|
on Central and Western Asia |
| By: | Kirill Borissov (European University at St. Petersburg, Russia); Mikhail Pakhnin (European University at St. Petersburg, Russia); Ronald Wendner (University of Graz, Austria) |
| Abstract: | In this paper, we propose an approach to describe the behavior of naïve agents with quasi-hyperbolic discounting in the neoclassical growth model. To study time-inconsistent decision making of an agent who cannot commit to future actions, we introduce the notion of sliding equilibrium and distinguish between pseudo-perfect foresight and perfect foresight. The agent with pseudo-perfect foresight revises both the consumption path and expectations about prices; the agent with perfect foresight correctly foresees prices in a sliding equilibrium and is naive only about their time inconsistency. We prove the existence of sliding equilibria for the class of isoelastic utility functions and show that generically consumption paths are not the same under quasi-hyperbolic and exponential discounting. Observational equivalence only holds in the well-known cases of a constant interest rate or logarithmic utility. Our results suggest that perfect foresight implies a higher long-run capital stock and consumption level than pseudo-perfect foresight. |
| Keywords: | Quasi-hyperbolic discounting; Observational equivalence; Time inconsistency; Naive agents; Sliding equilibrium; Perfect foresight. |
| JEL: | D15 D91 E21 O40 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2021-08&r= |
| By: | Portes, Jonathan (King's College London) |
| Abstract: | I review trends in migration to the UK since the Brexit referendum, examining first the sharp fall in net migration from the EU that resulted, and then the recent more dramatic exodus of foreign-born residents during the covid-19 pandemic. I describe the new post-Brexit system, and review studies which attempt to estimate both the impact on future migration flows and on GDP and GDP per capita. Finally, I discuss the wider economic impact of the new system and some of the policy implications. |
| Keywords: | immigration, Great Britain, productivity |
| JEL: | E24 J24 J61 M53 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14425&r= |
| By: | Ly Dai Hung (Vietnam Institute of Economics, Hanoi, Vietnam) |
| Abstract: | The paper examines the determinants of convergence in economic growth (relative convergence) across provinces in Vietnam. The methodology combines the endogenous growth theory, analyzed in Aghion, Howitt và Mayer-Foulkes (2005), with empirical evidence on a data sample of 63 provinces over 2010-2019. The result shows that only with high-quality human capital, the economic growth rate raises for a higher proximity to world technology frontier, or the convergence of economic growth happens. Among the central cities, Hai Phong has an outstanding growth rate by exploring the backwardness advantage, based on the combination of high proximity to world technology frontier with improvement of institutional quality. The result suggests that the human capital should receive highest investment on the policy architecture in the future. |
| Abstract: | Bài viết đánh giá các yếu tố chi phối sự hội tụ về tốc độ tăng trưởng thu nhập (hội tụ tương đối) của các tỉnh, thành phố trực thuộc Trung ương. Phương pháp nghiên cứu kết hợp lý thuyết tăng trưởng nội sinh dựa vào bài báo của nhóm tác giả Aghion, Howitt và Mayer-Foulkes (2005) với bằng chứng thực nghiệm dựa vào bộ số liệu của 63 địa phương giai đoạn 2010-2019. Kết quả cho thấy chỉ với các địa phương có chất lượng cao về nguồn nhân lực, tốc độ tăng trưởng thu nhập gia tăng khi khoảng cách thu nhập càng xa, tức là hội tụ về tốc độ tăng trưởng. Còn các địa phương còn lại đang tồn tại sự phân cực về tốc độ tăng trưởng. Trong các thành phố trực thuộc Trung ương , Hải Phòng có tốc độ tăng trưởng vượt trội nhờ tận dụng lợi thế của địa phương đi sau, dựa vào sự kết hợp của khoảng cách công nghệ ban đầu xa và cải thiện liên tục về chất lượng thể chế. Các kết quả gợi ý rằng chất lượng nguồn nhân lực cần được chú trọng trong các thiết kế chính sách ở cấp địa phương trong thời gian tới. |
| Keywords: | Cross-Section Regression,Economic of Region and Provinces,Convergence of Economic Growth |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03258903&r= |
| By: | Afees A. Salisu (Centre for Econometric and Allied Research, University of Ibadan, Ibadan, Nigeria); Christian Pierdzioch (Department of Economics, Helmut Schmidt University, Holstenhofweg 85, P.O.B. 700822, 22008 Hamburg, Germany); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield, 0028, South Africa) |
| Abstract: | We examine the predictive value of tail risks of oil returns for the realized variance of oil returns using monthly data for the modern oil industry (1859:10-2020:10). The Conditional Autoregressive Value at Risk (CAViaR) framework is employed to generate the tail risks for both 1% and 5% VaRs across four variants of the CAViaR framework. We find evidence of both in-sample and out-of-sample predictability emanating from both 1% and 5% tail risks. Given the importance of real-time oil-price volatility forecasts, our results have important implications for investors and policymakers. |
