|
on Central and Western Asia |
| By: | G. William Schwert |
| Abstract: | Academic finance has grown and evolved in the 46 years since the Journal of Financial Economics (JFE) began publishing papers. This paper uses detailed data on the 2,858 papers written by 3,152 different authors published in the JFE from 1974-2019. Cumulatively, these papers have received 278,018 citations from other published papers as reflected in the Social Science Citation Index. Increasing computing power and electronic communication have likely resulted in trends toward more empirical work, more co-authorship, and more complex papers. Growth in the demand for finance faculty has driven up faculty salaries, and therefore the demand for journal services. |
| JEL: | G10 G20 G30 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28198&r=all |
| By: | Tang, Rongsheng |
| Abstract: | This paper studies the formation of market economy in China from 1978 to 1992, a period in which market economy was introduced and developed alongside planned government procurements for agricultural goods. Under the “dual track system” (DTS), rural farmers were obligated to fulfill government procurements before selling to the market, whereas urban consumers enjoyed de facto subsidies to agricultural products. Using a neoclassical general equilibrium model with heterogeneous firms and workers and input-output linkage, this paper exploits historical data and analyzes allocation, prices, and the formation of markets in China during this DTS period. Theoretically, while DTS will distort the resources allocation between rural and urban (misallocation effect), it selects workers and farmers in the rural (selection effect). What is more, comparing to the economy under Soviet-style big bang reform, DTS activates industrialization by providing intermediate goods with lower-than-market price (activation effect). Quantitatively, directly switching to market economy in 1978 would decrease total output by 4.5% as the activation effect dominates. On the intensive margin, reform on DTS ( procurement price was getting closer to market price ) had contributed to total output by 4.4% from 1978 to 1992. |
| Keywords: | Dual Track System; procurement; price distortion; misallocation |
| JEL: | E65 N10 O43 O53 |
| Date: | 2021–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105510&r=all |
| By: | Assaf Razin |
| Abstract: | Post WWII globalization forces are facing headwinds in the form of global crises-the “The Great Recession” and the “The Pandemic Recession”. Israel’s trade and financial globalization, however, is steadily rising. The pandemic-induced slump in economic activity is deep, as consumer spending, investment spending, and export demand tumble. Central banks, tied down by the zero interest rate, resort to semi-fiscal expansionary policies. Indeed, the stabilization burden falls on fiscal policy. The paper provides an overview of the new globalization trends in the world and in Israel, with emphasis on the role of global crises, the Global Financial Crisis, and the Pandemic Crisis in changing globalization long-term trends. When the coronavirus hit, supply chains and production have been disrupted. However, the impact of the pandemic shock is not on the supply side only. On the demand side, the desire to invest has plunged, while people across the rich world are now saving much of their income. Would this short-term changes can reinforce the re-trending of the globalization, which is observed since the Global Financial Crisis? The paper focuses on globalization and provides comparative overview of experiences of the advanced economies and Israel. |
| JEL: | F1 F3 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28339&r=all |
| By: | Yusuf Emre Akgunduz; Yusuf Kenan Bagir; Seyit Mumin Cilasun; Murat Gunay Kirdar |
| Abstract: | This study combines an administrative dataset of the full population of Turkish firms and the setting of the sudden mass migration of Syrian refugees to Turkey to identify the effect of migrants on firm performance and market structure. As a result of the migrant shock, existing firms expand and new firms are established. Quantitatively, a 10 percentage-point rise in migrant-to-native ratio increases average firm sales by 4% and the number of registered firms by 5%. While the number of firms rises, new firms are more likely to be small. The resulting market structure shows less concentration and firms reduce the share of workers formally employed. We further document an increased propensity to export and an increase in the variety of exported products. The impact on exports is driven by a rise in competitiveness of firms in regions hosting Syrians as a decline in export prices is observed. We also uncover evidence for an effect of migrants’ skills and networks on exports, as the export value and variety of products to the Middle East and North Africa (MENA) region increase more than those to the EU region among exporters while the prices of products exported to the two regions show similar changes. |
| Keywords: | Refugees, Firm performance, Market structure, Sales, Informality, Exports, Migrant business networks |
| JEL: | J15 J61 F16 L11 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2101&r=all |
| By: | Jariani, Farzaneh |
| Abstract: | According to the Keynesian Model, the effectiveness of fiscal stabilization policy will rest on the size of fiscal multipliers and one of the most important and effective factors on the fiscal increasing coefficient can be the same crowding out & crowding in effects of the government fiscal policy on the private sector's investment on the real estate which it has been taken into consideration over the last few decades. Since, there is an interaction among the governance variables, government and investment and therefore an active private sector's investment is known as a very significant strategy in the direction of retaining the economic sustainable growth and with regards to this important matter in this study, we have taken into account the simultaneous effects of economic indexes, prosperity index, economic freedom index, governance index and comprehensive sanctions on the real estate investment and Iranian people's welfare applying the Multilevel GLM method from 1985 to 2019. Results of such study show that the government's macro policy makings have had a crowding out effect on the private investments on the real estate meanwhile the private investments on the real estate, bad governance and low and non-inclusive economic growth have lead to the small participation of manpower and losing the social capital and generally speaking, the failure of ensuring the social welfare and prosperity. |
| Keywords: | Keynesian Model, Fiscal Policy, Real Estate, Crowding Out, Crowding In, Good Governance, Comprehensive Sanctions, Legatum Prosperity Index, Index of Economic Freedom |
| JEL: | E62 G3 H2 H31 H32 H54 O3 O42 O53 |
| Date: | 2021–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105506&r=all |
| By: | Karimi, Abdul Matin |
| Abstract: | After the United States invasion of 2001 that toppled the Taliban’s Islamic Emirate, a Republic Government was established in Afghanistan. The newly formed Government could not succeed in raising adequate public revenue to meet the growing public expenditure. To fill the fiscal deficit, the newly formed Government relied on foreign aid grants because it could not afford debt-financing. Foreign aid grants influx since 2002 helped Afghanistan in many ways. However, a continued and massive reliance on foreign aid grants transformed Afghanistan into an aid-dependent rentier state. Besides, a large inflow of foreign aid grants also had several counterproductive consequences for the country. To understand the sources and implications of aid-dependency, as well as explore the potential solutions for overcoming aid-dependency, the author conducted this study. This research study uses a mixed research method, and the analysis is based on both primary and secondary data. This research’s findings indicate that the small size of the economy, informality, high unemployment, lack of technical and institutional capacity, high level of corruption, and enormous military spending are some of the main reasons impeding the enhancement of domestic public resource mobilization (DPRM) in Afghanistan. To overcome these challenges, the author recommended short-term, medium-term, and long-term policy recommendations that could have a reasonable chance of success to enhance DPRM in Afghanistan. These recommendations are based on the analysis of the situation in Afghanistan and the lessons learned from other countries. |
| Keywords: | Foreign Aid; ODA; Aid-Dependency; Afghanistan; Foreign Aid in Afghanistan; Afghanistan Aid Dependency; Fiscal Policy; Domestic Public Expenditure; Domestic Public Revenue; Domestic Revenue Mobilization; DPRM; DRM; Self-Reliance Policies; Financial Self-Reliance. |
