The Macroeconomic Effects of Shocks to Large Banks’ Capital

We propose a simple approach to quantifying the macroeconomic effects of shocks to large banks’ leverage. We first estimate a standard dynamic model of leverage targeting at the bank level and use it to derive an aggregate measure of the economic capital buffer of large US bank holding corporations. We then evaluate the response of key macro variables to a shock to this aggregate bank capital buffer using standard monetary VAR models. We find that shocks to the capital of large US banks explain a substantial share of the variance of credit to firms and real activity.     

Helping behavior in a virtual crisis situation: effects of safety awareness and crisis communication

Incident evaluations show that bystanders tend to help: they do not wait for professionals to arrive, but act as required by the situation at hand. In the present study, we investigated how safety awareness (induced before an accident happened) and providing a course of action by emergency services affect helping behavior after witnessing a virtual accident with two victims. The main task of the participants was to arrive at a job interview in time. Safety awareness was manipulated by the specific organization they went to: either promoting safe traffic or healthy living. The results show that all participants were inclined to help. Participants who were primed towards safe traffic more often called the emergency number, but talked to the victim less often. Participants who had received specific courses of action moved the victim less often. In all, the results clearly indicate the value of effective risk communication (before an event occurs) and crisis communication (after an event has occurred), as both types of information improve the quality of actual helping behavior at the scene.     

How credible is the North Korean threat?

We perform event analysis on particular episodes of tension in the Korean peninsula between 2000 and 2008, and investigate the effect of the events on South Korean financial markets (stock markets, bond yield spreads and the exchange rate) given that South Korea would be the first affected by a military aggression from North Korea. Surprisingly, in nearly all cases, these events, which have often been dramatized in the world media, have no significant impact on either of these variables or only a very small one. We also find no significant impact of events on listed firms that would a priori be likely to suffer from increased tension between the two Koreas. Since financial markets often contain better predictions than expert opinions or surveys, these results strongly suggest that the North Korean threat is non‐credible.     

Are the BRIC countries overtaking intermediate countries in the race for international R&D? The case of Spain

The emergence of Brazil, Russia, India and China (BRIC) as international locations for foreign direct investment in R&D is a sign that multinationals are relocating their technological activities to new territories. This trend may weaken the supremacy of the developed countries until now considered leaders in innovation, and may mean the loss of the competitive advantages enjoyed by the countries considered intermediate innovators. This paper examines the situation of Spain as a typical intermediate economy and compares it to its main competitors among the BRICs. Based on eight case studies of subsidiaries with R&D centres in Spain, we conclude that the policies adopted by certain emerging economies to develop their national innovation systems are proving effective and that these countries now pose a threat to intermediate economies. However, the BRICs still lag behind in terms of the security of their institutional framework; this situation leaves intermediate countries in an advantageous position.     

International automotive production networks: how the web comes together

This paper aims to provide empirical evidence for the connections between new trade theory and the spatial distribution of economic activities, considering the results obtained by the literature on New Economic Geography as a starting point. To do this, we apply Social Network Analysis specifically to the World Automotive Trade Network. We explore the structural features of the auto network for the years 1996 and 2009 using data on trade flows for 172 countries. Our findings suggest that the auto network has become denser, more extensive and more integrated over time, depicting a center-periphery structure in which regional clusters play a prominent role. In this configuration, strong agglomeration forces generated by companies’ desire for large and rich market access with minimum transportation costs are balanced by the search for new high-potential markets.     

IMMIGRANT RELATIVE WAGES AT THE GREAT RECESSION: EVIDENCE WITH MATCHED EMPLOYER‐EMPLOYEE DATA FOR SPAIN

The article examines relative wages of immigrants in Spain, with a particular focus on the impact of the Great Recession. The empirical analysis is restricted to men and is based on matched employer‐employee microdata and the decomposition techniques of Juhn et al. (1991, 1993) and Fortin et al. (2011). Our results show that the significant native‐immigrant wage gap that exists both in terms of average wages and of differentials along the wage distribution is essentially explained by differences in the endowments of observed characteristics so that, in general, immigrants tend to receive a similar wage treatment than Spaniards with analogous observed attributes. On the other hand, the Great Recession has had a noticeable impact on the relative wages of immigrants, given that the significant increase of the native‐immigrant wage gap observed during the previous expansionary period was mitigated during the economic downturn due to composition effects arising from the severe employment destruction pattern.     

Service innovation as a political process

Service innovation processes are driven by stakeholders in interaction and are understood and sketched as a value negotiation process that consists of an iterative process of securing potential value in service. While previous research has focused on service innovation as a harmonious closed system, our study explores service innovation as a political process in which stakeholders negotiate to create and secure future value. Data are collected through interviews and participant observations in four different case studies. Our study contributes to the field by illuminating service innovation as a political process and explaining how this is operationalized. The findings also contribute to an understanding of how stakeholder resources impact a chosen strategy; the resulting strategy’s impact on the service concept vis-à-vis its potential value; and how several involved stakeholders formulate, negotiate, and secure future potential value, which are the activities that drive a service innovation process.     

Commitment and Lapse Behavior in Long‐Term Insurance: A Case Study

This article presents a case study of a portfolio of individual long‐term insurance contracts sold by a Spanish mutual company. We describe the risk levels, the rating structure, and the implied cross‐subsidies on a portfolio of policies providing health, life, and long‐term care insurance. We show evidence of reclassification risk through the history of disability spells. We also analyze the lapse behavior and seek to provide a rationale for the portfolio’s dynamics. We discuss the lack of commitment from the policyholders (lapses) and from the mutual company (which took a run‐off decision). Finally, we draw conclusions regarding the design of such contracts.     

Ponds,Power and Institutions: The Everyday Governance of Accessing Urban Water Bodies in a Small Bengali City

While researchers in the growing field of urban political ecology have given significant attention to the fragmented hydroscape that characterizes access to drinking water in the global South, so far the (re)production of other urban waters and its related power relations have been underexplored. This article seeks to contribute to filling this gap by exploring the everyday negotiations over access to urban water bodies, in particular ponds. These are understood as a composite resource that is simultaneously water, land and public space. This analysis draws on a case study from a small city in West Bengal, India, and is based primarily on data from open interviews with different actors with a stake in urban ponds. The article demonstrates that in a context of ambiguity of the statutory governance regime and fragmented control, the (re)production of the pondscape is embedded within complex relationships of power whereby social marginalization can be offset at least momentarily by local institutions such as neighbourhood clubs and political parties.