Consumption multipliers of different types of public spending: a structural vector error correction analysis for the UK

The aim of this paper is to investigate the relationship between government spending and private consumption in the UK, for which there is scarce previous empirical evidence. We disaggregate public expenditure into three categories and search for the corresponding private consumption multipliers. Our analysis is based on the estimation of a structural vector error correction model with quarterly non-interpolated data for the period 1981:1–2007:4. Initially, we estimate negative but barely significant effects on consumption of shocks to total public spending. Then, using the public spending breaking down, we find that while shocks to public wages crowd-out private consumption as predicted by neoclassical models, shocks to the non-systematic component of social spending and government purchases of goods and services generate a positive reaction, so to crowd-in private consumption. Thus, the qualitative and quantitative dimensions of fiscal multipliers on private consumption change across different public spending categories. Our findings suggest that any empirical support of competing theoretical models on the issue would benefit from a disaggregation of government expenditure, rather than focusing on the aggregate measure.     

Probabilistic sophistication,second order stochastic dominance and uncertainty aversion

We study the interplay of probabilistic sophistication, second order stochastic dominance and uncertainty aversion, three fundamental notions in choice under uncertainty. In particular, our main result, Theorem 2, characterizes uncertainty averse preferences that are probabilistically sophisticated, as well as uncertainty averse preferences that satisfy second order stochastic dominance. As a byproduct, Proposition 2 highlights a fundamental tension between probabilistic sophistication/second order stochastic dominance and uncertainty aversion in the presence of nontrivial unambiguous events.     

Ascending auctions for multiple objects: the case for the Japanese design

Summary. We consider two ascending auctions for multiple objects, namely, an English and a Japanese auction, and derive a perfect Bayesian equilibrium of the Japanese auction by exploiting its strategic equivalence with the survival auction, which consists of a finite sequence of sealed-bid auctions. Thus an equilibrium of a continuous time game is derived by means of backward induction in finitely many steps. We then show that all equilibria of the Japanese auction induce equilibria of the English auction, but that many collusive or signaling equilibria of the English auction do not have a counterpart in the Japanese auction.Received: 2 September 2004, Revised: 20 April 2005, JEL Classification Numbers: C72, D44.Fabrizio Germano: Correspondence toWe are indebted to Philippe Jehiel for useful discussions and to Nicolas Vieille for suggestions in the proof of Proposition 2; we also thank seminar audiences in Athens, Basel, Beer-Sheva, Berlin, Brussels, Cambridge, Edinburgh, Exeter, Lausanne, Lisbon, London, Louvain-la-Neuve, Namur and Tel Aviv. Germano acknowledges financial support from Euopean Commission, TMR Network Grant ERBFMRXCT0055, “Cooperation and Information” as well from the Spanish Ministry of Science and Technology, Grants SEC2001-0792, SEJ2004-06319, and in form of a Ramon y Cajal Fellowship. Lovo is member of GREGHEC, unité CNRS, FRE-2810. The support of the Economic and Social Research Council (ESRC) is also gratefully acknowledged. The work was part of the programme of the ESRC Research for Economic Learning and Social Evolution.     

More Innovation with Less? A Strategic Contingency View of Slack Resources,Information Search,and Radical Innovation

This study investigates the nonobvious interrelationship between slack resources and radical innovation. While organizational slack and innovation literature has implicitly recognized a link between these constructs, at least two important aspects of their relationship have been overlooked. First, little attention has been paid to the mechanisms by which slack resources become beneficial for radical innovation. Drawing on information search and organizational learning theories, we propose distal search activity—searching for information outside the current knowledge domain of the firm—as a mediating variable between slack resources and radical innovation. Second, little consideration has been given to the strategic orientation of the firm as the context in which slack resources are deployed to enhance radical innovation. Adopting Miles and Snow's typology of strategic archetypes, we propose a moderating role of strategy in the slack resources–distal search–radical innovation chain of relations. We tested our hypotheses on a sample of Chinese high‐technology firms, using multiple informant survey data and regression analysis. Our results indicate that slack resources are positively related to radical innovation, and that this relationship is partially mediated by distal search. Thus, there appear to be two routes (one direct, one indirect) to transform slack resources into radical innovation. Further, moderation analysis shows that the effect of slack resources on distal search is strongest among analyzers, while the effect of distal search on radical innovation is strongest among defenders. In sum, our results suggest that analyzers are relatively more dependent on the amount of slack resources compared to other strategy types, that is, resource constraints would have a more negative effect on analyzers. We discuss theoretical and managerial implications of our study and conclude by suggesting future research opportunities.     

Managing the Unexpected Across Space: Improvisation,Dispersion, and Performance in NPD Teams

Organizations are increasingly moving toward a team‐based structure for managing complex knowledge in new product development (NPD) projects. Such teams operate in an environment characterized by dynamic project requirements and emergent nonroutine issues, which can undermine their ability to achieve project objectives. Team improvisation—a collective, spontaneous, and creative action for identifying novel solutions to emergent problems—has been identified as a key team‐situated response to unexpected challenges to NPD team effectiveness. Geographic dispersion is increasingly becoming a reality for NPD teams that find themselves needing to improvise solutions to emergent challenges while attempting to leverage the knowledge of team members who are physically distributed across various locations. However, very little is known about how teams' improvisational actions affect performance when such actions are executed in increasingly dispersed teams. To address this gap in the literature, this paper draws on the emerging literature on different forms and degrees of team dispersion to understand how team improvisation affects team performance in such teams. In particular this paper takes into account both the structural and psychological facets of dispersion by considering the physical distance between team members, the configuration of the team across different sites, as well as the team members' perception of being distant from their teammates. Responses from 299 team leaders and team members of 71 NPD projects in the software industry were used to analyze the relationship between team improvisation and team performance, as well as the moderating effect of the three different conceptualizations of team dispersion. Results of the study indicate that team improvisation has a positive influence on project team performance by allowing team members to respond to unexpected challenges through creative and timely action. However, increasing degrees of team member dispersion (both structural and psychological) attenuate this relationship by making it difficult to have timely access to other team members' knowledge and by limiting real‐time interactions that may lead to the development of creative solutions. The results of this research offer guidance to managers about when to balance the desire to leverage expertise to cope with unexpected events. Moreover, the present paper provides directions for future research on improvisation and team dispersion. Future research is encouraged to investigate factors that may help highly dispersed teams to overcome the shortcomings of team dispersion in dealing with emergent events.     

Panel data and descriptor for energy econometrics – an efficiency,resilience and innovation analysis

Quality & Quantity - The work at hand presents a new extensive panel dataset for energy economics, econometrics and policy. The referred dataset is made of 5000 observations circa, including 6...     

Teaching an old dog a new trick: Reserve price and unverifiable quality in repeated procurement

This paper shows that, in a repeated competitive procurement, a buyer can use the reserve price in a low-price auction as a “public”—hence nondiscriminatory—incentive device to elicit unverifiable quality. We study a model with many firms and one buyer, who is imperfectly informed on the firms' costs. When firms are ex ante identical, the provision of quality is sustained by a sufficiently high reserve price to reward firms for the quality provision and by the threat of setting a low reserve price forever, if quality is not delivered. The buyer can elicit the desired level of unverifiable quality provided her baseline valuation of the project is not too high and the net benefit from unverifiable quality is not too low. These results are robust to firms' heterogeneity in their time preferences when the punishment for a deviation is finite but sufficiently long.     

Reading cases of local quality of life assessment as incomplete and socio-politically contentious practices

Quality & Quantity - Quality of life represents one of the most relevant and controversial issues in the contemporary socio-economic and political scene. This paper examines local quality of...