The Validity of Gibrat’s Law: Evidence from Ecuadorian Service SMEs

The objective of this research is to analyze the relationship between size and growth through the validation of Gibrat's law. A sample of 17,082 Ecuadorian companies in the service sector is used for the period 2010–2015. The estimation method used is that of quantile regression for panel data; the results suggest that small companies grow faster than their larger counterparts. The results show that the growth, measured through sales and employment, of SMEs in the service sector in Ecuador is not independent of firm size and therefore does not correspond to a random process.     

On adjusting for risk changes when assessing the profitability effects of regulatory changes

Since regulatory changes affect the profitability and the systematic risk of regulated firms, standard ‘residual’ analysis may not uncover the true impact of regulatory changes. This paper presents a method, based on the CAPM which uses pre- and post regulatory change information, to differentiate risk from profit related changes in stock market valuations.     

Risk-sharing and crises. Global games of regime change with endogenous wealth

I add heterogeneous agents and risk-sharing opportunities to a global game of regime change. The novel insight is that when there is a risk-sharing motive, fundamentals drive not only individual behavior, but also select which individuals are more relevant for the likelihood of a crisis because of endogenous shifts in wealth. If attacking is relatively safe, attack behavior in the global game and trade in state-contingent assets feed back into each other. This feedback implies that multiple equilibria may exist even if signal noise becomes arbitrarily small. In addition, heterogeneity in risk-aversion within the population amplifies the influence of the state of the economy on the probability of a crisis.     

Establishment of air transport undertakings – Towards a more holistic approach

This paper addresses the issue of principal place of business. Principal place of business can be interpreted in various ways in addition to its strict legal meaning in international air law. The term establishment is also relevant because since the Open Skies decisions of the European Court of Justice of 2002, this term has been used, although not reconciled with the existing aviation law regime. The interpretation of these terms is not only an academic exercise; airlines may be able to choose their hubs in relation to the meaning of their principal place of business, and exercise traffic rights from there. The same is true for the interpretation of the term establishment. Since airlines generate about 80% of their revenues from the operation of traffic rights, the choice of criteria for the determination of the term ‘principal place of businesses’ affecting role of airports as hubs under a modernised air law regime. This has practical relevance for the conduct of a future air transport policy.     

Ecological footprint analysis of road transport related to tourism activity: The case for Lanzarote Island

This work tries to evaluate road transport usage in Lanzarote Island and its implications for sustainable tourism development. The methodology followed here is the ecological footprint indicator. Its evaluation is based on projections of trip matrix estimated for Lanzarote Island. This study allows us to determine, in an approximate way, the environmental impact (that is, the contribution to climate change) of car usage on the island. Besides, it permits to extract some important conclusions about the trade-off existing between the need of individual mobility and tourism development in Lanzarote Island.     

Tourism and economic development: analysis of geographic features and infrastructure provision

The idea of committing to tourism as a tool for economic development – a decision supported by a large number of countries and international organizations – is becoming widespread, since the potential of tourism has been advocated, without a doubt, to improve the socio-economic conditions of host countries. However, in recent years, a critical school of thought has emerged that questions the universal validity of tourism as a development tool, and therefore calls into question the solution implemented by these countries and institutions. In this context, this research study, after analysing the validity of each one of these two schools of thought, advocates for an intermediate situation based on the premise that there is no automatic relationship between the two dimensions, but instead a country must meet certain characteristics in order for this link to occur. In this sense, since the scientific literature has shown the importance of geography and infrastructure provision in improving the living conditions of the population, the aim of this work is to identify what are the determining factors that help or hinder the transformation of tourism growth into economic development.     

Implementation of optimal contracts under adverse selection

This paper studies a 2-agent, 2-type principal-multiagent model of adverse selection under the assumption that the agents each have complete information. We construct a mechanism implementing the first-best contracts in Nash equilibrium that: satisfies a condition related to individual rationality, is renegotiation-proof, has a small-sized message space, achieves unique implementation and satisfies undomination of Nash equilibrium strategies. Moreover, we prove that other requirements which relate to individual rationality (different from the one satisfied by our mechanism) are not compatible with implementation of the first-best contracts. Received: 27 July 1998 / Accepted: 26 May 2000     

International Terrorism,Domestic Political Instability,and the Escalation Effect

What are the main causes of international terrorism? Despite the meticulous examination of various candidate explanations, existing estimates still diverge in sign, size, and significance. This article puts forward a novel explanation and supporting evidence. We argue that domestic political instability provides the learning environment needed to successfully execute international terror attacks. Using a yearly panel of 123 countries over 1973–2003, we find that the occurrence of civil wars increases fatalities and the number of international terrorist acts by 45%. These results hold for alternative indicators of political instability, estimators, subsamples, subperiods, and accounting for competing explanations.     

Inter-fuel substitution,technical change and the demand for energy in the UK economy

A model for energy demand, based on a translog cost function is formulated. Unlike previous studies, technical progress is modelled by means of stochastic, as opposed to deterministic, trend components. The model is estimated using quarterly UK data for four economic sectors, and forecasts of the future level of demand are made.