Factor‐Based Identification‐Robust Interference in IV Regressions

Robust methods for instrumental variable inference have received considerable attention recently. Their analysis has raised a variety of problematic issues such as size/power trade‐offs resulting from weak or many instruments. We show that information reduction methods provide a useful and practical solution to this and related problems. Formally, we propose factor‐based modifications to three popular weak‐instrument‐robust statistics, and illustrate their validity asymptotically and in finite samples. Results are derived using asymptotic settings that are commonly used in both the factor and weak‐instrument literature. For the Anderson–Rubin statistic, we also provide analytical finite‐sample results that do not require any underlying factor structure. An illustrative Monte Carlo study reveals the following. Factor‐based tests control size regardless of instruments and factor quality. All factor‐based tests are systematically more powerful than standard counterparts. With informative instruments and in contrast to standard tests: (i) power of factor‐based tests is not affected by k even when large; and (ii) weak factor structure does not cost power. An empirical study on a New Keynesian macroeconomic model suggests that our factor‐based methods can bridge a number of gaps between structural and statistical modeling. Copyright © 2015 John Wiley & Sons, Ltd.     

Optimal taxation with joint production of agriculture and rural amenities

We show that, when there is joint production of an agricultural good and rural amenities, the first-best allocation of resources can be implemented with a tax on the agricultural good and some subsidies on the production factors (land and labor). The use of a subsidy on the agricultural good can only be explained by the desire of the policymaker to redistribute income from the consumers to the farmers.     

The Political Economy of Social Security

We consider a two-period overlapping generations model in which individual voters differ by age and by productivity. In such a setting, a redistributive pay-as-you-go system is politically sustainable, even when the interest rate is higher than the rate of population growth. The workers with medium wages (not those with the lowest wages) and the retirees form a majority which votes for a positive level of social security. This level depends on the difference between the rates of population growth and interest as well as on the redistributiveness of the benefit rule.     

Performance and persistence of Commodity Trading Advisors: Further evidence

We re‐examine the performance of Commodity Trading Advisors (CTAs) over the January 1995 to October 2008 period. We compare abnormal performance based on a number of alternative existing models, as well as a category‐specific model introducing asset‐, option‐, and moments‐based factors. Taking more factors into account significantly raises the explanatory power, and 9 out of 12 CTA categories significantly outperform the market. We find that numerous CTAs show persistence over a horizon of at least three months and they are also more likely to be persistent over a longer period. Yet, most of the persistence fades away upon the “acid test” of considering only the top and bottom quartiles of CTAs. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 30:725–752, 2010     

Default Risk in Corporate Yield Spreads

An important research question examined in the credit risk literature focuses on the proportion of corporate yield spreads attributed to default risk. This topic is reexamined in light of the different issues associated with the computation of default probabilities obtained from historical default data. We find that the estimated default risk proportion in corporate yield spreads is sensitive to the ex ante estimated term structure of default probabilities used as inputs. This proportion can become a large fraction of the spread when sensitivity analyses are made with respect to the period over which the probabilities are estimated and the recovery rates.     

Improving Supply Chain Efficiency Through Electronic Payments: The Case of Micro-Entrepreneurs in Kenya and Tanzania

Research suggests that one possible key to development may be the growth of micro-entrepreneurial firms. The current work suggests that improving supply chain efficiency may help these very small enterprises grow. Specifically, it examines the role played by the use of mobile payments to facilitate transactions with suppliers. The study contrasts Kenya, which has widespread adoption of mobile payments by both consumers and small business, with neighboring Tanzania, where adoption, although substantial, has occurred at a much slower rate and achieved far less penetration. Findings support the idea that positive business outcomes such as increased income and increased hiring are related to mobile payment usage.     

Epistemological and ethical considerations in conceptualizing and implementing human resource management

As an example of applied social science, the field of human resource management is used to show that ethical problems are not only those of carrying out research, of professional conduct, and of the distribution fairness of social science knowledge. A largely overlooked ethical issue is also the implicit choices that are made as an integral part of research and implementation. First, an analysis is undertaken of the implicit assumptions, values and goals that derive from the conception of human problems in work organizations as managing human resources. Secondly, it is argued that such a conception is in fact a socially constructed reality with real consequences and not a reflection of objective states of human and social nature with which we have to live. Thirdly, to the extent that our implicit assumptions are in part based upon conceptual choices that are made by individuals or as a collective act of a discipline or work organization, the development of an ethical framework that could guide such choices becomes a crucial challenge for business ethics.H. Peter Dachler currently holds the chair for organizational psychology at the University of St. Gall, Switzerland. He received his graduate training in industrial/organizational psychology at the University of Illinois at Urbana and subsequently taught in the Department of Psychology at the University of Maryland, College Park. He was a fellow for two years at the International Institute of Management in the Science Center, Berlin, and is on the editorial boards of various international and American scientific journals. He has published mainly in the areas of motivation, leadership, organization theory, and the theoretical and practical implications of a constructionist epistemology for employee assessment, participation and leadership. Georges Enderle is a senior lecturer for business ethics at the University of St. Gall, Switzerland. Since 1983 he has been Director of the Institute for Business Ethics. He is the author of Sicherung des Existenzminimums im nationalen und internationalen Kontext — eine wirtschaftsethische Studie [Securing the minimal standard of living in the national and international context: A business ethics perspective]. He has written various articles on business ethics.     

Full pooling in multi-period contracting with adverse selection and noncommitment

This paper analyses multi-period regulation or procurement policies under asymmetric information between the regulator and regulated firms. As well known in the literature, some degree of separation is always optimal under any form of commitment. In contrast, we show that full pooling is optimal under noncommitment when the discount factor is sufficiently high. We also discuss the meaning of full pooling under double randomization. Finally, we provide a graphical analysis of the second-best policy in terms of the regulator's commitment capacity. Received: 4 December 1996 / 7 October 1999     

NUSAP: a method to evaluate the quality of assumptions in quantitative microbial risk assessment

The Numeral Unit Spread Assessment Pedigree (NUSAP) system was implemented to evaluate assumptions in a quantitative microbial risk assessment (QMRA) model for Salmonella spp. in minced pork meat. This QMRA model allows the testing of mitigation strategies for the reduction of human salmonellosis and aims to serve as a basis for science‐based policy making. The NUSAP method was used to assess the subjective component of assumptions in the QMRA model by a set of four pedigree criteria: ‘the influence of situational limitations’, ‘plausibility’, ‘choice space’ and ‘the agreement among peers’. After identifying 13 key assumptions relevant for the QMRA model, a workshop was organized to assess the importance of these assumptions on the output of the QMRA. The quality of the assumptions was visualized using diagnostic and kite diagrams. The diagnostic diagram pinpointed assumptions with a high degree of subjectivity and a high ‘expected influence on the model results’ score. Examples of those assumptions that should be dealt with care are the assumptions regarding the concentration of Salmonella on the pig carcass at the beginning of the slaughter process and the assumptions related to the Salmonella prevalence in the slaughter process. The kite diagrams allowed a clear overview of the pedigree scores for each assumption as well as a representation of expert (dis)agreement. The evaluation of the assumptions using the NUSAP system enhanced the debate on the uncertainty and its communication in the results of a QMRA model. It highlighted the model’s strong and weak points and was helpful for redesigning critical modules. Since the evaluation of assumptions allows a more critical approach of the QMRA process, it is useful for policy makers as it aims to increase the transparency and acceptance of management decisions based on a QMRA model.