Cronyism in Business, Public Sector and Politics

This paper contrasts the incentives for cronyism in business, the public sector and politics within an agency problem model with moral hazard. The analysis is focused on the institutional differences between private, public and political organizations. In business, when facing a residual claimant contract, a chief manager ends up with a relatively moderate ��rst-best level of cronyism within a ��firm. The institutional framework of the public sector does not allow explicit contracting, which leads to a more severe cronyism problem within public organizations. Finally, it is shown that the nature of political appointments (such that the subordinate's reappointment is conditioned on the chief's re-election) together with implicit contracting makes political cronyism the most extreme case. JEL classifi��cation: D72, D73, D86. Keywords: Cronyism; Meritocracy; Manager; Bureaucrat; Politician.

Industrial Location and Space: New Insights

This paper tries to resolve some of the main shortcomings in the empirical literature of location decisions for new plants, i.e. spatial effects and overdispersion. Spatial effects are omnipresent, being a source of overdispersion in the data as well as a factor shaping the functional relationship between the variables that explain a firm���s location decisions. Using Count Data models, empirical researchers have dealt with overdispersion and excess zeros by developments of the Poisson regression model. This study aims to take this a step further, by adopting Bayesian methods and models in order to tackle the excess of zeros, spatial and non-spatial overdispersion and spatial dependence simultaneously. Data for Catalonia is used and location determinants are analysed to that end. The results show that spatial effects are determinant. Additionally, overdispersion is descomposed into an unstructured iid effect and a spatially structured effect. Keywords: Bayesian Analysis, Spatial Models, Firm Location. JEL Classification: C11, C21, R30.

Smooth Transition Patterns in the Realized Stock- Bond Correlation

Abstract: We analyze the realized stock-bond correlation. Gradual transitions between negative and positive stock-bond correlation is accommodated by the smooth transition regression (STR) model. The changes in regime are de��ned by economic and ��financial transition variables. Both in sample and out-of- sample results document that STR models with multiple transition variables outperform STR models with a single transition variable. The most important transition variables are the short rate, the yield spread, and the VIX volatility index. Keywords: realized correlation; smooth transition regressions; stock-bond correlation; VIX index JEL Classifi��cations: C22; G11; G12; G17

Competition for Procurement Shares

We propose a new procurement procedure which allocates shares of the total amount to be procured depending on the bids of suppliers. Among the properties of the mechanism are: (i) Bidders have an incentive to par- ticipate in the procurement procedure, as equilibrium payoffs are strictly positive. (ii) The mechanism allows to vary the extent to which affirma- tive action objectives, like promoting local industries, are pursued. (iii) Surprisingly, even accomplishing affirmative action goals, procurement ex- penditures might be lower than under a classical auction format. Keywords: Procurement Auction, Affirmative Action. JEL: C72, D44, H57

Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990's

This paper computes and compares alternative quality-adjusted price indexes for new cars in Spain in the period 1990-2000. The proposed hedonic approach simultaneously controls for time-invariant unobserved product effects and time-variant unobserved quality changes, that are assumed to be captured by model age effects. The results show that the non-adjusted price index largely overstates the increase in the cost of living induced by changes in car prices and that previous evidence for this market have not measured the real extent of that bias, probably due to the omission of controls for unobservables. It is also shown that omitting age effects can also lead to misleading conclusions. The estimated price indexes give also some insights on what could have been the determinants of price evolution in the Spanish car market. JEL classi���fication numbers: C43, E31, L11, L13, Keywords: Hedonic price indexes, Spanish car market, car prices, CPI, Cost of living

Does the EU financing system contribute to shadow economic activity?

Financial contributions to the EU budget depend basically on official GDP. This means that countries with higher shadow economic activity contribute less than they should contribute in a system based on actual GDP and therefore could reduce their incentive to fight against such activities. In this paper we investigate if the EU financing system really has an influence on the intensity with which governments in EU member states fight against shadow economic activity. We find that the EU net contributors significantly fight more intensively against shadow economic activity while EU net receivers significantly fight less. As a result, shadow economic activity is higher in net receiver and lower in net contributor countries than it were in comparison with a scenario of nationally balanced EU funding. Quantitatively and averaged over the time period 2001-2007, the diagnosed effect amounts to a stimulation of hidden economic activity by almost 10% for particular economies. JEL classification: C31, D63, F33, H21, H26. Keywords: EU financing system, shadow economy, tax auditing.

