Colombia’s macroeconomic challenges at the end of the supercycle of commodity prices

The end of the commodity boom presents major challenges for the Colombian economy. The major ones relate to the need to reduce the current account deficit and find new growth engines. A competitive real exchange rate is essential for objectives and requires stronger interventions in the foreign exchange market; these interventions also help to smooth out the trajectory of the inflation rate. Finally, although fiscal adjustment has been adequate, there are fiscal needs associated with the additional public sector spending demanded by the peace agreement and the need to correct the major structural tax imbalances generated by previous tax reforms.     

On the influence of US monetary policy on crude oil price volatility

Forecasting oil prices is not straightforward, such that it is convenient to build a confidence interval around the forecasted prices. To this end, the principal ingredient for obtaining a reliable crude oil confidence interval is its volatility. Moreover, accurate crude oil volatility estimation has fundamental implications in terms of risk management, asset pricing and portfolio handling. Generally, current studies consider volatility models based on lagged crude oil price realizations and, at most, one additional macroeconomic variable as crude oil determinant. This paper aims to fill this gap, jointly considering not only traditional crude oil driving forces, such as the aggregate demand and oil supply, but also the monetary policy rate. Thus, this work aims to contribute to the debate concerning the potential impact of (lagged) US monetary policy as well as the other crude oil future price (COFP) determinants on daily COFP volatility. By means of the recently proposed generalized autoregressive conditional heteroskedasticity mixed data sampling model, different proxies of the US monetary policy alongside US industrial production (proxy of the US aggregate demand) and oil supply are included in the COFP volatility equation. Strong evidence that an expansionary (restrictive) variation in monetary policy anticipates a positive (negative) variation in COFP volatility is found. We also find that a negative (positive) variation of industrial production increases (decreases) COFP volatility. This means that volatility behaves counter-cyclically, according to the literature. Furthermore, the out-of-sample forecasting procedure shows that including these additional macroeconomic variables generally improves the forecasting performance.     

Social Responsibility and Social Security: The Foundation of <Emphasis Type="Italic">Caja de Pensiones para la Vejez y de Ahorros</Emphasis>

The concept of corporate social responsibility (CSR) is not new. Many entrepreneurs created and developed companies along the time, with a strong sense of ethical and social responsibility. This article presents an example of how CSR was conceived and put into practice when Caja de Pensiones para la Vejez y de Ahorros was created in Barcelona in 1905, following the life and ideas of its founder, Francesc Moragas, a lawyer with a deep commitment for social action and a successful conception of the technical and economic dimensions of a financial and social institution.     

The Collaborative Enterprise

Instead of the currently prevailing competitive model, a more collaborative strategy is needed to address the concerns related to the unsustainability of today’s business. This article aims to explore collaborative approaches where enterprises seek to build long-term, mutually beneficial relationships with all stakeholders and want to produce sustainable values for their whole business ecosystem. Cases here analyzed demonstrate that alternative ways of doing business are possible. These enterprises share more democratic ownership structures, more balanced and broader governance systems, and a more comprehensive view of organizational goals and performance – which goes beyond the narrow concept of financial bottom line and into a stronger and systematic care of the needs and requirements of the different stakeholder groups. Thanks to this evidence and different theoretical and empirical contributions, we suggest that the strength and sustainability of enterprises come from their ability to fit into the environmental, social, and cultural context in which they operate. By creating values for all stakeholders, enterprises can involve them and gain deep support based on their commitment. This may lead to superior performance from a multiple-bottom-line perspective.     

Efficient egalitarian equivalent allocations over a single good

This paper studies efficient and egalitarian allocations over a single heterogeneous and infinitely divisible good. We prove the existence of such allocations using only measure-theoretic arguments. Under the additional assumption of complete information, we identify a sufficient condition on agents’ preferences that makes it possible to apply the Pazner–Schmeidler rule for uniquely selecting an efficient egalitarian equivalent allocation. Finally, we exhibit a simple procedure that implements the Pazner–Schmeidler selection in a subgame-perfect equilibrium. We thank Gabrielle Demange, William Thomson, two referees and seminar audiences at Boston, Palermo and Rochester University for their comments. Financial support from MIUR is acknowledged.     

Fiscal Trends and Self-Fulfilling Crises

This paper develops a second-generation currency crisis model with endogenously changing fundamentals. Previous second-generation models are static, e.g. Obstfeld (1994 ), or dynamic with exogenous paths of fundamentals, e.g. Obstfeld (1986 ). In our model, the government weighs the disutility of making fundamentals consistent with a peg against a penalty for floating. If the former dominates, the government runs expansionary policies, precipitating a crisis. For some parameters, self-fulfilling speculation affects when the crisis happens, but not whether it happens. For other values, there are "purely self-fulfilling" crises, where a peg that could have survived forever collapses if attacked in the first few periods.     

R&amp;D spillovers and employment: evidence from European patent data

In this paper we investigate the role of patents in the relationship between R&D activity, spillovers and employment at the firm level. A reduced-form labour demand equation is estimated. Our analysis is based upon a dataset consisting of 879 R&D-intensive manufacturing firms worldwide for which information was collected for the period 2002–2010. We use data from all EU R&D investment scoreboard editions issued every year until 2011 by the JRC-IPTS (scoreboards). Since the innovation output of the industrial strategy of every firm is the number of patents, the main contribution to the existing literature is to investigate also the impact of patents/R&D ratio and patents/spillovers ratio on employment level. The empirical results suggest a significant impact of R&D spillover effects on company employment although the results differ substantially according to the spillover stock, which may considerably affect policy implications.     

Banking theories and macroeconomics

Mainstream models that allow for financial operations are characterized by the understanding of banks as intermediaries of outside money (IOM). This approach to banks became dominant thanks to a peculiar rhetorical device by Tobin (1963 Tobin, J. 1963. “Commercial Banks as Creators of ‘Money’.”Paper 205. New Haven, CT: Cowles Foundation. [Google Scholar]). In recent years, however, this understanding is being increasingly questioned and an old view of banks as originators of inside money (OIM) is being reconsidered. The present article highlights the fundamental differences of these alternative doctrines from a money supply perspective and provides a simple theoretical argument to consider the limits of a point of view à la Tobin and regard the OIM banking theory more general than the IOM theory.     

How does firm diversification impact innovation?

This study sheds light on the relationship between business diversification and innovation. A diversification strategy is both a driver of sunk costs and strategic slack. Strategic slack is a valuable reserve of knowledge, usable to foster innovation. Using linear models, we explore the interplay between research and development (R&D) and organisational slack in large and diversified companies listed on the Euronext 100 Index. We consider the diversification pattern over time, and its interactions with the following three categories: sunk costs, slack resources, and R&D. The results show an antithetic effect of diversification and slack on R&D expenditures. In contrast to unabsorbed and potential slack, diversification and sunk costs hinder innovation. However, diversification is a huge source of strategic slack and, thus, has a positive effect on innovation, indirectly.     

Analyzing the determinants of firm's absorptive capacity: beyond R&D

This article proposes a new model for analyzing the determinants of absorptive capacity in companies. We suggest that absorptive capacity is determined not only by research and development activities, but also by a set of internal factors, which we group into three basic categories: organizational knowledge, formalization, and social integration mechanisms. In addition, we suggest that these factors may influence all components of the firm's absorptive capacity, and that the influence can be positive or negative depending on the applicability of the knowledge being absorbed. This paper thus advances the understanding of absorptive capacity by exploring a largely ignored aspect in the literature: the role of knowledge attributes. We show how the model can be operationalized and empirically tested and provide preliminary evidence supporting most of the propositions in the analytical model.