Relative price riddles in international business cycle theory: Are transport costs the explanation?

We study relative price behavior in an international business cyclemodel with specialization in production, in which a goods marketfriction is introduced through transport costs. The transporttechnology allows for flexible transport costs. We analyze whetherthis extension can account for the striking differences betweentheory and data as far as the moments of terms of trade and realexchange rates are concerned. We find that transport costs increaseboth the volatility of the terms of trade and the volatility of thereal exchange rate. However, unless the transport technology isspecified by a Leontief technology, transport costs do not resolvethe quantitative discrepancies between theory and data. Asurprising result is that transport costs may actually lower thepersistence of the real exchange rate, a finding that is in contrastto much of the emphasis of the empirical literature.

Disability, capacity for work and the business cycle: An international perspective

An important policy issue in recent years concerns the number of people claimingdisability benefits for reasons of incapacity for work. We distinguish between workdisability , which may have its roots in economic and social circumstances, and healthdisability which arises from clear diagnosed medical conditions. Although there is a linkbetween work and health disability, economic conditions, and in particular the businesscycle and variations in the risk of unemployment over time and across localities, mayplay an important part in explaining both the stock of disability benefit claimants andinflows to and outflow from that stock. We employ a variety of cross?country andcountry?specific household panel data sets, as well as administrative data, to testwhether disability benefit claims rise when unemployment is higher, and also toinvestigate the impact of unemployment rates on flows on and off the benefit rolls. Wefind strong evidence that local variations in unemployment have an importantexplanatory role for disability benefit receipt, with higher total enrolments, loweroutflows from rolls and, often, higher inflows into disability rolls in regions and periodsof above?average unemployment. Although general subjective measures of selfreporteddisability and longstanding illness are also positively associated withunemployment rates, inclusion of self?reported health measures does not eliminate thestatistical relationship between unemployment rates and disability benefit receipt;indeed including general measures of health often strengthens that underlyingrelationship. Intriguingly, we also find some evidence from the United Kingdom and theUnited States that the prevalence of self?reported objective specific indicators ofdisability are often pro?cyclical that is, the incidence of specific forms of disability arepro?cyclical whereas claims for disability benefits given specific health conditions arecounter?cyclical. Overall, the analysis suggests that, for a range of countries and datasets, levels of claims for disability benefits are not simply related to changes in theincidence of health disability in the population and are strongly influenced by prevailingeconomic conditions. We discuss the policy implications of these various findings.

Hybrid consumption paths in the attribute space: A model and application with scanner data

This paper presents and estimates a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products.We run some simulations to analyze the consumption paths out of the steady state. Underthe hybrid utility assumption, the consumer behaves inertially among the unfamiliar brandsfor several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical analysis is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.

Are these classical business cycles?

The aim of this paper is to test formally the classical business cyclehypothesis, using data from industrialized countries for the timeperiod since 1960. The hypothesis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: fixed investment has typically a long cycle, while the cycle in inventory investment is shorter. To check the robustness of our results, we subject the data for 15 OECD countries to a variety of detrending techniques. While the hypothesis is not confirmed uniformly for all countries, there is a considerably high number for which the data display the predicted pattern. None of the countries shows a pattern which can be interpreted as a clear rejection of the classical hypothesis.

Causes of subcontracting: Evidence from panel data on construction firms

This paper examines factors explaining subcontracting decisions in the construction industry. Rather than the more common cross-sectional analyses, we use panel data to evaluate the influence of all relevant variables. We design and use a new index of the closeness to small numbers situations to estimate the extent of hold-up problems. Results show that as specificity grows, firms tend to subcontract less. The opposite happens when output heterogeneity and the use of intangible assets and capabilities increase. Neither temporary shortage of capacity nor geographical dispersion of activities seem to affect the extent of subcontracting. Finally, proxies for uncertainty do not show any clear effect.

Endogenous labor market participation and the business cycle

Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show analytically how variations in the participation rate are driven by the cross-sectional density of home productivity near the participation threshold, andhow this density translates into an extensive-margin labor supply elasticity. A calibration of the model to macro data not only matches employment and participation variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches unemployment variations well. Furthermore, the labor supply elasticity implied by our calibration is consistent with microeconometric evidence for the US.

Comparative advantage and the cross-section of business cycles

Business cycles are both less volatile and more synchronized with the world cycle in rich countries than in poor ones. We develop two alternative explanations based on the idea that comparative advantage causes rich countries to specialize in industries that use new technologies operated by skilled workers, while poor countries specialize in industries that use traditional technologies operated by unskilled workers. Since new technologies are difficult to imitate, the industries of rich countries enjoy more market power and face more inelastic product demands than those of poor countries. Since skilled workers are less likely to exit employment as a result of changes in economic conditions, industries in rich countries face more inelastic labour supplies than those of poor countries. We show that either asymmetry in industry characteristics can generate cross-country differences in business cycles that resemble those we observe in the data.

Do institutional changes affect business cycles? Evidence from Europe

We study the effects that the Maastricht treaty, the creation of the ECB, andthe Euro changeover had on the dynamics of European business cycles using a panelVAR and data from ten European countries - seven from the Euro area and threeoutside of it. There are changes in the features of European business cycles and in thetransmission of shocks. They precede the three events of interest and are more linkedto a general process of European convergence and synchronization.