| JEL: | E62 F35 H24 H25 H63 H68 |
| Date: | 2020–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105524&r=all |
| By: | Rajapakshe, PSK; Jayasundara, JMSB; Prasanna, RPIR; Ekanayake, EMS; Naradda Gamage, Sisira Kumara; Abeyrathne, GAKNJ; Aravinda, MAKN; Bandara, KBTUK; Senarath, BTDN |
| Abstract: | It is well documented that Small and Medium Enterprises (SMEs) are recognized as the key to economic growth, innovations and market competition in both developed and developing countries. In Sri Lankan context SMEs play a noteworthy role in environmental, social and economic sustainability. This paper attempted to investigate institutional and legislative barriers and to explore the drivers affecting towards the sustainable transition development of Sri Lankan SMEs, through a systemic literature review. In this study researchers developed model framework for sustainable transition development of SMEs and filled the gap of literature interms of institutional and legislative barriers and drivers on SMEs sustainability. Findings of this study will provide directions for further invetigations on barriers and drivers for sustainable transition development of SMEs in an empirical context which certainly helpful to find out the case specific and unique divers and barriers for sustainability of SMEs. |
| Keywords: | Institutonal Barriers, Economic Growth, Sustainable Transition Development, Economic Sustainability, SMEs, Sri Lanka |
| JEL: | L10 |
| Date: | 2020–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105052&r=all |
| By: | Dasgupta, Aditya; Ziblatt, Daniel |
| Abstract: | By giving political rights to poor voters, did democratic political institutions pose a risk to financial capital? This paper draws lessons from the reaction of sovereign bond markets to franchise extensions between 1800 and 1920. If franchise extension transferred political power from economic and financial elites to workers, as redistributive theories of democratization suggest, then this should have resulted in a fall in the market price (increase in the yield) of a country’s bonds. Exploiting the asynchronous timing of franchise reforms across countries, we provide evidence that franchise extension contributed to large increases in the premium demanded by investors to hold sovereign debt, reflecting an increased risk of default. However, bond markets became less sensitive to franchise extensions over time, a pattern potentially due to the structure of inequality and the strategic adoption of institutions which protected financial interests. |
| Date: | 2021–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:s2pqn&r=all |
| By: | Lorenzo Bretscher (University of Lausanne and Swiss Finance Institute); Lukas Schmid (University of Southern California - Marshall School of Business); Ishita Sen (Harvard University - Harvard Business School); Varun Sharma (London Business School) |
| Abstract: | We compile a rich dataset that links institutional investors' position level holdings with corporate bond characteristics and estimate demand elasticities with respect to critical sources of risk. Persistence in institutions' holdings provide us with an instrument to isolate exogenous movements in prices. We find significant heterogeneity in demand elasticities across the main players in the corporate bond market, namely insurers, pension funds, and mutual funds. Long-term investors are sensitive to interest rate movements and supply liquidity, whereas mutual funds, with shorter investment horizon and benchmark constraints, demand liquidity. Price impact increased post-crisis for all institutions and has remained higher than the pre-crisis levels, signaling a general decline in bond market liquidity due perhaps to regulatory changes in the corporate bond market. Price impact jumped up significantly during COVID-19, perhaps suggesting a reluctance of dealers to intermediate in the market place, and illustrating that firms' funding opportunities are highly sensitive to investors' latent demand shocks. Our results have wide ranging implications for corporate bond pricing due to heterogeneity in investors and investment mandates, and are hard to reconcile with standard, representative agent based models. |
| Keywords: | Corporate Bonds, Demand Systems, Insurance Companies, Mutual Funds, Liquidity |
| JEL: | G11 G12 G21 G22 G23 G24 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2107&r=all |
| By: | Jakub Grossmann |
| Abstract: | This paper analyzes employment effects of four minimum wage increases implemented in the Czech Republic during 2012-2017, which cumulatively increased the national minimum wage by 37 percent. We analyze outcomes at the level of firm-occupation-county-specific job cells and apply an intensity-treatment estimator similar to that of Machin et al. (2003). Our preferred specifications suggest that minimum wage increases led to higher wages for low-paid workers and did not have significant impacts on their employment. |
| Keywords: | minimum wage; intensity treatment; job cells; Czech Republic; |
| JEL: | J31 J38 J68 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp679&r=all |
| By: | Sulistiowati (Economics and Business Faculty, Universitas Tanjungpura, Indonesia Author-2-Name: Nurul Komari Author-2-Workplace-Name: Universitas Tanjungpura, Pontianak, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - Even though it has high historical, cultural, and economic values, Sambas weaving has in fact begun to decline. This can be seen from the reduced number of weavers and the less absorption of products in the market. Increasing the variety of weaving motifs and product diversification are some strategies to overcome the problems. Increasing the variety of patterns and diversifying products require the ability to innovate from weaving craftsmen. Sharing knowledge is a driver of increased innovation ability. Weavers' self-efficacy is needed to encourage their innovative behavior. This research aims to analyze the effect of knowledge sharing and self-efficacy on weavers' innovative behavior. Methodology/Technique - The research questions that must be answered in this research were 1). Does knowledge sharing affect the weavers' innovative behavior?; 2). Does self-efficacy affect the weavers' innovative behavior? The data were collected by distributing self-report questionnaires to 50 weaving crafters. Finding - The data were also supported by a secondary source taken from the literature study. Measurement variables were developed from the theory and results of previous studies. The data, then, were analyzed by using multiple linear regression with SPSS software. This research suggested that there is no significant influence of knowledge-sharing behavior on innovative behavior of weavers. There is a positive and significant influence of self-efficacy on innovative behavior of weavers. Type of Paper - Empirical |
| Keywords: | Innovative Behavior; Knowledge Sharing; Self-Efficacy; Sambas Weaving. |
| JEL: | M12 M19 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:gjbssr571&r=all |
| By: | Keshav, Vaibhav |
| Abstract: | This paper explores the effect of birth weight on a series of anthropometric outcomes among children. We use a panel of individual-level data from 39 developing countries covering the years 1999-2018 and attempt to solve the Endogeneity using mother fixed effect and twin fixed-effect strategies. The results suggest that improvements in birth weight result in statistically and economically significant improvements in children's anthropometric outcomes. An additional 100 grams birth weight is associated with a 0.43 and 0.25 units increase in weight for age percentile and height for age percentile, respectively. The links are stronger among low educated mothers and poorer households. The observed protective effect of birth weight on infant mortality suggests that the true effects of birth weight on children’s outcomes are larger and that the estimated effects probably understate the true effects. |
| Keywords: | Health, Fetal Origin Hypothesis, Children Anthropometry, Height for Age, Weight for Age, Birth Weight, Twin Fixed Effect |
| JEL: | D10 I15 J13 P36 |
| Date: | 2021–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105488&r=all |
| By: | Isha Gupta (Department of Economics and Management “Marco Fanno†University of Padova, Italy) |
| Abstract: | This paper estimates the causal effect of having young children aged 0 to 5 years on mothers’ labour force participation in rural India. In order to address the potential endogeneity in the fertility decision, I exploit Indian families’ preference for having sons. I leverage exogenous variation in the gender of older children aged 6+ years as an instrumental variable for having younger children aged 0 to 5 years in the family. IV estimates show that the mothers’ participation is significantly reduced by 9.9% due to the presence of young children aged 0 to 5 years in the household, with the negative effect mostly driven by mothers belonging to the highest income quartile; mothers with high education; and mothers residing in nuclear families. |
