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on Business Economics |
| By: | Fazliddin Shermatov; Stephane Robin; Aldo Geuna |
| Abstract: | Whether artificial intelligence pays off for the firms that build it into their products is hard to establish, because AI innovation is itself hard to observe. The medical technology sector is a rare exception: an AI-enabled device must obtain clearance from a national health authority before it can reach a patient, leaving a dated, firm-attributable record of AI innovation output that can be observed directly rather than proxied. We exploit this setting with a three-stage recursive model estimated on a novel firm-level dataset linking FDA premarket clearances, USPTO patents, Scopus publications, and Orbis financials, tracing the full innovation chain from external collaboration through AI device introduction to firm performance. We find that external AI research collaboration is a robust driver of AI device introduction across firm sizes and estimators, with a larger effect for small firms, consistent with external knowledge ties substituting for limited internal R&D capacity. Decomposing by partner type, the effect is largest for industry and clinical collaborations and smallest for academic ties, consistent with the former being closer to the regulatory and commercialisation process. Firms that bring AI devices to market display higher labour productivity, an effect robust for small firms and the full sample that holds under both sequential and joint maximum-likelihood estimation and accumulates across successive device introductions. Effects on profit margins are present but weaker and do not survive all specifications, a pattern consistent with competitive entry eroding pricing power as AI devices diffuse through the sector. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.08485 |
| By: | Aitor Irastorza-Fadrique; Lars Nesheim; Peter Levell |
| Abstract: | Since the 2008 Global Financial Crisis, the UK has experienced persistently weak productivity and corporate investment alongside a sustained decline in corporate leverage. We use a large annual panel of UK firms drawn from the FAME database to document and decompose these long-run trends over 2006–2023. Our productivity results confirm earlier evidence of weak growth and widening differences between leading firms and the rest, while extending the firm-level analysis through 2023 and to finance and insurance. Across productivity, investment, and leverage, we distinguish common time effects affecting incumbent firms from compositional effects associated with firm entry and exit. Productivity weakness after 2016 is primarily observed within incumbent firms. The investment slowdown is likewise concentrated after 2016 and driven mainly by declining investment intensity within firms. For leverage, compositional changes account for an important part of the decline around the Global Financial Crisis, whereas subsequent deleveraging occurs primarily within incumbent firms. |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:azt:cemmap:15/26 |
| By: | Canipek, Aras; Kind, Axel; Litov, Lubomir; Trešl, Jiří |
| Abstract: | Weaker creditor rights can increase credit costs and thus prompt firms to reduce debt and investment. Yet, they can reduce distress costs and thus allow firms to increase leverage and eliminate risk-reducing but unprofitable investments. We hypothesize that firm size influences the effect of creditor rights on credit costs and distress costs and thus which effect dominates. Weaker creditor rights should have a negative effect for small firms but a positive effect for large firms. Using a German bankruptcy reform, we find support for our hypothesis. Our findings reconcile mixed evidence and have important implications for optimal bankruptcy design. |
| Keywords: | creditor rights, bankruptcy law, debt, investments, firm size |
| JEL: | G31 G32 G33 G34 G38 K22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:343060 |
| By: | J. David Brown; Matthew Denes; Ran Duchin; John Hackney |
| Abstract: | We study the effects of vast increases in U.S. small business program eligibility standards, which expanded larger firms' access to support for small businesses. Exploiting quasi-random variation in the timing of these expansions and using administrative Census data, we show that revenues decline for the smallest firms, particularly those that are younger, more productive, and financially constrained. Government procurement contracts also are reallocated to larger firms. Consequently, firm exits increase, wages decline, and patenting falls. These findings highlight the economic consequences of expanding eligibility: by crowding out the smallest firms, resources shift away from high-potential firms, reducing dynamism and innovation. |
| JEL: | E24 G38 H25 H57 L25 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35703 |
| By: | Boris Hofmann; Xiaoxi Liu; Ilhyock Shim |
