Does vertical specialisation increase productivity?

This paper investigates the impact of global value chain (GVC) participation on productivity. It uses data on trade in value‐added from the World Input‐Output Database. The results based on a panel estimation covering 13 sectors in 40 countries over 15 years suggest that participation in GVCs is a significant driver of labour productivity. Backward participation in GVCs, that is, the use of imported inputs to produce for exports, emerges as particularly important. An increase by 10% in the level of GVC participation increased average productivity by close to 1.6%.     

Better together: Complementarity between theory and practice in strategic management education

Theory versus practice is an enduring debate in the strategy pedagogy literature. Multiple authors have weighed in, proposing that we need more theory, more prmactice, or a specific mechanism to blend the two. The author questions the underlying assumption that theory and practice are in tension, instead using learning theories to develop a theoretical model positioning them as complements with synergistic effects on learning outcomes. This changes the conversation; all the previous entries in the debate stand to be valid, depending on the surrounding circumstances, and the field can now turn its attention to establishing the contingencies that influence which theory-practice blend works best in specific situations.     

Wealth and Income Inequality in Europe

While it has long been apparent that global levels of wealth and income inequality have been steadily increasing since the 1970s, the issue received scant attention in Europe until the recent fi nancial crisis and the resulting Great Recession illuminated for the general public just how great the chasm between the very rich and everybody else had grown. This realisation was coupled with an increased focus on inequality among economists and other academics, leading to a fresh drive for policy ideas to remedy the alarming trend. This Forum comprises a diverse range of viewpoints on the recent history and dynamics of inequality within Europe, each striving to defi ne the root causes in the various countries being examined. The defi nition of these causes, of course, can inform the direction of policies aimed at alleviating the growing inequality in many European countries and thereby curtail one of the major political and social issues of our time.     

Are all non-GAAP disclosures created equal?

Publicly traded companies in the U.S. must prepare financial statements in accordance with the requirements of U.S. Generally Accepted Accounting Principles (U.S. GAAP). However, many companies also report non-GAAP measures—those calculated outside the requirements of U.S. GAAP—in their earnings announcements, annual reports, and SEC filings. The SEC began regulating the release of non-GAAP measures in 2003 and has expressed ongoing concern regarding firms’ disclosure of the same, but the use of non-GAAP measures continued to increase nonetheless. A 2018 Audit Analytics report found that in 2006, 76% of SEC filers included non-GAAP measures, but in 2017 that percentage rose to 96%. This installment of Accounting Matters provides an overview of the SEC regulations regarding non-GAAP measures, examines how investors react to non-GAAP disclosures, and provides guidance regarding how companies can avoid receiving a non-GAAP disclosure comment letter from the SEC.     

Biosecurity in agriculture: an economic analysis of coexistence of professional and hobby production*

One component of biosecurity is protection against invasive alien species, which are one of the most important threats worldwide to native biodiversity and economic profitability in various sectors, including agriculture. However, agricultural producers are not homogeneous. They may have different objectives and priorities, use different technologies, and occupy heterogeneous parcels of land. If the producers differ in terms of their attitude towards invasive pests and the damages they cause, there are probably external effects in the form of pest spread impacts and subsequent damages caused. We study such impacts in the case of two producer types: profit‐seeking professional producers and utility‐seeking hobby producers. We show that the hobby producer, having first set a breeding ground for the pest, under‐invests in pest control. We also discuss potential policy instruments to correct this market failure and highlight the importance of considering different stakeholders and their heterogeneous incentives when designing policies to control invasive alien species.     

Fiscal Policy and Welfare in a Small Open Economy with Imperfect Competition

This paper considers the effects of fiscal policy in a two-sector small open economy, with unionized labour markets, and heterogeneous types of imperfect competition in the product markets. By making the marginal propensity to import endogenous, the paper shows that there is no robust or general relationship between the balanced-budget multiplier and the degree of imperfect competition. The fiscal multiplier with distortionary taxes can be positive or negative, depending on the size of the importables sector and the foreign firm's market share. The normative rule for fiscal policy depends on the size of the fiscal multiplier. An increase in economic activity is insufficient by itself to induce the government to over-supply public goods relative to the Walrasian case.     

Review Essay: The Bank for International Settlements: An Assessment of its Role in International Monetary and Financial Policy Coordination

This article reviews the role of the Bank for International Settlements (BIS) and its adaptability to the changing international financial structure, from the gold standard to floating exchange rates. Today, the BIS has assumed the role of creator of international standards for banks and financial conglomerates through the Basel Committee on Banking Supervision. Its implied mission is to prevent international financial crises and to mitigate negative externalities when they occur. The overall assessment of the BIS is positive. Its small membership gives it a sense of purpose and minimizes free riding. Given the high degree of financial integration in the world and consequent large spillovers, the BIS would have to be created if it did not already exist.     

Technology and labor regulations: theory and evidence

This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which bind more for low skilled workers, become less technologically advanced in their high skill sectors, but more technologically advanced in their low skill sectors. We then present data on capital-output ratios, on estimated productivity levels and on patent creation, which tend to support the predictions of our model.     

On the Consumer Value of Complementarity: A Benefit Function Approach

The article develops a conceptual model of the consumer value of complementarity and illustrates its usefulness in an application to fisheries. Complementarity arises when some goods have a positive effect on the marginal value of other goods. We propose a measurement of the value of complementarity based on the benefit function. Our econometric analysis of fish consumption in Italy examines these issues, with special attention given to dynamics. Our results show that, while short-run fish demand is characterized by substitution relationships, complementarity does develop in the intermediate run and in the long run.