time consistent public policy in this paper we study how a benevolent government that cannot commit to future policy should trade off the costs and benefits of public expenditure we characterize and solve for markov perfect equilibria of the dynamic game between successive governments the characterization consists of an inter temporal first order condition a generalized euler equation for the government and we use it both to gain insight into the nature of the equilibrium and as a basis for computations for a calibrated economy we find that when the only tax base available to the government is capital income an inelastic source of funds at any point in time the government still refrains from taxing at confiscatory rates we also find that when the only tax base is labour income the markov equilibrium features less public expenditure and lower tax rates than the ramsey equilibrium

the role of investment specific technological change in the business cycle this is a quantitative investigation of the importance of technological change speci c to new investment goods for postwar us aggregate uctuations a growth model that incorporates this form of technological change is calibrated to us data and simulated using the relative price of new equipment to identify the process driving investmentspeci c technology shocks the analysis suggests that this form of technological change is the source of about 30 of output uctuations 2000 elsevier science b v all rights reserved

the boundaries of loss aversion abstract in this article the authors propose some psychological principles to describe the boundaries of loss aversion a key idea is that exchange goods that are given up as intended do not exhibit loss aversion for example the authors propose that money given up in purchases is not generally subject to loss aversion the results of several experiments provide preliminary support for the hypotheses the authors find that consistent with prospect theory loss aversion provides a complete account of risk aversion for risks with equal probability to win or lose the authors propose boundaries for this result and suggest further tests of the model

polarized business cycles abstract four stylized facts motivate this paper i business cycle movements are wider in emerging countries ec than in developed ones ii ec experience greater economic policy uncertainty iii ec are more polarized and less politically stable and iv epu is positively related to political polarization a standard real business cycle model augmented to incorporate political polarization a polarized business cycle pbc model is shown to be consistent with these facts we first derive our results analytically and then quantify the effects of a permanent increase in polarization to the us economy

the determinants of an environmentally responsive firm an empirical approach abstract our empirical results indicate that a firm s formulation of an environmental plan is positively influenced by customer pressure shareholder pressure government regulatory pressure and neighborhood and community group pressure but negatively influenced by other lobby group pressure sources and a firm s sales to asset ratio firms which view environmental issues as important in the next 5 years are also more likely to have a plan relative to the manufacturing sector firms in the natural resource sector are more likely to formulate environmental plans while firms in the service sector are less likely to have plans our results provide insight into how firms react to environmental issues they also offer policymakers a list of determinants which can be used either as an alternative or complement to environmental regulation

the politics of fdi expropriation i examine the role of political instability and fractionalization as potential explanations for the lack of capital flows from rich countries to poor countries i e the lucas paradox using panel data from 1984 to 2014 i document that i developed countries exhibit larger inflows of foreign direct investment fdi ii countries subject to high investment risk ir receive low fdi inflows and iii ir is higher in fractionalized and politically unstable economies these findings suggest a negative relationship between political instability and fdi through the ir channel i inspect the theoretical mechanism using a dynamic political economy model of redistribution wherein policymakers can expropriate resources from foreign investors the proceeds are used to finance group specific transfers to domestic workers but hinder economic growth by discouraging fdi i show that the political equilibrium exhibits overexpropriation and underinvestment

the instability of fixed exchange rate systems when raising the nominal interest rate is costly abstract this paper points to a vicious circle which may arise when a government tries to defend its currency by raising the nominal interest rate in a fixed exchange rate system we present a stylised model in which raising the nominal interest rate helps to maintain the parity but is costly for the government the speculators are aware that this cost gives incentives for the government to stop defending the parity which in turn reinforces the speculation against the currency we show that this mechanism can generate self fulfilling currency crises the outcome of which depends on the level of sacrifice that the government is ready to endure and the evolution of domestic economic conditions we provide some informal evidence showing that this model explains some features of the 1992 93 ems crisis

industry self regulation without sanctions the chemical industry s responsible care program industry self regulation the voluntary association of firms to control their collective action has been proposed as a complement to government regulation proponents argue that the establishment of

