ISRN Economics http://www.hindawi.com The latest articles from Hindawi Publishing Corporation © 2014 , Hindawi Publishing Corporation . All rights reserved. The Pricing of Portuguese Privatisation Second Initial Public Offerings Wed, 21 May 2014 13:02:28 +0000 http://www.hindawi.com/journals/isrn.economics/2014/652712/ The paper studies the pricing of PSIPOs (privatization second initial public offerings) PIPOs of companies that had been public in the past. A dataset comprising all the Portuguese companies nationalized in 1975 and privatized in the late eighties and nineties is used. Findings on short- and long-run pricing of IPOs and PIPOs are summarized, and implications for the pricing of PSIPOs are discussed. Short- and long-run returns are computed, using three alternative methods (buy and hold abnormal returns, wealth relatives, and cumulative abnormal returns) in the long-run analysis. Short-run overpricing is identified, unlike the underpricing pattern revealed by most IPO research. This initial overpricing is essentially found to be corrected in the first trading month. In the long-run, no evidence of overpricing is found, again unlike the usual conclusion of the IPO literature, and more in line with empirical evidence on second IPOs. Results provide support to the conclusion that privatization IPOs tend to be less underpriced than standard IPOs and that firms coming back to the market for a second IPO tend to be less underpriced than pure IPOs and provide a good rating for the performance of the Portuguese Republic pricing stocks in the Portuguese privatization program. Rui Alpalhão Copyright © 2014 Rui Alpalhão. All rights reserved. Evolutionary Model of the City Size Distribution Tue, 01 Apr 2014 13:24:18 +0000 http://www.hindawi.com/journals/isrn.economics/2014/498125/ An evolutionary model of the city size distribution is presented that explains the size of a city from the reproduction process and the migration of humans between cities. The model suggests that the city size distribution is a lognormal distribution with a power law tail in agreement with empirical results and computer simulations. The main idea of the model is that the competition between cities in the migration process is the origin of Gibrat's law. While growth rate fluctuations generate the lognormal branch of the size distribution, the power law tail for large cities is caused by a small mean growth rate. Joachim Kaldasch Copyright © 2014 Joachim Kaldasch. All rights reserved. Endogenous Technical Progress in the Theory of Economic Growth Wed, 26 Mar 2014 13:00:13 +0000 http://www.hindawi.com/journals/isrn.economics/2014/928121/ It is shown that substitutive work, which can be defined as work of production equipment (capital stock) replacing the efforts of workers in production processes, can be considered as a measure of technical progress. The methods of estimation of substitutive work are discussed. The theoretical results are illustrated on the data for the US. economy. Vladimir N. Pokrovskii Copyright © 2014 Vladimir N. Pokrovskii. All rights reserved. Evolutionary Model of Moore’s Law Sun, 09 Mar 2014 06:28:34 +0000 http://www.hindawi.com/journals/isrn.economics/2014/781623/ Moore suggested an exponential growth of the number of transistors in integrated electronic circuits. In this paper, Moore’s law is derived from a preferential growth model of successive production technology generations. The theory suggests that products manufactured with a new production technology generating lower costs per unit have a competitive advantage on the market. Therefore, previous technology generations are replaced according to a Fisher-Pry law. Discussed is the case that a production technology is governed by a cost relevant characteristic. If this characteristic is bounded by a technological or physical boundary, the presented evolutionary model predicts an asymptotic approach to this limit. The model discusses the wafer size evolution and the long term evolution of Moore’s law for the case of a physical boundary of the lithographic production technology. It predicts that the miniaturization process of electronic devices will slow down considerably in the next two decades. Joachim Kaldasch Copyright © 2014 Joachim Kaldasch. All rights reserved. Responding to a Forest Catastrophe: The Emergence of New Governance Arrangements in Southern California Thu, 20 Feb 2014 13:00:15 +0000 http://www.hindawi.com/journals/isrn.economics/2014/982481/ The San Bernardino National Forest in southern California experienced an unprecedented bark beetle outbreak in the early 2000s. The outbreak, coupled with a looming threat of catastrophic wildfire, droughts, changing forest management priorities, and a legacy of poor forest management practices coalesced to create a challenge that existing institutions and management agencies could not address. In response, an interagency collaborative effort, the Mountain Area Taskforce (MAST), was initiated. Based on key informant interviews, this paper details how this new governance organization emerged and how it effectively addressed