Value at Risk and Economic Growth

The improvement of data statistics as well as the econometrician methods have facilitated the introduction the new variables and factors I the economic growth analysis. In this sense, real variables have mainly been considered in the economic growth studies, but not financial or risk management aspects. In this sense, it is interesting to analyze the relationship between economic growth and value at risk and the feed-back process. The goal of the paper is to analyze the relationship between economic growth and risk management and the feed-back process. We will consider economic variables, including economic growth, rule of law, human capital, fiscal policy and monetary policy, among others, in our analysis. We will analyze the theoretical relationships between these variables and risk and the effects of risk on economic growth. We will also develop an empirical analysis considering the case of 15 European Union countries.

Constitutional coordination in unstable party systems: the Brazilian constitution of 1988

Constitutional assemblies are a common feature of many democratic transitions. However, the goal of coordinating constitutional choice would seem nearly impossible when assemblies are comprised of highly fragmented and volatile political parties. Building on Knight’s bargaining model, this article argues that the main challenge to coordination in unstable party systems is the procedural disequilibrium that results from incomplete information over breakdown payoffs. The likelihood of compromise in such circumstances is a function of the ideologies that frame constitutional choice and inform coalition-building. Thus, unstable party systems are not chaotic, although they may be deeply conflict-laden. These issues are illustrated empirically via the Brazilian Constitution of 1988, which demonstrates the possibilities for a stable constitutional order emerging from a fragmented and volatile party system.

Sustainability and consumption

We consider the implications of the three pillars of sustainability (environment, economy and social justice) on consumption in a wealthy country. Building a theoretical model that includes consumers, business, government, the environment, and economic and political relations between nations, we explore how sustainability should affect the consumption behavior of consumers, charitable aid to poorer countries, and responsible environmental practices by businesses. Our model enables us to provide normative implications for consumers, society and business. Importantly, we assume that all stakeholders will optimize their self-interest, and that altruism will only partly explain behavior consistent with sustainability. Among the more non-obvious findings are that (1) the poorer the poor countries are, the less the rich countries should consume, (2) the more sensitive the global political climate is to economic inequity between the rich and poor nations, the less the rich countries should consume, and (3) if aid to poor countries is effective enough, then the more materialistic the society is, the more charitable aid it should give. We also confirm a number of more intuitive findings, such as that business should use more green technology as the taxes on pollution and/or efficiency of green technology increase, and the more resource-intensive consumption is, the less consumers should consume. Taken as a whole, the findings imply that societal consumption patterns should be sensitive to aspects of environmental impact and social justice, even if altruistic motivations are absent.     

The influence of redemption time frame on responses to incentives

In the present research, Construal Level Theory is used to predict that consumers will mentally characterize incentive offers differently as a function of their redemption time frames. Data from two experiments indicate that concrete features, such as the face value of an offer or its mode of presentation (as a dollar figure or as a percentage discount), are prominent for incentives with short time frames but not for incentives with long ones. In the latter case, abstract features, such as the incentive’s goal congruity or fit with personal values, are more likely to influence responses.     

The effectiveness of publicity versus advertising: a meta-analytic investigation of its moderators

This study provides an answer to the question whether and under which conditions publicity is more or less effective than advertising. Advertising refers to paid communication that identifies the message sponsor, whereas publicity is communication that secures editorial space in media for promotion purposes and does not have an identifiable sponsor. The primary advantage of advertising over publicity is the sponsor’s control over message content; its disadvantages are audience skepticism and lack of credibility. We investigate this trade-off between credibility effects and effects of recipients’ processing and evaluation of message content. Results of a meta-analytic structural equation model show that the positive credibility effect of publicity is on average about three times as strong as the information evaluation effect, supporting the overall superiority of publicity over advertising. This effect, however, is moderated by prior knowledge and only holds for products about which recipients lack prior knowledge. The effects change for known products when advertising becomes superior. The effectiveness of publicity depends on further moderating variables. In particular, academic studies tend to underestimate the true effects of publicity over advertising due to experimental manipulations. Campaigns that combine publicity and advertising weaken the effects of publicity, whereas advertorials (i.e., advertisements disguised as editorial material) are more effective, since they combine the advantages of both publicity and advertising. The results have theoretical and practical implications.     

