Homogeneous,heterogeneous or shrinkage estimators? Some empirical evidence from French regional gasoline consumption

This paper contrasts the performance of heterogeneous and shrinkage estimators versus the more traditional homogeneous panel data estimators. The analysis utilizes a panel data set from 21 French regions over the period 1973–1998 and a dynamic demand specification to study the gasoline demand in France. Out-of-sample forecast performance as well as the plausibility of the various estimators are contrasted.The authors would like to thank Jean-Loup Madre, Research Director at INRETS, for his assistance with obtaining the data set and the editor Robert M. Kunst and two referees for their helpful comments and suggestions. Badi H. Baltagi would like to thank the Bush Program in Economics of Public Policy for its support. An earlier version of this paper was presented at the North American Summer Econometric Society Meetings at UCLA, June, 2002.     

Does less inequality among households mean less inequality among individuals?

Consider an income distribution among households of the same size in which individuals, equally needy from the point of view of an ethical observer, are treated unfairly. Individuals are split into two types, those who receive more than one half of the family budget and those who receive less than one half. We look for conditions under which welfare and inequality quasi-orders established at the household level still hold at the individual one. A necessary and sufficient condition for the Generalized Lorenz test is that the income of dominated individuals is a concave function of the household income: individuals of poor households have to stand more together than individuals of rich households. This property also proves to be crucial for the preservation of the Relative and Absolute Lorenz criteria, when the more egalitarian distribution is the poorest. Extensions to individuals heterogeneous in needs and more than two types are also provided.     

Ambiguity aversion and trade

What is the effect of ambiguity aversion on trade? Although in a Bewley??s model, ambiguity aversion always leads to less trade; in other models, this is not always true. However, we show that if the endowments are unambiguous, then more ambiguity aversion implies less trade for a very general class of preferences. The reduction in trade caused by ambiguity aversion can be as severe as to lead to no trade. In an economy with MEU decision makers, we show that if the aggregate endowment is unanimously unambiguous, then every Pareto optima allocation is also unambiguous. We also characterize the situation in which every unanimously unambiguous allocation is Pareto optimal. Finally, we show how our results can be used to explain the home-bias effect. As a useful result for our methods, we also obtain an additivity theorem for CEU and MEU decision makers that does not require comonotonicity.     

The globalization of telcos: A normative view

As global forces are penetrating the local telephone markets, the authors argue that telcos are global by virtue of operating in such markets. The foreign expansion should aim at strengthening the home market's overall competitive position. Consequently, the strategic core needs to be clearly identified and offshore markets developed according to whether they are vital, critical, or only peripheral to the company's home base interests. Strategic anarchy must evolve into strategic hierarchy. © 1996 John Wiley & Sons, Inc.     

Order flow and exchange rate dynamics in electronic brokerage system data

We analyze the association between order flow and exchange rates using a new dataset representing a majority of global interdealer transactions in the two most-traded currency pairs at the one minute frequency over a six-year time period. This long span of high-frequency data allows us to gain new insights about the joint behavior of these series. We first confirm the presence of a substantial association between interdealer order flow and exchange rate returns at horizons ranging from 1 min to two weeks, but find that the association is substantially weaker at longer horizons. We study the time-variation of the association between exchange rate returns and order flow both intradaily and over the long term, and show that the relationship appears to be stronger when market liquidity is lower. Overall, our study supports the view that liquidity effects play an important role in the relationship between order flow and exchange rate changes. This by no means rules out a role for order flow as a channel by which fundamental information is transmitted to the market, as we show that our findings are quite consistent with a recent model by Bacchetta and Van Wincoop (2006: Can information heterogeneity explain the exchange rate determination puzzle? American Economic Review, 96, pp. 552–576.) that combines both liquidity and information effects.     

Music Piracy on the Web – How Effective are Anti-Piracy Arguments? Evidence from the Theory of Planned Behaviour

This article presents the results of an experiment in which three different types of anti-piracy arguments were tested among 139 young adult consumers susceptible to engage in swapping music over the Internet: (1) stressing the negative personal consequences of pirating music, (2) stressing the negative consequences for the artists, and (3) stressing the unethical nature of this behaviour. The psychological determinants of music piracy behaviour were modeled in part with (1991) Ajzen’s theory of planned behaviour. The results show that the intention to swap music on-line depended on one’s attitude toward music piracy, one’s perception that important others want that this behaviour be performed, and one’s perceived competency in doing so. In addition, having swapped music on-line in the past had a strong influence on one’s intention to do it again. Contrary to expectations, the anti-piracy arguments had no significant impact on the behavioural dynamics underlying on-line music piracy.     

How to operationalize porter's diamond of international competitiveness

Michael Porter's “diamond” framework has as its focus a set of home country national determinants of international competitiveness. For applications to international business this presents analytical difficulties because Dunning's eclectic theory of the multinational enterprise demonstrates that it is the interaction between national and international determinants that leads to the competitive success of global industries. This article suggests a method of extending Porter's framework to incorporate the modern theory of the multinational enterprise; in particular, a variant of SWOT analysis is used to operationalize the Porter diamond. © 1993 John Wiley & Sons, Inc.