| Keywords: | Oil Tail Risks, Realized Variance of Oil-Price, Forecasting |
| JEL: | C22 C53 Q02 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202146&r= |
| By: | Aroop Chatterjee (WITS - University of the Witwatersrand [Johannesburg]); Léo Czajka (UCL - Université Catholique de Louvain); Amory Gethin (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab) |
| Abstract: | This paper estimates the distribution of personal wealth in South Africa by combining microdata covering the universe of income tax returns, household surveys, and macroeconomic balance sheets statistics. We document unparalleled levels of wealth concentration. The top 10% own 86% of aggregate wealth and the top 0.1% close to one third. The top 0.01% of the distribution (3,500 individuals) concentrate 15% of household net worth, more than the bottom 90% as a whole. Such levels of inequality can be accounted for in all forms of assets at the top end, including housing, pension funds and financial assets. We find no sign of decreasing inequality since the end of apartheid. This article is arevisedversion of the article"Estimating the Distribution of Household Wealth in South Africa"(World Inequality Lab Working Paper 2020/06) |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wilwps:halshs-03266286&r= |
| By: | ONOSE, Okpeku Lilian; Aras, Osman Nuri |
| Abstract: | The export-led growth hypothesis states a positive relationship between the growth of exports and long-run economic growth. This study examines the validity of the export-led growth hypothesis of services exports in 5 emerging economies, including Brazil, India, Nigeria, China, and South Africa (BINCS), for the period of 1980-2019. The study employs the panel mean group autoregressive distributed lag (ARDL) procedure to identify a causal relationship between services exports and gross domestic product (GDP) per capita. The findings show that the export-led growth hypothesis in services only has a positive effect on economic growth in the short run while other variables, including foreign direct investment (FDI), gross capital formation, and labour, increase economic growth in the long run. Hence, the emerging countries should focus more on internal investment to boost growth in the long and short run. |
| Keywords: | Exports, Economic Growth, Export-Led Growth, Services Exports, Emerging Economies |
| JEL: | F43 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108350&r= |
| By: | Guilhem Lecouteux (Université Côte d'Azur; GREDEG CNRS) |
| Abstract: | Behavioural economics has challenged the normative consensus that agents ought to choose following their own preferences. I argue that normative economists implicitly defended a criterion of the sovereignty of the autonomous consumer, and that current debates in normative behavioural economics arise from disagreements about the nature of the threats to autonomy that are highlighted by behavioural economics. I argue that those disagreements result from diverging ontological conceptions of the ‘self’ in the literature. I distinguish between the unitary, psychodynamic, and socio-historical conceptions of the self, and show how different positive theories about preferences and the nature of the agent may determine normative positions in normative behavioural economics. |
| Keywords: | preference satisfaction, autonomy, welfare, reconciliation problem, sociohistorical self |
| JEL: | B40 D02 D60 D91 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2021-27&r= |
| By: | Nirmal, Rajalakshmi; Babu, Suresh Chandra |
| Abstract: | Based on experiments to bring about comprehensive crop insurance coverage over the last 50 years, the Indian government introduced a new crop insurance program, called Pradhan Mantri Fasal Bima Yojana (PMFBY), in April 2016. Coming after two successive years of drought, the scheme aimed at reducing the burden of smallholders who borrow at high rates of interest but remain at the mercy of the “weather god†to reap optimal returns. Although this new program filled many gaps in the previous crop insurance interventions, it still could not attract smallholder and marginal farmers to fully subscribe to it. It also faced its own set of challenges. It earned farmers’ wrath because of lack of transparency in crop loss assessments and delayed settlement of claims. The government of India had to make the program voluntary under pressure from farmers’ associations, although it was designed as mandatory for famers seeking institutional credit. This paper’s focus is identifying the reasons for failure of PMFBY in most of the states despite its improved features, and comparing these states with a state where it has been relatively successful. It does this through evidence collected from a field study in Marathwada—a drought-prone region in western India, with the nation’s highest rate of farmer suicides. It takes learnings from stakeholder interviews in Marathwada to design implementation strategies for PMFBY’s success and win back the confidence of farmers. The state of Karnataka, in contrast to Marathwada, is an outlier among states in India, with a record of successful implementation of the PMFBY program. This paper studies PMFBY program implementation in Karnataka through a positive deviance case study approach. Though Karnataka hasn’t yet seen full success in terms of penetration achieved in crop insurance, its model can help develop best practices for implementation of PMFBY. The paper argues that getting buy-in from all stakeholders, adopting remote sensing technologies, strengthening infrastructure and institutional capacity, conducting outcome evaluation, and putting in place a monitoring system could be effective mechanisms to mainstream the program among smallholder farmers. |
