Infectious diseases and endogenous fluctuations

This paper develops a framework to study the economic impact of infectious diseases by integrating epidemiological dynamics into a discrete time one sector growth model. An infectious disease with SIS dynamics affects the labor force and the infected individuals are too ill to work. The susceptible (healthy) individuals choose how much labor to supply so that the effective labor supply comprises of the proportion of healthy individuals (extensive margin) and their labor supply (intensive margin). The epidemiology of disease transmission is modeled explicitly and the global dynamics of the economic variables is studied. Depending on how infectious the disease is, the disease may be eradicated or become endemic. If the disease is infectious enough, cycles and chaos emerge in the economy. A leading example illustrates the model: we show how the system dynamics change as the parameters vary and how the intensive margin responds to changes in the extensive margin due to the spread of diseases. We show how the fluctuations can be stabilized via disease control methods.     

The Macro-prudential aspects of loan-to-deposit-ratio-linked reserve requirement

Micro-prudential regulation is sometimes more focused on the health of the financial institutions and pays less attention to the objective of sustainable intermediation and financial stability in the long run. A macro-prudential policy is formulated to reduce this myopic tendency. This article shows analytically how Loan-to-Deposit-Ratio (LDR)-linked Reserve Requirement (RR) can be used to apply counter-cyclical measures in banking industry by providing disincentive mechanism when a bank operates outside the preferred operational corridor. At the lower limit of LDR, a requirement of higher RR can push banks to extent more loans in order to support economic development in a period of economic bust. At the upper limit of LDR, a requirement of higher RR and/or capital can also provide disincentive to slow down its investment activities in an economic booming period and manage liquidity risk better.     

Trading activity,dealer concentration and foreign exchange market quality

We study the relation between foreign exchange market quality and both trading activity and dealer concentration by considering two currency pairs with significant differences along both dimensions – the Euro–US dollar and Canadian dollar–US dollar. A variance ratio test reveals over-reaction in currency prices, but that this is smallest when trading activity is high and dealer concentration at its peak. A GARCH model shows that over-reaction declines as trading activity and dealer concentration increase, with the results being stronger for the Euro. Our results confirm that trading activity is an important determinant of market quality, but also point to a significant role for dealer concentration.     

Hard and soft law approaches to addressing psychosocial risks in Europe: lessons learned in the development of the Italian approach

Psychosocial risks in the workplace have been identified as some of the most significant emerging risks, particularly since issues such as work-related stress, which is closely linked to psychosocial risks, are widely recognised as major challenges in modern occupational safety and health. This paper presents the policy framework and key initiatives that have been implemented for the management of psychosocial risks in the workplace in Europe. It discusses several approaches and initiatives, both from a hard and soft law perspective, that have been implemented at European Union and national level. Within this context, it discusses the key issues that pertain to the development of national approaches, focussing as an example on the Management Standards for work-related stress developed in the UK and their recent adaptation in Italy. The Italian approach is discussed in detail as an example that may highlight key process elements in the development of psychosocial risk management policies, and promote good practice in this area through lessons learned. It is concluded that it is more pressing now than ever for a critical evaluation of efforts employed so far to address psychosocial risks to be conducted, and an approach at European level to be developed that will allow both flexibility and a certain level of benchmarking across members states. Such an approach can be supported by European bodies, responsible for surveillance and promotion of good practice, working in collaboration with similar national bodies.     

Robustness of sunspot equilibria

Summary. A sunspot equilibrium (SSE) is based on some extrinsic randomizing device (RD). We analyze the robustness of SSE. (1) We say that an SSE allocation is robust to refinements if it is also an SSE allocation based on any refinement of its RD. (2) We introduce two core concepts for analyzing the robustness of SSE in the face of cooperative-coalition formation. In the first, the blocking allocations are based on the RD that defines the SSE. In the second (stronger) core concept, coalitions select their own RDs. For the convex economy with restricted market participation, SSE allocations are robust under each of the definitions and the cores converge on replication of the economy to the set of SSE allocations. For the economy with an indivisible good, SSE allocations are not always robust. We provide examples of each of the following: (i) an SSE allocation that is not robust to refinement, (ii) an SSE allocation that is in neither core, (iii) an SSE allocation that is in the first core, but not in the second, and (iv) a core that does not converge upon replication to the set of SSE allocations. Received: July 31, 1995; revised version August 30, 1996     

