Some Doubts about the Economic Analysis of the Flow of Silver to China in 1550–1820

Open Economies Review - The paper takes issue with the mainstream economic analysis of the enormous flow of silver into China in 1550–1820. First, I challenge the view that arbitrage between...     

Information provision in financial markets

We set up a rational expectations model in which investors trade a risky asset based on a private signal they receive about the quality of the asset, and a public signal that represents a noisy aggregation of the private signals of all investors. Our model allows us to examine what happens to market performance (market depth, price efficiency, volume of trade, and expected welfare) when regulators can induce improved information provision in one of two ways. Regulations can be designed that either provide investors with more accurate information by improving the quality of prior information, or that enhance the transparency of the market by improving the quality of the public signal. In our rational expectations equilibrium, improving the quality of the public signal can be interpreted as a way of providing information about the anticipations and trading motives of all market participants. We find that both alternatives improve market depth. However, in the limit, we show that improving the precision of prior information is a more efficient way to do so. More accurate prior information decreases asymmetric information problems and consequently reduces the informativeness of prices, while a more accurate public signal increases price informativeness. The volume of trade is independent of the quality of prior information and is increasing in the quality of the public signal. Finally, expected welfare can sometimes fall as prior information or the public signal become more precise.     

The relationship between monetary policy and economic development in modern Europe: Problems and possible solutions

The author analyzes the risks of dismantling of the European Union posed by the current monetary policy, under which the single currency of the European Union not only retarded economic growth, but also led to economic contraction and high unemployment. Analyzing the widely debated idea of federalization as a way to tackle the challenge of Euroscepticism in major European countries and estimating the net transfers that are necessary for the proper functioning of the recipient country, the author concludes that federalization can only be considered a real action provided the current policy pursued by Germany as the hegemon of the European Union is to change. In the conclusion, the article reviews the problem of monetary independence as a necessary condition for the implementation of a national industrial policy based on the experience of France.     

Native language,spoken language,translation and trade

We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguistic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) the separate role of ease of communication as distinct from ethnicity and trust, and (3) the contribution of translation and interpreters to ease of communication. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication plays a distinct role, apart from ethnicity and trust, and so far as ease of communication enters, translation and interpreters are significant. Finally, emigrants have much to do with the role of ethnicity and trust in linguistic influence.     

Human resource management in Asian subsidiaries: comparison of French and Japanese MNCs

European and Japanese multinational corporations (MNCs) have expanded their activities in Asia, usually through massive mobilization of various human resources from head offices, whether expatriated or on short-term assignments, and a reliance on diverse categories of local employees. Because expatriation is costly, difficult and often limited in its results, MNCs have developed localization strategies for management positions to support their regional development. This contribution addresses such a scenario by comparing Japanese and French MNCs in eight Asian countries, based on 53 interviews across subsidiaries of 17 MNCs. We find that Japanese MNCs have not localized management positions as much as French MNCs, but they have grown more willing to do so. To compensate for the lack of local capabilities without sending more expatriates, both French and Japanese MNCs frequently send experts on short-term assignments. Finally, though human resource practices vary widely across countries, even for a given MNC, some harmonizing principles have been introduced to regional HRM strategies recently.     

Innovation in food firms: contribution of regional networks within the international business context

This paper explores the role of regional networks in processes of innovation within an international business context. It is hypothesized that firms participating in regional networks demonstrate a stronger innovation competence. Data are drawn from a survey among food firms in the region of Meetjesland, Belgium, and reflect the relation between the firm and a number of regional characteristics. After restructuring the data through factor analysis and cluster analysis, the important role of regional networking is revealed using discriminant analysis. The analysis marks out two factors having the strongest power to discriminate between the clusters: firms are classified as having a stronger innovation competence when networking within the region, and when orienting towards the international market. Results demonstrate that internationally operating firms benefit from regional networking. Further, it is argued that regional networking is not contradictory to an international market orientation, and that firms gain innovation competence by searching for external knowledge on different geographical scales. As these networks have the potential to enhance the innovation competence of firms, support to regional networking is promoted as a policy tool.     

Contracts offered by bureaucrats

We examine the power of incentives in bureaucracies by studying contracts offered by a bureaucrat to her agent. The bureaucrat operates under a fixed budget, optimally chosen by a funding authority, and she can engage in policy drift, which we define as inversely related to her intrinsic motivation. Interaction between a fixed budget and policy drift results in low‐powered incentives. We discuss how the bureaucrat may benefit from stricter accountability as it leads to larger budgets. Low‐powered incentives remain even in an alternative centralized setting, where the funding authority contracts directly with the agent using the bureaucrat to monitor output.