| Keywords: | INDIA; SOUTH ASIA; ASIA; crop insurance; crops; insurance; risk management; agriculture; remote sensing; technology; mobile telephones; adaptation; sustainability; agricultural risk management; implementation science |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2012&r= |
| By: | Sabiou M. Inoua (Economic Science Institute, Chapman University) |
| Keywords: | economic growth, economic development, product diversification, economic complexity metrics |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-11&r= |
| By: | Richard A. Brecher (Department of Economics, Carleton University); Zhihao Yu (Department of Economics, Carleton University) |
| Abstract: | This paper shows that a high-wage country might reduce its unemployment by trading with a low-wage economy,despite popular predictions to the contrary. We demonstrate this possibility in a Heckscher-Ohlin-Samuelson type of model with two countries, which differ only because one of them has a binding minimum-wage constraint and a technological improvement that (despite the heightened wage) creates a comparative advantage in the labor-intensive good. Under these circumstances, the minimum-wage economy will experience an unemployment reduction when it trades with a low-wage counterpart. This theoretical result is consistent with some recent empirical estimates. |
| Keywords: | Trade, Unemployment, Minimum wage, Country-specific technology |
| JEL: | F16 |
| Date: | 2021–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:21-04&r= |
| By: | Dayioglu-Tayfur, Meltem (Middle East Technical University); Kirdar, Murat G. (Bogazici University); Koc, Ismet (Hacettepe University) |
| Abstract: | Millions of children are forcibly displaced around the world, making child labor a serious risk. However, little is known about this topic due to the difficulty of finding representative datasets for this population and information on child labor. In this study, we use a representative dataset on Syrian refugees in Turkey, the largest refugee group in any single country, to examine the incidence of child labor and its determinants. The incidence of paid work is remarkably high among boys. While 17.4% of 12-14 year-olds are in paid employment, a staggering 45.1% of 15-17 year-olds receive payment. We find that paid work is positively associated with poverty, proficiency in Turkish, living in an industrialized region in Turkey, originating from rural areas in Syria and living in a household with a young, female, or less-educated head. Family composition matters more for girls' employment than boys'. Boys' (girls') employment increases if their father (mother) is alive – suggesting network effects. Being older at arrival is highly associated with child labor, indicating that difficulty with school integration drives children into employment. |
| Keywords: | child labor, forced displacement, Syrian refugees, paid work, migrants, Turkey |
| JEL: | J13 J15 J61 O15 O53 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14466&r= |
| By: | Eric S. Rosengren |
| Abstract: | Vaccination rates have been better than expected in much of the U.S., and that’s led to a more rapid reopening of the economy than was forecast earlier this year. Forecasts of gross domestic product (GDP) have been significantly upgraded since the start of this year, with the median forecast of Federal Open Market Committee members at 7% growth for 2021. That is unusually high for a U.S. recovery. Despite the positive signs, we still have quite a way to go before we reach full employment, given the most recent unemployment rate was 5.8%, substantially above the 4.5% FOMC participants project by the end of 2021. One reason for that is a slower recovery in public-facing services, including tourism, hospitality, restaurants, and retail. Inflation is higher, but spikes in food and energy prices explain much of this, and those will moderate. Increased inflation can also be attributed to a variety of things that have happened over the last six months because of the unusual facets of coming out of a pandemic – including shortages in a variety of goods and services that we don’t normally experience during a recovery. Low rates and a high degree of stimulus have been appropriate, but it is important over time to watch for conditions that potentially raise financial stability issues. |
| Keywords: | economic recovery; economic conditions; payroll employment; inflation rate |
| Date: | 2021–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbsp:92828&r= |