Online Market Entry: The Motivations for Imitation across Retailer Types

This study examines the motivations for imitation in retailers' online channel entry. Extant literature suggests that legitimacy and efficiency are the primary motivators for firms to imitate. We develop hypotheses that center on the belief that not all firm types would use the same motivator for deciding to imitate and enter the online market; legitimacy would be the driving force for some retailer types whereas efficiency would be the motivator for others. We test our hypotheses on unique data collected from multiple sources. Our findings confirm that the motivators for imitation vary across retailer types. Copyright © 2014 John Wiley & Sons, Ltd.     

Role of monetary policy in a New Keynesian economy: a note from a laboratory experiment

This paper discusses an experimental study on the role of monetary policy within a New Keynesian macroeconomic framework. The novelty of this article is that each subject was asked to forecast both the inflation rate and output gap at the same time one period ahead, which is an improvement over the existing literature. We find that if both the expected inflation rate and expected output gap is incorporated in the monetary policy rule then inflation can be anchored and stabilized more efficiently.     

Green advertising receptivity: An initial scale development process

The aim of this research is to develop and validate a scale to measure consumers' receptivity to green advertising (REGRAD), in light of the absence of such a scale from the green marketing research stream. REGRAD is posited as an individual difference factor, which can be measured, and consumers can be divided into segments based on this factor. The scale development process resulted in a nine-item scale, which shows a high degree of correlation with environmental behavior and a distinction from the environmental skepticism scale. REGRAD moderates attitudes and intentions toward a company and its green initiatives. Given the trend by marketers to target and market products as ‘green’, REGRAD can be used in identifying consumers who will be more receptive than others to these marketers' efforts. It can also guide the development of marketing communication messages. Research and managerial implications are explored, and the limitations of the research and directions for future research are presented.     

I complain for your good? Re-examining consumer advocacy

Marketplace helping behavior such as opinion leadership, market maven, and purchase pals that benefit others has been extensively studied. A diverse but similar to other marketplace helping behaviors is the concept of consumer advocacy. Extant review of literature reveals that customer advocacy and consumer advocacy are conceptually different. The former is an organization level construct, and the latter is an individual consumer's ‘generalized tendency to share market information’. It is argued that a following dissatisfactory service encounter, consumer advocates would indulge in market placing helping behavior such as negative word of mouth to prevent other consumers' from having similar marketplace disappointments. Hence, prior studies link consumer advocacy to ‘altruistic tendencies’. On the basis of self-construal theory, this study investigates the motivations for consumer advocacy. Using a scenario-based experimentation implemented in survey method; we establish that consumer advocacy is motivated by an amalgamation of altruism and self-interest. We also operationalize third-party complaint construct and empirically test whether consumer advocacy is a predictor.     

How do firms make money selling digital goods online?

We review research on revenue models used by online firms who offer digital goods. Such goods are non-rival, have near zero marginal cost of production and distribution, low marginal cost of consumer search, and low transaction costs. Additionally, firms can easily observe and measure consumer behavior. We start by asking what consumers can offer in exchange for digital goods. We suggest that consumers can offer their money, personal information, or time. Firms, in turn, can generate revenue by selling digital content, brokering consumer information, or showing advertising. We discuss the firm’s trade-off in choosing between the different revenue streams, such as offering paid content or free content while relying on advertising revenues. We then turn to specific challenges firms face when choosing a revenue model based on either content, information, or advertising. Additionally, we discuss nascent revenue models that combine different revenue streams such as crowdfunding (content and information) or blogs (information and advertising). We conclude with a discussion of opportunities for future research including implications for firms’ revenue models from the increasing importance of the mobile Internet.