The effects of uncertainty about countries' compliance with the Stability and Growth Pact

The Stability and Growth Pact (SGP) was established to govern discretionary fiscal policy in the European Monetary Union. This article studies the effects created when there is uncertainty about the members��� commitment to respecting the established deficit limits in the SGP. We will show that, even if countries respect the SGP deficit ceiling, the presence of uncertainty about their compliance will bring about higher volatility in key economic variables, which could, in turn, affect unemployment and growth negatively. This finding shows that it is important to reduce uncertainty about the members��� commitment towards the SGP. Keywords: fiscal policy rules, monetary union, Stability and Growth Pact, uncertainty, commitment. JEL No.: E63, F55, H62, H87

An axiomatic justification of mediation in bankruptcy problems.

This paper provides a natural way of reaching an agreement between two prominent proposals in a bankruptcy problem. Particularly, using the fact that such problems can be faced from two different points of views, awards and losses, we justify the average of any pair of dual bankruptcy rules through the definition a double recursive process. Finally, by considering three posible sets of equity principles that a particular society may agree on, we retrieve the average of old and well known bankruptcy rules, the Constrained Equal Awards and the Constrained Equal Losses rules, Piniles��� rule and its dual rule, and the Constrained Egalitarian rule and its dual rule. Keywords: Bankruptcy problems, Midpoint, Bounds, Duality, Recursivity. JEL classification: C71, D63, D71.

A way to play bankruptcy problems.

The commitment among agents has always been a difficult task, especially when they have to decide how to distribute the available amount of a scarce resource among all. On the one hand, there are a multiplicity of possible ways for assigning the available amount; and, on the other hand, each agent is going to propose that distribution which provides her the highest possible award. In this paper, with the purpose of making this agreement easier, firstly we use two different sets of basic properties, called Commonly Accepted Equity Principles, to delimit what agents can propose as reasonable allocations. Secondly, we extend the results obtained by Chun (1989) and Herrero (2003), obtaining new characterizations of old and well known bankruptcy rules. Finally, using the fact that bankruptcy problems can be analyzed from awards and losses, we define a mechanism which provides a new justification of the convex combinations of bankruptcy rules. Keywords: Bankruptcy problems, Unanimous Concessions procedure, Diminishing Claims mechanism, Piniles��� rule, Constrained Egalitarian rule. JEL classification: C71, D63, D71.

Orosomucoid system: 17 additional orosomucoid variants and proposal for a new nomenclature.

There are two forms of orosomucoid (ORM) in the sera of most individuals. They are encoded by two separate but closely linked loci, ORM1 and ORM2. A number of variants have been identified in various populations. Duplication and nonexpression are also observed in some populations. Thus, the ORM system is very complicated and its nomenclature is very confusing. In order to propose a new nomenclature, ORM variants detected by several laboratories have been compared and characterized by isoelectric focusing (IEF) followed by immunoprinting. A total of 57 different alleles including 17 new ones were identified. The 27 alleles were assigned to the ORM1 locus, and the others to the ORM2 locus. The designations ORM*F1, ORM1*F2, ORM1*S and ORM2*M were adopted for the four common alleles instead of ORM1*1, ORM1*3, ORM1*2 and ORM2*1 (ORM2*A), respectively. The variants were designated alpha numerically according to their relative mobilities after IEF in a pH gradient of 4.5-5.4 with Triton X-100 and glycerol. For the duplicated genes a prefix is added to a combined name of two alleles, e.g. ORM1*dB9S. Silent alleles were named ORM1*Q0 and ORM2*Q0 conventionally. In addition, the effects of diseases to ORM band patterns after IEF are also discussed.