| Keywords: | Female labour force participation, Fertility, Instrumental variable, Local average treatment effect (LATE), India, Compliers |
| JEL: | J13 J22 C26 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0267&r=all |
| By: | Berrak Bahadir (Department of Economics, Florida International University); Neven Valev (Georgia State University) |
| Abstract: | We show that global liquidity contributes to household credit growth across countries. The effect is particularly strong in countries that are more closely integrated with the world economy as well as in those with a greater level of financial development and more open capital markets. We also find tentative evidence that countries with a greater presence of foreign banks and those with more concentrated banking systems experience a closer link between global liquidity and household credit. |
| Keywords: | consumer credit, household credit, global liquidity |
| JEL: | G21 E3 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2106&r=all |
| By: | Dasgupta, Aditya |
| Abstract: | Can technological change contribute to political turnover? Influential theories suggest that technological change represents a form of creative destruction that can weaken incumbents and strengthen outsiders, leading to political turnover. This paper investigates a large-scale historical natural experiment: the impact of the green revolution on single-party dominance in India. Drawing on a theoretical framework based on models of contests, this paper argues that high-yielding variety (HYV) crops strengthened the incentives and capacity of a politically excluded group, in this case agricultural producers, to seek greater political representation. Exploiting the timing of the introduction of HYV crops, together with district-level variation in suitability for the new crop technology, instrumental variables analyses show that the green revolution played a pivotal role in the rise of agrarian opposition parties and decline of single-party dominance. The findings support theories linking technological change to political turnover, with important implications for the political economy of democratization. |
| Date: | 2021–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:muqb9&r=all |
| By: | Robert L. Clark; Annamaria Lusardi; Olivia S. Mitchell |
| Abstract: | Early in the COVID-19 pandemic, much of the US economy was closed to limit the virus’ spread, and several emergency interventions were implemented. Our analysis of older (45-75) respondents fielded in April-May of 2020 indicates that about one in five respondents was financially fragile and would have difficulty facing a mid-size emergency expense. Some subgroups were at particular risk of facing financial difficulties, especially younger respondents, those with larger families, Hispanics, and the low income. Moreover, the more financially literate were better able to handle such shocks, indicating that knowledge can provide some additional protection during a pandemic. |
| JEL: | D14 G53 I38 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28207&r=all |
| By: | Rahul Giri (International Monetary Fund); Kei-Mu Yi (University of Houston; Federal Reserve Bank of Dallas; NBER); Hakan Yilmazkuday (Department of Economics, Florida International University) |
| Abstract: | This paper assesses the quantitative importance of including sectoral heterogeneity in computing the gains from trade. Our framework draws from Caliendo and Parro (2015) and has sectoral heterogeneity along five dimensions, including the elasticity of trade to trade costs. We estimate the sectoral trade elasticity with the Simonovska and Waugh (2014) simulated method of moments estimator and micro price data. Our estimates range from 2.97 to 8.94 across sectors. Our benchmark model is calibrated to 21 OECD countries and 20 sectors. We remove one or two sources of sectoral heterogeneity at a time, and compare the gains from trade to the benchmark model. We also compare an aggregate model with a single elasticity to the benchmark model. Our main result from these counterfactual exercises is that sectoral heterogeneity does not always lead to an increase in the gains from trade, which is consistent with the theory. |
| Keywords: | gains from trade, estimated trade elasticities, simulated method of moments, sectoral heterogeneity, international price dispersion, multi-sector trade |
| JEL: | F10 F11 F14 F17 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2103&r=all |
| By: | Yadav, Vishal; Singh, Shishir Kumar; Velan, Nirmala; Aftab, Md Asif |
| Abstract: | The study builds up a financial inclusion index (FII) across districts of 27 Indian states utilizing UNDP's similar approach in constructing the Human Development Index. The FII is constructed for the period 2011-2018. The study additionally investigates government schemes' effectiveness, especially the PMJDY, in augmenting financial inclusion throughout its inception. The study's significant finding shows that a greater part of the Indian locale falls under the class of low financial inclusion. Southern areas perform better while the central, eastern, and north-eastern locale perform poorly in financial inclusion. Further, FII and HDI have a positive association between them. Furthermore, the PMJDY framework has not driven the economy towards a high degree of financial inclusion with only a couple of areas improving their rank from low to medium financial inclusion. Subsequently, underlying changes are legitimized in the institutional setting by fortifying and growing monetary organizations and all the while handling digital literacy. |
| Keywords: | Financial Institutions, Financial inclusion index (FII), Indian districts, PMJDY. |
| JEL: | G00 G21 O16 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105064&r=all |
| By: | Signe Krogstrup; William Oman |
| Abstract: | Climate change is one of the greatest challenges of this century. Mitigation requires a large-scale transition to a low-carbon economy. This paper provides an overview of the rapidly growing literature on the role of macroeconomic and financial policy tools in enabling this transition. The literature provides a menu of policy tools for mitigation. A key conclusion is that fiscal tools are first in line and central, but can and may need to be complemented by financial and monetary policy instruments. Some tools and policies raise unanswered questions about policy tool assignment and mandates, which we describe. The literature is scarce, however, on the most effective policy mix and the role of mitigation tools and goals in the overall policy framework. |
| Keywords: | Climate change;Carbon tax;Climate policy;Greenhouse gas emissions;Public investment and public-private partnerships (PPP);WP,government failure,policy authorities,Policy tool,mitigation policy,monetary policy tool,Policy instrument |
| Date: | 2019–09–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/185&r=all |
| By: | Kato, Hayato; Okoshi, Hirofumi |
| Abstract: | Do low corporate taxes always favor multinational production in the course of economic integration? We propose a two-country model in which multinationals choose the locations of production plants and foreign distribution affiliates and shift profits between home plants and foreign affiliates by manipulating transfer prices in intra-firm trade. We show that when trade costs are high, plants are concentrated in the low-tax country, but surprisingly this location pattern reverses when they are low. Unlike existing models with single-plant firms, the impact of economic integration is non-monotonic, which we empirically confirm: a fall in trade costs first decreases and then increases the share of plants in the high-tax country. We also analyze tax competition and find that allowing for transfer pricing makes competition tougher, indicating a possibility of international coordination on transfer-pricing regulation making the world better off. |
| Keywords: | Profit shifting; Multinational firms; Intra-firm trade; Trade costs; Foreign direct investment (FDI) |
| JEL: | F12 F23 H25 H26 |
| Date: | 2021–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105536&r=all |
| By: | Ken Chung; Anthony Bellotti |
