Time for change in Portuguese science

There is an almost perfect positive relationship between scientific output and gross domestic product (GDP) in Western Europe (Fig. 1). But two countries — Ireland and Portugal — spoil the relationship

Firm Growth and Liquidity Constraints: A Dynamic Analysis

Using a large unbalanced panel data set of Portuguese manufacturing firms surviving over the period from 1990 to 2001, the purpose of this paper is to examine whether liquidity constraints faced by business firms affect firm growth. We use a GMM-system to estimate a dynamic panel data model of firm growth that incorporates cash flow as a measure of liquidity constraints and persistence of growth. The model is estimated for all size classes, including micro firms. Our findings suggest that smaller and younger firms have higher growth-cash flow sensitivities than larger and more mature firms. This is consistent with the suggestion that financial constraints on firm growth may be relatively more severe for small and young firms. Finally, firms that were small and young and strongly liquidity-constrained at the beginning of the sample period exhibited more persistent growth than those that were large and old and weakly liquidity-constrained. These results have significant policy implications.firm size, firm growth, liquidity constraints, GMM estimator, panel data

Does firm size matter for investment and R&D? Evidence from panel data of manufacturing firms in the Portuguese economy

R&D; Liquidity constraints; Size effects; Panel data

On the expansion of finance and financialisation

In this paper we explore the role of finance in the recent crisis noting that its expansion, in a context of deregulation and globalisation, has boosted financial profits and capital accumulation, but at the cost of a growing systemic instability both in the leading capitalist economy, i.e. the USA, and at the international level. The expansion of finance tends to emerge in certain phases of capitalist development, in particular during periods of countries’ decline. At the same time, each phase has its peculiar aspects and, referring to the recent evolution, we focus on the phenomenon of financialisation, intended as an increasing involvement of economic agents in the working of financial markets.deregulation; renationalisation; capitalist accumulation; instability; inequality

Residential water demand under block rates: a Portuguese case study

A residential water demand equation is estimated using a panel data sample of 5 Portuguese local communities and 72 months, corresponding to a total number of 360 observations. Because of the presence of multi-part tariffs, we use as explanatory variables the two common price-related variables: marginal price and difference. To prevent the simultaneity bias from using observed quantities to determine the values of marginal price and difference directly from the rate schedule, we use an instrumental variable approach to create a constant marginal price and difference parameters for each rate structure. The price elasticity value obtained fall within the range of those found in other case studies. Thus, although presenting weak elasticity, price seems to play a role in water demand management. However, we do not confirm the expected influence of difference on residential water demand. This can be a consequence of the complexity of the Portuguese water tariffs and the confusing signs that come from the simultaneous use of fixed quotas and increasing block tariffs. So, it is imperative to clarify water tariffs objectives by reviewing the Portuguese water tariffs design processes.demand, water utilities, pricing policy.

Horizontal Differentiation and the survival of Train and Coach modes in medium range passenger transport, a welfare analysis comprising economies of scope and scale

The Portuguese transport system as a whole suffers from the dominance of personal transportation, this being generally less efficient. Coaches and trains struggle to stay in the business. This model explains the markets’ performance beyond price differentials, bundling the transport modes’ appeal in one index for each. The differentiated transport cost approach accounts for product differentiation, economies of scope accruing to the consumer, and allows for economies of scale, in the form of fixed costs, to be weighted in, as well as tax policies towards motoring. It goes further by building a general welfare function that permits all factors and competition regimes to be properly compared. These are a monopoly by cars, duopolies with cars and each of the public transports, and oligopolies with public transports either competing or colluding. Simulations are carried out, and discussed in light of swings in market share and changes in welfare, with a reasonable claim to plausibility. Both public transports make the public better off by staying in the market, although the coaches’ contribution is more decisive. Trains results are weighted down by heavy fixed costs, and the far reaching coach network of destinations offers the second best service (behind that of cars). Collusion in the public transports is a price worth paying, when compared with the car monopoly emerging from bankrupt operators.Horizontal Differentiation, Intermodal choice, Oligopoly, Economies of Scope, Economies of Scale, Regulation

Firm Growth and Persistence of Chance: Evidence from Portuguese Microdata

Considering a dynamic firm growth model with serial correlation this work studies the effects of R&D activities and investment, both physical and R&D, on the growth of firms. The main hypotheses maintain that firms with a strong commitment to R&D have higher rate of growth and investment has a positive effect on firm growth. We investigate such relations with reference to an unbalanced panel data set of Portuguese manufacturing firms over the period 1990 to 2001. We find that a systematic tendency for smaller firms to grow more quickly is the main reason why firm growth is not entirely stochastic.Firm growth, R&D, GMM system estimator

Measuring market power in the Iberian electricity wholesale market through the residual demand curve

The existence of market power in the electricity market is a recurrent issue. Measuring and understanding market power practices in the Iberian electricity market turn out to be interesting: though a liberalized market, two integrated firms control 80% of total demand and there is a strong - often direct - intervention of government in the market. For various reasons, among which the difficulty in obtaining reliable, extensive data stands out, market power in the Iberian electricity market has rarely been measured. This work aims to contribute to a better knowledge of the way market power occurs. We calculate the elasticity of residual demand to evaluate the two dominant firm’s market power, using hourly bides in the Spanish spot market for the period July-August 2004 to 2006. Although our approach was highlighted by Frank Wolak work on the electricity sector, we extend it and discuss its constraints. We discuss the results obtained in the light of the evolution of the electricity sector during that period.Market power, wholesale market, residual demand curve elasticity, government intervention

Application of a structural model to a wholesale electricity market: The Spanish market from January 1999 to June 2007

The aim of this work is to analyse the agents’ behaviour in highly concentrated and strongly regulated electricity wholesale markets with rigid demand. In order to accomplish this aim, the analysis was based on the former Spanish electricity generation market, between January 1999 and June 2007, before the MIBEL (Iberian Electricity Market) has started. The analysis is carried out in the theoretical framework of the structural models. The result of the structural model supports the apparently competitive nature of the market analysed for the period 1999 to 2003, despite than fact that the Lerner index average was high during this period. It will therefore be important in future work to analyse whether the high average mark-up verified accords with the CTCs (stranded costs compensation which have the characteristics of contracts for difference) which frame the activities of the electricity producers.electricity market, rigid demand, structural model, market power