Objects and Subjects in Technological Interdependence. Towards a Framework to Monitor Innovation

Technology, even more than other aspects of economic life, is characterized by a strong interdependence across both sectors and organizations. However, we still know little about the determinants and impact of technological interdependence. The standard input-output analysis is unable to explain interdependence in technological life since a large proportion of innovations are either untraded or are disembodied from products. Innovations which are not appropriated by the innovators are not signalled by prices. Moreover, input-output tables do not systematically consider exchanges within economic organizations, such as firms. This paper proposes a more complex accounting framework for innovation which would monitor the technological field of the innovation and the product where it is used, as well as the producer-user interrelationship.     

Normal utilization as the adjusting variable in Neo‐Kaleckian growth models: A critique

As well‐known, the canonical Neo‐Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem—making the normal rate of utilization an endogenous variable that converges to the actual utilization rate—justifying it with new, micro‐founded premises. We argue that these new justifications for the convergence of normal to actual utilization do not stand closer scrutiny. First, the proposed microeconomic model relies on various restrictive assumptions, some of which are mutually inconsistent. Second, the derivation of the macroeconomic adjustment mechanism from the microeconomic analysis involves a logical leap that can be justified only by a very arbitrary assumption with little economic justification. Finally, we discuss the way in which this mechanism has been incorporated into the Neo‐Kaleckian growth model by proposers of this approach. We show that, even if one puts aside, for the sake of argument, the first two points, the existence of autonomous components of demand is sufficient to invalidate the resulting macroeconomic model.     

On relative performance,remuneration and risk taking of asset managers

We analyze the asset management problem when the manager is remunerated through a scheme based on the performance of the fund with respect to a benchmark and his/her choices are driven by a power utility function. We show that it is not the asymmetric-fulcrum type feature of the scheme that makes the difference in preventing excessive risk taking in case of a poor performance. To prevent gambling when the performance deteriorates, it is important not to provide a fixed fee to the asset manager, and that remuneration is sensitive to a very poor relative performance as in the case of a capital stake or of a management fee with flow funds. We provide empirical evidence on the mutual fund industry showing excessive risk taking in case of a very poor performance and limited risk taking in case of overperformance with respect to the benchmark. These results agree with a remuneration scheme including a fixed fee and a cap.     

From network ties to network structures: Exponential Random Graph Models of interorganizational relations

Theoretical accounts of network ties between organizations emphasize the interdependence of individual intentions, opportunities, and actions embedded in local configurations of network ties. These accounts are at odds with empirical models based on assumptions of independence between network ties. As a result, the relation between models for network ties and the observed network structure of interorganizational fields is problematic. Using original fieldwork and data that we have collected on collaborative network ties within a regional community of hospital organizations we estimate newly developed specifications of Exponential Random Graph Models (ERGM) that help to narrow the gap between theories and empirical models of interorganizational networks. After controlling for the main factors known to affect partner selection decisions, full models in which local dependencies between network ties are appropriately specified outperform restricted models in which such dependencies are left unspecified and only controlled for statistically. We use computational methods to show that networks based on empirical estimates produced by models accounting for local network dependencies reproduce with accuracy salient features of the global network structure that was actually observed. We show that models based on assumptions of independence between network ties do not. The results of the study suggest that mechanisms behind the formation of network ties between organizations are local, but their specification and identification depends on an accurate characterization of network structure. We discuss the implications of this view for current research on interorganizational networks, communities, and fields.     

A new class of multidimensional Wishart-based hybrid models

In this article, we present a new class of pricing models that extend the application of Wishart processes to the so-called stochastic local volatility (or hybrid) pricing paradigm. This approach combines the advantages of local and stochastic volatility models. Despite the growing interest on the topic, however, it seems that no particular attention has been paid to the use of multidimensional specifications for the stochastic volatility component. Our work tries to fill the gap: we introduce two hybrid models in which the stochastic volatility dynamics is described by means of a Wishart process. The proposed parametrizations not only preserve the desirable features of existing Wishart-based models but significantly enhance the ability of reproducing market prices of vanilla options.

     

Rating systems,procyclicality and Basel II: an evaluation in a general equilibrium framework

The introduction of Basel II has raised concerns about the potential impact of risk-sensitive capital requirements on the business cycle. Several approaches have been proposed to assess the procyclicality issue. In this paper, we adopt a general equilibrium model and conduct comprehensive analysis of different proposals. We set out a model that allows to evaluate different rating systems in relation to the procyclicality issue. Our model extends previous models by analysing the effects of different rating systems on banks’ portfolios (as in Catarineu et al. in Econ Theory 26:537–557, 2005) and the contagion effects relevant to financial stability (as in Goodhart et al. in Ann Finance 1:197–224, 2005). The paper presents comparative statics results comparing a cycle-dependent and a neutral rating system from the point of view of banks profit maximization. Our results suggest that banks’ preferences about point in time or through the cycle rating systems depend on the banks’ characteristics and on the business cycle conditions in terms of expectations and realizations.     

The globalisation of technology and its implications for developing countries: Windows of opportunity or further burden?

On the basis of a categorisation of ways in which the generated knowledge is transmitted, this paper explores the impact of the different forms of the globalisation of technology on developing countries. Through travelling, media, scientific and technical workshops, Internet and many other communication channels, globalisation allows the transmission of knowledge at a much greater pace than in the past. However, this does not automatically imply that developing countries succeed to benefit from technological advances. On the contrary, this will strongly rely on the nature of the technology and of the policies implemented in both advanced and developing countries.