| Abstract: | This paper investigates the phenomenon of support and resistance levels (SR levels) in financial time series, which act as temporary price barriers that reverses price trends. We develop a heuristic discovery algorithm for this purpose, to discover and evaluate SR levels for intraday price series. Our simple approach discovers SR levels which are able to reverse price trends statistically significantly. Asset price entering SR levels with higher number of price bounces before are more likely to bounce on such SR levels again. We also show that the decay aspect of the discovered SR levels as decreasing probability of price bounce over time. We conclude SR levels are features in financial time series are not explained simply by AR(1) processes, stationary or otherwise; and that they contribute to the temporary predictability and stationarity of the investigated price series. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2101.07410&r=all |
| By: | Kumar B, Pradeep |
| Abstract: | Many indicators of gender inclusiveness show that Kerala has been much ahead of other states in ensuring the welfare of females. It needs to be reiterated that in the case of both education and health, women in Kerala stand quietly at the receiving ends as the beneficiaries rather than the agents of economic and social change. The women inclusive way of progress does not necessarily confine itself to the widening of education and health opportunities for women, but it largely and more positively depend on the effective participation of women in economic activities. It is disheartening that if we probe into the status of women from these yardsticks of ‘active’ economic participation, the picture of gender equality appears more discouraging in Kerala which has been acclaimed as a ‘model’ for not only other states in the country but also for other countries in the world. A secular decline in Work Participation Rate for women in labour market clearly shows that education does not aid women to add themselves to the labour market. Economists and sociologists offer many plausible explanations for this absconding nature of educated and skilled women from the labour market. The real gender inclusion and women empowerment will be fulfilled only when women start actively engaging in productive fields using their knowledge and entitlements. |
| Keywords: | Gender status, Women Empowerment, Work Force Participation, Active Agents, Unemployment, Decision Making, Economic Participation |
| JEL: | A10 |
| Date: | 2020–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104878&r=all |
| By: | Florian Eckert (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Philipp Kronenberg (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Heiner Mikosch (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Stefan Neuwirth (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | Most macroeconomic indicators failed to capture the sharp economic fluctuations dur- ing the Corona crisis in a timely manner. Instead, alternative high-frequency data have been used, aiming to monitor the economic situation. However, these data are often only loosely related to the business cycle and come with irregular patterns of missing observations, ragged edges and short histories. This paper presents a novel mixed- frequency dynamic factor model for measuring economic activity at high-frequency intervals in rich data environments. Previous research has estimated the dynamic factor conditional on actually observed data only. In contrast, we propose to estimate the dynamic factor conditional on a balanced panel with observed and latent data information, where the latent data are themselves estimated in a separate state-space block. One benefit of this data augmentation strategy is that it allows to easily ac- count for serial correlation in the factor measurement errors. We apply the model to a set of daily, weekly, monthly and quarterly series and extract a dynamic factor, which is identified as the weekly growth rate of GDP. It turns out that the model is well suited to exploit the business cycle information contained in alternative high- frequency data. GDP is tracked timely and accurately during the Corona crisis and past economic crises. |
| Keywords: | Economic Activity Indicator, Real Time, Nowcasting, Alternative HighFrequency Data, Mixed-Frequency Dynamic Factor Model, Data Augmentation |
| JEL: | C11 C32 C38 C53 E32 E37 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:20-488&r=all |
| By: | Mamoru Kaneko (Emeritus Professor, Waseda University and University of Tsukuba) |
| Abstract: | We study the St.Petersburg paradox from the viewpoint of bounded intelligence. Following Llyod Shapley, we reformulate its coin-tossing gamble introducing a finite budget of the banker, while this is as a resolution in the narrow sense as long as the standard expected reward criterion is adopted. It is still impossible for both banker and people to participate and to generate positive profits. We introduce cognitive bounds to people to modify the expected reward criterion and show that many people are incomparable to between participation and not. This is a rationalistic though people have cognitive bounds, and we take one more step of going to semi-rationalistic behavioral-probability for incomparable alternatives. This shows that some people show positive probabilities of participation in the coin-tossing with a fee producing positive profits for the banker. The last part is formulated as a monopoly market and its activeness is shown by the Mote Carlo simulation method. |
| Keywords: | St.Petersburg Paradox; Shapley's Modification; Expected Utility Theory with Probability Grids; Cognitive Bounds; Bounded Intelligence; Incomparability; behavioralprobability; Monte Carlo Method |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2014&r=all |
| By: | Eric Monnet; Damien Puy |
| Abstract: | Why did monetary authorities hold large gold reserves under Bretton Woods (1944–1971) when only the US had to? We argue that gold holdings were driven by institutional memory and persistent habits of central bankers. Countries continued to back currency in circulation with gold reserves, following rules of the pre-WWII gold standard. The longer an institution spent in the gold standard (and the older the policymakers), the stronger the correlation between gold reserves and currency. Since dollars and gold were not perfect substitutes, the Bretton Woods system never worked as expected. Even after radical institutional change, history still shapes the decisions of policymakers. |
| Keywords: | Gold;Gold reserves;International reserves;Currencies;Banking;WP,Bretton Woods system,gold standard exposure,unit of currency,exchange rate,gold standard practice |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/161&r=all |
| By: | Bernard Dumas; Marcel Savioz |
| Abstract: | We construct recursive solutions for, and study the properties of the dynamic equilibrium of an economy with three types of agents: (i) house- hold/investors who supply labor with a finite elasticity, consume a large variety of goods that are not perfect substitutes and trade government bonds; (ii) firms that produce those varieties of goods, receive productivity shocks and set prices in a Calvo manner; (iii) a government that collects an exogenous fiscal surplus and acts mechanically, buying and selling bonds in accordance with a Taylor policy rule based on expected inflation. In this setting we show that stock market returns are much less than one-for-one related to inflation over a one-year holding period, which means that stock securities have a strong nominal character. We also show that their nominal character diminishes as the length of the stock-holding period increases, in accordance with empirical evidence. |
| JEL: | G12 G18 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28186&r=all |
| By: | Jasmin Gider; Simon N. M. Schmickler; Christian Westheide |
| Abstract: | We study how stock price informativeness changes with the presence of high-frequency trading (HFT). Our estimate is based on the staggered start of HFT participation in a panel of international exchanges. With HFT presence market prices are a less reliable predictor of future cash flows and investment, even more so for longer horizons. Further, idiosyncratic volatility decreases, mutual funds trade less actively and their holdings deviate less from the market-capitalization weighted portfolio. These findings suggest that price informativeness declines with HFT presence, consistent with theoretical models of HFTs' ability to anticipate informed order flow, reducing incentives to acquire fundamental information. |
| Keywords: | High-Frequency Trading, Price Efficiency, Information Acquisition, Information Production |
| JEL: | G10 G14 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_257&r=all |
| By: | Kady Keita; Gene L. Leon; Frederico Lima |
| Abstract: | We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy. |
| Keywords: | Sovereign bonds;Fiscal governance;Credit ratings;Yield curve;Public Expenditure and Financial Accountability (PEFA);WP,sovereign bond,market,credit rating,market access |
