Competitiveness of the Euro Zone Manufacturing: A Panel Data Analysis

The purpose of this paper is to assess the main aspects involved in the competitiveness of manufacturing industries in the Euro zone area (EZ-12). To this end, we apply the generalized method of moments to a panel data error correction model. Our sample spans the period from 1970 to 2007, and our findings provide insight into the impact of manufacturing on the international competitiveness of European firms and industries. From the estimated magnitude of the relevant coefficients, we conclude that in the long run, a change in labor and capital compensation is not fully passed on to manufacturing growth, while an increase in the market power of the manufacturing sector will negatively affect its competitiveness.     

Illustrating the importance of Austrian business cycle theory: A reply to Murphy,Barnett, and Block; A call for quantitative study

Murphy et al. (2009) criticize Young’s (2005) test of Austrian business cycle theory (ABCT) using US industry-level quarterly job reallocation data and the federal funds rate as a monetary policy indicator. I argue that not only are Murphy et al.’s specific criticisms misguided; more importantly, they all but completely rule out the type of empirical study that Young (2005) advocates: specifically, one that (1) is quantitative and distinguishes between statistical and economic significance and (2) attempts to exploit a hypothesis that is both a prediction of ABCT and not a prediction of competing monetary theories of the cycle. I argue that empirical studies embodying (1) and (2) are critical to ABCT as a research program. Furthermore, I review the existing econometric studies of ABCT from the last 10 years and conclude that there is much room for improvement along these lines.     

The Resource Dependence, Service and Control Functions of Boards of Directors in Hong Kong and Taiwanese Firms

Since the Asian financial crisis of the late 1990's, there have been numerous calls for the reform of East Asian corporate governance. Without reform, fears abound that the crisis will return. However, a baseline understanding of corporate governance in East Asia needs to be established before reform efforts can begin. In the West, three major functions of boards are commonly recognized: resource dependence, service, and control. These functions have yet to be examined in the context of boards of directors of Overseas Chinese firms in East Asia. In this exploratory study, we examine the extent to which these functions are performed, primarily by outside board members, in Overseas Chinese firms in Hong Kong and Taiwan. We find that the service and control functions are less pronounced for East Asian boards than what would be expected in the West, while the resource dependence function is more pronounced. We also findthat the governance of the region is being moved closer to international practices by a new generation of leaders that have been exposed to Western influences and intense global competition. The implications of our findings for managers, educators, and researchers are discussed.     

FORMAL SEARCH AND REFERRALS FROM A FIRM'S PERSPECTIVE

We explore the relationship between firms' characteristics and recruitment strategies. We present a theoretical search model with two search channels: a costly formal channel and a costless informal channel (referrals). We empirically test the model predictions and find that: larger firms search more formally; firms search more formally for high-skilled workers; the positive relationship between firm's size and formal search intensity also holds for firms not using referrals; firms using referrals invest less into formal search compared to firms not using referrals; larger firms hire less often by referrals than smaller firms; and larger search effort leads to more applicants.     

A quantitative explanation of the low productivity in South–Eastern European economies: the role of misallocations

It is well known that southeast Europe is the least developed area in Europe. Using a methodology based on the idea of heterogeneous firms, this paper studies the degree to which firm heterogeneity and resource misallocation can explain the lower TFP in southeast Europe. The results show a significant degree of heterogeneity and resource misallocation, although the results are sensitive to the calibration used. There is evidence that firm-level productivity depends on firm size, while taxation negatively influences it. There is also some evidence that foreign-owned firms are more competitive, as are exporting firms. Results are generally robust across the various specifications used, but less so relative to the measure of productivity used. Additional evidence suggests that infrastructure-related obstacles as well as institutional instability drive the output distortion, while no factor is underlined as a significant driver of capital distortions, suggesting the need for better data sources for the latter.     

