Political objectives and privatization decisions

In early Romanian privatization a group of firms was explicitly banned from privatization. We use this institutional feature to test which factors contributed to the selection of firms for long‐term state ownership, and find that politicians sheltered from privatization large and inefficient firms which paid low wages and had high overdue payments. These results are consistent with minimization of employment losses, even if efficiency enhancement of privatization had to be sacrificed. We conjecture that the unfavourable economic conditions bringing large employment losses motivated Romanian politicians to fear the possible negative employment effects of privatization.     

Beta-convergence and sigma-convergence in corporate governance in Europe

This paper tests for beta-convergence and sigma-convergence in the corporate governance models, using a sample of corporate governance ratings for 198 European corporations listed on the FTSE Eurofirst 300 index. A piecewise linear regression is deployed to select a model and the Poisson pseudo-maximum likelihood estimator is also applied to estimate an exponential model. It concludes that there is statistical evidence of beta- and sigma-convergence within countries and the results suggest that institutional differences between countries are statistically relevant.     

Mortality transition and differential incentives for early retirement

Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual?s expected lifetime human wealth.     

Patents,R&;D and lag effects: evidence from flexible methods for count panel data on manufacturing firms

This paper investigates the relationship between patents and research and development expenditures using new longitudinal patent data at the firm level for the U.S. manufacturing sector from 1982 to 1992. The paper also develops a new class of count panel data models based on series expansion of the distribution of individual effects. Estimation results from various distributed lag and dynamic multiplicative panel count data models show that the contemporaneous relationship between patenting and R&D expenditures continues to be strong, accounting for over 60% of the total R&D elasticity. The lag effects are higher than have previously been found for the 1970s data. We would like to thank Chris Bollinger, Bronwyn Hall and Paula Stephan for useful comments on the previous version of the paper. Earlier versions were presented at the 11th International Conference on Panel Data, Texas A&M University, the Midwest Econometrics Group Meeting, and the Annual Conference of the Southern Economic Association.     

The Value of Transferable Skills

Most studies on skill transferability focus on the return to capabilities developed in the initial job and disregard the different characteristics of the origin and the destination industries. In contrast, this article assesses the borders of skill transferability by comparing the return to skills for firm stayers, firm changers in the same industry, and firm changers to other industries. Based on a sample of Portuguese employees in retail banking, our results confirm significant inter‐firm and inter‐industry skill transferability. Difference‐in‐differences estimates with propensity score matching show that firm switchers benefit from a wage premium compared to firm stayers. However, the wage premium drops sharply when movers leave the banking sector.     

Informality and mobility

Informality is a defining characteristic of labour markets in developing and transition countries. This paper analyzes patterns of mobility across different forms of formal and informal employment in Russia. Using the Russian Longitudinal Monitoring Survey household panel we estimate a dynamic multinomial logit model with individual heterogeneity and correct for the initial conditions problem. Simulations show that structural state dependence is weak and that transition rates from informal to formal employment are not lower than from non-employment. These results lend support to the integrated view of the labour market.     

On the dynamics of inflation persistence around the world

We study the dynamics of inflation persistence in 45 countries for the period 1960–2008 using a recently developed test for multiple changes in persistence, which decomposes the sample information between adjacent I (0) and I (1) periods. We find that: (i) inflation persistence and average inflation tend to fall and rise at the same time; (ii) in some countries there are changes in the level of inflation which do not seem to be related to changes in inflation persistence; (iii) around half of the countries analyzed do not present any burst of I (1) behavior, and hence have stationary inflation throughout; (iv) for the other half, we detect switches of the type I (0) ? I (1) ? I (0), hence, inflation persistence, when it has occurred, has been temporal; and, (v) for about half of the countries in which inflation has presented I (1) behavior, persistent inflation lasted more than a decade. In addition, we find that in the last 50 years there have been mainly two episodes where long bursts of I (1) inflation took place simultaneously among groups of countries. In general, the “Great Inflation” occurred during the seventies and eighties in advanced economies, whereas it occurred during the eighties and nineties in emerging economies, particularly in Latin America.     

Shifts in Portfolio Preferences of International Investors: An Application to Sovereign Wealth Funds

We develop a dynamic general equilibrium model to analyze the macroeconomic effects of a shift in portfolio preferences of foreign investors. The model has two countries and two asset classes (equities and bonds). It is characterized by imperfect substitutability between assets and allows for endogenous adjustment in interest rates and asset prices. To illustrate the mechanics of the model, we calibrate it to analyze a transfer of reserves from central banks to sovereign wealth funds (SWFs). We look separately at two diversification paths: a shift away from dollar assets (path 1), and a shift away from US bonds to US equities (path 2). In path 1, the dollar depreciates and US net debt falls on impact and increases in the long run. In path 2, the dollar depreciates and US net debt increases in the long run.     

Abstraction and product categories as explanatory variables for food consumption

This study sets out to explore variation in the consumer choice structure in relation to three types of products with different levels of search, experience and credence attributes. The decision structures of rice, wine and functional food (experience, search and credence products) consumers were explored by means of laddering. The results suggest the presence of an emotional component in foods that increases in complexity (becomes more abstract) with the number of credence attributes. The findings recommend adjusting the complexity of advertising campaigns and product positioning to the type of product being promoted.     

Ugo Broggi: a precursor in mathematical economics

The concern for the existence of solution to the Walras - Cassel model is usually dated at the beginning of the 1930s, and one decade later the proof of existence of utility function. Ugo Broggi, however, posed both issues in 1923 and 1919, respectively, and even hinted at modern ways of solving them. He was an outstanding mathematician, a former disciple of David Hilbert and collaborator with the Giornale degli Economisti. Broggi's achievements are also linked to a critical reading of Osorio's treatise on Paretian economics.