Employer Association Responses to the Effects of Bargaining Decentralization in Australia and Italy: Seeking Explanations from Organizational Theory

The literature has neglected to analyse employer associations as organizations facing potential environmental threats to their financial sustainability. We examine associations' responses to collective bargaining decentralization, a major, contemporary threat. Using a qualitative, comparative case approach, we examine eight associations — four each in Australia and Italy — to develop a model of response types. Stronger decentralization effects increase associations' exposure to new and heightened competition, which in turn produces stronger association responses. These include prioritizing commercial over associational objectives. We analyse responses using strategic choice and resource dependence theories, finding that associations use both. However, the decision how to combine them reflects environmental conditions as well as choices linking organizational purpose and financial sustainability.     

Interconnections Between Eurozone and US Booms and Busts Using a Bayesian Panel Markov‐Switching VAR Model

The proposed panel Markov‐switching VAR model accommodates changes in low and high data frequencies and incorporates endogenous time‐varying transition matrices of country‐specific Markov chains, allowing for interconnections. An efficient multi‐move sampling algorithm draws time‐varying Markov‐switching chains. Using industrial production growth and credit spread data, several important data features are obtained. Three regimes appear, with slow growth becoming persistent in the eurozone. Turning point analysis indicates the USA leading the eurozone cycle. Amplification effects influence recession probabilities for Eurozone countries. A credit shock results in temporary negative industrial production growth in Germany, Spain and the USA. Core and peripheral countries exist in the eurozone. Copyright © 2016 John Wiley & Sons, Ltd.     

Feasibility of risk‐based inspections in organic farming: results from a probabilistic model

A risk‐based inspection system might improve the efficiency of the organic farming certification system and ultimately provide a basis for increased competitiveness of this sector. This requires the definition of an effective inspection procedure that allows statistical evaluation of critical risk factors for noncompliance. In this article, we present a study based on data from selected control bodies in five European countries that is aimed at determining the feasibility of risk‐based inspections in the organic sector according to the data that are currently routinely recorded. Bayesian networks are used for identification of the factors that can affect the risk of noncompliance. The results show that previous/concurrent noncompliant behavior explains most of the risk, and that the risk increases with farm size and the complexity of their operations. The data currently recorded by control bodies appear to be insufficient to establish an effective risk‐based approach to these inspections.     

Scenario planning for tourism management: a participatory and system dynamics model applied to the Galapagos Islands of Ecuador

This paper presents a decision-support system based on a system dynamics model designed to examine tourism management in the Galapagos Islands. A participatory approach was used to integrate the views of multiple stakeholders in the Galapagos Islands and to build an understandable, graphical representation of the impacts of tourism and residential population growth. Each subsystem is examined through hypotheses involving three scenarios of tourism growth that are associated with different residential population expansions. A number of integrative and linked social-ecological effects in our model have been shown to severely shock the natural environment of the Galapagos and saturate the capacity of several socio-economic subsystems. Major concerns of the expanding human dimension in the Galapagos are represented by (1) the growing number of introduced species that threaten the Islands’ unique natural environment, and (2) the rapid saturation of the Galapagos National Park's tourism reception capacity. The model relies upon real data to specify rules, relationships, and rates of exchange that are derived through statistical functions and/or functions specified in theory or practice. The presented decision-support system is a quantitative scenario-planning tool that can be used by policy-makers to achieve an enhanced understanding of the Galapagos Islands as a coupled human–natural system.     

Missing in Asynchronicity: A Kalman‐em Approach for Multivariate Realized Covariance Estimation

Motivated by the need for a positive‐semidefinite estimator of multivariate realized covariance matrices, we model noisy and asynchronous ultra‐high‐frequency asset prices in a state‐space framework with missing data. We then estimate the covariance matrix of the latent states through a Kalman smoother and expectation maximization (KEM) algorithm. Iterating between the two EM steps, we obtain a covariance matrix estimate which is robust to both asynchronicity and microstructure noise, and positive‐semidefinite by construction. We show the performance of the KEM estimator using extensive Monte Carlo simulations that mimic the liquidity and market microstructure characteristics of the S&P 500 universe as well as in a high‐dimensional application on US stocks. KEM provides very accurate covariance matrix estimates and significantly outperforms alternative approaches recently introduced in the literature. Copyright © 2014 John Wiley & Sons, Ltd.     

THE PERSISTENCE OF INCOME POVERTY AND LIFESTYLE DEPRIVATION: EVIDENCE FROM ITALY

This article estimates poverty persistence over an individual's lifetime, using two definitions: income poverty and a multidimensional index of lifestyle deprivation. We stress the ability of the two definitions to provide a generally consistent characterization of poverty persistence risks faced by various population subgroups, but also the additional insights to be gained by analysing the two definitions in parallel in a longitudinal context. The results of multiple‐spell hazard rate models highlight the weaknesses of the Italian labour market, the insufficiencies of the existing social security system, and the deep territorial dualism in generating persistent poverty for certain groups of the population.     

Modelling Deposit Insurance Scheme Losses in a Basel 2 Framework

This paper extends the existing literature on deposit insurance by proposing a new approach for the estimation of the loss distribution of a Deposit Insurance Scheme (DIS) that is based on the Basel 2 regulatory framework. In particular, we generate the distribution of banks’ losses following the Basel 2 theoretical approach and focus on the part of this distribution that is not covered by capital (tail risk). We also refine our approach by considering two major sources of systemic risks: the correlation between banks’ assets and interbank lending contagion. The application of our model to 2007 data for a sample of Italian banks shows that the target size of the Italian deposit insurance system covers up to 98.96% of its potential losses. Furthermore, it emerges that the introduction of bank contagion via the interbank lending market could lead to the collapse of the entire Italian banking system. Our analysis points out that the existing Italian deposit insurance system can be assessed as adequate only in normal times and not in bad market conditions with substantial contagion between banks. Overall, we argue that policy makers should explicitly consider the following when estimating DIS loss distributions: first, the regulatory framework within which banks operate such as (Basel 2) capital requirements; and, second, potential sources of systemic risk such as the correlation between banks’ assets and the risk of interbank contagion.