on the psychology of loss aversion possession valence and reversals of the endowment effect loss aversion states that losses loom larger than gains we consider two types of loss aversion defined by two interpretations of loss a loss can be defined 1 in terms of valence or 2 in terms of possession correspondingly valence loss aversion vla entails greater sensitivity to negative vs positive changes and possession loss aversion pla entails greater sensitivity to items leaving vs entering one s possession both types of loss aversion imply an endowment effect for attractive items but pla implies a reversal of the endowment effect for unattractive items experimental results show endowment effect reversals consistent with pla

partisan conflict and private investment abstract american politics have been characterized by a high degree of partisan conflict in recent years combined with a divided government this has led not only to significant congressional gridlock but also to spells of high fiscal policy uncertainty the unusually slow recovery from the great recession during the same period suggests the possibility that the two phenomena may be related in this paper i investigate the hypothesis that political discord depresses private investment to this end i construct a novel high frequency indicator of partisan conflict the partisan conflict index pci uses a semantic search methodology to measure the frequency of newspaper articles reporting lawmakers disagreement about policy i find a negative relationship between the pci and aggregate investment in the us moreover the decline is persistent which may help explain the slow recovery observed since the 2007 recession ended partisan conflict is also associated with lower capital investment rates at the firm level even when economic policy uncertainty and macroeconomic conditions are controlled for i estimate that about 27 of the decline in corporate investment between 2007 2009 can be attributed to a rise in partisan conflict

electoral business cycles in oecd countries studies of oecd countries have generally failed to detect real economic expansions in the pre election period casting doubt on the existence of opportunistic political business cycles we develop a theory that predicts a substantial portion of the economy experiences a real decline in the pre election period specifically the political uncertainty created by elections induces private actors to postpone investments with high costs of reversal the resulting declines referred to as reverse electoral business cycles are larger the more competitive the electoral race and the greater the polarization between major parties we test these predictions using quarterly data on private fixed investment in ten oecd countries between 1975 and 2006 the results suggest that reverse electoral business cycles exist and as expected depend on electoral competitiveness and partisan polarization moreover simply by removing private fixed investment from gross domestic product gdp we uncover robust evidence of opportunistic cycles

what are the determinants of investment in environmental r d to face the challenges posed by climate change environmental rd yet investment in environmental r d remains below the social optimum the aim of this paper is to analyse the determinants of investment in environmental innovation and to detect the differences if any with the determinants of investment in general innovation in addition this paper examines the relationship between environmental innovation r d expenditure and a range of policy instruments including environmental regulation and other policy measures including r d subsidies and environmental taxes the empirical analysis is carried out for 22 manufacturing sectors in spain for the period 2008 2013 to overcome problems of data availability we construct a comprehensive database from different surveys the main implications from our results are 1 managerial strategy appears as a relevant driver of environmental r d investments 2 the establishment of a policy mix between environmental energy and technological regulatory measures is recommended 3 the promotion of self regulation through actions that encourage companies to follow a policy that affects their energy efficiency and is environmentally friendly

towards green growth how does green innovation affect employment abstract we examine the relationship between green innovation and employment from data taken from the spanish technological innovation panel pitec for period 2007 2011 the increasing relevance of environmental issues for the spanish economy its unemployment problem and the uniqueness in its innovation structure make it a proper and interesting context to investigate green innovation dynamics we find a positive relationship between green innovation and employment and the relationship is stronger for firms in the so called dirty industries in addition we show that the relationship is positive for firms that introduce green innovation voluntarily as compared to firms that introduce green innovation merely to comply with regulations a positive and significant relationship is also found between employment and firms that report an increase in the degree of importance paid to green innovation

persistent ideology and the determination of public policy over time this article investigates how public policy responds to persistent ideological shifts in dynamic politico economic equilibria to this end i develop a tractable model to analyze the dynamic interactions among public policy individuals intertemporal choice and the evolution of political constituency my main finding is that a right wing ideology may increase the size of government data from a panel of 18 oecd countries confirm that after controlling for the partisan effect there is a positive relationship between the right wing political constituency and government size this is consistent with my theoretical prediction but hard to explain by existing theories

