Fernando Zanella

Are costs really sticky? Evidence from publicly listed companies in the UAE

This article measures the degree of adjustment between operating revenues and costs for publicly listed companies in the United Arab Emirates (UAE). Traditional cost models assume that variable costs change proportionally in response to an upward or downward fluctuation in demand. However, in recent years, such an assumption has been questioned by a variety of papers from the economics and accounting fields. Typically, cost stickiness is defined as costs decreasing by less than 1% when sales decrease by 1%, while reacting closer to the proportion of change when sales increase. This study, unlike the vast majority of the literature, did not find cost stickiness in the UAE after using panel data regression analysis. The main explanation is that UAE has mostly expatriate labour force that does not have the typical benefits of employment protection legislation (EPL) available in other national jurisdictions. EPL is a main reason that costs adjustments during decreasing sales is curbed due to the associated costs of firing employees.

Testing for the government's intertemporal budget restriction in Brazil during 1823--1889

This article tests whether the governments intertemporal budget restriction was fulfilled during the Brazilian imperial period (1823–1889). To accomplish this, newly developed tests for cointegration with unknown structural breaks are applied. It is found that government spending and government revenue are cointegrated if the effect of two unknown structural breaks is taken into account. The estimated parameter vector reveals that the one-by-one relationship that is required for solvency does not prevail for the sub-periods before and after the first break, however it prevails for the sub-period after the second break. We interpret these findings as empirical support for the long-run government solvency in Brazil at the end of the imperial period.

Utilização do custo-meta por empresas brasileiras como estratégia de gestão: alguns estudos setoriais utilizando o método da causalidade de Granger

This article aims to develop, based on the Granger-causality test, a research technique to assess, in business sectors and as an alternative for case studies, the price strategies adopted by Brazilian companies. It focuses on the differentiation between those companies which use target costing as a strategy from those using the cost plus margin, or yet, from companies without a clear strategy for establishing prices and costs. Forty-seven companies from eight different segments were analyzed through Granger causality. In most cases, the results revealed a lack of strategy in terms of company price and cost management. Target costing was only predominant in the electric power distribution sector. The research results suggest possibilities for future studies.

Degredados, Their Human Agency, and Micro Institutions in Colonial Brazil: An Institutionalist Reinterpretation

Abstract: Institutions are widely recognized as determinants of economic development. However, institutional economists often overlook pertinent historical incidents in their search for broad patterns. At times, this search oversimplifies truly complex phenomena. In light of this, we apply a micro-institutional analysis to explain the success of colonial Brazils early settlements as a mix of accident and design. By doing so, we stress the limitations that can result when applying an aggregate institutional interpretation of economic history and development. We also apply the principal-agent model and its main feature – risk-sharing – to an extreme case that involves settlers and natives risking their lives, while Portuguese principals sought to reduce transaction costs in an important and resource-rich colony.