Consumption,housing collateral and the Canadian business cycle

How important are collateral constraints for reproducing salient features of the data? To address this question, we estimate two nested versions of a New Keynesian model: one with collateralized household debt and the frictionless version of the same model. Both versions of the model are fit to Canadian data using Bayesian methods. We argue that the presence of collateral constraints improves the performance of the model in terms of overall goodness of fit. Housing collateral helps to generate a positive correlation between consumption and house prices. Moreover, housing collateral induced spillovers boosted consumption growth during the housing market boom‐bust cycles of the late 1980s and early 2000s.     

Predictive Strength of Lending Technologies in Funding SMEs

Using a proprietary database of lending decisions (N = 9,898) for small and medium‐sized enterprises (SMEs), the paper investigates how banks cope with the adverse selection dilemma. Based on an intertemporal framework, we qualify incorrect and correct lending decisions of banks and investigate the power of lending technologies to predict errors and correct choices. Findings suggest that adverse selection can be better controlled by a durable bank–firm relationship, as well as by an atomistic loan decision process, at the local level. By contrast, a loan decision‐making process based exclusively on hard financial information about SMEs may lead to adverse selection errors.     

How does(n't) Urban Shrinkage get onto the Agenda? Experiences from Leipzig,Liverpool, Genoa and Bytom

This article discusses the question of how urban shrinkage gets onto the agenda of public‐policy agencies. It is based on a comparison of the agenda‐setting histories of four European cities, Liverpool (UK), Leipzig (Germany), Genoa (Italy) and Bytom (Poland), which have all experienced severe population losses but show very different histories with respect to how local governments reacted to them. We use the political‐science concepts of ‘systemic vs. institutional agendas’ and ‘policy windows’ as a conceptual frame to compare these experiences. The article demonstrates that shrinkage is hardly ever responded to in a comprehensive manner but rather that policies are only implemented in a piecemeal way in selected fields. Moreover, it is argued that variations in institutional contexts and political dynamics lead to considerable differences with regard to the chances of making shrinkage a matter of public intervention. Against this background, the article takes issue with the idea that urban shrinkage only needs to be ‘accepted’ by policymakers who would need to overcome their growth‐oriented cultural perceptions, as has been suggested in a number of recent writings, and calls for a more differentiated, context‐sensitive view.     

'Young In,Old Out' Revisited: New Patterns of Employment Replacement in the Italian Economy

This paper, based largely on data from the Italian social security (INPS) records, shows that recent employment trends in Italy have been marked by large job and worker turnover and a new and strong process of renewal and substitution of labour in industry. Entries of young workers have shown a remarkable increase, mainly through the application of work and training contracts ('contratti di formazione e lavoro') that provide firms with a means to cut labour costs. Meanwhile many workers in their 40s with considerable seniority, but still perfectly fit to go on working, found themselves squeezed out. The exit of this generation of mature workers was eased through subsidised early retirement, golden handshakes and a wide application of the 'cassa integrazione guadagni' (wage supplementation fund). This pattern of labour force replacement in industrial production, described as 'young in, old out', is at odds with the frequent ranking of Italy among the industrial countries hampered by rigid labour markets and questions theories of unemployment based on 'insider-outsider' hypotheses.     

DECENTRALIZING EQUALITY OF OPPORTUNITY*

In a global justice problem, equality of opportunity is satisfied if individual well‐being is independent of exogenous irrelevant characteristics. Policymakers, however, address questions involving local justice problems. We interpret a collection of local justice problems as the decentralized global justice problem. We show that controlling for effort locally, which is not required by the global justice objective, is sufficient for decentralizing equality of opportunity. Moreover, under some conditions, equalizing rewards to effort is not only sufficient but necessary. This implies in particular that most affirmative action policies may not contribute to providing equality of opportunity.     

Modeling model selection in model pluralism

ABSTRACT

In his recent book, Rodrik [(2015). Economics rules. Why economics works, when it fails, and how to tell the difference. Oxford University Press] proposes an account of model pluralism according to which multiple models of the same target are acceptable as long as one model is more useful for one purpose and another is more useful for another purpose. How, then, is the right model for the purpose selected? Rodrik roughly outlines a selection procedure, which we formalize to enhance understanding of his account of model pluralism and to advance the critical discussion.     

Communities and managerial competencies supporting SMEs innovation networking: a longitudinal case study

Over the last few decades, the need for small and medium‐sized enterprises (SMEs) to rely on networking to get access to innovation and larger knowledge bases has become evident. This paper analyzes the birth and evolution of an Italian innovation community created by a group of SMEs searching for innovation. Coming from quite different fields, these SMEs converged around a challenging project in the field of biomedical and rehabilitation devices. The aim of the paper is twofold: (1) to investigate what type of competences and tasks have to be accomplished to effectively manage an innovation community (IC) and what managerial roles (promotors) emerge by crossing competences and tasks; and (2) to what extent community members' absorptive capacity (ACAP) influences their ability to acquire and exploit innovation generated by the community. Using an in‐depth longitudinal case study analysis, we identified three different stages in community evolution. We also studied which promotors' roles that emerged in each stage and determined their relationship both between each other and to community performance. Furthermore, we investigated to what extent an existing knowledge base in a specific domain and previous experiences in networking influenced community members' ability to exploit innovation. We found that a specific correspondence among competences and tasks is needed to guarantee community performance and that promotors should interact among themselves to enable the community to reach its goal. Concerning ACAP, we found that prior experience and familiarity in networking are not predictive of new knowledge exploitation.