GARCH models without positivity constraints: Exponential or log GARCH?

This paper provides a probabilistic and statistical comparison of the log-GARCH and EGARCH models, which both rely on multiplicative volatility dynamics without positivity constraints. We compare the main probabilistic properties (strict stationarity, existence of moments, tails) of the EGARCH model, which are already known, with those of an asymmetric version of the log-GARCH. The quasi-maximum likelihood estimation of the log-GARCH parameters is shown to be strongly consistent and asymptotically normal. Similar estimation results are only available for the EGARCH (1,1) model, and under much stronger assumptions. The comparison is pursued via simulation experiments and estimation on real data.     

TRADE DIVERSIFICATION,INCOME, AND GROWTH: WHAT DO WE KNOW?

This paper surveys the empirical literature on export and import diversification and its linkages with growth. We review widely used measures of diversification and the evidence about their evolution focusing on how export diversification relates to trade liberalization and economic development. We also discuss the linkages between trade diversification and productivity at the firm and industry level, highlighting new advances on the linkages between import diversification and productivity.     

Improving corporate biodiversity management through employee involvement

This paper presents an empirical examination of the role of employee involvement in the internalization of corporate biodiversity management. A qualitative study in natural resource companies was conducted, based on semi‐directive interviews with managers, consultants, and experts in this area. The findings show that employee involvement is essential to improve biodiversity practices in natural resource companies, which largely rely on organizational citizenship behaviors for the environment. The role of tacit knowledge, voluntary initiatives, and prevention of harmful behaviors in the workplace are highlighted. The main obstacles to the internalization of biodiversity issues include their complexity, the lack of corporate commitment, the externalization of initiatives, and the lack of training for employees. The contributions to the literature on corporate environmental management, internalization of new practices, and organizational citizenship behaviors for the environment are explained. Managerial implications and avenues for future research are also provided.     

The Distributional Effects of Tax‐benefit Policies under New Labour: A Decomposition Approach*

I revisit the distributional effects of tax‐benefit policy reforms under New Labour using counterfactual microsimulations embedded in a Shapley decomposition of time change in inequality and poverty indices. This makes it possible to quantify the relative effect of policy changes compared to all other changes, and to check the sensitivity of this policy effect to the use of (i) income vs. price indexation, and (ii) base vs. end period data. Inequality and poverty depth would have increased, and the sharp fall in child poverty would not have occurred, had the reforms of income support and tax credits not been implemented.     

Locating fire stations: An integrated approach for Belgium

This paper illustrates the potential of a decision-support system developed for Belgium by a consortium of universities and a private firm, in the framework of a public call made by the Ministry of the Interior. The system is designed to provide the Belgian emergency management administration with a complete decision-aid tool for the location of fire stations. The originality of the project is that it includes a risk-modeling approach developed at a national scale. This analysis involves a multiscale GIS that includes a thorough representation of the physical, human and economic spatial realities, a risk-modeling approach, an adequate optimal location and allocation model (taking into account both queuing and staffing problems). The final result is an interactive operational tool for defining locations, equipment allocations, staffing, response times, the cost/efficiency trade-off, etc. This flexible tool can be used in an assessment as well as a prospective context. It has been used to draw a national reorganization plan for fire stations that started being implemented in 2010.     

Value creation,competition, and performance in buyer‐supplier relationships

The value‐based approach to strategy argues that a firm's ability to capture value depends on the extent of its added value. In this paper, I empirically test the link between added value and value capture using a longitudinal dataset of United Kingdom law firm performance, capabilities, and client relationships. In this setting, competitors relevant for defining a firm's added value are those that share a client with the firm. Further, within a client relationship, value creation, and hence added value, can be decomposed in two parts: product‐line capability and client‐specific scope economies. I find that added value, measured at the level of each buyer‐supplier relationship, is a driver of relationship stability and supplier profitability. This suggests that suppliers with similar capabilities might enjoy different economic returns depending on the composition of their set of relevant competitors. These findings shed light on the conditions under which firms can appropriate returns from their capabilities. They indicate that concepts from cooperative games can be fruitfully applied to empirical studies of firm performance and to the elaboration of insights from the resource‐based view of the firm. Copyright © 2010 John Wiley & Sons, Ltd.     

Value creation and value capture with frictions

We use a formal value‐based model to study how frictions—incomplete linkages in the industry value chain that keep some parties from meeting and transacting—affect value creation and value capture. Frictions arise from search and switching costs and moderate the intensity of industry rivalry and the efficiency of the market. We find that firms with a competitive advantage prefer industries with less, but not zero, frictions. We show that rivalry interacts nontrivially with other competitive forces to affect industry attractiveness. Firm heterogeneity emerges naturally when we introduce resource development. Heterogeneity falls with frictions, but the sustainability of competitive advantage increases. Overall, we show that introducing frictions makes value‐based models very effective at integrating analyses at the industry, firm, and resource levels. Copyright © 2011 John Wiley & Sons, Ltd.     

Crime and benefit sanctions

In this paper we look at the relationship between crime and economic incentives in a different way to other work in the economics of crime field. We look at empirical models where a toughening of the unemployment benefit regime can be used to study how people on the margins of crime may react to changes in economic incentives. We present three sets of complementary evidence, all of which show that toughening the benefit regime can have an unintended consequence, namely increases in crime. The first approach presents quasi-experimental evidence, looking at crime rates in areas of England and Wales before and after the introduction of a new, tougher unemployment benefit programme—the Jobseekers Allowance (JSA)—in October 1996. The second approach considers qualitative evidence on individuals affected by the change in the benefit regime. The third relates changes in area crime rates to post-JSA sanctions. Each of these approaches uncovers evidence of higher crime occurring as a consequence of the benefit reform.

p-Best response set and the robustness of equilibria to incomplete information

In this paper, we use p-best response sets—a set-valued extension of p-dominance—in order to provide a new sufficient condition for the robustness of equilibria to incomplete information: if there exists a set S which is a p-best response set with , and there exists a unique correlated equilibrium μ^* whose support is in S then μ^* is a robust Nash equilibrium.