a landscape scale forest challenge. Forest governance analyses often focus attention on macroscales, overlooking the microlevel arrangements that set MAST apart from other responses to bark beetle outbreaks. Interagency collaboration has taken on greater importance in efforts to address forest management at landscape scales and this case study provides important insights into the challenges and opportunities of these new governance arrangements. Brian Petersen and Adam M. Wellstead Copyright © 2014 Brian Petersen and Adam M. Wellstead. All rights reserved. Technoeconomic and Policy Analysis for Corn Stover Biofuels Tue, 04 Feb 2014 00:00:00 +0000 http://www.hindawi.com/journals/isrn.economics/2014/515898/ Conventional fossil fuels dominate the marketplace, and their prices are a direct competitor for drop-in biofuels. This paper examines the impact of fuel selling price uncertainty on investment risk in a fast pyrolysis derived biofuel production facility. Production cost specifications are gathered from previous research. Monte Carlo analysis is employed with uncertainty in fuel selling price, biomass cost, bio-oil yield, and hydrogen price parameters. Experiments reveal that fuel price has a large impact on investment risk. A reverse auction would shift risk from the private sector to the public sector and is shown to be more effective at encouraging private investment than capital subsidies for the same expected public cost. Ryan Petter and Wallace E. Tyner Copyright © 2014 Ryan Petter and Wallace E. Tyner. All rights reserved. How Persistent Is the Occupation-Education Mismatch in Canada? Thu, 23 Jan 2014 08:46:14 +0000 http://www.hindawi.com/journals/isrn.economics/2014/490914/ This paper investigates the duration of overqualification in Canada, the time-varying probability of leaving overqualification, and the wage consequences associated with the transition. The paper also applies a survival analysis approach to examine the impact of key driving factors on the probability of transitioning from overqualification to a job match using a proportional hazard (Cox) model. The analysis shows that within a 5-year period, an overqualified worker has a 22 percent probability of transitioning to an occupation that matches the education level. The probability of transition also decreases quickly over time, thus lowering the chances of finding a job match after 12 months. Regression analyses also provide evidence that overqualified workers with short tenure are more likely to transition than workers with medium to long tenure. Finally, job-related training nearly doubles the chance of transitioning out of overqualification. Xuyang Chen and Maxime Fougère Copyright © 2014 Xuyang Chen and Maxime Fougère. All rights reserved. Exchange Rate Volatility and Aggregate Exports: Evidence from Two Small Countries Mon, 20 Jan 2014 07:02:12 +0000 http://www.hindawi.com/journals/isrn.economics/2014/839380/ This paper examines the effect of exchange rate volatility for two small countries, Croatia and Cyprus, on aggregate exports during the period of first quarter of 1990 to first quarter of 2012. It is claimed by some researchers that exchange rate volatility causes a reduction on the overall level of trade. Empirical researchers often utilize the standard deviation of the moving average of the logarithm of the exchange rate as a measure of exchange rate fluctuation. In this study, we propose a new measure for volatility. Overall, our results suggest that there is a positive effect of volatility on exports of Croatia and Cyprus. Dimitrios Serenis and Nicholas Tsounis Copyright © 2014 Dimitrios Serenis and Nicholas Tsounis. All rights reserved. Impact of Formal Financial Market Participation on Farm Size and Expenditure on Variable Farm Inputs: The Case of Maize Farmers in Ghana Sun, 12 Jan 2014 07:55:29 +0000 http://www.hindawi.com/journals/isrn.economics/2014/329674/ The study examined maize farmers’ participation in the formal financial market and its impact on farm size and expenditure on variable farm inputs. A multistage sampling method was used in selecting 595 maize farmers from the seven districts in Ashanti and Brong Ahafo Regions of Ghana. A structured questionnaire and interview schedule were used to elicit information from the respondents. The impact of formal financial market participation on farm size and expenditure on variable inputs was estimated using Propensity Score Matching (PSM) method. The results of the study showed that formal financial market participation has the potential to significantly increase expenditure on variable inputs by farmers and consequently use of improved technology. Therefore, formal financial market participation should be encouraged through education and promotional activities. Dadson Awunyo-Vitor, Ramatu M. Al-Hassan, and Daniel B. Sarpong Copyright © 2014 Dadson Awunyo-Vitor et al. All rights reserved. Education and Unemployment Patterns for Young Workers with Job Experience in Spain Sun, 12 Jan 2014 00:00:00 +0000 http://www.hindawi.com/journals/isrn.economics/2014/420260/ This paper analyzes the