The efficiency of the Scandinavian banking sector – a wavelet quantile regression analysis

In this article, the Scandinavian housing financing market is analysed in order to determine whether the interest rate price-discovery processes of Denmark, Norway and Sweden are efficient. Based on wavelet quantile regression analysis, we find systematic positive asymmetric price transmission (APT) inefficiencies. We conclude that there is a very high propensity for mortgage lenders to directly increase its customers’ mortgage interest rates subsequently to an increase in its borrowing costs. However, after a corresponding borrowing cost decrease, the same mortgage lenders are very slow to decrease its customers’ mortgage rates. These positive coefficients for so-called APT effects are found in all Scandinavian countries, even if the coefficients for Norway were not statistically significant. Wavelet quantile regression analysis, with a focus on the relevant higher percentiles, is easily motivated since the mortgage rates are adjusted very infrequently. Moreover, wavelet decomposition allows a robust analysis at different time frequency scales, while simultaneously controlling for nonstationary trends, autocorrelation and structural breaks. Except for the still positive but yet insignificant and inconclusive coefficients for Norway, the result is very clear-cut. Regardless of which wavelet scaling decomposition or quantile coefficient that is studied – positive APT effects are clearly identified and confirmed on the Scandinavian mortgage market.     

INNOVATION ACTIVITIES EXPLAINED BY FIRM ATTRIBUTES AND LOCATION

In this paper, innovation activities of a firm are observed as its R&D spending and participation in three categories of innovation systems. The various factors that can influence a firm's innovation efforts are divided into, (i) firm location reflecting the regional milieu and (ii) firm attributes such as corporate structure, nature of the knowledge production, type of industry and a set of specific firm characteristics. The study is based on information about 2094 individual firms, which may be non-affiliated or belong to a group (multi-firm enterprise). The empirical analysis applies a novel data set to examine the influence of location versus a vector of firm attributes. Among innovative firms, the location of a firm does not influence neither the R&D intensity nor the frequency of interaction in horizontal and vertical innovation systems, when controlling the skill composition, physical capital intensity, industry, firm size and market extension. The paper contributes to the literature by observing that innovative firms have similar characteristics irrespective of where they are located, although the share of innovative firms differs between regions.     

Innovative Assets And Inter-Asset Linkages—A Resource-Based Approach To Innovation

The paper proposes a framework for analyzing assets and inter-asset linkages associated with technological innovation. The framework is consistent with a Penrosian view of the firm and draws on recent contributions from both the more general resource-based perspective and the innovation and technology perspective of the firm.

Three broad categories of firm assets are distinguished: tradeable resources, technical/functional capabilities and managerial competences. Assets for technological innovation are defined as resources, technical capabilities and managerial competences for developing new products and processes. A taxonomy of generic innovative assets is proposed that distinguishes four generic categories of innovative assets: Scientific research assets, process innovative assets, product innovative application assets and aesthetic design assets. Critical inter-asset linkages are analyzed in terms of inter-asset specificity. It is argued that high degrees of inter-asset specificity provide greater scope for innovation and make higher demands on the innovative assets and their coordination than low degrees of inter-asset specificity. It is moreover suggested that complementary assets not only play the role of assuring proper commercialization of given innovations; they may also play a critical role as a ‘focusing device’ for directing the innovative process.

Finally, some implications for strategy in innovative firms are indicated. Thus, the proposed inter-asset framework may help to specify the notion of core competences and provide a more differentiated perspective on innovation strategy and first-mover advantages.     

Orthodox Core–Heterodox Periphery? Contrasting Citation Networks of Economics Departments in Vienna

ABSTRACT

The notion of an ‘orthodox core–heterodox periphery’ structure and the extent of interdisciplinary links have been widely discussed, and partially investigated bibliometrically, within economic discourse. We extend this research by applying tools from social network analysis to citation data of three economics departments located in Vienna, two mainstream and one non-mainstream, to assess their relative citation patterns. We show that both mainstream economics departments follow the asserted core–periphery pattern and have a mono-disciplinary research focus, while the citation network of the non-mainstream department has a polycentric structure and is both more heterodox and interdisciplinary. These findings suggest that discussions about the future of heterodox economics should pay more attention to the organizational level and seek allies from other disciplines.     

On the origin and rise of central bank independence in West Germany∗

Abstract

This paper investigates the (re-)establishment of central banking in West Germany after 1945 and the history of the Bundesbank Act of 1957. The main focus is on the early emphasis on central bank independence, which at the time represented a German peculiarity. The paper inquires whether contemporary German economic thought may have provided a theoretical case for this peculiar tradition and scrutinizes the political calculus that motivated some key actors in the play. Contrary to conventional wisdom, important contradictions between the postulate of central bank independence and Ordoliberalism are identified.

