Basic analytics of multilateral lending and surveillance

I analyse the role of multilateral financial institutions in a world of global capital markets assuming that they have an informational advantage over private lenders in the market for sovereign debt. I show that the adverse selection problem in this market may be solved through certification if the multilateral agency does not care too much about borrower country welfare. However, with lending the private information of the agency will be revealed whatever its weighting of borrower welfare vs. private lenders' profits. Multilateral lending on concessional terms also alleviates the moral hazard problem — that investment in creditworthy borrowers is reduced as private lenders seek to avoid ex post default by constraining credit.     

Neue Banken- und Fiskalarchitektur für Europa: Krisen vermeiden,statt sie nur zu bewältigen

In December 2013 agreement on the second pillar of the banking union was reached. The SRM sets up restructuring guidelines for banks, including a bank-paid resolution fund, fully operational in 2025. In the article we discuss how the current design of the banking union falls short of the goal of breaking the link between governments and their banks. We explain how an insolvency code for sovereigns is central to achieving this goal and evaluate alternative mechanisms to synchronise the business cycles of member states: 1) the coordination of national stabilisation policies; 2) the introduction of a cyclical shock insurance; and 3) the enlargement of the euro area budget, of which we consider the first alternative the most promising.     

Developing a House Price Index for The Netherlands: A Practical Application of Weighted Repeat Sales

This paper describes the development of a house price index that has been introduced in May 2005 in The Netherlands. This monthly index, called Woningwaarde Index Kadaster (House Price Index Kadaster), is designed to detect changes in the price of the overall stock of owner-occupied homes. Fifty-five indices are calculated: one overall index, four regional indices, 12 provincial indices and 38 indices based on combinations of region/province and dwelling type. We used Case and Shiller’s geometric Weighted Repeat Sales Model to calculate monthly house price indices. We used recorded data on the sales of over 500,000 owner-occupied homes in The Netherlands, all representing repeat sales between January 1993 and December 2006. The accuracy of the index was determined using the 95% confidence interval. We observed that accuracy might become a problem in smaller sub samples. Revision volatility was explored by comparing the index values computed from all available data until December 2005 with the index values computed from the data available until December 2006. Our analysis showed that revision volatility does not seem to be a major problem to the index. We also explored heteroskedasticity in the Repeat Sales method but did not find conclusive evidence for the proposed heteroskedasticity. Given our target (a geometric mean index value) and the characteristics of the dataset (very large but without property characteristics) the Repeat Sales Method seems to be adequate for calculating a house price index for The Netherlands.

Leveraging External Sources of Innovation: A Review of Research on Open Innovation

This paper reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside‐in” and “coupled” modes of open innovation. From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four‐phase model in which a linear process—(1) obtaining, (2) integrating, and (3) commercializing external innovations—is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals, complemented by highly cited work beyond those journals. A review of 291 open innovation‐related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front‐loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations. Research on obtaining innovations includes searching, enabling, filtering, and acquiring—each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including “not invented here”). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as cocreation, network collaboration, and community innovation. This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on interorganizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The paper concludes with recommendations for future research that include examining the end‐to‐end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.     

Comment choosing a monetary instrument the case of supply-side shocks

In a recent paper Craine and Havenner (1981) claim that ‘an additional advantage of the linear-quadratic framework (which is not well known) is that the basic forces affecting the instrument choice decision can be analyzed without an explicit specification for price expectations since the distribution of the error terms in a linear model is independent of the predetermined variables’ (p. 219). The aim of this note is to demonstrate that Craine and Havenner's claim does not generalize to models with expectations of future variables conditioned on present information, such as Turnovsky's (1980) model.     

New development: The crisis and European local government reforms

This article highlights the main reform trajectories put in place in French, Italian, German and Portuguese local governments during the recent crisis and identifies a number of important trends: for example increasing centralization of decision-making powers away from local governments. The authors explain why local governments have an opportunity to use reforms during the crisis to strategically reposition their value proposition.     