| Date: | 2019–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/218&r=all |
| By: | Matondang Elsa Siburian (Graduate School of Economics, Waseda University) |
| Abstract: | The objective of this paper is to clarify the potential joint determination between fiscal decentralization, regional inequality, and the provision of local public goods in Indonesia. Using provincial-level data over the period 2001-2014, we estimate the simultaneous equation model (SEM) to circumvent the possibility of interdependence between the interest variables. The result reveals that fiscal decentralization is associated with lower regional income disparity but not vice versa. The result confirms that regional income inequality and the provision of public goods are simultaneously determined. The result provides no evidence of interdependence between fiscal decentralization and the provision of local public goods. |
| Keywords: | fiscal decentralization; regional inequality; local public goods; Indonesia; simultaneous equation model |
| JEL: | H10 H77 H70 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2001&r=all |
| By: | Shairilizwan Taasim (Department of Social Science and Management Faculty of Humanities, Management and Science Author-2-Name: Adrian Daud Author-2-Workplace-Name: Universiti Putra Malaysia, Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - Prior to the East ASEAN Growth Area (EAGA) in ASEAN, Brunei, Indonesia, Malaysia, and the Philippines (BIMP) took in an inflow of immigrants to support growth. The more they depended on foreign labour, the issue of gender inequality in the job sector became an issue that is hindering prosperity. Methodology/Technique - The research was aimed to identify the relation between unemployment rate from the gender perspective and economic growth of BIMP-EAGA by using two methods, namely Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS). Annual time series data for the period of 1990 to 2018 was employed. Findings & Novelty - The result was contrary to Okun's law which says that there is a negative relation between the male unemployment rate and GDP. This study found that the female unemployment rate did not affect GDP and was insignificant. Policies that benefit and increase the participation of female workers in the job sector should be enhanced to prepare a conducive environment for the economy. Type of Paper - Empirical. |
| Keywords: | Labour Force, Gender, Economic Growth, BIMP |
| JEL: | E24 J16 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jber194&r=all |
| By: | Paul De Grauwe; Yuemei Ji |
| Abstract: | We analyse the use of current and forward-looking data in the setting of monetary policy (Taylor rule). We answer the question of whether the use of forward-looking data is to be preferred over the use of current data. We use a behavioural macroeconomic model that generates periods of tranquillity alternating with crisis periods characterized by fat tails in the distribution of output gap. We find that the answer to our question depends on the nature of the monetary policy regime. In general, in a strict inflation targeting regime the use of forward-looking data leads to a lower quality of monetary policymaking than in a dual mandate monetary policy regime. Finally, nowcasting tends to improve the quality of monetary policy especially in a strict inflation targeting regime. |
| Keywords: | Taylor rule, behavioural macroeconomics, animal spirits, strict inflation targeting, dual mandate, nowcasting |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8853&r=all |
| By: | Kurita, Kenichi; Managi, Shunsuke |
| Abstract: | This paper constructs the economic model to consider the circular economy in cities from the waste management perspective. Specifically, we analyze the link between migration, natural capital, human capital, and waste management by extending the new economic geography model. We show the results; the population distribution pattern in the long run varies depending on the congestion effect of natural capital and waste management's technological level. In particular, a full agglomeration equilibrium realizes in the long-run for higher technological levels of waste management (lower congestion effects), an interior asymmetric equilibrium does for intermediate technological levels (intermediate congestion effects), and the symmetric dispersion equilibrium realizes for the lower technological levels (higher congestion effects). |
| Keywords: | Circular economy; Waste management; Economic geography; Agglomeration; Natural capital |
| JEL: | F18 Q53 R11 R12 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105435&r=all |
| By: | Elisabeth Paul; Oriane Bodson; Valéry Ridde |
| Abstract: | Purpose – The study aims to explore the theoretical bases justifying the use of performance-based financing(PBF) in the health sector in low- and middle-income countries (LMICs).Design/methodology/approach – The authors conducted a scoping review of the literature on PBF so as toidentify the theories utilized to underpin it and analyzed its theoretical justifications.Findings – Sixty-four studies met the inclusion criteria. Economic theories were predominant, with theprincipal-agent theory being the most commonly-used theory, explicitly referred to by two-thirds of includedstudies. Psychological theories were also common, with a wide array of motivation theories. Other disciplines inthe form of management or organizational science, political and social science and systems approaches alsocontributed. However, some of the theories referred to contradicted each other. Many of the studies includedonly casually alluded to one or more theories, and very few used these theories to justify or support PBF. Notheory emerged as a dominant, consistent and credible justification of PBF, perhaps except for the principalagent theory, which was often inappropriately applied in the included studies, and when it included additionalassumptions reflecting the contexts of the health sector in LMICs, might actually warn against adopting PBF.Practical implications – Overall, this review has not been able to identify a comprehensive, credible,consistent, theoretical justification for using PBF rather than alternative approaches to health system reformsand healthcare providers’ motivation in LMICs.Originality/value – The theoretical justifications of PBF in the health sector in LMICs are under-documented.This review is the first of this kind and should encourage further debate and theoretical exploration of thejustifications of PBF. |
| Keywords: | Low- and middle-income countries; Performance-based financing; Scoping review; Theory |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/318091&r=all |
| By: | Mayang Sekar Pembayun Khamisan (Trisakti School of Management, Kyai Tapa 20, 11440, Jakarta, Indonesia Author-2-Name: Silvy Christina Author-2-Workplace-Name: Trisakti School of Management, Kyai Tapa 20, 11440, Jakarta, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - This study aims to obtain empirical evidence about the factors that influence tax avoidance. The independent variables tested in this research were financial distress, tax loss carried forward, institutional ownership, managerial ownership, audit committee, audit quality, firm size, and return on assets with e Cash Effective Tax Rate (CETR) used as a dependent variable in this study. Methodology/Technique - The companies used in this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) with a research period of 2016-2018. The number of research samples used were 162 data. The method of sampling used purposive sampling and this research used multiple regression analyses to test the hypothesis. Finding - This research provides the result that financial distress, tax loss carried forward, institutional ownership, managerial ownership, audit committee, audit quality, firm size, and return on assets have no influence on tax avoidance. Originality/value - The difference between this study and previous studies is that this study focuses on financial distress, tax loss carried forward and corporate governance. Type of Paper - Empirical. |
| Keywords: | Financial Distress, Tax Loss Carried Forward, Institutional Ownership, Managerial Ownership, Audit Committee, Audit Quality, Firm Size, Return on Assets, Cash Effective Tax Rate. |
| JEL: | M41 M49 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr190&r=all |
| By: | Simon Cornée; Marc Jegers; Ariane Szafarz |