| By: | Nicolás Oliva; H. Xavier Jara; Pia Rattenhuber |
| Abstract: | Based on tax records data from Ecuador, we analyse gender differences in top income groups from 2008 to 2017. Ecuador represents an interesting case as it shares many trends with other countries in the region in terms of women's status in the labour market. While we observe a significant increase in the share of women at the top of the income distribution during this period, women remain underrepresented in top income groups, at 38.7 per cent in the top 10 per cent income group and 22.8 per cent in the top 0.1 per cent income group. |
| Keywords: | Top incomes, Gender inequality, Tax data, capital incomes, Ecuador, Administrative data |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-109&r= |
| By: | Bruno Bises (Università Roma Tre); Francesco Bloise (Università Roma Tre); Antonio Scialà (Università Roma Tre) |
| Abstract: | Using panel data on 34 OECD countries followed from 2000 to 2015, we analyse the extent to which the labour share plays a role in mitigating the link between market and disposable income inequality in the non-comprehensive personal income tax hypothesis (i.e. when some or all capital income items are excluded from the personal income tax base). We find that one standard deviation increase of labour share is significantly related to a 9-percentage points reduction in the elasticity of disposable income inequality with respect to market income inequality. This important result obtained after controlling for country and year fixed effects, country-specific linear trends and several variables capturing the characteristics of the taxbenefit system in terms of overall progressivity, suggests that labour share could be considered as an “automatic stabilizer†of income inequality. Relevant implications for tax policy concern the role of the tax base of the personal income tax for the overall redistributive effect of the public budget. |
| Keywords: | Labour share, personal income inequality, redistribution, personal income taxation. |
| JEL: | D31 D33 H24 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:gfe:pfrp00:00049&r= |
| By: | Jongrim Ha (World Bank); M. Ayhan Kose (World Bank; Brookings Institution; CEPR; CAMA); Franziska Ohnsorge (World Bank; CEPR; CAMA) |
| Abstract: | This paper introduces a global database that contains inflation series: (i) for a wide range of inflation measures (headline, food, energy, and core consumer price inflation; producer price inflation; and gross domestic product deflator changes); (ii) at multiple frequencies (monthly, quarterly and annual) for an extended time period (1970-2021); and (iii) for a large number of (up to 196) countries. As it doubles the number of observations over the next-largest publicly available sources, our database constitutes a comprehensive, single source for inflation series. We illustrate the potential use of the database with three applications. First, we study the evolution of inflation since 1970 and document the broad-based disinflation around the world over the past half-century, with global consumer price inflation down from a peak of roughly 17 percent in 1974 to 2.5 percent in 2020. Second, we examine the behavior of inflation during global recessions. Global inflation fell sharply (on average by 0.9 percentage points) in the year to the trough of global recessions and continued to decline even as recoveries got underway. In 2020, inflation declined less, and more briefly, than in any of the previous four global recessions over the past 50 years. Third, we analyze the role of common factors in explaining movements in different measures of inflation. While, across all inflation measures, inflation synchronization has risen since the early 2000s, it has been much higher for inflation measures that involve a larger share of tradable goods. |
| Keywords: | Prices, global inflation, deflation, inflation synchronization, global factor. |
| JEL: | E30 E31 F42 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:2107&r= |
| By: | Timothy E. Dore (Federal Reserve Board); Tetsuji Okazaki (Faculty of Economics, The University of Tokyo); Ken Onishi (Federal Reserve Board); Naoki Wakamori (Faculty of Economics, The University of Tokyo) |
| Abstract: | We study how government loan programs affect the growth of small businesses by examin-ing a unique policy-based small business lending program in Japan. Combining the loan-level program data with a financial statement database, we find that small business bor-rowers increase employment and asset levels after receiving the loan and that these effectspersist for several years. Differences in debt levels are persistent over time, cash holdings ofloan recipients fall in the long run, and the effects on asset levels are larger in magnitudethan those on employment. In addition, the effects are larger in magnitude for firms iden-tified as financially constrained. These results suggest that the government loan programis successful in relaxing binding financial constraints for small businesses that participatein the program. |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2021cf1170&r= |
