Portuguese Economic Journal, 2020, Volume 19, nº 1
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- Who should you vote for? Empirical evidence from Portuguese local governmentsPublication . Gabriel, Ricardo DuqueThe economic literature considers voters quasi-rational agents that care about max- imizing their individual welfare when deciding on who to vote for. Voters believe that, once a politician is elected, his or her characteristics will affect policy outcomes and consequently their private welfare. To assess whether mayors’ characteristics influence municipalities’ financial performance, I use a dataset composed of 278 Portuguese mainland municipalities from 2003 to 2016. I find that mayors’ age, edu- cation, occupation, and tenure influence the level of public investment, tax revenues, debt, and budget balances. Although most of the Portuguese voters only consider can- didates’ political affiliation when deciding on who to vote for, my estimates do not show any significant impact of this characteristic on the financial indicators analyzed. Therefore, these results question the way Portuguese vote by arguing that, when vo- ting for local government representatives, they should care about other characteristics among candidates besides their political affiliation.
- A comparative study of several bootstrap-based tests for the volatility in continuous-time diffusion modelsPublication . Tianshun, Yan; Liping, ZhangThis article develops three bootstrap-based tests for a parametric form of volatil- ity function in continuous-time diffusion models. The three tests are the generalized likelihood ratio test by Fan et al. (Ann Stat 29(1):153–193, 2001), the nonparamet- ric kernel test (LWZ) by Li and Wang (J Econometrics 87(1):145–165, 1998) and Zheng (J Econ 75(2):263–289, 1996) and the nonparametric test (CHS) by Chen et al. (2017). Monte Carlo simulations are performed to evaluate the sizes and power properties of these bootstrap-based tests in finite samples over a range of bandwidth values. We find that the bootstrap-based tests are not influenced by prior restrictions on the functional form of the drift function and that the bootstrap-based CHS test has better power performance than the bootstrap-based GLR and LWZ tests in detect- ing a parametric form of volatility. An empirical study on weekly treasury bill rate is further conducted to demonstrate these bootstrap-based test procedures.
- Portfolio selection in euro area with CAPM and Lower Partial Moments modelsPublication . Fonseca, José Soares daThis article selects portfolios using estimates given by CAPM and three Lower Partial Moments models (LPM). The CAPM assumption about investors’ behaviour towards risk is that they are equally concerned with upside and downside risk. The LPM models, however, are based on the assumption that investors’ utility functions weight downside risk more heavily than upside risk. The major difference between LPM models is their definition of upside and downside risk. The asset pricing models estimations and the corresponding portfolio selection were conducted on several euro area domestic stock indexes and the European Monetary Union stock market index (EMU). A pairwise comparison of portfolio performance is conducted through Sharpe ratios calculated sepa- rately for upside and downside market conditions. The results of this comparative analysis of different pricing models provide evidence that CAPM and one LPM model offer better protection against adverse market conditions than the other two LPM models studied.
- Analysis of consumer preferences for information and expert opinion using a discrete choice experimentPublication . Ribeiro, Tiago; Corsi, Armando; Lockshin, Larry; Louviere, Jordan; Loose, Simone MuellerWe present a study of consumer preferences for information in wine purchases. Consumers are presented with extra information in the form of qualitative product descriptions and quantitative expert ratings. We implement a discrete choice exper- iment in which we vary experimentally the presence of the descriptions and ratings and the values of the ratings themselves. Respondents are asked to choose amongst a set of 5 wine bottles in a sequence of 21 choice scenarios. We find that the presence of extra information and high expert ratings have a significant impact on the will- ingness to pay for a given wine. The dispersion of ratings for a given wine does not affect respondents’ choices. In our estimates high average ratings by experts carry a premium of AUD $10.