Economics Research International http://www.hindawi.com The latest articles from Hindawi Publishing Corporation © 2014 , Hindawi Publishing Corporation . All rights reserved. The Government Subsidy Strategy Choice for Firm’s R&D: Input Subsidy or Product Subsidy? Tue, 15 Apr 2014 00:00:00 +0000 http://www.hindawi.com/journals/ecri/2014/632176/ To encourage enterprises to conduct technology innovation, the government needs to formulate appropriate subsidies policy. This paper compares two R&D subsidy policies in a supplier-manufacturer supply chain, in which the manufacturer conducts R&D activity for quality improvement. By means of game theory, we investigate the optimal decisions of the players under the two R&D subsidy policies, that is, input subsidy policy and product subsidy policy. Finally, we compare the profits and welfare to explore the better R&D subsidy policy and provide decision support for government to formulate subsidy policy. The results show that under input subsidy policy the optimal production output, quality improvement, profits, government subsidies, and social welfare are all lower than those of product subsidy policy. Therefore, the government should use product subsidy strategy to encourage enterprise R&D activities. Zhiying Liu and Qinqin Li Copyright © 2014 Zhiying Liu and Qinqin Li. All rights reserved. Bioeconomics of Commercial Marine Fisheries of Bay of Bengal: Status and Direction Thu, 03 Apr 2014 00:00:00 +0000 http://www.hindawi.com/journals/ecri/2014/538074/ The fishery of the Bay of Bengal (BOB) is assumed to be suffering from the overexploitation. This paper aims to assess the sustainability of current level of fishing effort as well as possible changes driven by anthropogenic and climate driven factors. Therefore, the commercial marine fishery of BOB for the period of 1985/86 to 2007/08 is analyzed by applying Gordon-Schaefer Surplus Production Model on time series of total catch and standardized effort. Static reference points such as open-access equilibrium, maximum economic yield, and maximum sustainable yield are established. Assumptions about potential climatic and anthropogenic effects on r (intrinsic growth rate) and K (carrying capacity) of BOB fishery have been made under three different reference equilibriums. The results showed that the fishery is not biologically overexploited; however, it is predicted to be passing a critical situation, in terms of achieving reference points in the near future. But, on the other hand, economic overfishing started several years before. Higher fishing effort, and inadequate institutional and legal framework have been the major bottlenecks for the proper management of BOB fisheries and these may leads fishery more vulnerable against changing marine realm. Thus, the present study calls for policy intervention to rescue the stock from the existing high fishing pressure that would lead to depletion. Ahasan Habib, Md. Hadayet Ullah, and Nguyen Ngoc Duy Copyright © 2014 Ahasan Habib et al. All rights reserved. Exchange Rate Movement and Foreign Direct Investment in Asean Economies Sun, 30 Mar 2014 09:34:44 +0000 http://www.hindawi.com/journals/ecri/2014/320949/ The inflows of foreign direct investment (FDI) are important for a country's economic development, but the world market for FDI has become more competitive. This paper empirically analyses the exchange rate movements and foreign direct investment (FDI) relationship using annual data on ASEAN economies, that is, Malaysia, the Philippines, Thailand, and Singapore. By employing ARDL bounds test approach, the empirical results show the existence of significant long-run cointegration between exchange rate and FDI for the case of Singapore, Malaysia, and the Philippines with all countries recording negative coefficient implying that the appreciation of Singapore dollar, Malaysian ringgit, and the Philippine peso has a positive impact on FDI inflows. Using the ECM based ARDL approach for causality test, both Singapore and the Philippines show long-run bidirectional causality between exchange rate and FDI whereas long-run unidirectional causality running from the exchange rate to FDI in Malaysia. Furthermore, this study also found that short-run unidirectional causality running from the exchange rate to FDI exists in Singapore. Jaratin Lily, Mori Kogid, Dullah Mulok, Lim Thien Sang, and Rozilee Asid Copyright © 2014 Jaratin Lily et al. All rights reserved. Predictable Dynamics in the Small Stock Premium Thu, 20 Feb 2014 08:34:52 +0000 http://www.hindawi.com/journals/ecri/2014/405231/ We start this paper by providing a detailed study of how the mean monthly return on the Small-Minus-Big (SMB) Fama-French