time consistent public expenditures in this paper we study the optimal choice of public expenditures when there is no way of committing to future policy and reputational mechanisms are not operative this amounts to conflning our attention to markov equilibria the environment is a neoclassical growth model where consumers derive utility from a public good this environment gives rise to a dynamic game between successive governments and the private sector and this game is made interesting by the presence of a state variable the capital stock we characterize equilibria in terms of an intertemporal flrst order condition a generalized euler equation gee for the government and we use this condition both to gain insight into the nature of the equilibrium and as a basis for computation the gee reveals how the government optimally trades ofi tax wedges over time it also allows us to discuss in what sense a current government may be strategically in uencing future governments in their taxation decisions for a calibrated economy we flnd that when the tax base available to the government is capital income an inelastic source of funds at any moment in time the government still refrains from taxing at high rates in order to smooth distortions over time as a result the economy is far from the mix of public and private goods that would be optimal in a static context in return the savings distortion is not very severe and the capital stock is quite high

fiscal policy and the current account deficits and trade jose vinals does the balance of payments act as an external constraint on the design of domestic economic policy in practice most governments believe it does yet popular discussion is sometimes confused this paper begins by evaluating the nature of the external constraint and the extent to which it can adequately be measured by the current account of the balance of payments it is often argued that a fiscal expansion will increase employment it is also widely held that a fiscal expansion necessarily leads to a deterioration of the current account while these propositions may hold in specific circumstances neither is generally true the theoretical basis of the two propositions is examined and compared with recent international experience when important changes in fiscal stance occurred the popular presumptions are confirmed by recent experience in the us the uk and germany but france is a counterexample to the first and spain to the second the important policy implication is that one can identify both in theory and in practice clear circumstances in which expansionary fiscal policy is appropriate and will not be thwarted by external considerations

exchange intervention policy in a multiple country world abstract intervention policy is examined in a three country model employment and output in each country depend upon the domestic currency value of a natural basket of currencies called the sally each country will find it desirable to intervene to stabilize its sally rate if capital movements are more volatile than trade flows this is a natural generalization of well known small country results however in this general equilibrium setting it is clear that such a policy can destabilize employment in another country and lead to retaliation currency unions are also examined and found to have similar spillover problems

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

can exchange rate predictability be achieved without monetary convergence evidence from the ems abstract the evidence presented here suggests that the european monetary system has indeed coincided with more predictable exchange rates nominal and real between france germany and italy but if increased monetary policy coordination is the main explanation then it is surprising that the conditional variance of real interest differentials between these countries does not appear to have fallen unless the disturbances are mostly real in which case fixed rates are suboptimal high onshore offshore interest differentials for franc and lira assets and the very slow convergence of intra ems inflation rates suggest that capital controls have played a large role

a resource based perspective on corporate environmental performance and profitability drawing on the resource based view of the firm we posited that environmental performance and economic performance are positively linked and that industry growth moderates the relationship with the returns to environmental performance higher in high growth industries we tested these hypotheses with an analysis of 243 finns over two years using independently developed environmental ratings results indicate that it pays to be green and that this relationship strengthens with industry growth we conclude by highlighting the study s academic and managerial implications making special reference to the social issues in management literature

does exchange rate pegging enhance credibility evidence from the european monetary system the european monetary system ems has been credited with immediately enhancing the credibility of onetary policy among its member countries however there is little empirical evidence to support this view this study provides evidence from exchange rate data that political actions taken to support the ems enhanced rate arangement further empirical results were sensitive to the specification of the estimating equations and varied dramatically if risk premia discounts were absent from estimating equations

