Permit markets,carbon prices and the creation of innovation clusters

Innovation clusters combining public and private effort to develop breakthrough technologies promise greater technological advances to slow down climate change. We use a multi-country model with an emission trading system to examine whether and how international climate policy can incentivize countries to create such innovation clusters. We find that a minimal carbon price is needed to attract applied research firms, but countries may nevertheless fail to invest in complementary research infrastructure. We construct a mechanism that leads to innovation clusters when emissions targets are set before uncertainty surrounding technological developments is resolved. It is a combination of low permit endowments for the country with the lowest costs to build the needed infrastructure, compensation for this country by profits from permit trade, and maximal possible permit endowments for the remaining countries. We outline how the EU-ETS can be further refined according to this mechanism.     

Is bank staff interaction associated with customer saving behavior in banks?

Major changes are underway in the U.S. retail banking sector toward heavy investments in technology and fewer in personnel. Using the 2017 survey of household economics and decision‐making (SHED) (n = 11,359), we examine the relationship between saving behavior related to emergency, long‐term and periodic expenses and personal, technological, and hybrid bank account access methods. Binary logistic regression models were used to estimate the odds of reporting various saving behaviors in relation to various banking access methods. Findings suggest that the personal access method is positively associated with savings behavior for periodic expenses for the general population, and negatively associated with emergency savings in people with lower education attainment. Technology is associated with all types of saving behavior, while the hybrid access method is associated only with saving for periodic expenses. As investments in self‐service technology increase, the importance of access methods to savings behavior must be considered.     

Are You a Chocolate Lover? An Investigation of the Repurchase Behavior of Chocolate Consumers

This study aimed to understand the factors affecting repurchase behavior of chocolate brands and, consequently, customer retention and acquisition. The study adopted a qualitative, inductive approach using in-depth interviews with 31 Australian consumers. The factors identified in the extant literature as antecedents of customers’ repurchase intention in the chocolate industry, including brand recognition, sales promotion, product price value, variety, taste, texture, size, packaging, and customer satisfaction, were confirmed. The results also indicated that functional value, product selection value, self-gratification value, socialization value, and transactional value were also considered during the consumer decision-making process. Implications for practitioners are provided.     

Volatility spillovers between WTI and Brent spot crude oil prices: an analysis of granger causality in variance patterns over time

There has been an increase in price volatility in oil prices during and since the global financial crisis (GFC). This study investigates the Granger causality patterns in volatility spillovers between West Texas International (WTI) and Brent crude oil spot prices using daily data. We use Hafner and Herwartz’s (2006) test and employ a rolling sample approach to investigate the changes in the dynamics of volatility spillovers between WTI and Brent oil prices over time. Volatility spillovers from Brent to WTI prices are found to be more pronounced at the beginning of the analysis period, around the GFC, and more recently in 2020. Between 2015 and 2019, the direction of volatility spillovers runs unidirectionally from WTI to Brent oil prices. In 2020, however, a Granger-causal feedback relation between the volatility of WTI and Brent crude oil prices is again detected. This is due to the uncertainty surrounding how the COVID-19 pandemic will evolve and how long the economies and financial markets will be affected. In this uncertain environment, commodities markets participants could be reacting to prices and volatility signals on both WTI and Brent, leading to the detection of a feedback relation.     

Deep learning for modeling the collection rate for third-party buyers

This study evaluates a wide range of machine learning techniques such as deep learning, boosting, and support vector regression to predict the collection rate of more than 65,000 defaulted consumer credits from the telecommunications sector that were bought by a German third-party company. Weighted performance measures were defined based on the value of exposure at default for comparing collection rate models. The approach proposed in this paper is useful for a third-party company in managing the risk of a portfolio of defaulted credit that it purchases. The main finding is that one of the machine learning models we investigate, the deep learning model, performs significantly better out-of-sample than all other methods that can be used by an acquirer of defaulted credits based on weighted-performance measures. By using unweighted performance measures, deep learning and boosting perform similarly. Moreover, we find that using a training set with a larger proportion of the dataset does not improve prediction accuracy significantly when deep learning is used. The general conclusion is that deep learning is a potentially performance-enhancing tool for credit risk management.     