factor is affected by the January effect and the stock market return during the preceding month and preceding calendar year. We then proceed to building a predictive model for the monthly SMB factor return that incorporates the January effect and the dependence on both the market return during the preceding month and preceding calendar year. Our findings suggest that a positive small stock premium appears mainly during the years following the years with a negative return on the market as the result of a delayed and stronger reaction of small stocks to good news and a stronger January effect. We also argue that the January effect constitutes a much lesser part of the size effect than it was previously supposed. Valeriy Zakamulin Copyright © 2014 Valeriy Zakamulin. All rights reserved. Evaluation of the 2006–2008 Food Crisis on Household Welfare: The Case of the Sultanate of Oman Sun, 16 Feb 2014 15:31:51 +0000 http://www.hindawi.com/journals/ecri/2014/581638/ The objective of this paper is to evaluate the impact of high food prices during the 2006–2008 food crisis period on the welfare of households in the Sultanate of Oman. The welfare impacts of price changes are estimated using the Hicksian compensating variation (CV) methodology. The compensating variation was estimated for 4 different income household groups as well as two location groups (urban-rural). Results suggest that all household groups suffered welfare losses due to the food crisis. On average, Omani households need to be compensated about 10.3% of their income for the price increase they experienced during the 2006–2008 period. Rural households are more affected than urban households with a required compensation of 12.4% and 9.87%, respectively. In all cases most of the impact is felt on the first round where no consumption adjustment is made; the second round effect is comparatively small compared to the first-order effect. Total compensation required to compensate all households amounts to O.R. 266 M, that is, a 1.14% of GDP, whereas a compensation targeted to the low-income quartile amounts only to O.R. 26.7 M representing 0.1% of GDP. Houcine Boughanmi, Ahmed Al Shamakhi, Msafiri Mbaga, and Hemesiri Kotagama Copyright © 2014 Houcine Boughanmi et al. All rights reserved. Contribution of Co-Skewness and Co-Kurtosis of the Higher Moment CAPM for Finding the Technical Efficiency Thu, 16 Jan 2014 10:00:12 +0000 http://www.hindawi.com/journals/ecri/2014/253527/ The objective of this paper is to present the technical efficiency of individual companies and their respective groups of Bangladesh stock market (i.e., Dhaka Stock Exchange, DSE) by using two risk factors (co-skewness and co-kurtosis) as the additional input variables in the Stochastic Frontier Analysis (SFA). The co-skewness and co-kurtosis are derived from the Higher Moment Capital Asset Pricing Model (H-CAPM). To investigate the contribution of these two factors, two types of technical efficiency are derived: (1) technical efficiency with considering co-skewness and co-kurtosis (WSK) and (2) technical efficiency without considering co-skewness and co-kurtosis (WOSK). By comparing these two types of technical efficiency, it is noticed that the technical efficiency of WSK is higher than the technical efficiency of WOSK for the individual companies and their respective groups. As per available literature in the context Bangladesh stock market, no study has been conducted thus far to measure technical efficiency of companies and their respective groups by using the risk factors which are derived from the H-CAPM. In this research, the link between H-CAPM and SFA is established for measuring technical efficiency and it is believed that the findings of this study may be applied to other emerging stock markets. Md. Zobaer Hasan and Anton Abdulbasah Kamil Copyright © 2014 Md. Zobaer Hasan and Anton Abdulbasah Kamil. All rights reserved. Economics of Bioenergy Tue, 31 Dec 2013 08:51:44 +0000 http://www.hindawi.com/journals/ecri/2013/154928/ Amani Elobeid, Miguel Carriquiry, Silvia Secchi, and Tun-Hsiang (Edward) Yu Copyright © 2013 Amani Elobeid et al. All rights reserved. Biofuel Expansion, Fertilizer Use, and GHG Emissions: Unintended Consequences of Mitigation Policies Mon, 30 Dec 2013 11:58:30 +0000 http://www.hindawi.com/journals/ecri/2013/708604/ Increased biofuel production has been associated with direct and indirect land-use change, changes in land management practices, and increased application of fertilizers and pesticides. This has resulted in negative environmental consequences in terms of increased carbon emissions, water quality, pollution, and sediment loads, which may offset the pursued environmental