An application of a new seasonal unit root test to inflation

In this paper, we apply the modified seasonal unit root test with seasonal level shifts at unknown time proposed by Popp (2007) to the G7 inflation rate. We also study the power properties of this test and generate critical values for a range of different break points and sample sizes. We find that there is a non-seasonal unit root in Canada's inflation rate, a semi-annual unit root in Germany's inflation rate, and no seasonal unit root at the annual frequency for any of the G7 countries.     

Foreign capital,return to education and child labour

The paper attempts to identify the different channels through which economic reforms can affect the incidence of child labour in a developing economy using a three-sector general equilibrium framework with child labour. We show that reduction in poverty is not a necessary condition for the problem of child labour to improve in the developing economies. Economic reforms like an inflow of foreign capital can mitigate the incidence of child labour by raising the return to education and lowering the earning opportunities of children.     

Do the diversification choices of individual investors influence stock returns?

This paper shows that the diversification choices of individual investors influence stock returns. A zero-cost portfolio that takes a long (short) position in stocks with the least (most) diversified individual investor clientele generates an annual, risk-adjusted return of 5–9%. This spread reflects the combined effects of sentiment-induced mispricing, narrow risk framing, and asymmetric information, where the sentiment effect is the strongest. Furthermore, the influence on returns is stronger among smaller, low institutionally owned, and hard-to-arbitrage stocks. These results are robust to concerns about relatively short sample size, improper factor model specification, slow information diffusion, and high transactions costs.     

Turning Around a State Owned Enterprise: The Case of Scooters India Limited

Past research on firm turnaround shows that the propensity of an organization to undertake a successful turnaround depends on a complex interaction between action choices in the organization and constraints in the business environment. This article extends this line of research by examining corporate decline and turnaround in an environment with numerous challenging environmental constraints: the state-owned sector in India. Using an in-depth case study of a state-owned enterprise in India, this research found that the business environment, the firm's decision-making process, its leadership characteristics, and the stakeholders' responses were are all found to influence the firm's action choices and turnaround process. This study also shows that in addition to the strategic and operational changes so commonly associated with firm turnaround, the importance of leadership and the basic credibility of the firm's top management with major stakeholders and government officials also play key roles in the turnaround.     

Bill-and-Keep peering

Peering arrangements between Internet Service Providers (ISPs), in which providers agree to carry traffic originating from a peer, are common in the Internet. A common contractual peering agreement between smaller ISPs is “Bill-and-Keep”, where no money changes hands between the peers. This paper first investigates a situation when ISPs who have access to a transit ISP capable of handling their traffic for a fee, decide to peer incurring some fixed peering cost. Using a simple model it is shown that Bill-and-Keep peering is the fair and efficient outcome if the transit ISP charges for both inbound and outbound traffic and transit charges as well as costs of peering are symmetric. Next, complementarity between providers at the operational level, as measured by improvement in quality of service (QoS), is analyzed using an idealized model. Assuming that each provider incurs costs, or degradation in QoS, from its traffic traversing its own as well as the peer's links and chooses the amount of traffic to send on its peers’ links in its self-interest, the Nash equilibria of the resulting one shot game and then of an infinitely repeated game are analyzed. For the one-shot game, it is established that, while it is not possible for all the providers to be worse off, it is certainly possible for all of them to be better off. An intuitive sufficient condition for each of the providers to be better off in Nash equilibrium is then derived. Further, it is shown that providers that are better off in the one-shot game can cooperate using threat strategies in an infinitely repeated game and can each be even better off. Coalition formation between peers as a dynamic process is also investigated and some examples and conjectures on some preliminary findings are provided. Finally, the policy implications of the findings are discussed.