education and unemployment patterns for young workers with some experience in Spain at the beginning of the current economic crisis, using the ad hoc module of the Spanish Labour Force Survey 2009. The results clearly show that educational level and field of study are crucial when explaining the instability of the first job and the difficulty in obtaining another one. Specifically, the lower is the educational level, the greater is the risk of unemployment, not only because it is less likely to keep the first job, but also because it is harder to find another one. Moreover, considering the field of study at a given educational level, it is detected that graduates from health and welfare are the best positioned in the labour market (especially university degree holders). For the rest of fields of study, and despite the differences in the risk of unemployment are small, it is observed that the lowest level of unemployment corresponds to sciences and technology, followed by social sciences and the rest of fields. The education and unemployment patterns detected in the paper may be useful to guide both policy and individual decisions. Juan Acosta-Ballesteros, M. del Pilar Osorno-del Rosal, and Olga M. Rodríguez-Rodríguez Copyright © 2014 Juan Acosta-Ballesteros et al. All rights reserved. Exchange Rate Determination and Forecasting: Can the Microstructure Approach Rescue Us from the Exchange Rate Disparity? Wed, 18 Dec 2013 10:52:56 +0000 http://www.hindawi.com/journals/isrn.economics/2013/724259/ Using two measures of private information and high-frequency transaction data from the leading interdealer electronic broking system Reuters D2000-2, we examine the association between exchange rate return and contemporaneous order flow and the predictability power of lagged order flow on the future exchange rate return. Our empirical analysis demonstrates that at high frequency (5, 10, 15, 20, 25, and 30 min) there exists strong positive association between exchange rate returns and contemporaneous order flow. However, the results indicate weak predictability of order flow on the future exchange rate return. Guangfeng Zhang, Qiong Zhang, and Muhammad Tariq Majeed Copyright © 2013 Guangfeng Zhang et al. All rights reserved. The Impact of Competition, Subsidies, and Taxes on Production and Construction Cost: The Case of the Swedish Housing Construction Market Tue, 10 Dec 2013 13:23:16 +0000 http://www.hindawi.com/journals/isrn.economics/2013/868914/ Few empirical studies focus on developing data and analyses on the factors that influence the decision making process of builders, developers and landlords. Interest subsidy, taxes, and competition are some of the factors that can influence the level of construction or production costs and ultimately the price of the housing units produced. Different subsidy schemes and value-added taxes (VAT) have been used as tools to increase housing construction in Sweden. However, their effect on costs of the housing stock has not been rigorously examined in the current housing supply literature. The aim of this paper is to investigate the relationship between production and construction cost and its determinants especially their relationship to different subsidy schemes and value-added taxes. In our econometric analysis, we utilize a quarterly panel data that covers 1975–2004. Our results suggest that there is a positive relationship between subsidies and construction cost and inverse relationship to value added taxes. This could explain why few companies within the housing construction industry raise the cost of production since these companies could manage to transfer some of the tax burden from themselves to the housing developers. Paper goes on to discuss common practices of construction companies that affects production costs. Abukar Warsame, Rune Wigren, Mats Wilhelmsson, and Zan Yang Copyright © 2013 Abukar Warsame et al. All rights reserved. A Model of Endogenous Growth: The Case of an Innovative Economy Thu, 05 Dec 2013 16:40:37 +0000 http://www.hindawi.com/journals/isrn.economics/2013/901096/ The main aim of this paper is to bring some improvements to the model developed by Funke and Strulik, having as starting point the basic model proposed by Grossman and Helpman. We will prove that the competitive equilibrium solution is locally unique. Nevertheless, at least as regards the stability of equilibrium point, we confirm the results obtained by Funke and Strulik. Constantin Chilarescu and Ioana Viasu Copyright © 2013 Constantin Chilarescu and Ioana Viasu. All rights reserved. Fund-Raising Games Played on a Network Sun, 17 Nov 2013 08:56:39 +0000 http://www.hindawi.com/journals/isrn.economics/2013/298595/ It is well known among fund-raisers that many people contribute to charities or organizations only when asked and that large donations are more likely to occur as a fund-raiser increases the time spent soliciting and/or researching a potential donor. As fund-raisers can only spend time with research donors that they are aware of, the relationship (or links) between fund-raisers and donors is quite