Overcrowding,a disease of social growth

Overcrowding satisfies the physician's criteria for a disease—of society, caused by the lack of a doctrine for the future. This article is a clinical examination of the disease, its symptoms, pathogenesis, diagnosis and treatment.     

Delaying retirement in Spain

We study the reform of the Spanish public pension system in a multiperiod, general equilibrium, overlapping generations model economy populated by heterogeneous households. Our households differ in their place of birth, in their age, in their education and, endogenously, in their employment status, in their wealth, and in their pension entitlements. They receive a stochastic endowment of efficiency labor units each period. And they face a disability risk and a survival risk. They understand the link between the payroll taxes that they pay and the public pensions that they receive. And they decide how much to consume and to work, and when to retire from the labor force. We calibrate this economy to Spanish data, and we use it to study the consequences of delaying three years the statutory retirement ages in 2010. We find this reform is sufficient to solve the sustainability problems that plague the current Spanish public pension system. Our model economy predicts that under the current rules, the pension system fund will run out in 2028 and in the reformed economy it will last until 2050. We also find that it is moderately expansionary, and that it improves social welfare from the year 2015 onwards. We conclude that policymakers should seriously consider delaying the statutory retirement ages in Spain sometime in the near future.     

Interpretation problems of the partial correlation with nonnormally distributed variables

The partial correlation is a commonly used measure for assessing the bivariate correlation of two quantitative variables after eliminating the influence of one or more other variables. The partial correlation is generally interpreted as the correlation that would result if the variables to be eliminated were fixed (not allowed to vary and influence the other variables), which is referred to in the statistical literature as conditional correlation. The present paper demonstrates, by means of theoretical derivations and practical examples, that when the assumption of multivariate normality is violated (e.g., as a result of nonlinear relationships among the variables investigated) the usual interpretation of the partial correlation coefficient will be basically incorrect. In extreme cases the value of the partial correlation coefficient may be strongly positive, close to 1, whereas the conditional correlation may have a large negative value. To solve this problem the paper suggests to partial out a certain function (in most cases the square) of the variables whose effects are to be eliminated if nonlinear relationships are likely to occur.     

TASTE FOR VARIETY AND OPTIMUM PRODUCT DIVERSITY IN AN OPEN ECONOMY

We extend the Benassy 'taste for variety' model to an open economy setting. With the Benassy effect, the market equilibrium is inefficient, openness reduces the varieties provided in the unconstrained optimum and there are potential gains from international coordination.     

Heterogeneous Firm‐Level Effects of Knowledge Exchanges on Product Innovation: Differences between Dynamic and Lagging Product Innovators*

Product innovation is the result of a constant interaction between the in‐house research and development (R&D) department and knowledge exchanges with the firm's environment. Knowledge exchanges come in different forms. They break down into information gathering applied in new product development, research cooperation on particular innovation projects, and managing information outflows allowing the consequent appropriation of the results of product innovation through specific methods. The way firms handle knowledge exchanges affects their performance. This paper looks at three related indicators of performance: (1) research intensity (a measure of innovative input); (2) the share of revenue realized through innovative product sales (a measure of innovative output); and (3) their impact on the growth in total revenue. The bulk of the econometric literature looking into these matters only allows general statistical statements on the behavior of an “average” firm. This paper takes on another view by using the quantile regression method to stress the heterogeneity of innovative firms in their dealing with knowledge exchange and the effect this has on their performance. A first key finding is that research intensity is positively influenced by knowledge externalities, research cooperation, and appropriability, and it is through this that these variables affect innovative revenue and also the growth in total revenue. By using quantile regression these relationships are further refined to screen for differences in behavior between dynamic and lagging innovators. This refinement indicates that, in the case of research intensity, the knowledge externalities gain in importance in the higher quantiles and are insignificant in the lower ones. Next, research cooperation remains important in all quantiles, but a higher significance is observed in the higher quantiles as well. Finally, appropriability is extremely important for the lower quantiles, but it becomes insignificant in the highest. These findings corroborate the assumptions made in the literature on open innovation: knowledge externalities and research collaboration are vital for those opening up their firm for new ideas and who are, at the same time, reluctant to protect their findings through specific appropriation measures. In the case of innovative revenue all variables on knowledge exchange operate through the research intensity irrespective of the quantile, although the impact of research intensity on this type of revenue is higher in the upper quantiles. As for the growth in revenue, the effect of the innovative revenue is, again, higher in the higher quantiles. This suggests that dynamic product innovators have the most efficient R&D process and the strongest growers are so, especially, because they are successful product innovators.     

