Remittances in Mexico and their unobserved components

ABSTRACT

The present study aims to determine the common trends and the permanent and transitory components of remittances received by Mexican households. This is done by estimating a small Dynamic Factor Model (DFM), using the approach first proposed by Gonzalo and Granger [1995. “Estimation of Common Long-memory Components in Cointegrated Systems.” Journal of Business and Economic Statistics 13 (1): 27–35], determining the number of common trends subject to the cointegration results. The study also shows the similarities between this small DFM with respect to large DFM, which are widely used in the econometric literature. The results indicate the presence of one cointegration relationship. Consequently, there are four common trends. The cointegration relationship is negatively dominated by Mexico's economic activity and positively by the US industrial production. The effects of the exchange rate and the US unemployment rate are positive, but less relevant. This economic scenario leads to remittances exceeding its permanent component.     

Comparing trade areas of technology centres using ‘Geographical Information Systems’

Advances in geographical information systems have contributed to location and marketing design strategies on the part of retailers. The techniques used in this field are based on delimiting trade areas and spatial analysis. The same approach is applied in this study to technology centres, which are considered as suppliers of knowledge-intensive services to their associated firms. The research objective focuses on analysing the spatial distribution of firms associated with two technology centres from different sectors. The results indicate that firms associated with a technology centre present spatial patterns that are similar to those observed in retailing, while significant differences were also found between the two technology centres used for the study.     

Social capital as a distinctive feature of Social Economy firms

In recent years, the growing importance in developed countries of the Social Economy sector and the contribution of social capital to regional economic development are being studied in depth. Linking these two fields of research, the aim of the present work is to analyse the social capital endowments of Social Economy firms in comparison to those in traditional profit-maximizing firms. To do so, a literature review will be firstly carried out to clarify both the concept of social capital and, more specifically, its relation with entrepreneurship and social enterprises. In the empirical section, the social capital endowments both of social firms (cooperatives and owned-worker enterprises) and traditional firms are compared using data from two surveys conducted in Andalusia, a lagged Spanish region with long tradition in the Social Economy sector. Results show that social capital endowments measured through cooperation agreements and company links with local suppliers and costumers are higher in cooperatives and worker-owned companies. Therefore, Andalusian authorities must continue with its support policy to these enterprises as a mean to reinforce the regional economic development.     

Spanning tests in return and stochastic discount factor mean–variance frontiers: A unifying approach

We propose new spanning tests that assess if the initial and additional assets share the economically meaningful cost and mean representing portfolios. We prove their asymptotic equivalence to existing tests under local alternatives. We also show that unlike two-step or iterated procedures, single-step methods such as continuously updated GMM yield numerically identical overidentifying restrictions test, so there is arguably a single spanning test. To prove these results, we extend optimal GMM inference to deal with singularities in the long run second moment matrix of the influence functions. Finally, we test for spanning using size and book-to-market sorted US stock portfolios.     

Optimal savings with taxable and tax-deferred accounts

We solve and estimate a life-cycle model with earnings risk and liquidity constraints in the presence of tax-deferred retirement accounts (TDAs). We explicitly consider two very different types of households (with TDAs): direct and indirect stockholders. The latter hold stocks only through TDAs and, consistent with the data, save considerably less than the former, who hold stocks both inside and outside these accounts. We find that TDAs promote higher wealth accumulation but only marginally higher net savings. Consumption increases mostly during retirement, as desired, but the effect is largest for those households with higher savings rates already.     

Diversity, persistence and chaos in consumption patterns

In this paper we present a model from which discretionary consumption dynamics can be analyzed as global properties emerging from the endogenous transformation of a society inhabited by boundedly rational interactive consumers. By considering local and global interactions among consumers, we show that behavioral diversity plays a central role in the evolution of consumption patterns. The analysis of the model reveals the existence of a regime characterized by the persistence of different social standards, and a time evolution of the social distribution of behavioral patterns towards a heteroclinic cycle. In some cases the evolution seems to be chaotic, generating unpredictable, erratic dynamics of the aggregate social indices (average or social propensity for discretionary consumption).      

An integrative model of the role of knowledge in the internationalization process

Knowledge is considered an essential resource in a company’s internationalization process, both from the sequential point of view and from the perspective of International Entrepreneurship. This paper proposes a model to integrate the influence of knowledge on international behavior based on proposals taken from the literature on organizational learning in multinational companies. The model comprises several phases: prior knowledge; acquisition of new knowledge; integration of both sets of knowledge; action and feedback. Using the proposed model, different courses of action are identified for further research into the process of company internationalization.     

Board independence, firm performance and ownership concentration: Evidence from Chile

What determines the composition of companies' boards in the context of high ownership concentration? Are independent directors important as an internal governance mechanism in companies with high ownership concentration? Do markets favor companies whose controlling shareholders use voting rights to elect professional directors?Using a four-year, 160-company panel data, and controlling for endogeneity, this paper addresses these three related questions, finding that an increase in the proportion of outside directors affects company value. The paper also finds that companies that present more exacerbated agency conflicts tend to incorporate professional directors to the boards, in an effort to improve corporate governance and ameliorate the agency problem.     

Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis

This paper investigates the Granger-causality between exports, imports, and economic growth in Portugal over the period 1865–1998. The role of the import variable in the investigation of exports–output causality is emphasized, enabling one to test for the cases direct causality, indirect causality, and spurious causality between export growth and output growth. The empirical results do not confirm a unidirectional causality between the variables considered. There is a feedback effect between exports–output growth and imports–output growth. More interestingly, there is no kind of significant causality between import–export growth. Both results seem to support the conclusion that the growth of output for the Portuguese economy during that period revealed a shape associated with a small dual economy in which the intra-industry transactions were very limited.     

The effects of learning and signaling on money demand: With an application to heterodox inflation stabilization programs

This paper develops a nonlinear vector autoregression of inflation and money growth subject to changes in regime. The regimes are fully characterized by the mean and variance of inflation and are conjectured to be the result of alternative government policies. Agents are unable to observe directly whether government actions are indeed consistent with the inflation rate targeted as part of a stabilization program. However, as part of their money demand decision, agents construct probability inferences regarding the regime. Government announcements are assumed to provide agents with additional, possibly truthful information regarding the regime.  This specification is estimated using data from the Israeli and Argentine high-inflation periods. Results indicate that the successful stabilization program implemented in Israel in July 1985 was more credible than either the earlier Israeli attempt in November 1984 or the Argentine programs. Government's signaling might simplify the agents' inference problem and increase the speed of their learning but, under certain conditions, it might also increase inflation volatility. Welfare gains from a temporary increase in real balances might be high enough to induce agents to raise their money demand in the short-term even if they are uncertain about the nature of government policy and the eventual outcome of the stabilization attempt. Statistically, the model restrictions cannot be rejected at the 1% significance level. First version received: August 1998/Final version received: January 1999