Monetary policy and dynamic efficiency in economies of overlapping generations

In an economy of overlapping generations, money, distinct from debt, provides liquidity and is dominated as a store of value. Nominal rates of interest that are low, but do not vanish, eliminate equilibrium allocations far from Pareto optimal allocations.     

Dollarization and the inflation threshold

Abstract.  Empirical evidence suggests non-linearity in the impact of inflation on financial intermediation and real activity. Evidence also suggests that high inflation affects financial intermediation through the substitution of dollars 'under the mattress' for savings in domestic banks. We model an economy where inflation and real activity are positively related at low levels of inflation. However, when the inflation rate exceeds a threshold, agents substitute dollars for deposits issued by domestic banks, reducing the scale of financial intermediation and investment. As a consequence, at high levels of inflation, capital stock and output become negatively related to the inflation rate.     

What is the Value of Luxury? A Cross‐Cultural Consumer Perspective

International luxury businesses are challenged by the identification and satisfaction of the common needs and desires of global market segments. Although luxury goods have become available to a wider range of consumers, the traditional conspicuous consumption model has been transformed into a new experiential luxury sensibility that is marked by a change in the way that consumers define luxury. Based on an empirical study in collaboration with American, European, and Asian researchers, the results provide evidence that consumers in various parts of the world purchase or wish to purchase luxury products for varied reasons but that such consumers generally possess similar values. Regardless of their countries of origin, the basic motivational drivers of luxury consumers are similar among the financial, functional, personal, and social dimensions of luxury value perceptions, although the relative importance of these dimensions varies.     

Path-dependent scenario trees for multistage stochastic programmes in finance

The formulation of dynamic stochastic programmes for financial applications generally requires the definition of a risk–reward objective function and a financial stochastic model to represent the uncertainty underlying the decision problem. The solution of the optimization problem and the quality of the resulting strategy will depend critically on the adopted financial model and its consistency with observed market dynamics. We present a recursive scenario approximation approach suitable for financial management problems, leading to a minimal yet sufficient representation of the randomness underlying the decision problem. The method relies on the definition of a benchmark probability space generated through Monte Carlo simulation and the implementation of a scenario reduction scheme. The procedure is tested on an interest rate vector process capturing market and credit risk dynamics in the fixed income market. The collected results show that a limited number of scenarios is sufficient to capture the exposure of the decision maker to interest rate and default risk.     

The Effects of Non‐tariff Measures on Agri‐food Trade: A Review and Meta‐analysis of Empirical Evidence

The increasing policy interest and academic debates on non‐tariff measures (NTMs) has stimulated a growing literature on how NTMs affect agri‐food trade. The empirical literature provides contrasting and heterogeneous evidence, with some studies supporting the ‘standards as catalysts’ view, and others favouring the ‘standards as barriers’ explanation. To the extent that NTMs can influence trade, understanding the prevailing effect, and the motivations behind one effect or the other, is a pressing issue. We review a large body of empirical evidence on the effect of NTMs on agri‐food trade and conduct a meta‐analysis to disentangle potential determinants of heterogeneity in estimates. Our findings show the role played by the publication process and by study‐specific assumptions. Some characteristics of the studies are correlated with positive significant estimates, others covary with negative significant estimates. Overall, we found that the effects of NTMs vary across types of NTM, proxies used for NTMs, and levels of detail of studies. The estimated effects are also influenced by methodological issues and publication processes.     

Reformulating Arrow’s Conditions in Terms of Cardinal Pairwise Comparison Matrices Defined Over a General Framework

In the paper, we deal with cardinal preferences of experts when these are expressed by means of Pairwise Comparison Matrices (PCMs). In order to obtain general results, suitable for several kinds of PCMs proposed in literature, we focus on PCMs defined over a general unifying framework, that is an Abelian linearly ordered group. In this framework, firstly, we aggregate several PCMs and we analyse how the aggregated PCM preserves some coherence levels, such as transitivity, weak consistency and consistency. Then, we reformulate Arrow’s conditions in terms of PCMs, and we provide two preference aggregation procedures for representing group preferences that give a social PCM and a social cardinal ranking, respectively. Finally, we analyse how these preference aggregation procedures satisfy reformulated Arrow’s conditions.     

Breaking Through Complexity: Visual and Conceptual Dimensions in Logo Evaluation across Exposures

This research investigates the effects of visual and conceptual complexity (VC and CC) on brand logo evaluations at single and multiple exposures. Building upon the theoretical distinction between visual and conceptual constructs and on a processing fluency account, it is proposed that the effects of VC and CC on attitude toward the logo change across exposures following opposite patterns, and are driven by the mechanisms of perceptual fluency and conceptual fluency, respectively. The results of a hybrid experimental study suggest that the initially positive effect of VC on attitude toward the logo becomes negative with multiple exposures, whereas the initially negative effect of CC on attitude toward the logo becomes positive as exposures increase. The findings contribute to research on consumer reactions to the visual elements of brands, and offer guidelines to brand managers and logo designers for leveraging on VC and CC, as well as on the number of exposures, in order to raise the attractiveness of logos.     

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.