Cost of doing business index in Latin America

Quality & Quantity - The World Bank's Ease of Doing Business Index (EDBI) has been widely used in analyzes of attracting investments and formulating public policies. Despite its importance...     

Green bonds,sustainable development and environmental policy in the European Union carbon market

This study assesses the non-linear effects of green bonds, conventional bonds and energy commodities on the behaviour of the cap-and-trade European Union carbon market (European Union Emissions Trading System [EU-ETS]). By estimating four models, using Markov-switching (MS) econometric methodology, non-linearities are confirmed in dynamic behaviours, observing in the global calculation a positive effect of green bonds (S&P Green and Sol Green) on the carbon market, in regimes of both high and low volatility, whereas conventional bonds (S&P Agg) and energy commodities (DJCI En) contribute to a decrease in the carbon market in regimes of high volatility. The relevance of green bonds is underlined in determining the behaviour of the carbon market, besides observing greater persistence of the low volatility regime. These results allow both investors and fund managers to implement strategies in different volatility or economic activity contexts through a diversified portfolio and green/climate structure.     

Drivers of exceptional job creation – a dynamic probit approach using portuguese firm-level data

Portuguese Economic Journal - It is a well-established fact that a small number of firms, known as Gazelles, drive a disproportionately large amount of net job creation. This fact has attracted...     

Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies

Recent theories have provided a persuasive account of a key stylized fact of mature economies: the common long-run trends of average real wages and labor productivity, and the ensuing stationarity of functional distribution. Central to these theories is the notion of directed technical change, which claims that a rise in labor costs sparks the adoption of labor-saving innovations. This paper empirically examines a core prediction of these theories, namely that shocks to functional distribution elicit compensatory adjustments in real product wages and labor productivity. Using two disaggregated data-sets of manufacturing industries (EU-Klems and Unido), I find evidence of cointegration and two-way, long-run Granger causality between these two variables. These findings suggest that directed technical change is indeed key for producing stationarity in functional distribution, and they complement the recent empirical literature on distributive cycles and productivity growth. Preliminary evidence from the Unido data-set also suggests the importance of directed technical change in developing countries. To illuminate the empirical procedure, I present a theoretical model of growth and distribution with directed technical change.     

The indexation of wages and bonds in Brazil

This paper analyses the dynamic relationship between the degrees of indexation of wages and public bonds in Brazil. A simple model is constructed to show that both degrees of indexation are determined simultaneously. We apply cointegration techniques and estimate error-correction representations to assess the temporal causality between them. Our results provide empirical support for the existence of simultaneity in the degrees of indexation in Brazil in the period 1980–93.     

The economy of Portugal and the European Union: From high growth prospects to the debt crisis

This paper documents some of the recent economic history of Portugal, since its accession to the EEC, to the adoption of the Euro and more recently to the financial and economic crisis. In the first part of the paper we show the economic performance of Portugal during the last 25 years till now, from the fast growth of the late 1980s and early 1990s to the current recession. We point out some of the reasons for this trajectory – slow productivity growth, disconnection between productivity and wages, continued external and public deficits – and choose three areas that must be improved in order to reverse the current downward spiral – justice needs to be more effective and faster, education needs to improve its quality and distribution across the population, and the public administration must become more efficient.     

The Flexible Fourier Form and Local Generalised Least Squares De‐trended Unit Root Tests*

In two recent papers Enders and Lee (2009) and Becker, Enders and Lee (2006) provide Lagrange multiplier and ordinary least squares de‐trended unit root tests, and stationarity tests, respectively, which incorporate a Fourier approximation element in the deterministic component. Such an approach can prove useful in providing robustness against a variety of breaks in the deterministic trend function of unknown form and number. In this article, we generalize the unit root testing procedure based on local generalized least squares (GLS) de‐trending proposed by Elliott, Rothenberg and Stock (1996) to allow for a Fourier approximation to the unknown deterministic component in the same way. We show that the resulting unit root tests possess good finite sample size and power properties and the test statistics have stable non‐standard distributions, despite the curious result that their limiting null distributions exhibit asymptotic rank deficiency.     

Estimating financial distress likelihood

This study develops an ex-ante model for estimating financial distress likelihood (FDL), and contributes to the literature by presenting a financially-based definition of distress that is independent of its legal consequences, a theoretically supported model for the FDL, and an appropriate methodology that uses panel data to eliminate the unobservable heterogeneity. The model is then estimated cross-sectionally to obtain an indicator of the likelihood of financial distress that incorporates the specificity of each company. In doing so, this study provides a well-specified model that is stable in terms of magnitude, sign and significance of the coefficients and, more importantly, that yields a measure of the FDL that is more robust to time and the international context than the estimates of FDL that are based on seminal models. This measure could be appropriate for use in future research that deals with FDL, such as capital structure and the prevention of financial distress.     

Factors influencing the preparedness of large unlisted companies to implement adapted International Financial Reporting Standards in Portugal

The Sistema de Normalização Contabilística [SNC] is the Portuguese title for the corpus of International Financial Reporting Standards [IFRS] that have been adapted for use in Portugal by unlisted companies. Based on an analytical framework that draws on aspects of new institutional theory, we surveyed 116 large unlisted Portuguese companies in September 2009 to identify factors associated with their preparedness to implement the SNC. Generally, their degree of preparedness was low. Institutional factors that influenced the degree of preparedness positively included the participation of a parent company in conversion procedure decisions, the presence of exclusively Portuguese shareholders, the conduct of export activities, and mimetic behaviors. The results reveal that important insights can be obtained from complementing a study of isomorphic influences with the concepts of resistance and institutional logic. Though coercive and mimetic institutional factors influenced levels of preparedness positively, the preparedness process was undermined by resistance within the Portuguese accounting profession and by the embeddedness of code-law practices in the prevailing logic.