An Empirical Approach

There is empirical evidence that investors' confidence is not only adversely affected by corruption but also by the lack of predictability and confidence that accompanies corrupt deals. However, the positive aspect of this lack of confidence is that it acts as a deterrent to corruption. Empirical data provided here on a cross–section of countries proves that confidence in corrupt deals enhances the further spread of corruption. This suggests that the adverse effects of corruption cannot be avoided by divesting it of its unpredictability.     

The Austrian current account deficit: Driven by twin deficits or by intertemporal expenditure allocation?

The evidence presented in the paper rejects the twin deficit hypothesis for the Austrian current account balance during the last two decades. The results are based on an estimate of a vector error correction model including quarterly data for the current account balance and potentially relevant variables driving its dynamics. We compute the variance decomposition of the current account's forecast error and its generalized impulse responses to shocks in the innovations of the system. The results in favor of intertemporal expenditure reallocation cannot be reproduced within a second analysis including the current account and a measure of net output, however. The estimated implicit current account balance, interpreted as the discounted expected change in future net output, does not follow the actual behaviour of the current account. First version received: June 1999/Final version received: March 2001     

Politically stable pay-as-you-go pension systems: When the social-insurance budget is too small in a democracy

The essay analyzes in an overlapping-generations model, to which extent a pay-as-you-go pension system will be the outcome of majority voting, given specific institutional set-ups. Clearly, the vote of an active person depends on his expectations about how the present decision (i.e., his contribution) is linked to the future (i.e., his benefits), when he will be retired. In the paper we employ the assumption of a basic social contract where each active voter's future benefits are positively related to his contributions. It is shown that in this framework a steady-state with a positive (though lower than optimal) level of the pension system exists, even if a new majority decision about the system takes place every period.     

The Relationship Between Leaders’ Group-Oriented Values and Follower Identification with and Endorsement of Leaders: The Moderating Role of Leaders’ Group Membership

In this article, we hypothesize that leaders who display group-oriented values (i.e., values that focus on the welfare of the group rather than on the self-interest of the leader) will be evaluated more positively by their followers than leaders who do not display group-oriented values. Importantly, we expected these effects to be more pronounced for leaders who are ingroup members (i.e., stemming from the same social group as their followers) than for leaders who are outgroup members (i.e., leaders stemming from a different social group than their followers). We tested our hypotheses in two studies. Results of a field study (N = 95) showed the expected relationship between leaders’ group-oriented values and followers’ identification with their leaders. A scenario study (N = 137) replicated the results and extended it to followers’ endorsement of their leaders. Overall, these findings suggest that displaying group-oriented values pays off more for ingroup than for outgroup leaders.     

Information sharing as a safeguard against the opportunistic behavior of South African Karoo Lamb farmers

Misconduct in global meat supply chains are omnipresent and even more so in differentiated chains where credence attributes such as origin and taste are used to differentiate the product. By definition, these attributes signal asymmetric information which implies that in the presence of bounded rational individuals with conflicting interests, misconduct in the form of opportunistic behavior is bound to prevail. Increased information exchange through farmer networks is, however, expected to reduce opportunistic behavior. In the case of a differentiated meat product, such as Karoo Lamb, the article studies the farmer‐abattoir transaction with the purpose of recommending strategies that can be implemented to reduce the farmer's tendency to behave opportunistically. The article employs the PLS approach to SEM and reveals a significant negative relationship between information shared and opportunistic behavior. The results indicate significant positive relationships between trust in the abattoir and information shared as well as between farmer networks and information shared. These results are indicative of the support provided to the information shared construct by higher levels of trust between farmers and abattoirs and established farmer networks. It is, therefore, recommended that differentiated meat supply chains, through their various associations, concentrate their efforts to promote information sharing by building stronger, trust centered relationships and by supporting farmer networks.