benefits of biofuels. This study analyzes two distinct policies aimed at mitigating the negative environmental impacts of increased agricultural production due to biofuel expansion. The first scenario is a fertilizer tax, which results in an increase in the US nitrogen fertilizer price, and the second is a policy-driven reversion of US cropland into forestland (afforestation). Results show that taxing fertilizer reduces US production of nitrogen-intensive crops, but this is partially offset by higher fertilizer use in other countries responding to higher crop prices. In the afforestation scenario, crop production shifts from high-yielding land in the United States to low-yielding land in the rest of the world. Important policy implications are that domestic policy changes implemented by a large producer like the United States can have fairly significant impacts on the aggregate world commodity markets. Also, the law of unintended consequences results in an inadvertent increase in global greenhouse gas emissions. Amani Elobeid, Miguel Carriquiry, Jerome Dumortier, Francisco Rosas, Kranti Mulik, Jacinto F. Fabiosa, Dermot J. Hayes, and Bruce A. Babcock Copyright © 2013 Amani Elobeid et al. All rights reserved. Insider Power and Average Labor Demand When Recessions Are Prolonged Mon, 25 Nov 2013 18:53:58 +0000 http://www.hindawi.com/journals/ecri/2013/653731/ This paper examines how insider power in wage negotiations affects average labor demand when recessions are more persistent than booms. It shows that the effect of insider power on average labor demand is more contractionary the greater is the persistence of troughs relative to booms. This analysis is a contribution to the discussion of why the existence of dual labor markets (in which insider power is strong) is negative for employment in the current situation of more prolonged troughs. Pilar Díaz-Vázquez Copyright © 2013 Pilar Díaz-Vázquez. All rights reserved. The Impact of US Biofuels Policy on Agricultural Production and Nitrogen Loads in Alabama Sun, 24 Nov 2013 10:48:10 +0000 http://www.hindawi.com/journals/ecri/2013/521254/ The Energy Independence Security Act aims to increase the production of renewable fuels in order to improve the energy efficiency of the United States of America. This legislation set the biofuel production goal at 136.3 million m3 by 2022, with approximately 79 million m3 derived from advanced biofuels or renewable fuels other than corn ethanol. A bioeconomic model was used to assess the potential impact of the biofuel mandate in terms of nitrogen loss associated with corn production in northern Alabama considering the El Nino Southern Oscillation phases. From simulations conducted at the watershed level, the expansion in biofuel production would increase the production of corn by 122.89% with associated increase in nitrogen loss of 20%. Furthermore, nitrogen loss would be more severe in climatic transition towards La Nina. Ermanno Affuso and Leah M. Duzy Copyright © 2013 Ermanno Affuso and Leah M. Duzy. All rights reserved. Evidence on the Efficient Market Hypothesis from 44 Global Financial Market Indexes Thu, 31 Oct 2013 18:40:33 +0000 http://www.hindawi.com/journals/ecri/2013/238253/ This paper employs Granger causality tests to identify the impacts of historical information from global financial markets on their current levels in 30-day windows. The dataset consists primarily of the daily index levels of the (1) open, (2) closed, (3) intraday high, (4) intraday low, and (5) trading volume series for the world’s 37 most influential equity market indexes, two crude oil prices, a gold price, and four major money market prices in the United States are used as control groups. Our results indicate a persistent impact of historical information from global markets on their current levels, and this impact duplicates itself in a cyclical pattern consistently over decades. Such persistence in the patterns causes some market indexes to be upgraded to global or regional market leaders. These findings can be interpreted as constituting violations of the weak-form efficient market hypothesis. The results also reveal recursive impacts of information in these markets and the existence of an information digestion effect. Huijian Dong, Helen M. Bowers, and William R. Latham Copyright © 2013 Huijian Dong et al. All rights reserved. Migration-Driven Aggregation Behaviors of Job Markets in a Multi-Group Environment Mon, 21 Oct 2013 09:47:46 +0000 http://www.hindawi.com/journals/ecri/2013/250717/ This paper introduces a new model describing the aggregate growth of job markets. We divide the job market in each city into two groups: native job market of size and an immigrant