A note on solution concepts for nontransferable utility games

While many game-theoretic solution concepts pertain to conditions of transferable utility (TU), market transactions and other exchanges generally occur under nontransferable utility (NTU). Extant solutions translate TU solution concepts to the NTU case by utilizing endogenously determined utility weight vectors, which can violate notions of equity. A new solution procedure is developed that resolves this longstanding problem, and an existence proof is provided.     

A spatial dominance approach to evaluate the performance of stocks and bonds: Does the investment horizon matter?

The common advice by practitioners is to allocate a greater proportion of stocks for long-term investors than for short-term investors. However, part of the academic literature disagrees with this advice. We use a spatial dominance test which is suited for comparing alternative investments for a given time horizon. Using daily data for the US from 1962 to 2012, we test for dominance of cumulative returns series for stocks versus bonds at different investment horizons from 1 to 15 years. We find evidence that bonds second order spatially dominate stocks for horizons from 1 to 4 years. In contrast, for horizons of 6 years and longer, we find evidence that stocks dominate bonds. The conclusion that bonds dominate stocks at short horizons, while stocks dominate bonds at long horizons is consistent across different periods and international markets. When different portfolios of stocks and bonds are compared, we find that for long investment horizons only those portfolios with a sufficiently high proportion of stocks are efficient in the sense of spatial dominance.     

Mercosur: fostering regional economic integration

Emerging multinationals are a relatively new phenomena in the global trade scene. Brazilian companies involved in international business, numbering over 900, are present in a number of industries in several markets around the world. The development of Mercosur has created an environment conducive to the increasing involvement of Brazilian companies in overseas markets. This article discusses the relationship among economic integration, flows of foreign direct investment, and firm strategies in the Mercosur region, with respect to the Brazilian experience. ©1998 John Wiley & Sons, Inc.     

Book Review

Kindleberger, Charles P., The International Economic Order: Essays on Financial Crisis and International Public Goods, Cambridge, MA: MIT Press, 1988, xi + 235 pages.

Root, Franklin R., International Trade and Investment (6th ed.), Cincinnati, OH: South-Western Publishing Co., 1990, viii + 696 pages.

Krugman, Paul, Rethinking International Trade, Cambridge, MA: The MIT Press, 1990, viii + 282 pages.

Schmiegelow, Michele, and Henrik Schmiegelow, Strategic Pragmatism: Japanese Lessons in the Use of Economic Theory, New York: Praeger, 1989, 212 pages.

Lynn, Leonard H., and Timothy J. McKeown, Organizing Business: Trade Associations in America and Japan, Washington, DC: American Enterprise Institute for Public Policy Research, 1988, xviii +191 pages.

Patterson, Seymour, The Microeconomics of Trade, Kirksville, MO: Thomas Jefferson University Press, 1989, vii + 223 pages.

Whalley, John, The Uruguay Round and Beyond—Final Report from the Ford Foundation Project on Developing Countries and the Global Trading System, Ann Arbor: MI: The University of Michigan Press, 1989, xi + 211 pages.

Baumol, William J., Edward N. Wolff, and Sue Anne Batey Blackman, Productivity and American Leadership: The Long View, Cambridge, MA: The MIT Press, 1989, x + 395 pages.

Carter, Barry E., International Economic Sanctions: Improving the Haphazard U.S. Legal Regime, Cambridge, UK: Cambridge University Press, 1988, xiv + 290 pages.

Dornbusch, Rudiger, The Road to Economic Recovery: Report of the Twentieth Century Fund Task Force on International Debt, Background Paper, New York: Priority Press, 1989, vi + 123 pages.

Edwards, Sebastian, Real Exchange Rates, Devaluation and Adjustment, Cambridge, MA: The MIT Press, 1989, xi + 371 pages.     

The impact of broadband on jobs and the German economy

This study calculates the impact of investment in broadband technology on German employment and economic output. Two sequential investment scenarios are analysed: the first one reflects the government’s National Broadband Strategy that extends through 2014, and the second covers the ultra-broadband evolution from 2015 to 2020. The authors conclude that the required investment of close to 36 billion euros is justifi ed by the substantial benefi ts that would be generated in terms of both additional jobs and GDP growth.     

Endogenous credit-card acceptance in a model of precautionary demand for money

A credit-card acceptance decision by retailers is embedded intoa simple model of precautionary demand for money. The modelgives a new explanation for how the use of credit-cards candiffer so widely across countries. Retailers’ propensityto accept cards reduces the need for buyers to hold cash asthe chance of a stock-out (of cash) is reduced. When retailersmake their decision with respect to credit-card acceptance theydo not take into account the effect that decision has on othersellers. This externality generates multiple equilibria oversome portions of the parameter space.     

Interdependence between US and European military spending: a panel cointegration analysis (1988-2013)

The aim of this article is to study the interdependence of military spending between US and a panel of European countries in the period 1988–2013. The empirical estimation is based on a: (1) unit root tests and a cointegration analysis and (2) fully modified ordinary least squares and dynamic ordinary least squares estimations. General results highlight that military spending of European countries is: (1) positively associated with US military spending and (2) negatively associated with average military spending of other European countries.     

Privatization strategies: Is Brazil moving in the wrong gear?

In the 1980s, marketization strategies gained momentum around the globe. Increasingly, the visible hand was being replaced by a revival of neoliberal growth strategies. Privatization was a response to state-owned enterprise, sluggish performance, and excessive intervention in sectors not requiring assistance. In many countries the state became the problem and not the solution for further gains in competitiveness and efficiency. Privatization strategies were implemented more aggressively in Latin America in the 1980s and early 1990s. In Brazil, the largest economy in Latin America, policymakers used erratic strategies from the early 1980s through the early 1990s. This article addresses the Brazilian privatization experience, paying heed to the dynamics of the different strategies pursued throughout the privatization programs and elaborating on the specific steps taken by the Brazilian policymakers. © 1995 John Wiley & Sons, Inc.     

Fostering intra‐BRICS trade and investment: The increasing role of China in the Brazilian and South African economies

In the past two decades, Brazil, South Africa and China have designed closer economic and political ties. Since the early 2000s, China has become a key economic partner for both countries. International trade and foreign direct investment between the three nations have expanded, and closer political ties have also evolved. This article elaborates on the increasing economic interdependence between Brazil, China, and South Africa addressing challenges and opportunities for all three countries involved.