important. We model a fund-raising game where fund-raisers can only solicit donors whom they are tied to and analyze how this network influences donation requests. We show that if this network is incomplete and if donors experience extreme donor fatigue, then fund-raisers will spend more time soliciting donors that other fund-raisers are also tied to and less time soliciting donors that they are the only fund-raiser tied to. If instead donors experience mild donor fatigue, then fund-raisers prefer donors that they are the only fund-raiser tied to over donors that are shared with other fund-raisers. If donors are potential givers with no donor fatigue, then multiple equilibria may exist. Stochastic stability is used to refine the number of equilibria in this case, and conditions are given under which the unique stochastically stable equilibrium is efficient. Alison Watts Copyright © 2013 Alison Watts. All rights reserved. Efficiency of Demand Shocks in Order to Reduce Current Account Imbalances in the EMU Thu, 07 Nov 2013 18:04:27 +0000 http://www.hindawi.com/journals/isrn.economics/2013/787352/ With the current European sovereign public debt crisis and current account imbalances difficulties in the EMU, many papers now underline that the problem of the European construction is its lack of institutional framework and common economic governance necessary to make a monetary union viable. According to these papers, the solution would lie in a stronger economic cooperation, with the Northern European countries contributing to lighten the burden of the Southern debtor countries. In this context, our model shows that a symmetric positive demand shock in the EMU could only slightly reduce the external indebtedness of the Southern European countries but would efficiently reduce their public debt levels. To the contrary, an asymmetric positive demand shock in the creditor Northern European countries (e.g., an increase in German wages) could reduce the current account deficits of the Southern European countries, in particular for countries with the highest openness to trade. Nevertheless, it would worsen the indebtedness levels, and it would also increase the recessionary risks in these countries. Séverine Menguy Copyright © 2013 Séverine Menguy. All rights reserved. Lead, Follow or Cooperate? Sequential versus Collusive Payoffs in Symmetric Duopoly Games Wed, 06 Nov 2013 13:45:36 +0000 http://www.hindawi.com/journals/isrn.economics/2013/645481/ In many strategic settings comparing the payoffs obtained by players under full cooperation to those obtainable at a sequential (Stackelberg) equilibrium can be crucial to determine the outcome of the game. This happens, for instance, in repeated games in which players can break cooperation by acting sequentially, as well as in merger games in which firms are allowed to sequence their actions. Despite the relevance of these and other applications, no full-fledged comparisons between collusive and sequential payoffs have been performed so far. In this paper we show that even in symmetric duopoly games the ranking of cooperative and sequential payoffs can be extremely variable, particularly when the usual linear demand assumption is relaxed. Not surprisingly, the degree of strategic complementarity and substitutability of players’ actions (and, hence, the slope of their best replies) appears decisive to determine the ranking of collusive and sequential payoffs. Some applications to endogenous timing are discussed. Marco A. Marini and Giorgio Rodano Copyright © 2013 Marco A. Marini and Giorgio Rodano. All rights reserved. Dynamics of Housing Price: Foreclosure Rate Interactions Mon, 28 Oct 2013 13:29:12 +0000 http://www.hindawi.com/journals/isrn.economics/2013/250459/ The dynamic impacts of the federal funds rate and the foreclosure rate on the log of the S&P/Case-Shiller aggregate 10-city monthly housing price index are investigated using VMA modeling techniques in the period 2000(1)–2011(3). The findings are consistent with the view that the interest rate policy of the Federal Reserve in that period that kept rates artificially low contributed to the housing bubble. Positive shocks in the foreclosure rate are shown to be associated with declines in the change in the housing price index after a lag. In addition, negative shocks in the change in the housing price index are associated with a higher foreclosure rate. The results suggest that both the change in the housing price index and the foreclosure rate create a negative externality that is dynamic. John F. McDonald and Houston H. Stokes Copyright © 2013 John F. McDonald and Houston H. Stokes. All rights reserved. Growth and Volatility Reconsidered: Reconciling Opposite Views Sun, 15 Sep 2013 11:36:00 +0000 http://www.hindawi.com/journals/isrn.economics/2013/381368/ Many contributions in the recent literature have investigated over the relationship between GDP growth and its volatility without getting a clear and unambiguous answer. Besides reassessing the well-known effect of output volatility on growth as benchmark analysis, this study aims at looking