Welfare Policy in the Presence of Unionised Labour and Internationally Mobile Firms*

To what extent does the welfare state exacerbate the loss of jobs due to offshoring? We consider a model with oligopolistic sectors that are exposed to offshoring, as well as a unionised labour force that is entitled to unemployment benefits. We find that deeper economic integration induces wage moderation to the point that wages become independent of workers' outside options. Because the entire incidence of redistribution falls on net wages, the unions' willingness to moderate wages is constrained by the level of redistribution. Beyond an upper limit of redistribution, extending the welfare state compels unions to oppose wage moderation at the cost of losing jobs to offshoring. Below that upper limit, however, redistribution becomes less rather than more distortive.     

Polymyxin B and colistin—the economic burden of nephrotoxicity against multidrug resistant bacteria

Background: Polymyxin B and colistin are nephrotoxic drugs used in the treatment of carbapenem-resistant Enterobacteriaceae. The aim of this study is to evaluate the burden of costs due to polymyxin associated AKI and propose a simulated break-even price for new therapies.

Methods: The pharmacoeconomic model is based on two large cross-sectional studies of polymyxin nephrotoxicity. Total direct costs in patients with and without renal failure were compared. The direct cost of each hemodialysis section (USD82.94) and daily hospital charges (USD934.85) were based on the values used in a major public hospital in the city where the clinical study was performed. The break-even price of new drugs was simulated considering eventual new drugs as effective as polymyxins, but less nephrotoxic in different percentages. Outcomes of patients after hospital discharge were not evaluated.

Results: Total direct cost of the group of patients who survived without AKI was significantly lower than total direct cost of the groups either with AKI or the group who died without AKI. There was a tendency of even higher costs in those who died with AKI and dialysis. Direct cost of hemodialysis was not as important as the longer hospitalization after sepsis. Considering daily cost of polymyxin is USD60, drugs with 50% less AKI could be considered cost-beneficial if the daily cost is lower than USD160.

Conclusions: AKI in patients with carbapenem-resistant Enterobacteriaceae treated with polymyxin increases both length of stay in hospital and total costs.     

The search for legitimacy and organizational change: The agency of subordinated actors

This article investigates the organizational changes triggered by the implementation of certified management systems (CMS) in Denmark and explores how institutionalized organizational practices change over time. The study shows that improvements in performance were not significant in the implementation of CMS, though in most cases its adoption implied organizational changes. The study also shows that the search for external legitimacy was appropriated by various internal organizational actors, other than management. When internal actors share the institutionalized beliefs and norms of the wider society, they implicitly strive to reduce decoupling. We argue that understanding the social dynamics of legitimacy in organisations requires paying attention to the agency of superordinated as well as subordinate actors.     

The effect of crises on firm exit and the moderating effect of firm size

The liability of smallness assumption suggests that smaller firms face higher exit risks. However, does it apply during crises? We show that during downturns size reduces firms’ exit risk by less; the hazard rate increases more rapidly in size.     

Endogenous Fishery Management in a Stochastic Model: Why Do Fishery Agencies Use TACs Along with Fishing Periods?

This paper seeks to explain the circumstances under which using total allowable catch (TAC) as an instrument to manage a fishery along with fishing periods may be of interest from a regulatory point of view. The deterministic analysis by Homans and Wilen (J Environ Econ Manag 32:1?C21, 1997) and Anderson (Ann Oper Res 94:231?C257, 2000) is thus extended to a stochastic scenario where the resource cannot be measured accurately. The resulting model is solved numerically to find the optimal control rules in the Iberian sardine stock. Three relevant conclusions can be highlighted from simulations: first, the greater the uncertainty regarding the state of the stock, the lower the probability of the fishery being closed before the end of the fishing period. Second, the use of TACs as a management instrument in fisheries that are already regulated by fishing periods leads to: (i) an increase in the optimal season length and harvests, especially for medium and high numbers of licences; (ii) improved biological and economic variables when the fleet is large; and (iii) extinction risk for the resource being eliminated. Third, the regulator would rather select the number of licences than restrict the season length.     

