Pricing errors and estimates of risk premia in factor models

In this paper, we consider the effect of the theoretical pricing error in the arbitrage pricing model on estimates of risk premia implied by the model. Under arbitrage pricing, the pricing error satisfies a strong bounding condition where for an infinite set of assets, the sum of squared pricing errors is bounded. We characterize the pricing error in terms of orders of probability and estimate an expected returns model which allows for pricing errors less than order one in probability. The principal finding of the paper is that misspecification of the pricing error and misspecification of the factor structure has no effect on the bias or mean squared error of the dominant risk premium. This implies that an exact form of arbitrage pricing can be used to estimate risk premia.     

Factors Influencing Partial and Complete Adoption of Organic Farming Practices in Saskatchewan, Canada

Using a sample of organic producers in Saskatchewan, Canada, this study uses a Tobit model to identify the factors that discourage or encourage the complete adoption of organic farming and to assess why farmers differ in the share of total cultivated crop area they allocate to organic practices. In particular, the study evaluates the effect of transaction costs on the decision to convert partially or completely from conventional to organic practices. The results highlight the importance of lowering certain transaction costs to encourage the adoption of organic management practices. Significant transaction costs were found to include infrastructure and services, satisfaction with marketer performance, marketing problems, and Internet use. Results suggest that farmers with smaller land holdings are more inclined to undertake complete adoption. While the education levels of organic farmers show no significant effect on the probability of adoption, younger organic farmers allocate significantly less of their cultivated area to organic practices. À partir d'un échantillon de producteurs de cultures biologiques de la Saskatchewan, au Canada, nous avons utilisé un modèle Tobit pour déterminer les facteurs qui encouragent ou découragent l'adoption totale des pratiques agricoles biologiques et les raisons pour lesquelles le pourcentage des superficies consacrées aux cultures biologiques varie d'un producteur à l'autre. Nous avons également examiné les répercussions des coûts de transaction sur la décision de passer, en totalité ou en partie, des pratiques conventionnelles aux pratiques biologiques. Les résultats ont fait ressortir l'importance de réduire certains coûts de transaction afin d'encourager l'adoption des méthodes agronomiques biologiques. Les coûts de transaction les plus importants incluaient les infrastructures et les services, l'efficacité des intermédiaires, les problèmes liés à la mise en marché et l'utilisation d'Internet. Les résultats autorisent à penser que les producteurs agricoles qui possèdent de petites superficies sont plus enclins à adopter en totalité l'agriculture biologique. Alors que le niveau de scolarité des producteurs ne semble pas avoir de répercussions sur la probabilité d'adopter l'agriculture biologique, les jeunes producteurs de cultures biologiques consacrent beaucoup moins de leurs superficies cultivées à la culture biologique.     

Knowledge quality,innovation and firm performance: a study of knowledge transfer in SMEs

Small Business Economics - Using structural equation modelling on 291 small and medium enterprises in Australia, we examine the impact of knowledge transfers from supply chain actors on innovation...     

Testing a susceptibility threshold for risk promotion messages in the shark diving context

Abstract

This paper presents the results of two experiments designed to test a susceptibility threshold in the shark cage diving context, positing that persons who are high relative to low sensation-seekers are more likely to approach risks that are portrayed as scary and moderately probable. The results of study one provide evidence for the susceptibility threshold showing high sensation-seekers having greater behavioral intent to engage in risk behaviors when a message portrays a scary but only moderately probable risk. The second experiment finds high susceptibility messages result in more negative attitudes and behavioral intentions. Implications for risk message design and theory are addressed.     

Trigger warning: the causal impact of gun ownership on suicide

With a growing debate over tighter firearm regulations, we consider an important social consequence of increased firearm access: increased firearm suicides. Using data from the federal criminal background check system, we consider the impact of firearm ownership on firearm suicide rates. To deal with concerns of identification, we instrument for firearm background checks with state-year-level Google search intensity for phrases that reflect fear of future gun shortages and learning about the constitutional rights of firearm owners. We find that an increase in firearm ownership has a sizable and statistically significant impact on firearm suicide rates. A 10% increase in firearm ownership increases firearm suicide rates by approximately 3%, which is five times larger than non-instrumented estimates. Furthermore, we find no effect of gun ownership on non-firearm suicide rates, suggesting our findings are not simply capturing a suicide method substitution effect. The results are consistent with a variety of validity and robustness tests. Our results make clear the link between firearm ownership and firearm suicide rates, which have increased dramatically over the last decade.     

Context effects of TV programme-induced interactivity and telepresence on advertising responses

This article provides an analysis of the relationship between annual advertising expenditures and sales, using a time series regression procedure, for beer, wine, and liquor sold in the United States from 1971 to 2012. Information from these four decades provides a comprehensive analysis of the relationships of numerous variables with aggregate alcohol category sales. Even though per capita alcohol consumption has not changed much throughout this period, alcohol advertising media expenditures for all alcohol beverages have increased almost 400% since 1971. This study has provided evidence of consumption changes across categories of alcohol beverages over the past 40-plus years with the preponderance of those changes significantly correlated to fluctuations in demography, taxation and income levels – not advertising. Despite other macro-level studies with consistent findings, the perception that advertising increases consumption exists. The findings here indicate that there is either no relationship or a weak one between advertising and aggregate category sales. Therefore, advertising restrictions or bans with the purpose of reducing consumption may not have the desired effect. Implications on policy decisions regarding advertising controls are addressed.     

What Monetary Policy after the Crisis?

The objective of this paper is to reflect on some of the implications that recent economic experience has for monetary and financial stability policies. We contend that the financial crisis and the upsurge in inflation 2007–08 have shown that the policy model based on the new consensus in macroeconomics, which largely held sway over the past decade or more, is broken. It is argued that inflation targeting cannot deliver low inflation. We argue that fine-tuning through interest rates should not be attempted, but rather a constant real interest rate target based on the output growth rate should be adopted. The key objective of monetary policy should be shifted to financial stability, the independence of central banks should be brought to an end, and their decision making should be coordinated with other macroeconomic policy initiatives.     

‘McJobs’, ‘good jobs’ and skills: job‐seekers' attitudes to low‐skilled service work

This article focuses on unemployed job‐seekers' attitudes towards entry‐level jobs in three areas of the service sector – retail, hospitality and call‐centre work. The article examines whether job‐seekers are reluctant to pursue these opportunities, and provides an analysis of the motives of those ruling out service work. A range of potential barriers is discussed, including the extent to which job‐seekers perceive the service economy as offering only so‐called ‘McJobs’– low‐skilled, low‐paid jobs with few opportunities for development. However, the article also focuses on perceived skills mismatches, with some job‐seekers arguably over‐qualified for entry‐level service jobs, while others consider themselves to lack the necessary ‘soft’ skills. The analysis is based on interviews with 220 unemployed people in Glasgow. The article concludes that policy action may be required to encourage job seekers to consider a broader range of vacancies and to provide tailored training in partnership with service employers. On the demand side, service employers must address the need for entry‐level positions that offer realistic salaries, decent work conditions and opportunities for progression and development.