Technological Regimes and Schumpeterian Patterns of Innovation

This paper proposes that the specific pattern of innovative activities in an industry can be explained as the outcome of different technological (learning) regimes . A technological regime is defined by the particular combination of technological opportunities, appropriability of innovations, cumulativeness of technical advances and properties of the knowledge base. Building upon the distinction between Schumpeter Mark I and Schumpeter Mark II industries, this paper provides empirical estimates of the relationships between indicators of the Schumpeterian patterns of innovation (concentration of innovative activities, stability in the hierarchy of innovators and importance of new innovators) and indicators of the variables defining technological regimes.     

Belief-free price formation

We analyze security price formation in a dynamic setting in which long-lived dealers repeatedly compete for the opportunity to trade with short-lived retail traders. We characterize equilibria in which dealers’ pricing strategies are optimal irrespective of the private information that each dealer may possess. Thus, our model’s predictions are robust to different specifications of the dealers’ information structure. These equilibria reconcile, in a unified and parsimonious framework, price dynamics that are reminiscent of well-known stylized facts: excess price volatility, price to trading flow correlation, stochastic volatility and inventory-related trading.     

Credit rating industry: A helicopter tour of stylized facts and recent theories

The recent subprime crisis and the ongoing Euro zone crisis have generated an enormous interest in the credit rating industry not only among economists but also among average citizens. As a consequence, we have seen an explosion of the economic literature on the industry. The objective of this survey is to introduce readers to the key stylized facts of the credit rating industry and to the recent theoretical economic literature on this industry.     

Targeting welfare in Italy: old problems and perspectives on reform

This paper has two principal objectives. Using a tax‐benefit microsimulation model and the 1998 micro data of the Bank of Italy survey of household income and wealth, we first study the distributional effects of the current Italian income maintenance system and highlight its main defects and limitations, concerning in particular its unequal coverage of the population and its low efficiency in fighting poverty. The second aim is to describe and analyse the reforms recently implemented in this field; in particular, the Italian government has reformed the targeting criteria and introduced three new cash transfers. We describe these reforms both in their institutional characteristics and in their likely distributional consequences, and examine whether and to what extent they are able to overcome the shortcomings of the current system.     

Modelling systemic price cojumps with Hawkes factor models

Instabilities in the price dynamics of a large number of financial assets are a clear sign of systemic events. By investigating portfolios of highly liquid stocks, we find that there are a large number of high-frequency cojumps. We show that the dynamics of these jumps is described neither by a multivariate Poisson nor by a multivariate Hawkes model. We introduce a Hawkes one-factor model which is able to capture simultaneously the time clustering of jumps and the high synchronization of jumps across assets.     

Reconstruction and visualisation of melt topology in veined microdioritic enclaves

A number of xenocrystic microdioritic enclaves within the Ross of Mull Granite contain narrow veins of monzonitic material that have formed through the selective partial fusion of granitic magma mechanically incorporated into the microdiorite magma. Field evidence suggests that, as melting of the granitic material ensued, a monzonitic melt formed and exfiltrated from the surrounding microdioritic matrix resulting in Saffman–Taylor instabilities and the development of viscous fingering phenomena. The monzonitic melt network is now preserved as monzonitic veins. Mechanical serial sectioning through a representative veined microdioritic enclave shows that: (a) the topology of the veins is complex but crudely polyhedral, (b) there is porosity (monzonitic melt fraction) variation throughout the length of the veined enclave and (c) that the monzonitic veins are interconnected in three dimensions. Using image analysis software, the total porosity of individual veined enclave sections has been estimated, along with the variation in porosity with depth. Three dimensional rendering and animation software has been used to reconstruct and visualise the monzonitic melt network using Apple QuickTime? software. The above method provides a cheap and powerful way of visualising remnant macroscopic transport properties (such as connectivity and melt topology) in partially molten igneous rocks.     

Current-Account Reversals in Developing Countries: The Role of Fundamentals

This paper studies episodes of current-account reversal in developing countries (DCs) in the period 1965–1994. First, a number of persistent shifts (reversals) in the current-account balance dynamics are identified by structural break and segmented trend tests; then, the relationship between these reversals and a set of fundamentals suggested by the intertemporal approach to the current account is investigated in a panel-data set-up. We find that fundamentals play a different role in episodes of persistent deterioration or improvement of the current-account balance in DCs.     

Preemption contests between groups

We consider a preemption game between competing groups; firms lobbying individually for their groups' interests provide an empirical example. Among symmetric groups, the first firm to take action bears an (unobserved) cost and wins the prize on behalf of its group. In equilibrium, the firm with the lowest cost takes action, but with delay. More competition and a smaller ratio of costs to benefits reduce delay. Firms in larger groups wait longer, but group action can occur earlier, as the probability of a low-cost firm is higher. Asymmetries in group size or strength of externalities also matter.     

What do bank acquirers want? Evidence from worldwide bank M&A targets

What drives bankers to create larger and larger, often multinational banking groups? In this paper we investigate whether the targets in cross-border bank M&As are materially different from those banks targeted in domestic M&A deals. The main message of this paper is that, with few exceptions, domestic and foreign investors target similar banks. In particular, and contrary to what one might expect, bank size does not have a different effect on the probability of being a domestic or a cross-border target, instead it has a positive and highly significant effect in both cases. We find that the main differences between national and international M&As are the characteristics of the countries where the banks operate.     

Powerless: gains from trade when firm productivity is not Pareto distributed

Most trade models featuring heterogeneous firms assume a Pareto productivity distribution, on the basis that it provides a reasonable representation of the data and because of its analytical tractability. However, recent work shows that the characteristics of the productivity distribution crucially affect the estimated gains from trade. This paper thoroughly compares the gains from trade obtained under three different productivity distributions (Pareto, lognormal, and Weibull) and investigates their policy implications. We find that both the magnitude of the welfare gains and the relative importance of the fixed versus variable trade costs change significantly. Hence, relying blindly on a single distribution is dangerous when performing trade policy analysis.