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on Business Economics |
| By: | Nuriye Melisa Bilgin; Gianmarco Ottaviano |
| Abstract: | We study how digital infrastructure relaxes constraints on the diffusion and economic impact of artificial intelligence (AI). Using administrative data and a nationally representative enterprise survey from Turkey (2021-2024), we document significant disparities in AI adoption. Adoption is concentrated among large firms and in regions with high-speed broadband and proximity to data centers, particularly for software-intensive and cloud-based applications. To identify causal effects, we exploit the staggered expansion of Turkey's national natural gas pipeline network, which serves as a conduit for fiber-optic deployment. Because pipeline routing is determined by energy distribution priorities rather than digital demand, it provides plausibly exogenous variation in connectivity. Difference-in-differences estimates show that improved connectivity significantly increases AI adoption, particularly for software-intensive technologies and among small and medium-sized enterprises. Instrumental-variable estimates indicate that infrastructure-driven AI adoption raises labor productivity and export intensity while shifting labor composition toward ICT-related roles. These findings highlight digital infrastructure as a primary determinant of both the pace of AI diffusion and its resulting economic returns. |
| Keywords: | artificial intelligence, digital infrastructure, broadband, technology diffusion, firm productivity, cloud computing |
| Date: | 2026–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2172 |
| By: | Gonzalo Basante Pereira; Ina Simonovska |
| Abstract: | We develop a framework to measure the severity of financial constraints for young firms across countries. Using ORBIS balance-sheet data for 23 economies, we show that short-term leverage rises while long-term leverage falls early in firms' life cycles, with this pattern persisting longer where contract enforcement is weaker. We build a model of optimal financing under limited enforcement with endogenous debt maturity and blueprint capacity that matches these patterns and enables structural measurement of financial constraints. The framework decomposes the funding gap into within-firm borrowing constraints that ease with repayment history and a scale distortion identifiable through cross-country comparisons. |
| Keywords: | contract enforcement, capital structure, debt maturity, young firms, cross-country financial frictions |
| JEL: | F34 F36 O16 E22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12596 |
| By: | Fei, Yue; Hege, Ulrich; Jia, Xiao |
| Abstract: | We study how IPO reforms transmit to venture capital (VC) markets using the introduction of China’s entrepreneurial boards, ChiNext and the registration-based STAR. We document that both boards attract younger, higher-growth firms with weaker fundamentals in levels, but postIPO growth persists for ChiNext firms while decelerating sharply for STAR firms. VC backing plays different roles across regimes: on ChiNext it aligns with valuation premia and long-run outperformance, whereas on STAR it mainly predicts higher first-day returns. To identify causal effects on VC allocation, we construct novel text-based regulatory exposure measures from listing documents using keyword matching and Sentence-BERT semantic similarity, and show that VC financing reallocates toward firms more aligned with "supported" activities. |
| Keywords: | IPO Reforms; IPO Listing Requirements; Venture Capital; Business Description; BERT; China |
| JEL: | G24 G28 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131666 |
| By: | Hiroshi IYETOMI; Yuta ARAI; Yuichi IKEDA |
| Abstract: | The ongoing geopolitical tensions between the United States and China are reshaping global production networks, particularly in the electronics industry, where East Asia serves as a central manufacturing hub. This study empirically examines Japan's position within the evolving East Asian electronics value chain using firm-level supply chain data. We construct a global supply chain network consisting of 15, 292 nodes (firms) and 27, 751 links (transactional relationships), centered on the electronics industry along with its two closely related sectors: the automotive and aerospace-defense industries. Our findings indicate that Japan continues to occupy an important upstream position, particularly in electronic components, manufacturing equipment, and precision instruments. However, a decline in the relative market share and network centrality of Japanese firms in the mainstream semiconductor industry suggests a departure from Japan's former dominance. In contrast, we identify a distinct automotive cluster in which Japanese firms remain highly competitive. The analysis also reveals an aerospace and defense community dominated by U.S. and European firms, characterized by limited participation from Japanese firms and the potential strategic exclusion of China. Furthermore, we uncover a separate cluster linking electronics, automation, and utilities, where Japanese firms play a prominent role with a 58% share. This cluster highlights a unique structural feature of industrial organization in Japan. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26025 |
