Short note on inf-convolution preserving the Fatou property

We model agents’ preferences by cash-invariant concave functionals defined on L ^∞, and formulate the optimal risk allocation problem as their infimal-convolution. We study the case of agents whose choice functionals are law-invariant with respect to different probability measures and show how, in this case, the value function preserves a desirable dual representation (equivalent to the Fatou property). Financial support from the European Science Foundation (ESF) “Advanced Mathematical Methods for Finance” (AMaMeF) under the exchange grant 1192 is gratefully acknowledged.     

Food Stamps and Food Spending: An Engel Function Approach

Estimation of Food Stamp Program (FSP) effects has been complicated by self-selection and by a contradiction between observed spending patterns and the economic theory of consumer choice. We developed a modified version of the traditional theory, in which participant households may be partly extramarginal even if they have some cash spending on at-home food. Using Current Population Survey (CPS) data for 2001–2005, we estimated Engel functions for at-home and away-from-home food spending for FSP participants and nonparticipants. Compared to nonparticipants with the same level of total income, participants had higher at-home food spending and lower away-from-home food spending.     

Evaluating the Validity of the Dichotomous Choice Question Format in Contingent Valuation

Hypothetical and actual cash willingness to pay (WTP) for an art print were elicited with dichotomous choice and open-ended question formats. Comparing hypothetical and actual dichotomous choice responses using both a likelihood ratio test and the method of convolutions suggests we reject equality at the 0.05 but not the 0.01 level. Hypothetical WTP was roughly two times actual WTP with the dichotomous choice format. There were no significant differences between the open-ended and dichotomous choice question formats when both were used to estimate hypothetical WTP or both used to estimate actual WTP.     

Stability and bifurcations in <Emphasis Type="Italic">IS-LM</Emphasis> economic models

In this note, we analyze the local dynamics of a general non-linear fixedprice disequilibrium IS-LM model. We assume investment behavior as a general nonlinear function avoiding any Kaldor type assumption. By proving the existence of a family of periodic solutions bifurcating from a steady state, we confirm and extend some results in the literature for IS-LM models reducible to Leinard’s equation. We use bifurcation theory and study the effect of a change of the adjustment parameter in the money market upon the solutions of the model as the steady state loses stability. We establish analytically that the values of the adjustment parameter in the money market may affect the equilibrium relative to the product market and the government budget constraint. (JEL: C62, E32)     

Continuous mobile banking usage and relationship commitment – A multi-country assessment

Although conducting banking transactions via mobile phones, smart phones and tablets has become popular in many countries, major gaps exist in our understanding of those who use this technology, particularly how experienced users perceive mobile banking. Drawing from the literature on mobile banking adoption, continuous usage behavior and post-adoption of technology behavior, the authors shed light on the nature of experienced mobile banking users’ relationship commitment (RC) with their bank and personal finances. The study reveals changes in commitment and shows that mobile banking offers substantial added value to users. Overall, this research will help managers better understand the importance of mobile banking services in the light of customer RC.     

Efficiency in wine grape production: comparing long‐established and newly developed regions of South Africa

Efficiency, partly based on technology, is central to international competitiveness. This article applies a stochastic frontier inefficiency model to a panel of 77 wine grape farms in South Africa between 2005 and 2015 and allows the comparison of efficiency levels for the old established wine regions with those of newer entrants. Thus, we investigate whether experience plus first choice of location matters more than the follower's advantage of newer technology. In all regions, a greater share of permanent labor and increased supervision raised efficiency, while more inorganic fertilizer and less irrigation has the opposite effect. Innovations in trellising had insignificant effects (except in the old regions) but not replacing old vines reduced efficiency. However, a higher proportion of red varietals also lowered efficiency in the old regions due to a fall in the price of red wine as these farmers continued to concentrate on quality reds. The new regions compensated for falling prices by increasing crop size with irrigation and fertilizer and extending the area planted, but with less concern for quality. This appears to be more successful in efficiency terms, but as international demand for quality wine increases it may be a poor long‐term strategy.     

Labour Demand in the Post‐apartheid South African Wine Industry

In 2013 the minimum agricultural wage in South Africa was increased by an unprecedented 51%. We use data on 77 Western Cape Province wine grape farms from 2005–2015 to estimate the impacts on employment. Previous post‐apartheid labour market reforms increased minimum wages substantially, but re‐entry to global markets after sanctions were lifted increased demand and this preserved jobs in the wine sector. However, by 2005 this demand growth had largely ceased. The long‐run wage elasticity for permanent employees was found to be ?0.4, but for casual workers the figure was ?4.7, so the 51% wage increase is likely to decimate casual employment in the future. Thus, the poorest and most vulnerable casual workers lose most in terms of jobs, incomes and secure livelihoods, whereas 80% of full‐time staff benefit from the higher minimum wages. Thus, the minimum wage change is likely to increase the gap between privileged permanent staff and casual workers. This result is not surprising in view of the long‐standing interdependence between farmers and their permanent workers in wine grape production.