Shocks,Structural Change,and the Patterns of Income Diversification in Burkina Faso*

Abstract: This article investigates changes in income diversification patterns for the case of Burkina Faso between 1994 and 2003. Contrary to common beliefs, our empirical analysis shows that rural households are not increasingly diversifying their income portfolios. Beyond insuring against and coping with weather shocks, diversification behaviour reflects structural change. Higher returns to agricultural activities, in particular in the cotton and livestock sectors, appear to be the root cause for less non‐agricultural diversification and some of our findings hint at better opportunities in the non‐farm sector. Yet, average returns in the non‐farm sector appear to remain relatively low and migration increasingly turns into a desperation‐led strategy. Overall, structural change seems to be biased in favour of richer households. Regarding responses to droughts, we confirm earlier findings, especially that the poorest households are hit particularly hard, being forced to sell livestock, which is often their only asset.     

Stock exchange merger and liquidity: The case of Euronext

The paper empirically investigates the effects of the Euronext stock exchange merger on listed firms, i.e. the merger of stock exchanges in Amsterdam, Brussels, Lisbon and Paris. Specifically, it examines how exchange consolidation has affected stock liquidity and how the effect varies with firm type, i.e. what types of firms benefit the most in terms of stock liquidity and other financial outcomes. The results show asymmetric liquidity gains from the stock exchange merger, where the positive effects are concentrated among big firms and firms with foreign sales. There is not a significant increase in stock liquidity of small or medium sized firms, nor of firms that only operate domestically. Beyond the significant size and foreign exposure effects (i.e. big firms and firms with foreign sales gain), the analysis finds no systematic pattern in the distribution of merger benefits across industries or listing locations. The merger is associated with an increase in Euronext's market share, where the increase is drawn from the London Stock Exchange. There is however no evidence of Euronext enhancing its competitive stand in terms of attracting new firm listings.     

Non‐Linear Oil Price Dynamics: A Tale of Heterogeneous Speculators?

Abstract. While some of the recent surges in oil prices can be attributed to a robust global demand at a time of tight production capacities, commentators occasionally also blame the impact of speculators for part of the price pressure. We propose an empirical oil market model with heterogeneous speculators. Whereas trend-extrapolating chartists may tend to destabilize the market, fundamentalists exercise a stabilizing effect on the price dynamics. Using monthly data for West Texas Intermediate oil prices, our STR-GARCH estimates indicate that oil price cycles may indeed emerge due to the non-linear interplay between different trader types.     

Wegweiser für die „Bali-Roadmap“

Am 15. Dezember 2007 endete die UN-Klimakonferenz in Bali mit einer so genannten Roadmap, die den Fahrplan der Klimaverhandlungen bis zur n?chsten Klimakonferenz 2009 in Kopenhagen vorgibt. In welchen Politikbereichen lassen sich innerhalb dieses Fahrplans Synergien nutzen? Welche Verhandlungsstrategien führen zu den besten Ergebnissen für die globale Klimapolitik? Dr. Andreas L?schel, 36, ist Leiter des Forschungsbereichs „Umwelt- und Ressourcen?konomik, Umweltmanagement“ am Zentrum für Europ?ische Wirtschaftsforschung (ZEW) in Mannheim; Dr. Ulf Moslener, 35, Dr. Klaus Rennings, 44, und Dr. Bodo Sturm, 35, sind dort wissenschaftliche Mitarbeiter.     

DIVISION HEADQUARTERS GO ABROAD - A STEP IN THE INTERNATIONALIZATION OF THE MULTINATIONAL CORPORATION*

Why are division headquarters of multinational corporations in some cases located abroad? In the multinational corporation the physical location of division headquarters is a problematic issue because of the need for close links both to corporate headquarters and the foreign subsidiaries. This paper develops a model explaining this location as a consequence of power relations associated with the internationalization of the corporation and tests it on a sample of divisions of Swedish multinationals. the results support the view that power relations have an impact on location of division headquarters. One interesting result is the clear indication of countervailing forces, consisting of an attraction force of foreign dominant subsidiaries and a resisting force related to the interests of corporate headquarters.     

Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options

Since January 2005 the European Union has launched an EU-internal emissions trading scheme (EU ETS) for emission-intensive installations as the central pillar to comply with the Kyoto Protocol. The EU ETS will be linked to a Kyoto emissions market where greenhouse gas emission allowances of signatory Kyoto countries can be traded. In this paper we investigate the implications of Russian market power for environmental effectiveness and regional compliance costs to the Kyoto Protocol taking into account potential linkages between the Kyoto emissions market and the EU ETS. We find that Russia may have incentives to join the EU ETS as long as the latter remains relatively separated from the Kyoto international emissions market. In this case, Russia can exert monopolistic price discrimination between two separated markets thereby maximizing revenues from hot air sales. The EU will be able to substantially reduce compliance costs if it does not restrain itself to EU-internal emission regulation schemes. However, part of the gains from extra-EU emissions trading will come at the expense of environmental effectiveness as (more) hot air will be drawn in.      