into the “black box” of the business cycle volatility by disentangling the impacts of volatility of GDP major components—that is, private consumption, private investment and government expenditure—on growth, simultaneously considered. Our empirical analysis unveils a remarkably robust and strong negative correlation of consumption volatility with mean growth and a positive one with volatility of investment and of public expenditure. If these findings shed some additional light on the (still controversial) relationship between economic fluctuations and growth, they will also make it possible to compare the relative impact of each component, with possibly relevant policy implications. Importantly, this might reconcile opposite views about the issue that different empirical results might originate from the relative importance across empirical studies of the various components of volatility. L. Bisio and L. Ventura Copyright © 2013 L. Bisio and L. Ventura. All rights reserved. Playing with Fire: Internal Devaluation for the GIPSI Countries Sat, 24 Aug 2013 08:07:53 +0000 http://www.hindawi.com/journals/isrn.economics/2013/891795/ European authorities are encouraging internal devaluation by GIPSI countries in order to improve their competitiveness and reduce current account deficits. However, this option introduces an additional source of risk, as it may generate deflation, making fiscal consolidation for these countries even harder to achieve. Several authors have suggested that an enhanced coordination of national fiscal policies would be preferable. This paper contributes to the debate in two instances. First, we analyze the main drivers of debt dynamics for peripheral versus core countries in the Eurozone in the last decade, to evidence that GIPSI countries should focus on a fiscal consolidation that does not damage growth, while deflation should be avoided. Second, we implement a scenario analysis to analyze the effectiveness of a coordinated policy among Eurozone members, where core countries accept a 3% target for inflation and reduce the pace of their fiscal consolidation, while GIPSI countries focus on fiscal consolidation with a low (but positive) level of inflation. This coordinated policy might be a better option as it (i) increases the competitiveness of GIPSI countries while avoiding the risks of deflation, (ii) ensures stability of debt for both groups of countries without imposing an excessive inflation target from EU core countries, and (iii) introduces the possibility of a fiscal stimulus. David Peón and Fernando Rey Copyright © 2013 David Peón and Fernando Rey. All rights reserved. Long-Term Effects of Expiration of Derivatives on Indian Spot Volatility Tue, 06 Aug 2013 10:00:58 +0000 http://www.hindawi.com/journals/isrn.economics/2013/718538/ This paper examines the impact of expiration of derivatives on spot volatility of Indian capital market. The review of the literature shows that the previous Indian studies have covered a period of only 4–6 years after the introduction of derivative trading in India in 2000. They are unanimous about volume effect but not about return and volatility effect. This paper uses regression techniques and one symmetric and three asymmetric GARCH models, namely, TGARCH, EGARCH, and PGARCH, to evaluate the impact. It uses daily data on popular index S&P CNX Nifty of National Stock Exchange of India, during a period of more than a decade from June 12, 2000 to January 10, 2012. Findings of the study show that spot returns, volume, and volatility are high on expiration day and they build up further on the day after expiry which shows that the Indian market is weakly efficient. The expiration effect is mainly due to concentration of volumes in near-month contracts and absence of physical settlement. Sunita Narang and Madhu Vij Copyright © 2013 Sunita Narang and Madhu Vij. All rights reserved. Impacts of the Recent Expansion of the Sugarcane Sector on Municipal per Capita Income in São Paulo State Sun, 28 Jul 2013 09:05:58 +0000 http://www.hindawi.com/journals/isrn.economics/2013/828169/ The aim of this study is to evaluate the impacts of this expansion on the income of people in the state’s districts and towns. Beginning with a breakdown of the main determinants of per capita income, a spatial dynamic panel model is proposed. The proportion of adults in the municipal population, the labour force utilization rate, and the average labour income were used as control variables. Furthermore, to isolate the impacts of the expansion of the sugarcane sector on per capita gross domestic product (GDP), the share of farming in municipal areas, the share of agriculture within farming in general, the share of sugarcane farming within agriculture, and a dummy for districts and towns with an operational plant were included in the model. The series cover the 645 districts and towns of São Paulo State from 2000 to 2008. The results of the system generalized method of moments (system-GMM) showed a positive relationship of spatial and temporal dependence in the real per capita GDP. And the estimated direct