Pros and Cons of Backing Winners in Innovation Policy

In the economics profession there is a fierce debate whether industrial and innovation policy should be targeted to specific sectors or firms. This paper discusses the welfare effects of such targeted policies in a third-market international trade model under imperfect competition. A theoretical case for picking winners through a preferential innovation policy is discussed, which is shown to hold without evoking retaliation from foreign competitors. However, in practice information uncertainties remain a concern. The question whether in this case ‘backing winners’ is a wise policy option depends on the characteristics of the information asymmetries and on the extent the government is able to design selection procedures in a way to minimize the transaction costs that may be caused from the market participants’ opportunistic behavior.Innovation policy; R&D subsidies, strategic trade policy, asymmetric information, spill-over effects

A cointegration model for search equilibrium wage formation

In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective, this paper presents an econometric analysis of the influence of labor market flows on wage formation as an alternative to the traditional specification of wage equations in which unemployment represents Phillips-curve or wage-curve effects. The paper estimates a dynamic wage equation for the Netherlands using a cointegration approach. It finds that labor flows, and notably flows from outside the labor market, are important determinants of both short-run and long-run wage setting.wage curve, labor market flows, cointegration model

A rare cause of chronic mesenteric ischemia from fibromuscular dysplasia: a case report

<p>Abstract</p> <p>Introduction</p> <p>Chronic mesenteric ischemia is a condition that is classically associated with significant atherosclerosis of the abdominal arteries, causing postprandial abdominal pain out of proportion to physical examination. The abdominal pain is exacerbated after meals due to the shunting of blood away from the intestines to the stomach, causing relative ischemia. More than 95% of chronic mesenteric ischemia cases are due to atherosclerosis. We report the first known case of chronic mesenteric ischemia from fibromuscular dysplasia. To the best of our knowledge, this is also the first known case in the literature where postprandial abdominal pain was the presenting symptom of fibromuscular dysplasia.</p> <p>Case presentation</p> <p>A 44-year-old Caucasian woman with a history of hypertension and preeclampsia, who had taken oral contraceptive pills for 15 years, presented with an intractable, colicky abdominal pain of two weeks duration. This abdominal pain worsened with oral intake. It was also associated with diarrhea and vomiting. Physical examination revealed stage III hypertension out of proportion to her risk factors and diffuse abdominal pain without peritoneal signs. An abdominal computed tomography scan, completed in the emergency room, revealed nonspecific colitis. Laboratory work revealed leukocytosis with a left shift, an erythrocyte sedimentation rate of 79 and a C-reactive protein level of 100. She was started on intravenous flagyl and intravenous ciprofloxacin. However, all microbial cultures were negative including three cultures for clostridium difficile. Urine analysis revealed nephritic range proteinuria. The laboratory profile was within normal limits for perinuclear-anti-neutrophil cytoplasmic antibody, cytoplasmic-anti-neutrophil cytoplasmic antibody, anti-saccharomyces cerevisiae antibody, antinuclear antibody test, celiac profile, lactate, carbohydrate antigen-125 and thyroid stimulating hormone. A colonoscopy was completed, which revealed diffuse colonic lymphoid reactive hyperplasia. A small bowel series was negative for any inflammation. An indium scan, pan-computed tomography scan and transvaginal ultrasound were also negative. Magnetic resonance angiography of her abdomen revealed proximal superior mesenteric artery stenosis, which was confirmed by computed tomography angiogram findings of severe proximal and distal superior mesenteric artery stenosis, consistent with the appearance of fibromuscular dysplasia on angiography in the absence of vasculitis or atherosclerotic disease. The patient's superior mesenteric artery stenosis was subsequently angioplastied suboptimally and had to be stented with an Angioplus stent. One month after she was admitted, her abdominal pain and tolerance to oral feeds improved tremendously.</p> <p>Conclusion</p> <p>Fibromuscular dysplasia most commonly presents with renal artery stenosis, which rarely causes abdominal pain. This case illustrates how fibromuscular dysplasia can present as a rare cause of chronic mesenteric ischemia, similar to chronic mesenteric ischemia from atherosclerosis.</p

Are entrepreneurs' forecasts of economic indicators biased?

Insight into the investment behaviour of firms is central in understanding economic dynamics. A critical question, however, is whether firms provide sufficiently reliable data to enable them to make plausible forecasts at the meso (regional or sectoral) level. This paper analyses Dutch investment forecasts at different levels of aggregation. The central research question is whether entrepreneurs, individually or as a group, make systematic errors in their investment forecasts. A statistical test reveals that investment forecasts are not biased at the aggregated (regional and sectoral) level. At the micro level, however, there is a significant bias. Hence, using aggregated (regional and sectoral) data to test the lack of bias (unbiasedness) of forecasts may lead to the wrong conclusions. Moreover, aggregated investment forecasts may then be an inappropriate source for policy recommendations, despite their seemingly high reliability. This finding may in principle be valid for many European countries, since data collection on investment is organized in similar ways throughout Europe

The Transaction Costs Perspective on Standards as a Source of Trade and Productivity Growth

This paper discusses the design, implementation and use of standards from the perspective of transaction costs economics. A proper design and implementation of standards may lead to a considerable reduction of transaction costs, which enhances trade and, consequently, economic welfare. A major example is the use of containers, which has drastically changed the worldwide transport infrastructure, and lowered the costs of transport of goods considerably. The example of containers also shows that network externalities play a major role in the use of standards, and that, on the other hand, worldwide standards with large sunk investment costs may lead to a lock-in. This may call for government intervention in the design and use of standards, and in the transition processes to new standards. The paper provides ample further examples of standards and on the role of the government, or clubs, with respect to these standards

Measuring Pattern, Amplitude and Timing Differences between Monetary and Non-Monetary Seasonal Factors of Tourism — The Case of Aruba

Seasonality is a frequent and important occurrence in the tourism industry, with concurrent effects on both the financial and volume flows of tourism. The purpose of this study is to measure pattern, amplitude and timing differences between the seasonal factors of monetary and non-monetary indicators of tourism development in Aruba. The study contributes to filling the gap in the literature on the dynamics in the co-movement of these two types of seasonal factors, with the simultaneous incorporation of three measurement dimensions of this relationship. The methodology involves decomposing time series on both stay-over tourism and tourism expenditure using the Census X-12 technique, with the subsequent calculation of Pearson's correlation coefficients, ratios of amplitudes and timing differentials of peaks and troughs. The results show important differences in the pattern, amplitude and timing of the seasonal factors

Beating the random walk: a performance assessment of long-term interest rate forecasts

This article assesses the performance of a number of long-term interest rate forecast approaches, namely time series models, structural economic models, expert forecasts and combinations thereof. The predictive performance of these approaches is compared using outside sample forecast errors, where a random walk forecast acts as benchmark. It is found that for five major Organization for Economic Co-operation and Development (OECD) countries, namely the US, Germany, UK, The Netherlands and Japan, the other forecasting approaches do not outperform the random walk on a 3-month forecast horizon. On a 12-month forecast horizon, the random walk model is outperformed by a model that combines economic data and expert forecasts. Several methods of combination are considered: equal weights, optimized weights and weights based on the forecast error. It seems that the additional information contents of the structural models and expert knowledge adds considerably to the performance of forecasting 12 months ahead. © 2013 Taylor & Francis