Were the peseta exchange rate crises forecastable during target zone period?

During the 1990s several fixed or quasi-fixed exchange rate systems collapsed. Currency crises have happened in both developed and emerging countries so it is necessary to forecast and avoid them. However, financial market crises have been extremely difficult to forecast. Economic agents' expectations are nonobservable variables that cannot be ignored in the models. In addition, if it is required to study the European case during the 1990s, the censored disposition of the exchange rate cannot be ignored either. A discrete time target zones model is proposed where these aspects are taken into account. It will be tested in a peseta/deutsche mark exchange rate framework, from June 1989 to December 1998. The results indicate differences between before and after the shift in band widths in August 1993.     

Length of time spent in Chapter 11 bankruptcy: a censored partial regression model

This paper investigates original issuers of high yield bonds in Chapter 11 bankruptcy to determine which factors affect the length of time spent in Chapter 11. In order to do this analysis a flexible new duration model is proposed, the censored partial regression model. This model allows consideration of the effect of some variables on the duration using a nonparametric functional form. It is found that the choice of prepackaged Chapter 11, the length of time negotiating before filling for Chapter 11, the profitability, the highly leveraged transactions, the participation on different disputes, the role of vulture funds and some institutional changes turn out to be relevant to analyse this duration.     

Estimating the size of the shadow economy in Spain: a structural model with latent variables

There has recently been a revival of international interest in measuring the size of the shadow economy. The current study adopts an approach to the Spanish case that is based on the theory of unobservable variables. This methodology involves the estimation of structural models (MIMIC) which analyses a set of causes of the shadow economy while simultaneously taking into account its influence upon a series of indicators. The proposed model permits the determination of a relative evolution over time of the size of the shadow economy, which requires the calibration of the model with an exogenous estimation in order to obtain real values. The exogenous estimation employed is that obtained by a monetary method based on a money demand function. The results show a considerable shadow economy, measuring between 8 and 18.8% of GDP in the period 1976–2002, and demonstrate that the shadow economy is significantly influenced by the tax burden, the degree of regulation and unit labour costs. A positive correlation is obtained between GDP, money demand and the level of the shadow economy.     

Are wages and productivity converging simultaneously in Euro-area countries?

A convergence analysis is applied to wages and productivity for Euro-area countries in the period from 1981 to 2001. The results show a reduction in the dispersion of wages and unit labour costs, but not in productivity. Different patterns are found for real and nominal wages: higher levels of inflation in countries with higher growth rates of unit labour costs have caused nominal wages to move towards equalization. Moreover, disparities in all the variables have remained more or less the same since 1997, suggesting that the establishment of a single currency area has not accelerated the process of wage equalization.     

Modelling unobserved heterogeneity in contingent valuation of health risks

Human preferences for alternative levels of health risks can be heterogeneous. In this paper a flexible distribution approach to model health values elicited with the dichotomous choice contingent valuation method is considered. Rigid parametric structures cannot model sample heterogeneity while imposing strong assumptions on the error distribution. A mixture of normal distributions is considered which can approximate arbitrary well any empirical distributions as the number of mixtures increases. The model is applied to data on willingness to pay for reducing the individual risk of an episode of respiratory illness. The mixture distribution model is compared with the rigid probit model using a Bayes factor test. The results show that the mixture modelling approach improves performance while allowing for the consideration of alternative groups of individuals with different preferences for health risks.     

External economies as a mechanism of agglomeration in EU manufacturing

Productive externalities are significant determinants of agglomeration, not deeply studied at the industry and international level. We analyse the impact on productivity growth of technological externalities, both inter- and intraindustry, national or international, at the industry level for the EU countries and the period 1995–2002. The results confirm the advisability of considering international externalities when countries are taken as regions, whose omission underestimates national spillovers. Together with national endowments and a central geographical position, the growth of productivity is encouraged by national and international specialization as a general result; moreover, it is fuelled by stronger interindustry spillovers and productive diversification, a result more evident for high technology industries, while lower technology industries are more sensitive to the omission of international externalities. Economic integration seems to be relevant, because supranational regions with less friction for goods and factor movements are more likely to take advantage of external economies as a mechanism of productivity growth and agglomeration.     

How different are the production functions of the European manufacturing sectors? New empirical evidence

The neo-classical model of international trade assumes that the Total Factor Productivity (TFP) of a sector is common across countries, that returns to scale are constant and that the sectoral production of the countries differs by virtue of the factor endowments. In this article, we consider whether the differences in production can also be explained by the economies of scale in the national industries and by the technological differences across countries. To test this hypothesis, we estimate three models proposed in Harrigan (1999 Harrigan, J. 1999. Estimation of cross-country differences in industry production functions. Journal of International Economics, 47: 267–93.  [Google Scholar]) with data for eight European Union (EU) Member States covering the period 1978 to 1992 and analyse how the TFP changes from country to country.     

Economic and conservation implications of a variable effort penalty system in effort-controlled fisheries

Bycatch of threatened, endangered or protected species by commercial fishers is a universal problem. Technical solutions are often applied that may impose inefficiencies across the fleet, even in periods or areas when the risk of bycatch is low. These may include gear specifically designed to avoid the bycatch which may also reduce the targeted catch, or designation of marine protected areas that exclude fishing from whole areas. In this article, we examine the effectiveness of a variable penalty system that can provide incentives for fishers to redirect their effort away from problem areas. The system is examined using a case study of fishery, which is currently subjected to gear and closure controls to limit bycatch of turtles and seabirds. An alternative incentive-based management policy using a series of differential hook penalties has been proposed as a flexible tool to discourage vessels operating in certain areas. The effects of various hook penalties and closures in key areas on fishing effort in those areas and elsewhere as well as vessel economic performance are assessed using a location choice model. The results suggest that incentive-based approaches may result in lower costs to industry than closures provided some level of residual bycatch is acceptable.     

Valuing the social cost of corruption using subjective well being data and the technique of vignettes

Corruption can have an effect on people's happiness and satisfaction, and therefore, can generate a social cost. However, the perceptions of corruption and satisfaction can also vary across subjects, due to socioeconomic and cultural characteristics. This article studies the differences in the perceptions of corruption and satisfaction across subjects, utilizing the technique of vignettes for the correction of the bias that follows from the differences in the response scale across individuals. The evidence comes from a sample of citizens in Spain, who are asked about their perceptions of corruption and personal satisfaction. The results show that there exists a response scale bias, both for corruption and satisfaction. These results are utilized to approximate the social cost of corruption.     

Intraday patterns and trading strategies in the Spanish stock market

Different rating and investment companies have recently pointed out Spain’s brightening growth outlook, which has energized the Spanish stock market. By anticipating greater interest in the behaviour of the Spanish stock market, we show that the best trading strategy is that in which the investor enters long or short after the opening of the New York Stock Exchange (NYSE) till the end of the trading day at 17:30. This strategy should be complemented with that of entering long or short from the opening of the trading day till the closing price before the opening of the NYSE in no-coincidence phases.