Changing Risk Premia: Evidence from a Small Open Economy

Little is known about the differences in the relation between risk and return in large economies such as the U.S. compared with smaller, less studied, markets. In this paper, Sweden serves as a representative for small open economies. The price of risk on the Swedish stock market is estimated using a conditional asset pricing model that allows for time variation in the risk. Four different GARCH-M models are used in the econometric specification. The estimates of the price of risk are invariably positive and significant, and we conclude that there exists a time-varying risk premium in the Swedish stock market. Our results show that there are small differences in the preferences towards risk of representative investors in small and large economies.     

Does Managerial Behavior Determine Farm Technical Efficiency? A Case of Grape Production in an Economy in Transition

This study explores how farmers' managerial behavior in their production planning processes influences the economic performance of their farms, measured through input‐oriented and output‐oriented technical efficiency. A conceptual framework in which differences in managerial behavior were assumed to be due to bounded rationality was developed. The 3‐year means (2006–2008) from a panel data set on grape‐producing family farms in FYR Macedonia were analyzed. Technical efficiency was estimated with the nonparametric data envelopment analysis approach. The impact of farmers' managerial behavior was assessed in a second‐stage regression. The results suggest that bounded rationality in farmers' production planning decisions causes inefficiency. Copyright © 2011 John Wiley & Sons, Ltd.     

Pyrrhic victories – anticipating the closedown effect

Previous studies with empirical evidence on social responsible driven closedowns have identified a productivity increase effect that occurs during the process of organizational closedowns, known as the closedown effect. Our proposition is that this effect can be anticipated as a consequence of a closedown decision. Encountering four different non social responsible closedown cases, of various durations, we statistically test this proposition. Further, we identify a need for an analytical distinction of the phases of the closedown process, in terms of the primary ‘advanced notice period’ and the secondary ‘countdown period’. Based on the analysis, and with this distinction, we are able to conclude that the productivity increase effect can be anticipated during the countdown period. The comparably longer time frame in the Studding case provides the strongest support for our proposition. From the analysis we suggest hypotheses for further research.     

A combination of differentiation and consolidation theory and risk-benefit analysis to examine decisions on mastitis prevention

Abstract

Mastitis infections cause severe pain in dairy cows and are the most costly illness to farmers. This study combined differentiation and consolidation (Diff-Con) theory with risk-benefit analysis to explore how risky decisions are perceived and justified after a decision has been taken. More specifically, using survey data from 428 Swedish dairy farmers, their decisions about adopting preventive measures to control mastitis (mastitis control options, MCO) in dairy herds were examined. The analyses included group comparisons with non-parametric rank tests and use of both ordinary least squared regression and seemingly unrelated regression analysis to examine how prior adoption of MCO affects farmers’ attitudes to the MCO. The results showed that MCOs already adopted were rated higher in perceived riskiness (if not implemented) and in expected benefit (for illness prevention) than non-adopted MCOs. Having made the decision to implement a strategy increased the likelihood of that decision being perceived as more beneficial (reducing mastitis) and risky (in terms of disease increase if not implemented), irrespective of the combination of strategies used on the farm, during the post-consolidation stage. No difference in perceived illness prevalence could explain the farmers’ rating of the MCOs. These findings suggest that there may be a path dependency in farmers’ decision-making with respect to MCO. This implies that novel MCOs may have difficulty in achieving wider implementation. These results have implications for the development of strategies to communicate best practices for use of MCOs and for new research on MCOs and farmers’ decision-making.     

Countertrade in the Asian-Pacific Region

The article surveys the literature on countertrade with special reference to the Asian-Pacific region. It covers the five most common forms of 'tied' trade: barter, counterpurchase, buyback, offset and bilateral agreements. It focuses on China as the most important centrally planned economy in the region; on the two regional market economies which have made use of countertrade, Indonesia and Malaysia; and on Singapore as a countertrade service centre. The literature survey consists not so much of the relatively few academic books and articles on the subject but of a miscellany of articles to assist practitioners and to study appropriate responses at the firm, national and global level.     

Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?

The rate of change in the share of skilled labor has increased steadily over the past 35 years in Swedish manufacturing. A closer inspection of the period after 1970 indicates that, while relative supply changes of skilled labor seem to have been the main driving force behind the growing skill shares in manufacturing industries over the period 1970–85, an acceleration in the relative demand for skills appears to have propelled higher skill shares during the late 1980s and at the beginning of the 1990s. Consistent with such a development is the finding of an increasing degree of complementarity between knowledge capital and skilled labor, and that Swedish manufacturing firms, in recent years, have invested heavily in R&D. There is also some support for the belief that intensified competition from the South has increased the relative demand for skilled labor. However, the impact appears to be small and essentially driven by the textile industry.     

Moral and Instrumental Norms in Food Risk Communication

The major normative recommendations in the literature on food risk communication can be summarized in the form of seven practical principles for such communication: (1) Be honest and open. (2) Disclose incentives and conflicts of interest. (3) Take all available relevant knowledge into consideration. (4) When possible, quantify risks. (5) Describe and explain uncertainties. (6) Take all the public’s concerns into account. (7) Take the rights of individuals and groups seriously. We show that each of these proposed principles can be justified both in terms of more fundamental ethical principles and instrumentally in terms of the communicating agent’s self-interest. The mechanisms of this concordance of justifications are discussed. It is argued that the concordance is specific for areas such as food risks in which agents such as companies and public authorities are highly dependent on the public’s trust and confidence. The implications of these findings both for moral philosophy and for practical food risk communication are discussed.