Endogenous business cycles and dynamic inefficiency

This paper explores how the occurrence of local indeterminacy and endogenous business cycles relates to dynamic inefficiency, as defined by Malinvaud (1953), Phelps (1965) and Cass (1972). We follow Reichlin (1986) and Grandmont (1993) by considering a two-period overlapping generations model of capital accumulation with labor–leisure choice into the first-period of an agent's life and consumption in both periods. We first show that local indeterminacy and Hopf bifurcation are necessarily associated with a capital–labor ratio that is, at steady state, larger than the Golden Rule level. Consequently, paths converging asymptotically towards the steady state are shown to be dynamically inefficient, as there always exists another trajectory that starts with the same initial conditions and produces more aggregate consumption at all future dates. More surprising, however, is our main result showing that stable orbits, generated around a dynamically inefficient steady state through a supercritical Hopf bifurcation, may, in contrast, be dynamically efficient.     

Impact of Agriculture on Rural Tourism: A Hedonic Pricing Approach

The increased awareness of farmers' role in the maintenance of rural landscapes may contribute to a reassessment of the place of agriculture in society. In this paper, we look at how this role, in relation to landscape, is valued by rural tourists or, in other words, whether it is a response to a societal demand, as is argued by defenders of multifunctional agriculture. The results from a hedonic pricing analysis indicate that landscape features associated with agricultural activities (such as meadows and grazing cattle) positively influence the demand for rural tourism and have a positive impact on the price tourists are willing to pay for rural accommodation. This is also illustrated by the adverse impact of perceived negative externalities from agricultural production (such as intensive maize cultivation) on this price.     

Farm-based modelling of the EU sugar reform: impact on Belgian sugar beet suppliers

A mathematical programming model, calibrated on individual farmdata, is used to analyse the reform of the common market organisation(CMO) in the sugar sector of the European Union. The model includesa precautionary farm supply function for out-of-quota sugarbeet that is estimated as part of a simultaneous system of first-orderconditions. Simulation results from a sample of Belgian sugarbeet farms show that the sugar CMO reform induces differentsupply and income effects across farms depending on their shareof out-of-quota sugar beet relative to their total beet supplyand their quota rent. A further cut in the minimum price ofsugar beet initiates structural change in the farm sector.     

Controlling monopoly power in a double-auction market experiment

There is robust evidence in the experimental economics literature showing that monopoly power is affected by trading institutions. In this paper, we study whether trading institutions themselves can shape agents' market behavior through the formation of anchors. We recreate experimentally five different double-auction market structures (perfect competition, perfect competition with quotas, cartel on price, cartel on price with quotas, and monopoly) in a within-subject design, varying the order of markets implementation. We investigate whether monopoly power endures the formation of price anchors emerged in previously implemented market structures. Results from our classroom experiments suggest that double-auction trading institutions succeed in preventing monopolists from exploiting their market power. Furthermore, the formation of price anchors in previously implemented markets negatively impacts on monopolists' power in later market structures.     

An innovative feature selection method for support vector machines and its test on the estimation of the credit risk of default

Support vector machines (SVM) have been extensively used for classification problems in many areas such as gene, text and image recognition. However, SVM have been rarely used to estimate the probability of default (PD) in credit risk. In this paper, we advocate the application of SVM, rather than the popular logistic regression (LR) method, for the estimation of both corporate and retail PD. Our results indicate that most of the time SVM outperforms LR in terms of classification accuracy for the corporate and retail segments. We propose a new wrapper feature selection based on maximizing the distance of the support vectors from the separating hyperplane and apply it to identify the main PD drivers. We used three datasets to test the PD estimation, containing (1) retail obligors from Germany, (2) corporate obligors from Eastern Europe, and (3) corporate obligors from Poland. Total assets, total liabilities, and sales are identified as frequent default drivers for the corporate datasets, whereas current account status and duration of the current account are frequent default drivers for the retail dataset.     

Elderly consumers and financial choices: A systematic review

The purpose of this paper is to investigate elderly choices and behaviors in financial services markets. A systematic review of a five-decade period (1970–2019) of academic research in the marketing field was carried out in order to identify elderly consumers’ decisions regarding financial asset management and legacy, highlighting the main findings of extant research and practical implications for marketers. Results shed light on financial asset management in terms of welfare, retirement planning, and investments for old age, as well as legacy practices in terms of special possessions, charities, and rites of passage. The study underlines the need to consider the heterogeneous nature of elderly consumers’ values and lifestyles in designing strategies for financial services and products, emphasizing that demographic differences alone are not adequate to effectively define market segments. Furthermore, the role of mixed marketing approaches considering elderly choices are discussed, together with implications for companies that want to target such consumer target.

     

What nutrition label to use in a catering environment? A discrete choice experiment

Worksite and university canteens are increasingly used for daily main meal consumption. Following the use of front-of-pack nutrition labels on pre-packed foods, the provision of easily accessible nutrition information on foods prepared and consumed out of home is a highly topical policy issue with the potential to help consumers making better informed and more healthy food choices when eating out. Information that is presented in a format preferred by the target group is more likely to be used. A sample of 1725 university canteen users participated in a web-based choice experiment designed to identify and understand individual preferences for alternative nutrition labels on canteen meals. Participants valued the presence of nutrition labels on canteen meals and showed a preference for more detailed formats. Ability and motivation to process information as well as socio-demographics explained differences in label preferences. Observed decreasing marginal utility from combinations of two simple label formats as well as from combinations of two detailed formats, signalled information insufficiency versus information overload, respectively. In order to satisfy most canteen users’ information needs, a nutrition label that contains basic Guideline Daily Amount (GDA)-type of numerical information in combination with familiar visual aids like stars and colour codes is proposed to be used in university canteens.     

Land use scenario development as a tool for watershed management within the Rio Mannu Basin

The Rio Mannu River Basin (Sardinia, Italy) is undergoing a process of agricultural intensification. Like many Mediterranean areas, this basin is characterized by water shortages and diffuse pollution from agricultural sources. Hence the objective of this study was to develop possible land use and land management scenarios that could constitute an alternative to the current watershed management. Several land use and land management scenarios were formulated and analyzed with local stakeholders, and two were selected and simulated as realistic in consideration of the socio-economical aspects of the study area. Scenario 1 involves agricultural practices that include a reduction in fertilizer use to meet the Water Framework Directive requirements for “good” status of water bodies. Scenario 2 introduces rapeseed cultivation, replacing durum wheat in a small area, to investigate the impact of biofuel plant cultivation on water quality. Each option was assessed by considering the effects on water quality, crop yields and economic benefits. The Soil and Water Assessment Tool (SWAT) model was applied to simulate hydrological processes and evaluate current and future nutrient loads. This model requires adequate streamflow data for calibration and validation. However, as is the case for many Mediterranean basins, insufficient data were available. Therefore, a methodology was developed and tested to calibrate hydrological processes based on the transposition of a parameter set from a gauged catchment located in the same region. This study suggests that a sound use of fertilizers could substantially reduce the amount of nutrients flowing into surface waters, although the effects of such a policy on crop yield and farm income would be negative in some cases. Moreover, the results clearly predict that the replacement of durum wheat with rapeseed (a biofuel crop), could offer a margin of profit, but would have a negative impact on water quality due to increased nutrient losses. Consequently, this option is unsuitable for this area. Furthermore, it can be inferred from these results that the promotion of the use of energy from renewable sources may have a negative impact on the objectives of the EU Water Framework Directive. Clearly, this process needs to be regulated, taking into account environmental and socio-economical aspects.