and indirect effects indicate that the expansion of the sugarcane sector had a positive impact on per capita GDP, both in towns where the expansion took place and in their neighbouring towns. Luiz Satolo and Mirian Bacchi Copyright © 2013 Luiz Satolo and Mirian Bacchi. All rights reserved. Price Responsiveness in District Heating: Single Houses and Residential Buildings—a Cross-Sectional Analysis Thu, 04 Apr 2013 14:07:28 +0000 http://www.hindawi.com/journals/isrn.economics/2013/324127/ Price responsiveness is argued to be one important factor determining the possibility for a natural monopoly such as a district heating company to exercise its monopoly power. Increased price responsiveness, measured, for example, by the own price elasticity, reduces monopoly power, as consumers increasingly reduce demand as a response to a price increase. However, consumers in single houses having individual metering have presumably higher price responsiveness compared to consumers in residential buildings using collective metering. One major question raised in this paper is thus whether single houses show larger price responsiveness compared to residential buildings. Using cross-sectional data for 187 networks in Sweden for the year 2007 indicates that even if single houses have higher price responsiveness, district heating reveals in general a very inelastic behavior. Stefan Hellmer Copyright © 2013 Stefan Hellmer. All rights reserved. The Respective Effects of Being Observed and Sanctioned in Modified Dictator and Ultimatum Games Thu, 04 Apr 2013 13:26:37 +0000 http://www.hindawi.com/journals/isrn.economics/2013/761482/ We experiment within a laboratory the respective effects of being observed and sanctioned in both a dictator and an ultimatum game. We obtain the classical results that individuals do not play the subgame perfect equilibria. We also show that being observed increases the offers made by the proposer in the dictator game but this effect is difficult to identify in the ultimatum game. We also find that in the dictator game, the more the individuals are sensitive to observation the less they are to sanction. Agnès Festré and Pierre Garrouste Copyright © 2013 Agnès Festré and Pierre Garrouste. All rights reserved. John Nyman and the Economics of Health Care Moral Hazard Wed, 13 Mar 2013 08:42:46 +0000 http://www.hindawi.com/journals/isrn.economics/2013/603973/ In 2003, John Nyman published The Theory of Demand for Health Insurance. His principal contributions are (1) to replace the previously unexamined axiom of risk avoidance with the axiom of welfare maximization; (2) to uncover a misinterpretation in the literature on moral hazard, namely, the insurance payoff as a price reduction, rather than as an income transfer. The immediate consequence of these reformulations is to recognize insurance-induced health care utilization as resulting in an increase in social welfare. Despite its evident validity and enormous implications, Nyman’s work has received very little attention or recognition in the health economics literature. Sander Kelman and Albert Woodward Copyright © 2013 Sander Kelman and Albert Woodward. All rights reserved. Constructing a Small-Region DSGE Model Mon, 11 Mar 2013 10:33:16 +0000 http://www.hindawi.com/journals/isrn.economics/2013/825862/ This paper constructs a tractable dynamic stochastic general equilibrium (DSGE) model of a regional economy that is considered small because it does not affect its national economy. To examine properties of our small-region DSGE model, we conduct several numerical simulations. Notably, fiscal expansion in our model is larger than that in standard DSGE models. This is because the increase in regional output does not raise interest rates, and this leads to the crowding-in effects of investment. Kenichi Tamegawa Copyright © 2013 Kenichi Tamegawa. All rights reserved. An Empirical Modelling of New Zealand Hospitality and Tourism Stock Returns Tue, 26 Feb 2013 14:08:02 +0000 http://www.hindawi.com/journals/isrn.economics/2013/289718/ This paper examines the factor risk premiums of stock returns for the hospitality and tourism companies in New Zealand. The Arbitrage Pricing Theory (APT) approach is used to investigate the expected return for stock portfolio with respect to market, macro (i.e., money supply and discount rate), and tourism factor sensitivities. Monthly stock prices, market index, tourism, and macroeconomic data are used in the study. The results indicate that the risk premiums for international tourism demand and term premium (proxy for discount rate) are positively significant at the 5% level. A one unit increase in tourist arrival sensitivity would result in expected return increase of 10 to 17 percentage point. Similarly, a one unit increase in term premium can increase hospitality-tourism expected returns by 0.2 percentage point. However, the findings for the money supply factor are not significant. As the study shows that investors face high positive tourism demand risk, it is imperative for firms and policymakers in New Zealand to promote inbound tourism through