Analysis of spatial variance clustering in the hedonic modeling of housing prices

This paper examines the spatial dependency exhibited by the error term variance of hedonic modeling based on German housing price data. To this end, it applies the spatial autoregressive conditional heteroscedasticity (SARCH) model previously discussed in housing literature, which allows for the consideration of spatial dependency when modeling the error variance of hedonic pricing. This model represents a spatialized version of the well-known ARCH-model used in time series analysis. Consistent with previous findings, this paper confirms the existence of spatial conditional heteroscedasticity, i.e. dependency in the error variance. However, this spatial dependency is not a global phenomenon, but can be ascribed to spatial concentrations of apartments with a relatively high variance in a small number of the same neighborhoods. The analysis of spatial heteroscedasticity helps to improve the estimation efficiency and prediction accuracy. In addition, spatial differences can be used to account for idiosyncratic risk when conducting mass appraisal.     

Perceived credit constraints in the European Union

The promotion and support of small and medium-sized enterprises (SMEs) is an essential component of policies designed to help improve Europe’s economic performance. A crucial issue is whether SMEs face difficulty obtaining bank loans. Using pre-crisis survey data from 2005 and 2006 for nearly 3,500 SMEs (firms with fewer than 250 employees) in the European Union (EU), we investigate the determinants of perceived bank loan accessibility at the firm level and at the country level. Based on hierarchical (multi-level) binomial logit regressions, our findings show that the youngest and smallest SMEs have the worst perception of access to bank loans. The SMEs in nations with concentrated banking sectors are more positive about loan accessibility. In addition, a high fraction of foreign-owned banks is associated with improved perception of loan accessibility in the EU 15 but not in the EU 10.     

Enacting entrepreneurship research in a pioneering,provocative and participative way: on the work of Bengt Johannisson

Bengt Johannisson received the International Award for Entrepreneurship and Small Business Research in 2008. In this essay we present and evaluate his work over the last four decades in three of its dimensions: pioneering, provocative and participative. While his research interests and themes range widely, early on he resisted the individualization of entrepreneurship studies and instead emphasized that entrepreneurship is a social practice that must be contextualized, localized and situated. In so doing, he uses such concepts as networks, industrial districts, regions and local communities. Making interpretive studies possible in a European context, his conceptual and methodological approach documents how future studies of entrepreneurship can be enacted as a reflexive, participative practice where methods of research, intervention and debate become blurred.     

Books Received

The international community is placing increasing emphasis on aid for trade to assist low income countries to integrate into the global economy and to address their domestic constraints to export driven growth. There is, however, scant information on the effectiveness of previous support for export development to inform the design of new initiatives. In this paper, we exploit information on product specific technical assistance for trade and estimate a simple partial equilibrium model to assess the impact on the key measurable outcome – exports of the product subject to assistance. We apply a difference in differences approach to isolate the impact of the policy interventions and draw four main conclusions: on average, export development (ED) programs have coincided with or predated stronger export performance; such programs appear to be more effective where there is already significant export activity; there is some concern about the additionality of the programs and that support may be being channeled to sectors that would have prospered anyway; ultimately, conclusions strongly depend on what one postulates would have happened in the absence of the policy intervention, so the definition of a credible counterfactual is of utmost importance for the evaluation of technical assistance for exports.     

Pricing of Payment Services: A Comparative Analysis of Paper-based Banking and Electronic Banking

This paper aims at comparing paper-based banking and electronic banking in terms of cost-efficiency and pricing. The focus is primarily on giro payments made manually by mail and electronically via the Internet, but also by cash over the counter. The paper presents principles of efficient pricing in terms of production fees and capacity fees. It also demonstrates that the current pricing of payment services in Norway and Sweden is far away from these principles as production fees are set below marginal costs while capacity fees are in many cases above capacity costs. Such deviations may stimulate customers to an excess demand for electronic payments while paper-based payments will be depressed.     

Domestic multinationals, foreign affiliates, and labour demand elasticities

Using information on a panel of multinational firms operating in the United Kingdom from 1996 to 2005, we find that labour demand in domestic multinationals is less sensitive to labour cost changes than in foreign multinationals. This difference in the wage elasticity of labour demand persists even when we control for the skill intensity of firms or their level of intangible assets. This is in line with an interpretation that the provision of headquarter services in domestic multinational firms protects against strong fluctuations in labour demand. Overall, our results suggest that the wage elasticity of labour demand is about 40 % lower in domestic than in foreign multinationals.     

Multinational Companies and Linkages: Panel-Data Evidence for the Irish Electronics Sector

This paper analyses the extent and determinants of backward local linkages between multinational companies and domestic suppliers in the Irish electronics industry, and their effect on indirect employment generated in domestic supplier firms. Several models in recent literature show that linkages between firms can lead to positive effects on the development of indigenous industry, agglomerations, technology spill-overs and indirect employment generation. Our empirical analysis, using a uniquely generated firm-level panel data set, indicates that the extent of linkages is related in a non-linear fashion to the length of time that the firm is located in Ireland. In the context of the literature on the effects of linkages, we find empirical evidence consistent with the view that growth in employment in upstream supplier firms in electronics is linked to the development of downstream firms.     

Assessing the profitability of intraday opening range breakout strategies

Is it possible to beat the market by mechanical trading rules based on historical and publicly known information? Such rules have long been used by investors and in this paper, we test the success rate of trades and profitability of the Open Range Breakout (ORB) strategy. An investor that trades on the ORB strategy seeks to identify large intraday price movements and trades only when the price moves beyond some predetermined threshold. We present an ORB strategy based on normally distributed returns to identify such days and find that our ORB trading strategy result in significantly higher returns than zero as well as an increased success rate in relation to a fair game. The characteristics of such an approach over conventional statistical tests is that it involves the joint distribution of low, high, open and close over a given time horizon.     

Antecedents of trust in industrial districts: an empirical analysis of inter-firm relations in a Turkish industrial district

Structural features and institutional settings of industrial districts, rather than contracts as a co-coordinating mechanism, promote trust in exchanges between firms in industrial districts. Based on this assumption, the paper explores the antecedents of trust in a Turkish industrial district at three levels: institutional environment; institutional arrangements; and inter-firm exchanges. In relation to institutional environment, dominant institutions of the Turkish economy – mainly state and finance – and their policies that undermine the role of SMEs in economic development are studied. In this context a third institution, the ‘district association’ that has a vital role in promoting trust-based governance has been analysed. At the second level, formal and informal institutional arrangements that govern the web of exchanges between firms are surveyed. The third level of analysis is directed at entrepreneurs and their attitudes towards family, friendship, expertise and reputation are studied. The research site is the Merter textile district in Istanbul. Data for second and third levels of analysis has been collected through structured interviews and is analysed quantitatively. For institutions and institutional environment, data has been collected mainly by in-depth interviews and is supported by secondary data. Research findings show that informal institutional arrangements are more important than formal arrangements and reputation and expertise of the other firm is more important than family-friendship connections as antecedents of trust.