Smooth breaks and non-linear mean reversion: Post-Bretton Woods real exchange rates

The recent literature on Purchasing Power Parity (PPP) has emphasized the role of two phenomena that may lead to the rejection of the PPP hypothesis: structural breaks and non-linear adjustment induced by transaction costs. These two hypotheses are analyzed separately in the literature. We develop tests for unit roots that account jointly for structural breaks and non-linear adjustment. Structural breaks are modeled by means of a Fourier function that allows for infrequent smooth temporary mean changes and is hence compatible with long-run PPP. Nonlinear adjustment is modeled by means of an ESTAR model. Our tests present good finite sample properties. The tests are applied to a set of 15 OECD countries' RERs and are able to reject the null of a unit root in 14 cases. The breaks are usually associated with the great appreciation and later depreciation of the dollar in the 1980s and the ESTAR adjustment appears to play an important role.     

Network modeling approaches for calculating wholesale NGA prices: A full comparison based on the Greek fixed broadband market

According to the European Commission Recommendation for setting copper and fiber wholesale prices where cost orientation is imposed as a remedy, National Regulatory Authorities (NRAs) should adopt a Bottom-UP Long-Run Incremental Cost Plus (BU LRIC+) costing methodology that estimates the current cost that a hypothetical efficient operator would incur to build a modern efficient Next Generation Access (NGA) network. The starting point of modeling an efficient operator investing in NGA networks is the network modeling approach. In this paper, we compare the most widely adopted network modeling approaches in terms of wholesale fiber-to-the-home (FTTH) prices. In particular, the modified scorched node approach is compared to the extreme cases of the scorched node and the scorched earth approaches. The comparison between the aforementioned scenarios sheds light on the impact of each approach on the wholesale FTTH prices. The main finding of this paper is that the scorched earth approach leads to a maximum of 10% reduction in the short-term access prices compared to the most inefficient scorched node approach, whereas further extending its optimizations by optimizing the number of central offices, both the short-term and long-term wholesale price reductions are quite significant (more than 20%) regardless of service speeds. Consequently, NRAs should consider a geographically differentiated modeling approach when regulating the wholesale market by adjusting the level of scorching in each area and network segment according to the investment plans of telecom operators. An appropriate variation of the modeled network operator's efficiency is expected to more accurately represent the costs of a reasonably efficient operator based on the real market conditions and a forward-looking perspective. These findings provide valuable information to both network operators and telecom regulators.     

Investments in next generation access infrastructures under regulatory uncertainty

This article studies the impact of regulatory uncertainty on an incumbent’s incentives to undertake the socially optimal investments in NGA networks. Thus, a regulatory non-commitment setting in which the regulator sets the access price after the deployment of the NGA network is used. In particular, it is assumed that the regulator sets the access price at the marginal cost of providing the access with some probability and gives an access markup, which equals the average cost of the investments, with the complementary probability. It is found that when the slope of the marginal investment cost function is not particularly steep in relation to the impact of investments on demand, the incumbent underinvests compared to the socially optimal investment level. On the contrary, in a more realistic case when the impact of investments on demand is low in relation to the slope of the marginal investment cost function, the incumbent may overinvest or underinvest depending on the probability of incorporating an access markup into the access price.     

Exploring the determinants of the OSS market potential: The case of the Apache web server

A theoretical framework is proposed for the better understanding of the OSS global diffusion. Following a case study approach, the Apache web server's market potential is estimated, forecasted and examined in terms of the socio-economic factors determining its diffusion, across different economic environments in developed versus developing countries. Market saturation is explored under the prism of three theoretical perspectives: the institutional, the endogenous and the exogenous growth theories. Findings suggest that Apache market saturation levels depend on both endogenous and exogenous to a country factors and that institutional quality plays an important role to the market potential. Implications for theory and public policy are discussed.     

Productivity growth and inflation in Europe: Evidence from panel cointegration tests

In this paper we investigate the productivity growth – inflation nexus in fifteen European countries over the period 1961–1999 using panel unit root and panel cointegration tests. Emphasis is placed on the distinction between long-run and short-run causality using recently developed tests appropriate for heterogeneous panel. The empirical results are relevant for the role of the EMU and the Treaty of Maastricht in catching up, real convergence, and the future growth prospects of Europe. The policy implications of the findings are discussed in detail.     