the harm of symbolic actions and green washing corporate actions and communications on environmental performance and their financial implications we examine over 100 top performing canadian firms in visibly polluting industries as we seek to answer four research questions what specific environmental issues are firms addressing how do these issues differ between industries are both symbolic and substantive actions financially beneficial does green washing measured as the difference between symbolic and substantive action and or green highlighting measured as the combined effect of symbolic and substantive actions pay we find that substantive actions of environmental issues green walk neither harm nor benefit firms financially but symbolic actions green talk are negatively related to financial performance we also find that green washing discrepancy between green talk and green walk has a negative effect on financial performance and green highlighting concentrated efforts of the talk and walk has no effect on financial performance in this article we provide explanations of our findings and put forth future research directions

asymmetry in the ems new evidence based on non linear forecasts abstract in this paper we provide new evidence on the hypothesis of german leadership and asymmetric performance in the ems in the framework of causality tests using daily data given the evidence about non linearity in financial series we propose applying non linear forecasting methods based on the literature on complex dynamic systems our analysis covers nine countries and the sample period runs until 30 april 1998 so including the more recent events in the ems history a comparison of our results with those obtained from standard linear econometric techniques leads us to conclude that inference on causality based on our non linear predictors would be preferable to that based on the standard linear approach

corporate social and financial performance an investigation in the u k supermarket industry the comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years the results while broadly conclusive of a positive relationship are not entirely consistent in addition most of the previous studies have concentrated on large scale cross industry studies and often with a single variable for corporate social performance in order to produce statistically significant results this weakens the richness of understanding that might be obtained from a single industry study with multiple social variables which would also allow investigation of inter relationships between individual and sub sets of social performance measures and between individual and sub sets of social performance and financial performance measures there have also been criticisms that the results lack a rigorous theoretical basis and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research following a review of the literature this paper presents the initial findings from a study of the u k supermarket industry which suggest that contemporaneous social and financial performance are negatively related while prior period financial performance is positively related with subsequent social performance positive relationships between both age and size of the company with social performance are also found

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

who buys overpackaged grocery products and why understanding consumers reactions to overpackaging in the food sector while most studies dealing with waste reduction at the consumer level focus on recycling this paper rather concentrates on precycling strategies and purchasing behaviors in order to understand how to promote waste reduction at the source more specifically the purpose of this work is to grasp consumers perceptions of overpackaging and understand the mechanisms underlying their choice of overpackaged versus non overpackaged food products based on the different themes that emerged from a qualitative study study 1 n 11 a quantitative research was conducted among french interviewees study 2 n 327 in order to identify relevant groups of consumers five profiles emerged from the cluster analysis the supporters the self sacrificing the detractors the indifferent and the self centered finally an experiment was conducted study 3 n 808 that highlights the influence of range positioning and salience of non overpackaging on consumer choice implications for public policy makers and companies are discussed

how cynical can an incumbent be strategic policy in a model of government spending abstract when parties with different preferences compete for election strategic manipulation of state variables for electoral purposes can occur even with rational voters this paper presents a model in which government resources can be used productivity for the benefit of everybody or unproductively for the benefit of the ruling party s constituency a government more inclined to unproductive spending may choose to collect public resources inefficiently in order to produce the importance of spending decisions in the election the model highlights the strategic role of policy decisions that affect incentives and constraints faced by future governments and their impact on election results

polarization and corruption in america abstract using panel data from the us states we document a robust negative relationship between state level government corruption and ideological polarization this finding is sustained when state polarization is instrumented using lagged state neighbor ideology we argue that polarization increases the expected costs of engaging in corruption especially deterring marginal low level corruption consistent with this thesis federal prosecutorial effort falls and case quality increases with polarization tangible anti corruption measures including the stringency of state ethics laws and independent commissions for redistricting are also associated with increased state polarization

to be different or to be the same it s a question and theory of strategic balance this paper addresses the performance consequences of firm level strategic similarity past research observed that firms face pressures to be different and to be the same by differentiating firms reduce competition by conforming firms demonstrate their legitimacy both reduced competition and legitimacy improve performance this paper begins building a theory of strategic balance by synthesizing the differentiation and conformity perspectives the theory directs attention to intermediate levels of strategic similarity where firms balance the pressures of competition and legitimation empirical support for the theory is found in a longitudinal study of commercial banks several suggestions for developing a theory of strategic balance conclude the paper the theory s major implication is that firms should be as different as legitimately possible copyright 1999 john wiley sons ltd

