Does the Dollar Index Really Measure Outward Orientation?

This paper assesses an important attempt to measure 'trade orientation' by a World Bank economist, David Dollar. Recognising the difficulties in measuring trade openness, Dollar (1992) produced an index of outward orientation. He adjusted national price levels with factor endowments, and used the difference between actual and predicted price levels as a measure of real exchange rate distortion. Although the 'Dollar index' was produced almost ten years ago and has been subject to various criticisms, it still remains the most popular measure of trade openness. First, this paper argues that the critics have not been entirely successful in discrediting the index. It goes on to produce alternative theoretical and empirical evidence that suggests that the Dollar index has fundamental flaws, and thus has no relevance to the debate on trade orientation and should be abandoned.     

Competition,External Economies of Scale,and Unionized Wage

We provide a rationale for the mixed relationship between product market competition and unionized wage, and more importantly, for a generally unexplained empirical evidence of a positive relationship between product market competition and unionized wage. We show that a higher product market competition decreases (increases) unionized wage if the external scale economies are weak (strong). However, a higher product market competition may decrease or increase the unionized wage if the external scale economies are moderate.

     

Competitive strategies,innovation, and firm performance: an empirical study in a developing economy environment

This paper studies the relationships between competitive strategies, innovation, and firm performance within the context of Turkish manufacturing companies. The data were collected from top management of the firms via Computer Assistant Telephone Interviewing method. One hundred and forty manufacturing firms operating in various sectors including textile, automotive supply, computer and electronics provide the basis for this empirical research. In order to test our model, we employ structural equation modelling using partial least squares. The results show that competitive strategies such as cost-leadership and differentiation can lead to innovation, which, in turn, increase firm performance. Managers implement cost-leadership and differentiation strategies to take part in competitive market conditions; however, they should put additional importance on innovation that plays a significant role as a bridge between competitive strategies and firm performance.     

External debt,growth and investment for developing countries: some evidence for the debt overhang hypothesis

Portuguese Economic Journal - We investigate the effect of total, public, and private external debt stocks on the growth rate and also on total, government, and private investment by using data for...     

CORRUPTION AND FOREIGN DIRECT INVESTMENT: A PANEL GRAVITY MODEL APPROACH

This paper investigates the relationship between corruption and foreign direct investment (FDI) in the case of 15 transition countries by using a panel gravity model approach and suggests that corruption does not deter FDI.     

It’s in the air: Aroma marketing and affective response in the hotel world

Smell is considered to be the sense that is most closely attached to emotional reactions. This makes scent in the hotel environment an important atmospheric variable to study, because fragrances are expected to increase the likelihood of producing an emotional reaction from consumers. Capitalizing on smell’s ability to cue memories and conjure up emotions, the purpose of this research is to examine the emotional states evoked by various hotel scents in a hotel business in Hong Kong that uses scent throughout its premises. More specifically, this study intends to make a connection between the emotional states evoked by the hotel scents and how hotel businesses can make use of their guests’ emotional responses. Scent marketing is an overlooked subject in hospitality and tourism research.     

Fashionable hospitality: A natural symbiosis for Hong Kong's tourism industry?

Despite the well-accepted synergy between shopping and tourism, co-branding between hotels and retail brands has not been realized by either academia or practitioners. Considering the international recognition of retail brands, hotel and retail co-branding may be a sustainable competitive advantage, especially in shopping destinations such as Hong Kong. Using a one-shot cross-sectional design, this study investigated potential consumer reactions and preferences about likely hotel and retail co-branding in Hong Kong and mainland China. Findings indicated several opportunities as well as threats for hotels and retail brands as well as the need to understand specific markets, especially mainland Chinese before venturing into hotel and retail co-branding. Practical implications and future research suggestions are provided.     

Creditor rights and debt allocation within multinationals

We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that partially centralized borrowing structures are optimal with either weak or strong creditor rights. For intermediate levels of creditor rights fully decentralized (centralized) borrowing structures are optimal if managers have strong (weak) empire-building tendencies. Decentralized borrowing is more attractive for companies focussing on short-term profitability. Credits are rather taken in countries with better creditor rights and more efficient insolvency systems.     

Value at risk and the cross-section of hedge fund returns

Using two large hedge fund databases, this paper empirically tests the presence and significance of a cross-sectional relation between hedge fund returns and value at risk (VaR). The univariate and bivariate portfolio-level analyses as well as the fund-level regression results indicate a significantly positive relation between VaR and the cross-section of expected returns on live funds. During the period of January 1995 to December 2003, the live funds with high VaR outperform those with low VaR by an annual return difference of 9%. This risk-return tradeoff holds even after controlling for age, size, and liquidity factors. Furthermore, the risk profile of defunct funds is found to be different from that of live funds. The relation between downside risk and expected return is found to be negative for defunct funds because taking high risk by these funds can wipe out fund capital, and hence they become defunct. Meanwhile, voluntary closure makes some well performed funds with large assets and low risk fall into the defunct category. Hence, the risk-return relation for defunct funds is more complicated than what implies by survival. We demonstrate how to distinguish live funds from defunct funds on an ex ante basis. A trading rule based on buying the expected to live funds and selling the expected to disappear funds provides an annual profit of 8–10% depending on the investment horizons.     

The intertemporal relation between expected returns and risk

This paper explores the time-series relation between expected returns and risk for a large cross section of industry and size/book-to-market portfolios. I use a bivariate generalized autoregressive conditional heteroskedasticity (GARCH) model to estimate a portfolio's conditional covariance with the market and then test whether the conditional covariance predicts time–variation in the portfolio's expected return. Restricting the slope to be the same across assets, the risk-return coefficient is highly significant with a risk–aversion coefficient (slope) between one and five. The results are robust to different portfolio formations, alternative GARCH specifications, additional state variables, and small sample biases. When conditional covariances are replaced by conditional betas, the risk premium on beta is estimated to be in the range of 3% to 5% per annum and is statistically significant.