| Abstract: | This paper unpacks the continuum of social finance institutions (SFIs), ranging from foundations offering pure grants to social banks supplying soft loans. The in-between category includes under-researched “quasi-foundations” granting loans requiring partial repayment. We develop a model under which SFIs maximize their social contribution arising from financing successful social projects, under a budget constraint dictated by their funders. Our model determines the feasibility of each SFI category and reveals that quasi-foundations are efficient and adapted to environments with low market rates. Finally, we show that value-based unconditional reciprocity from SFI borrowers can elicit a so-called “hold-up” effect, whereby the SFI maximizing its social contribution charges a high interest rate to its loyal clients. |
| Keywords: | Social Finance; Philanthropy; Foundations; Social Banks |
| JEL: | G21 D63 G24 H25 |
| Date: | 2021–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/318629&r=all |
| By: | Olkhov, Victor |
| Abstract: | This paper discusses the value-at-risk (VaR) concept and assesses the financial adequacy of the price probability determined by frequency of trades at price p. We take the price definition as the ratio of executed trade value to volume and show that it leads to price statistical moments, which differ from those, generated by frequency price probability. We derive the price n-th statistical moments as ratio of n-th statistical moments of the value and the volume of executed transactions. We state that the price probability determined by frequency of trades at price p doesn’t describe probability of executed trade prices and VaR based on frequency price probability may be origin of unexpected and excessive losses. We explain the need to replace frequency price probability by frequency probabilities of the value and the volume of executed transactions and derive price characteristic function. After 50 years of the VaR usage main problems of the VaR concept are still open. We believe that VaR commitment to forecast the price probability for the time horizon T seems to be one of the most tough and expensive puzzle of modern finance. |
| Keywords: | value-at-risk; risk measure; price probability; market trades |
| JEL: | C02 D46 D81 G1 G11 G12 G17 |
| Date: | 2021–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105458&r=all |
| By: | Musy, Olivier |
| Abstract: | We develop a New Keynesian Phillips curve based on a combination of staggered price contracts and indexation to past inflation. This Phillips curve links current inflation dynamics to past inflation with a positive weight, as well as current and lagged expectations of inflation and output, giving a possible alternative explanation for recent empirical findings on the role of expectations in the determination of inflation. |
| Keywords: | Inflation Dynamics, Staggered contracts, Price Indexation, Sticky Prices, New Keynesian Phillips Curve, Sticky Expectations |
| JEL: | E3 E31 E5 |
| Date: | 2020–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105012&r=all |
| By: | Benedict J. Clements; Sanjeev Gupta; Saida Khamidova |
| Abstract: | This paper studies the evolution of worldwide military spending during 1970-2018. It finds that military spending in relation to GDP is converging, but into three separate groups of countries. In the largest group, responsible for 90 percent of worldwide spending, outlays have remained stubbornly high. Military spending in developing economies reacts to improvements in security conditions and military spending in neighboring countries, suggesting that further increases in the peace dividend are possible. In developing economies, rising social spending tends to crowd out military outlays, but this is not the case in advanced economies. With social outlays projected to rise as developing countries look to achieve the Sustainable Development Goals (SDGs), military spending could come under pressure to fall further. |
| Keywords: | Defense spending;Expenditure;Health care spending;Total expenditures;Education spending;WP,spending doe,high-spending country |
| Date: | 2019–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/196&r=all |
| By: | Ni, Bin; Kato, Hayato; Liu, Yang |
| Abstract: | This study uses unique division-level data of Japanese firms to examine how foreign direct investment (FDI) affects domestic employment. Contrary to most previous studies focusing on the effect on net employment growth, we decompose it into gross job creation and gross job destruction. We find that FDI destination plays an important role: FDI to Asia increases job creation, while FDI to Europe or North America decreases it. A frictional search-and-matching model with heterogeneous jobs can explain the differential effects. The model provides additional predictions on job creation and destruction by job type, which are also empirically confirmed. |
| Keywords: | Outward FDI, firm-establishment-division-level data, multinational enterprises (MNEs), large-firm search model, high/low-skilled jobs |
| JEL: | F23 J21 J23 |
| Date: | 2021–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105522&r=all |
| By: | Dasgupta, Aditya; Kapur, Devesh |
| Abstract: | Government programs often fail on the ground because of poor implementation by local bureaucrats. Prominent explanations for poor implementation emphasize bureaucratic rent-seeking and capture. This article documents a different pathology that we term bureaucratic overload: local bureaucrats are often heavily under-resourced relative to their responsibilities. We advance a two-step theory explaining why bureaucratic overload is detrimental to implementation as well as why politicians under-invest in local bureaucracy, emphasizing a lack of electoral incentives. Drawing on a nationwide survey of local rural development officials across India, including time-usage diaries that measure their daily behavior, we provide quantitative evidence that (i) officials with fewer resources are worse at implementing rural development programs, plausibly because they are unable to allocate enough time to managerial tasks and (ii) fewer resources are provided in administrative units where political responsibility for implementation is less clear. The findings shed light on the political economy and bureaucratic behavior underpinning weak local state capacity. |
| Date: | 2021–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:2qvwb&r=all |
| By: | Zainab Bello (Faculty of Business Management, Alasala University, Dammam, Saudi Arabia Author-2-Name: Garba Ibrahim Tanko Author-2-Workplace-Name: Department of Public Administration, Usmanu Danfodiyo University Sokoto, 840104, Sokoto, Nigeria Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - This paper's objective is to make a comprehensive compilation of the various theories used in studies of work-life balance (WLB) in order to understand their usage. Methodology/Technique - Based on past literature, this paper focused on review of relevant literature from various online data bases as well as manual texts of studies on WLB with particular attention on the theories used. Using descriptive layout, the paper gives adequate review of WLB theories. Finding - This paper found that there are numerous prevailing theories on WLB explaining the relationships in various WLB studies. Such as Overall Appraisal, Structural Functionalism, Enhancement, Facilitation, Segmentation Spill-over, Compensation, Conservation, Conflict, Human Capital, Congruence, Ladder, Instrumental, Resource drain, Ecology, Border, Boundary and Integration Theories. Based on literature, this paper found that Boundary theory and Border theory are the two major foundation theories used in many studies to explain the different aspects of WLB. Novelty - This paper found that there are no universally accepted theories for WLB. Theories used on WLB studies depend on the range of the study's framework, variables or perspectives of the study. This leads to omissions or overlapping in frameworks. |
| Keywords: | Work-life Balance; WLB Concepts; Work-Life Balance Theories; Family-Work |
| JEL: | B54 D63 E24 J24 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:gjbssr573&r=all |
| By: | Attema, Arthur; Frasch, Jona; L'Haridon, Olivier |
| Abstract: | In recent years the interest in multivariate and higher-order risk preferences has increased noticeably. A growing body of literature has demonstrated both the relevance and the impact of these preferences in several domains, although for health the empirical evidence is lacking. In this study we empirically measure multivariate and higher-order risk preferences for quality of life and longevity, the two elements of the Quality-Adjusted Life Year (QALY) model. We observe overwhelming support for correlation seeking between these two attributes as well as significant evidence of cross-imprudence and cross-intemperance. These findings indicate that higher-order risk preferences appear to deviate more from neutrality for health than for money. Furthermore, we test if preferences for a risky treatment for a disease affecting only quality of life, depend on life expectancy. Our results show no systematic evidence of such a relation, although there is a marginally significant positive relation between riskiness of the comorbidity affecting life expectancy and risk aversion for a treatment affecting quality of life. We therefore observe no definitive deviation from the QALY model, although the model appears to be more robust when expected longevity is high. |
