Fiscal Consolidations: A Theoretical Essay with a Heterogeneous-Agent Model

Since the emergence of the financial crisis, most of the EU countries have promoted impressive public interventions to support financial institutions, contributing to a significant rise in general government gross debt-to-GDP ratios. As such, the issue of how to best pursue a fiscal consolidation will become crucial regarding the fiscal policy stance. This paper aims at characterizing four different stylized debt consolidation strategies extensively identified in the literature (one pure revenue-based and three expenditure-based) in order to assess welfare affects and, in particular, the inequality effects involved. For this purpose, we built a general equilibrium heterogeneous-agent model capable of exploring the relationship between fiscal policy and the endogenous cross-section distribution of income and wealth. Moreover, we decompose the impacts on welfare criteria in order to distinguish pure efficiency effects from insurance and inequality effects. According to our simulations, the adjustment based on the reduction of unproductive expenditures came out to be the most welfare-enhancing compared to those based on tax increases or on social transfer reductions.     

The Role of Collateral in the Credit Acquisition Process: Evidence from SME Lending

This study tests the simultaneous impact of observed characteristics and private information on debt term contracts in a multi‐period setting, using a dataset of 12,666 credit approvals by one major Portuguese commercial bank during 2007–2010. The main results show that borrowers with good credit scores that know they have a high probability of success and are unlikely to default are more willing to pledge collateral in return for a lower interest rate premium (IRP). Furthermore, lenders tailor the specific terms of the contract, increasing both collateral requirements and the IRP from observed risk, for borrowers operating in riskier industries and with less credit availability. The results are robust to controls for joint debt terms negotiation and the degree of collateralization offered by the borrower.     

Is This What The Democratic City Looks Like? Local Democracy,Housing Rights and Homeownership in the Portuguese Context

This article analyses the creation of a normative framework for the democratic city during the regime change in Portugal in 1975—the answers that were given to the question, ‘What should a city be like in a democratic regime?’ While I critically discuss post‐democracy and its use of post‐foundational contributions, I review the post‐revolution Portuguese constitutional debate, contending that the call for democratization brought by urban popular organizations was answered with a political compromise that exchanged expectations of a participatory city for a commitment to a social rights city, enhanced with a promise of homeownership for urban popular segments. In light of this, in this article I question post‐democratic proposals, arguing that when this approach implicitly establishes equivalence between democracy and ‘the political’, it has difficulties in interpreting how the grammar of democracy is ‘organized’ in conflictual and contingent processes of democratic institutionalization. As an alternative, I contend that a critical debate concerning democracy and the urban must address how democratic expectations of emancipation have been translated into institutions and rights through interwoven and situated processes of politicization and depoliticization that allow both politicization of the urban and the production of consent .     

A SURVEY OF THE ECONOMICS OF FAIR TRADE

Fair Trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices, availability of credit, and improved community development and social goods. Fair Trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries. This paper provides an overview of the potential effects of Fair Trade, both theoretical and empirical, on small‐scale producers in developing countries. Our review discusses the empirical evidence on prices and income, as well as the importance of limited market access and productivity. We discuss evidence on labor markets and human capital investments as well.     

Capital requirements under the credit risk-based framework

This work aims to study the hypothesis of lower capitalization of banks under the risk-based rules introduced in Basel II. In this sense, an assessment of the impact of these rules on the capital requirements for non-financial firms’ credit risk is performed. A comparison with Basel I is presented and intervals of variation for the risk drivers such that capital requirements exceed the ones under Basel I are established. Data for a European country supports the hypothesis of a smaller capitalization of banks under the risk-based framework, as far as credit risk in concerned.     

Testing the law of one price in food markets: evidence for Colombia using disaggregated data

This article applies stationarity tests to examine evidence of market integration for a relatively large sample of food products in Colombia. We find little support for market integration when using the univariate KPSS tests for stationarity. However, within a panel context and after allowing for cross-sectional dependence, the Hadri tests provide much more evidence supporting the view that food markets are integrated or, in other words, that the law of one price holds for most products.     

How social capital and knowledge affect innovation

This research analyzes the effects of interorganizational links on radical innovation using a comprehensive framework that integrates three research streams: social capital, the knowledge-based view and innovation. Incorporating data from 143 companies of innovative manufacturing and service industries, our results show that while knowledge complexity per se exerts a clear influence on radical innovation, the effect of knowledge tacitness appears only in combination with social capital. Similarly, the mere existence of strong cooperation agreements (relational social capital) does not guarantee more radical innovations, only when combining high levels of social capital with tacit knowledge does this antecedent produce more radical innovation.     

Speed or quality? How the order of market entry influences the relationship between market orientation and new product performance

The role of market orientation as an antecedent of new product performance has been extensively documented in the literature. What is less clear, however, is how firms should make use of their market orientation under different market conditions. This study addresses this question by investigating how market orientation leads to superior new product performance for products that enter the market at different times. In particular, the study examines the moderating effect of order of market entry on the mediated relationship between market orientation and new product performance via product quality and innovation speed. Data from a sample of 244 new product development projects show that a firm's market orientation can improve the performance of first-to-market products and late entrants by facilitating the development of quality products, whereas it can improve the performance of early entrants by facilitating greater innovation speed.     

Market Orientation Adoption among Rural Tourism Enterprises: The Effect of the Location and Characteristics of the Firm

This paper highlighted the importance of market orientation as a strategy for the success of rural tourism enterprises. The purpose of the work was to identify an explanatory model for the market orientation adopted by rural tourism enterprises. The explanatory factors identified were as follows: category; information and communications technology use; and the entrepreneur's gender. It was also found that the location of the enterprise relative to its competitors may also influence market orientation adoption. A spatial econometric model was used that took into account the characteristics of the rural tourism enterprise and its physical location, in terms of their effect on market orientation adoption. Copyright © 2013 John Wiley & Sons, Ltd.