Current Accounts and Global Adjustment: The Long and Short of It

Global rebalancing is underway, but still quite a distance from being done. Current account imbalances have been a persistent feature of the global economy for over 100 years, especially during the two eras of globalization—the period 1870 to 1914 and the present. Such imbalances have reflected underlying imbalances between savings and investment as well as the prevailing international monetary regime. One important lesson from the past 150 years is that capital flows play an important role in funding global investment opportunities—a role that would be harmed if policy makers responded to the perceived threat of global imbalances by imposing any sort of cap. During those periods when capital flows have been relatively unhindered, investment opportunities around the world have been financed by capital flows. Such flows have financed the growth of many erstwhile “emerging market” economies, including the U.S. in the early part of this century. And global capital flows are doing much the same for many emerging markets today, even though purchases of reserves by some countries have been offsetting inbound private capital flows in the aggregate. The other main lesson of history is that imbalances do not last forever, and tend to lead to adjustments and reversals. Experience shows that such adjustments are much easier for surplus countries than for deficit countries.     

A cross validation test of four models for quantifying multiattribute preferences

This paper examines the internal predictive validity of four multiattribute preference models: (a) a self-explicated model with equal importance weights; (b) a self-explicated model with unequal weights; (c) Sawtooth Software's Adaptive Conjoint Analysis (ACA); and (d) full profile conjoint analysis. We also discuss the problem of choosing criterion measures for comparing cross validations across models.The authors would like to acknowledge the support of the Huntsman Center for Global Competition and Innovation and the Crosby/Foggitt Fellowship from the Sol C. Snider Entrepreneurial Center, both at the Wharton School.     

The Allocation of Nutrient Load Reduction across a Watershed: Assessing Delivery Coefficients as an Implementation Tool

Delivery coefficients have long been used in economic analysis of policies that seek to address environmental problems like water pollution. However, the derivation and validity of delivery coefficients have not been examined carefully by empirical analyses. We derived estimates of delivery coefficients and then evaluated them as a bridge between complex simulation models and economic policies like water quality trading. We found that the allocations achieved outcomes that differed from intended water quality targets by less than 10% in most cases. For the least-cost allocation with heterogeneous costs, cost savings significantly outweighed deviations from water quality targets.     

Salesmen-customer interaction: An experimental approach

The interaction between customers and salesmen often determines the final outcome of a retail transaction. Salesmen often use various cues about potential customer's byuing intentions in designing their sales presentation strategies. This study examines nonprice aspects of salesmen-customer interaction utilizing an experimental design. The results of the study show that salesmen respond differently to prospects with different characteristics.     

Dynamic causality testing for EKC hypothesis,pollution haven hypothesis and international trade in India

This study examines the causality relationships between foreign direct investment (FDI), economic growth (GDP) and CO₂ emissions along with the level of trade (exports and imports) taking place in India. The study uses data obtained from World Development Indicators (WDI) of World Bank Group for the period 1982–2013. The study employed the dynamic multivariate Toda-Yamamoto (TY) approach that uses the modified Wald (MWALD) test. Among the major findings of the study are: the existence of both Pollution Haven Hypothesis and Environmental Kuznets Curve (EKC) hypothesis in India. The other findings of the study are: FDI is causing exports; exports are causing imports; imports are causing CO₂ emissions; and finally CO₂ emissions and GDP are causing each other. This finding concludes mainly two things. First, India imports more of pollution-intensive manufactured goods. Second, FDI is causing GDP in India but through CO₂ emissions.     

Bayesian estimation based on ranked set sample from Morgenstern type bivariate exponential distribution when ranking is imperfect

In this paper we consider Bayes estimation based on ranked set sample when ranking is imperfect, in which units are ranked based on measurements made on an easily and exactly measurable auxiliary variable X which is correlated with the study variable Y. Bayes estimators under squared error loss function and LINEX loss function for the mean of the study variate Y, when (X, Y) follows a Morgenstern type bivariate exponential distribution, are obtained based on both usual ranked set sample and extreme ranked set sample. Estimation procedures developed in this paper are illustrated using simulation studies and a real data.     

Concomitants of Record Values Arising from Morgenstern Type Bivariate Logistic Distribution and Some of their Applications in Parameter Estimation

In this paper we have obtained the joint probability density function of concomitants of two record values and hence obtained an explicit expression for the product moment of concomitants of two record values arising from Morgenstern family of distributions. Appling this expression for the product moments of concomitants of record values we have derived the best linear unbiased estimators based on concomitants of record values of some parameters involved in Morgenstern type bivariate logistic distribution which is a subfamily of the Morgenstern family of distributions. The efficiencies of these estimators based on the first n concomitants of record values for n≤10 are also obtained.     

Cost Structure and Payout Policy

I investigate the effects of firms’ proportion of fixed and variable costs on their payout policy and find that firms with higher fixed costs have significantly higher volatility in their future cash flows and more variable future operating incomes. These firms pay a lower fraction of their operating income in dividends and share repurchases. Finally, these firms return higher fractions of their payouts via share repurchases because this method offers greater flexibility. The results are robust to several alternate specifications and firm‐level controls, and show that firms’ cost structures play a significant role in payout policy choices.     

Evaluating cause‐marketing campaigns in the Indian corporate landscape: The role of consumer skepticism and consumer attributions of firm's motive

More and more business organizations are engaging in social initiatives to make a positive contribution to society. Cause marketing, such as CSR, is one of the many ways that firms can manifest social responsibility by pitching‐in where government solutions are few or takes time in implementation, and it is the only type that calls for consumer participation. Because customer participation is imperative for the success of the campaign, it must be designed to connect with consumers while also making them feel that corporate efforts are authentic and truly helping the cause and not exploitative of the social cause. Using fictitious brand, cause‐marketing campaigns were designed, and two studies were conducted to analyze the relationship between cause involvement, consumer attributions on firm's motive, and consumer attitudes towards cause campaigns, and if and how the relationship differs when consumer skepticism towards cause claims existed. Multivariate analysis performed for hypotheses testing suggests that cause involvement influenced campaign attitudes and the relationship was mediated by consumer attributions of firm's motive, and consumer skepticism towards cause campaigns affected the relationship.     

Unskilled immigration,technical progress,and wages—Role of the household sector

This paper revisits the relationship between unskilled immigration and skilled wage in the context of the BREXIT episode. Our simple general equilibrium model introduces a household sector, the inclusion of which shows that both return to capital and effective skilled wage may increase with a greater inflow of immigrants. This is a novel outcome in the theory of trade and factor flows. In addition, though technical progress in a skill‐intensive sector raises wage inequality, it no longer displaces traditional jobs. Here, the usual negative impact of unskilled immigration on the traditional sector is mitigated by increased returns to the unskilled workers.