| By: | Ko Adachi (Bank of Japan); Kazuhiro Hiraki (Bank of Japan) |
| Abstract: | Economic surveys and the market price of inflation-linked assets are two major sources for gauging inflation expectations. Recent studies have developed methodologies that use various indicators to estimate underlying inflation expectations and their term structure. This article reviews recent research on inflation expectations, with a focus on Hiraki and Hirata's (2020) study on market-based inflation expectations, and Maruyama and Suganuma's (2019) study on the term structure of inflation expectations. We also describe recent movements in inflation expectations in Japan. Overall, inflation expectations weakened somewhat after the outbreak of COVID-19 in early 2020, but they have been more or less unchanged in recent months. Given the great uncertainty over the consequences of COVID-19 and their impact on domestic and overseas economies, future developments in inflation expectations will also continue to be highly uncertain. It is therefore important to continue monitoring the various indicators of inflation expectations by considering their characteristics. |
| Keywords: | Inflation expectations; Survey-based inflation expectations; Breakeven inflation rate |
| JEL: | C32 D84 E31 E43 E52 G12 |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojlab:lab21e01&r= |
| By: | Takatoshi Sasaki (Bank of Japan); Tomoya Sakata (Bank of Japan); Yui Mukoyama (Bank of Japan); Koichi Yoshino (Bank of Japan) |
| Abstract: | This study estimates the growth rate of China's economy until 2035 based on the assumption that productivity will continue converging to that of frontier economies and assesses the feasibility of such an outcome. Our estimates imply that the size of China's economy can potentially double by 2035 as long as the country follows the "catch-up" process achieved by other East Asian economies. However, given the circumstances that China faces, such as the need to maintain agricultural output levels, limits to the growth of its export-dependent manufacturing industry, and the aging of the population, the obstacles to following the other East Asian economies' catch-up process are substantial. To overcome these obstacles and proceed with catch-up, China will need to boost TFP growth by promoting innovation and making steady progress in addressing institutional and resource allocation issues. |
| Keywords: | China; Catch-up Process (Convergence); Aging of the Population; Savings Rate; Total Factor Productivity (TFP) Growth |
| JEL: | E21 E22 J11 O11 O47 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp21e07&r= |
| By: | Alice Henriques Volz; Lindsay Jacobs; Elizabeth Llanes; Kevin B. Moore; Jeffrey P. Thompson |
| Abstract: | Defined benefit (DB) pensions and Social Security are two important resources for financing retirement in the United States. However, these illiquid, non-market forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This paper develops an alternative, expanded wealth concept, augmenting precise net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We use this expanded wealth concept to explore the concentration of wealth among households aged 40 to 59 and find that (1) including DB pension and Social Security results in markedly lower measures of wealth concentration and that (2) trends toward higher wealth inequality over time, while moderated, are still present. |
| Keywords: | wealth concentration; saving; Social Security; pensions |
| JEL: | D14 D31 D63 G51 I31 J15 |
| Date: | 2021–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:92855&r= |
| By: | Elisa Guglielminetti (Bank of Italy); Concetta Rondinelli (Bank of Italy) |
| Abstract: | Following the outbreak of the COVID-19 pandemic, household consumption fell dramatically and the propensity to save rose to unprecedented levels. In this paper we investigate the drivers of households' behaviour in Italy from a macro and microeconomic perspective. At the aggregate level, we find that only half of the slump in private consumption can be explained by the deterioration in economic conditions. The residual contribution can be traced back to other pandemic-related factors - such as the fear of infection, the lockdown policies and increased uncertainty about the future - whose relevance varies between expenditure categories. By complementing the macro analysis with microdata from the Bank of Italy's Special Survey of Italian Households, we find that, apart from any economic reasons, spending is held back more by fear of infection and uncertainty about the future than by the restrictive measures. Households where the head is self-employed are mainly discouraged by the fear of infection and uncertainty, whereas those where the head is unemployed are more concerned about their economic situation. |
| Keywords: | Covid-19, household consumption, saving, fear of contagion, uncertainty, lockdown policies |
| JEL: | D14 D15 E21 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_620_21&r= |
