors (industry and services) and of different sizes in 30 countries. The business leaders who have been consulted are prepared to assume their civic responsibilities, and go beyond their traditional responsibilities towards their clients, employees, shareholders, suppliers and subcontractors. They accept the need to contribute to an unprecedented amplification of social progress, and to involve themselves in an action programme.     

中国经济的内外平衡:一种三管齐下的战略

本报告是我和Giavazi教授共同完成的.显而易见的:第一,现有的宏观经济战略在中国是极其成功的;第二,我们也看到中国经济和社会的不平衡在不断地加剧,因而要进行一些调整.这是两个前提和出发点.我们报告的焦点是宏观经济战略和策略.而且,我们思考的结果和各项建议与"十一五"规划都非常相似,可谓是"英雄所见略同".     

International bank-industry relations: An empirical assessment

This paper examines the determinants of the provision of banking services in host countries of multinational companies, based on an empirical study of these relationships in the case of France. Factors evaluated include: the traditional banking relationships in the multinational's home country, the strengths and weaknesses of indigenous and foreign banks in the host environment, the specific nature of the banking service required, and the nature of bank reputation in the host country.