Twin Crises in Emerging Markets: The Role of Liability Dollarization and Imperfect Competition in Banking

Currency crises in emerging markets have been accompanied by banking crises, with concentration in the market for bank credit increasing after large devaluations. This paper examines how the presence of imperfect competition and liability dollarization in banking shapes the real effects of the just mentioned twin crises. An important gap in the theoretical literature is filled, by being the first paper to provide a model of twin crises in the presence of imperfect competition in banking, and the changes in market structure that occur in the aftermath of crises. Doing so, the analysis is able to reveal that currency devaluations generate more severe twin crises in economies with less competitive banking sectors. This result is consistent with the empirical evidence on the concentration‐fragility view, and it unveils the importance of prudential regulation that focuses on the market structure in banking.     

Financial stress and sovereign debt composition

Using a panel of 13 advanced economies for the period 1980–2012, we find that periods of impaired financial intermediation mainly accrue to maturity mismatches in sovereign debt. Thus, a higher (lower) share of short-term (medium and long-term) debt leads to an increase in the financial stress index. From a policy perspective, our work suggests that debt management policies translated into longer average maturities of sovereign debt not only reduce the expected debt servicing cost, but also mitigate strains in the financial sector.     

HORIZONTAL MERGERS WITH CAPITAL ADJUSTMENT: WORKERS' COOPERATIVES AND THE MERGER PARADOX

We study the incentives towards horizontal merger among firms when the amount of capital is the strategic variable. We focus on workers' cooperatives, but our conclusions apply also to employment‐constrained profit maximizers. Within a simple oligopoly model, we prove that the horizontal merger, for any merger size, is: (i) privately efficient for insiders as well as for outsiders; (ii) socially efficient if market size is large enough, even in the case of merger to monopoly.     

Ethnographic Case Study (ECS): Abductive modeling of ethnography and improving the relevance in business marketing research

By extending interpretative methods to business settings, this paper formalizes a model of Ethnographic Case Study (ECS) built upon extensive literature review and abductive elaboration of two-year fieldwork on 12 Italian companies. Objectives and related contributions are twofold. First, key compulsory and complementary stages of ECS marketing research are presented for business contexts. Second, the paper envisions the quality of the knowledge generated through the ECS inquiry, and argues that the methodological peculiarities of this approach may help reduce the relevance gap affecting business research. The systematic cooperation between researchers and practitioners along the ECS phases may benefit relevance through (i) the fine tuning of reciprocal expectations, (ii) the sharing of the research experience, (iii) the multiplication of the beneficiaries of the findings granted by ECS, and (iv) the participation in the process of knowledge dissemination. In this light, the ECS model supports the convincement that methods are not only a way to theory validation but also to theory discovery.     

Network Externality and the Coordination Problem

We show that Rohlfss (1974) model is a special case of a spatial monopoly model á la Hotelling (1929) with uniform consumer distribution and quadratic transportation costs, where location is exogenous and the good yields no intrinsic utility. By relaxing these assumptions, we prove that the coordination problem typically thought to affect markets for network goods may not arise in general. Endogenizing location makes it easier for the monopolist to extract consumer surplus but also to cover the entire market. We also show that the main conclusions remain qualitatively unmodified if consumer distribution is triangular.revised version received September 16, 2003     

Happiness and relational goods: well-being and interpersonal relations in the economic sphere

The present paper provides an introduction to this special issue devoted to Happiness and Relational Goods. We start by presenting a few concepts that have recently appeared in the economic literature with the aim of capturing some of the peculiarities of personalised interactions. We claim that these concepts can be subsumed fairly well under the concept of ‘relational goods’. We then review the recent empirical literature on happiness and relational goods. Finally, we briefly introduce the papers contained in this special issue by outlining their respective contributions.     

The Optimal Level of Debt in an OLG Model with Endogenous Fertility

Abstract. In the present work we extend Diamond's OLG model by allowing for endogenous fertility and look at the consequences of such an extension on the rules for optimal public debt issuing. In particular, we show that the condition according to which the rate of growth of population should be higher than the interest rate is no longer sufficient for obtaining welfare improvements via debt increases and that the level of optimal debt is, ceteris paribus, lower than the one arising with exogenous fertility. Finally, a sensitivity analysis shows that the optimal level of debt is higher the lower the capital share, the higher individuals' degree of patience, the bigger the child‐rearing cost and the lower the preference for children. On policy grounds we argue that debt‐tightening policies may be optimal in the long run provided that the cost of rearing children does not increase (or, if anything, does decrease).     

The Bargaining–sales‐delegation Game

This article revisits the managerial delegation literature led by Vickers ( 1985 ), Fershtman and Judd ( 1987 ) and Sklivas ( 1987 ) by introducing a bargaining mechanism between owners and managers over managerial contracts. It shows that the degree of bargaining interacts with the extent of product differentiation in determining whether the sub‐game perfect Nash equilibrium is sales delegation or profit maximisation. In contrast with the classical result, no sales delegation emerges and the typical prisoner's dilemma of the managerial delegation literature is solved. This holds in both contexts of Cournot and Bertrand rivalries. The article also provides results for the more general cases with heterogeneous managerial bargaining power and endogenous decisions of the owners regarding the bargaining power of the manager that should be or not be hired in a firm. Copyright © 2016 John Wiley & Sons, Ltd.     

THE EFFECTS OF PENSION FUNDS ON MARKETS PERFORMANCE: A REVIEW

The worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi‐pillar pension systems and enhance pension funds. For this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades. In this paper, we provide an updated review of the empirical advances in this field of study, with particular focus on the effects that pension funds produce on labour markets, financial markets and economic growth.     

The monetary transmission mechanism: Evidence from the industries of five OECD countries

This paper studies the monetary transmission mechanism using disaggregated industry data from five industrialized countries. Our goal is to document the cross-industry heterogeneity of monetary policy effects and relate it to industry characteristics suggested by monetary transmission theories. Sizable and significant cross-industry differences in the effects of monetary policy are found. Such differences swamp the hardly detectable cross-country variability. Sectoral output responses to monetary policy shocks are systematically related to the industry output durability, financing requirements, borrowing capacity and firm size. These findings are consistent with a quantitatively non-negligible role of financial frictions in the monetary transmission.