| By: | Antonin Bergeaud (Banque de France - Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Clément Mazet-Sonilhac (Banque de France - Banque de France - Banque de France, Institut d'Études Politiques [IEP] - Paris); Sara Signorelli (UvA - University of Amsterdam [Amsterdam]) |
| Abstract: | Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broadband internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out. |
| Keywords: | Broadband,Firm organization,Labor market,Outsourcing |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ipppap:halshs-03265792&r= |
| By: | Lu, Wenna (Cardiff Metropolitan University); Copeland, Laurence (Cardiff Business School, Cardiff University); Xu, Yongdeng (Cardiff Business School) |
| Abstract: | Many recent papers have investigated the role played by volatility in determining the cross-section of currency returns. This paper employs two time-varying factor models: a threshold model and a Markov-switching model to price the excess returns from the currency carry trade. We show that the importance of volatility depends on whether the currency markets are unexpectedly volatile. Volatility innovations during relatively tranquil periods are largely unrewarded in the market, whereas during the volatile period, this risk, has a substantial impact on currency returns. The empirical results show that the two time-varying factor models fit the data better and generate a smaller pricing errors than the linear model, while the Markov-switching model outperforms the threshold factor models not only by generating lower pricing errors but also distinguishing two regimes endogenously and without any predetermined state variables. |
| Keywords: | carry trade; asset pricing; trading strategies; currency portfolios; Markov-switching model |
| JEL: | F3 G12 G15 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2021/16&r= |
| By: | Marzagão, Thiago |
| Abstract: | How much insider trading happens in Brazil’s stock market? Previous research has used the model proposed by Easley et al. [1996] to estimate the probability of insider trading (PIN) for different stocks in Brazil. Those estimates have a number of problems: i) they are based on a factorization that biases the PIN downward, especially for high-activity stocks; ii) they fail to account for boundary solutions, which biases most PIN estimates upward (and a few of them downward); and iii) they are a decade old and therefore based on a very different market (for instance, the number of retail investors grew from 600 thousand in 2011 to 3.5 million in 2021). In this paper I address those three problems and estimate the probability of insider trading for 431 different stocks in the Brazilian stock market, for each quarter from October 2019 to March 2021. |
| Date: | 2021–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:fu9mg&r= |
| By: | Fenny Marietza; Ridwan Nurazi; Fitri Santi; Saiful |
| Abstract: | The social and psychological concept of herding behavior provides a suitable solution to give an understanding of the behavioral biases that often occur in the capital market. The aim of this paper is to provide an overview of the broader bibliometric literature on the term and concept of herding behavior. Articles are collected through the help of software consisting of Publish or Perish (PoP), Google Scholar, Mendeley, and VOSViewer through a systematic approach, explicit and reproductive methods. In addition, the articles were scanned by Scimagojr.com (Q1, Q2, Q3, and Q4), analyzing 83 articles of 261 related articles from reputable and non-reputable journals from 1996 to 2021. Mendeley software is used to manage and resume references. To review this database, classification was performed using the VOSviewer software. Four clusters were reviewed; The words that appear most often in each group are the type of stock market, the type of crisis, and the factors that cause herding. Thus these four clusters became the main research themes on the topic of herding in times of crisis. Meanwhile, methodology and strategy are the themes for future research in the future. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.13598&r= |
| By: | Marie-Theres Schickfus von; Marie-Theres von Schickfus |
| Abstract: | The tightening of climate policies may cause technologies based on fossil fuels to lose value compared to “green” technologies. For firms with significant fossil-based knowledge, this implies that their firm (market) value is at risk. This technological risk is also relevant for financial market actors, in particular institutional investors following long-term investment strategies. Measuring technological knowledge using patent data at the firm level, this paper uses a dynamic patent count data model and explores whether institutional investors address technological transition risk via engagement activities. Despite robust evidence for a positive influence of institutional investors on overall innovation, no evidence can be found that institutional ownership is associated with a change in the direction of innovation. |
| Keywords: | Green innovation, climate policy, green finance, climate risk, institutional investors |
| JEL: | Q55 G23 O34 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_356&r= |
| By: | Ibarra-Ramírez Raúl |