Possible hybridization of Brazilian planorbid snails and its importance in population dynamics

This study focuses on the possibility of experimental hybridization among host snail species for Schistosoma mansoni in Brazil, with morphological characterization of the hybrids found. By using albinism as a genetic marker, intraspecific crossbreedings were performed between two strains of each species involved, in addition to interspecific crossbreedings; the only viable crossbreeding was between pigmented Biomphalaria glabrata (Paulista, PE) and albino B. tenagophila (Joinville, SC), with the formation of F1 and F2 generations. All offspring in F1 displayed black eyes and a renal ridge on the mantle, while F2 displayed dissociated morphological traits. With regard to reproduction, F1 was more efficient than F2. The experiment's results suggest post-zygotic reproductive isolation.

Aspects related to productivity for four generations of a Lutzomyia longipalpis laboratory colony

A closed colony of Lutzomyia longipalpis was established with specimens collected in the Raposa - Serra do Sol indian reservoir, one of the main foci of visceral leishmaniasis in the State of Roraima, Brazil. Biological observations were made on four generations of a L. longipalpis colony with emphasis on productivity. Aspects studied were the number of laid and retained eggs, and the number of adults (male and female) per generation. During the four generations the percentage of engorged females that laid eggs varied from 64.2% (third generation-F3) to 90.3% (second generation-F2). The mean number of eggs laid per female varied from 23.6 (F3) to 39.9 (first generation-F1). The maximum number of eggs laid per female varied from 84 (F3) to 124 (F1). The mean number of retained eggs per female was 12.7 (parental generation-P and F1) to 22.1 (F2). The number of females exceeded the number of males in all generations. However, significant difference for male/female ratio was found only for F3. Fecundity rates were between 42.1 (F3) and 58.3 (F2). From a total of 439 blood-fed females, 355 females laid 12,257 eggs that yield 5,354 adults (2,525 males and 2,829 females) in four generations. F2 presented maximum productivity and fecundity rates.

Like milk or wine: Does firm performance improve with age?

Our empirical literature review shows that little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. For Spanish manufacturing firms, we analyse the firm performance related to firm age between 1998 and 2006. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity. Keywords: firm age, firm growth, LAD, financial structure, vector autoregression JEL CODES: L25, L20

Pork Value Chains: A Comparison of Catalonia, Spain and Manitoba, Canada

The purpose of this paper is to provide a comparative analysis of pork value chains in Catalonia, Spain and Manitoba, Canada. Intensive hog production models were implemented in Catalonia in the 1960s as a result of agriculture crises and fostered by feedstuffs factories. The expansion of the hog sector in Manitoba is more recent (in the 1990s) and brought about in large part by the opening of the Maple Leaf Meats processing plant in Brandon, Manitoba. This plant is capable of processing 90,000 hogs per week. Both hog production models ��� the ���older��� one in Catalonia (Spain) and the ���newer��� in Manitoba��� have been, until recently, examples of success. Inventories and production have been increasing substantially and both regions have proven to have great export potential. Recently, however, tensions have been developing with the hog production models of both regions, particularly as they relate to environmental concerns. The purpose of the paper is to compare the value chains with respect to their origins (e.g. supply a growing demand for pork, ensure farm profitability) and present states (e.g. environmental concerns, profitability). Keywords: pork value chain, hog farms, agri���food studies. JEL: Q10, Q13, O57

Environmental Regulations in the Hog Farming Sector: A Comparison of Catalonia, Spain and Manitoba, Canada

This article examines the governance structures for managing the location and operation of Intensive Livestock Farming Operations (ILFOs). The article focuses on the hog sector and compares two very different jurisdictions: the Province of Manitoba, Canada and the Autonomous Community of Catalonia, Spain. Both are regions that have witnessed recent increases in hog production, including increasing spatial concentration of ILFOs and increasing size of those ILFOs. Policy has both fostered and sought to manage the increased production. Following a brief background description of restructuring, the changing legislative framework for Manitoba and Catalonia are described. Keywords: environmental regulations, hog farms, manure management, animal feeding operations. JEL: Q15, Q58, R52, O57