Industry and time specific deviations from fundamental values in a random coefficient model

The paper analyzes the relationship between stock prices and fundamentals for a large sample of US stocks in the last 10 years using a random coefficient model. Heterogeneity and omitted variable bias are properly taken into account with model coefficients being allowed to vary across time and industries. The random coefficient model allows to track waves of reliance on analysts’ forecasts and nonfundamental stock price components across time and clearly identifies the growth of the nonfundamental component in the long 1991–2000 swing.      

Pricing Augmented Commercial Services

The delivery of augmented services is a powerful demonstration of innovative product/service management. Based on well-executed scanning and positioning efforts, augmented services allow marketers to obtain a premium price for their innovative ness by delivering more than what consumers have learned to expect. For this purpose, Roberto Friedmann and Warren French have developed the notion of an augmented service. They then proceed to outline the necessary considerations and procedures for creating an augmented service that commands a premium price in its market.     

Judicial Efficiency and Immigrant Entrepreneurs

Extensive research exists on the individual determinants of being an immigrant entrepreneur, concerning both social environment and human capital. However, the role of the judiciary has not been investigated yet. Analyzing more than 160,000 new micro enterprises owned by immigrants, our paper aims to fill this gap by focusing on the relation between justice and immigrant entrepreneurship. Results show that judicial efficiency is one of the determinants of self‐employment, although some differences among immigrant groups are identified. Therefore, the study confirms the key role of judicial enforcement in promoting not only growth but also the integration of these new citizens.     

The economic consequences of corporate tax rates reductions in the EU: Evidence using a computable general equilibrium model

In a globalised world, governments are eager to attract foreign investors by lowering corporate tax rates. Recent trends point towards a revival of a race to the bottom in corporate income tax (CIT) rates in developed economies. EU countries have been active in this respect. A generalised fall in CIT rate could prove detrimental to tax revenues and trigger increase in other taxes to meet fiscal policy objectives. However, it could also spur investment and growth and prove to be a good fiscal policy strategy if, as a result, the corporate tax base increases. The final economic and fiscal impact of a reduction in CIT rates is therefore unclear. Using a CGE model, we find that uncoordinated tax reforms significantly impact national economies and third‐country effects can be significant when large countries implement CIT rate cuts. Small countries are better off unilaterally reducing their CIT rate at the expense of other EU countries. We find that negative spillovers are mitigated when the country reducing its CIT rate restores its budget balance by cutting either public expenditures or social transfers. A larger degree of non‐EU capital mobility also tends to reduce the negative spillover effects of unilateral CIT rate reductions.     

Do persistence and passion matter: Evidence from the educational testing service major field test in business

The authors examined the determinants of success on the Educational Testing Service Major Field Test in Business. The authors find that gender, SAT performance, and concentration are significant predictors of performance. Additionally, they derive proxies for student passion and persistence, and find that the greater the student's passion for business is, the higher the score is. The authors discover that students who demonstrate persistence, as measured by the extent to which they outperform their grade point average expectations, also score higher on the exam.     

Price Transmission in the Swiss Wheat Market: Does Sophisticated Border Protection Make the Difference?

This article discusses horizontal wheat price transmission from international markets to the domestic Swiss market. The Swiss case is peculiar due to the presence of different border policies segmenting the domestic wheat market according to its use: food or feed. Vector Error Correction (VEC) models with structural breaks are estimated. They account for these policy instruments and their adaptation during periods of market exuberance, and acknowledge linkages between the two market segments. Estimation results suggest that the border policy regime isolates the domestic wheat market for feed use, while, in the food case, the domestic price still responds to international markets.     

Is there a link between globalisation and civil conflict?

This paper investigates the empirical relationship between globalisation and civil conflict in a sample of 159 countries over the period 1972–2009. To that end, we use a measure of globalisation that distinguishes the social and political dimensions of integration from the economic dimension, thus allowing us to adopt a broader perspective than in most of existing studies. The results show that the inclusion of country fixed effects removes the statistical association between the degree of integration with the rest of the world and the incidence of internal conflict. We present instrumental variables estimates that also show no causal effect of globalisation on civil conflict. These findings do not depend either on the specific dimension of globalisation considered or the measure of conflict used in the analysis. Likewise, the absence of a relationship between globalisation and civil conflict is not driven by countries located in the most conflictive regions in the world.     

R&D intensity of investment across Europe before and after the crisis

In this paper we investigate the comovements between the R&D intensity of private investment and GDP growth in different European Union (EU) areas over the period 1999–2014. Our empirical analysis shows that only core countries display a common countercyclical mechanism leading to an increased intensity of R&D over prolonged downturns. The lack of an effective countercyclical pattern of R&D intensity over the evolution of GDP growth in periphery countries makes this area highly vulnerable to persistent recessions, with potentially harmful consequences for long‐term growth. For recent EU members the evidence of acyclicality should be evaluated in the light of the catching‐up process still at work in this area. Our analysis suggests that any successful EU innovation policy should not disregard the potential divergence in R&D performance due to the dispersion of the countercyclical properties of the investment intensity in productivity enhancing activities in the different EU areas.     

The heterogeneous effect of oil discoveries on democracy

This paper evaluates the existence of a resource curse on political regimes using the Synthetic Control Method. Focusing on 12 countries, we compare their democracy level with the weighted democracy level of countries that have not experienced oil shocks and have similar pre‐event characteristics. We find that the exogenous variation in oil endowment does not have the same effect on all countries. In most cases, the event has a negative effect in the long run, but countries with a pre‐existing high level of democracy are not negatively affected.     

Optimal Export Taxes, Welfare, Industry Concentration, and Firm Size: A General Equilibrium Analysis

By using an imperfect-competition model, it is shown that an export tax, optimal in partial equilibrium, is upwardly biased and may not be optimal in a general equilibrium setting with free entry/exit. It is shown also that the export tax has an ambiguous impact on firm size. The results of an applied general equilibrium model for the Turkish economy suggest that the export tax estimated with the PE formula is larger by a small factor than the computed export tax. However, the export tax leads to an increase in firm size and, most importantly, to a social welfare loss.