The Dynamics of Productivity: A Decompostion Approach Using Distribution Functions

In this paper we use a micro panel data set of Spanish manufacturing firms to measure the contributions of continuing firms and turnover to total factor productivity growth over the period 1990–1997. The paper proposes an approach to the decomposition of productivity growth that is based on the estimation of productivity distributions. We characterize the dynamics of productivity distributions defining counterfactual distributions and using non-parametric methods. The results we obtain indicate that incumbent firms are the main factor contributing to the change in the productivity distribution. Net entry contributes positively to TFP growth. Finally, changes in the relative weights of incumbent, entering and exiting firms produce a counter-cyclical movement of productivity.     

Trade Union Derecognition in Britain, 1988–1994

Since the initial studies of derecognition, many articles have focused on the issue, by and large pointing to a slow increase in derecognition. However, a small number have indicated it is actually much larger. This paper shows that derecognition is even greater than these suggest and that its nature has changed. The paper looks at the contexts of this rise but argues that derecognition should not yet be seen as a major problem facing the unions.     

Testing the significance and the non-linearity of the Phillips trade-off in the Euro Area

This paper tests the significance and the non-linearity of the Phillips trade-off in the aggregate Euro Area, in an unobserved components model of stochastic NAIRU and trend output featuring the Phillips equation and the Okun law as main identifying equations, with quarterly data for 1970:I-2002:III. The Phillips curve turns out to be linear and its trade-off statistically significant, while non-linearity shows up in the Okun relation. The results prove to be robust to alternative lag length structures of the model, and to alternative non-linear functional forms. The trend-cycle decompositions estimated with the model capture the main features of the Euro Area’s recent macroeconomic record.First version received: 1 September 2003 / Final version received: June 2004CEMPRE - Centro de Estudos Macroeconómicos e Previsão - is supported by the Fundação para a Ciência e a Tecnologia, Portugal, through the Programa Operacional Ciência, Tecnologia e Inovação (POCTI) of the Quadro Comunitário de Apoio III, which is financed by FEDER and Portuguese funds.We thank comments on earlier versions by Fabio Canova, Miguel St Aubyn, Alvaro Almeida, Pete Richardson, Kevin Ross, and two anonymous referees. We acknowledge James D. Hamilton’s help with the confidence bands. The usual disclaimer applies.     

Measuring financial risks with copulas

This paper is concerned with the statistical modeling of the dependence structure of multivariate financial data using the concept of copulas. We select some special copulas and identify the type of dependency captured by each one. We fit copulas to daily returns and simulate from the fitted models. We compare the effect of the choice of copula on risk measures and assess the variability of one-step-ahead predictions of portfolio losses. We analyze extreme scenarios and fit extreme value copulas to the block maxima and minima from daily returns. The stress scenarios constructed are compared to those obtained using models from the extreme value theory. We illustrate the usefulness of the copula approach using two stock market indexes.     

Can teaching social dilemmas make people more prosocial? An experiment

Economics and business students regularly behave less prosocially than others. Can ethics training reverse this tendency? Results from a repeated public goods experiment reveal that it can. Students who attend an interactive lecture on social dilemmas show significantly more cooperation than others. However, the lecture does not appear to increase the incidence of reciprocal behavior. As many current social problems qualify as social dilemmas, this result stresses the importance of ethics training for policy makers and curriculum designers alike in overcoming the incentive structure of social dilemmas.     

Data-driven tree structure for PIN models

Probability of informed trading (PIN) models characterize trading with certain types of information through a tree structure. Different tree structures with different numbers of groups for market participants have been proposed, with no clear, consistent tree used in the literature. One of the main causes of this inconsistency is that these trees are artificially proposed through a bottom-up approach rather than implied by actual market data. Therefore, in this paper, we propose a method that infers a tree structure directly from empirical data. More precisely, we use hierarchical clustering to construct a tree for each individual firm and then infer an aggregate tree through a voting mechanism. We test this method on US data from January 2002 for 7608 companies, which results in a tree with two layers and four groups. The characteristics of the resulting aggregate tree are between those of several proposed tree structures in the literature, demonstrating that these proposed trees all reflect only part of the market, and one should consider the proposed empirically driven method when seeking a tree representing the whole market.

     

TAXATION IN MATCHING MARKETS

We analyze the effects of taxation in two-sided matching markets where agents have heterogeneous preferences over potential partners. Our model provides a continuous link between models of matching with and without transfers. Taxes generate inefficiency on the allocative margin, by changing who matches with whom. This allocative inefficiency can be nonmonotonic, but is weakly increasing in the tax rate under linear taxation if each worker has negative nonpecuniary utility of working. We adapt existing econometric methods for markets without taxes to our setting, and estimate preferences in the college-coach football market. We show through simulations that standard methods inaccurately measure deadweight loss.     

Region brand legitimacy: towards a participatory approach involving residents of a place

Places have started to adapt commercial branding tactics. But how do stakeholders perceive such practices? Drawing on survey data from French residents, we analyse the advertising legitimacy of a place brand and its influence on the effectiveness of marketing communications in the context of region branding. The results confirm that advertising legitimacy mediates the relationship between exposure to an advertisement and its efficiency. The place brand is more legitimate when advertisements target firms, residents or tourists than when they promote local products through co-branding. We highlight a new expression of democratic legitimacy: a process adapted to hybrid (public–private) organizations.