THE NEW INSTITUTIONAL ECONOMICS – A DIFFERENT APPROACH TO ECONOMIC ANALYSIS

The initial objective of the paper is to describe the way in which the term ‘New Institutional Economics’ (NIE) emerged in the literature and became the designation for a new field concerned with the study of various analytical techniques designed for the exploration of institutional phenomena. It is then shown how some of the more important of these techniques, transaction‐cost economics, property‐rights analysis and contract theory, have been applied in two central lines of neoinstitutional thought – the Williamsonian and the Northian. Criticisms of these two disparate theoretical positions on the NIE are considered and assessed. Next, a brief review of some of the empirical literature is undertaken so that the explanatory powers of NIE themes can be gauged. Finally, the paper offers a few general remarks on the present state of the NIE and its possible influence on the further development of economics.     

The European economy at the cross roads: Structural reforms, fiscal constraints, and the Lisbon Agenda

This paper studies the incentives to sustain and extend a monetary union under alternative assumptions about the extent of market reform within the union and accession countries. Lack of labour mobility, or wage/price flexibility, or fiscal reform, brings costs for both new entrants and in the existing union. Countries will therefore want a union where there has been sufficient reform, and also one where markets are more flexible than their own. But existing members will want the same properties of their partners. Fiscal restrictions may exaggerate this incentive mismatch and could therefore delay the necessary reforms. Similarly, too large costs up front may also delay those reforms.     

An empirical investigation of the sustainability of the public deficit in Portugal

In this paper, we investigate Portuguese government expenditures and revenues as an example for a long time series. Our hypothesis states that there may be periods when the deficit is sustainable and those when it is not. Usually, after a period of unsustainable deficits, a new regime takes over. These regime shifts call for an approach that takes into account a non-constant structure of the underlying data generating process. Consequently, we use different tests which we set up in a time-varying framework. We apply and compare the results of the Trace test, Breitung’s non-parametric test and the Bohn test. We identify several break points and find that the Trace test performs worst in this case while Breitung’s test and the Bohn test give similar results. Comparing the results with history, we find that the last two tests best reflect what happened historically.     

A geometric approach to finite sample and large deviation properties in two-way ANOVA with spherically distributed error vectors

This article investigates a two-way ANOVA model with interactions assuming that the vector of error variables possesses a general spherically symmetric distribution instead of a multivariate normal one. Via a geometric approach we study a test for the usual hypothesis of non-interaction under this general assumption. Moreover, based on a certain geometric representation formula, we establish exponential large deviation rates of the least squares estimators in the above model for a specific class of spherical distributions.This research was partially supported by a special research grant from Alexander von Humboldt-Stiftung, Bonn, F. R. Germany.     

Einzelbesprechungen

Ohne Zusammenfassung     

Commercial bank behavior and monetary policy in an open economy : West Germany 1960–1980

This paper studies movements in the ratio of free liquid reserves of West German commercial banks to total deposits over the period 1960–1980. The desired ratio is assumed to depend positively on the ‘own yield’, measured by recently experienced variance of the required-reserve ratio (a proxy for portfolio adjustment costs avoided by holding free reserves), and negatively on the yield on alternative assets. The observed free reserve ratio also responds to changes in the Bundesbank's holdings of foreign exchange and net government deposits. Empirical tests on quarterly data support the hypothesis, though behavioral shifts occured in 1966 and 1973.     

“Just a Little Respect”: Effects of a Layoff Agent’s Actions on Employees’ Reactions to a Dismissal Notification Meeting

For several decades, most discussion on financial fraud has centered on the fraud triangle, which has evolved over time through various extensions and re-interpretations. While this has served the profession well, the articulation of the human side of the act is indirect and diffused. To address this limitation, this research develops a model to explain the role of human desires, intentions, and actions in indulgence of, or resistance to, the act of financial fraud. Evidence from religion, philosophy, sociology, neurology, behavioral economics, and social psychology is integrated to develop and support an alternative fraud model, called the disposition-based fraud model (DFM). To articulate the model, its two primary components, disposition and temptation, are further developed and extended. Although the DFM is generally applicable to any act of fraud, this paper focuses on executive fraud. The similarities and differences between the DFM and extant fraud models are discussed. Importantly, in light of the DFM, a re-interpretation of the fraud triangle is made to improve our understanding of the human element in it. Additionally, potential implications of the model for corporate governance are discussed, suggestions for further research are offered, and the DFM’s strengths and limitations are noted.     

Revisiting the role of the environment in the capabilities–financial performance relationship: A meta‐analysis

Within the capabilities‐based view of the firm, there is debate about the relative importance of ordinary and dynamic capabilities for firm performance and about the extent to which their performance effects are contingent on environmental conditions. We meta‐analyze 115 studies to investigate the relationship between both ordinary and dynamic capabilities and the financial performance of firms in relatively stable versus changing environments. The results suggest that the performance effects of both types of capabilities are positive and similar in magnitude. Environmental dynamism reinforces the effects of both ordinary and dynamic capabilities. Furthermore, the two types of capabilities are closely associated. Our findings provide support for a moderate capabilities‐based view of the firm, rather than one that considers dynamic capabilities as superior to ordinary ones. Copyright © 2015 John Wiley & Sons, Ltd.