Dutch Disease,factor mobility,and the Alberta Effect: the case of federations

Do reduced costs of factor mobility mitigate Dutch Disease effects to the extent that they are reversed? The case of federations provides an indication they do. We observe resource blessing (curse) effects at the provincial (federal) level, and argue the difference in outcomes stems from the difference in factor mobility costs. We construct a simple tax competition model which shows that if factor mobility costs are sufficiently low, a resource‐boom triggers an Alberta Effect that mitigates, and possibly reverses, Dutch Disease symptoms. The paper concludes with empirical evidence for the main implications of the model.     

Categorization of tourist attractions and the modeling of tourist cities: based on the co-plot method of multivariate analysis

This paper examines the relation between the trip characteristics of tourists and the attractions that they visit. This analysis was made possible by means of a new method of multivariate analysis—co-plot—that enables the simultaneous analysis of observations and variables and the graphic presentation of the interrelations among them. Jerusalem was seen as an “ideal” city for the demonstration of the co-plot method of data analysis due to the heterogeneity of its tourism. The research was conducted between September 1998 and March 1999. The results of the statistical analysis show that Jerusalem's tourist attractions can be categorized into four distinct groups and that there is a tendency of spatial concentration among sights belonging to the same group. Based on these results, a spatial model of tourism consumption in large cities was developed.     

Entering new markets: The effect of performance feedback near aspiration and well below and above it

Research summary : This study draws on the resource‐based view and the behavioral theory of the firm to gain new insights about the effect of performance relative to aspiration level (i.e., performance feedback) on the decision to enter new markets. Results show an inverted U‐shaped relationship between performance both below and above aspiration level, and the probability of firms to enter new markets. That is, when firms are well below or well above their aspiration level, they significantly change their behavior. This article develops a theoretical framework to clarify and organize these findings. Managerial summary : This study examines the effect of performance feedback, and particularly, large discrepancies between firm performance and aspiration level on the decision to enter new markets. It provides support to the role of performance feedback in affecting the decision to enter new markets, a factor that has received relatively little attention in the extensive literature that has examined the inducements of such moves. Results show that, as performance falls below or rises above aspiration, a firm's probability of entering new markets increases up to a certain point after which this relationship decreases. This shows that the tendency to enter new markets is different for firms that are in the neighborhood of aspiration level compared to those that are well below or above it. Copyright © 2016 John Wiley & Sons, Ltd.     

Crime,Terror and Corruption and Their Effect on Private Investment in Israel

There are a number of mechanisms through which illegal activity can affect economic activity. Until now, most empirical research that has attempted to quantify the negative effects of illegal activity on economic performance has used international cross-section comparisons. The present study is apparently the first attempt in the literature to examine directly the effects of crime and corruption (and one of few to examine the effects of terror) on private investment by examining the behavior of investors over time in a specific country within a structured model of investment. Israel was chosen as the subject of the study. According to international indexes, Israel’s status as a civil society has degraded over the past decade and according to the corruption index of Transparency International, it is now ranked 33rd in the world. The results of the research can serve as the basis for comparison in similar studies of other Western countries. The study’s conclusions support the hypothesis that crime and major (but not sporadic), significant or ongoing, terror events play an important part in determining the investment behavior of firms in Israel, both in the short and the intermediate/long run.     

Limit Order Book as a Market for Liquidity

We develop a dynamic model of a limit order market populatedby strategic liquidity traders of varying impatience. In equilibrium,patient traders tend to submit limit orders, whereas impatienttraders submit market orders. Two variables are the key determinantsof the limit order book dynamics in equilibrium: the proportionof patient traders and the order arrival rate. We offer severaltestable implications for various market quality measures suchas spread, trading frequency, market resiliency, and time toexecution for limit orders. Finally, we show the effect of imposinga minimal price variation on these measures.     

Additional cautionary notes about the Pearson's correlation coefficient

In this paper we draw attention to two usually-neglected problems with the use of the Pearson's correlation coefficient for ordinal scores. We refer to the questions of substantial differences between the marginal distributions of the two variables to be correlated, and the number of ties on each one of the distributions or on both. Finally, we propose a correction factor for the Pearson's correlation coefficient when the number of ties is large. Some empirical examples are given in order to demonstrate these points.     

Stocks or Options? Moral Hazard, Firm Viability, and the Design of Compensation Contracts

We consider the choice between stocks and options to provideeffort incentives to a risk-averse manager. We show that stockscan dominate options as a means of motivation only if nonviabilityrisk is substantial, as in financially distressed firms or start-ups.Options dominate stocks for other firms. These results holdregardless of the existing portfolio of the manager. We provideempirical evidence that higher bankruptcy risk is indeed correlatedwith more use of stock.     

On the moral hazard problem without the first-order approach

We study the moral hazard problem without the first-order approach or other common structure. We present sufficient conditions under which the shadow value of simultaneously tightening the minimum payment and individual rationality constraints has a simple and intuitive expression. We then show how this expression can be used to perform comparative statics exercises in which we study (i) the effect of a change in the agent?s wealth on the well-being of the principal; and (ii) the effects of the outside option and minimum payment on the effort level optimally implemented.