Impact of Public Debt on Economic Growth in Advanced Economies

This paper examines the impact of public debt on the economic growth in advanced economies over a period of 1946 to 2009, using an econometric approach. The findings suggested an inverse relationship between public debt and economic growth in advanced economies. These relationships were found to be significant as well. Model results also show that the real GDP growth rate does not decline sharply whether the public debt-to-GDP ratio is lower than 220%. The public debt-to-GDP ratio elasticity of the real growth rate shows that an increase of 1% in public debt/GDP category above 120% decreases the real GDP growth rate in 1.13%. The negative effect of public debt is only stronger on the real GDP growth rate in advanced economies when the public debt-to-GDP ratio is above 220%. Finally, these findings lead us to reassess the austerity agenda, and the governments should devise new strategies for public debt management in advanced economies, taking into account their economic and financial performance.

Are Decision Makers Rational in Ambiguous Situations?

This research work analyzes human behavior in complex situations and explains how decisions makers act in ambiguous situations. The objective of this research work is to study the sunk cost effect and the completion percentage effect of an investment project in a decision-making process. This research work uses a “retrospective rationality” approach to justify irrational behaviors such as the sunk cost effect, the completion percentage effect of an investment project and the irrational escalation since decision-makers are repeatedly affected by the decisions on past irreversible investments. This research work evaluates three sunk cost levels, and three completion percentage levels of an investment project, besides three neutral situations in a business environment and a personal decision situation. Graduate students in three Portuguese Management Schools responded to the questionnaires. Model results show that the value of resources invested is crucial for understanding the students’ rational behavior, who participated in this research work. These results disclose statistical evidence that the information on sunk costs and completion percentage of an investment project determines human behavior under irrational escalation in ambiguous situations. As a consequence, decision makers have the opportunity to interpret their decisions, since the scenarios do not allow a unique definition of rational choice, it is not correct to judge the irrational decision makers that decide to continue to invest in ambiguous situations. Keywords: Human Behavior, Sunk costs Effect, Completion Percentage Effect of an Investment Project, Irrational Escalation, Ambiguous Situations.

Expenditure pattern analysis of cultural tourists at World Heritage Sites: an empirical evidence based on CHAID analysis

Nowadays, World Heritage Sites (WHS) have been facing new challenges, partially due to a different tourism consumption patterns. As it is highlighted in a considerable amount of studies, visits to these sites are almost justified by this prestigious classification and motivations are closely associated with their cultural aspects and quality of the overall environment (among others, Marujo et al, 2012). However, a diversity of tourists’ profiles have been underlined in the literature. Starting from the results obtained in a previous study about cultural tourists’ profile, conducted during the year 2009 in the city of Évora, Portugal, it is our intend to compare the results with a recent survey applied to the visitors of the same city. Recognition of Évora by UNESCO in 1986 as “World Heritage” has fostered not only the preservation of heritage but also the tourist promotion of the town. This study compares and examined tourists’ profile, regarding from the tourists’ expenditure patterns in Évora. A total of 450 surveys were distributed in 2009, and recently, in 2015, the same numbers of surveys were collected. Chi-squared Automatic Interaction Detection (CHAID) was applied to model consumer patterns of domestic and international visitors, based on socio demographic, trip characteristics, length of stay and the degree of satisfaction of pull factors. CHAID allowed find a population classification in groups that able to describe the dependent variable, average daily tourist expenditure. Results revealed different patterns of daily average expenditure amongst the years, 2009 and 2015, even if primarily results not revealed significant variations in socio-demographic and trip characteristics among the visitors’ core profile. Local authorities should be aware of this changing expensive behavior of cultural visitors and should formulate strategies accordingly. Policy and managerial recommendations are discussed.