The fed model: The bad,the worse,and the ugly

The negative relationship between stock market P/E ratios and government bond yields seems to have become conventional wisdom among practitioners. However, limited empirical evidence and a misleading suggestion that the model originated in the Fed are used to support the model's plausibility. This article argues that the Fed model is flawed from a theoretical standpoint and reports evidence from 20 countries that seriously questions its empirical merits. Despite its widespread use and acceptance, the Fed model is found to be a failure both as a normative and as a positive model of equity pricing.     

Measurement Error in Access to Markets*

Microeconometric studies increasingly utilize travel times to markets as a determinant of economic behaviour. These studies typically use self‐reported measures from surveys, often characterized by measurement error. This paper is the first validation study of access to markets data. Unique data from Peru allow comparison of self‐reported variables with scientifically calculated variables. We investigate the determinants of the deviation between imputed and self‐reported data and show that it is non‐classical and dependent on observable socio‐economic variables. Our results suggest that studies using self‐reported measures of access may be estimating biased effects.     

Relaxing the limits to growth

Intereconomics - The following contribution is essentially based on the author’s presentation to the Club of Rome’s recently held world conference on “Alternatives to...     

Corporations,Stakeholders and Sustainable Development I: A Theoretical Exploration of Business–Society Relations

Sustainable development (SD) – that is, “Development that meets the needs of current generations without compromising the ability of future generations to meet their needs and aspirations” – can be pursued in many different ways. Stakeholder relations management (SRM) is one such way, through which corporations are confronted with economic, social, and environmental stakeholder claims. This paper lays the groundwork for an empirical analysis of the question of how far SD can be achieved through SRM. It describes the so-called SD–SRM perspective as a distinctive research approach and shows how it relates to the wider body of stakeholder theory. Next, the concept of SD is operationalized for the microeconomic level with reference to important documents. Based on the ensuing SD framework, it is shown how SD and SRM relate to each other, and how the two concepts relate to other popular concepts such as Corporate Sustainability and Corporate Social Responsibility. The paper concludes that the significance of societal guiding models such as SD and of management approaches like CSR is strongly dependent on their footing in society. Reinhard Steurer is a senior researcher and lecturer at the Research Institute for Managing Sustainability at the Vienna University of Economics and Business Adminstration. His research focuses on the changing roles of states, businesses and civil societies in the context of sustainable development. He is author and co-author of numerous articles, dealing with questions of how governments and businesses tackle the challenge of sustainable development, and what the two societal domains can learn from each other in doing so. He holds a Ph.D. in Political Science from the University of Salzburg/Austria, and a Masters in Public Policy from the University of Maryland/U.S.A. Markus E. Langer studied ecology and environmental economics at the University of Vienna and the Vienna University of Economics and Business Adminstration as well as industrial environmental management at Yale University. He is currently working as Managing Director of FORUM Umweltbildung. Previously he was working since 1999 as a senior researcher and lecturer at the Research Institute for Managing Sustainability at the Vienna University of Economics and Business Adminstration. His research focused on the Evaluation of Sustainable Development as well as Corporate Social Responsibility and Stakeholder Management. Astrid Konrad studied business administration at the University of Graz. She has been working at the Research Institute for Managing Sustainability at the Vienna University of Economics and Business Adminstration since 2002. Her research focus is on Corporate Social Responsibility and Stakeholder Management. André Martinuzzi studied business adminstration at the Vienna University of Economics and Business Administration. He is working as a project manager at the Department of Environmental Economics and Management since 1993, as a lecturer at the Vienna University of Economics and Business Adminstration and leads the Managing Sustainability Research Centre since 1999. Since 2001 he worked as a scientific coordinator of Austria’s Sustainability Strategy. In 2003 he worked as a scientific editor of the Corporate Social Responsibility vision statement of the Austrian Industry and as a process consultant for the Austrian Forest Program. Research areas: Eco-Consulting, Corporate Sustainability, Evaluating Sustainable Development, Sustainability Strategies and Stakeholder Dialogues.