Choosing and using payment instruments: evidence from German microdata

Germans are still very fond of using cash. Of all direct payments transactions in 2008, cash accounted for an astounding 82 % in terms of number and for 58 % in terms of value. With a dataset that combines transaction information with survey data on payment behaviour of German consumers, we shed light on how individuals decide on their cash usage. We employ a two-stage empirical framework which jointly explains payment card ownership and the use of cash. Our results indicate that cash usage is compatible with systematic economic decision making. Consumers decide on the adoption of payment cards and then use available payment media according to transaction characteristics, the relative costs of cash and card usage, socio-demographic characteristics and their assessment of payment instruments’ characteristics. Importantly, older consumers use significantly more cash than younger consumers. We show that this difference in payment behaviour is not attributable to age as such but largely to differences in the characteristics of older and younger consumers. This suggests that the high cash intensity of older consumers cannot fully be attributed to the role of habit or to their slow adoption to new payment technologies.     

An exploration of consumers’ experiences in physical stores: comparing consumers’ and retailers’ perspectives in past and present time

Abstract

In this paper, we explore consumers’ in-store experiences and their components, from both a consumer and retailer perspective. This is a replication of a study we performed in 2006 and thus we also examine how the role of the physical store has changed over the last decade. We use the Critical Incident Technique (CIT) to improve our understanding of consumers’ in-store experiences. Moreover, we conduct in-depth interviews with Swedish retailers to achieve an understanding of how retailers use aspects of the store environment to enhance the consumer experience. Interestingly, our results suggest that consumers’ in-store experiences to a large extent are created by the same aspects today as ten years ago (e.g. personnel, layout, atmosphere). Furthermore, while retailers today emphasize the importance of fulfilling new and more advanced consumer demands, they often still accentuate the weight and use of traditional values (e.g. personnel and layout) ahead of advanced technology.     

CSR Business as Usual? The Case of the Tobacco Industry

Tobacco companies have started to position themselves as good corporate citizens. The effort towards CSR engagement in the tobacco industry is not only heavily criticized by anti-tobacco NGOs. Some opponents such as the the World Health Organization have even categorically questioned the possibility of social responsibility in the tobacco industry. The paper will demonstrate that the deep distrust towards tobacco companies is linked to the lethal character of their products and the dubious behavior of their representatives in recent decades. As a result, tobacco companies are not in the CSR business in the strict sense. Key aspects of mainstream CSR theory and practice such as corporate philanthropy, stakeholder collaboration, CSR reporting and self-regulation, are demonstrated to be ineffective or even counterproductive in the tobacco industry. Building upon the terminology used in the leadership literature, the paper proposes to differentiate between transactional and transformational CSR arguing that tobacco companies can only operate on a transactional level. As a consequence, corporate responsibility in the tobacco industry is based upon a much thinner approach to CSR and has to be conceptualized with a focus on transactional integrity across the tobacco supply chain. Guido Palazzo is Assistant Professor for Business Ethics at the University of Lausanne (Switzerland). He graduated in Business Administration at the University of Bamberg (Germany) and earned his PhD in Political Philosophy (1999) from the University of Marburg (Germany). His research interests are in Corporate Social Responsibility, Corporate Branding, Democratic Theory, and Organizational Ethics. Ulf Richter is a doctoral student at the University of Lausanne. He is writing his thesis on Corporate Social Responsibility, conceptualizing the concept from a multidisciplinary perspective. He has studied in Germany, Peru and the US, and graduated from the European Business School, Oestrich-Winkel, majoring in International Management and Real Estate.     

Solving and Testing for Regressor-Error (in)Dependence When no Instrumental Variables are Available: With New Evidence for the Effect of Education on Income

This paper has two main contributions. Firstly, we introduce a new approach, the latent instrumental variables (LIV) method, to estimate regression coefficients consistently in a simple linear regression model where regressor-error correlations (endogeneity) are likely to be present. The LIV method utilizes a discrete latent variable model that accounts for dependencies between regressors and the error term. As a result, additional ‘valid’ observed instrumental variables are not required. Furthermore, we propose a specification test based on Hausman (1978) to test for these regressor-error correlations. A simulation study demonstrates that the LIV method yields consistent estimates and the proposed test-statistic has reasonable power over a wide range of regressor-error correlations and several distributions of the instruments. Secondly, the LIV method is used to re-visit the relationship between education and income based on previously published data. Data from three studies are re-analyzed. We examine the effect of education on income, where the variable ‘education’ is potentially endogenous due to omitted ‘ability’ or other causes. In all three applications, we find an upward bias in the OLS estimates of approximately 7%. Our conclusions agree closely with recent results obtained in studies with twins that find an upward bias in OLS of about 10% (Card, 1999). We also show that for each of the three datasets the classical IV estimates for the return to education point to biases in OLS that are not consistent in terms of size and magnitude. Our conclusion is that LIV estimates are preferable to the classical IV estimates in understanding the effects of education on income. JEL Classification: C12, C13, C21, J3, M3