| By: | Crowley, M. A.; Palacios, M. D.; Faraglia, E.; Giannitsarou, C.; Havemeister, L. |
| Abstract: | Geopolitical uncertainty alters the incentives of firms to organise their corporate structure across borders, creating a distinct margin of adjustment in response to policy risk. We study this margin using the Brexit referendum as a quasi-natural experiment. We combine firm level data on parent-subsidiary links for UK and EU firms between 2011 and 2021 with measures of Brexit-related uncertainty and study changes in foreign subsidiary formation at the extensive margin. Following the referendum, there was an increase in the number of subsidiary formation from the UK into the EU, while the number of EU firms that expanded with subsidiaries into the UK dropped. UK firms establishing their first EU subsidiary after the referendum were systematically weaker ex ante than comparable firms that did so before the referendum. Increased Brexit-related uncertainty is associated with increased foreign subsidiary formation from the UK into the EU, driven primarily by small firms, alongside suggestive evidence of decreased domestic subsidiary incorporation by UK firms. We interpret these findings as evidence of a 'precautionary' foreign direct investment channel, operating through changes in the corporate structures of firms in response to geopolitical uncertainty. |
| Keywords: | Brexit, Foreign Subsidiary, Geopolitical Uncertainty, Parent Firm |
| JEL: | F21 F23 G32 F15 D22 |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2619 |
| By: | NISHIMURA, Junichi; OKAMURO, Hiroyuki |
| Abstract: | With the progress of decentralization of policymaking since the 2000s, local innovation ecosystems have attracted worldwide attention. This study examines whether R&D support provided by diverse policy agents within a local ecosystem enhances firm innovation performance. We pay special attention to 1) a multilevel policy mix of national/prefectural and city governments, 2) a policy instrument mix of hard (financing) and soft (non-financing) support, and 3) a public-private partnership of governments and local supporters. Our estimation results based on an original firm-level survey show that R&D support from city governments, particularly soft support such as networking, advice and consultation, significantly contributes to firm innovation performance. Local supporters’ R&D support also positively impacts performance. We find significant complementarity between R&D support from city governments and local supporters. In contrast, national/prefectural R&D support shows no significant effects, and we observe no significant complementarity regarding multilevel or policy instrument mixes. We confirm that the qualitative findings from our interviews with local government officials and firms are consistent with our quantitative findings. |
| Keywords: | R&D support, place-based policy, policy mix, multilevel governance, innovation ecosystem, city |
| Date: | 2026–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-159 |
| By: | Sinan Gokkaya; Xi Liu; René M. Stulz |
| Abstract: | We penetrate the black box of post-acquisition integration by examining whether business unit leaders (BULs)—executives responsible for integrating and operating acquired targets—shape integration outcomes. Using natural language processing-based measures of realized integration outcomes and financial metrics, we find that BULs’ target-industry experience increases (decreases) integration success (failures) through superior realization of transaction synergies. Other BUL attributes are unrelated to integration outcomes. Consistent with the importance of integration for acquisition success, such experience enhances acquisition performance. BULs’ target-industry experience improves integration planning and their post-acquisition career outcomes but is unrelated to earlier stages of the acquisition process. |
| JEL: | G3 G34 I25 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35074 |
| By: | Beck, Anne; Pedraza, Alvaro |
| Abstract: | This paper examines how suppliers adjust their decarbonization choices when major customers obtain validated emission-reduction targets. Using global supplier-customer links matched to firm-level emissions and project-level data from voluntary carbon registries, the analysis shows that downstream climate pressure elicits both real and symbolic responses, but in systematically different ways across suppliers. On average, treated suppliers become more likely to adopt climate targets of their own. High-emission suppliers subsequently reduce their emission intensity relative to comparable firms, indicating meaningful operational adjustments. Low-emission suppliers, by contrast, do not further reduce emissions; instead, they expand their use of carbon credits, sharply increasing offset intensity as a lower-cost alternative to additional physical abatement. These offsets disproportionately originate from lower-rated projects, suggesting that increased demand does not translate into pressure for higher-quality credits. Overall, downstream climate commitments induce a sorting in decarbonization strategies: high-emission suppliers undertake substantive reductions, while low-emission suppliers rely more heavily on market-based mechanisms to meet customer expectations. |
