Data‐Driven Identification Constraints for DSGE Models

We propose imposing data‐driven identification constraints to alleviate the multimodality problem arising in the estimation of poorly identified dynamic stochastic general equilibrium models under non‐informative prior distributions. We also devise an iterative procedure based on the posterior density of the parameters for finding these constraints. An empirical application to the Smets and Wouters ( 2007 ) model demonstrates the properties of the estimation method, and shows how the problem of multimodal posterior distributions caused by parameter redundancy is eliminated by identification constraints. Out‐of‐sample forecast comparisons as well as Bayes factors lend support to the constrained model.     

Bequest Intentions of Forest Landowners: Theory and Empirical Evidence

This article studies in an overlapping generations forest economy the conditions under which money and/or timber bequests occur across generations, assuming the usual case of one–sided altruism. We assume nonindustrial landowners have preferences for consumption and for amenities from unharvested forest stock. Within this framework, we examine conditions under which landowners choose to leave timber or money bequests, and we show how taxation is important to these conditions. Empirical evidence from bequests decisions for a cross–section sample of nonindustrial landowners in Virginia is then used to investigate the hypotheses suggested by the model with regard to the motive to leave bequests. The results are broadly consistent with the theoretical findings.     

Test Procedures for Unit Roots in Time Series with Level Shifts at Unknown Time*

Two types of unit root tests which accommodate a structural level shift at a known point in time are extended to the situation where the break date is unknown. It is shown that for any estimator for the break date the tests have the same asymptotic distribution as the corresponding tests under the known break date assumption. Different estimators of the break date are compared in a Monte Carlo experiment and a recommendation for choosing the break date in small samples is given. Example series from the Nelson–Plosser data set are used to illustrate the performance of our tests.     

Differentiating growing ventures from non-growth firms

This is the first step of the studies examining which factors differentiate growing from the non-growth firms. Four hypothesis of new firm performance will be tested with logistic regression method. Venture growth, measured by the growth of turnover, will be explained by entrepreneurial characteristics and motivation, and interaction between the firm and environment. The longitudinal study concentrates on the 86 responses, half of these responses (43) were classified as growing and the other half as non-growth firms. Personality characteristics and environmental factors do not explain the growth but experience, training and motivation are important variables that differentiate growing ventures from non-growth firms.     

Co-evolutionary policy processes: Understanding innovative economies and future resilience

The great debates of most fields associated with economic development rest on emergence versus intention and the interplay between the two. The ‘residual’ of unexplained divergence between goal and outcome, in this sense, can be ascribed in part to the interplay, or co-evolution, between policies (intention) and self-organizing (emergent) development. Do public policy and economic development co-evolve in technologically innovative economies, and if so, how? This paper discusses the basic premise that the gap between economic development strategies and their poor implementation cannot simply be removed by creating better-intended strategies, tools or institutions. The analysis uses evolutionary thinking for an analysis of economic development, and ends with some postulates for future study on innovative regions and the concept of resilience.     

Greening from the front to the back door? A typology of chemical and resource management services

Though services and product–service systems have been promoted as a promising way towards more eco‐efficient and sustainable societies, they have not turned into reality as expected. Chemical and resource management services are among the few operational examples. They aim to align the service provider's and customer's actions to reduce chemical usage and waste, improve supply chain management and increase resource efficiency. Arguably, they also create new business and higher profit margins compared with merely selling chemicals or handling industrial waste. Thus far they have been viewed as a single business model. In contrast, this study shows through the construction of five ideal types that the actual services and their focus vary. They range from the management of the chemical supply to operations, waste reduction, combined logistics services, process management, IT and other technologies. Consequently this affects the value creation, organization and environmental efficiencies of these services. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Becoming an acquirer and becoming acquired

This paper considers mergers and acquisitions (M&A) in Finland. We explain the likelihood that a firm acquires or is acquired by another firm. We try to find out whether the incidences of M&A are influenced by the firms' R&D activity, measured by the calculated R&D stock. We obtained a very robust result, which says that R&D stock increases the probability that a firm acquires in all industries. In the nonprocessing industries, R&D stock similarly increases the probability that a firm is acquired by another. In the processing industries, the firm's own R&D stock has, however, zero impact on the likelihood that another firm buys a firm concerned. We interpret these results indicating that M&A are used as instruments to transmit knowledge from one firm to another. In the nonprocessing industries, it is evident that knowledge capital cumulated in the target is the main motivation for the purchase. Then a buyer's own R&D—which also increases the probability of the trade—signals that a buyer is efficient in absorbing the purchased new technology. In the processing industries, the motive for acquisition is different. We discovered that in the processing industries, technology is rather transmitted from the buyer's firm than to the purchased firm. It looks like that, in these industries, the firms have decreased their unit costs by means of their R&D activity, and so through M&A, the appeared unit cost differences have been levelled.     

Path dependence in net migration during the ICT boom and two other growth periods: the case of Finland, 1980-2013

This paper examines the path dependence of net migration surpluses and deficits by Finnish municipalities in the period of 33 years. Such spatial clustering revealed by spatial autocorrelation represents the spatial formations in which the development indicated by migration is statistically similar over the municipal borders. The results of survival analysis indicate that the chronic centripetal tendency of development generates higher path probabilities of a municipality staying in a surplus formation located in the main urban regions and an increased lock-in tendency compared with deficit formations in peripheries. Thus, the growth processes seem to translate into the self-reinforcing spatial formations of growth and decline in population, production and regional competitiveness suspended by economic downturns and recessions, and so this path dependence is cyclic and recurring, which means that paths constitute relatively short pulses. In the great surge of Information and Communication Technology industries in the 1990s, the spatial formations of migration were higher in volume and path-dependent, but against expectations, spatially less stable compared with more modest growth periods.     

Near unit roots,cointegration, and the term structure of interest rates

The term structure of interest rates is often modelled as a cointegrated system with the yield spreads forming the cointegrating vectors. Testing whether the yield spreads span the cointegration space is problematic because conventional tests on the cointegration vectors tend to overreject when the largest autoregressive roots deviate from unity, as is likely to be the case with interest rates. A new test that is robust w.r.t. deviations from the exact unit root assumption is developed and applied to monthly US interest rate data from 1952:1–1991:2. Taking into account the regime shift in 1979, the hypothesis of the yield spreads being the cointegrating vectors cannot be rejected using the robust test. Copyright © 2000 John Wiley & Sons, Ltd.     

Sustainable Forestry: Timber Bequests, Future Generations and Optimal Tax Policy

This paper analyzes harvesting and timber bequest behavior in a two-period overlapping generations model where the government uses site productivity, yield and inheritance taxation. The ceteris paribus effects of forest and inheritance taxes are derived first, then the paper discusses the optimal design of forest and inheritance taxes by assuming that intergenerational externalities are either absent or operative. In the absence of intergenerational externalities, it is optimal to use only the site productivity tax, and not to introduce yield and inheritance taxes at all. In the presence of intergenerational externalities the situation changes. The paper demonstrates that the externality can be internalized by introducing either a yield tax or an inheritance subsidy, or both. If the government is able to use both at the same time, it is desirable to use the yield tax to 'punish' excessive harvesting and an inheritance subsidy to 'bribe' to give bequests.