THE PREDICTABILITY OF AGGREGATE CONSUMPTION GROWTH IN OECD COUNTRIES: A PANEL DATA ANALYSIS

We examine aggregate consumption growth predictability. We derive a dynamic consumption equation which encompasses relevant predictability factors: habit formation, intertemporal substitution, current income consumption and non‐separabilities between private consumption and both hours worked and government consumption. We estimate this equation for a panel of 15 OECD countries over the period 1972–2007, taking into account parameter heterogeneity, endogeneity and error cross‐sectional dependence using a GMM version of the common correlated effects mean group estimator. Small‐sample properties are demonstrated using Monte Carlo simulations. The estimation results support income growth as the only variable with significant predictive power for aggregate consumption growth. Copyright © 2013 John Wiley & Sons, Ltd.     

Does the ideal entrepreneurial team exist?

Up until now, studies on entrepreneurs and their relationship to business performance have focused primarily on analyzing the entrepreneur as an individual. While studies have been conducted on the entrepreneurial team, their focus has centered on team size and degree of diversity - cultural, age, gender - leaving a gap in the analysis of the effect of a team’s competencies on the outcome of the ventures. This research aims to help fill this gap by using the psychometric instrument DISC. This research analyzes entrepreneurship by opportunity, evaluating the performance of 109 Colombian companies and the composition of their entrepreneurial teams. The results obtained provide the basis for better understanding of the make-up of entrepreneurial teams, considering the variances and interdependencies of the competency development level among their members. They reveal that identifying the similarity or heterogeneity in certain groups of competencies, as well as how developed they are, can have an impact on the ventures’ success. The cluster analysis carried out suggests that highly developed competencies associated with the ‘dominance’ dimension in the members of an entrepreneurial team are essential. These must be above-average in heterogeneous levels among the team members. They must also be accompanied by the ‘steadiness’ competency provided by the team-oriented partners, as well as an average, homogeneous level of competencies associated with ‘conscientiousness’ if the new business is to achieve good financial results in its early years. The ‘influence’ dimension did not play a significant role. The teams made up of more homogeneous partners obtained the poorest financial results. Furthermore, the study provides new perspectives for measuring business performance in a venture, as well as for evaluating the relationships between the entrepreneurial team's competencies and the company’s results in the first years of business. Accordingly, it offers inputs for future research.

     

An evolutionary Cournot oligopoly model with imitators and perfect foresight best responders

We consider the competition among quantity setting players in a linear evolutionary environment. To set their outputs, players adopt, alternatively, the best response rule having perfect foresight or an imitative rule. Players are allowed to change their behavior through an evolutionary mechanism according to which the rule with better performance will attract more followers. The relevant stationary state of the model describes a scenario where players produce at the Cournot‐Nash level. Due to the presence of imitative behavior, we find that the number of players and implementation costs, needed to the best response exploitation, have an ambiguous role in determining the stability properties of the equilibrium and double stability thresholds can be observed. Differently, the role of the intensity of choice, representing the evolutionary propensity to switch to the most profitable rule, has a destabilizing role, in line with the common occurrence in evolutionary models. The global analysis of the model reveals that increasing values of the intensity of choice parameter determine increasing dynamic complexities for the internal attractor representing a population where both decision mechanisms coexist.     

“Relative Importance of Risk Sources in Insurance Systems”, Edward W. Frees,April 1998

Abstract

This paper considers a Sparre Andersen collective risk model in which the distribution of the interclaim time is that of a sum of n independent exponential random variables; thus, the Erlang(n) model is a special case. The analysis is focused on the function φ(u), the expected discounted penalty at ruin, with u being the initial surplus. The penalty may depend on the deficit at ruin and possibly also on the surplus immediately before ruin. It is shown that the function φ(u) satisfies a certain integro-differential equation and that this equation can be solved in terms of Laplace transforms, extending a result found in Lin (2003). As a consequence, a closed-form expression is obtained for the discounted joint probability density of the deficit at ruin and the surplus just before ruin, if the initial surplus is zero. For this formula and other results, the roots of Lundberg’s fundamental equation in the right half of the complex plane play a central role. Also, it is shown that φ(u) satisfies Li’s (2003) renewal equation. Under the assumption that the penalty depends only on the deficit at ruin and that the individual claim amount density is a combination of exponential densities, a closed-form expression for φ(u) is derived. In this context, known results of the Cauchy matrix are useful. Surprisingly, certain results are best expressed in terms of divided differences, a topic deleted from the actuarial examinations at the end of last century.     