WHY ARE FERTILITY RATES AND FEMALE EMPLOYMENT RATIOS POSITIVELY CORRELATED ACROSS O.E.C.D. COUNTRIES?*

We develop a quantitative theory of fertility and labor market participation decisions in order to investigate the role of labor market frictions in generating the observed positive association between fertility and employment among O.E.C.D. countries. We find that unemployment induces females to postpone and space births, which, in turn, reduces the total fertility rate. Moreover, differences in female labor outcomes across the United States and Spain can account for the low fertility rate in Spain relative to the United States. We also find that labor market frictions can generate a positive association between female employment ratios and fertility rates across economies.     

Optimal Investment Decisions for Two Positioned Firms Competing in a Duopoly Market with Hidden Competitors

This paper extends the literature dealing with the option to invest in a duopoly market for a leader‐follower setting. A restrictive assumption embodied in the models in the current literature is that investment opportunities are semi‐proprietary in that the two identified or positioned firms are guaranteed to hold at least the follower's position. More competition is realistically captured in our model by introducing the concept of hidden rivals so that the places in the market can be taken not only by positioned firm but also by these hidden competitors. The value functions and the optimal triggers for the positioned firms differ materially in settings with(out) the presence of hidden rivals. Unlike existing models, our model allows for (a)symmetric market shares and investment costs for the leader and the follower. Cooperative entrance by the two positioned firms is also modelled.     

Dutch disease revisited. Oil discoveries and movements of the real exchange rate when manufacturing is resource-intensive

We study how natural resource booms affect the real exchange rate in a situation where there are input–output linkages between the manufacturing sector and the natural resource sector. An increase in revenues from natural resources could de-industrialize an economy by raising the real exchange rate, rendering the manufacturing sector less competitive. This tendency towards de-industrialization has been called “Dutch disease”. We build a theoretical model showing that a country experiencing discoveries of natural resources, such as oil, is not necessarily bound to experience the Dutch disease. The appreciation of the real exchange rate can be escaped if patterns of specialization shift towards the manufacturing industries that use oil more intensively. In the second part of the paper, we test the model and find support for the claim that Dutch disease effect associated with discoveries of natural resources (namely oil) are dampened in countries that specialize in resource-intensive manufacturing industries.     

Determinants shaping the international currency system: Where do currencies stand relative to their equilibria?

Using a sample of 27 currencies, we empirically test the role of a large set of determinants potentially underlying currencies' share in the international currency system, providing, to the best of our knowledge, the most comprehensive study of this kind so far. We propose a new global indicator that quantifies the international use of currencies on the basis of three dimensions—medium of exchange, unit of account and store of value. From a range of indicators including openness, financial development and institutional development indicators, we uncover several variables that are significant in explaining the international status of currencies, hence contributing to understanding the role of the determinants shaping the international currency system. We also investigate the long-run equilibrium values for currency shares, allowing us to score currencies on the basis of the potential stemming from the determinants. We contribute to the debate on international currencies' prospects, not only by looking at much discussed currencies such as the US dollar, the euro and the Chinese renminbi, but also by uncovering potential of emerging currencies. This knowledge is of the utmost importance for the debate on the reform of the international monetary system—from the point of view of academics, policymakers and market practitioners.     

Determinants of the real exchange rate in the long-run for developing and emerging countries: a theoretical and empirical approach

This paper presents a new framework for the determinants of real exchange in the long-run in developing and emerging countries (DECs). We assume that currencies should be regarded as an asset. In consequence, dealers in the foreign exchange market play a crucial role on its dynamics. To set our model, we connect the model developed by Kaltenbrunner, which is grounded on chapter 17 of the General Theory, with productivity’s differential effect. By doing so, it states that even short-run factors and monetary variables affect the long-run real exchange rate. Moreover, it points out that the hierarchical nature of the international monetary system is crucial to understand exchange rate movements in DECs. Besides presenting such theoretical approach, our contribution is to test it empirically for 45 DECs from 1990 to 2008 by applying econometric techniques appropriate for panel data. We use a new data-set, which comprises, among other variables, foreign portfolio flow, interest rate differential, external vulnerability measures, and international liquidity, on annual basis. The empirical results endorse this framework. Overall, it shows the primacy of financial factors as determinants of the long-run real exchange rate and points to the endogenous and self-perpetuating nature of international monetary system hierarchy.