firm self regulation through international certifiable standards determinants of symbolic versus substantive implementation international certifiable management standards that have been advocated as a governance mechanism for firm self regulation of corporate social responsibility issues are effective only if certified firms comply with the requirements of the standards our empirical analysis shows that iso certified firms in china strategically select their level of compliance depending on customer preferences customer monitoring and expected sanctions by customers our findings have implications for the effectiveness of a global system of self regulation based on certifiable standards research on certifiable standards and for practicing managers who require suppliers to obtain standard certifications

the role of policymakers reputation in the ems disinflations abstract it is frequently argued that the ems itself in connection with the high anti inflation reputation of the german bundesbank is responsible for the inflation reduction and convergence which member countries have experienced based on the game theoretical model of backus and driffill 1985 american economic review 75 530 538 an empirical measure of the government s reputation for fighting inflation is derived by using a bayesian learning approach time varying estimates of these counterinflation reputation measures are computed for the original ems member countries and for a control group of major non ems countries the paper finds that only the smaller ems participants have gained anti inflation reputation during the ems period

why a stubborn conservative would run a deficit policy with time inconsistent preferences a conservative government in favor of a low level of public consumption knows that it will be replaced by a government in favor of a larger level of public consumption we show that the resulting level of public consumption is in between the levels the two governments would choose if each were in power both in the present and in the future in particular we show that if the conservative government is more stubborn in a particular sense than the succeeding government the conservative government will borrow more than it would had it remained in power in the future

growth in the shadow of expropriation we propose a tractable variant of the open economy neoclassical growth model that emphasizes political economy and contracting frictions the political economy frictions involve a preference for immediate spending while the contracting friction is a lack of commitment regarding foreign debt and expropriation we show that the political economy frictions slow an economy s convergence to the steady state due to the endogenous evolution of capital taxation the model rationalizes why openness has different implications for growth depending on the political environment why institutions such as the treatment of capital income evolve over time why governments in countries that grow rapidly accumulate net foreign assets rather than liabilities and why foreign aid may not affect growth

the manufacturing sector s environmental motives a game theoretic analysis what motivates manufacturing companies to make costly investments in producing in an environmentally clean manner the traditional argument is that such behaviour is value reducing and that therefore firms must be forced by regulation to invest in green production processes a counter argument is that firms have an incentive to make environmental investments in an attempt to attract green consumers and investors hence gaining competitive advantage over their rivals in this paper we employ a game theoretic approach that demonstrates that competing firms incentives to make voluntary investments in environmental clean up are affected by the size of the investment costs and the extent of consumer and investor green awareness we argue that an increase in green behaviour can be induced by a combination of governmental subsidies for firms that invest in environmentally clean production processes together with an education program that promotes green awareness amongst consumers investors and the managers themselves

national culture economic development population growth and environmental performance the mediating role of education literature on ethical behavior has paid little attention to the mechanism between macro environmental variables and environmental performance this study aims at constructing a model to examine the relationships which link cultural values population growth economic development and environmental performance by incorporating the mediating role of education the multiple linear regression model was employed to test the hypotheses on a 3 year pooled sample of 51 countries empirical results conclude that national culture economic development and population growth would significantly influence environmental performance directly in addition through the mediating effect of education population growth and national culture would significantly affect environmental performance indirectly these findings provide theoretical and managerial implications for constructing the mechanism of cultural values and ethical behavior in general and environmental management in particular

stochastic trends and jumps in ems exchange rates abstract in this paper we study the statistical properties of ems exchange rate returns our findings show that jumps time varying parameters and conditional leptokurtosis are pertinent features in the empirical distributions of ems exchange rate returns allowance for fat tails however tends to reduce the measured frequency of jumps in the distributions to more realistic proportions most successful in capturing the relevant features of ems exchange rate returns is a combined jump garch model with conditionally t distributed innovations jel f31

