The fed model: The bad,the worse,and the ugly

The negative relationship between stock market P/E ratios and government bond yields seems to have become conventional wisdom among practitioners. However, limited empirical evidence and a misleading suggestion that the model originated in the Fed are used to support the model's plausibility. This article argues that the Fed model is flawed from a theoretical standpoint and reports evidence from 20 countries that seriously questions its empirical merits. Despite its widespread use and acceptance, the Fed model is found to be a failure both as a normative and as a positive model of equity pricing.     

An Input–Output Analysis of the Philippine BPO Industry

This paper provides a profile of the Philippine business process outsourcing (BPO) sector, makes comparisons with India and other BPO providers, and summarises the results of an input−output analysis of the Philippine BPO industry's inter-sectoral linkages and its potential impact on compensation and employment. The input−output analysis shows that the BPO industry is not a key sector in terms of stimulating production in other sectors of the Philippine economy. Growth in the sector's revenues, however, can have a significant impact on compensation and employment. If appropriate policies are enacted and human capital improved, it is estimated that the Philippine BPO sector may become an important employment-generating sector.     

Labour‐market institutions and their impact on trade partners: A quantitative analysis

Recent theoretical literature studies how labour market reforms in one country can affect labour market outcomes in other countries, thereby rationalizing widely held policy beliefs and empirical evidence. But what is the quantitative relevance of such spillover effects? This paper combines two recent workhorse models: the canonical search‐and‐matching framework and the heterogeneous firms international trade model. Qualitatively, the framework confirms that labour market reforms in one country benefit its trading partners, replicating the stylized facts. However, when wages are bargained flexibly, the model quantitatively underestimates the correlation of structural unemployment rates across countries. Introducing some degree of real wage rigidity remedies this problem.     

Restrictions on Foreign Investments and the Relocation of Firms

We analyse why the Chinese government sets restrictions on foreign direct investment (FDI). We focus our analysis on the percentage of shares in relocated firms that the government allows to be foreign‐owned. The government's decision on this percentage depends on the entry cost, the number of firms that relocate and the weight of the consumer surplus in the objective function of the government. We show that by its choice of this percentage, the Chinese government may restrict or encourage FDI to its country. We also find that if the government may subsidise the fixed entry cost, it provides a subsidy only when the producer surplus has a greater weight than the consumer surplus in weighted welfare. In that case, the subsidy encourages relocation by both firms and permits the government to allow a lower percentage of shares to be foreign‐owned in relocated firms.     

The importance of packaging in purchase and usage behaviour

This study's primary objective is to analyse how consumers evaluate product packaging in two distinct phases of the consumer decision‐making process: at the moment of acquisition and post‐consumption. The packaging's technical, functional and informative attributes, as well as its influence on satisfaction and loyalty, were evaluated. An empirical study was conducted with a product of immediate consumption, milk, using four versions of packaging and a total sample of 265 family units. The model was evaluated using partial least squares (PLS), and differences were compared using variance analysis. The results demonstrate the most and least valued attributes, the primary differences between the four types of packaging, and the perception generated at each moment. The research provides interesting theoretical and empirical perspectives and has business implications for marketing directors and product managers.     

The Relationships of Empathy,Moral Identity and Cynicism with Consumers’ Ethical Beliefs: The Mediating Role of Moral Disengagement

This study examines the relationships of empathy, moral identity and cynicism with the following dimensions of consumer ethics: the passive dimension (passively benefiting at the expense of the seller), the active/legal dimension (benefiting from questionable but legal actions), the ‘no harm, no foul’ dimension (actions that do not harm anyone directly but are considered unethical by some) and the ‘doing-good’/recycling dimension (pro-social actions). A survey of six hundred Australian consumers revealed that both empathy and moral identity were related to negative beliefs regarding the passive and the active/legal dimensions of consumer ethics and were related to positive beliefs regarding the ‘doing-good’/recycling dimension. Cynicism was related to positive beliefs regarding the passive dimension of consumer ethics and was related to negative beliefs regarding the ‘doing-good’/recycling dimension. The role of moral disengagement in mediating these relationships was examined. Empathy and moral identity were only indirectly negatively related to the ‘no harm, no foul’ dimension of consumer ethics through moral disengagement, while cynicism was indirectly positively related to this dimension through moral disengagement. Theoretical and practical implications of these findings are discussed.     

A reduced lattice model for option pricing under regime-switching

We present a binomial approach for pricing contingent claims when the parameters governing the underlying asset process follow a regime-switching model. In each regime, the asset dynamics is discretized by a Cox–Ross–Rubinstein lattice derived by a simple transformation of the parameters characterizing the highest volatility tree, which allows a simultaneous representation of the asset value in all the regimes. Derivative prices are computed by forming expectations of their payoffs over the lattice branches. Quadratic interpolation is invoked in case of regime changes, and the switching among regimes is captured through a transition probability matrix. An econometric analysis is provided to pick reasonable volatility values for option pricing, for which we show some comparisons with the existing models to assess the goodness of the proposed approach.     

Market representations in industrial marketing: Could representations influence strategy?

A central question in industrial marketing is whether the form in which the market of a firm is represented influences the marketing strategy. This question has been studied generally through case study research, and quantitative evidence is limited. In response to this limitation, this paper reports on a quasi-experiment investigating whether market representations have a constructive aspect in business. Empirically, this study compares two types of market representations - ostensive and performative - in order to test for influence exacted in two well-established strategies in industrial marketing - service focus and product differentiation. Results indicate that service focus is selected when market representations rely on agency in firms (i.e., performative), and product strategies are selected when structures are emphasized (i.e., ostensive). This paper contributes to methodology development by expanding the link between a case study approach and quasi-experiments explaining how quasi-experiments can replicate findings in industrial marketing.