| Abstract: | Using firm-bank linked data for 10 Asian emerging market economies (EMEs) over 2005–2021, we study the domestic and cross-border implications of zombie firms. We document three main findings. First, the number of zombie firms in emerging Asia has increased significantly over the past 15 years, sustained by evergreening practices from weak banks. Second, zombie prevalence domestically depresses firm performance, crowds out healthy firms, and depresses inflation and GDP growth. Third, the macroeconomic effects of zombie firms extend across borders: expo sure to zombie firms in Asian EMEs significantly reduces inflation and growth in advanced economies. These spillover effects operate mainly through global value chains (GVCs) and an intermediate goods import price channel, while cross-border bank linkages do not play any major role. |
| Keywords: | zombie firms, evergreening, global value chains, cross-border spillovers, disinflation, financial stability |
| JEL: | E31 F14 F36 G21 G33 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1375 |
| By: | Sauer, Radek (Central Bank of Ireland) |
| Abstract: | The paper explores how a small low-tax economy is affected by foreign corporatetax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals’ R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm’s-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income. |
| Keywords: | intangible assets, multinational enterprises, corporate taxation, royalties, R&D services, endogenous markups. |
| JEL: | E22 E62 F23 H25 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:10/rt/26 |
| By: | Thiemo Fetzer (University of Warwick and University of Bonn); Christina Palmou (King's College London); Jakob Schneebacher (Institute for Fiscal Studies); Ivan Yotzov (Bank of England) |
| Abstract: | In a turbulent world, effective policy requires granular estimates of firm responses to shocks as they unfold. We develop a replicable framework that combines high-frequency administrative and survey microdata with a pre-registered shift-share design to estimate multi-margin firm responses in real time. We show that the resulting coefficient vectors can be interpreted as first-order perturbations of firms’ optimal-response functions. We apply the framework to the 2021–23 UK energy price shock and find that energy-intensive firms pass on cost increases, build cash reserves and shift towards homeworking. We find little evidence of aggregate employment losses or firm exits. Responses are highly heterogeneous: small firms drive price pass-through; large firms, capital investment. We show that our real-time estimates are consistent with the UK’s structural business survey, released two years later, and across survey instruments. We apply the framework out of sample and in real time to the energy price shock triggered by the 2026 US–Israeli strikes on Iran and discuss implications for the design of energy support schemes and environmental policy. |
| Keywords: | Real-time evaluation;firm dynamics;economic shocks;energy prices. |
| JEL: | C23 D22 D24 H23 L11 |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023580 |
| By: | Dupuy, Arnaud (University of Luxembourg); Raux, Morgan (Aix-Marseille School of Economics); Signorelli, Sara (CREST) |
| Abstract: | Technological change requires workers to reallocate across occupations, but it may also reshape how easily they can do so by changing occupational skill requirements. We exploit digitalization during the 2010s to study this mechanism. We measure occupational accessibility by comparing occupational skill requirements in job-posting data. Combining these measures with French matched employer–employee data, we find that occupations becoming more similar in their digital skill profiles experience greater worker mobility. Counterfactual simulations based on a structural two-sided matching model indicate that changes in occupational accessibility generate worker reallocation amounting to 21 percent of that generated by observed labor-demand shifts. |
| Keywords: | occupation mobility, technological change, matching |
| JEL: | J23 J24 J62 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18881 |
| By: | Hyunseob Kim; Doron Levit; Roni Michaely |
| Abstract: | Dual-class shares allocate control to founders whose firm-specific investments drive firm value but separate control from ownership, raising agency costs. We analyze this trade-off dynamically. Using new data on US dual-class firms spanning 52 years and difference-in-differences designs, we show that valuations rise following dual-class recapitalizations but decline over time, whereas innovative output increases persistently. These effects are concentrated in industries with greater firm-specific investments. We find corresponding results for stock unifications. Investment by mature dual-class firms is less sensitive to opportunities and voting premia increase with maturity. Our results support dynamic treatment effects and yield new policy implications. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.25972 |
| By: | Canipek, Aras |
| Abstract: | A large theoretical literature suggests that bankruptcy law penalties can reduce agency problems, yet evidence remains scarce. To provide evidence, I examine whether firms implement independent directors as a substitute when penalties are eliminated. For identification, I exploit that penalties are relevant only for risky firms. Across countries, board independence is negatively related to penalties, but only among risky firms. Comparing board independence of risky and safe firms around bankruptcy reforms in Germany, Italy, and the US confirms the results. Economically, risky firms increase the number of independent directors by 21% relative to safe firms following the elimination of penalties. |
