Certainty Independence and the Separation of Utility and Beliefs

Economists often operate under an implicit assumption that the tastes of a decision maker are quite stable, while his beliefs change with the availability of new information. We show that for a general class of preferences, a separation of a key component of tastes, the utility function, from the other components of the representation is possible only if the decision maker's preferences satisfy a mild but not completely innocuous condition, called ‘certainty independence’. We also outline the axiomatic characterization of the preferences that obtain such separation, which are a subset of the biseparable preferences.     

Spatial welfare economics versus ecological footprint: modeling agglomeration,externalities and trade

A welfare framework for the analysis of the spatial dimensions of sustainability is developed. It covers agglomeration effects, interregional trade, negative environmental externalities, and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy, that is, in line with the ‘new economic geography.’ By generating a number of numerical ‘counter-examples,’ it is shown that the footprint method is inconsistent with an approach aimed at maximum social welfare. Unless environmental externalities are such a large problem that they overwhelm all other components of economic well-being, a ‘spatial welfare economic’ approach delivers totally different rankings of alternative land use configurations than the ecological footprint.      

Effects of redistributing policy support on farmers’ technical efficiency

The objective of this article is twofold: first, investigating the relationship between technical efficiency and decoupled direct payments of a sample of Italian farms prior to the application of the 2014–2020 Common Agricultural Policy reform; second, evaluating possible implications of alternative scenarios about distribution of direct payments on technical efficiency. To these aims, a stochastic frontier analysis is adopted. Results indicate that direct payments produce significant effects on technical efficiency in specialized farms, which received higher levels of support. However, effects are contrasting. Moreover, results show that redistribution of policy subsidies may negatively impact on technical efficiency to an extent depending upon the criterion of redistribution applied. Finally, some policy suggestions are given.     

CHOOSING THE VARIABLES TO ESTIMATE SINGULAR DSGE MODELS

We propose two methods to choose the variables to be used in the estimation of the structural parameters of a singular DSGE model. The first selects the vector of observables that optimizes parameter identification; the second selects the vector that minimizes the informational discrepancy between the singular and non‐singular model. An application to a standard model is discussed and the estimation properties of different setups compared. Practical suggestions for applied researchers are provided. Copyright © 2014 John Wiley & Sons, Ltd.     

Accurate Short-Term Yield Curve Forecasting using Functional Gradient Descent

We propose a multivariate nonparametric technique for generatingreliable short-term historical yield curve scenarios and confidenceintervals. The approach is based on a Functional Gradient Descent(FGD) estimation of the conditional mean vector and covariancematrix of a multivariate interest rate series. It is computationallyfeasible in large dimensions and it can account for nonlinearitiesin the dependence of interest rates at all available maturities.Based on FGD we apply filtered historical simulation to computereliable out-of-sample yield curve scenarios and confidenceintervals. We back-test our methodology on daily USD bond datafor forecasting horizons from 1 to 10 days. Based on severalstatistical performance measures we find significant evidenceof a higher predictive power of our method when compared toscenarios generating techniques based on (i) factor analysis,(ii) a multivariate CCC-GARCH model, or (iii) an exponentialsmoothing covariances estimator as in the RiskMetrics^TM approach.     

A Model of the Representation of Interests in a Compound Democracy

This paper provides a model of democratic government as a compound of independent elective and non elective centers of power that compete in fostering the demands of voters and of interest groups. The analysis describes how interests of voters and of pressure groups are represented and under what conditions the compound democracy is more responsive to voters' or to interest groups' demands. These conditions are shown to depend on the center of power's relative opportunity costs at serving a plurality of interests and on the severeness of informational asymmetries between voters and interest groups.     

Employment changes, the structure of adjustment costs, and plant size

In this paper, we analyze the pattern of employment adjustment using a rich panel of Norwegian plants. The data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size. We develop and estimate a simple “q” model of labor demand, allowing for the presence of fixed, linear and quadratic components of adjustment costs. The econometric evidence supports the existence of purely fixed components, unrelated to plant size. As a result, the range of inaction is wider for smaller plants. The quadratic component of costs is also always important. In most specifications fixed costs are higher for employment contractions. The quadratic component is higher during employment contractions compared to expansions for small plants, while this is not true for larger plants.     

Does the Eco‐Management and Audit Scheme Foster Innovation in European Firms?

This paper studies whether environmental management systems can spur eco‐innovation, analyzing EMAS (Eco‐Management and Audit Scheme) adoption and patented innovations (at the European Patent Office) at firm level. It uses an original panel database of 30 439 European firms belonging to all sectors from 2003 to 2012. An original instrumental variable is implemented to control for potential endogeneity. The analysis reveals that EMAS adoption is conducive to more innovation at the firm level. The results vary across countries and sectors. In particular, EMAS is positively related to green patents for medium and low technology manufacturing. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

The Board of Directors and The Adoption of Quality Management Tools

Abstract

The article examines the role of the board of directors in Local Public Utilities (LPUs). It aims at verifying empirically if a correlation exists between specific characteristics of the board of directors and the adoption of innovative arrangements addressing emerging needs of users and citizens (i.e. quality). By means of applying multivariate statistical methods to a random sample of sixty Italian LPUs, this study finds the relational capital of the boards affecting the take up of quality-oriented actions by LPUs. These results support the resource-dependence theory, neglected by mainstream literature.