| Date: | 2026–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11306 |
| By: | Youn Baek; Deepak Hegde |
| Abstract: | We study who joins startup accelerators, how founders sort across programs, and which accelerators improve startup outcomes. Using a comprehensive sample of about 750, 000 U.S. startups linked to 329 accelerators, we adapt the teacher value-added framework from education economics to estimate accelerator value added (AVA) while accounting for sorting. Selection is systematic: observably better ventures are more likely to enter accelerators and to sort into higher-AVA programs. Yet accelerator performance is highly dispersed. Most accelerators have negative value added relative to a no-accelerator benchmark, while a small right tail generates large gains. High-AVA accelerators predict better long-term outcomes, including acquisition, employment, revenue, and valuation, and are also more likely to accelerate the shutdown of weaker ventures. We validate AVA using internal applicant data from a large U.S. non-equity accelerator. |
| JEL: | D8 G2 G3 O3 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35063 |
| By: | Yukiko SAITO; Xinyi TONG; Kongphop WONGKAEW |
| Abstract: | This paper examines the dynamics of the Japanese production network during the COVID-19 pandemic. We utilize a panel dataset of approximately 1.8 million firms spanning from 2015 to 2023 and document that firms largely maintained existing inter-firm relationships during the early stages of the pandemic, often before severing ties in subsequent periods. Moreover, new link formation did not recover at a commensurate pace, resulting a net contraction of the production network. Furthermore, we identify a shift in the geographical distance between transacted firms. Firms increasingly dropped local partners but added distant partners. Notably, changes in network dynamics and geographical distance were driven by firms with high ICT intensity and those located in core prefectures. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26027 |
| By: | Bryan Hardy; Felipe Saffie; Ina Simonovska |
| Abstract: | We study how U.S. dollar fluctuations transmit through domestic supply chains in emerging markets. Large firms borrow in foreign currency and extend trade credit to domestic partners, exposing the supply chain to exchange rate risk. We develop a model where financially constrained suppliers pass through shocks to buyers, while unconstrained firms absorb them. Using quarterly firm-level data from 19 emerging markets, we provide empirical evidence consistent with the model's predictions. We find that even highly exposed firms reduce trade credit only modestly following a depreciation, while accepting large profit losses, suggesting that firm-to-firm credit relationships partially shield downstream firms from financial shocks. |
| Keywords: | trade credit, financial constraints, supply chains, financial linkages, dollar |
| JEL: | F31 F34 G21 G32 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12598 |
| By: | Simon Fuchs; Woan Foong Wong |
| Abstract: | Over half of distance-weighted U.S. freight is shipped using more than one transport mode. We examine how multimodal transport networks shape the economic and environmental impacts of infrastructure investments and disruptions. We develop a tractable spatial equilibrium model of multimodal routing with mode-specific congestion at intermodal terminals. We estimate a modal substitution elasticity using road and rail data, and a terminal congestion elasticity using vessel-positioning data. Calibrated to the U.S. freight network, the model identifies key bottlenecks and quantifies $.46-$1.85 billion in real GDP gains from intermodal terminal improvements, with additional environmental benefits from shifting away from carbon-intensive road transport. Ignoring mode-specific congestion overstates welfare gains from highway improvements by 85%, while ignoring multimodal flexibility understates them by 22%. Losing rail network access is estimated to reduce real GDP by $230 billion. |
| JEL: | F11 R12 R42 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35065 |
| By: | Michael E. Waugh |
