Unemployment or credit: Which one holds the potential? Results for a small open economy with a low degree of financialization

This paper investigates the relative importance of unemployment versus credit in determining the potential level of real activity for a small open economy with a low degree of financialization. We use a multivariate unobserved component model (MUC) to derive the potential output and the associated output gap for the Lithuanian economy. The model is estimated via Bayesian methods and the time paths of unobserved variables are extracted via the Kalman filter. The inclusion of unemployment in the MUC model substantially improves the estimates of the output gap in real time. Adding information about credit further emphasizes the overheating of the economy in the pre-crisis period, both in real time and ex post. Including credit preserves the conclusions regarding turning points. We uncover a strong negative correlation between the model-implied unemployment gap (without accounting for credit) and real credit growth. Data revisions do not appear to be the primary source of revisions of output gap estimates.     

Trend‐cycle Estimation Using Fuzzy Transform and Its Application for Identifying Bull and Bear Phases in Markets

This paper is focused on one of the fundamental problems in financial time‐series analysis; namely, the identification of the historical bull and bear phases. We start with the proof that the trend‐cycle can be well estimated using the technique of a higher degree fuzzy transform. Then, we suggest a mathematical definition of the bull and bear phases and provide a novel technique for their identification. As a consequence, the turning points (i.e. the points where the market changes its phase) are detected. We illustrate our methodology on several examples.     

Capital regulation and bank balance sheet adjustments: a simultaneous approach

This study examines the balance sheets of banks in 15 Asian countries from 2004 to 2016 to explore how they respond to stricter capital regulation. We consider the simultaneity of balance sheet adjustments. Employing a normalisation method, the study found that Asian banks increased regulatory capital, primarily through retained earnings, and expanded assets over the study period. However, the two-step system Generalised Method of Moments results do not support the positive effect of capital regulation on regulatory capital components adjustments. In addition, stricter capital regulation even induces banks to reduce lending.     

Activists’ Strategic Communication in an Authoritarian Setting: Integrating Social Movement Framing into Issues Management

Triangulating 18 in-depth interviews with activists and campaign participants, news coverage, and social media content related to the campaign “6,700 people for 6,700 trees,” this study integrates social movement framing theory and issues management framework to examine activists’ strategic communications in an authoritarian setting. Results indicate activists’ sophisticated use of framing strategies following different stages of the issue life cycle to legitimately form an issue and successfully manage the issue in order to achieve their goals. This study offers meaningful theoretical implications for examining strategic communication in social movement campaigns. It also discusses practical lessons for applying these strategies to foster social change in similar contexts.     

A global analysis of factors impacting the intensive and extensive margins of bilateral foreign direct investment

This study investigates determinants of bilateral foreign direct investment (FDI) on both margins, the extensive margin (whether to invest) and the intensive margin (how much to invest), based on the recent structural gravity model for FDI developed by Anderson et al. (Trade and investment in the global economy. National Bureau of Economic Research, Cambridge, MA, 2017). I examine a global data set comprised of 110 countries over 9 years, 2004–12. Apart from conventional gravity variables, the source country's technology capital shows a significant and positive impact on both FDI margins. Bilateral investment treaties play a significant role only in determining the extensive margin. Results on FDI stocks and FDI flows can lead to different conclusions; thus, research should consult both types of data series to find which variables have robust effects. Furthermore, breaking down the sample by country development levels reveals that FDI from less‐developed countries (LDCs) is not affected by many common variables, and thus, there is a need to develop more theories and empirical work to investigate the FDI from LDCs in particular.     

The Individual Aspect of Interorganizational Cooperation: Favor-Based Cooperation

ABSTRACT

Purpose

Interorganizational (IO) cooperation has been examined primarily as a role-based concept. This research seeks to extend this concept by examining a distinct mode of IO cooperation: favor-based cooperation. This concept refers to voluntary exchanges of preferential treatments between boundary personnel across organizations that are perceived as going beyond the requirements of their role relationships.     

Post-Failure Success: Sensemaking in Problem Representation Reformulation

Failure is an inevitable feature of innovation, and management research promulgates the importance of learning from it. Key to excelling at an innovation-based strategy is understanding the processes that can turn failures into successes. However, post-failure success remains elusive. Although failure signals that the innovation journey is off course, shifting trajectory is difficult, because it may require revising assumptions and reformulating the project’s problem representation. Using comparative case studies, this study set out to understand how problem representations are reformulated. Employing case method and comparing data versus theory iteratively, the important role of sensemaking and of leadership behaviors in driving post-failure success became salient. Findings show that problem representations post-failure require a process of problem formulation characterized by sensemaking and that innovative solutions are enabled by the reformulation of problem representations that spring from prospective sensemaking. Furthermore, this article identifies leadership change behavior as the linchpin driving a problem formulation process characterized by prospective sensemaking that catalyzes innovative solutions and explains why some projects thrive post-failure and others do not. This article provides empirical support to the theoretical work of the literature on problem formulation, while extending the learning-from-failure literature by emphasizing and demonstrating the process driving post-failure success. The major implication of our study is that different leadership behaviors may foster different types of sensemaking (retrospective or prospective), and that, in turn, the type of sensemaking matters for how a problem is reformulated. Ultimately, this article concludes that in the context of project failure, problem reformulation that springs from prospective sensemaking enables innovative solutions post-failure.     

Team innovation in retail services: the role of ambidextrous leadership and team learning

Service Business - Drawing upon the ambidextrous leadership theory for innovation, this study investigates the role of opening and closing leadership behaviors in both exploratory and exploitative...     

Economic policy uncertainty and firm tax avoidance

We find strong evidence that firms reduce cash effective tax rate when economic policy uncertainty heightens. Firms also engage in more aggressive forms of tax avoidance including long-term tax planning or shelters. Cash holdings attenuate the negative effect of policy uncertainty on cash effective tax rate, especially for financially constrained firms. The cash tax savings are retained for reinvestments rather than dividend payouts. Our findings suggest that policy uncertainty exacerbates external financing frictions, which in turn induces precautionary motives of tax avoidance.     

Invoice currency choice,nonlinearities and exchange rate pass-through

ABSTRACT

Estimating time-varying thresholds as a proxy for exporter’s predicted exchange rates, this study proposes a new approach to analyse possible asymmetric behaviour of exchange rate pass-through (ERPT) or pricing-to-market (PTM) in Japanese exports between yen appreciation and depreciation periods. Constructing the industry-specific nominal effective exchange rate on a contract (invoice) currency basis, we perform the multivariate threshold near-vector autoregressive (near-MTVAR) estimation and reveal a strong tendency of symmetric ERPT in the short-run, between yen appreciation and depreciation periods. From the 2000s, however, Japanese machinery exporters increased the degree of PTM even in the long-run, while other industries raised the degree of long-run ERPT, reflecting the difference of product differentiation across industries. This evidence has significant implications for the recent unresponsiveness of the Japanese trade balance to the large depreciation of the yen.