Measurements and determinants of multifaceted poverty in South Africa

Poverty, despite being a multifaceted concept, is commonly measured in either absolute or relative monetary terms. However, it can also be measured subjectively, as people form perceptions on their relative income, welfare and life satisfaction. This is the first study that uses the National Income Dynamics Study data to analyse poverty across various objective and subjective methods. The paper finds that while respondents' poverty status varies across methods, blacks remain the racial group most likely to be defined as poor by at least one method. The multivariate analysis reveals that the impact of some explanatory variables, such as experience of negative events, frequency of crime victimisation, health status and importance of religious activities, is mixed across methods.     

Does it matter where you come from? Vertical spillovers from foreign direct investment and the origin of investors

This study uses firm-level panel data from Romania to examine whether the origin of foreign investors affects the degree of vertical spillovers from FDI. Investors' origin may matter for spillovers to domestic producers supplying intermediate inputs in two ways. First, the share of intermediates sourced locally by multinationals is likely to increase with the distance between the host and the source economy. Second, the sourcing pattern is likely to be affected by preferential trade agreements. In this case, the Association Agreement between Romania and the European Union (EU) implies that inputs sourced from the EU are subject to a lower tariff than inputs sourced from the United States or Canada. This means that on average American investors may have a greater incentive than EU investors to source from Romania and hence present a greater potential for vertical spillovers. The empirical analysis produces evidence consistent with this hypothesis. The results show a positive association between the presence of American companies in downstream sectors and the productivity of Romanian firms in the supplying industries and no significant relationship in the case of European affiliates. The results also indicate that Romanian firms in sectors whose products are expensive to transport benefit more from downstream presence of American affiliates than Romanian firms in sectors with low shipping costs. No such pattern is found for European affiliates.     

Retailers’ Price Positioning and the Motivational Profiling of Store‐Brand Shoppers: The Case of Spain

In recent years, retailers have worked to advance store‐brand strategies, leading to greater success and higher congruence with the retailer's positioning. In this new competitive context, this research aims to characterize store‐brand shoppers in terms of motivation and benefits sought, as well as analyze, on the basis of congruence theory, the moderating role of a retailer's price positioning on store‐brand shopper characterizations. The empirical study combines survey and household panel information related to leading retailers in Spain; the findings reveal that store‐brand shoppers are motivated by their price sensitivity, whereas they are less sensitive to service quality and name brands. However, the retailer's price positioning exerts a moderating effect on shopper profiles: In less price‐oriented retail chains, store‐brand purchases seem motivated less by price and more by quality, brand awareness, and brand reputation.     

Lab and framed lab versus natural experiments: Evidence from a risky choice experiment

Some recent papers have studied data from TV game shows to examine the behaviour of individuals towards risk. It is generally agreed that data from these shows are useful in detecting individual risk aversion in the field, with both “real life” subjects and incentives. Field experiments also include some interesting reality features that could affect individuals’ behaviour and possibly lead to different findings. This paper aims at investigating lab versus field evidence in risk taking attitudes, especially controlling for framing effects. To assess whether the behaviour of subjects in the field is consistent with that of experimental subjects, we designed an experiment to mimic (with experimental rewards and subjects) the rules of a well-known Italian TV game show, Affari Tuoi, in two different settings: a traditional lab setting, where the game was played individually (109 subjects) (Treatment 1); and a framed lab, in which the experiment was replicated in the Italian public television (RAI) studio where the show was actually recorded, with a smaller sample of undergraduate students (33) and in the presence of an audience (Treatment 2). Our comparison between the two different settings aims at establishing whether the presence of an audience, or of a situation that reproduces the stress that contestants must experience in the TV studio, can affect experimental subjects’ choices. We did not find any significant evidence of framing effects: students behave in a similar way in the two lab settings, responding essentially to incentives. Comparing the risk attitudes shown by experimental subjects in the two lab treatments with those exhibited by the contestants in the field, we found that contestants in the TV show are generally more risk averse than students in the lab.     

Monetary Union, institutions and financial market integration: Italy, 1862–1905

Years into the single currency, EMU financial markets are not fully integrated. We argue that the phenomenon can be better understood by looking at financial markets’ behavior in the wake of Italy’s monetary unification (1862). Variables such as the spread of the telegraph, trade volumes, and the diffusion of the ‘single currency’ fail to explain why it took 25 years for prices across regional stock exchanges to converge. A single Italian financial market appeared only when the State prevailed upon local vested interests by enforcing nation-wide financial market legislation.     

TESTING ALTERNATIVE VIEWS OF GOVERNMENT BUDGETING

We develop three competing models of government budgeting: (1) a rational model, in which government services are provided in accordance with consumer tastes, (2) a Friedman-type model, in which spending and borrowing decisions derive from the level of taxes, and (3) a Buchanan public-choice type model, in which the extent of deficit spending determines government spending plans. We use quarterly U.S. data over the period 1947 to 1987 to empirically test each of these models within a vector autoregressive framework, taking into account the potential role of other relevant macro variables. We first specify the testing framework utilizing data on the levels of government revenue, spending and deficit, and show that the resulting estimates are unrealistic. We then divide each of these variables into anticipated and unanticipated components. The results thus obtained reject the Buchanan-type models, but are unable to reject either a Friedman-type model or a “weak” form of the rational model. Our results suggest that future research should concentrate on developing appropriate tests capable of distinguishing between these two models of the government budgeting process.     

Exporting, capital investment and financial constraints

Many firms cite financial constraints as some of the most important impediments to their investment and growth. Using a unique data set from the Czech Republic this paper investigates the importance of financing constraints in the context of exporters. It finds that exporters are less financially constrained than non-exporters. However, after carefully correcting for possible endogeneity and selection issues, the evidence points to less constrained firms self-selecting into exporting rather than exporting alleviating firms’ financial constraints.     

Putting Austerity to Bed: Technical Progress,Aggregate Demand and the Supermultiplier

ABSTRACT

The paper investigates the determinants of private investment and economic growth from a theoretical perspective. We start with a critical analysis of the crowding-out effect and we present a new version of the Sraffian Supermultiplier: a model that accounts for both the multiplier and accelerator effects. We focus on different types of fiscal policies: generic ones and ‘mission-oriented’ ones that set a new direction for the economy. We show that mission-oriented policies have the potential to generate the largest positive effect on investments and output growth as well as on innovation processes and labour productivity growth.