Globalization

Should advertising be approached differently in emerging than in developed markets? Using data from 256 TV commercial tests conducted by a multinational FMCG company in 23 countries, we consider two routes of persuasion: a functional route, which emphasizes the features and benefits of a product, and an experiential route, which evokes sensations, feelings, and imaginations. Whereas in developed markets the experiential route mostly drives persuasion, the functional route is a relatively more important driver in emerging markets.

Motivated by recent empirical work, this paper formalizes a theory of competitive savings — an arms race in household savings for mating competition that is made more fierce by an increase in the male-to-female ratio in the pre-marital cohort. Relative to the empirical work, the theory can clarify a number of important questions: What determines the strength of the savings response by males (or households with a son)? Can women (or households with a daughter) dis-save? What are the conditions under which aggregate savings would go up in response to a higher sex ratio?

If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. Both the surge in export volume and the decline in export prices following quota removal are driven by net entry. This outcome is inconsistent with a model in which quotas are allocated based on firm productivity, implying misallocation of resources.

At a time of historic challenges to the viability of the Eurozone, we assess the contribution of the EU and the Euro to equity market integration in Europe. We use a simple and essentially model free measure of bilateral market segmentation: two countries are segmented if there is a wide divergence in the valuations of their industries. We first establish that segmentation is significantly lower for EU versus non-EU members.

This paper explores how academics and regulators might approach the task of developing a conceptual framework for financial accounting policy. It does so against a backdrop of a short history of accounting thought that lays out approaches that have been taken in the past and evaluates their impact. With the lessons from history recognized, the paper then offers a number of suggestions to be considered as we go forward. Some of these suggestions come from research. Some come from taking a utilitarian perspective on accounting.

Global economic transactions such as foreign direct investment (FDI) must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs) represent an important attempt to span this abyss. The authors use a network approach to demonstrate that the connections between two countries, through joint membership in the same IGOs, are associated with a large positive influence on the FDI that flows between them.

This paper examines listed companies in the US and Europe with market capitalizations less than the book value of equity in the years immediately before and after the global financial crisis of 2008. The paper documents a higher percentage of companies in the (European) STOXX 600 with market capitalization less than book value than in the (US) S&P 500. Further, the negative difference between market and book value is larger for European companies and more persistent over time. The paper seeks explanations for the differences.

Using the 2007–2009 financial crisis as a laboratory, we analyze the transmission of crises to country-industry equity portfolios in 55 countries. We use an asset pricing framework with global and local factors to predict crisis returns, defining unexplained increases in factor loadings as indicative of contagion. We find evidence of systematic contagion from US markets and from the global financial sector, but the effects are very small.

The rise of China in world trade has brought both benefits and anxiety to other economies. For many policy questions, it is crucial to know the extent of domestic value added (DVA) in exports, but the computation is more complicated when processing trade is pervasive. We propose a method for computing domestic and foreign contents that allows for processing trade. By our estimation, the share of domestic content in exports by the PRC was about 50% before China's WTO membership, and has risen to over 60% since then. There are also interesting variations across sectors.