Assessing the Behaviour of Non-Survey Methods for Constructing Regional Input–Output Tables through a Monte Carlo Simulation

The paper aims to analyse the behaviour of a battery of non-survey techniques of constructing regional I-O tables in estimating impact. For this aim, a Monte Carlo simulation, based on the generation of ‘true’ multiregional I-O tables, was carried out. By aggregating multi-regional I-O tables, national I-O tables were obtained. From the latter, indirect regional tables were derived through the application of various regionalisation methods and the relevant multipliers were compared with the ‘true’ multipliers using a set of statistics. Three aspects of the behaviour of the methods have been analysed: performances to reproduce ‘true’ multipliers, variability of simulation error and direction of bias. The results have demonstrated that the Flegg et al. Location Quotient (FLQ) and its augmented version (AFLQ) represent an effective improvement of conventional techniques based on the use of location quotients in both reproducing ‘true’ multipliers and generating more stable simulation errors. In addition, the results have confirmed the existence of a tendency of the methods to over/underestimate impact. In the cases of the FLQ and the AFLQ, this tendency depends on the value of the parameter δ.     

The New Macro Political Economy of Alberto Alesina

The paper examines the scientific work of Alberto Alesina as leader of a new school of macroeconomic political economy which has renovated and broadened the content of this branch of the economic science. His political economy is not dominated by the axiomatic normative economics, where benevolent planners maximize the aggregate welfare dressed in simplistic neo-Keynesian clothing. After an examination of its roots in the Italian tradition of political economy and public finance the paper makes a comparison with the public choice approach, with decision-making by the electors and politicians is done. However, Alesina new macro-economic perspective incorporates the hypothesis of rational agents while the public choice approach is inherently micro economic and is generally based on limited rationally.     

Indeterminacy and multiple steady states with sector-specific externalities

This paper studies a two-sector model with aggregate and sector-specific external effects in production and inelastic labor supply. We first characterize the existence, uniqueness and multiplicity of the steady states as well as their welfare properties. We particularly focus on the CES production functions and show that the steady state is generically either unique or there are exactly two. A simple geometrical methodology enables us to characterize the local dynamics of the steady state. We show that in order to get indeterminacy, the presence of both aggregate and sector-specific external effects is needed, along with low capital–labor elasticities of substitution and high, but bounded from above, elasticities in intertemporal consumption. We perform a sensitivity analysis and show that indeterminacy emerges for parameter values in line with those used in calibrations of standard RBC models, that is for unitary elasticities of input substitution and of intertemporal substitution in consumption.     

The Italian economia aziendale and chambers' CoCoA

At first glance the Italian accounting tradition of Economia Aziendale and Chambers’ system of Continuously Contemporary Accounting (CoCoA) appear extreme opposites. The ex ante financial calculation of distributable income drawing on the net present values of the aggregative net assets in the former, and in the latter a system of accounting for an all‐inclusive income with the separable assets measured in terms of their current cash equivalents, appear irreconcilable, unlikely bedfellows. But the International Financial Reporting Standards present a system using separable and aggregative assets’ fair values and calculations of their net present values in assessing asset impairment. Whether Economia Aziendale and CoCoA are indeed so opposed deserves renewed examination. Anglo‐American accounting, of which expositions of CoCoA are part, is said to lack a business economics tradition of the kind said to justify Economia Aziendale. This stands in stark contrast with European traditions manifested in the Dutch Bedrijfseconomie, the German Betriebswirtschaft, and the Italian Economia Aziendale. This article seeks to understand that absence by contrasting—the Economia Aziendale framework and accounting theory developed in the Anglo‐American tradition. The primary elements of space and time coordination—the lynchpins of the pure theory of the azienda (the core of Economia Aziendale)—are generally regarded as missing in the Anglo‐American tradition. But the original construction of Economia Aziendale leads to the generalization that any attempt to determine a firm's value or to measure and analyse its performance during its lifetime would result in an unacceptable interruption of the space and time coordination, and yield unreliable results. Curiously, the analysis here exposes an unexpected complementarity of Chambers’ CoCoA and some postulates of the pure theory of Economia Aziendale. The theory that has been only partially acceptable to the Anglo‐American profession (namely its use of market [fair] values) emerges as highly compatible with the most theoretically extreme in the Italian tradition.     

Economic and political liberalizations

This paper studies empirically the effects and the interactions of economic and political liberalizations. Economic liberalizations are measured as reforms that increase the scope of the market. Political liberalizations correspond to the event of becoming a democracy. Using difference-in-difference estimation, we study the effects on economic performance, macroeconomic policy and structural policies. Our main contribution is the analysis of the joint effects of both liberalizations, and the finding that the sequence of reforms matters. Countries that first liberalize the economy and then become democracies do much better than countries that pursue the opposite sequence, in almost all dimensions.     

Family versus Non‐Family Firm Franchisors: Behavioural and Performance Differences

Drawing from resource‐based theory, we argue that family firm franchisors behave and perform differently compared to non‐family firm franchisors. Our theorizing suggests that compared to a non‐family firm franchisor, a family firm franchisor cultivates stronger relationships with franchisees and provides them with more training. Yet, we predict that a family firm franchisor achieves lower performance than a non‐family firm franchisor. We argue, however, that this performance relationship reverses itself when family firm franchisors are older and larger. We test our hypotheses with a longitudinal dataset including a matched‐pair sample of private U.S. family and non‐family firm franchisors.     

Bootstrap HAC Tests for Ordinary Least Squares Regression*

There is a need for tests that are derived from the ordinary least squares (OLS) estimators of regression coefficients and are useful in the presence of unspecified forms of heteroskedasticity and autocorrelation. A method that uses the moving block bootstrap and quasi‐estimators in order to derive a consistent estimator of the asymptotic covariance matrix for the OLS estimators and robust significance tests is proposed. The method is shown to be asymptotically valid and Monte Carlo evidence indicates that it is capable of providing good control of significance levels in finite samples and good power compared with two other bootstrap tests.     

Fair wages,labor relations and asset returns

The paper investigates the nexus between labor and financial markets, focusing on how labor union’s attitude in the wage-setting process and the firm’s investment strategy affect asset returns. We assume that the labor union’s relative preferences between wage and employment depend on selected measures of firm’s financial performance. The paper shows that if the labor union ties its preference for wage to the firm’s dividends (or to any other quantity measuring available liquidity), then the volatility of the firm’s returns increases. Consequently, equities have to grant high expected returns in order to remunerate the increased volatility. This mechanism offers an explanation for the “equity premium” (that is the difference between the equity return rate and the risk free rate). It is a welcome result that the simulated excess return is about the empirical estimate and that it is obtained with a plausibly low parameterization of the shareholders’ risk aversion.