the impact of environmental management on firm performance environmental management has the potential to play a pivotal role in the financial performance of the firm many individuals suggest that profitability is hurt by the higher production costs of environmental management initiatives while others cite anecdotal evidence of increased profitability a theoretical model is proposed that links strong environmental management to improved perceived future financial performance as measured by stock market performance the linkage to firm performance is tested empirically using financial event methodology and archival data of firm level environmental and financial performance significant positive returns were measured for strong environmental management as indicated by environmental performance awards and significant negative returns were measured for weak environmental management as indicated by environmental crises the implicit financial market valuation of these events also was estimated cross sectional analysis of the environmental award events revealed differences for first time awards and between industries first time award announcements were associated with greater increases in market valuation although smaller increases were observed for firms in environmentally dirty industries possibly indicative of market skepticism this linkage between environmental management and financial performance can be used by both researchers and practitioners as one measure of the benefits experienced by industry leaders and as one criterion against which to measure investment alternatives

complementary resources and capabilities for an ethical and environmental management a qual quan study managers commitment to contribute to sustainable development holds the key to their long term business success and may be a source of competitive advantage the managerial perception of business ethics is influenced by the level of moral development and personal characteristics of managers these perceptions are also shaped by forces existing in the environment of the firm including available resources societal expectations sector and regulations the resource based perspective can thus contribute to the analysis of ethical issues offering important insights on how they can influence the environmental strategy of the firm the findings of this study show that firm resources have a strong influence on business managers ethical attitudes in addition the application of resource based rationales to ethical issues can be justified in the following several ways it influences a managerial perception of natural environment as a competitive opportunity it requires investments of financial and human resources flexibility and speed in the adaptation to environmental changes and it creates new resource based opportunities through changes in prevention pollution technology policy process and market forces

transparency political polarization and political budget cycles in oecd countries we investigate the effects of fiscal transparency and political polarization on the prevalence of electoral cycles in fiscal balance while some recent political economy literature on electoral cycles identifies such cycles mainly in weak and recent democracies in contrast we show conditioning on a new index of institutional fiscal transparency that electoral cycles in fiscal balance are a feature of many advanced industrialized economies using a sample of 19 oecd countries in the 1990s we identify a persistent pattern of electoral cycles in low er transparency countries while no such cycles can be observed in high er transparency countries furthermore we find in accordance with recent theory that electoral cycles are larger in politically more polarized countries

on the determinants of political polarization in this article we aim to identify the main determinants of political polarization using bayesian model averaging to overcome the problem of model uncertainty we find that the level of trust within a country and the degree of income inequality are the most robust determinants of political polarization

corporate social responsibility product differentiation strategy and export performance this article argues that corporate social responsibility csr may contribute to product differentiation in export markets and thus improve export performance we test this argument by observing a period of decreasing export competitiveness in a leading emerging economy brazil using a large scale survey design with 252 questionnaires completed by medium and large sized brazilian exporters we used structural equations modelling to test our hypotheses the results suggest that csr product differentiation predicts export performance better than product quality differentiation and almost as well as product innovation differentiation multi group analysis further revealed that the positive and significant effect of csr product differentiation on export performance is likely to be contingent on the number and type developing vs developed of countries that are targeted our study contributes to the literature on csr and export performance by developing and empirically validating a model that explains under which conditions csr based product differentiation may lead to improved export performance

barriers to investment in polarized societies i present a tractable dynamic model of political economy where disagreements about the composition of public spending result in implementation of short sighted policies the relative price of investment to consumption is excessively large in equilibrium due to over taxation investment rates are too low which slows down growth along the transition in the long run this results in output consumption and welfare being inefficiently low the larger is the degree of polarization the greater is the inefficiency political stability mitigates the effects of polarization by making the incumbent internalize the dynamic inefficiencies introduced by the choice of growth retarding policies

developing news based economic policy uncertainty index with unsupervised machine learning i propose creating a news based economic policy uncertainty epu index by employing an unsupervised algorithm able to deduce the subject of each article without the need for pre labelled data

