The effect of firm-level productivity on exchange rate pass-through

A heterogeneous-firm trade model can explain the recent decrease in exchange rate pass-through to aggregate US import prices as a result of decreased trade costs. This paper finds support for this explanation by testing another implication of this type of heterogeneous firm model: lower exchange rate pass-through for goods that are traded for short periods of time.     

WIC Participation and Relative Quality of Household Food Purchases: Evidence from FoodAPS

We examine the effect of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) on the quality of household food purchases using the National Household Food Acquisition and Purchase Survey (FoodAPS) and propensity score matching. A healthy purchasing index (HPI) is used to measure nutritional quality of household food purchases. WIC foods explain the improvement in quality of food purchases, not self‐selection of more nutrition‐conscious households into the program. The improvement in purchase quality was driven entirely by WIC participating households who redeemed WIC foods during the interview week. There was no significant difference between WIC participants who did not redeem WIC foods and eligible nonparticipants. In this sample, there is no evidence that lack of access to clinics has adverse effects on participation nor is there evidence that HPI depends on supermarket access. A supervised machine learning process supports our main conclusion on the importance of WIC foods.     

Firm behaviour under pollution ratio standards with non-compliance

This paper compares a firm’s short run optimal production and abatement rules under emission level standards and standards expressed in terms of emissions per unit of output (ratio standards). The models allow for non-compliance with standards, with expected penalties dependant on either level or relative violations of the standard in question. It is shown that ratio arguments make a difference to the optimal decision rules derived for a profit-maximising firm. For example, for a given level of emissions the firm both produces more, and abates more, under a ratio standard, so that ratio and level standards cannot be used interchangeably to achieve the same combination of emissions and output. The implications for the efficiency of pollution control are briefly discussed.

The perverse effect of environmental regulation on emissions: The role of product-mix changes

We study the effect of environmental regulation (taxation) on emissions when the only available abatement method consists of product-mix changes. Firms choose to produce one or both varieties of a product—a pollution-intensive (dirty) and a non-pollution-intensive (green)—and compete in a differentiated Cournot duopoly. We characterize the equilibrium market structure as a function of the tax rate and show that increases in the tax can promote product-mix changes that lead to a jump in emissions for some tax range, an effect we call the perverse effect of taxation. Our work emphasizes the key role horizontal product differentiation in this process and shows that the perverse effect does not require the presence of vertical product differentiation. Further, the perverse effect of taxation is especially strong in the presence of incomplete regulation, that is, when only one of the markets is subject to taxation.     

Rent Sharing and the Compensation of Head Coaches in Power Five College Football

The monopoly and monopsony power of intercollegiate sports create significant rents, but previous studies of intercollegiate football coaches’ salaries implicitly assume that coaches are paid their marginal revenue products. In a two-stage estimation, we show that coaches share in these rents. The first stage shows that several common measures of coaches’ productivity do not affect an athletic department’s variable revenue. When we include these measures in the second-stage salary equation, their impact on pay reflects bargaining power, not productivity. We also find that several measures of fixed revenue, which are independent of the coach’s performance, increase the coach’s pay.     

Do investors actually value sustainability? New evidence from investor reactions to the Dow Jones Sustainability Index (DJSI)

Research Summary: Research exploring investor reactions to sustainability has substantial empirical limitations, which we address with a large‐scale longitudinal financial event study of the first global sustainability index, DJSI World. We examine investor reactions to firms from 27 countries over 17 years that are added, deleted, or continue on the index. We find that once relevant controls and comparisons to observationally equivalent firms beyond the index are included, DJSI events have only limited significance and/or materiality. Nonetheless, investors' valuation of sustainability around the world has evolved over time, involving diminishing reactions to U.S. firms and increasing benefits, particularly of continuation on the index, over time. The study highlights the importance of careful analysis and longitudinal global samples in making inferences about the financial effects of social performance. Managerial Summary: The debate about how investors perceive corporate social responsibility (CSR) predates Milton Friedman's famous statement that the only social responsibility of business is to increase profits. Although extensive research has studied whether sustainability contributes to financial performance, we have yet to understand whether investors believe it pays off. This financial event study of reactions to the addition, continuation, and deletion from DJSI World, the first global sustainability index, shows that investors care little about DJSI announcements. Nonetheless, there is some evidence that global assessments of sustainability are converging and that investors may increasingly be valuing continuation on the DJSI, suggesting that firms may gain at least limited benefits from reliable sustainability activities.     

Would adopting the Australian dollar provide superior monetary policy in New Zealand?

Counterfactual experiments with the Reserve Bank of New Zealand's core model provide some insight into the implications for New Zealand's economic performance over the 1990s, had it credibly fixed its currency to the Australian dollar. If New Zealand had faced the relatively more stimulatory Australian monetary conditions prevailing over the 1990s, then output growth may have been temporarily boosted. However, demand pressures would have probably been greater and inflation higher. In particular, results suggest that over the latter part of the 1990s annual inflation would have been approximately 1% point higher on average. Stochastic simulation experiments provide a vehicle to analyse what the implications of currency union might be more generally. Results suggest that if New Zealand were to lose its ability to set monetary policy independent of that set in Australia, then the variability of inflation and output would increase over the business cycle.     

The impact of Chinese monetary policy shocks on East and South‐East Asia1

We study the effects of Chinese monetary policy shocks on China's major trading partners in East and South‐East Asia by estimating structural vector autoregressive (SVAR) models for six economies in the region. We find that a monetary expansion in Mainland China leads to an increase in real GDP (temporary) and the price level (permanent) in a number of economies in our sample, most notably in Hong Kong and the Philippines. The impact could result from intertemporal substitution present in a general equilibrium framework, which allows for positive domestic impacts of foreign monetary expansions. Our results emphasize the growing importance of China for its neighbouring economies and the significance of Chinese shocks for the design of monetary policy in Asian economies.     

Collaboration risk management in IT-enabled asymmetric partnerships: Evidence from telestroke networks

Information technology (IT)-enabled partnerships can unlock previously unattainable value propositions between organizations that have resource, capability, and other asymmetries by allowing larger organizations access to niche and local resources while providing smaller organizations access to enhanced resources and capabilities. However, recent studies have shown that many IT-enabled asymmetric partnerships often fail because the organizations do not effectively manage the involved collaboration risks. Most organizations focus on the strategic aspect of whether partners behave cooperatively or competitively, while paying scant attention to the operational aspect of bringing together partner contributions through coordination. To examine this problem, we report on a case study of two hub-spoke networks that used telemedicine to facilitate expertise sharing and decision making about stroke treatment at emergency departments in rural hospitals (spokes) based on information exchanges with remote neurologists at academic medical centers (hubs). As a result, we contribute to the inter-organizational information systems literature by explaining how organizations in IT-enabled asymmetric partnerships manage collaboration risks. We demonstrate how partners in such relationships perceive and approach strategic cooperation and operational coordination risks differently. We also explain how collaboration interactions change over time as the partners manage risks based on needs and resource endowments. Drawing on these findings, we provide guidance to organizations on how to manage sustainable IT-enabled asymmetric partnerships in general, and telestroke networks in particular.     

Event segmentation: A review and research agenda

Event academics and practitioners have long recognized the importance of segmenting event attendees. Despite a relatively long level of enquiry into event segmentation, there is little consistency in the methods, data analysis techniques and segmentation variables that are used. A review of 120 event segmentation studies incorporating an attendee-orientated approach was conducted to identify how event attendees are currently segmented. This study will serve as a reference guide to current event segmentation researchers on the segmentation approach/s and data analysis techniques utilized in previous studies. Recommendations for future research are suggested.