| Abstract: | This paper analyzes whether there exists a relationship between the slope of the yield curve and future economic activity in Mexico for the period 2004-2019. In particular, we evaluate whether such relationship depends on the term premium. For this purpose, we estimate a threshold model in which the relationship between the yield spread and future economic activity, measured as either output growth or the probability of a contraction, depends on whether the term premium is above or below an estimated threshold. The main results indicate that the slope of the yield curve seems to anticipate the behavior of economic activity only when the term premium is above a threshold. Our results also suggest that the slope of the yield curve has predictive power over the probability of facing a contraction in the future only when the term premium is above a threshold. The estimated value for such threshold depends on the forecast horizon and the measure of economic activity. |
| JEL: | C53 E32 E37 E43 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2021-07&r= |
| By: | Askandarou Diallo (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique); Luc Jacolin (Banque de France - Banque de France - Banque de France); Isabelle Rabaud (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | With a fall of 42% of Foreign Direct investment (FDI) flows worldwide in 2020, the Covid-19 crisis has raised important concerns about the impact of this source of financing on economic growth in Africa, in particular through its effect on national investment. While FDI is often seen as a welcome boost to economic growth and long run development, its net effect may depend critically on whether it stimulates domestic private investment or crowds it out and over what time horizon. This paper investigates the relationship between FDI and private investment in Sub-Saharan Africa (SSA), using a sample of 40 countries over 1980-2017. To disentangle short term from long-term dynamics, our empirical analysis is based on Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Full Effects (DFE). |
| Keywords: | Financial development,Domestic investment,Foreign direct Investment,Crowding-in/crowding-out effects |
| Date: | 2021–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03259551&r= |
| By: | Christian R. Proaño; Tomasz Makarewicz |
| Abstract: | The reluctance of a significant number of individuals in the current COVID-19 pandemic to adhere to social distancing measures - and even to get vaccinated - seems to be one of the major obstacles for the long-term success of public health policies around the world. Against this background we study the impact of boundedly rational perceptions for the dynamics of epidemics such as the COVID-19 pandemic in a standard epidemic model extended by a stylized macroeconomic dimension similar to Atkeson et al. (2021). We show through which channels misperceptions or even “scepticism” concerning the infectiousness of the decease or its mortality rate may undermine in the long-run the effectiveness of lockdowns and other public health policies. |
| Keywords: | Endogenous Cycles, COVID-19 Pandemic, Bounded Rationality, Heterogenous Expectations |
| JEL: | E3 E7 I1 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-51&r= |
| By: | Marc-Arthur Diaye (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); André Lapidus (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne); Christian Schmidt (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | This paper aims at restating, in a decision theory framework, the results of some signicant contributions of the literature on probability discounting that followed the publication of the pioneering article by Rachlin et al. (1991). We provide a restatement of probability discounting in terms of rank-dependent utility, in which the utilities of the outcomes of n-issues lotteries are weighted by probabilities transformed after their transposition into time-delays. This formalism makes the typical cases of rationality in time and in risk mutually exclusive, but allows looser types of rationality. The resulting attitude toward probability and toward risk are then determined in relation to the values of the two parameters involved in the procedure of probability discounting. |
| Keywords: | time discounting,Probability discounting,logarithmic time perception,rank-dependent utility,rationality,attitude toward probabilities,attitude toward risk |
| Date: | 2021–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03256606&r= |
| By: | Maximilian Böck (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | This paper studies how non-rational risk shocks affect the macroeconomy. Using a novel identification design which exploits survey data on expectations of financial executives in the US, I identify non-rational risk shocks via distortions in beliefs. Belief distortions are measured through surprises in beliefs of credit spreads, defined as the difference between subjective and objective forecasts. They are then used as a proxy for exogenous variation in the risk premium. Belief distortions elicit due to overreaction of credit spreads, eventually leading to exaggerated beliefs on financial markets. Results indicate that the constructed shocks have statistically and economically meaningful effects. This has sizeable consequences for the U.S. economy: A positive non-rational risk shock moves credit spreads remarkably while real activity and the stock market decline. |