random interactions in the chamber legislators behavior and political distance abstract i investigate the role of social interaction among members of parliament mps and the impact of such interaction on the political distance between parties using the random allocation of seats in the icelandic parliament i find that mp s voting and speech behaviors are affected by the behavior of legislators seated nearby i also show that greater random exposure to mps from different parties ultimately reduces the political distance between parties similar evidence is found using historical data for the u s house of representatives by exploiting the introduction of a lottery mechanism to determine desk assignments in 1845 i argue that random seating arrangements could constitute a low cost way of reducing differences within the political arena

on the effects of sterilized intervention an analysis of weekly data abstract as the recent empirical studies surveyed here illustrate it is very difficult to demonstrate that the exchange rate risk premium depends through a portfolio balance channel on the currency composition of outside assets the existence of a portfolio balance effect is a necessary condition for sterilized intervention to be a genuinely independent tool of monetary policy this paper studies u s canadian data and attempts to improve on earlier studies by using higher frequency weekly data and by implementing an appropriate instrumental variables technique 2s2sls however we still fail to detect evidence of a portfolio balance effect

does us partisan conflict matter for the euro area this paper highlights the international transmission of political uncertainty originated from a us partisan conflict shock a newly identified shock that transmits a type of uncertainty beyond the economic policy uncertainty spillovers identified by colombo 2013 using the recently developed us partisan conflict index uspc developed by azzimonti 2014 we find that a one standard deviation uspc shock leads to a 0 2 percent decline in european industrial production we also show that compared with us policy uncertainty shocks a shock to us partisan conflict creates deeper and more persistent spill over effects to the euro area

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

how does environmental corporate social responsibility matter in a dysfunctional institutional environment evidence from china drawing on institutional and signaling theories this study examines how environmental corporate social responsibility ecsr affects firm performance in a dysfunctional institutional environment we extend the ecsr literature by suggesting that ecsr indirectly influences firm performance through the mediating effects of business and political legitimacy based on a dataset of 238 firms in china we find that ecsr affects business and political legitimacy followed by firm performance moreover legal incompleteness weakens and legal inefficiency strengthens the effects of ecsr on business and political legitimacy

can equilibrium models explain nominal exchange regime non neutrality evidence from the european monetary system abstract in a recent paper alan stockman argues that the finding that real exchange rate variability id higher under flexible nominal exchange rate systems than under fixed nominal exchange rate systems typically interpreted as evidencee of price stickiness is consistent with equilibriu models stockman s theory we argue predicts that the formation of the european monetary system should have had no effect on the real exchange rate variability of its members we test this prediction and interpret our findings as evidence in support of stockman s theory although not as evidence that equilibrium models can account for nominal exchange regime non neutrality jel f31

the international monetary system forty years after bretton woods review essay in may 1984 a distinguished group of central bankers and economists gathered for a conference at bretton woods to consider the evolution of the world monetary system that was born at that location forty years earlier this volume contains nine essays with accompanying discussion on issues of performance and reform of current international monetary arrangements these papers deal with problems facing the industrialized and the lessdeveloped countries and assess the institutions that have been set up to accommodate these problems the major accomplishments of the original bretton woods conference were of course the establishment of the system of payments based on fixed exchange rates and the organization of the world bank and the international monetary fund as the order developed in the late 40 s and early 50 s each central bank saw it as its duty to intervene in foreign exchange markets to ensure an essentially fixed parity of their currency with respect to the dollar the role of the u s was to guarantee the dollar price of gold at 35 an ounce the system has been called a dollar standard because the dollar played the role of a reserve currency one of the paradoxes of the system as robert triffin pointed out in the early 60 s is that in order to produce a continuing and rapid enough expansion of world reserves the u s had to run balance of payments deficits yet continued deficits by the u s threatened the convertibility of the dollar into gold as it happened the system of fixed parities broke down in the early 70 s not because of a lack of reserves but because a glut of dollars made the bretton woods dollar exchange rates untenable the system eventually evolved into one in which most of the industrialized countries currencies more or less are determined by the market while the currencies of most second and third world countries are pegged to a major currency the floating period has been

