Trading firms in the services sectors: comparable evidence from four EU countries

We establish a set of stylised facts for trade and trading firms in five market services sectors using comparable firm- and activity-level data from four EU countries. Our analysis shows that exports account for much lower shares of overall sales in the services sectors than in manufacturing. This is because fewer firms are engaged in trade in the services sectors and also because within particular sectors firms trade a lower share of their sales on average. Services producers trade mostly goods, but in terms of value, trade in services is much more important to them than to manufacturers. Larger and more productive firms are more likely to be two-way traders and to engage in both goods and services trade. Trade by services firms is somewhat less dominated by firms that both export and import than trade by manufacturing firms. Few firms export many services or to many countries. The value of services exports is increasing in the number of markets served but not necessarily in the number of services traded.     

Risk Aversion and International Markets: Does Asset Trade Smooth Real Income?*

In a two-country model, complete asset markets do not guarantee that individuals will choose to eliminate all (diverifiable) risk in aggregate consumption. the presence of nontraded goods forces individuals to choose between reducing uncertainty in aggregate consumption and in the composition between traded and nontraded goods. This choice depends on a comparison of the standard coefficient of relative risk aversion with a second type of risk aversion that becomes relevant when nontraded goods are present, one that captures aversion to risk in composition. Regardless of the decision made, asset trade always reduces the risk premium.     

Learning through Partnership: Private Finance and Managementin the Delivery of Services for London

This article looks at the attractiveness of the Private Finance Initiative (PFI) and Public-Private Partnerships (PPPs) to the private sector. One of the authors works for Jarvis plc—the company has been a major participant in PFI projects and, more recently, in various PPPs in London and across the UK. The article aims to identify a realistic model of the role of the private sector in PPPs. The authors use three case studies from London to recommend ways of improving the partnership element of PPPs in order to reach a 'win-win' situation, rather than the traditional adversarial approach between private and public sectors.     

Coevolution of economic and ecological systems

This paper analyzes a model of economy–environment coevolution in which economic activities induce the genetic evolution of a biological species. This model is applied to the problem of pesticide resistance management. Just as in Munro (Environ Resour Econ, 9:429–449, 1997), we consider three main types of interactions: (1) a large pest population reduces economic revenues, (2) economic activities select for resistant genes and (3) the spread of resistant genes affects the size of the pest population. The model differs from Munro in that it includes evolutionary modeling of economic strategies. Economic agents are assumed to be boundedly rational, i.e they cannot compute the optimal level of pesticide use that minimizes resistance among pests. Economic evolution represents the change in the distribution of pesticide strategies in the population of economic agents and is modeled by a replicator dynamics equation. The interactions between economic evolution of pesticide strategies, pest population dynamics and genetic evolution of resistance of pests are studied in a system of three differential equations. We explore the dynamics and stability properties of the system using numerical simulations.     

How Important Is Trade and Foreign Ownership in Closing the Technology Gap? Evidence from Estonia and Slovenia

This paper focuses on the impact that the different methods of privatization implemented in Estonia and Slovenia might have had on the pattern of technology transfer to domestic firms through either FDI or international trade. We develop an empirical model that looks at three aspects of the problem: the importance of direct and indirect effects of FDI; the role of local absorptive capacity; and the role of trade in technology transfer. The study finds that the method of privatization does influence the way a firm obtains technology from abroad: Estonia, which attracted a considerable amount of FDI through its privatization programme, used this channel to gain direct access to global markets for technology, while Slovenia discouraged sales of state enterprises to multinational firms and inclined domestic firms to use trade flows to gain access to these markets. JEL no. D24, F14     

Structure and performance in the Portuguese banking industry in the nineties

In this paper we study the structure-performance relationship in the Portuguese banking industry during the nineties. The hypothesis of pure collusion, efficient structure, modified efficient structure and hybrid collusion/efficiency are tested using a direct measure of efficiency. Our results endorse the hybrid collusion/efficiency hypothesis in the first half of the nineties. However, after 1994 results lend some support to the modified efficient structure hypothesis. Competition at the local level remains important throughout the decade, suggesting that banks in less competitive local markets exert some level of market power and exhibit superior performances.Received: November 1999, Accepted: February 2003, JEL Classification: C21, L11Correspondence to: Victor MendesThe authors wish to thank Pedro Pita Barros and two anonymous referees for helpful comments. The usual disclaimer applies. Financial support from JNICT - Junta Nacional de Investigação Científica e Tecnológica (grant PCSH/ECO/938/95) is acknowledged.     

Maturity and volatility effects on UK smiles

The smile effect is a result of an empirical observation of the options implied volatility with the same expiration date, across different exercise prices. However, its shape has been under discussion seeming to be dependent on the option underlying security. In this paper, and filling up a scarce empirical research on the topic, we used liquid equity options on 9 stocks traded on the London International Financial Futures and Options Exchange (LIFFE) between August 1990 and December 1991. We tested two different hypothesis for testing two different phenomena: (1) the increase of the smile as maturity approaches; (2) and the association between the smile and the volatility of the underlying stock. In order to estimate implied volatilities for unavailable exercise prices, we modelled the smile using cubic B-spline curves. We found empirical support for the smile intensification (the U-shape is more pronounced) as maturity approaches as well as when volatility rises. However, we found two major sources of disagreement with the literature on stochastic volatility models. First, as maturity approaches, out-of-the-money options implied volatility tends to be higher than the implied volatility of in-the-money options. Second, as the volatility of the underlying asset increases, the implied volatility of in-the-money options tends to be higher than implied volatility of out-of-the-money options.Received: September 2001, Accepted: September 2003, JEL Classification: G13Correspondence to: João L. C. DuqueWe thank Professor Dean A. Paxson (University of Manchester), António Sousa Câmara (University of Strathclyde), Ser-Huang Poon (University of Lancaster) and the attendees of the 26th EFA Annual Conference for helpful comments on previous versions of this paper. We also want to thank to two anonymous referees for their relevant comments and suggestions. Financial support granted by the Fundação para a Ciência e a Tecnologia (FCT) and the Programa Praxis XXI is gratefully acknowledged.     

Economic performance,government size,and institutional quality

This paper studies the empirical link between government size, institutions and economic activity using a panel of 140 countries over 40 years. Our results, robust under different econometric techniques, show mostly a negative effect of government size on output, while institutional quality has generally a positive impact. Moreover, the detrimental effect of government size on economic activity is stronger the lower institutional quality, and the positive effect of institutional quality on output increases with smaller government sizes.     

A learning-oriented decision-making process for real estate brokerage service evaluation

Real estate brokers or realtors are expected to possess superior knowledge of their local markets and typically require commissions in return for their services in real estate sales. To justify these commissions, it is important to evaluate brokerage service performance. We develop a learning-oriented decision-making process for evaluating real estate brokerage services, which concentrates on understanding the nature, the role, and the interaction of the evaluation aspects of real estate brokerage service quality by integrating cognitive maps and the Decision EXpert approach. Results suggest that this framework permits new rudiments to be considered in the realtor decision-making and sales process, facilitating transparency, and understanding of realtor functions that may lead to recommendations to improve the performance and quality of these functions. Avenues for future research are also presented.