job market of size . A reversible migration of jobs exists in both groups. In addition, the interaction between these two groups creates both native and immigrant jobs. A loss of native jobs also takes place due to the interaction. Through studying initial conditions, job-creation rate, and job-loss rate we discover some meaningful results. The size change of native job market is closely related to that of the migration rate, native job-creation rate, and native job-loss rate. We assume that these rates are proportional to the sizes of two groups and find out that for certain initial conditions, immigrants influence native job markets positively. They create more jobs for both job markets. In addition, we can make conclusions about the future trend of the flow of jobs. People will move to places like big cities where there is a higher concentration of job opportunities. Ruoyan Sun Copyright © 2013 Ruoyan Sun. All rights reserved. The Short-Run and Long-Run Relationships between Mortality and the Business Cycle in Canada Thu, 18 Jul 2013 10:37:24 +0000 http://www.hindawi.com/journals/ecri/2013/409738/ This paper investigates the relationship between health and the business cycle for the Canadian economy. The majority of existing literature shows a procyclical relationship between death rates and indicators of the business cycle, suggesting that recessions are good for one’s health. We use a time series error correction model to determine the short-run and long-run impacts of the unemployment rates on death rates. Our results indicate that temporary slowdowns in economic activity are associated with lower death rates. Moreover, once we stratify the data by sex, we find a long-run negative relationship between the unemployment rate and death rates for both sexes. Zuzana Janko, J. C. Herbert Emery, and Pierre Guenette Copyright © 2013 Zuzana Janko et al. All rights reserved. Land Use Change from Biofuels Derived from Forest Residue: A Case of Washington State Mon, 03 Jun 2013 14:12:49 +0000 http://www.hindawi.com/journals/ecri/2013/836823/ Biofuel policy in the United States is transitioning away from corn towards second-generation biofuels in part because of the debate over environmental damages from indirect land use change. We combine a spatially explicit parcel level model for land use change in Washington State with simulations for biofuel policy aimed at utilizing forest residue as feedstock. Using a spatially explicit model provides greater precision in measuring net returns to forestland and development and indicates which areas will be most impacted by biofuel policy. The effect of policy is simulated via scenarios of increasing net returns to forestry and of siting feedstock-processing plants. Our results suggest that forestland will increase from such a policy, leading to a net reduction in atmospheric carbon from indirect land use change. This is in contrast to the experience of corn ethanol where the change in carbon emissions is potentially positive and large in magnitude. Daniel Brent and Sergey Rabotyagov Copyright © 2013 Daniel Brent and Sergey Rabotyagov. All rights reserved. US Agriculture under Climate Change: An Examination of Climate Change Effects on Ease of Achieving RFS2 Wed, 15 May 2013 17:05:22 +0000 http://www.hindawi.com/journals/ecri/2013/763818/ The challenges and opportunities facing today's agriculture within the climate change context are at least twofold: in addition to adapting to a potentially more variable climate, agriculture may also take on the addition role of mitigating GHG emissions—such as providing renewable fuels to replace fossil fuels to some extent. For the US, a large-scale GHG mitigation effort through biofuels production pursuant to the Renewable Fuel Standard (RFS2) is already unfolding. A question thus naturally arises for the RFS2-relevant US agricultural sector: will climate change make it harder to meet the volume goals set in the RFS2 mandates, considering that both climate change and RFS2 may have significant impacts on US agriculture? The agricultural component of FASOMGHG that models the land use allocation within the conterminous US agricultural sector is employed to investigate the effects of climate change (with autonomous adaptation at farm level), coupled with RFS2, on US agriculture. The analysis shows that climate change eases the burden of meeting the RFS2 mandates increasing consumer welfare while decreasing producer welfare. The results also show that climate change encourages a more diversified use of biofuel feedstocks for cellulosic ethanol production, in particular crop residues. Yuquan W. Zhang and Bruce A. McCarl Copyright © 2013 Yuquan W. Zhang and Bruce