This paper proposes pure significance tests for the absence of nonlinearity in cointegrating relationships. No assumption of the functional form of the nonlinearity is made. It is envisaged that the application of such tests could form the first step towards specifying a nonlinear cointegrating relationship for empirical modelling. The asymptotic and small sample properties of our tests are inv...

For Bertrand duopoly with linear costs, we establish via a single counterexample that: (i) A new monotone transformation of the firms’ profit functions may lead to the supermodularity of transformed profits when the standard log and identity transformations both fail, and (ii) Topkis’s notion of critical sufficient condition for monotonicity of a Bertrand firm’s best-reply correspondence cannot...

Economists model time as continuous or discrete. The recent literature on continuous time models with delays should help to bridge the gap between these two families of models. In this note, we propose a simple time–to–build model in continuous time, and show that a discrete time version is a true representation of the continuous time problem under some sufficient conditions. JEL codes: O40, E3...

This paper studies the entry of new competitors in public transport like long distance busses that compete with rail. A stylized model is used that analyzes the addition of a new more direct line in an existing network. We show that the introduction of the new line is only beneficial if there are relatively many users that want to use the new direct line. Our result raises serious concerns with...

Numerous behavioral studies have found women to be more trust-worthy and public-spirited than men. These results suggest that women should be particularly effective in promoting honest government. Consistent with this hypothesis, we find that the greater the representation of women in parliament, the lower the level of corruption. We find this association in a large crosssection of countries; t...

This paper presents a procedure for studying industrial performance and related issues such as changes in the wage structure. This procedure combines cluster analysis and discriminant analysis as a package, and applies this package to time series data. This enables us to organize industrial data into groups with similar wage or performance histories and then to extract summary time-series showi...

We study the dynamics linking monetary policy with bank leverage and show that adjustments in leverage act as the linchpin in the monetary transmission mechanism that works through uctuations in risk-taking. Motivated by the evidence, we formulate a model of the “risk-taking channel” of monetary policy in the international context that rests on the feedback loop between increased leverage of gl...

In this paper we provide textual evidence on the sophistication of medieval deterrence strategies. Drawing on one of the great opera librettos based on medieval sources, Wagner’s Tannhäuser, we shall illustrate the use of optimal randomization strategies that can be derived by applying notions of dominance or trembling-hand perfection. Particular attention is paid to the employed randomization ...

The share of manufacturing in output follows an inverted U shape over the course of development. However, both the timing and the magnitude of structural change differ substantially across countries. I show a simple open economy model of structural change can explain why countries with lower aggregate productivity industrialize more slowly and start de-industrialization at a lower share of manu...

The purpose of this article is three-fold: first, it tests whether inter-industry R&D spillovers are positively associated with the likelihood experiencing high growth episodes among intensive firms in Europe, US and Japan; second, such a relationship conditional on their level absorptive capacity (ACAP); third, acquisition foreign patents, an additional channel to access external knowledge...