The persistence of economic sentiment: a trip down memory lane

Journal of Economic Interaction and Coordination - Although various indicators of economic sentiment are often assessed in macroeconomic studies, the generating process of economic sentiment itself...     

BARGAINING OVER TAXES AND ENTITLEMENTS IN THE ERA OF UNEQUAL GROWTH

Entitlements have become an increasing component of total government spending in the United States over the last six decades. Using a political-economy model where parties bargain over taxes and entitlements, we argue that such dynamics can be explained by two factors: “unequal growth,” where top earners became richer while the income of the bottom 50% stagnated, and budget rules that provide bargaining power to low-income earners through a “status quo effect.” In a model calibrated to the United States, we show that sustained bargaining power by a party representing the poor results in a rising share of entitlements consistent with the data.     

Should SMEs get out of the building? Examining the role of customer co-creation on radical organizational creativity*

Facing the liability of smallness, SMEs face substantial challenges in internally developing solutions to spur the generation of new ideas that challenge existing practices. In this study, we point to co-creation with customers as an external solution to boost radical organizational creativity. Relying on a sample of SMEs in the Northern Netherlands, we examine the impact of co-creation on radical organizational creativity. Following insights from organizational learning theory, we also test the moderating effect of the nature of the organizational structure and the level of organizational creativity support. We find that customer co-creation has a positive impact on SME’s radical creativity. Surprisingly, we find that organizational creativity support negatively moderates this relationship. Together these findings enrich our theoretical understanding of the drivers of radical organizational creativity. Moreover, they provide SME managers specific guidelines on how to generate radically new ideas.     

Do data policy restrictions inhibit trade in services?

Review of World Economics - This paper examines whether restrictive data policies are related to trade in services. The authors have collected comparable information on a variety of policy measures...     

Nowcasting GDP using machine-learning algorithms: A real-time assessment

Can machine-learning algorithms help central banks understand the current state of the economy? Our results say yes! We contribute to the emerging literature on forecasting macroeconomic variables using machine-learning algorithms by testing the nowcast performance of common algorithms in a full ‘real-time’ setting—that is, with real-time vintages of New Zealand GDP growth (our target variable) and real-time vintages of around 600 predictors. Our results show that machine-learning algorithms are able to significantly improve over a simple autoregressive benchmark and a dynamic factor model. We also show that machine-learning algorithms have the potential to add value to, and in one case improve on, the official forecasts of the Reserve Bank of New Zealand.     

Analyzing companies' interactions with the Sustainable Development Goals through network analysis: Four corporate sustainability imperatives

The alignment between corporate strategies and the Sustainable Development Goals (SDGs) can be an indicator of long-term sustainability success. But which types of companies are most, and which are least, aligned with the SDGs? This paper scores how 67 economic activities—as a proxy for companies' operations and the goods or services they deliver—interact with 59 SDG targets. It then uses network analysis to define which activities are most and least aligned with the SDG Agenda. The results reveal four types of corporate activities, each having a strategic sustainability imperative: (i) “core activities” predominantly generate positive, while having few negative, impacts on the SDGs, challenging companies to scale their contributions to further align with the SDG Agenda; (ii) “mixed activities” have moderate/high degrees of both negative/positive impacts, posing a decoupling imperative; (iii) “opposed activities” provide few benefits yet cause significant adverse impacts, implying that companies must transform in order to better align with the SDGs; and (iv) “peripheral activities” have immaterial positive and negative impacts, creating an imperative to explore innovative avenues for creating SDG contributions. Detailed network graphs are presented that map companies' interactions with the SDGs and guide the creation of corporate sustainability strategies. Policy implications include the potential for using companies' activities as a lever for adopting a “nexus approach” to the SDGs.     

Carbon pricing under uncertainty

International Tax and Public Finance - Economists have adopted the Pigouvian approach to climate policy, which sets the carbon price to the social cost of carbon. We adjust this carbon price for...     

Notes and debate paper: Should merchandising and sourcing be worlds apart? The opportunity for more integrated strategic sourcing research

Whereas retailers are some of the biggest buyers that have some of the highest percentages of external spend as a share of revenue, they are not typically included in strategic sourcing research. Strategic sourcing research originated with a focus on supplies for manufacturing. But the strategic sourcing of merchandise by retailers is not as commonly studied. Merchandise sourcing is often approached very differently from manufacturing sourcing and often different teams of buyers with different roles and responsibilities are involved. Leveraging author industry experience and interviews with strategic sourcing executives in manufacturing and merchandise sourcing this notes and debate paper compares strategic sourcing across these domains and identifies fruitful research opportunities for developing a more comprehensive supply chain approach to strategic sourcing research.     

Positioning Strategies for Animal-Friendly Products: A Social Dilemma Approach

Many consumers express concerns about the welfare of animals in agriculture, but often refrain from purchasing animal-friendly alternatives that address their concerns. To support consumers in making choices in line with their values and attitudes, this study approaches consumer animal-friendly product choice as a dilemma between maximizing the buyer's self-interest and maximizing societal interest. To address this social dilemma, we developed and tested positioning strategies that reinforce the animal welfare label with complementary consumption values (functional, emotional, social, and epistemic). The results from a choice experiment with Dutch chicken meat shoppers showed that two strategies—emotional and epistemic—effectively increase consumer value perceptions. These insights imply that animal-friendly products positioned to invoke emotion or curiosity drive consumers towards animal-friendly product choices, and that these strategies are most effective for consumers who base their choice solely on maximizing either self-interest or societal interest.     

Bargaining foundation for ratio equilibrium in public‐good economies

We provide a bargaining foundation for the concept of ratio equilibrium in public‐good economies. We define a bargaining game of alternating offers, in which players bargain to determine their cost shares of public‐good production and a level of public good. We study the stationary subgame perfect equilibrium (SSPE) without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every SSPE without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some SSPE without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes.