FROM INSTITUTIONS TO FINANCIAL DEVELOPMENT AND GROWTH: WHAT ARE THE LINKS?

This paper presents an integrated overview of the literature linking institutions, financial development, and economic growth. From the large body of research on institutional development, the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating/worsening the information frictions and transaction costs that characterize the development of financial markets. The paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development.     

Computing DSGE models with recursive preferences and stochastic volatility

This paper compares different solution methods for computing the equilibrium of dynamic stochastic general equilibrium (DSGE) models with recursive preferences such as those in Epstein and Zin, 1989, Epstein and Zin, 1991 and stochastic volatility. Models with these two features have recently become popular, but we know little about the best ways to implement them numerically. To fill this gap, we solve the stochastic neoclassical growth model with recursive preferences and stochastic volatility using four different approaches: second- and third-order perturbation, Chebyshev polynomials, and value function iteration. We document the performance of the methods in terms of computing time, implementation complexity, and accuracy. Our main finding is that perturbations are competitive in terms of accuracy with Chebyshev polynomials and value function iteration while being several orders of magnitude faster to run. Therefore, we conclude that perturbation methods are an attractive approach for computing this class of problems.     

Sustainability Development and the Quality of Assurance Reports: Empirical Evidence

There is a rising trend among companies to publish their sustainability or corporate social responsibility (CSR) reports. Assurance of these reports is a valuable voluntary tool to provide them with higher credibility. Nonetheless, the quality of assurance reports differs in practice and the objective of this paper is to provide evidence in this new area of research. Indeed, we are pioneers in developing an index to measure the quality of assurance reports. We choose the Spanish setting because it is the worldwide leading country as regards CSR reporting (KPMG, 2011; Sierra et al., 2012). We have found evidence on the determinants for CSR reporting posited by existing literature that have an impact on (a) the decision of companies to publish their CSR reports, (b) the decision to assure the CSR report or not and (c) the decision to hire the assurance services from an auditor or a consultant and the subsequent quality of the assurance report. Last but not least, our results from a sample of 161 CSR assurance reports evidence that assurance reports are of fairly acceptable quality, according to the index proposed. Furthermore, the value of the quality index is significantly higher if the assurance services are provided by an auditor (as opposed to a consultant) and if the CSR reporting company is larger. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

An analysis of e-business adoption and its impact on relational quality in travel agency–supplier relationships

This study analyzes how managers of retail travel agencies perceive the antecedents and consequences of adopting e-business in their supplier relationships. A comprehensive model integrating its antecedents and relational effects is developed and empirically tested using SEM. The study surveyed 101 travel agents in Spain. Research findings indicate that customer pressure has a strong influence on e-communication practices. E-communication with the travel agency's supplier and the pressure exerted by the sector are the main antecedents for e-procurement. Effects of e-business on relational quality are contradictory. E-procurement influences negatively on trust. Conversely, e-communication has a positive impact on trust, thus having a favorable impact on perceived reciprocity and travel agent's commitment to its supplier. Main findings indicate that the use of the Internet is largely driven by normative pressures, and this coercive power has a detrimental impact on trust. To avoid such negative consequences, perceived reciprocity is a prerequisite for committed supplier relationships.     

The Operations Management of the Shanghai Expo Sees Great Success ——Special interview with Mohammed AI Ghamdi,Saudi Arabia Pavilion＇s executive director

The Saudi Arabia Pavilion at the Shanghai Expo, is a huge boat-shaped building like a half moon with a fantastic 3D IMAX theater within, and it has attracte＇d a great number of vis＇itors since it-was opened to public. At times it would take 10 hours standing in the queue betore visitors would make it through the doors. Covering a total ＇area of 6,000 square meters, the Saudi Arabia Pavilion ranks second only to the Chinese National Pavilion in terms of total size.     

Temporary trade and heterogeneous firms

Using Hungarian firm-transaction level export data, we show that about one third of firm–destination and about one half of firm–product–destination export spells are short-lived, or temporary, each year. This is in odds with theories where comparative advantage is stable and market entry costs are sunk. We show how endogenous choice between variable and sunk cost trade technologies can explain the empirical importance and some characteristics of temporary trade. We build a model in which the likelihood of temporary trade depends on productivity and capital cost of the firm as well as well-known gravity variables of destinations. These predictions are borne out by the data; the likelihood of permanent trade, defined by a simple filter, rises with firm productivity, financial stability, proximity and GDP of destination countries.     

THE DYNAMIC PROPERTIES OF ALTERNATIVE ASSUMPTIONS ON PRICE ADJUSTMENT IN NEW KEYNESIAN MODELS

This paper presents a classification of the different new Phillips curves existing in the literature as a set of choices based on three assumptions: the choice of the structure of price adjustments (Calvo or Taylor), the presence of backward indexation and the type of price contracts (fixed prices or predetermined prices). The paper suggests study of the dynamic properties of each specification, following different monetary shocks on the growth rate of the money stock. We develop the analytical form of the price dynamics, and we display graphics for the responses of prices, output and inflation. We show that the choice made for each of the three assumptions has a strong influence on the dynamic properties. Notably, the choice of the price structure, while often considered as unimportant, is indeed the most influential choice concerning the dynamic responses of output and inflation.     

Strategic groups and performance in the Spanish hotel sector

This study uses the strategic group theory to identify business strategies and competitive advantages implemented by Spanish hotels, which are grouped together according to three variables (size, chain affiliation, and category) and the degree of development of the different business strategies. An analysis carried out with the aim of checking the potential existence of significant differences in performance among the strategic groups revealed that the highest performance levels are achieved by larger-sized, chain-affiliated, and higher-category hotels as well as by establishments which base their competitive advantage on category and capacity or size and internal management.     

Coffee export booms and monetary disequilibrium: some evidence for Colombia

The theoretical models that analyse the monetary consequences of export booms show that under a regime of fixed exchange rates, they affect not only the demand for money, via real income, but also the money supply via foreign exchange accumulation. Within this theoretical framework, this study proposes an empirical approach to determine whether the coffee booms of the second half of the 1970s and mid–1980s led to excess money supply in the Colombian economy. The findings provide evidence in favour of a direct association between coffee export booms and excess money supply, implying that external disturbances jeopardize the ability of the economic authorities to carry out successful monetary policy.