Analysis of the phenomenon of speculative trading in one of its basic manifestations: postage stamp bubbles

We document and analyze the empirical facts concerning one of the clearest evidence of speculation in financial trading as observed in the postage collection stamp market. We unravel some of the mechanisms of speculative behavior which emphasize the role of fancy and collective behavior. In our conclusion, we propose a classification of speculative markets based on two parameters, namely the amplitude of the price peak and a second parameter that measures its ``sharpness''. This study is offered to anchor modeling efforts to realistic market constraints and observations.Comment: 9 pages, 5 figures and 2 tables, in press in Int. J. Mod. Phys.

Corporate Hierarchies and the Size of Nations: Theory and Evidence

Corporate organization varies within a country and across countries with country size. The paper starts by establishing some facts about corporate organization based on unique data of 660 Austrian and German corporations. The larger country (Germany) has larger firms with flatter more decentral corporate hierarchies compared to the smaller country (Austria). Firms in the larger country change their organization less fast than firms in the smaller country. Over time firms have been introducing less hierarchical organizations by delegating power to lower levels of the corporation. We develop a theory which explains these facts and which links these features to the trade environment that countries and firms face. We introduce firms with internal hierarchies in a Krugman (1980) model of trade. We show that international trade and the toughness of competition in international markets induce a power struggle in firms which eventually leads to decentralized corporate hierarchies. We offer econometric evidence which is consistent with the models predictions

A generalized nonlinear Schr\"odinger equation as model for turbulence, collapse, and inverse cascade

A two-dimensional generalized cubic nonlinear Schr\"odinger equation with complex coefficients for the group dispersion and nonlinear terms is used to investigate the evolution of a finite-amplitude localized initial perturbation. It is found that modulation of the latter can lead to side-band formation, wave condensation, collapse, turbulence, and inverse cascade, although not all together nor in that order.Comment: 12 pages, 5 figure

Power in the Multinational Corporation in Industry Equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate our outsource firm activities locally or to a foreign country. This paper focus instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market acces and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given most autonomy in their decision how to run the firm at intermediate levels of local competition. We then provide comparative statics for changes in fixed FDI entry costs and trade costs, information technology, the number of local competitors, and in the size of the local market

Domestic Rivalry and Export Performance: Theory and Evidence from International Airline Markets

The much-studied relationship between domestic rivalry and export performance consists of those supporting a national-champion rationale, and those supporting a rivalry rationale. While the empirical literature generally supports the positive effects of domestic rivalry, the national-champion rationale actually rests on firmer theoretical ground. We address this inconsistency by providing a theoretical framework that illustrates three paths via which domestic rivalry translates into enhanced international exports. Furthermore, empirical tests on the world airline industry elicit the existence of one particular path - an enhanced firm performance effect - that connects domestic rivalry with improved international exports

Worldwide spreading of economic crisis

We model the spreading of a crisis by constructing a global economic network and applying the Susceptible-Infected-Recovered (SIR) epidemic model with a variable probability of infection. The probability of infection depends on the strength of economic relations between the pair of countries, and the strength of the target country. It is expected that a crisis which originates in a large country, such as the USA, has the potential to spread globally, like the recent crisis. Surprisingly we show that also countries with much lower GDP, such as Belgium, are able to initiate a global crisis. Using the {\it k}-shell decomposition method to quantify the spreading power (of a node), we obtain a measure of ``centrality'' as a spreader of each country in the economic network. We thus rank the different countries according to the shell they belong to, and find the 12 most central countries. These countries are the most likely to spread a crisis globally. Of these 12 only six are large economies, while the other six are medium/small ones, a result that could not have been otherwise anticipated. Furthermore, we use our model to predict the crisis spreading potential of countries belonging to different shells according to the crisis magnitude.Comment: 13 pages, 4 figures and Supplementary Materia

The intensive and the extensive margins : not only an international issue

Empirical evidence shows that quantity (intensive margin) and variety availability (extensive margin) have effects of different magnitude on populations’ welfare. Indeed, the pattern of a market dynamics may cause changes in welfare inequality. Low income consumers benefit more from quantity than high income consumers, who are more interested in enjoying variety. These facts have been usu- ally addressed as consequences of trade liberalization by international trade theory. However, market dynamics are also present within the borders of every country. It is important to understand what forces, unrelated with international trade, affect these dynamics. This paper explores the transmission of different real shocks into mar- ket dynamics in a new-Keynesian closed economy. Results show that the source of the shock is crucial to determine the magnitude and direction of the effects on each margin.info:eu-repo/semantics/publishedVersio

Association of Southeast Asian Nations, People's Republic of China, and India Growth and the Rest of the World: The Role of Trade

This paper explores the impact of past and future growth in the Association of Southeast Asian Nations (ASEAN)1 Since the mid-1990s, ACI growth has improved the non-oil terms of trade of the developed countries. There have also been strong complementarities between ACI suppliers of intermediate inputs and PRC exports. More developed Asian countries have benefited from PRC capital goods demand. ACI growth has, however, put competitive pressures on other less-developed manufacturing exporters, worsening their terms of trade and constraining their pricing ability. ACI growth has been especially beneficial for oil and minerals commodity producers. On the other hand, net food importers and oil importing countries have been adversely affected by high import costs. , the People's Republic of China (PRC), and India - here referred to as the ACI countries - on aggregate welfare, relative wages, and global emissions in the rest of the world. It outlines several analytical frameworks, considers effects over the past decade and, based on consensus forecasts, the implications of that growth for the rest of the world in the decades to come. Future ACI growth provides opportunities and challenges for the rest of the world. For developed countries the opportunities are for selling high-end services and capital and consumer goods in the ACI markets and enjoying the benefits from intra-industry trade; the challenges will come from increased head-to-head competition in manufactured goods and services that should become more intense in future decades. For medium-income producers currently at between 30% and 60% of US levels, there will be a tougher tradeoff between more intensive competition with the PRC and serving the growing middle classes in ACI countries. For poorer countries, there will greater opportunities for becoming part of global supply chains in manufactured exports. Standard frameworks that assume internal factor mobility suggest continuing pressures for wage inequality in developed countries. But these hinge on the assumption that the ACI and developed countries will continue to produce similar products and that the ACI will specialize in unskilled labor-intensive products. In fact, as their exports become more technology - intensive and developed countries more specialized these pressures could be alleviated. On the one hand, as the "flying geese" process continues, exports from countries with lower incomes than the PRC are likely to displace PRC labor-intensive exports rather than domestic production in developed countries. On the other hand, while it may cause job loss and erode the returns to specific factors, PRC export growth is less likely to be a source of wage inequality in advanced economies