Dynamics of agricultural groundwater extraction: Comment and correction

In a paper published in this journal, Hellegers et al. [Hellegers, P., D. Zilberman, E. van Ierland, 2001. Dynamics of agricultural groundwater extraction. Ecological Economics, 303-311] analysed a dynamic model of groundwater extraction in which they added the quality dimension of nitrate concentration to an intertemporal model of resource depletion. This contribution shows that the set-up of the model contains a serious mistake which affects the results of the paper and it corrects the results.     

Capital liquidity and residents’ consumption decision: An asymmetry analysis of economic prosperity

Among the current literatures that discuss the influence exerted on residents’ consumption behavior by capital liquidity, some often independently decide the demarcation point of the liquidity restriction that affects residents’ consumption behavior, without taking into account when the economy is flourishing whether residents will be influenced by the restriction of the liquidity that their consumption behaviors can not be fully carried out. We introduce a threshold model which varies according to the actual GDP and other financial indicators (money supply, average stock index and balance of bank loans) to discuss residents’ consumption behavior in China under different economic states. The empirical results show that when the economy flourishes or resuscitates, residents’ income of the same period have not notable influence on their consumption, which suggests that residents’ consumption behavior does not considerably change according to the fluctuation of the current income, but conforms with the constant income-life cycle hypothesis. Moreover, two estimated values 0.7504 and 0.8597, as economic boom measures, all fall in the boom stable stage—basically consists with the early-warning index of the macro-economy boom issued by National Bureau of Statistics of China. It shows that the macro-economic boom is not notablely influenced by capital liquidity, so is residents’ consumption behavior.     

Learning by doing,spillovers and shakeouts

This paper studies industry evolution driven by non strategic learning by doing and spillovers. We characterize a dynamic process of cost and output changes and its effect on welfare and industry profits. The paper gives conditions for shakeouts to occur and analyzes the key factors affecting these conditions. Since shakeouts could lead to a long-run social loss due to higher market concentration, there is a role for a government to play in limiting unnecessary shakeouts. The most effective way to do so is to enhance spillovers.JEL Classification: L11, L13, O31Correspondence to: Michael TroegeWe would like to thank Hans Mewis, Christophe Moussu and an anonymous referee for valuable comments and suggestions. We also benefited from comments of seminar participants at WZB, Humboldt University, Northwestern University and the EEA/ESEM 1999 meetings. Part of the research was carried out while Michael Tröge was visiting Northwestern University. Financial support by the German Research Council (DFG) is gratefully acknowledged.     

Capital asset pricing model in Portugal: Evidence from fractal regressions

We examine risk profiles of the Portuguese stock market index component stocks using a novel approach to the classical capital asset pricing model (CAPM). Specifically, we estimate the CAPM via fractal regressions that allow studying the marginal effects at selected scales. In this way, we can reveal whether the risk is perceived differently by market participants with different investment horizons. Apart from the analysis itself, we provide new statistical insights into the issue of separating and comparing the scale-specific effects with statistical validity. We find several stocks deviating from an expected risk perception homogeneity across investment horizons. This is true for both analysed periods, i.e. before and after the global financial crisis. There are also several stocks that changed their relationship to the market portfolio in between, which has strong implications for possible portfolio construction. The proposed methodology is not limited to financial topics but can be used in any discipline where the scale-specific marginal effects might be of interest.     

THE SHORT‐RUN EMPLOYMENT EFFECTS OF RECENT MINIMUM WAGE CHANGES: EVIDENCE FROM THE AMERICAN COMMUNITY SURVEY

This paper presents early evidence on the employment effects of state minimum wage increases enacted between January 2013 and January 2015. As of 2015, we estimate that relatively large minimum wage increases (defined as those exceeding $1) reduced employment among low‐skilled population groups by just over 1 percentage point. Smaller minimum wage increases, as well as increases linked to inflation indexation provisions, appear to have had much smaller (and possibly positive) effects on employment over our sample period. The estimates thus raise the potential importance of nonlinearities in the minimum wage's effects, which are consistent with standard models of the labor market. (JEL H11, J08, J23)