fiscal policy under loose commitment due to time inconsistency or political turnover policymakers promises are not always fulfilled we analyze an optimal fiscal policy problem where the plans made by the benevolent government are periodically revised in this loose commitment setting the properties of labor and capital income taxes are significantly different than under the full commitment and no commitment assumptions because of the occasional reoptimizations the average capital income tax is positive even in the long run also the autocorrelation of taxes is lower their volatility with respect to output increases and the correlation between capital income taxes and output changes sign our method can be used to analyze the plausibility and the importance of commitment in a wide class of dynamic problems

time varied causality between us partisan conflict shock and crude oil return abstract to investigate the causality between us partisan conflict shock and crude oil return this paper utilizes bootstrap full sample granger causality and bootstrap rolling window sub sample granger causality tests although no evidence supports the causal nexus between partisan conflict shock and crude oil return with full sample data time varied causality is observed for particular sub samples such difference can be attributed to the parameter non constancy in the var system in terms of the empirical results the us partisan conflict shock causes the fluctuations of the crude oil market in 2008 2009 and 2014 2015 however such influence is temporary inversely the crude oil return causes us partisan shock in 1985 1986 1991 1994 1998 2000 and 2012 2013 these findings indicate crude oil market significantly affects political stability of the us especially during the periods of the gulf war and opec production cut the empirical results are robust in terms of both sample setting variation and window size selection

environmental marketing a source of reputational competitive and financial advantage corporate reputation is an intangible asset that is related to marketing and financial performance the social economic and global environment of the 1990 shas resulted in environmental performance becoming an increasingly important component of a company sreputation this paper explores the relationship between reputation environmental performance and financial performance and looks at the contingencies that impact environmental policy making

the liability of good reputation a study of product recalls in the u s automobile industry in this paper we explore opposing theoretical claims about how organizational reputation affects market reactions to product defects on the one hand good reputation could be a disadvantage because expectations about product quality are more likely to be violated by defects in highly reputed products on the other hand a good reputation could be an advantage because of strong inertial effects on reputation orderings we empirically test these competing hypotheses using data on product recalls in the u s automobile industry from 1975 to 1999 our results support for the idea that reputation can be an organizational liability in that highly reputed firms suffer more market penalty as a result of their product recalls we also propose that the reputational effects are moderated by two important factors substitutability and generalism specialism our results show that having few substitutes with an equivalent level of reputation or a focused product identity stemming from specialism buffers the negative market reactions to product recalls we conclude with a discussion on the implications of these results for institutional reputation and status theories

leaders and laggards the influence of competing logics on corporate environmental action we study the sources of resistance to change among firms in the canadian petroleum industry in response to a shift in societal level logics related to corporate environmental performance despite challenges to its legitimacy as a result of poor environmental performance the canadian petroleum industry was divided as to how to respond with some members ignoring the concerns and resisting change i e laggards while others took action to ensure continued legitimacy i e leaders we examine why organizations within the same institutional field responded differently delaying the industry response we found that one population of firms was aligned with increasing pressures from its stakeholders for improved environmental performance and the other was influenced by local cultural political and economic ideals less demanding of environmental actions our results reveal that several factors both at the institutional field level and the organizational level affected how these two populations reacted to a changing societal logic implications for theory practice and future research are discussed

testing a causal model of corporate risk taking and performance the determinants of organizational risk taking and its impact on economic performance are critical issues in strategic management using a model that included risk performance performance expecta

the corporate social performance financial performance link strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management rather than traditional arenas of strategic management using a greatly improved source of data on corporate social performance this paper reports the results of a rigorous study of the empirical linkages between financial and social performance corporate social performance csp is found to be positively associated with prior financial performance supporting the theory that slack resource availability and csp are positively related csp is also found to be positively associated with future financial performance supporting the theory that good management and csp are positively related 1997 by john wiley sons ltd