Information technology (IT) productivity paradox in the 21st century

Purpose – Since the 1970s productivity growth in most economies slowed, while information and communication technology expenditures increased: the “information technology (IT) productivity paradox.” Some researchers reported an end to the paradox, but this is most likely due to IT industry growth approaching the Year 2000 phenomenon. The purpose of this paper is to update IT productivity paradox research. Design/methodology/approach – For comparability this research replicates methods employed by previous studies but employs a two-level approach: first macroeconomic indicators; second labor and multi-factor productivity. Findings – Findings suggest IT investment has high positive correlation with gross domestic product growth, but not labor or multi-factor productivity. This ambiguity suggests the paradox is still poorly understood. Research limitations/implications – The findings are not conclusive; the authors cannot confirm or reject the existence of the productivity paradox. The global recession and banking crisis makes it prudent to wait until recovery before analyzing data from that period. Practical implications – Lack of convincing evidence supporting positive effects from IT investment suggests some firms benefit from IT investment, but not others, and that IT investment has questionable returns. Social implications – Firm level studies might find IT investment benefits some firms, but lack of convincing macroeconomic level evidence of positive effects of IT investment suggests the paradox still exists. Originality/value – This research updates the IT productivity paradox demonstrating the phenomenon is still poorly understood and thus worthy of further study, questioning the benefits of IT investment for industry and national economies

Underpricing on initial public offerings: further evidence from the JSE

This paper provides evidence of the existence of IPO underpricing on the JSE between 2000 and 2008. Average underpricing over the period was found to be 17.1 percent (median: 9.4 percent). In line with the general global decline in first day returns following the end of the internet bubble period, average underpricing on the JSE has decreased relative to previous studies

Firm age-at-IPO and the long-term performance of internet companies

Since the burst of the dot-com bubble in 2000, there has been an ongoing debate around the long-term viability of Internet-specific business models. Quick IPOs with lacking profitability and high failure rates have put many investors off in the aftermath of the crisis. In this thesis, I therefore analyze how Internet companies’ age-at-IPO relates to long-term stock performance. The sample consists of 116 Internet firms that went public on NASDAQ between 2003 and 2010. As predicted, I find that there is a significant U-shaped relationship between age-at-IPO and 5-year post-IPO performance. This implies that, on average, very young and old firms are most successful in the long run. The rationale for this finding is that Internet companies with quick IPOs have outstanding business models and can gain first-mover advantages, whereas older companies benefit from learning effects and already maintained a competitive advantage – even without public funding. Severe underperformance is mainly found for medium-aged Internet companies going public (age of 6 to 10 years). Furthermore, this thesis provides evidence that profitable Internet firms that have an IPO perform better in the long run than their unprofitable counterparts. Still, in contrast to most academic research, I do not find a significant relationship between profitability in the year of the IPO and long-term firm survival. A possible explanation is that most studies include the burst of the dot-com bubble and thus contain a large number of quick IPOs with high failure rates, whereas this thesis focuses on Internet IPOs in the more stable years 2003 to 2010. The findings underline the importance of first-mover advantages, especially in winner-takes-all Internet markets. Furthermore, they emphasize benefits from learning effects and the solid market position of older IPO companies. Overall, investors should carefully assess the IPO’s strategic implications and treat hot markets with caution – especially in the Internet sector

The Changing Economic Geography of Globalization

The process of globalization has had profound, often destabilizing, effects on space, at all levels (i.e. local, regional, national, international). This revealing book analyzes, both theoretically and empirically, the effects of globalization over space. It considers, through a dialogue among different paradigms, the ways in which space has become more important in the global economy. Globalization has been advocated as a way of shrinking time and space which will lead to a homogenized global market; a suggestion challenged in differing ways and with a variety of approaches by all the contributors to this volume. Leading authorities from a range of disciplines are represented amongst this impressive list of contributors, including Eric Sheppard, Bjørn Asheim, Richard Walker and Peter Swann. The chapters demonstrate persuasively the continuing, and even increasing, role of space in the global economy, and throughout, the book covers viewpoints from the fields of: international political economy economic geography regional and local economics. This impressive volume, which contains a selection of the best in contemporary scholarship, will be of interest to the international arena of academicians, policy makers and professionals in these or related fields