| Keywords: | bankruptcy law, board independence, debt, corporate governance |
| JEL: | G32 G33 G34 G38 K22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:343059 |
| By: | Ran Abramitzky; Leah Platt Boustan; Ahmet Gulek; Jens Hainmueller |
| Abstract: | We study the effects of H-1B immigration on U.S. industries that employ H-1B workers and their trading partners. Using a novel cross-industry design and the 1999–2003 expansion of the H-1B visa cap for identification, we find that H-1B exposure raised incomes for natives and pre-existing immigrants, with gains concentrated in non-STEM occupations. Income gains propagate forward through supply chains to downstream industries but not backward to upstream industries, consistent with a productivity shock rather than a labor supply shock. We find no direct effect on patenting, suggesting that productivity gains arise from better task execution rather than patentable invention. |
| JEL: | J60 J68 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35560 |
| By: | David J. Deming; Katrine V. Løken; Alexander Willén; Yaling Xu |
| Abstract: | Why do we have so many meetings? Few workplace features are so scorned, yet seemingly so necessary. This paper provides the first large-scale economic evidence on workplace meetings using an original survey of more than 9, 000 workers linked to matched employer–employee administrative data from Norway. We show that meetings are both common and costly, consuming an average of 12 percent of work hours and 14 percent of firm wage bills. Planning, problem solving, information sharing, and project coordination account for the majority of meeting activity. High-paying and high-revenue firms devote more resources to meetings despite facing a substantially higher opportunity cost of employee time. Meeting frequency and intensity are positively related to worker wage growth. Workers in meeting-intensive firms report greater on-the-job learning, and interactions with more senior colleagues are associated with stronger wage growth, suggesting that knowledge transmission within firms is an important mechanism. Meetings are the broccoli of work – widely disliked, but probably good for us anyway. |
| JEL: | J24 M5 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35706 |
| By: | Michael Dalton; Lisa B. Kahn; Andreas I. Mueller |
| Abstract: | We ask whether online job postings capture U.S. job vacancies, matching near-universal Burning Glass (BG) postings to the representative Job Openings and Labor Turnover Survey (JOLTS). BG converged toward JOLTS over 2007–2022, and its representativeness varies across establishment characteristics. We reweight BG to align postings with JOLTS openings along observables, and assess impacts on prior BG findings. Because large establishments account for most openings and are well represented, the level and cyclicality of skill demand survive our adjustment. But BG overstates labor market concentration (the Herfindahl-Hirschman Index) nearly threefold, because small and mid-sized establishments post less online. |
| JEL: | E24 E32 J23 J42 J63 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35697 |
| By: | De Ridder, Maarten; Rachel, Lukasz |
| Abstract: | In many economies, the recent productivity slowdown coincided with declines in carbon dioxide emissions. Productivity statistics ignore this progress, even though lower emissions raise future consumption. We propose emissions-adjusted total factor productivity (TFPE), a forward-looking, welfare-relevant productivity measure. TFPE requires few assumptions, relying on the social cost of carbon as a sufficient statistic. At recent consensus estimates of the social cost of carbon, U.S. TFPE could grow twice as fast as TFP during a transition to net zero by 2050. At these costs of carbon, historical productivity adjustments are modest; at higher values, the post-2005 U.S. productivity slowdown disappears. In other countries, TFPE growth significantly exceeds TFP growth during the 1990s. |
| Keywords: | total factor productivity;growth accounting;national accounts;climate damages |
| JEL: | N0 R14 J01 |
| Date: | 2026–09–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140962 |
| By: | Aghion, Philippe; Antonin, Céline; Paluskiewicz, Luc; Strömberg, David; Sun, Xueping; Wargon, Raphaël; Westin, Karolina |
| Abstract: | The 2018 China Initiative by the Trump administration complicated procedures and reduced funding for U.S.-China research collaborations. Using Scopus data, we analyze its impact on Chinese research. We find that it significantly lowered the quality of both publications and co-authors of Chinese researchers with prior U.S. collaborations compared to those with prior European collaborations, and reduced yearly citations for affected researchers by 6%. The effect was stronger for high-productivity Chinese researchers in U.S.-dominated fields. While China is at the forefront of the scientific frontier, it still depends more on the U.S. than the reverse. |
| Keywords: | China initiative;Chinese science;political tensions;science of science |
| JEL: | O31 I23 |
| Date: | 2026–09–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140961 |