What is different about urban activities of those with access to ICTs? Some early evidence from Québec,Canada

The first wave, conducted in 2002–2003, of an in-depth panel survey in Quebec City, was used to compare the out-of-home activities of adults who had the use of mobile phones, or of internet at home, to those who did not. A unique feature of the survey was the inclusion of respondents’ perceptions of the both the temporal and the spatial flexibility of all executed activities. We find, after statistical controls for other factors, that mobile phone use was positively associated with activity and trip levels, while internet access was negatively associated. These two ICTs also had mostly opposite relationships with the routinisation and pre-arrangement of activities and with some conventionally defined sub-classes of activity.     

PPP EXCHANGE RATE RULES,MACROECONOMIC (IN)STABILITY,AND LEARNING*

In order to maintain competitiveness, governments in developing economies seem to have pursued purchasing power parity (PPP) exchange rate rules, by adjusting the nominal devaluation rate in response to real exchange rate deviations from an intermediate target. This article shows that these rules are likely to induce macroeconomic instability, as they generate sunspot‐driven fluctuations that are in fact learnable by agents in the Expectational‐Stability sense. It finds that the existence of these “learnable sunspots” depends, among others, on open economy features, including the degree of openness and the degree of exchange rate pass‐through to consumer's import prices.     

Persistent gaps and default traps

We show how vicious circles in countries' credit histories arise in a model where output persistence is coupled with asymmetric information about output shocks. In such an environment, default signals the borrower's vulnerability to adverse shocks and creates a pessimistic growth outlook. This translates into higher interest spreads and debt servicing costs relative to income, raising the cost of future repayments, thereby creating “default traps”. We build a long and broad cross-country dataset to show the existence of a history-dependent “default premium” and of significant effects of output persistence on sovereign creditworthiness, consistent with the model's predictions.     

Pigouvian Taxes: A Strategic Approach

This paper analyzes the problem of designing mechanisms to implement efficient solutions in economies with externalities. We provide two simple mechanisms implementing the Pigouvian Social Choice Correspondence in environments in which coalitions can or cannot be formed.     

Promoting justice by treating people unequally: an experimental study

Which inequalities among individuals are considered unjust? This paper reports the results of an experiment designed to study distributive choices dealing with arbitrarily unequal initial endowments. In a three-person distribution problem where subjects either know or do not know their endowments, we find impartial behavior to be a stable pattern. Subjects either compensate for initial inequalities fully or not at all in both conditions, and they do so more often when they do not know their endowment than when they know it. Moreover, the type and the size of the good to be distributed also affect the frequency of impartial behavior.     

Foreign Direct Investment,Regulations and Growth

The paper explores the linkage between income growth rates and foreign direct investment (FDI) inflows. So far the evidence is rather mixed, as no robust relationship between FDI and income growth has been established. We argue that countries need a sound business environment in the form of good government regulations to be able to benefit from FDI. Using a comprehensive data set for regulations, we test this hypothesis and find evidence that excessive regulations restrict growth through FDI only in the most regulated economies. This result is robust to different specifications of the econometric model.     

Multivariate partial adjustment of financial ratios: a Bayesian hierarchical approach

In this paper we propose a multivariate extension of the partial adjustment model of financial ratios. To that end, we use a dynamic factor model which assumes that financial ratios measuring, essentially, the same economic–financial dimension of the firm evolve in a similar way, reflecting the evolution of the common factor. The proposed model is hierarchical with three levels. The first describes the relationship between each ratio and its common factor; the second describes the evolution of the common factors over time by means of Lev's ( 1969 ) partial adjustment model; and the third analyzes the similarity of firms' adjustment coefficients, taking into account their characteristics. The methodology is applied to the analysis of a set of financial ratios related to the business and financial structure of the firm. Copyright © 2008 John Wiley & Sons, Ltd.