Twenty-Five Years after the Fall of the Berlin Wall: An Empirical Revisit of West German Consumers' Attitudes Toward Products and Brands from Former East Germany

More than 25 years after the German reunification, data show that products/brands from the eastern regions of Germany (“Neue Länder”) still do not have significant shares in the country's western part (“Alte Länder”). To analyze potential reasons for this phenomenon, our current study replicates a previous study that investigated selected attitudes of Alte Länder consumers toward products/brands from the Neue Länder. It is shown that factors such as consumer ethnocentrism, product judgment, willingness to buy, and economic animosity continue to influence consumer behavior and as such our study offers potential explanation for the failure of Neue Länder products/brands in the western regions of Germany.     

Effects of export product diversification on quality upgrading: an empirical study

This paper empirically examines the effects of export product diversification on overall export quality in a panel data set of 115 countries from 1970 to 2010. It uses the data sets of the overall export quality and three export diversification measures of the International Monetary Fund: the extensive margin (variation in the number of new products exported), the intensive margin (variation in export values among existing exports), and the overall (Theil) index. It finds that export quality has only been increasing with a higher variation in export values among existing exports in low- and lower-middle-income countries. It also observes that export quality has been increasing with both a higher variation in export values among existing exports and new products exported in upper-middle- and high-income countries. The results are robust to the changing measures of controls in the benchmark model, the inclusion of many other controls; i.e. various measures of globalization, country size, factor endowments, macroeconomic stance, etc., and the exclusion of outliers.     

Media-Based Sentiment Indices as an Alternative Measure of Consumer Confidence

In this paper, we consider the feasibility of constructing online sentiment indices, using large amounts of media data, as an alternative to the conventional survey method used to create the consumer confidence index in South Africa. A clustering framework is adopted to provide an indication of possible candidate sentiment indices constructed from a combination of different text sources and dictionaries that best mimic the traditional survey-based consumer confidence index from the South African Bureau for Economic Research (BER). The results conclude that it is possible to create an index using sentiment analysis using online editorial data that does resemble the BER’s consumer confidence index. The different media-based sentiment indices (MSI) show a significant level of correlation and co-movement with the BER’s CCI. Impulse responses and cross-correlation functions indicate that the MSI could potentially lead the survey-based method up to two quarters. Furthermore, Granger-causality tests show that the media-based indices are good predictors of future consumer confidence index values. The results provide motivation for further study on the use of sentiment-based techniques and online media data sources to track consumer confidence within an emerging market such as South Africa.     

Quantifying the impact of the COVID-19 pandemic on US airline stock prices

This paper uses data at the trading day frequency and the method of local projections to quantify the dynamic responses of U.S. airline stock prices to a COVID-19 shock. We show that airline stock prices decline immediately by 0.1 percentage point in response to a 1% COVID-19 shock. In addition, the effect of the shock persists beyond the day on which it occurs, with most airline stock prices falling by as much as 0.6 percentage points after fifteen days. This negative response of airline stock prices to a COVID-19 shock is not explained by a COVID-19-induced increase in airlines’ variable costs, but rather by a COVID-19-induced decrease in air travel, which, in turn decreases revenues, profitability, and stock prices of U.S. airlines.     

Economic interpretations of DEA

Research on productive efficiency at the firm level has developed as an important and active strand of research the last decades, both within operations research, management science and economics. Two apparently different definitions of efficiency are examined, but it is shown that when both estimation methods are based on solving linear programming problems the definitions of efficiency are identical. The purpose of the paper is to give the basic ideas of efficiency analyses using DEA as a tool for researchers not so familiar with efficiency analysis and DEA. The concept of shadow prices is given special attention.