New Firm Survival: The Effects of Start-up Characteristics

This paper empirically examines the influence of operating activities and financial and investment decisions in the start-up year on post-entry survival, taking industry effects into account. Compared to traditional financial ratios, we find that funds flow measures are superior in identifying those start-up characteristics that are related to subsequent failure. In the first year, failed firms typically generate less cash flows, incur higher labour expenses, use more trade credit and financial debt, limit inventories and are cash constrained. Surprisingly, industry effects do not have a significant impact. From these results, we draw conclusions for public policy.     

What if they take it all? Heterogeneous impact of sickness absence reform

I investigate the effect of sickness absence reform in the Czech Republic, which reduced benefits paid during the first three days of sickness absence to zero. I find a substantial decrease in the incidence of sickness absence, which is about 15 percent of the pre‐reform mean. I find that workers in occupations with high flexibility and fewer routine tasks are more likely to reduce their sickness absences.     

In‐Group versus Out‐Group Trust: The Impact of Income Inequality

In this article, we adopt a variant of the trust game by Berg, Dickhaut, and McCabe (1995) and the dictator game by Cox (2004) to determine if income inequality can activate in‐group favoritism and, if so, whether such a bias is strong enough to survive the removal of income inequality. We find evidence of in‐group favoritism only on the part of rich first movers. Rich first movers trust their in‐group members significantly more in the presence of income inequality not only before but also after they gain enough experience. Poor first movers, in contrast, do not exhibit such in‐group bias. They do not discriminate between in‐group and out‐group at the very outset of the experiment, and once they become experienced, they behave with significantly more trust toward the rich than toward the poor. We also find that in‐group and out‐group favoritism established in the past can be alleviated, but not completely removed, by an equal income distribution.     

Tenant satisfaction assessment in social housing in England: How reliable? How meaningful?

Since the 1980s there has been a growing emphasis on consumerizing welfare services as a form of provider accountability and as part of the commercialization of public agencies, which has formed part of the New Public Management reforms. Associated with this, the structured measurement of tenant satisfaction is well established in England's social housing sector and has become increasingly important in informing official assessments of social landlord effectiveness. This paper investigates whether published tenant satisfaction scores are sufficiently reliable and robust to serve as a pre‐eminent and unambiguous service quality measure, examines the validity of comparing recorded satisfaction rates for social landlords operating in different social and demographic contexts, and looks into how raw survey results could be adjusted to take account of ‘context’ factors outside a landlord's direct control.     

Forgive or buy back: an experimental study of debt relief

In recent years, debt relief has once again been pushed to the forefront of political and economic interest. The general consensus is that with less debt burden poor countries suffering from debt overhang will be able devote more resources towards investment thereby promoting their own growth and thus benefit their creditors in the long run. An open question is which mechanism is best to relieve debt burden. In this paper, we adopt experimental methods to study the effectiveness and efficiency of debt forgiveness and debt buyback. We find that creditors tend to reduce more debt under Forgiveness than Buyback. Debtors under Forgiveness are not significantly more reciprocal than under Buyback. After controlling for the amount of debt relief, creditors are significantly worse off under Forgiveness whereas debtors are indifferent between the two schemes. From the viewpoint of promoting debt relief, debt forgiveness appears to be a more effective tool to achieve this goal. Nevertheless, if one is to maximize the overall efficiency, debt buyback is superior to debt forgiveness in making best of each relief dollar.     

A Policy Perspective on European Unemployment

This paper focuses on three major themes in the policy debate on European unemployment. A first issue concerns the causes of unemployment. We point to the diversity of the unemployment performance in Europe and plead for a policy approach which takes into account the interdependence between employment, labour costs and social protection. As a second major theme, we evaluate existing EU policies. While a EU social dimension is gradually developing, the European level is far from providing a comprehensive policy framework at this stage. A third issue relates to the national policy dimension and is linked to Europe's quest for a third way. We compare the corporatist and competitive labour market approach.     

Is Belgium ready for EMU? A look at national, sectoral and regional developments

In EMU the question arises how countries will respond to adverse economic shocks. A statistical decomposition of output shocks in Belgium identifies the sectoral level as the main source of turbulence. This sectoral focus reduces the need for monetary, exchange rate and budgetary policies as macro-economic adjustment mechanisms but raises the issue of labour market flexibility. We show that wages fail to respond to sectoral and regional shocks. Similarly to the other EU countries, this absence of wage adjustments tends to amplify the regional divergence in production and employment performance, and can thus threaten political cohesion.     

Export Promotion Via Official Export Insurance

Proponents of free trade argue that export promotion distorts competition and undermines the multilateral trade system. In most countries export insurance is provided by the government and, consequently, is driven more by a broad range of policy objectives than purely insurance principles. This paper, however, shows that export promotion does not necessarily imply trade distortions and that most export destinations do not benefit from insurance premium subsidies. A significant policy implication of these findings is that the WTO and the EU are correct not to banish completely official export insurance.     

Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises

This paper analyses the impact of geographic dispersion on employment changes within multinationals. Building on earlier work of Landier et al. (2009, Review of Financial Studies 22, 3: 1119), we investigate whether corporate decision‐making within a multinational is affected by the distance between an affiliate and its headquarter. Our findings suggest a detrimental impact of distance on employees, by either an increased likelihood of observing a downsizing event, or by witnessing a larger decrease in the number of employees at distant locations during downsizing events. In addition, our results seem to relate the higher likelihood of observing a downsizing event to the role of social factors on decision making. The more visible a manager is in his community, the less likely he is to downsize proximate divisions.     

Does money help predict inflation? An empirical assessment for Central Europe

This paper investigates the predictive ability of money for future inflation in the Czech Republic, Hungary, Poland and Slovakia. We construct monetary indicators similar to those the European Central Bank regularly uses for monetary analysis. We find in-sample evidence that money matters for future inflation at the policy horizons that central banks typically focus on, but our pseudo out-of-sample forecasting exercise shows that money does not in general improve the inflation forecasts vis-à-vis some benchmark models such as the autoregressive process. Since at least some models containing money improve the inflation forecasts in certain periods, we argue that money still serves as a useful cross-check for monetary policy analysis.