Serial and spatial error correlation

This paper demonstrates that jointly modeling serial and spatial error correlation results in a trade-off between the serial and spatial autocorrelation coefficients. Ignoring this trade-off causes inefficiency and may lead to nonstationarity.     

Stock-flow matching and the performance of the labor market

We estimate outflow equations for vacancies and unemployed workers in Britain, departing from the stock-based analysis of matching in two ways. First, we deal with the temporal aggregation problem that arises when discrete time data are used to describe continuous time processes. Second, we allow for a stock-flow matching mechanism in which the stock of traders on one side of the market matches with the flow of traders on the other side. Our estimates are in line with the predictions of stock-flow matching in terms of higher exit rates of flows and of matching combinations between labor market stocks and flows. Furthermore, employer search effectiveness did not seem to decline between the 1960s and the 1990s. Nevertheless, some deterioration in worker search effectiveness is detected, however less severe than that implied by previous, stock-based work.     

Modelling Heterogeneity and Uncertainty in Contingent Valuation: an Application to the Valuation of Informal Care

Both the lack of market data and the need to adopt a more holistic approach in the valuation of non‐market activities within health care have pointed towards the use of contingent valuation (CV) methods. However, to date, few studies have employed such techniques to value informal care, despite its provision being an important public policy question. We propose an analytical framework that through the use of random parameters models and respondents' certainty scales can incorporate both unobserved and observed heterogeneity in the CV modelling. This is the first CV study of informal care for Scotland (UK) and a £7.68 per hour value is estimated.     

Tests of functional form in dynamic econometric models: Some empirical experience

Econometric theory has provided several rival tests of functional form specifications in economic relations, but there is little empirical experience in using many of them. This note reports some practical applications, and compares the performance of various tests, in specifying dynamic econometric models.     

Connectivity and work dominance: Panacea or pariah?

Does technologically-supported work connectivity help young managers and professionals under the age of 45 deal with the pressing demands of their work, or does the presence of work-connecting technologies exacerbate the tendencies of this talent force to engage in more work and longer working hours? Utilizing both surveys and follow-up focus group interactions, this study found that while work-connecting technologies permitted a greater range of options regarding when and where work was done, this same connectivity provided constant availability to work and often drove expectations that more must be done, thereby increasing the likelihood of longer work hours and—surprisingly—leading to a diminished sense of flexibility. Study participants offer insights regarding the thought processes behind these outcomes. Perspectives on how emerging leaders and their organizations can effectively manage and achieve the potential of enhanced connectivity are provided. A four-phased approach is recommended. First, we discuss key cultural dynamics. Second, the role of organizational expectations and practices is emphasized. Third, we consider a set of responsibilities for organizational leaders, whose actions and cues provide the most vivid clarity for young managers attempting to decide where to draw the work/life balance line. Finally, the challenge and responsibility of personal accountability is presented. Consideration of a work paradigm that reorients our thinking about traditional “face time,” and strives to bridge the gap between the potential and pervasive impact of work-connecting technologies, is also included.     

Globalisation: A New Growth,New Trade Perspective

The current crisis in Asia has seen the case for more open economic policy come under attack in the developing world. In this article Michael Chui, Paul Levine, Mansoob Murshed, and Joseph Pearlman argue that any reversal of the trend towards globalisation would be a great mistake for policymakers. The association of openness with higher growth is one of the most robust empirical results in economics. Here we explore the mechanisms that explain this result. We argue that current high growth rates in Asia are unsustainable and there is a long-term as well as a short-term problem of ‘over-investment’ in Asia. However, we report research findings that show how international knowledge spillovers and free trade can enable the world economy to grow, the developing countries to progress, and the developed countries to benefit.     

Rational exuberance

We study a two-player investment game with information externalities. Necessary and sufficient conditions for a unique symmetric switching equilibrium are provided. When public news indicates that the investment opportunity is very profitable, too many types are investing early and investments should therefore be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable.     

A New Typology for Economic Sectors with a view to Policy Implications

This paper is an attempt to tease out a typology of economic sectors based on a systems approach to innovation and economic growth that may be useful for policy analysis. The typology explored here revolves around novel products rather than ethereal knowledge-producing entities. This insight goes back to Allyn Young (1928) and Joseph Schumpeter (1934) who argued that the introduction of new goods was the engine of economic growth. More precisely, our typology of sectors focuses on novel products which are efficiency-enhancing within and between sectors through the market mechanism. The scheme revolves around the relationship between 'Enabling' and 'Recipient' sectors (which gives the typology its name: ER), and offers a lens for viewing and interpreting a substantive part of the mechanics of modern economic growth. The last part of the paper briefly discusses a few immediate policy implications, although it has the potential for greater use and value in this regard.     

Selling to the moneyed masses

Over the past decade, the distribution of household incomes has shifted so much that a much larger proportion of consumers now earn significantly higher-than-average incomes--while still falling short of being truly rich. As a result, what used to be a no-man's-land for new product introductions has in many categories become an extremely profitable "new middle ground." How can marketers capitalize on this new territory? The key, say the authors, is to rethink the positioning and design of offerings and the ways they can be brought to market. Take, for instance, how Procter & Gamble redefined the positioning map for tooth-whitening solutions. A decade ago, dental centers were popularizing expensive bleaching techniques that put the price of a professionally brightened smile in the 400 dollars range. At the low end, consumers also had the choice of whitening toothpastes that cost anywhere from 2 dollars to 8 dollars. P&G wisely positioned itself between the two ends, successfully targeting the new mass market with its 35 dollars Whitestrips. In product categories where it's clear the middle ground has already been populated, it's important for companies to design or redesign offerings to compete. An example is the Polo shirt. How do you sell a man yet another one after he's bought every color he wants? Add some features, and call it a golf shirt. Here, marketers have introduced designs based on the concept of "occasional use" in order to stand out. Finally, companies wishing to reach the "almost rich" can change how they go to market. Perhaps no mass retailer has made a stronger bid for the mass affluent than Target Stores, which has pioneered a focus the company itself characterizes as upscale discount. The strategy has made Target an everyday shopping phenomenon among well-heeled urbanites and prosperous professionals.