Intergenerational earnings mobility in Singapore and the United States

This study compared intergenerational earnings mobility in Singapore and the United States by replicating the sample criteria in the Singapore National Youth Survey on the U.S. Panel Study of Income Dynamics. The mean estimated earnings elasticities are almost identical: 0.26 in Singapore and 0.28 in the United States. Transformed to 0.44 and 0.47 respectively to reflect permanent status, mobility in the two countries is moderately low compared internationally. The finding of similar mobility is not surprising given that the two countries have similar economic realities, welfare systems, education regimes, and labor structures. Policy makers face the daunting challenge of overcoming immobility and inequality while maintaining global competitiveness.     

Flexible Estimation of Copulas: An Application to the US Housing Crisis

Zimmer (‘The role of copulas in the housing crisis’, Review of Economics and Statistics 2012; 94 : 607–620) provides an interesting case study of the pitfalls of using parametric copulas to understand the US housing crisis in the latter part of 2000s. The original study by Zimmer (2012) employs a finite‐mixture copula to illustrate that the symmetry of the Gaussian copula may not be tenable, especially for US housing price data during the time period from 1975:Q2 to 2009:Q1. We undertake a replication of his study in a wide sense. First, we replicate the study by incorporating revised data and then extending the dataset to include the most recent data. Second, we implement a nonparametric copula estimator recently proposed by Racine (‘Mixed data kernel copulas’, Empirical Economics forthcoming) to the parametrically filtered data used in Zimmer (2012). Our replication finds that the application of the nonparametric copula to the same and extended filtered data provides an alternative flexible specification for copulas. However, the overall cautionary message of the flexible‐form copula espoused in Zimmer (2012) remains. Copyright © 2015 John Wiley & Sons, Ltd.     

Special economic zones and growth in China and India: an empirical investigation

This paper investigates the role of special economic zones (SEZs) in liberalizing the Chinese and Indian economies and their impact on economic growth. The policy change to a more liberalized economy is identified using SEZ variables as instrumental variables. The results indicate that export and FDI growth have positive and statistically significant effects on economic growth in these countries. The presence of SEZs increases regional growth but increasing the number of SEZs has negligible effect on growth. The key to faster economic growth appears to be a greater pace of liberalization.     

GAINS TO BIDDER FIRMS IN CASH AND SECURITIES TRANSACTIONS

This paper presents empirical test results of alternative hypotheses regarding differences in returns to shareholders of bidding firms that choose different payment methods (cash or securities). The evidence is consistent with the payment method signaling hypothesis, which asserts that when management of the bidding firm believes its own stock to be overvalued (undervalued), securities (cash) will be the preferred payment method. The results are not consistent with either the overpayment hypothesis or the present value/hubris hypothesis. The findings also explain the conflicting results reported in prior work on gains to bidding firms.     

Consumption and Government Spending Substitutability Revisited: Evidence from Taiwan

Bailey (1971) first documented the idea that there may be a degree of substitutability of the relationship between government spending and private consumption. In this paper, this issue is embedded in a Markov–switching framework where the relationship is subject to shifting between two different regimes. To control small–sample bias, the bootstrap maximum likelihood estimator is used. Evidence from Taiwan indicates that the crowding–in effect dominated the pre–1980 period; the substitutability dominates the post–1980 period. It renders unconvincing the Keynesian plea for expansionary fiscal policy of Taiwan since the 1980s. A Mundell–Fleming approach is proposed to explain this dating.     

A Hong Kong view of offensive advertising

Considerable research has been conducted on offensive advertising in Western countries. However, not much is known about consumers' views of offensive advertising in an Asian context. This research, which was conducted in Hong Kong, aimed at identifying what product/service advertisements consumers find offensive, what executional styles consumers find offensive, consumers' tolerance of offensive advertisements in different media and the effects of offensive advertisements on consumers' purchase intentions. The results from a survey of 200 consumers showed that chat-line services and funeral services were considered the most offensive products or services to be advertised. When looking at the manner of advertising, sexist themes, indecent language and nudity were found to be the major reasons for the respondents finding advertisements offensive. In general, direct mail was considered to be a medium that prompts lower tolerance by consumers to potentially offensive advertisements while men and women's magazines were considered to be media that prompt higher tolerance to potentially offensive advertisements. Finally, it was found that levels of advertising offensiveness had an effect on purchase intentions.     

Allocate Capital and Measure Performances in a Financial Institution

This paper provides a model for allocating capital and measuring performances for financial institutions. The methodology relates the economic valuation of the balance sheet to the market value of the firm. In so doing, each business unit is evaluated on an economic basis, and the capital allocated to these units is related to the risk premiums that the market demands. The paper's results have broad applications for corporate managers, risk managers, and other market participants in managing financial institutions to increase shareholders' value.     

Comparing Cournot and Bertrand equilibria in an asymmetric duopoly with product R&D

We compare the Cournot and Bertrand equilibria in an asymmetric duopoly with product R&D competition. If a firm’s marginal cost is lower than that of its rival, then this firm (its rival) is referred to as the more (less) efficient firm. Under each mode of competition, there are three types of equilibria: blockaded-entry, deterred-entry, and accommodated-entry. Moreover, the presence of R&D investment makes it harder for the less efficient firm to survive. Cournot competition entails a unique equilibrium, whereas Bertrand competition may yield two equilibria. It is harder for the less efficient firm to survive under Bertrand competition than under Cournot competition. Versus Cournot competition, Bertrand competition yields higher industry output, and it shifts production from the less efficient firm to the more efficient firm. This result, together with the known size effect, explains the following three findings. First, the more efficient firm has a normal output ranking, whereas the less efficient firm may demonstrate an output reversal. Second, the more efficient firm may demonstrate a R&D reversal, whereas the less efficient firm has a normal R&D ranking (its Cournot R&D effort exceeds its Bertrand R&D effort). Third, Bertrand competition is more welfare-efficient than Cournot competition.     

Restructuring of financial institutions and the corporate sector in Korea

This paper explores causes of the Korean currency crisis which started in November 1997. This paper also presents restructuring proposals and introduces the progress made so far. The urgency for quick restructuring and the necessity of the injection of money from both the government and foreign investors are emphasized. Restructuring of financial and corporate sectors should be pursued simultaneously. In the financial sector, the restructuring of banks should take precedence over other financial institutions. The key task in terms of bank restructuring involves the resolution of bad loans, recapitalization and the expedited reorganization of nonviable banks. Corporate reform is also important. Banks should play a central role in corporate workouts, especially in lowering excessive corporate debt and triggering corporate restructuring based on core competence. Transparency of corporate management, internationally accepted accounting practices, fuller disclosure requirements and stronger monitoring by minority shareholders are prerequisites for effective market discipline. Reform of ownership and governance structure are also important in enhancing managerial accountability of corporates as well as financial institutions.     

Evaluating Industrial Relations Systems of OECD Countries from 1993 to 2005: A Two‐Dimensional Approach

This article uses both cross‐sectional and longitudinal methods to evaluate the national industrial relations systems of 30 Organisation for Economic Co‐operation and Development (OECD) countries from 1993 to 2005. We adopt a pluralistic view of industrial relations that gives equal weight to efficiency and equity, along with a general systems model consisting of input, process and output. We rank each country in terms of a combined score of efficiency and equity. We find that the 30 OECD countries can be separated into three distinct groups (high on both equity and efficiency; high on efficiency but low on equity; moderate on equity and low on efficiency), and that these groups exhibit considerable stability over time.