Estimating a monetary policy reaction function for the dominican republic

Abstract

The paper specifies and estimates a hybrid McCallum–Taylor monetary policy reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank of the DR has been biased towards targeting the exchange rate. These findings are in line with the evidence on the fear-of-floating characteristic of developing countries. An evaluation of the estimated rule's historical performance shows that monetary base growth below (above) that implied by the ‘average’ policy reaction is associated with better (worse) macroeconomic performance.     

FASHION AND THE GOVERNANCE OF KNOWLEDGE IN A TRADITIONAL INDUSTRY: THE CASE OF THE FOOTWEAR SECTORAL INNOVATION SYSTEM IN THE NORTHERN REGION OF PORTUGAL

Abstract

The paper deals with the footwear industry as a sectoral innovation system. It particularly focuses on the incidental role of fashion in restructuring and innovation within the footwear production. The importance taken by fashion leads towards a more complicated reading of the recent changes of this industry, regarding its organization, innovation processes, and its mode of technological knowledge governance. More especially, within the traditional footwear industry, low levels of knowledge appropriability were combined with low cumulativeness in firms with low-innovative activity. However, as fashion was incorporated in the footwear industry, technological knowledge governance evolves towards higher cumulativeness at least at the industry level. This contribution discusses in detail the pervasiveness of fashion onto the footwear industry. It especially shows how the numerous agents involved in the fashion knowledge production and their geographical concentration allow for increasing returns when they align well with knowledge cumulativeness at the industry level. It also reveals that the renewed knowledge base of fashion exhibits a higher degree of tacitness and typically develops along an external localized knowledge base.     

Failing and Merging as Competing Alternatives during Times of Financial Distress: Evidence from the Colombian Financial Crisis

This paper studies the determinants of individual bank failures and M&A processes in Colombia during the financial crisis of the late 1990s. Using bank-specific data we estimate competing risk hazards models and find that while profitability and capitalization are the most important determinants of the probability of failing, a bank's size, efficiency and capitalization are the main determinants of the probability of participating in an integration process. All else constant, an increase in capitalization reduces the probability of disappearing, whether due to the occurrence of bankruptcy, a merge or an acquisition. However, a marginal increase in capitalization reduces the probability of bankruptcy significantly more than the probability of integration. This study is the first to present a competing risks hazard model to identify covariates that excerpt significant influence on the probability of failing or merging for banks of an emerging economy.     

A model of innovation and learning with involuntary spillovers and absorptive capacity

We develop a model of innovation and learning that incorporates explicitly the need for a firm to conduct its own research and development (R&D) in order to realize involuntary spillovers from other firms’ R&D activity and the development of absorptive capacity of research firms over time. The conclusions of the model follow directly from the functional forms that are used to describe the generation and absorption of technological knowledge. The first proposition formally characterizes the steady-state rate of growth of technology for the model. The analysis also shows how some of the key features of two distinct, pure modes of organization of the production of new knowledge, the R&D model and the new localized knowledge model, are implied by our model by simply drastically changing the relative magnitude of two exogenous parameters: the ease of learning and the pace of knowledge advance. The second proposition formally characterizes the connections implied by the model between involuntary spillovers and absorptive capacity. Analysis of the long-term interactions between involuntary spillovers of knowledge and absorptive capacity provides the essential insights into an understanding of the elements of a self-sustained process of endogenous growth. The third and last formal proposition of this paper accommodates firm-level arguments and the crucial role of a firm's absorptive capacity in taking advantage of its location in clusters, as implied by the theoretical model.     

