Reliable Estimates of Sovereign Rating

International Advances in Economic Research -     

TAXATION IN MATCHING MARKETS

We analyze the effects of taxation in two-sided matching markets where agents have heterogeneous preferences over potential partners. Our model provides a continuous link between models of matching with and without transfers. Taxes generate inefficiency on the allocative margin, by changing who matches with whom. This allocative inefficiency can be nonmonotonic, but is weakly increasing in the tax rate under linear taxation if each worker has negative nonpecuniary utility of working. We adapt existing econometric methods for markets without taxes to our setting, and estimate preferences in the college-coach football market. We show through simulations that standard methods inaccurately measure deadweight loss.     

Back to the future. Is industry 4.0 a new tecno-organizational paradigm? Implications for Latin American countries

ABSTRACT

The objective of this article is to establish a dialogue between the recent ‘Industry 4.0’ (I4.0) literature and evolutionary neo-Schumpeterean studies about techno-organizational paradigms. In that direction, we wonder whether I4.0 constitutes a new paradigm, as it is assumed by the first group of literature, or it represents – until the moment – an intensification of key features of the information and communication technology (ICT) paradigm, following the second group of studies. Some questions are raised about the implications of I4.0 for developing countries (DEC), afterwards. Specifically, we reflect on the possibilities of these countries to identify and take advantage of new windows of opportunity, opened by the development and diffusion of these technologies. In this regard, the review of recent Latin American experience raises strong concerns regarding I4.0 as a new source of intra- and international heterogeneity, linked to the severe difficulties these countries have in appropriating these technologies in the form of productivity gains and quasi-rents. It seems that this is partially derived from weak technological, organizational, and connectivity capabilities paths of accumulation between institutions and actors.     

Marketing capabilities and innovation. How do they affect the financial results of hotels?

From the point of view of firms’ managers, the knowledge of the factors which explain their firms’ financial results is considered of great usefulness to propose the most appropriate and profitable marketing strategies and actions. This research sets out from this central idea and proposes a model of relationships that considers the marketing results, the marketing capabilities, and the innovation capability as key factors for achieving good financial results. This model is verified via an empirical investigation carried out among 200 directors of hotel establishments in Andalusia, a region in the south of Spain which is one of the country's main tourist destinations. The results indicate that innovation capability is strongly conditioned by marketing capabilities and resources and that this innovation capability affects the financial results of the firms analyzed. Likewise, it is deduced that a market-oriented management philosophy contributes to the development of these marketing capabilities. The implications for management are considered very relevant as they must lead these firms to invest in the development of marketing resources and capabilities, and apply a market-oriented management philosophy if they wish to improve their financial results.     

Merger policy in innovative industries

We analyze optimal merger policy in R&D-intensive industries with product innovation aiming to improve the quality of products. Our results suggest that a permissive merger policy is rarely optimal in high-tech industries when the antitrust authority considers a welfare standard that balances the impact of mergers on consumers’ surplus and firms’ profits. In particular, relative to a benchmark where the effects from R&D are absent, we show that the optimal merger policy should not be substantially more permissive in the presence of those effects from R&D.     

Upgrading peripheral wind sectors

The implementation of traditional policies does not consider institutional singularities in peripheral sectors. The main aim of this paper is to analyse the interaction among local capabilities and multinational agents to upgrade a peripheral wind sector. The case study conducted in the peripheral region of Galicia (Spain) emphasises the challenges concerning policy design and implementation in this kind of regions. The theoretical foundations are based on the systemic and evolutionary approach of the innovation system and the global value chain perspective. This combination enables to analyse how local contexts could shape governance patterns within value chains in peripheral regions. Likewise, the target approach is also applied concerning the design and implementation of a policy programme and its timing. Empirical evidences underline the complementarity of market size and foreign direct investment policies, as well as the diversification towards green transitions through enhancing local capabilities.     

On the test score gap between Roma and non‐Roma students in Hungary and its potential causes

Using unique data from Hungary, the gap in reading and mathematics test scores between Roma and non‐Roma 8th grade students is assessed and a substantial gap between them revealed. Standardized test scores as well as the fraction of students with competences considered inadequate are examined. Regardless of measurement and subject area, the bulk of the gap is explained by social differences in income, wealth and parental education. Using reduced‐form regressions, two major mediating mechanisms are identified: first, on average the home environment of Roma children is less favourable for cognitive development; second, the educational environment of the average Roma student is different from the average non‐Roma student. Comparing students with similar home environments from the same school and class, the ethnic gap in test scores is found to be insignificant. Ethnic differences in the home environment are explained by social disparity, and ethnicity seems to play no additional role in that regard. The unequal distribution of Roma students in schools and classes is found to be explained predominantly by social difference, too, with a significant residual portion, indicating the effect of ethnic segregation.     

Informality and mobility

Informality is a defining characteristic of labour markets in developing and transition countries. This paper analyzes patterns of mobility across different forms of formal and informal employment in Russia. Using the Russian Longitudinal Monitoring Survey household panel we estimate a dynamic multinomial logit model with individual heterogeneity and correct for the initial conditions problem. Simulations show that structural state dependence is weak and that transition rates from informal to formal employment are not lower than from non-employment. These results lend support to the integrated view of the labour market.     

An Exploratory Study on Nonlinear Causality Among the MILA Markets

According to conventional portfolio theory, an increase in the interconnectedness of international financial markets may reduce the potential for constructing diversified portfolios. This article explores the implications of the creation of the Latin American Integrated Market (MILA)¹ over the dependence structure of its members using correlation and cointegration analysis as well as linear and nonlinear Granger causality tests. The creation of MILA aimed to enhance the integration process that Latin American financial markets “naturally” present while still providing diversification opportunities to investors. The results of our empirical analysis suggest that such objective is being achieved. Evidence of a rise in cross-country linear correlations and their linear causal relationship supports the idea of an increasing financial integration process in the region, while the absence of cointegration and the weakening of the nonlinear causal relationship favors the creation of diversified regional portfolios. These findings provide valuable insights for investment portfolio designers, regulators, and supervisors.     

The market valuation of ethical assets in Spain: an application of the hedonic pricing method

The aim of this paper is to calculate the market valuation of non‐financial characteristics, namely, the social responsibility criteria (social, ethical and environmental) included in the Spanish Socially Responsible Investment Funds. The hedonic price method is applied for this purpose. This method relates the price of Socially Responsible Investment Funds with both financial and social responsibility characteristics. Because of the large number of social responsibility characteristics included in these funds, prior to application of the hedonic price method, the principal components factor analysis technique is used. The data are taken from the prospectus for each fund and from the data provided by the National Securities Market Commission. Results indicate that the Spanish market is sensitive to the social responsibility practices of companies. In particular, the market value practices related to environmental sustainability, the enforcement of labour rights, sustainable production and consumption and non‐abusive market practices.