European Periphery Crises,International Financial Markets,and Democracy

This article analyzes the origin and causes of the recent economic and financial crises, mainly for the countries located in the periphery of the European Union (EU), as well as their evolution and transformation into social, political, and institutional crises. After explaining the differential impact of the crises on EU economies, we analyze how the economic policies developed thus far not only are unable to resolve the current crisis pattern but also actually entail a risk to the present democratic models by transferring the legitimate control over governments from citizens and democratic parliaments to unelected, nonrepresentative international financial markets.     

Sequential Betting Behavior: A Test of Asymmetric Inconsistencies in Group Decision Making

Previous research has shown that individual decision makers tend to bet more than initially planned after experiencing a loss but not after a gain. This research tests whether groups in consensus decision‐making contexts also demonstrate similar asymmetric inconsistencies. Two experiments, one at the individual level and one with three‐person groups, were carried out based on a gambling‐type betting task. Although individuals planned more conservatively than groups regarding their betting behavior after the first outcome, both individuals and groups misestimated their own betting behavior after losses but not after gains. Negative, but not positive, emotional reactions to previous decision outcomes were also misestimated, leading to incorrect predictions of future behavior. Implications for theory and future research are discussed.     

LATIN AMERICAN EXCHANGE RATE DEPENDENCIES: A REGULAR VINE COPULA APPROACH

This study implements a regular vine copula methodology to evaluate the level of contagion among the exchange rates of six Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) from June 2005 to April 2012. We measure contagion in terms of tail dependence coefficients, following Fratzscher's (1999) definition of contagion as interdependence. Our results indicate that these countries are divided into two blocks. The first block consists of Brazil, Colombia, Chile, and Mexico, whose exchange rates exhibit the largest dependence coefficients, and the second block consists of Argentina and Peru, whose exchange rate dependence coefficients with other Latin American countries are low. We also found that most of the Latin American exchange rate pairs exhibit asymmetric behaviors characterized by nonsignificant upper tail dependence and significant lower tail dependence. These results imply that there exists contagion in Latin American exchange rates in periods of large appreciations, whereas there is no evidence of contagion during periods of currency depreciation. This empirical regularity may reflect the “fear of appreciation” in emerging economies identified by Levy‐Yeyati, Sturzenegger, and Gluzmann (2013). (JEL C32, C51, E42)     

Digital transformation in maritime ports: analysis and a game theoretic framework

Digitalization is pushing the maritime industry beyond its traditional limits and provides many new opportunities to enhance the productivity, efficiency, and sustainability of logistics. The concept of smart ports, for instance, aims to adopt modern information technologies to enable a better planning and management within and between ports. Strong facilitators of the digitalization are investments into technology and cooperations for promoting information sharing and a better coordination and collaboration, often regarded as a stumbling block in highly competitive environments. Besides many new opportunities, important economic issues and problems arise. We provide an overview of the development and state-of-the-art of digital transformation in modern seaports in order to identify current potentials and barriers. Focusing on the crucial and challenging aspects of coordination and collaboration, we present a conceptual game theoretic framework that allows benefits and cost allocations considering inter-, intra-, and meta-organizational perspectives. We further demonstrate how this framework can be used to develop tools and methods for supporting strategic decision making for driving the digital transformation in seaports and addressing new economic issues and problems.     

Determinants of cross-border M&As in Latin America

This article analyzes the determinants of cross-border M&As in the Latin American region during the period 1998-2004. Using a unique dataset of 868 Mergers and Acquisitions (M&A) events, the study focuses attention on the effect of macroeconomic and investor protection conditions in the countries where the companies reside over the likelihood of these companies participating in a cross-border M&A transaction. The study considers the effect of company-specific variables in the likelihood of going cross-border. Univariate analysis and logistic regressions strongly support the idea that better economic and business-friendly conditions in the countries where the target operates, increase the likelihood of cross-border merger. Results show that not only is the business environment in the target country important but also in the bidder country. Lower levels of property rights protection in the acquirer country negatively affect the likelihood of a cross-border deal. Finally, the likelihood of a cross-border merger increases when the target faces higher cost of funding than the acquirer's.     

Epistemic conditions for rationalizability

In this paper I present conditions, not involving common knowledge of rationality, that lead to (correlated) rationalizability. The basic observation is that, if the actual world belongs to a set of states where the set Z of action profiles is played, everyone is rational and it is mutual knowledge that the action profiles played are in Z, then the actions played at the actual world are rationalizable actions. Alternatively, if at the actual world the support of the conjecture of player i is Dⁱ, there is mutual knowledge of: (i) the game being played, (ii) that the players are rational, and (iii) that for every i the support of the conjecture of player i is contained in Dⁱ, then every strategy in the support of the conjectures is rationalizable. The results do not require common knowledge of anything and are valid for games with any number of players.     

Derived versus full name brand extensions

Most brand extension studies follow the assumption that brand extensions use the full original parent brand name (e.g., Oral-B tooth brush may extend to Oral-B dental floss). However, some companies use derived brand names in their brand extension strategies (e.g. Nestea Iced Tea). This study explores the advantages and disadvantages of derived brand extensions compared to full name extensions. The study examines the importance of target market effects on the evaluation of both brand extension strategies. Findings support the idea that derived brand names leverage parent brand evaluations and protect parent brand from extension failures.     

Optimal Debt? On the Insurance Value of International Debt Flows to Developing Countries

According to reputation models of sovereign debt, the incentives to repay are proportional to the income insurance benefits provided by the access to international markets. This paper, however, documents that private net lending to developing countries exhibits a procyclical or acyclical pattern, contradicting this premise. By contrast, official debt net flows exhibit a countercyclical patter. In addition, the paper shows that (both current and past) defaults are associated with lower net debt flows. The findings suggest that, while reputation models may explain the preferred creditor status enjoyed by official lenders, they cannot account for the presence of sovereign debt markets in developing countries.     

Productivity and efficiency with discrete variables and quadratic cost function

We propose an index of productivity based on a quadratic cost function and developed for discrete data including technical and allocative inefficiency, jointly with technical change and returns to scale, as determinants of Total Factor Productivity. This new index is applied to Spanish stevedoring industry so as to identify the sources of change in the productivity of a multiproductive activity, where some companies do not produce some of the outputs. In this context, the functional quadratic form and the productivity index proposed prove particularly useful.     

Using a 401(h) account to fund retiree health benefits from your pension plan

If a health and welfare plan covering retirees faces financial shortfalls, administrators and trustees can fund retiree health benefit payments from a related pension plan that may be in better condition. This method is legal and ethical, but it requires sophisticated accounting techniques for creating an account that provides retiree members with promised benefits while meeting statutory and regulatory requirements.