Does trade credit play a signalling role? Some evidence from SMEs microdata

Using micro-data on small- and medium-sized enterprises, this paper empirically investigates the “signalling hypothesis” formulated on the role of trade credit (Biais and Gollier in Rev Financ Stud 10: 903–937, 1997; Burkart and Ellingsen in Am Econ Rev 94: 569–590, 2004). The research method adopted allows evaluation of the impact of suppliers’ credit on bank debt accounting for the strength (duration) of bank–firm relationships. Our main finding is that trade credit seems to have an information content for banks, especially when the latter do not dispose of adequate (soft) information on firms, which is likely the case at the beginning stages of bank–firm relationships. An implication of our results is that the availability of suppliers credit might be crucial to foster access to institutional funding for new firms entering the market. Our evidence also suggests that banks seem to consider suppliers a reliable source of information on firms’ financial conditions even after several years of lending relationships.     

Social Entrepreneurship and Business Ethics: Does Social Equal Ethical?

This editorial to the special issue addresses the often overlooked question of the ethical nature of social enterprises. The emerging social entrepreneurship literature has previously been dominated by enthusiasts who fail to critique the social enterprise, focusing instead on its distinction from economic entrepreneurship and potential in solving social problems. In this respect, we have found through the work presented herein that the relation between social entrepreneurship and ethics needs to be problematized. Further, we find that a range of conceptual lenses and methodological approaches is valuable as the social entrepreneurship field matures.     

Private polling in elections and voter welfare

We study elections in which two candidates poll voters about their preferred policies before taking policy positions. In the essentially unique equilibrium, candidates who receive moderate signals adopt more extreme platforms than their information suggests, but candidates with more extreme signals may moderate their platforms. Policy convergence does not maximize voters' welfare. Although candidates' platforms diverge in equilibrium, they do not do so as much as voters would like. We find that the electorate always prefers less correlation in candidate signals, and thus private over public polling. Some noise in the polling technology raises voters' welfare.     

Skills,sunspots and cycles

This paper explores the ability of a class of one-sector, multi-input models to generate indeterminate equilibrium paths, and endogenous fluctuations, without relying on factors’ hoarding. The model presents a novel theoretical economic mechanism that supports sunspot-driven expansions without requiring upward sloping labor demand schedules. Its distinctive characteristic is that the skill composition of aggregate labor demand drives expansionary i.i.d. demand shocks. Next, the model explains the labor market dynamics from the supply side, while endogenizing the capital productivity response to changes in the aggregate labor demand composition. Last but not least, it is worth to mention that the model presents an effective shock propagation mechanism that operates into the labor market and across labor market segments through the cross elasticities of equilibrium labor demand and supplies.      

Undominated (and) perfect equilibria in Poisson games

In games with population uncertainty some perfect equilibria are in dominated strategies. We prove that every Poisson game has at least one perfect equilibrium in undominated strategies.     

Climate Change and Adaptation: The Case of Nigerian Agriculture

The present research offers an economic assessment of climate change impacts on the four major crop families characterizing Nigerian agriculture. The evaluation is performed by shocking land productivity in a computable general equilibrium model tailored to replicate Nigerian economic development up to 2050. The detail of land uses in the model has been increased by differentiating land types per agro-ecological zones. Uncertainty about future climate is captured, using, as inputs, yield changes computed by a crop model under ten general circulation models runs. Climate change turns out to be negative for Nigeria in the medium term, with production losses and increase in crop prices, higher food dependency on foreign imports, and GDP losses in all the simulations after 2025. In a second part of the paper, a cost effectiveness analysis of adaptation in Nigerian agriculture is conducted. The adaptation practices considered are a mix of cheaper “soft measures” and more costly “hard” irrigation expansion. The main result is that the cost effectiveness of the whole package depends crucially on the possibility of implementing adaptation by exploiting low-cost opportunities which show a benefit-cost ratio larger than one in all the climate regimes.     

Stochastic continuous time growth models that allow for closed form solutions

We find a closed form solution that maximises the expected utility of an agent’s inter-temporal consumption subject to a stochastic technology, which is a linear combination of AK and Cobb–Douglas technologies. Additionally, we consider two cases of agent preferences: (i) Constant Relative Risk Aversion (CRRA) preferences, which treat optimal consumption as a linear function of capital, and (ii) Hyperbolic Absolute Risk Aversion (HARA) preferences, which treat optimal consumption as an affine function of capital. By establishing a minimum (subsistence) level of consumption in the HARA model, we are able to create a framework that more accurately represents real-world circumstances than previous studies have done. Furthermore, for both the CRRA and HARA cases we show the suitable, consistent stochastic differential equation which describes the capital dynamics. Finally, we perform a numerical simulation based on the CRRA case and calibrate US data for the HARA case.     

Socioeconomic stratification and stereotyping: lab-in-the-field evidence from Colombia

In this study, we test the hypothesis that the Colombian system of socioeconomic stratification (SES), which ranks dwellings from one to six to calculate utility (public services) rates, may induce discrimination. To this end, a field experiment with around 1000 participants from Bogotá is carried out. The design includes a combination of a trust game and a dictator game and SES-contingent decisions. Results exclude the presence of pure preferences for discrimination, yet they confirm that low strata are associated with stereotypes of low trustworthiness. We also observe significant prosocial behavior in the low-income population, and most strikingly, we do not observe any difference in trustworthiness across different income levels.