A Career in a Less-than-Perfect Economy

Business economists work within the confines of an imperfect economy. Economic theory can only take us so far. A less-than-perfect economy is characterized by imperfect information, dynamic adjustments over time and economic policy inconsistencies. Forecasts and scenario analysis must account for these factors for our analysis to deliver results that will better inform both private and public decision makers.     

Diagnostic tools in beta regression with varying dispersion

We consider the issue of performing residual and local influence analyses in beta regression models with varying dispersion, which are useful for modelling random variables that assume values in the standard unit interval. In such models, both the mean and the dispersion depend upon independent variables. We derive the appropriate matrices for assessing local influence on the parameter estimates under different perturbation schemes. An application using real data is presented and discussed.     

Interaction of maritime shipping and hinterland traffic using a two-level hierarchical transport network

A transport scenario based on a two-level network is developed in order to model operations in maritime transport. To enhance competitiveness and sustainability of shipping companies, the interaction between maritime shipping and hinterland traffic is considered in the novel two-level hierarchical transport network. Demand occurs on the second level, the hinterland, whereas the first level, the sea transport, acts as a pure distribution network. The two-level hierarchical transport model allows regulating the degree of interaction a liner operator has regarding the hinterland traffic. Moreover, access of vehicles to nodes or edges is given subject to feasibility constraints, relating to the size of a vehicle. In this work, the relation to existing routing models, such as the travelling salesman problem, the vehicle routing problem, or the travelling purchaser problem, is illustrated. Moreover, through the definition of a proper set of assumptions, it is possible to reduce the considered two-level hierarchical transport network to different standard routing models. These new insights allow the application of existing solution methods. Numerical experiments are conducted for a particular case and illustrate the influence of node costs on the distribution of workload to the vehicles.     

THE DEPENDENCE STRUCTURE OF RUNNING MAXIMA AND MINIMA: RESULTS AND OPTION PRICING APPLICATIONS

We provide general results for the dependence structure of running maxima (minima) of sets of variables in a model based on (i) Markov dynamics; (ii) no Granger causality; (iii) cross-section dependence. At the time series level, we derive recursive formulas for running minima and maxima. These formulas enable to use a bootstrapping technique to recursively recover the pricing kernels of barrier options from those of the corresponding European options. We also show that the dependence formulas for running maxima (minima) are completely defined from the copula function representing dependence among levels at the terminal date. The result is applied to multivariate discrete barrier digital products. Barrier Altiplanos are simply priced by (i) bootstrapping the price of univariate barrier products; (ii) evaluating a European Altiplano with these values.     

Kalte Wickel – Warme Wickel

Wickel & Co. lindern auf sanfte und natürliche Weise Beschwerden und aktivieren Selbstheilungskr?fte des Organismus. Sie wirken durch W?rme- oder K?ltereiz, Substanzen wie Kartoffeln und Quark und durch die dem Patienten entgegen gebrachte Zuwendung.     

Explaining Consumer Reactions to Corporate Social Responsibility: The Role of Gratitude and Altruistic Values

Although a lot of research establishes consumer reactions to corporate social responsibility (CSR), little is known about the theoretical mechanisms for these reactions. We conduct a field experiment with adult consumers to test the hypothesis that the effects of perceived CSR on consumer reactions are mediated by felt gratitude and moderated by the magnitude of altruistic values held by consumers. Two classes of consumer reactions are considered: intentions to (1) say positive things about the company, and (2) participate in advocacy actions benefiting the company.     

Fish Consumers: Environmental Attitudes and Purchasing Behavior

The objective of this study was to expand on the limited awareness of the U.S. fish consumer. Measures were tested through a Web-based national survey. The final survey consisted of 40 questions, including environmental awareness, food neophobia, fish consumption, reasons for consuming fish, and demographic variables. Correlations and t tests were used to analyze relationships between eating fish in restaurants and other variables. Hierarchical cluster analysis was used to segment respondents into two groups based on their environmental awareness and neophylic/neophobic attitudes. EcoFish consumers were more likely to be male, eat fish for health and the environment, and eat fish at restaurants significantly more than the Indifferent Fish consumers. Restaurants can use these results to market to eco-friendly, health-conscious fish consumers.     

An Ordered Probit Approach to Predicting the Probability of Inflation/Deflation

This paper provides an ordered probit approach that estimates the probability six months in the future of three distinct scenarios for prices: inflation, deflation, or price stability. The traditional way of forecasting inflation is to predict a single level and/or growth rate of the PCE deflator. However, this approach is not useful for identifying options or risks facing decision-makers, especially in financial markets. Also, point estimates of inflation convey a sense of overconfidence. Our approach is more practical for decision-makers who must hedge their portfolios, but it is also useful for policymakers, investors, and consumers who must attach a probability with each possible scenario of future price trends. Our results indicate that since June 2011 the probability of deflation has been persistently higher than of the other two scenarios. Thus, the recent years’ higher deflation probabilities may offer a justification for the persistence of the Federal Reserve’s highly accommodative monetary policy during 2012–14.     

Globalisation and Obesity

The WHO has recently announced the global obesity epidemic. An economic model is developed in which globalisation factors generate health externalities and contribute to global obesity growth. The unbalanced panel data set contains the information for 79 countries over the period 1986–2008. Fixed‐effects panel data estimation and quantile regression analysis were used to analyse the data. The fixed‐effects panel model results indicate that the impact of trade openness and the globalisation social index (GSI) on global obesity rates is positive and significant, which is consistent with prior expectations, while surprisingly the foreign direct investments (FDI) has no impact on global obesity. While these results are interesting, they are hiding the effect of globalisation processes across the conditional distribution of the obesity variable. The use of quantile regression uncovered that the impact of the FDI and the GSI on low and average quantiles (low and average obesity rates in our sample) is positive and significant, while high quantiles are not affected. Since low and average quantiles (low and average obesity rates) are representative of the less‐ and medium‐developed countries, this result implies that social globalisation and FDI adversely impact obesity in less‐to‐medium developed countries. Trade openness generally has no impact on changes in obesity rates across quantiles.     

Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya,Uganda, and Tanzania

Private investment can be an important engine of economic growth in East African countries that are plagued with adverse economic conditions, despite recent growth rates. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges towards adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries—Kenya, Tanzania, and Uganda—a positive relationship is found between mobile money use and firm’s purchase of fixed assets. This relationship is attributed to reduced transaction costs, increased liquidity, and increased credit worthiness associated with the use of mobile phone financial services. The finding is largely driven by small- and medium-sized enterprises (SMEs).