Stochastic non-smooth envelopment of data for multi-dimensional output

The proposed method of Stochastic Non-smooth Envelopment of Data (StoNED) for measuring efficiency has to date mainly found application in the analysis of production systems which have exactly one output. Therefore, the objective of this paper is to examine the applicability of StoNED when a ray production function models a production technology with multi-dimensional input and output. In addition to a general analysis of properties required by a ray production function for StoNED to be applicable, we conduct a Monte Carlo simulation in order to evaluate the quality of the frontier and efficiencies estimated by StoNED. The results are compared with those derived via Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). We show that StoNED provides competitive estimates in regard to other methods and especially in regard to the real functional form and efficiency.     

Comparisons of Bayesian estimation procedures for two-way contingency tables without interaction

Bayesian and empirical Bayesian estimation methods are reviewed and proposed for the row and column parameters in two-way Contingency tables without interaction. Rasch's multiplicative Poisson model for misreadings is discussed in an example. The case is treated where assumptions of exchangeability are reasonable a priori for the unknown parameters. Two different types of prior distributions are compared, It appears that gamma priors yield more tractable results than lognormal priors.     

Collaborative Prototyping: Cross‐Fertilization of Knowledge in Prototype‐Driven Problem Solving

This paper presents an inductive study that shows how collaborative prototyping across functional, hierarchical, and organizational boundaries can improve the overall prototyping process. Our combined action research and case study approach provides new insights into how collaborative prototyping can provide a platform for prototype‐driven problem solving in early new product development (NPD). Our findings have important implications for how to facilitate multistakeholder collaboration in prototyping and problem solving, and more generally for how to organize collaborative and open innovation processes. Our analysis reveals two levels of prototyping. Besides the more formal managerial level, we identify the informal designer level, where the actual practice of prototyping takes place. On this level, collaborative prototyping transforms the act of prototyping from an activity belonging exclusively to the domain of design engineers to an activity integral to NPD, with participants from within the organization (different functions and managers) and from outside (consultants and users). In effect, this collapses the discrete steps in the prototyping process (at the managerial level) to an essentially continuous process of iterative problem solving (at the designer level) that is centered around the collaborative prototype, which allows participants to see their suggestions implemented and exposing them to the design constraints. The study, moreover, shows how, at various stages of the prototyping process, the actual prototype was used as a tool for communication or development, thus serving as a platform for the cross‐fertilization of knowledge. In this way, collaborative prototyping leads to a better balance between functionality and usability; it translates usability problems into design changes, and it detects emerging usability problems through active engagement and experimentation. As such, the collaborative prototype acts as a boundary object to represent, understand, and transform knowledge across functional, hierarchical, and organizational boundaries. Our study also identifies some constraints in involving the appropriate stakeholders at the right time. The paper specifically elaborates on the role of users in collaborative prototyping, which is important in order to cover all phases of the problem‐solving cycle but triggers an interesting challenge due to the “reverse empathy” that a user may develop for the design constraints—parallel to the designer empathy for the user context. Finally, our study shows that despite the continuous nature of the (designer) practice of prototyping, there are certain windows of opportunities (at the managerial level) during which the collaborative prototyping approach actually leads to changes in the product design.     

Is Oil Palm Expansion a Challenge to Agroecology? Smallholders Practising Industrial Farming in Mexico

Agroecology has become a powerful alternative paradigm for rural development. In contrast to conventional approaches, this paradigm shifts the emphasis from technology and markets to local knowledge, social justice and food sovereignty, to overcome rural poverty and environmental degradation. However, the spread of this approach faces several obstacles. This paper deals with one of these obstacles: the ‘preference’ of smallholders for industrial farming. We specifically analyse the widespread uptake up of oil palm by smallholders in Chiapas. Contrary to agro‐ecological assumptions, oil palm proved favourable to smallholders in Chiapas because of historical and contemporary state–peasant relations and the advantageous economic circumstances within the oil palm sector. Based on this research, we identify four challenges for agroecology: (i) the existence of contradictory interests within the peasantry as a result of social differentiation; (ii) the role of the state in making conventional development models relatively favourable to smallholders; (iii) the prevalence of modernization ideologies in many rural areas; and (iv) the need for this paradigm to acknowledge smallholders' agency also when engaged in industrial farming. These challenges need to be tackled for agroecology to offer viable alternatives in a context of agro‐industrialization.