A. McCarl. All rights reserved. Economic Impact of Harvesting Corn Stover under Time Constraint: The Case of North Dakota Tue, 30 Apr 2013 08:49:41 +0000 http://www.hindawi.com/journals/ecri/2013/321051/ This study examines the impact of stochastic harvest field time on profit maximizing potential of corn cob/stover collection in North Dakota. Three harvest options are analyzed using mathematical programming models. Our findings show that under the first corn grain only harvest option, farmers are able to complete harvesting corn grain and achieve maximum net income in a fairly short amount of time with existing combine technology. However, under the second simultaneous corn grain and cob (one-pass) harvest option, farmers generate lower net income compared to the net income of the first option. This is due to the slowdown in combine harvest capacity as a consequence of harvesting corn cobs. Under the third option of separate corn grain and stover (two-pass) harvest option, time allocation is the main challenge and our evidence shows that with limited harvest field time available, farmers find it optimal to allocate most of their time harvesting grain and then proceed to harvest and bale stover if time permits at the end of harvest season. The overall findings suggest is that it would be more economically efficient to allow a firm that is specialized in collecting biomass feedstock to participate in cob/stover harvest business. Thein A. Maung and Cole R. Gustafson Copyright © 2013 Thein A. Maung and Cole R. Gustafson. All rights reserved. Induced Land Use Emissions due to First and Second Generation Biofuels and Uncertainty in Land Use Emission Factors Thu, 04 Apr 2013 09:43:35 +0000 http://www.hindawi.com/journals/ecri/2013/315787/ Much research has estimated induced land use changes (ILUCs) and emissions for first generation biofuels. Relatively little has provided estimates for the second generation biofuels. This paper estimates ILUC emissions for the first and second generation biofuels. Estimated ILUC emissions are uncertain not only because their associated land use changes are uncertain, but also because of uncertainty in the land use emission factors (EFs). This paper also examines uncertainties related to these factors. The results suggest that converting crop residues to biofuel has no significant ILUC emissions, but that is not the case for dedicated energy crops. Use of dedicated energy crops transfers managed natural land and marginal land (cropland-pasture) to crop production. Producing biogasoline from miscanthus generates the lowest land requirement among alterative pathways. The largest land requirement is associated with switchgrass. The difference is due largely to the assumed yields of switchgrass and miscanthus. The three major conclusions from uncertainty in emissions analyses are (1) inclusion or exclusion of cropland-pasture makes a huge difference; (2) changes in soil carbon sequestration due to changes in land cover vegetation play an important role; and (3) there is wide divergence among the emission factor sources, especially for dedicated crop conversion to ethanol. Farzad Taheripour and Wallace E. Tyner Copyright © 2013 Farzad Taheripour and Wallace E. Tyner. All rights reserved. Economic Impacts of Using Switchgrass as a Feedstock for Ethanol Production: A Case Study Located in East Tennessee Wed, 20 Mar 2013 13:16:36 +0000 http://www.hindawi.com/journals/ecri/2013/138485/ One of the major motivations to establish a biobased energy sector in the United States is to promote economic development in the rural areas of the nation. This study estimated the economic impact of investing and operating a switchgrass-based ethanol plant in East Tennessee. Applying a spatially oriented mixed-integer mathematical programming model, we first determined the location of biorefinery, feedstock draw area, and the resources used in various feedstock supply systems by minimizing the total plant gate cost of feedstock. Based on the model output, an input-output model was utilized to determine the total economic impact, including direct, indirect, and induced effects of feedstock investment and annual production in the study region. Moreover, the economic impact of ethanol plant investment and annual conversion operation was analyzed. Results suggest that the total annual expenditures in an unprotected large round bale system generated a total $92.5 million in economic output within the 13 counties of East Tennessee. In addition, an estimated $234 million in overall economic output was generated through the operation of the biorefinery. This research showed that the least-cost configuration of the feedstock supply