| Keywords: | correlation attitude, prudence, QALYs, risk apportionment, risk aversion |
| JEL: | I10 |
| Date: | 2020–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103339&r=all |
| By: | Paulo M.M. Rodrigues; Marina Balboa; Antonio Rubia; A. M. Robert Taylor |
| Abstract: | We introduce a new joint test for the order of fractional integration of a multivariate fractionally integrated vector autoregressive [FIVAR] time series based on applying the Lagrange multiplier principle to a feasible generalised least squares estimate of the FIVAR model obtained under the null hypothesis. A key feature of the test we propose is that it is constructed using a heteroskedasticity-robust estimate of the variance matrix. As a result, the test has a standard 2 limiting null distribution under considerably weaker conditions on the innovations than are permitted in the extant literature. Specifically, we allow the innovations driving the FIVAR model to follow a vector martingale difference sequence allowing for both serial and crosssectional dependence in the conditional second-order moments. We also do not constrain the order of fractional integration of each element of the series to lie in a particular region, thereby allowing for both stationary and non-stationary dynamics, nor do we assume any particular distribution for the innovations. A Monte Carlo study demonstrates that our proposed tests avoid the large over-sizing problems seen with extant tests when conditional heteroskedasticity is present in the data. We report an empirical case study for a sample of major U.S. stocks investigating the order of fractional integration in trading volume and different measures of volatility in returns, including realized variance. Our results suggest that both return volatility and trading volume are fractionally integrated, but with the former generally found to be more persistent (having a higher fractional exponent) than the latter, when more reliable proxies for volatility such as the range or realized variance are used. |
| JEL: | C12 C22 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202102&r=all |
| By: | Supreet Kaur; Sendhil Mullainathan; Suanna Oh; Frank Schilbach |
| Abstract: | We test whether increasing cash-on-hand raises the productivity of poor workers. Our motivation is psychological. Concerns about money can create mental burdens such as worry, stress, or sadness. These in turn could interfere with the ability to work effectively. We empirically test for this possibility using a field experiment with piece-rate manufacturing workers in India. We randomize the timing of income receipt, so that on a given day some workers have more cash-on-hand than others. This manipulation holds constant wages and piece rates, as well as human and physical capital. On cash-rich days, average productivity increases by 0.11 standard deviations (6.2%); this effect is concentrated among relatively poorer workers. Mistakes also decline on these days --- an effect that is again concentrated among poorer workers. Having more cash-on-hand thus enables workers to work faster while making fewer errors, suggesting improved cognition. We argue that mechanisms such as gift exchange, trust, and nutrition cannot account for our findings. Instead, our results suggest a range of psychological mechanisms wherein alleviating financial concerns allows workers to be more attentive and productive at work. |
| JEL: | D03 D14 D31 J24 O1 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28338&r=all |
| By: | Marcelo L. Bergolo; Martin Leites; Ricardo Perez-Truglia; Matias Strehl |
| Abstract: | Why do some individuals choose to evade taxes while others do not? One popular view is that some individuals cheat on their taxes because they are more dishonest, selfish, or perceive different social norms. There is, however, little direct evidence on this matter. In collaboration with the national tax agency in Uruguay, we address this question using a combination of surveys and administrative records. Leveraging a unique institutional setting, we measure individual-level evasion choices. We document significant variation in evasion decisions across individuals. For a subsample of 6,078 taxpayers, we use survey questions and incentivized laboratory games to measure traits such as honesty, selfishness, and perceived social norms. We find that these individual traits have some power to predict who evades taxes, but other factors, such as the environment, play a much bigger role. |
| JEL: | H24 H26 K42 Z1 Z13 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28235&r=all |
| By: | Jennifer Kee; Melinda Knuth; Joanna Lahey; Marco A. Palma |
| Abstract: | Eye-tracking is becoming an increasingly popular tool for understanding the underlying behavior driving economic decisions. However, an important unanswered methodological question is whether the use of an eye-tracking device itself induces changes in the behavior of experiment participants. We study this question using eight popular games in experimental economics. We implement a simple design where participants are randomly assigned to either a control or an eye-tracking treatment condition. In seven of the eight games, eye-tracking did not produce different outcomes. In the Holt and Laury risk assessment (HL), subjects with multiple calibration attempts behave like outliers under eye-tracking conditions, skewing the overall results. Further exploration shows that poor calibrators also show marginally higher levels of negative emotion, which is correlated with higher risk aversion in both HL and in the Eckel and Grossman gambling tasks. Because difficulty calibrating is correlated with eye-tracking data quality, the standard practice of removing participants who did not have good eye-tracking data quality resulted in no difference between the treatment and control groups in HL. Our results suggest that experiments may incorporate eye-tracking equipment without inducing changes in the economic behavior of participants, particularly after observations with low eye-tracking quality are removed. |
| JEL: | C9 D03 D8 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28223&r=all |
| By: | Schlingemann, Frederik P. (U of Pittsburgh and European Corporate Governance Institute); Stulz, Rene M. (Ohio State U and European Corporate Governance Institute) |
| Abstract: | The firms listed on the stock market in aggregate as well as the top market capitalization firm contribute less to total non-farm employment and GDP now than in the 1970s. A major reason for this development is the decline of manufacturing and the growth of the service economy as firms providing services are less likely to be listed on exchanges. We develop quantitative measures of representativeness showing how firms' market capitalizations differ from their contribution to employment and GDP. Representativeness is worst when the market is most highly valued and worsens over time for employment, but not for value added. |
| JEL: | E44 G23 G32 K22 L16 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2020-22&r=all |
| By: | Marco Del Angel; Caroline Fohlin; Marc D. Weidenmier |
| Abstract: | We study the impact of the 1918 Spanish Flu on U.S. stock prices. We use the death rate to control for the impact of the global pandemic and war news reported in the New York Times to capture the positive effects of the end of World War I on stock prices. Using a new weekly hand collected NYSE stock price index, we show that there is a -.73 correlation between the aggregate stock market and the death rate. Furthermore, vector autoregressions demonstrate that the death rate can explain up to 24 percent of the forecast error variance in the aggregate stock index from September 1918 until the end of the pandemic in March 1920. We also find that the flu had a significant, but varied impact on nine NYSE sectors. The empirical analysis indicates that pandemics can matter big time for stock prices. |
| JEL: | G1 I1 N2 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28356&r=all |
| By: | Birru, Justin (Ohio State U); Gokkaya, Sinan (Ohio U); Liu, Xi (Miami U of Ohio); Stulz, Rene M. (Ohio State U and European Corporate Governance Institute) |
