Plurality of Worlds, Plurality of Risks

Risk management decisions are not made only on the basis of expert risk assessment. In numerous instances, public controversy erupts, questioning the results of previous risk assessment procedures and shaping the development of risk management episodes. This article presents a case study of risk management in the context of a 1980s controversy over aerial spraying against a spruce budworm epidemic in Quebec and draws some general conclusions concerning the relationship between risk analysis and public controversies. Actors in public controversies define risks more broadly than risk assessment experts. Moreover, public controversies only partly concern issues of risk. They are first and foremost debates about social choices in which actors carry with them a multidimensional social experience of technology, trust, credibility and decision-making institutions. This experience contributes to the construction of a plurality of emergent representations of what is at stake in a controversy, referred to in this paper as "worlds of relevance." Analysis shows that in any given public controversy, there are not just two parties arguing against each other. Rather, several "worlds of relevance" can be found that link, in a variety of ways, a variety of entities not necessarily shared by all these worlds. Each "world of relevance" presents a different definition of what the issues and the stakes of the controversy are. Risks are only part of the picture, and they are embedded in "worlds of relevance" from which they take their significance. The successful management of a controversy entails the association of entities from different worlds.     

Money, real output, and deficit effects of coffee booms in Colombia

This paper develops a Vector Error Correction (VEC) model and uses the recently developed technique of ‘generalized’ impulse response analysis to test the empirical relationships in the Colombian economy between coffee revenues and a set of macro variables. We find that coffee price (revenue) shocks have exerted an important influence on money growth, inflation, and real exchange rates, and the direction of these effects are in line with some of the predictions of traditional Dutch Disease type models. The major difference between our results and the results of Dutch Disease type models arise in the effects of coffee booms on real output. We find that in the time horizon of 5 years after the boom, real output has increased in response to the effects of the coffee boom. The finding that coffee booms can result in positive long-run output effects is an important finding since it contradicts the traditional conclusion of Dutch Disease type models which envision an adverse long-run effect on output. We also find that the long-run effect of coffee booms is to reduce both current account and government deficits. These results illustrate strikingly that the term “Dutch Disease” is an unfortunately pejorative term that obscures the fact that coffee booms need not be viewed as a “disease” but as an extraordinary opportunity to strengthen internal and external balances.     

Compatible prior distributions for directed acyclic graph models

Summary.  The application of certain Bayesian techniques, such as the Bayes factor and model averaging, requires the specification of prior distributions on the parameters of alternative models. We propose a new method for constructing compatible priors on the parameters of models nested in a given directed acyclic graph model, using a conditioning approach. We define a class of parameterizations that is consistent with the modular structure of the directed acyclic graph and derive a procedure, that is invariant within this class, which we name reference conditioning.     

On the sustainability of bargaining solutions in family decision models

This paper analyses the sustainability of family bargaining agreements by developing a non-cooperative game between two spouses with symmetric preferences. To that end, we develop, by using a general utility function, a repeated non-cooperative game involving two players with symmetric preferences, where the characterization of a Nash sub-game perfect equilibrium allows us to demonstrate that the spouse with the greater bargaining power has a greater incentive to reach an agreement. This result is also reproduced by using a particular example of linear preferences in consumption. However, the influence of the bargaining power on the sustainability of a bargaining solution depends on the specification of the individual preferences, as well as the degree of altruism between the spouses.

Internationalization, innovation and entrepreneurship: business models for new technology-based firms

New technology-based firms, particularly those that develop their business around a new technological platform, are likely to be impacted by globalization, in terms of both pace of innovation and pressure of competition. For these firms, strategic decisions and growth processes are characterized by a deep inter-relationship amongst the processes of internationalization, innovation and entrepreneurship; processes which have tended to be examined independently in distinct bodies of literature. In practice strategic decisions concern each of these processes and address issues such as organizational boundaries, location of the operational activities, what activities to focus on and selection of value partners. The business model by which firms operate needs also to accommodate the spatial dimensions indicated by globalization; and the emergence of global technology markets. Little is known to date about the extent to which business models accommodate or are adapted to internationalization, innovation and entrepreneurship. This paper presents a review of the business model literature from which a generic business model framework is derived, identifying and introducing the main elements of these processes as the firms?? focus, modus and locus. This contribution makes a clear distinction between the business model and the strategy concepts and highlights the relevance of location decisions??not considered by extant business model literature to date. While our discussion draws on the high technology new venture as our primary example, we believe our business model conceptualization has general applicability.     

Cross‐Border Earnings of U.S. Natives Along the U.S.‐Mexico Border*

Objective. This study explores whether the earnings of U.S.‐born cross‐border workers differ from those of their U.S.‐employed counterparts. We also analyze whether the cross‐border/non‐cross‐border wage differential changed during the 1990s—a decade when U.S.‐Mexico trade intensified and the maquiladora industry expanded. Methods. Employing decennial U.S. Census data from 1990 and 2000, this article estimates earnings functions and uses wage decomposition analysis to study changes in the earnings of U.S.‐born Hispanic and non‐Hispanic cross‐border workers. Results. The number of U.S.‐native cross‐border workers, while relatively small, increased significantly between 1990 and 2000, as did their earnings. A closer examination reveals that this cross‐border earnings premium only developed among non‐Hispanics. Conclusions. These findings indicate that some U.S. natives find lucrative employment opportunities on the Mexican side of the border, which might be diminished by additional restrictions for U.S.‐born residents to easily cross back and forth into Mexico.     

Working life and retirement pensions in Spain: The simulated impact of a parametric reform

This article aims to offer an ex ante evaluation of the impact of a parametric reform of the Spanish pension system that would involve increasing the reference period used to calculate benefits, an approach proposed many times by various actors in the socio‐economic field. Such gradual change may be categorized as a non‐structural reform of the pension system. This contrasts with reforms of a structural nature that have been very popular in Latin America and elsewhere, involving the creation of defined contribution individual account schemes. As regards the parametric reform proposed in this article, the main findings indicate that it would have a small but negative impact on pension income for pensioners and would reduce income distribution.     

Deprivation using satisfaction measures in Spain: An evaluation of unemployment benefits

The evaluation of social programs constitutes an important aspect in the modeling of economic policies. On the basis that the measurement of well being through subjective measures provides a broader perspective than through objective economic variables, this paper first identifies the determinants of deprivation in Spain, in monetary terms, and in non-monetary terms using satisfaction variables. In addition to establishing that the more unequal the income distribution within a group, the less income-satisfied is the individual, we find that unemployment is one of the main determinants of deprivation and satisfaction. Accordingly, we propose a reform of unemployment benefit policy that maintains individuals at the same utility level as when employed, rather than applying the current benefit system. Our policy conclusions reveal that the public budget dedicated to paying benefits to restore satisfaction levels, during the period 1994-1999, would have increased by €2,536,165.13 thousand on an average annually. It could be a desirable policy in good times but, since it increases public spending and thus public deficit, economic policy makers should decide whether it is adequate in rainy days.