The shadow of death model revisited with an application to French firms

This article provides an empirical model of the shadow of death in which the exit probability of a firm depends on the firm’s productive performance and the firm’s level of sunk costs, which are viewed as barriers to exit. The shadow of death effect is treated by assuming a relationship between the propensity to exit and both the contemporaneous and lagged values of efficiency and sunk costs. To estimate the unobserved productive efficiency, we use the Ackerberg et al. (2006) estimator extended by the addition of a correction for selection bias. We use an unbalanced sample of approximately 100 000 French firms over the period 1997 to 2002. Our results indicate that the probability of exit is negatively affected by unobserved individual efficiency and the level of sunk costs. The shadow of death effect applies mainly in manufacturing, where both productive efficiency and sunk costs decrease during several years before exit. In service sectors, the exit process seems to occur more suddenly.     

Estimation of a hedonic price equation for Burgundy wine

A hedonic price equation and two jury grade equations are estimated for Burgundy wine. The approach is the same as in an earlier Bordeaux wine paper (Combris et al., 1997). The data come from an experimental study that is very similar to the study on Bordeaux wines. The results for the two wine-growing regions are compared and discussed.     

Exchange rates,central bank news and the zero lower bound*

The zero lower bound (ZLB) may restrict the responsiveness of exchange rates to news. A proxy for central bank communication is added as a determinant in a model of exchange rate movements. Two reserve currencies, the British pound and euro, and two currencies of small open economies, the Canadian dollar and Swedish krona, are examined. Reserve currencies are more vulnerable to the ZLB constraint, while the currencies of small open economies become more responsive to foreign central bank announcements. Certain unconventional monetary policy announcements were found to significantly impact exchange rates at the ZLB.     

Using low frequency information for predicting high frequency variables

We analyze ways of incorporating low frequency information into models for the prediction of high frequency variables. In doing so, we consider the two existing versions of the mixed frequency VAR, with a focus on the forecasts for the high frequency variables. Furthermore, we introduce new models, namely the reverse unrestricted MIDAS (RU-MIDAS) and reverse MIDAS (R-MIDAS), which can be used for producing forecasts of high frequency variables that also incorporate low frequency information. We then conduct several empirical applications for assessing the relevance of quarterly survey data for forecasting a set of monthly macroeconomic indicators. Overall, it turns out that low frequency information is important, particularly when it has just been released.     

What are the macroeconomic effects of high‐frequency uncertainty shocks?

This paper evaluates the effects of high‐frequency uncertainty shocks on a set of low‐frequency macroeconomic variables representative of the US economy. Rather than estimating models at the same common low frequency, we use recently developed econometric models, which allow us to deal with data of different sampling frequencies. We find that credit and labor market variables react the most to uncertainty shocks in that they exhibit a prolonged negative response to such shocks. When looking at detailed investment subcategories, our estimates suggest that the most irreversible investment projects are the most affected by uncertainty shocks. We also find that the responses of macroeconomic variables to uncertainty shocks are relatively similar across single‐frequency and mixed‐frequency data models, suggesting that the temporal aggregation bias is not acute in this context.     

Use of real-world evidence in meta-analyses and cost-effectiveness models

Abstract

Real-world evidence (RWE) provides external validity, supplementing and enhancing the randomized controlled trial data with valuable information on patient behaviors and outcomes, turning efficacy and safety results into real-world effectiveness and risks, but the use of RWE is associated with challenges. The objectives of this communication were to (1) summarize all guidance on how to conduct an RWE meta-analysis (MA) and how to develop an RWE cost-effectiveness model, (2) to describe our experience, challenges faced and solutions identified, (3) to provide recommendations on how to conduct such analyses. No formal guidelines on how to conduct an RWE MA or to develop an RWE cost-effectiveness model were identified. Using the context of non-vitamin K antagonist oral anticoagulants in stroke prevention in atrial fibrillation, we conducted an RWE MA, after having identified sources of uncertainty. We then implemented the results in an RWE cost-effectiveness model, defined as a model where all inputs come from RWE, including all parameters related to treatment effect. Based on challenges faced, our first recommendation relates to the necessity of conducting sensitivity analyses, either based on clinical or methodological considerations. Our second recommendation is the need for extensive collaboration with a wide range of experts, during the development of the analyses protocols, the implementation of the analyses and the interpretation of the results. RWE may address a number of gaps related to the treatment effect, and RWE economic evaluations for the treatment effect can provide extremely valuable insights into real-world economic value of interventions. As the increased recognition of the value of RWE could influence health technology assessment decision, and current practices, this communication supports the urgent need of more formal guidelines.     

LOCAL SERVICES OF GENERAL ECONOMIC INTEREST IN EUROPE. WATER SERVICES: WHAT ARE THE CHALLENGES?

ABSTRACT: This study was conducted within the CIRIEC International Scientific Commission ‘Public Services/Public Enterprises’ project on Local services of general economic interest. Compared to other sectors, the process of Europeanization has distinct features in the water field. At EU level, water policy is rather founded on the respect of common ambitious quality standards based on public health and environmental protection norms than the creation of an ‘internal market’. Therefore, the evolution of different models of governance, organization and supply have undergone specific changes. This study focuses on local and national diversity of water services and the broad outlines of current challenges and developments. It concludes that a key challenge is to guarantee the competent public authorities’ freedom of choice of management modes.     

A study of political activism in labour courts

We analyse 1234 judicial decisions to estimate political activism amongst judges arbitrating dismissal disputes in Australian labour courts. The political colour of the appointing political party and judges’ work background affect probability of employee success by about 10% points.