Testing Part of a DSGE Model by Indirect Inference

We propose a way of testing a subset of equations of a DSGE model. The test draws on statistical inference for limited information models and the use of indirect inference to test DSGE models. Using the numerical small sample distribution of our test for two subsets of equations of the Smets–Wouters model we show that the test has accurate size and good power in small samples, and better power than using asymptotic distribution theory. In a test of the Smets–Wouters model on US Great Moderation data, we reject the specification of the wage‐price but not the expenditure sector. This points to the wage‐price sector as the source of overall model rejection.     

Co-movement in Stock Prices in Emerging Economies: The Case of the Caricom Region

The Grand Anse Declaration of 1989 recognised the need for financial integration within the emerging economies that comprise the CARICOM region, as a way of furthering the wider process of economic integration and, indeed, economic development in that region. Using co-movement as a measure of financial integration, this paper investigates the co-movement in stock prices among the Barbados, the Jamaica and the Trinidad and Tobago Stock Exchanges, the three major exchanges within the CARICOM region. It also examines how integrated these exchanges are with the New York Stock Exchange. The GARCH-Copula methodology and, to a lesser extent, estimated correlation coefficients, are used to attain this objective. There appears to be co-movement in stock prices and returns within the CARICOM stock markets and significant dependence structures between the returns of the three CARICOM stock markets. However, there is considerably less evidence of integration between the CARICOM markets and the New York Stock Exchange.     

The Politics of Inequality as Organised Spectacle: Why the Swiss Do Not Want to Tax the Rich

In 2015, Swiss voters had the opportunity to impose a tax on the super rich in a popular vote and thereby fund a redistributive policy. However, a large majority voted against its seemingly obvious self-interest and rejected the tax. We propose an explanation for this puzzling outcome, bridging the usually separate behavioralist and institutionalist perspectives on the politics of inequality. We start from the observation that political economy tends to neglect processes of preference formation. Theorising preferences as socially constructed, we show that interest groups played a major role in shaping the outcome of the vote. Business frames were multiplied through allied parties and the media and had a major impact on individual voting behaviour. In addition, we demonstrate that interest groups representing business interests derive the content of their communication from business’s structurally privileged position in the capitalist economy. Specifically, creating uncertainty about possible perverse effects of government policies on jobs and growth is a powerful tool to undermine popular support. Frames based on this structural power ultimately explain why the Swiss refrained from ‘soaking the rich.’     

Inflation Risk?

Intereconomics - Inflation is on the rise again in the industrialised world. This has led to fears of a sustained surge in inflation. This article argues that while such fears may make sense in the...     

Entrepreneurial orientation and innovation in family SMEs: Unveiling the (actual) impact of the Board of Directors

Drawing on stewardship and resource dependence theories, we examine how the board of directors (BoD) influences the link between entrepreneurial orientation (EO) and ambidextrous innovation in small and medium sized family firms (family SMEs). Our analysis of 230 Spanish family SMEs shows that family involvement in the BoD has a negative effect on their ability to turn EO into innovation. Moreover, we show that the BoD's strategic involvement in service and control tasks and the provision of knowledge and skills have positive effects, whereas the intensity of BoD activity has a surprisingly negative effect. These findings underscore that the effects of the BoD on the entrepreneurship-innovation link are more complex than previously thought, pointing to the important role of both BoD composition and BoD functioning for enabling innovation in family SMEs.     

'High-performance' Management Practices, Working Hours and Work–Life Balance

The effects of selected high‐performance practices and working hours on work–life balance are analysed with data from national surveys of British employees in 1992 and 2000. Alongside long hours, which are a constant source of negative job‐to‐home spillover, certain ‘high‐performance’ practices have become more strongly related to negative spillover during this period. Surprisingly, dual‐earner couples are not especially liable to spillover — if anything, less so than single‐earner couples. Additionally, the presence of young children has become less important over time. Overall, the results suggest a conflict between high‐performance practices and work‐life balance policies.     

An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions

This paper explores differences in the bidding patterns of entrants and incumbents in road construction auctions. We find that entrants bid more aggressively and win auctions with significantly lower bids than incumbents. The differences in their bidding patterns are consistent with a model of auctions in which the distribution of an entrant's costs exhibits greater dispersion than that of an incumbent's and relations of stochastic dominance in the distributions do not persist for the entire range of estimated costs. We also find that more efficient firms bid, on average, more aggressively and firms with greater backlogs bid less aggressively.     

Intraday Lead-Lag Relationships Between the Futures-, Options and Stock Market

In rational, efficiently functioning and complete markets, returns on derivative and underlying securities should be perfectly contemporaneously correlated. Due to market imperfections, one of these markets may reflect information faster. The use of high-frequency data and the choice for a small unit time interval to measure these lead-lag relations comes at the cost of some or many missing observations, causing traditional estimators to either under- or overestimate covariances and correlations. We use a new estimator to estimate lead-lag relationships between the cash AEX index, options and futures. We find that futures returns lead both options and cash index returns by approximately 10 minutes. The relationship between options and the cash market is not completely unidirectional.     

Information styles of marketing and R&D personnel during technological product innovation projects

Abstract The research question in the present article can be phrased in the following way: what are the elements which influence the perception of the utility of information received from another function? A field study research has been conducted in 40 Belgian companies. In each company, we have studied two on-going innovation projects (one planning project, one development project). Crossfunctional communication behaviours at the R&D/marketing interface have been measured by means of mailed structured questionnaires. Three-hundred and eighty-six questionnaires have been returned. The data analyses show that there are four underlying information dimensions, i.e. the perceived relevance, the perceived comprehensibility, the perceived novelty and the perceived credibility of information. We also discuss some contingency variables (function of the message receiver, stage in the innovation process) that might moderate the impact of these dimensions. It will be shown that the interaction between source and receiver has a significant impact on the perceived credibility, the perceived comprehensibility and the perceived novelty of the received information.