Transition and Long-Term Growth: Conventional Versus Non-Conventional Determinants

MOCT-MOST: Economic Policy in Transitional Economies -     

Social interactions,product differentiation and discontinuity of demand

We propose a discrete choice model of socially interacting consumers choosing between two product variants. The model shows that the discontinuity of demand as well as the demand polarization proposed by Becker (1991), A Note on Restaurant Pricing and Other Examples of Social Influences on Price, depend crucially on the heterogeneity of consumers’ preferences and on the level of product differentiation. When the two products are sufficiently similar, it turns out that the market is shared asymmetrically as suggested by Becker (1991). By contrast, when the products are different and the preferences of the consumers are sufficiently heterogeneous, the market is shared symmetrically as in Hotelling’s (1929) model.     

Political and Legal Factors of Economic Growth in Russian Regions

The authors propose some new approaches in order to evaluate formally regional specifics of political and legal culture and institutes' impact on the dynamics of economic development of the regions and on the regions' investment climate. They demonstrate using a model that the influence of institutional factors, including some indicators for the basic individual rights maintenance in the regions, on economic growth is significant.     

Patient care,satisfaction and service quality in health care

It is becoming increasingly important in the healthcare setting to treat patients as consumers and measure their satisfaction with medical services rendered. As such, patient satisfaction should be considered an important output of a country's healthcare system, basically reflecting the stage of its development. The conducted study tested students’ satisfaction with the quality of service provided by student polyclinics. In particular, the study has analysed the impacts of personal relationships, promptness and tangibility on student satisfaction. The findings imply that all three factors significantly affect patient satisfaction, with personal relationships having the strongest impact. Such results suggest that healthcare providers should encourage their doctors to devote more time to their patients and show genuine concern for patients’ problems if they wish to improve overall satisfaction of their patients with the delivered services.     

Taylor principle and inflation stability in emerging market countries

The goal of this paper is to evaluate the validity of the Taylor principle for inflation control in 12 developing countries that use inflation targeting regimes: Brazil, Chile, Colombia, Hungary, Israel, Mexico, Peru, Philippines, Poland, South Africa, Thailand and Turkey. The test is based on a state-space model to determine when each country has followed the principle; then a threshold unit root test is used to verify if the stationarity of the deviation of the expected inflation from its target depends on compliance with the Taylor principle. The results show that such compliance leads to the stationarity of the deviation of the expected inflation from its target in all cases. Furthermore, in most cases, non-compliance with the Taylor principle leads to nonstationary deviation of the expected inflation.     

GHICA — Risk analysis with GH distributions and independent components

Over recent years, a study on risk management has been prompted by the Basel committee for regular banking supervisory. There are however limitations of some widely-used risk management methods that either calculate risk measures under the Gaussian distributional assumption or involve numerical difficulty. The primary aim of this paper is to present a realistic and fast method, GHICA, which overcomes the limitations in multivariate risk analysis. The idea is to first retrieve independent components (ICs) out of the observed high-dimensional time series and then individually and adaptively fit the resulting ICs in the generalized hyperbolic (GH) distributional framework. For the volatility estimation of each IC, the local exponential smoothing technique is used to achieve the best possible accuracy of estimation. Finally, the fast Fourier transformation technique is used to approximate the density of the portfolio returns.The proposed GHICA method is applicable to covariance estimation as well. It is compared with the dynamic conditional correlation (DCC) method based on the simulated data with d = 50 GH distributed components. We further implement the GHICA method to calculate risk measures given 20-dimensional German DAX portfolios and a dynamic exchange rate portfolio. Several alternative methods are considered as well to compare the accuracy of calculation with the GHICA one.     

Market undervaluation of risky convertible offerings: Evidence from the airline industry

We assess market valuation of airline convertible preferred stocks using a contingent claims valuation model that was extensively tested by Ramanlal et al. (Rev Quant Financ Account 10:303–319, 1998). Our sample consists of 4,096 daily price observations of 11 convertible preferred stocks issued by the U.S. airlines in 1980–1991. For each convertible we estimate daily model prices for 2 years after issuance and compare them with market prices by calculating pricing errors. While the entire sample’s mean pricing error is found to be negative 3.8%, the panel data analysis and the mean pricing errors of the sub-samples indicate that the undervaluation is much more severe in the first 6 months of trading. The results suggest that airlines leave about 10% on the table when they raise capital by issuing convertible securities.     

Risk attitudes and migration experience

Although risk and uncertainty are intrinsic to human migration, there is surprisingly little explicit research on the willingness to take risks in this context. This paper analyses whether migrants are more or less likely than non‐migrants to be risk tolerant, and whether these differences are gendered. Attitudes are explored in terms of responses under conditions of both risk and uncertainty, and self‐assessment of capabilities is also taken into account. The research is based on a sample of students who provide a relatively homogeneous group in socio‐economic terms, and relatively large numbers of individuals with experiences of temporary migration. Their attitudes to risk were assessed under experimental conditions, which measured their willingness to take risks on hypothetical gambles under different conditions. While there are some differences between males and females, and between migrants and non‐migrants, the outstanding finding is the far greater risk tolerance of female migrants as opposed to female non‐migrants, especially when compared to males.