Euro vs Dollar: An Improbable Threat

Ever since the setting up of the EMU, many scholars have argued that the Euro will take its place alongside the dollar and perhaps even replace it as international money. The theory behind this point of view is represented by search-theoretic models. The fundamental shortcoming of the traditional version of these models is that they fail to make a distinction between different types of money, in particular between commodity money and fiduciary money. In the international context a fiduciary money can be accepted only when a political exchange is possible between a leading country which has an interest in producing trust in the future value of its currency and other countries which attach no importance to the relative gains the issuing country acquires by exploiting the privilege of seigniorage. The Bretton Woods system and the dollar standard, although based on fiduciary monies, have worked thanks to the institutional framework maintained by the United States and accepted by other countries. Unlike the United States, the euro area is not in a position to exercise any form of political leadership on the international scene. As things stand the euro does not represent a threat to the dollar and it is bound to remain a regional money.     

Hotel Efficiency Analysis from the Customer’s Point of View in Romania: A Stochastic Production Frontier Approach

The purpose of this article is to measure the efficiency of hotel units in Romania from the customers’ point of view and to identify factors that explain the differences in efficiency between hotel units. A stochastic production frontier is estimated together with a technical inefficiency model using cross-sectional data from 622 hotel units in Romania. The results show that the average efficiency is high. However, there are significant differences between hotels in different regions and with different star ratings. The most influential factor affecting efficiency is the online visibility of a hotel unit on social media platforms and on travel planning sites. The study’s results offer insight for hotel decision-makers to be able to improve the perception of hotel efficiency by taking appropriate action to meet customer needs.     

Housing and cost of living: Application to the Spanish regions

Spain is a home-owner economy, and housing is a key good for determining the cost of living. However, its treatment in indices such as the Spanish Consumer Price Index (CPI) makes it impossible to measure the real impact of housing on the cost of living. This issue is especially relevant at the regional level, where the differences in the housing markets are very substantial. This paper demonstrates the importance of taking account of owner occupied housing in a measure of the cost of living for Spain.     

Fixed versus variable supply in the public provision of goods

Using discriminatory price auctions with variable supply, we explore a situation in which a corruptible public employee is in charge of producing and allocating a finite number of goods among consumers with uniformly distributed valuations. The negative effects of corruption are lower when the employee‘s task is to “provide at least q₀ goods” than when the employee is required to “provide exactly q₀ goods”.     

Fixed investment and economic growth: new results on causality

This study re-examines the issue of causality between investment shares and economic growth. A methodology is applied based on Arellano and Bond (1991), and Holtz-Eakin, Newey and Rosen (1988) to quinquennial panel data on growth and investment shares for the post war period and shows that, contrary to previous results in the literature, causality between fixed investment and growth runs in both directions. Investment shares Granger-cause growth rates and growth rates Granger-cause investment shares. Granger causality from investment shares to growth rates is found to be negative. The result is in contrast with a capital fundamentalist view which sees fixed investment as the key to long run growth, but is fully consistent with the predictions of Solow-type growth models.     

Entry of painters in the Amsterdam market of the Golden Age

We analyze the evolution of the entry of painters and price of paintings in the XVII century Amsterdam art market. In line with evolutionary theory, demand-driven entry in the market was first associated with product innovations and a rapid increase in the number of painters. After reaching a peak, the number of painters started to decrease in parallel with a price decline and the introduction of process innovations. To test for the role of profitability in the art market as a determinant of endogenous entry of painters, we build a price index for the representative painting inventoried in Dutch houses. This is based on hedonic regressions controlling for characteristics of the paintings (size, genre, placement in the house), the owners (job, religion, value of the collection, size of the house) and the painters. After a peak at the beginning of the century, the real price of paintings decreased until the end of the century. We provide anecdotal evidence for which high initial prices attracted entry of innovators, and econometric evidence on the causal relation between price movements and entry.