chain influenced the levels and types of economic impact of biorefinery. Burton C. English, Tun-Hsiang Edward Yu, James A. Larson, R. Jamey Menard, and Yuan Gao Copyright © 2013 Burton C. English et al. All rights reserved. Economics of Agricultural and Food Markets Tue, 19 Mar 2013 13:54:09 +0000 http://www.hindawi.com/journals/ecri/2013/154546/ Anthony N. Rezitis, José M. Gil, and Maria Sassi Copyright © 2013 Anthony N. Rezitis et al. All rights reserved. Commodity Food Prices: Review and Empirics Sun, 17 Mar 2013 10:05:59 +0000 http://www.hindawi.com/journals/ecri/2013/694507/ The present paper provides a literature review of studies examining the potential causes and consequences of recent surges in food and agricultural commodity prices. Furthermore, this paper uses the structural trend methodology proposed by Koopman et al. (2009) to analyze movements in the IMF monthly commodity food price index for the period 1992(11)–2012(10) and to provide forecasts for the period 2012(11)–2014(12). The empirical results indicate that commodity food prices present seasonality and cyclicality with the longest periodicity of two years. The empirical findings identify certain structural breaks in commodity food price series as well as outliers. These structural breaks seem to capture the trend component of the price series well, while the outliers take account of temporal effects, that is, short-lived spikes. Finally, the presented forecasts show high and volatile commodity food prices. Anthony N. Rezitis and Maria Sassi Copyright © 2013 Anthony N. Rezitis and Maria Sassi. All rights reserved. The Analysis of Several Models of Investment Value of Logistics Project Evaluation Thu, 14 Mar 2013 10:14:19 +0000 http://www.hindawi.com/journals/ecri/2013/412725/ The study of the logistics project evaluation model features reviews the traditional value evaluation model. On the basis of this, using the fuzzy theory, we establish several logistics project evaluation models under fuzzy environment. The analysis of the respective characteristics and the comparison of the calculated results of the three models show that these models are important methods of investment value of logistics evaluation. Ke Qiu Cheng Zhou Copyright © 2013 Ke Qiu Cheng Zhou. All rights reserved. Sequential Divestiture and Firm Asymmetry Mon, 11 Mar 2013 15:04:44 +0000 http://www.hindawi.com/journals/ecri/2013/352847/ Simple Cournot models of divestiture tend to generate incentives to divest which are too strong, predicting that firms will break up into an infinite number of divisions resulting in perfect competition. This paper shows that if the order of divestitures is endogenized, firms will always choose sequential, and hence very limited, divestitures. Divestitures favor the larger firm and the follower in a sequential game. Divestitures in which the larger firm is the follower generate greater industry profit and social welfare, but a smaller consumer surplus. Wen Zhou Copyright © 2013 Wen Zhou. All rights reserved. Firm’s Decisions Based on Consumers’ Choices in Ecocertified Food Markets Thu, 07 Mar 2013 17:10:59 +0000 http://www.hindawi.com/journals/ecri/2013/920164/ The present paper proposes a framework for examining whether a food production enterprise, attempting to build an ecocertification strategy, connects the creation of environmental value with the creation of economic value, balancing environmental sustainability with economic sustainability. More specifically, the paper combines demand theory with a discreet choice consumers’ model in an embryonic ecocertified food market, to examine whether economic value is created and to identify the determinants of this value creation. An empirical investigation of the model using consumer data indicates that a variety of factors, such as consumer’s age and profession, family’s income and purchasing strategy, product quality association in consumers’ mind and the retailing outlet, play an important role in shaping the respondents’ intention to pay for the ecofriendliness of products. The proposed framework can help enterprise management to balance the consumers’ and enterprise owners’ claims in cases where certification schemes or standards exist that enable enterprises to communicate social responsibility to their customers. Philippos Karipidis and Eftichios Sartzetakis Copyright © 2013 Philippos Karipidis and Eftichios Sartzetakis. All rights reserved. The Cost of Diabetes-Related Complications: Registry-Based Analysis of Days Absent from Work Wed, 06 Mar 2013 09:15:54 +0000 http://www.hindawi.com/journals/ecri/2013/618039/ The aim of this study was to estimate the annual number of days absent from work associated with