The effect of demand-driven structural transformations on growth and technological change

The paper analyses the effect of the dynamics of consumption preferences on the dynamics of macro–economic growth. We endogenously derive micro–dynamics of consumption behavior as a result of the increase in the number of income classes. The different degrees of inertia in the adjustment of consumption levels to income changes affect firm selection and the dynamics of market structure, which is ultimately responsible for different regimes of macro–economic growth. We find, first, that higher heterogeneity in consumption preferences amplifies and accelerates market dynamics, leading to a swift shift from a Malthusian to a Kaldorian growth pattern. Second, consumption smoothing mainly affects the timing of such a take–off. Inertia in consumption delays the occurrence of a Kaldorian engine for growth.     

Coherent modeling of mortality patterns for age-specific subgroups

Decisions in Economics and Finance - The recent actuarial literature has shown that mortality patterns and trajectories in closely related populations are similar in some respects and that small...     

Volatility and volatility-linked derivatives: estimation,modeling, and pricing

Decisions in Economics and Finance -     

Evolution of Risk and Political Regimes

The risk of political predation impedes the achievement of economic prosperity. In this study, we analyze how the risk of predation evolves in different political regimes. Formally, we look at the interaction between a government and citizens in which, in each period, the government has an option to predate. Citizens prefer governments that are competent and non‐predatory and strive to replace ones that are not. Regimes differ in the degree to which citizens can succeed in doing so. In pure democracies, citizens can displace incumbent governments; in pure autocracies, they cannot; and in intermediate cases, they can do so in probability. After economic downturns, the posterior probability that the government is competent and benevolent declines. According to the model, in intermediate regimes, but not in others, governments can separate by type. One implication, then, is that these regimes are politically and economically more volatile, with higher levels of variation in assessments of political risk and in economic performance. Another is that in such regimes, political leadership can make an economic difference. Empirically, we test our argument by measuring the impact of economic downturns on the perceived risk of political expropriation in different regime types, using as instruments the incidence of natural disasters and unexpected terms of trade shocks.     

Remittances and income diversification in Bolivia’s rural sector

This article examines the role of remittances in income diversification strategies in Bolivia’s rural sector. Remittances can be consumed or invested by the recipient. As an investment, funds can be used for farming or to finance other nonfarm productions. In this article, we use a large and nationally representative survey to estimate the effect that remittances have on the probability of producing income from nonfarm activities (diversification) by using a bivariate probit model. Our evidence shows that remittances increase the probability that a rural family engages in nonfarm activities, at least in some regions of Bolivia. We also find evidence that the sender’s decision to remit and the recipient’s decision to diversify may be jointly determined. As such, this suggests that remittances may serve as a mechanism to overcome localized failures in Bolivia’s capital markets.     

Further evidence on business cycle asymmetries in G7 countries

This paper tests for business cycle symmetry in G7 countries during the post-World War II period using a number of tests, each reflecting alternative definitions of business cycle asymmetry. The tests are applied to monthly coincident economic indicators of business cycles. This found that business cycles in the US are characterized by both longitudinal (deepness) and transversal (steepness and sharpness) asymmetries: further, it is found that asymmetric transition probabilties and time irreversibility are due to nonlinearities. On the contrary, business cycles in Germany exhibits a symmetric behaviour. Between these extremes are the other countries, for which at least one of the tests here considered rejects the null of cyclical symmetry. Particularly, business cycle is characterized by deepness and sharpness in Canada, asymmetry in persistence in France and Japan, and asymmetric transition probabilities in France and United Kingdom.     

Analysing rationing policies: drought and its effects on urban users’ welfare (Analysing rationing policies during drought)

The aim of this paper is to study the impact on consumers of rationing policies implemented during water shortages. Water scarcity gives rise to the need for rationing, and various methods, including supply cutoffs, can be used. A model is devised to quantify the welfare losses associated with qualitive and quantitive restrictions. Based on virtual prices and using the consumer surplus as a welfare measurement, welfare variations for different users have been calculated. To achieve the aim, information relative to Seville (Spain) has been used, analysing the drought period that took place in the first half of the 1990s. It has been possible to observe the main source that led to welfare losses for each kind of user.     

Co-evolution in tourism: the case of Albergo Diffuso

An important aspect of competitiveness between destinations concerns the way in which historical and cultural heritage is used. Thus, the relationship between territories and firms grows stronger, shifting the focus on the innovation processes within and across destinations. To increase our understanding of how these processes take place in a tourism destination, more theoretical and empirical research is required. This paper aims to respond to this call by examining the central role played by the Italian phenomenon of Albergo Diffuso (AD) through a co-evolutionary approach, fertilized by the evolutionary economic geography literature. The study focuses on the dynamics of the relationship between this new hospitality model, territories and tourists, by analysing 14 case studies of ADs rooted in historical villages. Findings show that AD can be considered as a new sustainability-oriented hospitality model which, by creating synergies with its territory, positively affects the competitiveness of the destinations where ADs are located. The theoretical implications suggest that the creation and development of these innovative firms are the result of effective multi-level co-evolutionary adaptations, adding new elements to the existing literature on innovation in tourism. Moreover, implications for both entrepreneurs and policy-makers emerge, together with suggestions for future research.     

The implementation of road user charging and the lessons learnt: the case of Valletta,Malta

Whilst the theory on road pricing is well developed there are only a few schemes operating worldwide with others which have failed to be implemented. One scheme which has received relatively little attention is the Controlled Vehicular Access System (CVA) recently implemented in Valletta, Malta. This paper draws on the experience of Valletta with a move from a fixed annual charge (V-licence) for access into the city to a time-based road user charge implemented in May 2007. The aims of this paper are to identify the reasons why a fixed charge was initially introduced; to review the literature related to implementation of road user charging schemes around the world; to compare the V-licence with the CVA and identify the issues relating to the change from one scheme to another. Through the direct involvement of one of the authors in the design and implementation of the road user charge in Valletta, this paper is based on archival data, direct observation and qualitative interviews. This paper concludes on what lessons can be learnt from the case of Valletta for other cities contemplating the introduction of a road user charge.