| Abstract: | This paper documents facts about international trade in AI-related products. I develop a large language model (LLM) classification tool that maps HS10 codes in U.S. trade data to products used in the construction and operation of AI infrastructure. AI-related products account for 23 percent of U.S. imports in 2025, and imports of these products have grown by 73 percent since 2023. Over the same period, imports of non-AI-related products have grown by only 3 percent, with the divergence between the two categories beginning in early 2024. Mexico is a key market on both the import and export side, and together with Taiwan these two countries account for about half of all U.S. trade in AI-related products. Trade policy has treated these products lightly with product-level exemptions shielding much of AI-related imports from tariffs. Absent the AI boom, a simple accounting exercise suggests that the U.S. goods trade deficit would have been nearly $200 billion smaller in 2025. |
| JEL: | F1 F40 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35053 |
| By: | Manuel Arellano (CEMFI, Centro de Estudios Monetarios y Financieros); Orazio Attanasio (Yale University, NBER and CEPR); Margherita Borella (Università di Torino, CeRP-Collegio Carlo Alberto and CEPR); Mariacristina De Nardi (University of Minnesota, Federal Reserve Bank of Minneapolis, CEPR and NBER); Gonzalo Paz-Pardo (European Central Bank) |
| Abstract: | We develop a new approach to estimating earnings, job, and employment dynamics using subjective expectations data from the NY Fed Survey of Consumer Expectations. These data provide beliefs about future earnings offers and acceptance probabilities, offering direct information on counterfactual outcomes and enabling identification under weaker assumptions. Our framework avoids biases from selection and unobserved heterogeneity that affect models using realized outcomes. First-step fixed-effects regressions identify risk, persistence, and transition effects; second-step GMM recovers the covariance structure of unobserved heterogeneities such as ability, mobility, and match quality. We find lower risk and persistence of the individual productivity component than in prior work, but greater heterogeneity in ability and match quality. Simulations show that reduced-form estimates overstate persistence and volatility on individual-level productivity due to job transitions and sorting. After accounting for heterogeneity, volatility declines and becomes flat across the earnings distribution. These results underscore the value of expectations data. |
| Keywords: | Subjective expectations, earnings dynamics models. |
| JEL: | C23 C81 D15 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2026_2605 |
| By: | Mark L. Egan; Gregor Matvos; Amit Seru; Lulu Wang; Vincent Yao |
| Abstract: | We use novel data on the composition and cost of payments across U.S. merchants to quantify consumer redistribution in the payment system. Cards charge interchange fees to merchants to fund consumer rewards. When merchants raise prices for all consumers in response to these costs, users of low-cost payment methods (e.g., cash and debit) cross-subsidize high-reward credit card users who shop at the same merchant. This standard mechanism implicitly assumes that consumers using different payment methods shop at the same merchants and that merchants face similar fees. We show instead that incidence depends on the joint distribution of payment choices across merchants. We document two key forces that shape redistribution. First, consumer sorting—where consumers who use different payment methods shop at different merchants—limits the exposure of cash and debit users to the effects of high interchange fees. Second, interchange fees vary across merchants; where users of different payment methods overlap, such as at large grocery stores, fees are lower due to sector discounts and private negotiations. We embed these forces in a sufficient-statistics framework that maps observed heterogeneity directly into redistribution. We estimate that interchange fees transfer approximately $30 billion every year from cash and debit users to credit card users. Consumer sorting and merchant fee heterogeneity reduce the magnitude of this regressive transfer by 25%, but do not eliminate it. Finally, we show that both the Durbin Amendment and the rise of premium credit cards have been regressive, highlighting how policy and innovation can reshape the incidence of platform fees. |
| JEL: | D14 E42 G0 G2 G5 L11 L81 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35067 |
| By: | Stephen W. Salant; Diego S. Cardoso; Julien Xavier Daubanes |
| Abstract: | To reduce Russia's ability to fund its war in Ukraine, Western governments imposed a price ceiling on Russian seaborne oil exports. Policy-makers sought a ceiling level to lower Russia's oil profits without raising excessively the world price buyers pay for oil. Previous analyses have explored this problem using simulations and, with a single exception, have treated the non-Russian supply response as exogenous. We pose the problem theoretically as a constrained minimization problem of the policy maker and solve it, treating Russia as either a monopolist or an oligopolist facing heterogeneous rivals with endogenous supply. |
| Keywords: | price cap, oil price, strategic supply |
| JEL: | L13 Q41 D78 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12608 |