International convergence in regulation: The case of measurable standards

Recent literature on competition in regulation concludes that the iterative adjustment that may start with mutual recognition is an open-ended process. This paper shows that, even without acceptance of reciprocal minimum standards, a process of iterative adjustment may be triggered by the coexistence of foreign goods with high standard levels and domestic goods with relatively low standard levels. Focusing on the case of international heterogeneity of levels of a specific standard, the paper offers an intuitive counter-argument to the fear that free trade necessarily implies a “race to the bottom“ of standard levels.     

Micro versus macro cointegration in heterogeneous panels

We consider the issue of cross-sectional aggregation in nonstationary and heterogeneous panels where each unit cointegrates. We derive asymptotic properties of the aggregate estimate, and necessary and sufficient conditions for cointegration to hold in the aggregate relationship. We then analyze the case when cointegration does not carry through the aggregation process, and we investigate whether the violation of the formal conditions for perfect aggregation can still lead to an aggregate equation that is observationally equivalent to a cointegrated relationship. We derive a measure of the degree of noncointegration of the aggregate relationship and we explore its asymptotic properties. We propose a valid bootstrap approximation of the test. A Monte Carlo exercise evaluates size and power properties of the bootstrap test.     

Fiscal policy effects, convergence, and growth

The objective of this paper is to create an economic growth model with public capital that determines when exogenous or endogenous growth appears, showing the optimal public sector dimension, and determines the convergence equation condition. An empirical analysis is also developed for several countries.     

Kriging methodology for regional economic analysis: Estimating the housing price in Albacete

Because of the socioeconomic importance of the housing subsector in the local, regional, and national economy and its implications for housing policy, this paper attempts to analyze the spatial behavior of the free housing price in the city of Albacete. To achieve this aim, the authors have used the models and estimators imported from geology called kriging. To do this, it is necessary to know the spatial dependence structure of the process, which is shown in the variogram.     

Business Ethics: Law As A Determinant of Business Conduct

The Principles of Corporate Governance require that business conduct conform to the law. In recent years, news reports of business misconduct have cast doubt on a conclusion that conformity is the prevalent practice. This article explores the influence of law on business conduct by comparing the law’s requirements and purposes with actual business conduct in the market. Specifically, it explores whether certain legal regimes are more effective than others in inducing greater commitment to legal compliance by corporate actors. The conclusion drawn is that the prevalent legal regime – a vague common law or legislative mandate – is typically associated with corporate conduct that evades or ignores the law’s mandate or its underlying purpose. Vincent Di Lorenzo is Professor of Law; Senior Fellow, Vincentian Center for Church and Society, St. John's University; J.D. Columbia University (Harlan Fiske Stone Scholar); Associate Articles Editor, Columbia Journal of Law and Social Problems. Before joining the faculty at St. John's University School of Law, Professor Di Lorenzo was a member of the faculty at The Wharton School, University of Pennsylvania, and was associated with a major Wall Street firm practicing in the real estate-banking department. He is a member of the American Bar Association and the New York State Bar Association. Professor Di Lorenzo has authored many articles and books in the banking, legislation and real estate areas.     

Does Co‐authorship Lead to Higher Academic Productivity?

In recent decades, co‐authorship and policies aimed at inducing academic collaboration have increased simultaneously. Assuming that intellectual collaboration is exogenously determined, prior studies found a negative relationship between co‐authorship and productivity. I examine a panel data on economists publishing from 1970 to 2011 to test the causal effect of intellectual collaboration on intellectual output. As characteristics of the individual and her opportunity set are endogenously related to both collaboration and productivity, I instrument the amount of co‐authorship by the common research interest between an author and her potential co‐authors. After controlling for endogenous co‐authorship formation, unobservable heterogeneity and time varying factors, the effect of intellectual collaboration on individual performance becomes positive.