WHY FREE MARKETS SHOULD NOT BE BLAMED FOR THE CURRENT RECESSION

Interventionist thinkers are now claiming intellectual victory, blaming the free‐market system and its ideology for the current economic collapse. We find this thesis untenable, drawing on the Austrian Business Cycle Theory. Instead, we argue that the roots of our present downturn lie in the monetary system, whose institutional structure is far from any free‐market ideal. Moreover, several government policies have contributed to the problems.     

From sending to host societies: immigration in Greece,Ireland and Spain in the 21st century

In a relatively short period of time, new immigration patterns have changed the geography of immigration of the EU15, bringing three old emigration countries, Ireland, Spain and Greece, to the forefront of the new immigration wave. This article studies the analogies and differences of the recent immigration experience of this group of countries, focusing on the demographic characteristics of the immigrants (origin, sex, gender and education), labour market insertion (wages, labour market segregation and quality of matching) and overall economic performance in terms of poverty rates.     

Do employment subsidies work? Evidence from regionally targeted subsidies in Turkey

This paper studies the effects on registered employment and number of registered establishments of two employment subsidy schemes in Turkey. We implement a difference-in-differences methodology to construct appropriate counterfactuals for the covered provinces. Our findings suggest that both subsidy programs did lead to significant net increases in registered jobs in eligible provinces (5%–13% for the first program and 11%–15% for the second). However, the cost of the actual job creation was high because of substantial deadweight losses, particularly for the first program (47% and 78%). Because of better design features, the second subsidy program had lower, though still significant, deadweight losses (27%–46%). Although constrained by data availability, the evidence suggests that the dominant effect of subsidies was to increase social security registration of firms and workers rather than boosting total employment and economic activity. This supports the theory that in countries with weak enforcement institutions, high labor taxes on low-wage workers may lead to substantial incentives for firms and workers to operate informally.     

The dynamics of business service exchanges: Insights from logistics outsourcing

This paper offers insights about the dynamics of business service exchanges. We draw on the interaction approach, contracting theory and the notion of qualification from economic sociology to develop an analysis frame for such dynamics. We then apply this frame to a single, longitudinal case study. Contrary to the extant service supply literature assuming that service definitions remain (or should remain) fixed throughout the purchasing process, our findings suggest that, under high uncertainty conditions, the service exchange object is (re)shaped through iterative cycles of stabilisation and destabilisation. This study also reveals a connection between service definition and relationship governance dynamics—uncertainty and opportunism risks related to service destabilisation can be managed through dynamic deployment of relational, contractual and economic mechanisms. This paper also contributes to our understanding of the contract as basis for interaction and openness and offers an extension of qualification theory to complex business-to-business (B2B) service settings.     

Supply chain relationships: Exploring the linkage between inter-organisational adaptation and learning

This paper aims to advance the process dimension of inter-organisational adaptation that takes places in supply chain relationships, building upon learning literature. Therefore, it summarizes and disentangles the different debates on inter-organisational adaptation and learning in the literature and establishes the theoretical linkage between both concepts. Two dyadic case studies show that the learning processes that underlie inter-organisational adaptations may be comprehensively classified based upon the direction of learning, resulting in “learning from” versus “learning with”, and based upon the span of learning, resulting in “incidental learning” versus “incremental learning”. The experiential nature of learning provides an explanation for the reinforcing character of inter-organisational adaptation, which is an alternative to the explanations presented in literature on supply chain relationships.     

Estimation of Asymmetric Stochastic Volatility Models: Application to Daily Average Prices of Energy Products

Energy supply and demand, and as a consequence energy prices, are likely to represent one of the biggest challenges of the 21st century. Commodity markets exhibit increased volatility when there is little or no underutilized supply capability to meet natural fluctuations in demand. In the case of energy markets, the large capital requirements and significant lead times associated with energy production and delivery make them more susceptible to the imbalances in supply capability and demand. Energy price volatility has destructive impact on market agents, and this impact is intensified when the prices exhibit asymmetric volatility. This article pursues two aspects of the issue. First we consider general aspects, especially the asymmetric pattern of volatility of daily returns of different types of energy products. Then, we analyze the behaviour of daily returns by using traditional models of volatility that include AGARCH, TGARCH, EGARCH, and ARSV strategies, as well as a threshold asymmetric autoregressive stochastic volatility (TA-ARSV) model that we propose. The energy products considered in this analysis are probably the most relevant energy products for the economic activity of the nations and the economic relations between countries: Crude Oil (OPEC reference basket and London Brent index), Gasoline, Natural Gas, Butane, and Propane. We use spot prices and the time reference ranges from 1986–1993 to 2009 depending on the product.     

A Micro‐Decomposition Analysis of Aggregate Human Development Outcomes*

We show how differences in aggregate human development outcomes over time and space can be additively decomposed into a pure mean income (growth) component, a component attributed to differences in the distribution of income, and components attributed to ‘non‐income’ factors and differences in the model linking outcomes to income and non‐income characteristics. The income effect at the micro level is modelled non‐parametrically, so as to flexibly reflect potentially complex distributional changes. Our proposed method is illustrated using data for Morocco and Vietnam, and the results offer some surprising insights into the observed aggregate gains in schooling attainments.     

Antecedents to supplier integration in the automotive industry: A multiple-case study of foreign subsidiaries in China

Supplier integration has become an important concept for improving supply chain performance. The aim of this paper is to identify factors that facilitate and inhibit supplier integration in the context of the Chinese automotive industry. An inductive approach based on grounded theory was chosen as the research methodology, where data was collected through 30 detailed case interviews with subsidiaries of foreign automotive companies operating in China. The results indicate that buyer-side leadership is an important antecedent for building motivation, trust, and commitment among suppliers and for shaping their mindsets. This, in turn, facilitates strategic alignment and enables suppliers to build collaborative capabilities, which are finally shown to be a key enabler for successful supplier integration.     

Why Sweden's pension reform was able to be successfully implemented

Governments that do not reform pay-as-you-go (PAYG) pension systems will eventually face a pension crisis. In a democracy, reforms require majority support. The problem is that pension reform requires today's generation to bear the burden to avoid burdening tomorrow's generation. Sweden recently passed pension legislation that specifies a gradual transition from a public defined-benefit plan to a defined contribution plan. Why was Sweden successful in reforming its pension system? We find that a political economy perspective helps to answer this question: there are more winners who would vote in favour of the reform than non-winners who would vote against it. When comparing the net effect (present value of expected benefits minus present value of remaining contributions) of the new and old systems, contributions of the working generation (age < 53) are reduced by more than their expected benefits.     

Codes of Best Practice in competitive markets for managers

We study the corporate governance of firms in environments where possibly heterogeneous shareholders compete for possibly heterogeneous managers. A firm, formed by a shareholder and a manager, can sign either an incentive contract or a contract including a Code of Best Practice. A Code allows for better management control, but makes it hard for managers to react quickly when market conditions change. Codes tend to be adopted in markets with low volatility and in environments where managers obtain low levels of benefits. The firms with the best projects tend to adopt a Code when managers are not too heterogeneous, while the best managers tend to be hired through incentive contracts when the projects are similar. Although the matching between shareholders and managers is often positively assortative, shareholders with the best projects might be willing to renounce hiring the best managers; instead, signing contracts including Codes with lower-ability managers.