effective marketing and management. This in turn can provide high expected returns and create shareholder value for investors. Christine Lim and Felix Chan Copyright © 2013 Christine Lim and Felix Chan. All rights reserved. The Effect of Labour Turnover Costs on Average Labour Demand When Recessions Are More Persistent than Booms Tue, 12 Feb 2013 08:46:34 +0000 http://www.hindawi.com/journals/isrn.economics/2013/138182/ This paper examines how labour turnover costs affect average labour demand when troughs are more persistent than booms. We show that the effect of firing costs on average labour demand is more expansionary (or less contractionary): the greater is the difference between the persistence of troughs and the persistence of booms, and the more prolonged are the macroeconomic shocks. This analysis may shed some light on the expected effect of a reduction of firing costs when an economy is suffering more prolonged recessions (relative to booms): average labour demand will be lower. Pilar Díaz-Vázquez and Luis E. Arjona-Béjar Copyright © 2013 Pilar Díaz-Vázquez and Luis E. Arjona-Béjar. All rights reserved. Layers of Socioeconomic Vulnerability in Malawi in the Context of the Millennium Development Goals Thu, 31 Jan 2013 09:36:34 +0000 http://www.hindawi.com/journals/isrn.economics/2013/346750/ Millennium Development Goal 1 focuses on the eradication of poverty and hunger by 2015. While progress towards achieving this goal is promising in many developing countries, it is estimated that 920 million people would still be living under the adjusted poverty threshold of US$1.25 per day. This study employed data from the Malawi 2010 Demographic and Health Survey to examine the relative ranking of women ( 23,020) across the wealth index scale by identifying the characteristics of women which influence their likelihood of belonging to “poor” or “rich” households. Results from the ordered probit model show that older women and those with some formal schooling were likely to fall within the higher categories of the wealth status index. Belonging to households headed by females was associated with lower categories of wealth status than those headed by males. We interpret these results in line with the current development strategies aimed at reducing poverty and hunger by 2015 and the need to identify and respond appropriately to the layers of socioeconomic vulnerability in Malawi. Henry V. Doctor Copyright © 2013 Henry V. Doctor. All rights reserved. Spatial Dimensions of Economic Growth in Brazil Thu, 31 Jan 2013 09:18:07 +0000 http://www.hindawi.com/journals/isrn.economics/2013/398021/ The contribution of this paper is to explore time and spatial scale dimensions of economic growth in Brazil using alternative panel data techniques to provide a measure of the extent of spatial autocorrelation (in kilometres) over three decades (1970–2000) as well as discussing the determinants of economic growth at a variety of geographic scales (minimum comparable areas, micro-regions, meso-regions, and states). The magnitude and statistical significance of growth determinants such as schooling, population density, population growth, and transportation costs are dependent on the scale of analysis. Moreover, the extent of residual spatial autocorrelation showed that it seems to vary across spatial scales. Indeed, spatial autocorrelation seems to be bounded at the state level and it shows positive and statistically significant values across distances of more than 1,500 kilometres at the other three spatial scales. Among other results, the study suggests that the nonspatial panel data techniques are not able to deal with spatially correlated omitted variables across different spatial scales, except for the state level where nonspatial panel data models seem to be appropriate to investigate growth determinants and convergence process in the Brazilian states case. Guilherme Mendes Resende Copyright © 2013 Guilherme Mendes Resende. All rights reserved. Choosing the Right Spatial Weighting Matrix in a Quantile Regression Model Mon, 28 Jan 2013 16:16:54 +0000 http://www.hindawi.com/journals/isrn.economics/2013/158240/ This paper proposes computationally tractable methods for selecting the appropriate spatial weighting matrix in the context of a spatial quantile regression model. This selection is a notoriously difficult problem even in linear spatial models and is even more difficult in a quantile regression setup. The proposal is illustrated by an empirical example and manages to produce tractable models. One important feature of the proposed methodology is that by allowing different degrees and forms of spatial dependence across quantiles it further relaxes the usual quantile restriction attributable to the linear quantile regression. In this way we can obtain a more robust, with regard to potential functional misspecification, model, but nevertheless preserve the parametric rate of convergence and the established inferential apparatus associated with the linear quantile regression approach. Philip Kostov Copyright © 2013 Philip Kostov. All rights reserved.