Applications in Macroeconometrics

The title of this work, Applications in Macroeconometrics, reflects the unifying theme of my essays: new, and original research in applied macroeconomics, and applied econometrics. This dissertation consists of three chapters specifically looking at producer price inflation pass-through, technical progress, and moral hazard in United States critical banking markets. My first chapter seeks to quantify the pass-through (PT) and causal direction of producer to consumer prices. We further disaggregate PPI down to commodity-specific indices to quantify disaggregated PPI PT coefficients. By estimating an augmented Phillips Curve, we find short-run PT of aggregate PPI to be around 7 percent. Using a VARX framework, we conduct Toda-Yamamoto tests that show evidence of bidirectional causality between CPI and PPI inflation. When disaggregating down to commodity-specific indices, we find several PPI series that exhibit unidirectional causality and express stronger pass-through coefficients than aggregate PPI. My second chapter (coauthored with Scott Schuh and Brad Humphreys) expands a niche literature that argues how technical progress and productivity growth--which are ordinarily arduous to measure--can be expressed in athletic outcomes. In particular, we formalize the link between race outcomes, and total factor productivity (TFP) using deterministic and stochastic trend econometric models. A bivariate error-correction model reveals evidence that race outcomes and TFP share a common trend, and that race outcomes adjust to TFP but not vice versa. These results suggest aggregate technological progress partially diffuses to firms and industries, and motivates further investigation of the underlying structural relationships. My third chapter contributes new evidence to the literatures on banking performance, and too-big-to-fail (TBTF) in US banking. We estimate a restricted translog semiparametric smooth coefficient seemingly unrelated regressions model (SPSC SUR), wherein model elasticities are functions of nonperforming assets, a proxy for moral hazard, to derive nonperformance-adjusted returns-to-scale estimates for critical market banks from 2001 through 2021. Over our full sample, the median critical market bank tends to operate under increasing returns-to-scale while half of all critical market banks exhibit slight decreasing returns-to-scale. Results taken over the past two decades suggest that most TBTF banks have exhausted their economies of scale concurrent with the shrinking competitive landscape

Macroeconomic impact on venture markets : Does the correlation exist?