Worth waiting for: increasing satisfaction by making consumers wait

A truism in the marketing literature, and among many marketing practitioners, is that requiring consumers to wait negatively impacts quality evaluations, purchase intentions and a range of other important outcomes. However, it is also true that consumer waiting or queuing has historically been considered from an operations perspective. The present research takes a different approach and examines waits in the context of their ability to function as a signal of quality. Four experiments demonstrate a required wait can indeed signal quality to consumers and increase, rather than decrease, both purchase intentions and actual experienced satisfaction. Three moderators of this effect are examined: preexisting knowledge, consumption motivations, and the extent to which quality is difficult to objectively determine. The results suggest in situations where quality is important, unknown or ambiguous, managers may increase consumer satisfaction by making consumers wait.     

SCALE EFFECT VERSUS INDUCED POLICY RESPONSE IN THE ENVIRONMENTAL KUZNETS CURVE: THE CASE OF U.S. WATER POLLUTION

The environmental Kuznets curve (EKC) could arise from the scale effect in abatement technology as emphasized by Andreoni and Levinson (2001) or from the induced policy response as suggested by Grossman and Krueger (1995). This paper incorporates these two contrary views into a model and quantitatively evaluates their relative importance in shaping the EKC of U.S. water pollution. Our main findings include: (a) some scale effect in abatement technology must exist, otherwise the turning point of the EKC will be unreasonably high; (b) the scale effect alone is not sufficient to explain the practical occurrence of the turning point of the EKC; and (c) the scale effect features critically in the induced policy response as well. (JEL H41, O40, Q20)     

Hospital economic impact from hemostatic matrix usage in cardiac surgery

Objective:

Improved health outcomes can result in economic savings for hospitals and payers. While effectiveness of topical hemostatic agents in cardiac surgery has been demonstrated, evaluations of their economic benefit are limited. This study quantifies the cost consequences to hospitals, based on clinical outcomes, from using a flowable hemostatic matrix vs non-flowable topical hemostatic agents in cardiac surgery.

Research design and methods:

Applying clinical outcomes from a prospective randomized clinical trial, a cost consequence framework was utilized to model the economic impact of comparator groups. From that study, clinical outcomes were obtained and analyzed for a flowable hemostatic matrix (FLOSEAL, Baxter Healthcare Corporation) vs non-flowable topical hemostats (SURGICEL Nu-Knit, Ethicon–Johnson &; Johnson; GELFOAM, Pfizer). Costing analyses focused on the following outcomes: complications, blood transfusions, surgical revisions, and operating room (OR) time. Cardiac surgery costs were analyzed and expressed in 2012 US dollars based on available literature searches and US data. Comparator group variability in cost consequences (i.e., cost savings) was calculated based on annualized impact and scenario testing.

Results:

Results suggest that if a flowable hemostatic matrix (rather than a non-flowable hemostat) was utilized exclusively in 600 mixed cardiac surgeries annually, a hospital could improve patient outcomes by a reduction of 33 major complications, 76 minor complications, 54 surgical revisions, 194 transfusions, and 242?h of OR time. These outcomes correspond to a net annualized cost consequence savings of $5.38 million, with complication avoidance as the largest contributor.

Conclusions:

This cost consequence framework and supportive modeling was used to evaluate the hospital economic impact of outcomes resulting from the usage of various hemostatic agents. These analyses support that cost savings can be achieved from routine use of a flowable hemostatic matrix, rather than a non-flowable topical hemostat, in cardiac surgery.     

An empirical examination of factors driving the offshore renminbi market

Following the 2010 establishment of the offshore renminbi market in Hong Kong, renminbi deposits there quickly rose above RMB 1 trillion. In this article, we examine fluctuations between the offshore value of the renminbi in Hong Kong and its onshore value in mainland China. The size of the spot market spread appears to be influenced by stock market sentiment as reflected in the spread between A-shares listed in Shanghai and H-shares listed in Hong Kong. There is also some evidence of a link between the spread and the pace of renminbi deposit growth in Hong Kong.     

Poor institutions as a comparative advantage

Classic theories of comparative advantage point to factor productivity and factor abundance as determinants of specialization and trade. Likewise, geography and topography can determine trade patterns. Institutions, however, are increasingly seen as important sources of comparative advantage. A global drug prohibition regime implies that institutional quality matters more than traditional sources in the drug trade. This paper theoretically models trade patterns of illicit goods and confirms the role of institutions empirically with respect to the drug trade. In particular, illicit enterprises gain force in countries where resources are scarce, drug enforcement is uncertain, and institutions are weak in absolute terms and relative to neighboring countries. I propose several policy alternatives that emphasize economic opportunity for the poor and institutional quality that complement drug prohibition.