Developing countries in the process of economic globalisation

The last decade has witnessed the emergence of a more global economy reflecting the continued rise in trade (especially of manufactures) as a proportion of output, a major shift of international specialisation, faster diffusion of technical progress and the globalisation of financial markets. What have been the effects of this process on developing countries?     

THE ECONOMICS OF THE GOVERNMENT BUDGET CONSTRAINT

This article summarizes the simple analytics of the macroeconomiceffects of government budget deficits. The presentation is organizedaround three key relationships: the national income accountsbudget deficit identity, the deficit financing identity, andthe dynamic equation for the evolution of the ratio of publicdebt to gross national product. The national income accountsidentity highlights the effect of the deficit on domestic savingand investment and the current account. Examining the financingof the deficit brings to light the different kinds of macroeconomicimbalance the deficit can cause—as a first approximation,printing money excessively shows up as inflation, excessiveuse of foreign reserves leads to crises in the balance of payments,high foreign borrowing leads to a debt crisis, and too muchdomestic borrowing leads to high real interest rates and crowdingout of private investment. The debt dynamics equation is usedto show the long-run constraints on fiscal policy.      

Who is Who

Praxis / MagazinNews

Who is Who     

State of the Art der Forschung zum Interkulturellen Konsumentenverhalten. Eine Analyse der Literatur von 2005 bis 2010

Companies entering different country markets frequently face the challenge of adapting their marketing-mix to specific value orientations. Cross-cultural consumer research aims at supporting this adaption process. Therefore, research tries to develop theories that explain under which circumstances consumer behavior is culture-free or culture-bound. The present article conducts a literature review in order to examine how the field has developed from 2005 to 2010. The review systematically evaluates 92 relevant studies considering the research approach, the selection of cultural units, the operationalization of culture, and the type of consumer behavior. The analysis reveals that the field is growing in terms of quantity and variety. Additionally, recent studies have overcome some methodological problems of cross-cultural research. The article condenses the most relevant findings and derives implications for further research.     

Evaluating FOMC forecast ranges: an interval data approach

The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve publishes the range of members’ forecasts for key macroeconomic variables, but not the distribution of forecasts within this range. To evaluate these projections, previous papers compare the midpoint of the range with the realized outcome. This paper proposes an alternative approach to forecast evaluation that takes account of the interval nature of projections. It is shown that using the conventional Mincer–Zarnowitz approach to evaluate FOMC forecasts misses important information contained in the width of the forecast interval. This additional information plays a minor role at short forecast horizons but turns out to be of sometimes crucial importance for longer-horizon forecasts. For 18-month-ahead forecasts, the variation of members’ projections contains information that is more relevant for explaining future inflation than information embodied in the midpoint. Likewise, when longer-range forecasts for real GDP growth and the unemployment rate are considered, the width of the forecast interval comprises information over and above the one given by the midpoint alone.     

Empirical generalizations of demand and supply dynamics for movies

High financial risks in production and marketing, the hedonic nature of products, and the global cultural relevance of movies have encouraged a substantial number of researchers to analyze the success drivers of movies. This research provides empirical generalizations in managing the supply and demand of motion pictures. Prior empirical research either ignored the endogeneity of box office and screen allocation or was based on selective samples, ignoring the large amount of smaller movies released to the market. Using two large and unique samples of all movies released in two major movie markets, the US (2000–2010; n = 2098) and Germany (2002–2010; n = 1360), we extend prior research and present empirical generalizations and new fields of research.     

Formal institutions and subjective well-being: Revisiting the cross-country evidence

A long tradition in economics explores the association between the quality of formal institutions and economic performance. The literature on the relationship between such institutions and happiness is, however, rather limited, and inconclusive. In this paper, we revisit the findings from recent cross-country studies on the institution–happiness association. Our findings suggest that their conclusions are qualitatively rather insensitive to the specific measure of ‘happiness’ used, while the associations between formal institutions and subjective well-being differ among poor and rich countries. Separating different types of institutional quality, we find that in low-income countries the effects of economic–judicial institutions on happiness dominate those of political institutions, while analyses restricted to middle- and high-income countries show strong support for an additional beneficial effect of political institutions. Our results bear important implications that we discuss in the concluding section of the paper.