The chief executive officer as corporate champion of technological innovation: aii empirical investigation

Research on innovation has engoged the attention of many scientific disciplines over the past few decades. But while some categories of determining factors (mainly organizational and environmental) are at the centre of this research, others, such as the role and significance of strategic leadership, seem to have received much less empirical attention. Using evidence from a sample of 97 manufacturing enterprises, the present study tests a model of the impact of strategic leadership and corporate context on technological innovatin (TT). The personality and demographic characteristics of chief executive officers (CEis') are used to measure strategic leadership. A number of environmental and internal organizational variables measure the broader context. Four dimensions of TI are measured. Results suggest that CEO characteristics significantly influence TI, but the structural and environmental context is on aggregate more influential. Interestingly though, in new product introductions, CEIs' characteristics outweight environmental and internal organizational factors.     

Assessing the impact of liberalisation policies on the Greek labour market: an insider–experts' view from the perspective of the varieties of liberalisation

During the recent Great Recession (2008–2018), Greece has become the prototype example of the implementation of austerity policies in Europe. Contrary to public discourse, these austerity policies were complemented by substantial labour market reforms that promoted employment and wage flexibility. This article aims to present a theory-driven understanding of the implementation and the effects of these reforms. For this purpose, we employ a qualitative study consisting of semi-structured interviews with 50 labour market experts—government officials and labour lawyers, academics, labour union representatives and employer association representatives. Using Thelen's framework on the Varieties of Liberalization, we conclude that, contrary to the initial aims of the reforms, Greece followed a trajectory of direct deregulation, reducing considerably the level of both coordination between employers and workers, and coverage of employment protection. The interviews show that the dismantling of collective bargaining system was the most decisive move in this path.     

Empirical size and power of some diagnostic tests applied to a distributed lag model

We produce Monte Carlo evidence on the size and power of the RESET, a heteroscedasticity test, and a test for autocorrelation applied to realistic distributed-lag models. We find that the autocorrelation test has the correct size and high power to detect not only autocorrelation (given a correct model), but also the erroneous omission of several lags of an explanatory variable, whereas the RESET and heteroscedasticity tests are oversized in the presence of positive disturbance autocorrelation, especially when the regressors are also positively autocorrelated, and have no power to detect such misspecification errors. In large samples, size distortion may be avoided by using autocorrelation-robust methods.

Firm efficiency and stock returns

In this paper, we investigate the role of firm efficiency in asset pricing using a sample of US publicly listed companies for the period 1988–2007. We employ non-parametric data envelopment analysis (DEA) on various input/output combinations, focusing on sales and market value as output measures in the construction of the frontier technologies. Using these performance measures, we examine whether efficient firms perform differently from inefficient firms following standard financial analysis procedures. First, we employ performance attribution regressions, by forming portfolios based on efficiency scores and tracking the performance of the various portfolios over time. Second, we perform cross-sectional/panel regressions to determine whether firm efficiency indeed has explanatory power for the cross-section of stock returns. Our results suggest that firm efficiency plays an important role in asset pricing and that efficient firms significantly outperform inefficient firms even after controlling for known risk factors.     

Composition versus decomposition in two-stage network DEA: a reverse approach

A two-stage production process assumes that the first stage transforms external inputs to a number of intermediate measures, which then are used as inputs to the second stage that produces the final outputs. The fundamental approaches to two-stage network data envelopment analysis are the multiplicative and the additive efficiency-decomposition approaches. Both they assume a series relationship between the two stages but they differ in the definition of the overall system efficiency as well as in the way they conceptualize the decomposition of the overall efficiency to the efficiencies of the individual stages. In this paper, we first show that the efficiency estimates obtained by the additive decomposition method are biased, by unduly favouring one stage against the other, while those obtained by the multiplicative method are not unique. Then, we present a novel approach to estimate unique and unbiased efficiency scores for the individual stages, which are then composed to obtain the efficiency of the overall system, by selecting the aggregation method a posteriori. Within the particularity of two-stage processes emerging from the conflicting role of the intermediate measures, we develop an envelopment model to locate the efficient frontier whose derivation from our primal multiplier efficiency assessment model is effectively justified. The results derived from our approach are compared with those obtained by the aforementioned basic methods on experimental data as well as on test data drawn from the literature. Similarities and dissimilarities in the results are rigorously justified.