diabetes-related complications. Registry data were obtained for 34,882 individuals aged 18–70 years with hospital-diagnosed diabetes (ICD-10 codes: E10–E14) identified from a large national sample (40% of the Danish population) with 6 years of hospital utilisation data. The occurrence of a complication was defined as a hospital admission with a specified diagnosis or procedure code. Data on sickness episodes with municipal subsidy were retrieved for each individual. Days absent from work attributable to complications were defined as the estimated difference in absence days between individuals with and without the specified complication and were estimated for the first and subsequent years after the initial episode of the recorded complication. Angina pectoris, ischaemic stroke, and heart failure were the three most frequent complications in the population. Heart failure, amputation, renal disease, and peripheral vascular disease were on average associated with more than three-month additional absence from work during the first and subsequent years. Leg ulcers and neuropathy were associated with more days absent from work during the first year than in subsequent years. Diabetes complications are associated with a substantial number of additional days absent from work. The avoidance of these complications would benefit both patients and society. Jan Sørensen and Uffe Jon Ploug Copyright © 2013 Jan Sørensen and Uffe Jon Ploug. All rights reserved. Information in Repeated Ultimatum Game with Unknown Pie Size Thu, 07 Feb 2013 17:17:59 +0000 http://www.hindawi.com/journals/ecri/2013/470412/ Within existing literature, it is well known that people’s behavior in ultimatum game experiments cannot be explained by perfect rationality model. There is, however, evidence showing that people are boundedly rational. In this paper, we studied repeated ultimatum game experiments in which the pie size is only known to the proposer (player 1), but the transaction history is made known to both players. We found that subject’s behavior can be very well explained by the history-consistent-rationality model (HCR model) of Lee and Ferguson (2010), which suggests that people’s behavior is affected by what they observed in the past. The HCR model is able to yield point predictions whose errors are on average within 5% of the total pie size. The experimental results provide evidence that subjects' behavior is boundedly rational with respect to the transaction history. Ching Chyi Lee and William K. Lau Copyright © 2013 Ching Chyi Lee and William K. Lau. All rights reserved. Impact of Foreign Direct Investment, Trade Openness, Domestic Demand, and Exchange Rate on the Export Performance of Bangladesh: A VEC Approach Wed, 21 Nov 2012 16:24:05 +0000 http://www.hindawi.com/journals/ecri/2012/463856/ This paper investigates the impact of foreign direct investment (FDI), trade openness, domestic demand, and exchange rate on the export performance of Bangladesh over the period of 1980–2009 using the vector error correction (VEC) model under the time series framework. The stationarity of the variables is checked both at the intercept and intercept plus trend regression forms under the ADF and PP stationarity tests. The Johansen-Juselius procedure is applied to test the cointegration relationship between variables followed by the VEC regression model. The empirical results trace a long-run equilibrium relationship in the variables. FDI is found to be an important factor in explaining the changes in exports both in the short run and long-run. However, the study does not trace any significant causal relationship for the cases of trade openness, domestic demand, and exchange rate. The study concludes that Bangladesh should formulate FDI-led polices to enhance its exports. Bishnu Kumar Adhikary Copyright © 2012 Bishnu Kumar Adhikary. All rights reserved. A Case Study of Probit Model Analysis of Factors Affecting Consumption of Packed and Unpacked Milk in Turkey Thu, 08 Nov 2012 08:22:01 +0000 http://www.hindawi.com/journals/ecri/2012/732583/ This paper focused on the effects of some sociodemographic factors on the decision of the consumer to purchase packed or unpacked fluid milk in Sivas, Turkey. The data were collected from 300 consumers by using face-to-face survey technique. The sample size was determined using the possibility-sampling method. Probit model has been used to analyze the socioeconomic factors affecting milk consumption of households. Four estimators (household size, income, milk preferences reason, and milk price) in the probit model were found statistically significant. According to empirical results, consumers with lower household size and higher income