Fiscal strategies,foreign indebtedness,and overlapping generations

Conclusions This paper offers a unifying dynamic system approach to real government debt and real capital formation in a world economy. The sustainability of permanently maintained primary fiscal deficits is investigated in an open economy. In particular if national governments compete in the issuance of debt at an international capital market sustainable debt profiles appear only as a theoretical (i. e., not empirically valid) curiosity. Within the more realistic regime of an undercapitalized world economy a nation can only run a permanently maintained primary surplus. Starting from a PMP surplus the paper also demonstrates the viability of temporary deficits implying an increase in taxation later to stabilize the fiscal debt. By reversing the argument this shows, the right way to reduce government debt in a non-traumatic manner is to run a higher temporary surplus via higher taxation. Using this extrasurplus to buy back fiscal debt the economy may reduce taxation later while enjoying vigorous capital accumulation towards a higher capital-labour ratio. Furthermore, the paper shows that ceteris paribus a relatively high social security load and a relatively high size of a balanced budget causes external indebtedness via consumption oriented current account deficits. It is left for further research to see what happens if government borrows for public investment instead of public consumption.My research was supported by Deutsche Forschungsgemeinschaft. While preparing the paper 1 had access to unpublished work by M. Carlberg and T. Ihori. Discussions with M. Carlberg, H. Großmann, J. Michaelis, and H. Schmid are gratefully acknowledged. The diagrams were mastered by C. Schwarz.     

Productivity and Employment in the Information Economy: What Kaldor’s and Verdoorn’s Growth Laws Can Teach the US

During the last decade of the 20th century the US economy experienced the longest economic boom since World War II. Information and communication technologies (ICT) are seen as one of the main reasons for this development and it is still an open question how ICT will affect growth and employment in the future. To evaluate this process Kaldors growth laws, especially Verdoorns law are reconsidered. It will be discussed which changes in the Verdoorn-Coefficient (VC) and the employment threshold (ET) can be expected due to ICT. Induced technical progress and increasing returns to scale could make future economic growth to be less labor-intensive. A simple OLS estimation using data for the US non-farm sector indicates that the VC increased in the second half of the 1990s. Thus, more output growth is required to keep employment constant.The author gratefully acknowledges the most valuable comments from two anonymous referees and the participants of the Annual Meeting of the Austrian Economic Association (NOeG) at the Vienna University of Economics (WU), May 21–22, 2004. Any remaining errors are my own.     

Fitting parametric lorenz curves to grouped income distributions — A critical note

Empirical Economics - The paper surveys various parametric Lorenz curves to be fitted to grouped income data in order to obtain an estimate for the Gini measure of inequality. The curves are fitted...     

Does foreign aid really raise per capita income? A time series perspective

Abstract. We analyze the relationship between per capita income and foreign aid. We employ annual data and five‐year averages and carefully examine the time‐series properties of the data. Panel estimations with dynamic feasible generalized least‐squares (DFGLS) show that aid generally has an insignificant or minute negative significant impact on per capita income (particularly in highly aid‐dependent countries). This holds true for countries with different levels of human development and income, as well as for different regions. We also find that aid has a small positive impact on investment, but a significant negative impact on domestic savings (crowding out) and the real exchange rate (appreciation). JEL classification: F35, O11, C23, C51     

The market price of fiscal uncertainty

Recent fiscal interventions have raised concerns about US public debt, future distortionary tax pressure, and long-run growth potential. We explore the long-run implications of public financing policies aimed at short-run stabilization when: (i) agents are sensitive to model uncertainty, as in Hansen and Sargent (2007), and (ii) growth is endogenous, as in Romer (1990). We find that countercyclical deficit policies promoting short-run stabilization reduce the price of model uncertainty at the cost of significantly increasing the amount of long-run risk. Ultimately these tax policies depress innovation and long-run growth and may produce welfare losses.     

Risk management,corporate governance,and bank performance in the financial crisis

The recent financial crisis has raised several questions with respect to the corporate governance of financial institutions. This paper investigates whether risk management-related corporate governance mechanisms, such as for example the presence of a chief risk officer (CRO) in a bank’s executive board and whether the CRO reports to the CEO or directly to the board of directors, are associated with a better bank performance during the financial crisis of 2007/2008. We measure bank performance by buy-and-hold returns and ROE and we control for standard corporate governance variables such as CEO ownership, board size, and board independence. Most importantly, our results indicate that banks, in which the CRO directly reports to the board of directors and not to the CEO (or other corporate entities), exhibit significantly higher (i.e., less negative) stock returns and ROE during the crisis. In contrast, standard corporate governance variables are mostly insignificantly or even negatively related to the banks’ performance during the crisis.     

Rare Earths in the Trade Dispute Between the US and China: A Déjà Vu

Intereconomics - The trade dispute between the US and China has reached a point where export restrictions on rare earths have become a possible means for sanction. This contribution provides a...     

The more others care,the more you share? – Social contagion as a stardom trigger of social media superstars –

Emerging superstars on social media platforms reshape the media landscape. This research analyses social contagion as a stardom trigger of social media superstars (SMS). We argue that in addition to serving as a quality indicator, the number of observed consumers of SMS performances also indicates the suitability of discussing the SMS performances with others. We experimentally manipulated the number of previous views of a YouTube video and find that a high number of previous views significantly increases the perceived quality and the video’s discussion suitability even when holding all objective video characteristics constant. We discuss implications for aspiring SMS and (online) marketers.     

On the treatment of persons with disabilities in organizations: A review and research agenda

Human resource practitioners play a crucial role in promoting equitable treatment of persons with disabilities, and practitioner's decisions should be guided by solid evidence‐based research. We offer a systematic review of the empirical research on the treatment of persons with disabilities in organizations, using Stone and Colella's seminal theoretical model of the factors influencing the treatment of persons with disabilities in work organizations, to ask: What does the available research reveal about workplace treatment of persons with disabilities, and what remains understudied? Our review of 88 empirical studies from management, rehabilitation, psychology, and sociology research highlights seven gaps and limitations in extant research: (a) implicit definitions of workplace treatment; (b) neglect of national context variation; (c) missing differentiation between disability populations; (d) overreliance on available data sets; (e) predominance of single‐source, cross‐sectional data; (f) neglect of individual differences and identities in the presence of disability; and (g) lack of specificity on underlying stigma processes. To support the development of more inclusive workplaces, we recommend increased research collaborations between human resource researchers and practitioners on the study of specific disabilities and contexts, and efforts to define and expand notions of treatment to capture more nuanced outcomes.     

Determinants of idea sharing in crowdsourcing: evidence from the automotive industry

Drawing on external ideas through crowdsourcing has become common practice for firms that seek to improve and extend their product portfolios. As these initiatives often address the users of products, it is essential for firms to recognize those attributes that determine these individuals' willingness to share their ideas. This study takes the example of the automotive industry to examine how three attributes of car drivers determine their sharing behavior – that is, altruism, psychological ownership of ideas, and trust in car manufacturers. Our findings suggest that trust and altruism strengthen idea sharing, while psychological ownership weakens it. Furthermore, we find that car drivers' perception of sharing‐related risk acts as an important boundary condition for these relationships.