Political Connectedness and Firm Performance: Evidence from Germany

Abstract. This paper investigates politically connected firms in Germany. With the introduction of a new transparency law in 2007, information on additional income sources for all members of the German parliament became publicly available. We find that members of the conservative party (CDU/CSU) and the liberal party (FDP) are more likely to work for firms than members of left‐wing parties (SPD and The Left) or the green party (Alliance 90/The Greens). Politically connected firms are larger, less risky and have lower market valuations than unconnected firms. They also have fewer growth opportunities, but slightly better accounting performance. On the stock market, connected firms significantly outperformed unconnected firms in 2006, i.e. before the publication of the data on political connections. Differences in stock market performance were much smaller in 2007.     

The Impact of Direct Cash Payments on Whole Blood Supply

This paper investigates the impact of monetary incentives on whole blood donations. We take advantage of a quasi‐natural experiment in Germany, in which one blood donation site changes its payment scheme from remunerated to non‐remunerated. All other donation sites maintain their payment schemes. We show that donation volumes drop significantly after the pay drop and do not recuperate. At the same time, donation volumes increase at other paid donation sites, which is partly due to donor migration to these sites. We do not find any impact of the changed payment scheme on blood quality. Our results offer additional insight into the complex question whether it is efficient to ensure blood supply by paying donors a direct monetary compensation.     

Das Zusammenspiel von gesellschaftlicher Umwelt- und Selbstbeobachtung in der Medienberichterstattung

Mass media communication makes societal changes visible and opens the platform for discussion and public debate. Observation of societal changes and public debate are intrinsically linked. Using the example of media coverage on war and questions of defense and security policies, we researched the relationship between societal changes and public debate in a longitudinal study. We performed a content analysis of the daily newspapers FAZ and Süddeutsche Zeitung for the time period of 1989?C2000. The results showed interesting frame relationships between the coverage of single wars and the coverage of defense policies. Specific aspects of war coverage lead to more coverage of security and defense policy issues, and the framing of the one is interrelated to the framing of the other in complex ways.     

A Comment on ‘The Measurement of Prices of Production’ by Peter Flaschel,Reiner Franke & Roberto Veneziani

After giving a summary of the Cambridge debate, the comment criticizes the proposal by Flaschel, Franke and Veneziani to base the classical approach on systems of production with unequal rates of profit both theoretically and on empirical grounds: The classical gravitation of market prices towards normal prices is hard to defend, if there are persistent differentials of profit rates, but the profit rate differentials in the paper are not even stable. The comment further defends the idea of representing states of knowledge about technology by means of input-ouput tables against objections regarding the transferability of methods between countries and discusses alternative approaches to the treatment of fixed capital. It is shown that the data used by the authors for capital stocks are not supported by the data of the German Statistical Office. I agree with the authors in the most essential point, however: Contrary to the position taken e.g. by Joan Robinson, we all believe that the problems of capital theory raised in the Cambridge debate must be analyzed not only in abstract theory but also at the applied level. We all were surprised to find that empirical wage curves tend to be close to straight lines so that double intersections of such wage curves, hence reswitching and reverse capital deepening, must be rare. This phenomenon needs to be explained; a possible explanation can be derived from the random nature of the input-output matrices, and, so far, no other explanation has been proposed.     

Environmental Liability Law and Induced Technical Change – The Role of Discounting

We analyse the incentives of environmental liability law for inducing progress to emission abatement technology. We consider three liability rules: strict liability, a negligence rule with an emission norm as the due care standard, and a double negligence rule which combines the emission standard with an abatement technology norm. In the case of distortive discounting, i.e. where the private discount rate deviates from the social one, we show, how the level of distortion influences the ranking of liability rules, according to the criterion of generated social cost.     

Analytical Support to Negotiations: An Empirical Assessment

Twenty-three cases of international negotiation are analyzed and compared to better understand the role of analytical and informational tools in supporting practical negotiators. For each case, data were gathered through interviews with Austrian diplomats on the type and amount of analytical support provided, associated bureaucratic support, and problems encountered, along with a host of key factors about the case itself-the issues, situation, strategies, process, structures, and outcomes. These data were coded and analyzed statistically. It was found that most analytical support is qualitative in nature and can be categorized as information organizing tools, comparison methods and creativity techniques; economic negotiations, in particular, tended to be supported more by quantitative methods, including forecasting and statistical models. Analytical support is particularly important to understand own and other side positions and strategies and to bolster complex negotiations that require issue packaging. A generational gap between senior and mid-level diplomats emerged: junior practitioners expressed a greater interest in analytical support tools. In general, the application of analytical support was perceived positively among practitioners and was correlated with the achievement of treaties and comprehensive solutions. These findings suggest that there needs to be greater investment in developing and providing practical analytical support to negotiators, more supporting infrastructure to facilitate the use of these techniques, and increased training opportunities.     

C.E.S. production functions in the light of the Cambridge critique

The Cambridge debate of the 1960s showed conclusively that the aggregation of capital, so as to obtain a surrogate production function according to Samuelson, is not possible in general, with critical implications also for other variants of neoclassical theory. The framework for the demonstration is that of linear activity analysis.There is an individual wage curve in function of the rate of profit for each technique. If these individual wage curves were straight lines, their envelope would define a wage curve resulting from all techniques, from which a surrogate production function could be derived, but all wage curves are straight only, if there is only one industry. And if wage curves are not straight, phenomena such as reswitching show that essential neoclassical hypotheses need not hold. A recent empirical investigation by Han and Schefold has found one empirical example for reswitching and several for reverse capital deepening.A rigorous derivation of surrogate production functions thus is ruled out also on empirical grounds, but the paradoxes seem not to be as frequent as the critics once thought, so that the question arises whether approximate surrogate production functions could be derived, with individual wage curves which would be sufficiently linear to construct approximate surrogate production functions, indicating a relationship between the intensity of capital and output per head which would be sufficiently precise to work with.The paper is part of a wider investigation, in which conditions for the existence of quasi-linear wage curves and the possibility of the construction of approximate surrogate production functions are given. The emphasis here is on the special hypotheses needed to obtain C.E.S. production functions.