levels tend to consume packed milk consumption. Our study findings suggest that consumers who were sensitive to price were less likely to consume packed milk and believe that packed milk price is expensive compared to unpacked milk price. Also, milk price was effective factor concerning packed and unpacked milk consumption behavior. The majority of consumers read the contents of packed fluid milk and are affected by safety food in their shopping preferences. Meral Uzunoz and Yasar Akcay Copyright © 2012 Meral Uzunoz and Yasar Akcay. All rights reserved. The Impact of Infrastructure Spending in Sub-Saharan Africa: A CGE Modeling Approach Tue, 30 Oct 2012 10:09:00 +0000 http://www.hindawi.com/journals/ecri/2012/875287/ In this paper we construct a standard CGE model to explore the impact of scaling up infrastructure in six African countries. As the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analysts raise concern on financing these infrastructures after construction and that external funding of these can create major distortion and have a negative impact on the trade balance of these countries. This study aims to provide insights into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investments funded with different fiscal tools. These investments scenarios are compared to nonproductive investment that can be interpreted as a business as usual scenario. Our results show that foreign aid does produce Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed. Moreover, growth effects contribute to attenuate the negative effects. Antonio Estache, Jean-François Perrault, and Luc Savard Copyright © 2012 Antonio Estache et al. All rights reserved. Demand for Fresh Vegetables in the United States: 1970–2010 Mon, 22 Oct 2012 11:53:20 +0000 http://www.hindawi.com/journals/ecri/2012/942748/ This paper analyzes a demand system for eight major fresh vegetables in the USA using the most recently available dataset (1970–2010). A first-differenced Linear Approximate Almost Ideal Demand System (LA-AIDS) is applied to estimate price and expenditure elasticity of demand, imposing homogeneity and symmetry restrictions. We find that not only are consumers responsive to changes in own-prices but they also respond significantly to changes in prices of other fresh vegetables that are consumed together. Conditional budget share allocation to lettuce, cabbage, and celery has declined, while the share of the consumer dollar going to tomatoes, peppers, and onions has increased over the period. Except for cabbage, all own-price elasticity estimates are negative, less than unity in absolute value, and statistically significant. About half of the 56 cross-price elasticities are negative and significant, indicating high, albeit asymmetric, complementarities among these fresh vegetables. Expenditure elasticities are positive and significant for all but one of these eight vegetables. Over the period under consideration, demand and expenditure elasticities remained fairly stable. Cephas Naanwaab and Osei Yeboah Copyright © 2012 Cephas Naanwaab and Osei Yeboah. All rights reserved. Food Price Inflation Rates in the Euro Zone: Distribution Dynamics and Convergence Analysis Mon, 22 Oct 2012 11:34:11 +0000 http://www.hindawi.com/journals/ecri/2012/868216/ It is widely recognized that inflation as a monetary phenomenon is determined by money supply changes. In the short run, however, several factors may lead to inflation rate differentials among different regions in the same country or among different countries in a monetary union. This paper examines the mean reversion attitude of food price inflation rates in the Euro zone, borrowing the concepts and developments from the recent growth literature and using panel unit root tests. Additionally, in order to capture sufficiently the evolving distributional dynamics, nonparametric econometric methods are also implemented. Finally, the comovement of the inflation rates among different food subgroups is also explored. The data consist of monthly observations of the EU harmonized consumer price indices of food and three different food subgroups (meat, bread and cereals, and vegetables) for the 12 older member states of the Euro zone, covering the period from 1997 to 2010. The results do not fully support the hypothesis of the food price inflation rates convergence for the whole period under investigation. Mean reversion shows up in different time periods and in different food categories. Moreover, the analysis of distribution dynamics sheds light to different aspects of convergence and highlights processes like club formation and polarization. Angelos Liontakis Copyright © 2012 Angelos Liontakis. All rights reserved.