Attributes of Foreign Subsidiaries and the Location Strategy of Multinational Firms in Global Cities in Latin America

International business research has recently honed in on the subnational dimension of multinational enterprises (MNEs), particularly the city level. Through a binomial logistic regression of data from 254 foreign subsidiaries of 10 Latin American global cities between 2006 and 2012, we found that specific attributes of the firm related to the industrial sector, subsidiary control, and ownership level have a positive effect on the location choice in cities. In addition, we found that in the previous period and during the international financial crisis, MNEs exploited their internalization advantages more intensely by exerting greater control over their subsidiaries in global cities.     

Extremal Dependence in International Output Growth: Tales from the Tails

This article explores the comovement of the economic activity of several OECD countries during periods of large negative and positive growth. Extremal dependence measures are here applied to assess the degree of cross‐country tail dependence of output growth rates. Our main empirical findings are: (i) cross‐country tail dependence is much stronger during periods of large negative growth, than during the ones of large positive growth; (ii) cross‐country growth is asymptotically independent; (iii) cross‐country tail dependence is considerably stronger than the one arising from a Gaussian dependence model. In addition, our results suggest that, among the typical determinants for explaining international output growth synchronization, only economic specialization similarity seems to play a role during such extreme periods.     

Bonus-Malus Scales in Segmented Tariffs With Stochastic Migration Between Segments

This article proposes a computer‐intensive methodology to build bonus‐malus scales in automobile insurance. The claim frequency model is taken from Pinquet, Guillén, and Bolancé (2001) . It accounts for overdispersion, heteroskedasticity, and dependence among repeated observations. Explanatory variables are taken into account in the determination of the relativities, yielding an integrated automobile ratemaking scheme. In that respect, it complements the study of Taylor (1997) .     

University Company Government Interaction： FAPEMIG as Propeller Agent of the Scientific-Technological Development in Minas Gerais, Brazil

This article aims to present the main indicators for Science, Technology, and Innovation （ST＆l） generated by the Fundacao de Amparo a Pesquisa do Estado de Minas Gerais （FAPEMIG） in four years （2008-2011）. The methodology used was a case study, with documentary research, held in the annual reports of activities of the foundation. The results showed that all indicators analyzed in aggregate form, evolved gradually. It is concluded that the FAPEMIG comes complying with their mission to induce and encourage research and scientific and technological innovation for the development of the State of Minas Gerais in the southeast region, maintaining the recognition as one of the main agents of development inductors ST＆I in Brazil.     

Debt dilution in 1920s America: lighting the fuse of a mortgage crisis

The idea that real estate could have contributed to banking crises during the Great Depression has been downplayed due to the conservatism of mortgage contracts at the time. For instance, loan‐to‐value ratios often did not exceed 50 per cent. Using newly discovered archival documents and data from 1934, this article uncovers a darker side of 1920s US mortgage lending: the so‐called ‘second mortgage system’. As borrowers often could not make a 50 per cent down payment, a majority of them took second mortgages at usurious rates. As theory predicts, debt dilution, even in the presence of seniority rules, can be highly detrimental to both junior and senior lenders. The probability of default on first mortgages was likely to increase, and commercial banks were more likely to foreclose. Through foreclosure they would still be able to retrieve 50 per cent of the property value, but often after a protracted foreclosure process. This would have put further strain on banks during liquidity crises. This article is thus a timely reminder that second mortgages, or ‘piggyback loans’ as they are called today, can be hazardous to lenders and borrowers alike. It provides further empirical evidence that debt dilution can be detrimental to credit.     

“Twin deficits” in Greece: in search of causality

Abstract:

The paper discusses the trajectories of the Greek public deficit and sovereign debt between 1980 and 2010 and its connection to the political and economic environment of the same period. We pay special attention to the causality between the public and the external deficits in the period after 1995, the post–Maastricht Treaty period. We argue that, due to the European monetary unification process and the adoption of the common currency, causality ran from the external deficit to the public deficit. This hypothesis is tested econometrically using both Granger causality and cointegration analyses. We find empirical support for this hypothesis.