Empirical Analysis of Business Growth Factors Using Swedish Data

Empirical research conducted on the U.S., German, Australian, and Scottish economies has shown that age, size, location, legal form, and industry are related to business growth. Much of this research has focused on manufacturing firms, thus providing little information about the effect of industrial sector differences on these factors. We seek to both confirm that small independent firms demonstrate the greatest growth rates and to explore the effects of the industrial sector on this conclusion.
This article uses Swedish data to replicate previous research while using a different definition of business to enhance the study of effects from industry, international versus domestic businesses, and domestic versus foreign ownership. Results show that business age, beginning size, ownership form, industrial sector, and legal form are the most important factors related to growth. Although business growth differs among industrial sectors, youth, ownership independence, and small size are major factors that underlie growth across all industries.     

GEL statistics under weak identification

The central concern of this paper is the provision in a time series moment condition framework of practical recommendations of confidence regions for parameters whose coverage probabilities are robust to the strength or weakness of identification. To this end we develop Pearson-type test statistics based on GEL implied probabilities formed from general kernel smoothed versions of the moment indicators. We also modify the statistics suggested in Guggenberger and Smith (2008) for a general kernel smoothing function. Importantly for our conclusions, we provide GEL time series counterparts to GMM and GEL conditional likelihood ratio statistics given in Kleibergen (2005) and Smith (2007). Our analysis not only demonstrates that these statistics are asymptotically (conditionally) pivotal under both classical asymptotic theory and weak instrument asymptotics of Stock and Wright (2000) but also provides asymptotic power results in the weakly identified time series context. Consequently, the empirical null rejection probabilities of the associated tests and, thereby, the coverage probabilities of the corresponding confidence regions, should not be affected greatly by the strength or otherwise of identification. A comprehensive Monte Carlo study indicates that a number of the tests proposed here represent very competitive choices in comparison with those suggested elsewhere in the literature.     

Can Technology-Specific Deployment Policies Be Cost-Effective? The Case of Renewable Energy Support Schemes

While there is relatively limited disagreement on the general need for supporting the deployment of renewable energy sources for electricity generation (RES-E), there are diverging views on whether the granted support levels should be technology-neutral or technology-specific. In this review paper we question the frequently stressed argument that technology-neutral schemes will promote RES-E deployment cost-effectively. We use a simple partial equilibrium model of the electricity sector with one representative investor as a vehicle to synthesize the existing literature, and review potential rationales for technology-specific RES-E support. The analysis addresses market failures associated with technological development, long-term risk taking, path dependencies as well as various external costs, all of which drive a wedge between the private and the social costs of RES-E deployment. Based on analytical insight and a review of empirical literature, we conclude that the relevance of these market failures is typically heterogeneous across different RES-E technologies. The paper also discusses a number of possible caveats to implementing cost-effective technology-specific support schemes in practice, including the role of various informational and politico-economic constraints. While these considerations involve important challenges, neither of them suggests an unambiguous plea for technology-neutral RES-E support policies either. We close by highlighting principles for careful RES-E policy design, and by outlining four important avenues for future research.     

Theory, Reality, and Performativity in Markets

A bstract .   The purpose of this article is to analyze the relation between scientific knowledge in the form of theories and the world that such theories are about. The focus is on market theories. I argue that everyday knowledge, conceptualized using the notion of "lifeworld," is the bedrock of scientific knowledge. I also make two distinctions, one between types of markets and one between principles of order in markets. There are two different types of markets, fixed-role markets and switch-role markets, and no existing theory can be used to explain both of them. In fixed-role markets, such as a producer market of garments, actors are identified as either sellers or buyers. In switch-role markets, such as the stock exchange market or currency market, actors are not identified with one role. The other distinction is between standard and status markets. In a status market, order is maintained because the identities of actors on both sides of the market are ranked according to status, which is a more entrenched social construction than the commodity traded in the market. In a market characterized by standards, the situation is reversed: the commodity is a more entrenched social construction than the social status of actors in the market. These distinctions are the backdrop of my analysis of the idea that markets are performed. It is concluded that the performativity approach is useful today for analyzing switch-role markets. A further conclusion is that neoclassical economic theory can be used in understanding switch-role markets, but not fixed-role markets.     

Empirical Analysis of Limit Order Markets

We provide empirical restrictions of a model of optimal order submissions in a limit order market. A trader's optimal order submission depends on the trader's valuation for the asset and the trade-offs between order prices, execution probabilities and picking off risks. The optimal order submission strategy is a monotone function of a trader's valuation for the asset. We test the monotonicity restriction in a sample of order submissions and their realized outcomes from the Stockholm Stock Exchange. We do not reject the monotonicity restriction for buy orders or sell orders considered separately, but reject the monotonicity restriction for buy and sell orders considered jointly.