The knowledge multiplier

The paper develops a formal model of external knowledge and identifies the role of knowledge multipliers. Social interactions and knowledge multipliers play a crucial role in determining the rate of technological change. The analytical identification of the knowledge multiplier expression constitutes a key step in the appreciation of the crucial role of knowledge interactions. First, social considerations endogenously change the knowledge production function of each firm. The knowledge multiplier is the specific mechanism by means of which external knowledge contributes to enhance the innovative capacity of each firm. The production function of knowledge shows that the larger the knowledge multiplier is the stronger are the cumulative positive effects of external knowledge on the generation of new knowledge. Second, social considerations explain the long-run dynamics of innovation. Social reinforcement and the knowledge multiplier determine the rise or fall in the rate of accumulation of technological knowledge.     

Business Cycle Synchronization between Euro Area and Central and Eastern European Countries

We analyze the degree of co‐movements in real macroeconomic aggregates across selected euro area and Central and Eastern European (CEE) countries applying a multi‐factor model. Our results suggest that the evolution of the global European factor matches well the narrative of main economic events between 1995 and 2011, capturing among others the recession during the recent global financial and economic crisis. This factor plays a central role in explaining real output growth variability in euro area and is negligible in CEE countries. Furthermore, using Markov switching models and concordance indices, we shed light on an increase in business cycle synchronization, with the degree of concordance between country‐specific and European business cycles being high.     

Social welfare and competitiveness

The predominant narrative of globalisation is that it has led to a decline in the power of the nation state and an increase in the power of markets. Others note that the power of the state has increased along some dimensions, even as it has lost economic power. Both of these literatures, however, tend to be too reductive by focusing on the national scale. In contrast, this paper argues that globalisation may reconfigure, respatialise, and potentially increase the economic and political power of certain states. This hypothesis is tested empirically through reference to Chinese engagement in the Southern African country of Zambia using data obtained from in-depth interviews conducted with government officials, Chinese business owners, employees and other key informants.     

A Cross-National Study on Online Consumer Perceptions,Trust, and Loyalty

This article analyzes the validity of signaling theory and relationship marketing in e-commerce and in two different countries with different stages of technology development. We advance a model that reflects the role played by website characteristics as determinant factors of trust and loyalty to the website. The model is tested for young Internet users. It is examined in Spanish and Japanese contexts to ascertain whether any differences emerge due to differing cultures and shopping contexts. Results reveal few differences between Spain and Japan, despite their contrasting development of e-commerce and Information and Communication Technologies (ICT). Customer service is the most important website signal to engender trust, a feature closely linked to loyalty both in Japan and Spain. However, reputation seems more important when engaging Japanese buyers' trust, whereas only website design has an impact on Spanish buyers' trust.     

Web Adoption and Firm Performance in the Fashion Industry: The Moderating Role of Social and Economic Rational Managerial Perceptions

This article draws on an integrated perspective of institutional theory and the resource-based view of the firm by studying the causal relationships among Web technology adoption, social and economic rational managerial perceptions, and firm results. It does so in the context of the fashion industry. The article suggests that both resource-based view and institutional factors may better explain firm performance. Isomorphic rationality as institutional forces of firm homogeneity are proposed as determinants of rent potential that complement and extend resource-based explanations of firm success variation and sustainable competitive advantage in the fashion industry.     

The Effect of Perceived Value and Switching Barriers on Customer Price Tolerance in Industrial Energy Markets

Purpose: This article analyzes the effects of perceived value, satisfaction, and switching barriers on price tolerance. It also examines the moderating effect of switching barriers.

Methodology/Approach: Empirical research was conducted by collecting information from a sample of 326 major gas and electricity consumers in a newly liberalized industrial market with a high concentration of suppliers.

Findings: Switching barriers are the main antecedent to price tolerance. Price tolerance of industrial customers depends directly on switching barriers more than on satisfaction. The customer satisfaction construct is a necessary but not sufficient predictor of price tolerance. While satisfaction has an effect on price tolerance, the effect of perceived value on price tolerance is only indirect through satisfaction, even though it may produce positive direct effects when there are high switching barriers.

Originality/Value/Contribution: For the first time in a B2B framework, the moderating effects of switching barriers on the relationship between perceived value, satisfaction, and price tolerance have been analyzed.