Venture capital industry has been historically extensively researched due to its expanding size and the growing overall interest in it. However, macroeconomic perspective by its impact to the ventures growth potential and performance has been less at the center of previous studies. This study has concentrated on the macroeconomic environment and analyzed the potential consequences of its variations to the venture capital markets performance. The focus in the study has been on the United States venture capital markets due to its globally largest size, thereby providing strongest basis for finding significant outcomes within the research area. Furthermore, major risks affecting ventures are identified and key means for their management in the industry are presented. This study has identified multiple remarkable factors for risk mitigation at the portfolio level within the venture capital markets. The empirical section of the research process is conducted by gathering data from approximately 26 years of specific macroeconomic variables and United States venture capital variables. The empirical research is executed by utilizing regression analysis. The venture capital variables in the regression analysis consist of total amount invested, number of deals and average deal size within the United States venture capital markets. The macroeconomic variables chosen for the regression analysis consist of United States 10-year treasury bonds yield, Russell 2000 index, initial public offerings, unemployment rate and industrial production index. Overall, the principal era of interest and focus within the study includes the most recent covid crisis and previous economic crisis. The empirical findings of the accomplished analysis states that the United States venture capital markets are significantly correlated with the surrounding macroeconomy in certain aspects. Transitions within macroeconomy significantly affects the risk levels of ventures and therefore leads to risk mitigation or alternatively risk augmentation depending on investors risk preferences and defined risk-to-reward ratio. This provides essential insight to the venture capitalists decision making process regarding execution of ventures during perceived economic environment and eases evaluation of potential investments future growth prospects.Riskipääomasijoittamisen toimialaa on historiallisesti laajasti tutkittu sen laajenevan koon ja kasvavan yleisen kiinnostuksen vuoksi. Makrotaloudellinen näkökulma sen vaikutuksesta riskisijoitusten kasvupotentiaaliin ja suorituskykyyn on kuitenkin ollut vähemmän aiempien tutkimusten keskiössä. Tässä tutkimuksessa on keskitytty makrotaloudelliseen ympäristöön ja sen muutosten mahdollisiin vaikutuksiin riskipääomamarkkinoiden suoriutumisessa. Tutkimuksessa on keskitytty Yhdysvaltojen riskipääomamarkkinoihin sen maailmanlaajuisesti suurimman koon vuoksi, mikä tarjoaa vahvimman perustan merkittävien tulosten löytämiselle tutkimusalueella. Lisäksi tunnistetaan suurimmat riskisijoituksiin vaikuttavat riskit ja osoitetaan keskeisimmät keinot niiden hallintaan toimialalla. Tässä tutkimuksessa on havaittu useita merkittäviä riskien lieventämiseen vaikuttavia tekijöitä riskipääomamarkkinoiden salkkutasolla. Tutkimusprosessin empiirinen osuus on toteutettu keräämällä tietoja noin 26 vuoden ajalta tietyistä makrotaloudellisista muuttujista ja yhdysvaltalaisista riskipääomamuuttujista. Empiirinen tutkimus on toteutettu regressioanalyysiä hyödyntämällä. Regressioanalyysin riskipääomamuuttujat koostuvat sijoitetusta kokonaismäärästä, sopimusten määrästä ja keskimääräisestä kaupan koosta Yhdysvaltojen riskipääomamarkkinoilla. Regressioanalyysiin valitut makrotaloudelliset muuttujat koostuvat Yhdysvaltain 10 vuoden valtion joukkolainojen tuotosta, Russell 2000 indeksistä, listautumisanneista, työttömyysasteesta ja teollisuustuotantoindeksistä. Kaiken kaikkiaan tutkimuksen tärkein kiinnostuksen ja keskittymisen aikakausi sisältää viimeisimmän koronakriisin ja aiemmat talouskriisit. Saavutetun analyysin empiiriset havainnot osoittavat, että Yhdysvaltojen riskipääomamarkkinat korreloivat merkittävästi ympäröivän makrotalouden kanssa tietyiltä osin. Makrotalouden siirtymät vaikuttavat merkittävästi riskisijoitusten riskitasoon ja johtavat siten riskien lieventämiseen tai vaihtoehtoisesti riskien kasvattamiseen sijoittajien riskimieltymysten ja määritellyn riski-tuottosuhteen mukaan. Tämä antaa olennaisen kuvan pääomasijoittajien päätöksentekoprosessista koskien riskisijoitusten toteuttamista koetun taloudellisen ympäristön aikana, ja helpottaa potentiaalisten sijoitusten tulevien kasvunäkymien arviointia

Financial Crisis, Firm Fundamentals and the Pricing of Bank Stocks in Nigeria – Analysis from a Panel of Banks

Nigerian stock market was rated low before the year 2006. The rating changed afterwards to one of the emerging market economies of the world. Trading activities increased significantly until the recent global financial crisis struck hard on the entire economy. This study looks critically into the issue of stock pricing and the various changes that occurred in the characteristics of banks’ stocks prices during the most recent global financial crisis. With a panel of 10 banks, this study adopts a pooled least square regression analysis method. Among other things, this study finds out that both when the banks are pooled together into one and when studied individually, dividend at previous period is a statistically significant determinant of stock pricing. Also the size of traded stock of seven (7) of the 10 banks studied exerts significant negative effect on the prices of the seven banks’ stocks, leaving only three (3) to be insignificant. Against the apriori expectation, increase in the economic growth rate of the Nigerian economy leads to decrease in the stock prices of 9 out of the 10 studied banks. Of these 9 banks’ stock prices, 7 receive significant impact from economic growth rate. Based on the policy implications of the finding above and so many more, this research study offers some policy recommendations that may be employed to avert such disastrous effects of financial crisis on the investors. Keywords:Financial Crisis, Bank Stock Prices, Bank Fundamentals, Macroeconomic variables

Renewed Perspectives in Business Cycle Theory: An Analysis of Three Heterodox Approaches

Since the collapse of the housing market in 2007-2008, economists have been faltering to provide basic answers to why and how it happened. Turning back to the history of economic thought, this project examines three models of business cycles: the Austrian business cycle theory, Hyman Minsky’s Financial Instability Hypothesis, and the geoclassical cycle theory. Hypothesizing that mainstream economics has rendered its models irrelevant by abstracting from important concepts such as time and uncertainty, I propose that economics does not need to reinvent itself, but rather revisit its past. Using both logic and historical evidence to evaluate the three theories, I conclude that the geoclassical cycle theory is the best explanation of the both the 2008 crash and historical episodes of boom and bust