Ranking participants in tournaments by means of rating functions

In this paper we bring a novel approach to the theory of tournament rankings. We combine two different theories that are widely used to establish rankings of populations after a given tournament. First, we use the statistical approach of paired comparison analysis to define the performance of a player in a natural way. Then, we determine a ranking (and rating) of the players in the given tournament. Finally, we show, among other properties, that the new ranking method is the unique one satisfying a natural consistency requirement.     

Reconsidering social capital: a latent class approach

Social capital has proven to be a useful concept, but has not been well-measured in the economics literature. We motivate and demonstrate the application of latent class models to measure social capital, based on the idea that social capital is an unobservable multidimensional construct. We explain and show the construction of latent classes that measure an individual’s social capital using data from the General Social Survey. Our method generates meaningfully different conclusions about the accumulation of social capital than those obtained by previous research. We present evidence that higher income influences social capital accumulation because of a higher opportunity cost of time. We also find evidence of complementarities in social capital accumulation within an individual’s peer group. Finally, we show that community heterogeneity influences the likelihood that individuals adhere to certain social norms independent of their propensity to participate in voluntary organizations.     

Domestic GHG emissions and the responsibility of households in Spain: looking for regional differences

The aim of this article is to analyze the responsibilities of Spanish households, as final consumers, for the generation of domestic greenhouse gases emissions (GHG), by region of residence, distinguishing between NUTS 1 and NUTS 2 (autonomous regions). The motivation is the process of convergence experimented by Spanish regions based on the strong economic growth experienced by the country until 2008, which could results in different emissions responsibilities because of different lifestyles and production structures. We examine in depth the relationships between a representative household in each region and its patterns of consumption. Although we do find a relationship between per capita income and regional responsibility for pollution generation, it is based on a demand scale effect, which overlaps the effects of the regional consumption patterns. Thus, in the richest regions (Madrid, Northeast, East), despite their having a less polluting pattern than other regions, the level of per capita embodied emissions is higher, due to their higher level of consumption. This scale effect, and the linkages between regional responsibilities for emissions and household consumption patterns are analyzed using linear models based on Social Accounting Matrices. The basis of the estimations is the regional emission intensity (average emission per euro spent by each type of regional home).     

Determinants of Financial Distress Costs

This paper provides international evidence on financial distress costs. To achieve this aim, we have developed a model where financial distress costs are determined, on the one hand, by making use of a more accurate indicator of the probability of financial distress and, on the other, by a set of variables that, according to financial theory, explain the magnitude of the costs borne by a firm in the case of financial distress. Our results reveal the relevance of our improved indicator of the probability of financial distress, since it positively affects financial distress costs in all the countries analyzed. Furthermore, since our model controls for the probability of financial distress, we can test the trade-off between the benefits and costs of debt. This allows us to verify that the benefits debt outweigh the costs. Our results also indicate that distress costs are negatively related to liquid assets; hence, their benefits more than offset their opportunity costs.     

The Underinvestment and Overinvestment Hypotheses: an Analysis Using Panel Data

We study the relationship between firm value and investment to test the underinvestment and overinvestment hypotheses. The results obtained, using panel data methodology as the estimation method, indicate that the abovementioned relation is quadratic, which implies that there exists an optimal level of investment. As a consequence, firms that invest less than the optimal level suffer from an underinvestment problem, while those investing more than the optimum suffer from overinvestment. The quadratic relation is maintained when firms are classified depending on their investment opportunities, the optimum being in accordance with the quality of investment opportunities.     

Microeconomic adjustments in Chile during 1977–1981: The importance of being a grupo

This paper uses the financial statements of industrial firms to provide an integrated firm level view of the changes in the Chilean economy during 1977–1981. Both real side and financial shocks had major effects on the performance of some types of firms. Exportable goods producers did relatively poorly in ‘real’ activities, for reasons probably tied to Chile's real prolonged exchange rate appreciation. Import-competing firms that began the period with high protection did even worse, apparently reflecting the larger change in their output prices as protection was dismantled. The reforms thus shifted demand away from industries least in line with the country's comparative advantage, but they also hurt exportables — the very sector authorities intended to promote.On the financial side, the highly positive real cost of peso borrowing reduced industrial profits considerably. A handful of powerful conglomerates (grupos) generated large (but presumably unrealized) capital gains by investing in the securities of related enterprises. Such activities allowed them to offset relatively poor returns on real operations; and their ownership of the country's major banks allowed them to consolidate control of a large volume of assets with debt finance. These two results explain why the grupos were suddenly in considerable financial difficulty when the Chilean boom ended in 1982.     

Trade Policies and the Highly Indebted Countries

In the early 1980s, faced with a mounting debt crisis, mosthighly indebted developing countries increased trade barriersto save foreign exchange—but in the last three to fouryears, they have reversed course. Almost all of these countrieshave undergone real devaluations, and many have undertaken significantliberalizations, so much so that some (Bolivia, Costa Rica,Jamaica, Mexico, Morocco, and Uruguay) are less protectionistthan before the debt crisis. But industrial countries have imposed new nontariff barriersagainst imports from highly indebted countries. Canada, Australia,the European Community, and the United States have greatly increasedthe use of countervailing duties and antidumping actions. Thismakes it more difficult for highly indebted countries to payoff their debts, and ultimately rebounds on creditor governmentsand banks.