Business Sphere, Vol. 20, no.3

When selecting sites for the industry’s leading data centers, experts and IT leaders such as Google and Microsoft, are increasingly choosing Iowa They’re doing so because they understand that Iowa is a safe zone for data and information storage — tucked away from the major threats and terrorist targets in the U.S. What’s more, there are many infrastructural and financial benefits that only Iowa offers. With all this activity, available research and Iowa’s inherent advantages, it seems the question isn't so much why Iowa, but why not?

Business Sphere, Vol. 21, no.3

Iowa may be known for some of the world’s most fertile cropland, but in recent years, we’ve become fertile ground for rapid growth in information technology as well. From the recent “plug-in” of Google’s $600-million Council Bluffs data center to Microsoft’s planned half-billion-dollar West Des Moines expansion to IBM’s 1,300-job-creating expansion in Dubuque, technology leaders are finding Iowa a place to grow. And why not? Iowa has a supportive business climate and its infrastructure — physical and human — give our technology companies the competitive advantages that allow them to grow and prosper.

Business Sphere, Vol. 18, no.3

Iowa may be known for some of the world’s most fertile cropland, but in recent years, we’ve become fertile ground for rapid growth in information technology as well. From the recent “plug-in” of Google’s $600-million Council Bluffs data center to Microsoft’s planned half-billion-dollar West Des Moines expansion to IBM’s 1,300-job-creating expansion in Dubuque, technology leaders are finding Iowa a place to grow. And why not? Iowa has a supportive business climate and its infrastructure — physical and human — give our technology companies the competitive advantages that allow them to grow and prosper.

Business Sphere, Vol. 19, no.3

Iowa may be known for some of the world’s most fertile cropland, but in recent years, we’ve become fertile ground for rapid growth in information technology as well. From the recent “plug-in” of Google’s $600-million Council Bluffs data center to Microsoft’s planned half-billion-dollar West Des Moines expansion to IBM’s 1,300-job-creating expansion in Dubuque, technology leaders are finding Iowa a place to grow. And why not? Iowa has a supportive business climate and its infrastructure — physical and human — give our technology companies the competitive advantages that allow them to grow and prosper.

Business Sphere, Vol. 18, no.1

Information technology is a strong and important sector of the Iowa economy employing 30,000 Iowans at more than 2,000 companies, according to a new analysis from Battelle Institute consultants. The strength of Iowa’s IT industry is based in the service-segment. Internet and data services, communications network services, and software and computer services constitute 81 percent of all IT employment. Slightly ahead of U.S. trends, these service sectors compose the backbone of Iowa’s IT industry,

Forensic intelligence for medicine anti-counterfeiting

Medicine counterfeiting is a crime that has increased in recent years and now involves the whole world. Health and economic repercussions have led pharmaceutical industries and agencies to develop many measures to protect genuine medicines and differentiate them from counterfeits. Detecting counterfeit is chemically relatively simple for the specialists, but much more information can be gained from the analyses in a forensic intelligence perspective. Analytical data can feed criminal investigation and law enforcement by detecting and understanding the criminal phenomenon. Profiling seizures using chemical and packaging data constitutes a strong way to detect organised production and industrialised forms of criminality, and is the focus of this paper. Thirty-three seizures of a commonly counterfeited type of capsule have been studied. The results of the packaging and chemical analyses were gathered within an organised database. Strong linkage was found between the seizures at the different production steps, indicating the presence of a main counterfeit network dominating the market. The interpretation of the links with circumstantial data provided information about the production and the distribution of counterfeits coming from this network. This forensic intelligence perspective has the potential to be generalised to other types of products. This may be the only reliable approach to help the understanding of the organised crime phenomenon behind counterfeiting and to enable efficient strategic and operational decision making in an attempt to dismantle counterfeit network.

Perspectives for Forensic Intelligence in anti-doping: Thinking outside of the box.

Today's approach to anti-doping is mostly centered on the judicial process, despite pursuing a further goal in the detection, reduction, solving and/or prevention of doping. Similarly to decision-making in the area of law enforcement feeding on Forensic Intelligence, anti-doping might significantly benefit from a more extensive gathering of knowledge. Forensic Intelligence might bring a broader logical dimension to the interpretation of data on doping activities for a more future-oriented and comprehensive approach instead of the traditional case-based and reactive process. Information coming from a variety of sources related to doping, whether directly or potentially, would feed an organized memory to provide real time intelligence on the size, seriousness and evolution of the phenomenon. Due to the complexity of doping, integrating analytical chemical results and longitudinal monitoring of biomarkers with physiological, epidemiological, sociological or circumstantial information might provide a logical framework enabling fit for purpose decision-making. Therefore, Anti-Doping Intelligence might prove efficient at providing a more proactive response to any potential or emerging doping phenomenon or to address existing problems with innovative actions or/and policies. This approach might prove useful to detect, neutralize, disrupt and/or prevent organized doping or the trafficking of doping agents, as well as helping to refine the targeting of athletes or teams. In addition, such an intelligence-led methodology would serve to address doping offenses in the absence of adverse analytical chemical evidence.