The Missing Link: China's Contracted Engineering Projects in Africa

This paper examines the driving forces of China's contracted engineering projects in Africa. Using data on contracted engineering projects in 52 African countries over the period 1991–2010, three groups of hypotheses are tested: (1) economic motives; (2) political ties between China and Africa; and (3) host country characteristics. We find that countries get more projects if they have large market potential and are political allies of China. Our results also suggest that Forums on China–Africa Cooperation promote projects in Africa. In contrast, host country characteristics are hardly related to the amount of engineering projects received.     

Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets

To foster competition, governments can intervene by auctioning licenses to operate, or by imposing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for highway gasoline stations and imposing divestitures of such stations on the four major companies. We evaluate this policy experiment and find that the auctioning of licenses without an obligation to divest has no discernible effect on prices. An obligation to divest lowers prices by 1.3–2.3% at divested sites. Moreover, prices decrease by 0.9–1.2% at sites nearby. This suggests that the observed price decreases are at least partly due to competitive spillovers.     

Optimal Taxation: The Design of Child‐Related Cash and In‐Kind Benefits

Abstract. In this paper, we empirically derive the welfare function that guarantees that the current German tax and transfer system for single women is optimal. In particular, we compare the welfare function conditional on the presence and age of children and assess how recent reforms of in‐kind childcare transfers affect the welfare function. Our analysis is based on a discrete model of optimal taxation. We apply this framework using microsimulation and microeconometric techniques. In general, we find that marginal welfare weights are relatively high for non‐working single women. Further, we show that the reform of in‐kind childcare transfers is only optimal if society increases the marginal welfare weights for the working single women.     

The (UN)importance of public debt: A review essay

Summary In this article the debate on the consequences of the creation and existence of government debt is reviewed, using two recent books as a guideline. Four issues in particular are discussed: the correct definition and measurement of government debt, the discussion on the (in)effectiveness of fiscal policy, the inflationary consequences of public debt and finally the influence of government deficits on financial markets. It follows from our review of the debate that there exists as yet no consensus among economists on these issues.The author would like to thank Professor S.K. Kuipers, Professor J. Pen, Dr. C.G.M. Sterks and Professor J. Weitenberg for their comments on an earlier version of this paper.     

Small is beautiful but large is not to be belittled: reply

We appreciate that the Italian central bank has been able to provide the requested information for our comparison of the research output of European central banks. Based on this information, the ranking of the Italian central bank improves considerably. Still, many small central banks have a better research performance than the Banca d'Italia and, after recomputation, our previous conclusion that “small is beautiful” is not compromised.     

Asymptotic properties of a correlation coefficient type statistic connected with the general linear model

It is proved that under certain conditions the conditional distribution of the sample multiple correlation coefficient given the ‘other’ observations in a multivariate normal distribution is asymptotically normal. Moreover a second-order approximation for the first moment is given.     

Market timing and corporate capital structure: a transatlantic comparison

This article provides comparative international evidence on the effect of market timing on corporate capital structures using panel data for US, UK and continental European firms. We document that the empirical regularity found for US firms, that historical market-to-book ratios and corporate leverage correlate negatively does not extend to UK and continental European firms. The latter tend to raise debt rather than equity when stock prices are high, thus sticking more closely to a pecking order in which debt is preferred over external equity.     

Did Oral Interventions by the Indonesian Central Bank Support the Rupiah?

Most previous studies on the effectiveness of oral interventions (statements by officials in support of the exchange rate) focus on industrial countries. The present paper examines whether statements by Bank Indonesia officials (i.e. the central bank of Indonesia) during the period 2004–2007 have had any effect on the level and volatility of the rupiah–dollar exchange rate. Our exponential generalized autoregressive conditional heteroskedasticity models suggest that oral interventions have little impact on the level of the spot exchange rate, but increase the volatility of the spot exchange rate. Oral interventions indicating a stronger or weaker rupiah also have little influence on the level of the forward exchange rate while neutral statements lead to more volatility.