Arrow's equivalency theorem in a model with neoclassical firms

Summary. In this paper we consider a two-period general equilibrium model with uncertainty and real assets as financial instruments. The novelty of the analysis is that real assets are the stocks of neoclassical firms, so that both returns and yields depend on anticipated spot goods prices (and, of course, the yield matrix may change rank with prices). Assuming that financial markets are potentially complete, we establish generic existence of financial equilibrium and prove that there exists a dense set of economies such that financial equilibria are efficient.Received: 19 April 2001, Revised: 23 April 2003, JEL Classification Numbers: C60, D51, G10, D60.I am extremely grateful to Dave Cass for drawing my attention to this problem and inspiring me to work on it as well as for many stimulating discussions. I also benefited from discussions with H. Polemarchakis, M. Stinchcombe, and A. Villanacci. I am thankful to the anonymous referee of the first versions of the paper for thoughtful comments and suggestions, and to participants of a recruiting seminar at the University of Texas at Austin (January 2001), the Conference on Economic Design SED 2000, Istanbul, Turkey (June 2000), and Inter-University Student Conference, New York University, New York (May 2000).     

Weather as a Competitive Factor between Local and Foreign Manufacturing Companies in Russia

Globalisation has sparked academic interest in companies’ competitive factors and a myriad of internal and external competitive factors have been studied. However, to our knowledge the weather of the host country has not been under study even though weather has been demonstrated to affect economic activity. This paper utilises a company-level panel data to analyse if weather has an impact on domestic and foreign manufacturing companies’ operations in Russia. Temperature was identified to have a non-linear effect on foreign companies’ revenues, such that a warmer year raises revenues in colder regions while balancing out in warmer regions and actually has a negative effect in the hottest regions. For local Russian companies, we discovered an opposite, but less robust effect. This and home country climate based analysis support the hypothesis that foreign companies benefit from more pleasant weather in the local colder climate while the impact is not so critical for the local companies or foreign companies from countries with similar climate to Russia.     

Trade and trade policy with differentiated products: A Chamberlinian – Ricardian model. A comment

Abstract

This paper shows that the results of Venables (1987 Venables, A. 1987. Trade and trade policy with differentiated products: a Chamberlinian – Ricardian model. The Economic Journal, 97: 700–717. [Crossref], [Web of Science ®] , [Google Scholar]) depend critically on the assumption that there are no fixed costs of trade. The introduction of fixed costs of exporting, while making the model more consistent with the empirical evidence, leads to the opposite conclusion that technological progress in one country cannot harm the welfare of its trading partner. However, the results can be obtained in a richer setting with heterogeneous firms.     

Exit problems in regime-switching models

This paper provides a general framework for pricing of perpetual American and real options in regime-switching Lévy models. In each state of the Markov chain, which determines switches from one Lévy process to another, the payoff stream is a monotone function of the Lévy process labeled by the state. This allows for additional switching within each state of the Markov chain (payoffs can be different in different regions of the real line). The pricing procedure is efficient even if the number of states is large provided the transition rates are not very large w.r.t. the riskless rates. The payoffs and riskless rates may depend on a state. Special cases are stochastic volatility models and models with stochastic interest rate; both must be modeled as finite-state Markov chains. As an application, we solve exit problems for a price-taking firm, and study the dependence of the exit threshold on the interest rate uncertainty.     

The impact of university brand identification and eWOM behaviour on students’ psychological well-being: a multi-group analysis among active and passive social media users

ABSTRACT

Encouraging students to share positive online reviews should not be regarded only as a marketing tool. This study aims to examine (i) the relationship between positive online reviews behaviour for university and students’ well-being; and (ii) the impact of eWOM behaviour on students’ psychological well-being among active (those who share and read information) and passive (those who only read information) social media users. An online survey was conducted to examine the interplay of university brand identification, positive eWOM behaviour, and university life satisfaction on students’ psychological well-being. Results found that students who share positive reviews about university on social media tend to have better psychological health. This study also revealed that active social media users benefit more in terms of well-being through sharing positive online reviews about their universities. Implications for theory and practice of social media marketing in the higher education context are discussed.