JEL Classification Codes: B22, B31, E50     

The World Market for Labor and the World Market for Industrial Sites

At the center of the on-going debate about the U.S. Social Security system is the question of whether the way the system is financed can cope with the future challenges posed by the retiring Baby Boom generation. The "reformers" suggest changing the design of the system by moving to fully funded defined contribution retirement plans. Others argue that the so-called demographic problems are being used as an excuse to privatize the system. But both sides spend almost all of their energy and time figuring out the timing of insolvency of the system and the validity of the assumptions made in each forecast. In contrast, the present study closely examines the changing macroeconomic dynamics of the system since the 1960s. The analysis shows that undermining of the system is caused not by demographic changes or financing mechanisms but by low wages and medical inflation.     

Optimal Harvesting of an Age-Structured Schooling Fishery

Biologists have criticized traditional biomass models in fishery economics for being oversimplified. Biological stock assessment models are more sophisticated with regard to biological content, but rarely account for economic objectives. This study includes a full age-structured population model for studying schooling fisheries and extends the delayed difference approach used in earlier studies. We take the total harvest as the choice variable, resulting in a simple analytical structure. The model produces optimal steady states that may be higher or lower compared to the delayed-difference formulation. The model is applied to the Baltic sprat fishery. Both ecological and harvesting cost data support specifying Baltic sprat as a schooling fishery. Given nonlinear harvesting costs, the optimal solution is a path toward a steady state with smooth annual harvest and population age structure. Sensitivity analysis shows that the optimal solution is highly dependent on the population level of the sprat’s main predator Baltic cod. A linear cost function and an interest rate below 9 % imply pulse fishing instead of smooth continuous harvesting. Given nonlinear harvesting cost, the optimal steady state yield is rather insensitive to changes in the interest rate. However, under a high cod scenario, interest rates of 10 % or higher implies that no optimal steady state exists.     

Changing Economic Structures and Impacts of Shocks: Evidence from a Dynamic Stochastic General Equilibrium Model for China

We present a small‐scale dynamic stochastic general equilibrium model that features price rigidities, habit formation in consumption and costs in capital adjustment. We estimate the key parameters and calibrate the model with data for the Chinese economy. Our interest centres on the impact of technology and monetary policy shocks for different structures of the Chinese economy. In particular, we evaluate how a rebalancing of the economy from investment‐led to consumption‐led growth would affect the economic dynamics after a shock occurs. Our findings suggest that a rebalancing would reduce the volatility of the real economy in the event of a technology shock, which provides support for policies aiming to increase the consumption share in China.     

Intergenerational Income Persistence in Urban China

Intergenerational income elasticities are estimated using samples for urban China (covering many cities) for the years 1995 and 2002 and compared with results from other studies. We find that the income relation between the pairs—sons and fathers, sons and mothers, and daughters and mothers—are in 2002 all similar in magnitude. In contrast the relation between daughters' and fathers' income is weaker. The income relationship between offspring and mothers was weaker in 1995 than in 2002. Our preferred estimates of income persistence for the son/father pairs of 0.47 for 1995 and 0.53 for 2002 are higher than those which have been reported in the literature for several high‐income countries with large welfare states. The strength of the income link between sons and fathers in urban China appears to be not very different from what has been reported for countries such as Brazil, Chile, and the U.S.     

Time-specific disturbances and cross-sectional dependency in a small-sample heterogeneous panel data unit root test

In their seminal work, Im et al. (1997 Im, KS, Pesaran, MH and Shin, Y. 1997. Testing for unit roots in heterogeneous panels. 1997. Working paper, Department of Applied Economics, University of Cambridge. Mimeographed [Google Scholar], 2003 Im, KS, Pesaran, MH and Shin, Y. 2003. Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115: 53–74. [Crossref], [Web of Science ®] , [Google Scholar]) suggested that time series for several cross-sectional units could be used to increase the power of the Dickey--Fuller unit root test. They argued that when cross-sectional correlation is a problem that can be modelled by a time-specific factor, demeaning across the cross-sectional units can solve the problem. In this study, this proposition is proven valid, but it is also shown that previously supplied standardizing moments are inappropriate when the number of cross-sections are small, causing size to differ from the significance level. To correct this size distortion, the current paper supplies response surface parameters that can be used to obtain moments that are valid when a time-specific factor suffices for modelling cross-sectional correlation in the heterogeneous panel data unit root framework. The correct size of the panel data unit root test comes at the cost of a somewhat lower power against a stationary alternative.