In this paper, a model of bounded rational investors investing their portfolio in a passive investment vehicle (e.g., an Exchange Traded Fund replicating a broad index) or an actively managed fund is presented. The model proposes that the quick reswitching of these short-term oriented investors...

This paper examines the association between trade and financial linkages among European countries. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs...

Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads...

Our study reexamines standard econometric approaches for the detection of information asymmetries on insurance markets. We claim that evidence based on a standard framework with 2 equations, which uses potential sources of information asymmetries, should stress the importance of heterogeneity in...

This paper studies the interaction between technology, a publicly available input that flows in from abroad, and human capital, a private input that is accumulated domestically, as the twin engines of growth in a developing economy. The model displays two types of long run behavior, depending on...

Money illusion means that people behave differently when the same objective situation is represented in nominal terms rather than in real terms. This paper shows that seemingly innocuous differences in payoff representation cause pronounced differences in nominal price inertia indicating the...

This paper looks for empirical evidence of rational speculative bubbles on the Estonian stock market during the period 1996–1999. Four different testing methodologies are used in the paper: two tests are indirect, looking for statistical “footprints” of the speculative dynamics in the...

The aim of the research is to cover the important aspects of corporate capability portfolio development – its co-evolution and configuration with an alliance portfolio. Capability portfolio management has received less attention than it deserves, and the co-evolution of capability and alliance...

The purpose of the study is to describe how Finnish high-tech small and medium-sized enterprises (SME) can achieve growth from international markets and to explore what roles dynamic capabilities can play in SMEs’ international growth. The dynamic capabilities construct has been criticised for...

This paper uses and extends the empirical strategy developed by Angrist and Kugler (2003) in order to test the effect of external immigration on native employment rates in the European Union (EU) in light of the booming migration flows of the 2000s. My findings discredit the authors’ main...