| Abstract: | Following the Global Settlement, analysts extensively use a top pick designation to highlight their highest conviction best ideas. Such a designation enables analysts to provide greater granularity of information, but it can potentially be influenced by conflicts of interest. Examining a comprehensive sample of top picks, we find, even though top picks are more likely to be investment banking clients, they have greater investment value, attract greater media and investor attention, and lead to more trading than buy recommendations. Bad top picks are more likely to be influenced by strategic objectives and have adverse consequences for analysts. Institutions, but not retail investors, discern between good and bad top picks. |
| JEL: | G11 G12 G14 G20 G23 G24 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2020-24&r=all |
| By: | Zhang, Jing; Zhang, Wei; Li, Youwei; Feng, Xu |
| Abstract: | We document that hedge funds nurture mispricing in the Chinese financial market. We exploit the relationship between hedge fund holdings and the degree of mispricing in case that hedge fund holdings of stocks are mainly for arbitrage purpose but not for hedging, and that with and without short-selling restrictions. Hedge funds intentionally hold overvalued stocks. Their trades, which generate an abnormal return to 1.78% per month, also impede the dissipation of stock mispricing. Further, we find trend chasing may be the reason why hedge funds prefer to hold overvalued stocks. This research sheds new lights on the information content and potential investment value of hedge funds holdings in emerging markets. |
| Keywords: | Hedge funds; stock mispricing; asset pricing; arbitrage |
| JEL: | G11 G12 G23 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105377&r=all |
| By: | Zhai, Weiyang |
| Abstract: | This paper examines how the financial structure and capital openness of a country have affected the likelihood of financial crisis over the past two decades. By applying a panel probit estimation to a sample of 38 countries, we find the following. 1) An economy with a more market-based financial structure is less likely to experience a currency crisis. 2) More capital openness is associated with a lower probability of a currency crisis. 3) Countries with a more market-based financial structure are also less likely to experience a currency crisis if that structure is coupled with a more open capital account. 4) Unlike what is found for currency crises, neither financial structure nor capital openness has any effect on banking crises. |
| Keywords: | financial structure; capital openness; currency crisis; banking crisis |
| JEL: | G01 G15 G28 |
| Date: | 2020–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105457&r=all |
| By: | Julia M. Puaschunder (The New School, Department of Economics, School of Public Engagement, New York, USA) |
| Abstract: | Overall the following article innovatively paints a novel picture of the mass psychological underpinnings of business cycles based on information flows in order to recommend how certain communication strategies could counterweight and alleviate the building of disastrous financial market mass movements. Acknowledging that human beings are connected to and interact with each other in families, ties and larger networks of states, nations and intergovernmental institutions, studying the role of information in building socially-constructed economic correlates promises to explain how market outcomes are developed in the social compound and can be guided by media communication. Addressing problems of the neoclassical assumption of perfect information markets through the lens of ‘real competition,’ the following paper will specifically unravel how contemporary media communication produces certain types of price expectations that form consumption patterns leading to collectively-shared economic outcomes. An introduction to the history of economic cycles will lead to the analysis of the role of information in creating economic booms and busts in the age of globalization. Applying emergent risk theory onto economic fluctuations will serve as an innovative way to explain how and what information represented in the media creates economic ups and downs. Linguistic roots of news about the economy are aimed at shedding light on how media representations and temporal foci echo in economic correlates and shape market outcomes. As business cycles are a collective phenomenon, group interactions’ potential contribution to create business cycles will innovatively be outlined and the role of information flows among groups in creating price expectations unraveled. Business cycles will also be shown to obey some kind of natural complexity, as for being whimsically influenced by socio-historic and political trends. Recommendations how to create more stable economic systems by avoiding emergent risks and communicating market prospects more cautiously will be given in the discussion followed by a prospective future research outlook and conclusion. |
| Keywords: | Affect, Collective moods, Communication, Consumption, Coronavirus, COVID-19, Digitalization, Economic fundamentals, External shock, Information |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:smo:upaper:019jp&r=all |
| By: | Roxana Mihet (University of Lausanne and Swiss Finance Institute) |
| Abstract: | Information-based models of capital income inequality that link return heterogeneity to investor sophistication levels need to assume an increase in data costs to generate an increase in inequality. Empirically, this assumption contradicts the fact that investment markets have become more informative over time, and theoretically, it also overlooks the possibility that poorer investors can avoid paying a large fixed cost for data, simply by buying shares in a fund. In this paper, I study the impact of financial innovation on capital income inequality in a theoretical framework where investors, heterogeneous in their sophistication, have a costly choice between not investing, investing through a fund of average quality, and searching for an informed fund. The model predicts that while financial innovation can make the investment sector more efficient and boost financial inclusion, some financial innovation also brings risks. For example, when the cost of financial data processing falls, more wealthier investors trade on information. This makes participation less valuable for the marginal stock market participant, who is a relatively poorer investor in some average (uninformed) fund and who exits the market altogether, foregoing the equity premium. This amplifies the inequality gap and also jointly explains why in the last decades, in spite of a dramatic reduction in data processing costs and fund fees, the US stock market has become more informative, yet the stock market participation rate has been on the decline. |
| Keywords: | Quant Analysis, Inequality, Information Acquisition, Funds, Innovation. |
| JEL: | E21 G11 G14 L1 L15 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2104&r=all |
| By: | Vincent Dadam (University of Pretoria); Nicola Viegi (University of Pretoria; Economic Research Southern Africa (ERSA)) |
| Abstract: | This paper estimates a New Keynesian Wage Phillips Curve for South Africa to investigate the responsiveness of nominal wages to labour market conditions. The estimation is based on a model with staggered nominal wages setting, where all variations in hired labour input is taking place at the extensive margin. First we estimate the model using aggregate data from 1971 to 2013. Aggregate estimation results show that private sector nominal wages are not very responsive to employment conditions, while they also reveal a certain sensitivity to inflation and quite a good correlation with inflation expectations. On the other hand, the relationship between nominal wage inflation and price inflation is quite strong and robust for the whole sample. However, it becomes quantitatively weak for the inflation targeting period. In that period, trade unions inflation expectations are instead strongly correlated with nominal wage inflation. In the second part of the paper we assess the response of nominal wages to employment, labour productivity and output prices, given the reservation wage, using a panel of nine industrial sectors over the period 1970-2013. The findings confirm that nominal wage inflation has consistently outpaced the growth in productivity, even after correcting for price inflation, and that employment conditions had little effect on wage dynamics. We also test for the possibility that the dynamic of wages is anchored by an underlined reservation wage to investigate the presence of an error correction term in the wage equation for South Africa. The overall picture that comes out from the analysis is that of a wage formation mechanism that is very insensitive to overall macroeconomic conditions. |
| Keywords: | Wage rigidities, unemployment, labour market, Phillips Curve, New Keynesian |
| JEL: | E2 E24 E26 E31 E12 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202107&r=all |