LICENCE VALUES IN TAXI MARKETS

Wherever taxi regulators cap the number of taxis, operating licences acquire economic value. In the UK, the Office of Fair Trading recommended legislative repeal of quantity caps, but the status quo continues. This article argues that licence values send an important signal to taxi regulators.     

An experimental analysis of tax avoidance policies

Policies to reduce aggressive tax avoidance are increasingly being implemented or discussed in many countries around the world. Tax authorities hope that such policies will generate new tax revenue by increasing overall tax compliance. We present an experimental design to investigate the effect of a stylized anti-avoidance tax policy on tax compliance behavior. We highlight that anti-avoidance tax policies that reduce tax avoidance can also induce an increase in tax evasion (“substitution effect”), which limits the additional tax revenue these policies will generate. We show that the degree of substitution depends crucially on behavioral factors such as tax morale. Policymakers therefore also need to consider behavioral features while designing such policies and estimating their potential effects.     

Tournament Winner Proportion and its Effect on Effort: An Investigation of the Underlying Psychological Mechanisms

This study investigates the effects of the psychological mechanisms activated by different proportions of tournament winners on effort. Using a real-effort experiment that allows the evolution of social comparison, which is central to our theory, we show that firms can increase employee effort (and performance) by increasing the proportion of winners. Based on a causal model, we generate evidence for our theory that this effect is driven by relative performance concerns and bonus concerns, both of which depend on the proportion of tournament winners. In addition, we find that, over time, the change in effort is more negative the lower the proportion of winners. This effect is driven by the different behaviors of winners and losers in a previous tournament.     

FEMALE ENTREPRENEURSHIP IN EARLY ISLAM

The absence of female leaders in business and public life is conspicuous in Islamic societies. One explanation may be that Islam imposes legal and social inequality on men and women. However, a comparison of female entrepreneurship in pre‐Islamic society and in Mohammed's era shows that women occupied leadership roles before and after the establishment of Islam. Mohammed's wives were commercially astute, and Mohammed and his contemporaries respected the rights of women to make decisions regarding finances, matrimony and religious affiliation. The right of women to assume public leadership roles is compatible with Islam.     

The Thirteenth‐Century Economics of Thomas Aquinas

In the Middle Ages, discourse on economics, such as it was, proceeded for the most part as an application of theological doctrine. But economic analysis as an independent discipline per se was taking shape in thirteenth‐century scholasticism. This is shown by a review of relevant sections of Thomas Aquinas’ Summa theologiae regarding property rights and the division of labour; wealth and income policies; consumer protection and fair trade; and the distinction between usurious and licit financial returns.     

Commodity prices and growth: An empirical investigation

Whereas empirical evidence on the effect of higher commodity prices on the long-run growth of commodity exporters is ambiguous, time series analyses using vector autoregressive (VAR) models have found that commodity booms raise income in the short run. In this paper we adopt panel error correction methodology to analyze global data for 1963 to 2008 to disentangle the short and long run effects of international commodity prices on output per capita. Our results show that commodity booms have unconditional positive short-term effects on output, but non-agricultural booms in countries with poor governance have adverse long-term effects which dominate the short-run gains. Our findings have important implications for non-agricultural commodity exporters with poor governance, especially in light of the recent wave of resource discoveries in low-income countries.     

Trust in Companies and in CEOs: A Comparative Study of the Main Influences

Trust is a crucial factor for the long-term economic success of a company. However, not only does the company establish trust, but the CEO representing the company builds up trust as well and, therefore, also influences the company’s success. Our study examines how different dimensions of trust (i.e., ability, integrity, benevolence, and information quality) influence the degree of overall trust in a company and in CEOs. Nevertheless, dimensions that influence trust in a CEO can be completely different to those influencing trust in companies. Companies and CEOs that act on an international level can hardly be experienced individually, and thus people get information about the company via media use. Therefore, additionally we examine which kind of media is used for getting information about a company or CEO and whether a relationship exists between media use and trust. Findings from a survey in Switzerland (n = 245) show that companies are more trusted than CEOs and that the items which influence overall trust differ between CEOs and companies. Social responsibility as a benevolence item is important for both groups. Regarding information on different media channels, users of traditional media like newspapers, TV, and radio are most critical regarding trust in companies and CEOs.     

Internal Versus External Capital Markets in the Insurance Industry: The Role of Reinsurance

This study compares internal and external sources of capital in the insurance industry by analyzing reinsurance activity between affiliated and unaffiliated insurers. Tests are performed using data from a large sample of property-liability insurers that are affiliated with at least one other property-liability insurer. Results indicate that while demands for internal and external reinsurance have some factors in common, there are cost-based differences in internal and external capital, as well as structural differences in the use of internal and external reinsurance. Results are consistent with previous theories related to internal versus external capital markets.     

Do high interest rates defend currencies during speculative attacks? New evidence

Kraay [Kraay, A., 2003. Do high interest rates defend currencies during speculative attacks? Journal of International Economics 59, 297-321.] documents the lack of any systematic association between monetary policy and the outcome of a speculative attack. This paper revisits Kraay's work and modifies it by introducing an improved measure of monetary policy and an additional country-specific fundamental, short-term corporate debt, to capture balance sheet vulnerabilities emphasized by the recent currency crises literature. The results show that for low levels of short-term corporate debt, raising interest rates lowers the probability of a successful attack. This effect decreases and eventually reverses for higher levels of debt. These findings contrast earlier empirical evidence and imply a fundamental reconsideration of the role of monetary policy during currency crises.