| Keywords: | Business Cycles, Risk Shocks, Belief Distortions |
| JEL: | C32 E32 E44 E71 G41 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp314&r= |
| By: | Abdelghani Maddi (HCERES, CEPN) |
| Abstract: | Actors in research and scientific publishing are gradually joining the Open-Access (OA) movement, which is gaining momentum to become nowadays at the heart of scientific policies in high-income countries. The rise of OA generates profound changes in the chain of production and dissemination of knowledge. Free access to peer-reviewed research methods and results has contributed to the dynamics of science observed in recent years. The modes of publication and access have also evolved; the classic model, based on journal subscriptions is gradually giving way to new economic models that have appeared with the arrival of OA. The objective of this article is twofold. First, propose a model for the publishing market based on the literature as well as on changes in open science policies. Second, analyze publishing strategies of publishers and institutions. To do so, we relied on game theory in economics. Results show that in the short term, the publisher's equilibrium strategy is to adopt a hybridpublishing model, while the institutions' equilibrium strategy is to publish in OA. This equilibrium is not stable and that in the medium/long term, the two players will converge on an OA publishing strategy. The analysis of the equilibrium in mixed-strategies confirms this result. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.13321&r= |
| By: | Oyegoke, Ebunoluwa O.; Aras, Osman Nuri |
| Abstract: | In most developing countries, Foreign Direct Investment (FDI) serves as a means of earning foreign reserves via investments, businesses and foreign aids from advanced countries. FDI is considered a valuable source of finance and capital formation, Technology-Transfer and know-how, as well as a viable medium for trade among countries. The Spillover effect also allows for the transfer of innovations and invention to the receiving countries, one of which Nigeria belongs. According to the requirement for accelerated growth in association with the Sustainable Development Goals is not completely clear, however, for economies to experience sustainable and inclusive development, cross-border trade is paramount. Presently, Nigeria is the first host economy of FDI in Sub-Saharan Africa, and the third in the continent. Recently, Nigeria has witnessed several trade policies which aim at diversifying the economy away from oil revenue. These policies are focused on improving the industrial sector, and of course, results in austerity. In 2018, the total FDI inflow to the country was around USD 1.9 billion, while in 2017, FDI inflow was around USD 3.5 billion, showing a decrease due to the consequence of the austerity measures imposed in 2018. At the third quarter of 2019, the FDI was only 3.37% (USD 200.08 million) of the total capital inflow for the period. Traditionally, FDI is designed to improve the recipient economies thereby enhancing economic growth and development, it is in this view that many developing countries attract foreign investors with the hope of strengthening their economy by increasing the foreign investment portfolio. However, most empirical analysis of the impact of FDI on economic growth advises otherwise, hence, a controversy. According to the existing literature, some empirical results found a negative relationship between FDI and economic growth, while others opined that as FDI increases, it results in a boost of output productivity, hence a positive relationship between the variables. Therefore, this study contributes to the existing literature by investigating the effects of FDI both on the owner, and the host country, using Nigeria as a case study. |
| Keywords: | Foreign Direct Investment, Economic Growth, Sustainable Development Goals, Nigeria. |
| JEL: | F63 |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108348&r= |
| By: | Coen, Jamie (London School of Economics); Kashyap, Anil (University of Chicago); Rostom, May (Bank of England) |
| Abstract: | We characterise the large number of mortgage offers for which people qualify. Almost no one picks the cheapest option, nonetheless the one selected is not usually much more expensive. A few borrowers make very expensive choices. These big mistakes are most common when the menu they face has many expensive options, and are most likely for high loan to value and loan to income borrowers. Young people and first-time buyers are more mistake-prone. The dispersion in the mortgage menu is consistent with banks attempting to price discriminate for some borrowers who might pick poorly while competing for others who might shop more effectively. |
| Keywords: | Price discrimination; consumer choice; mortgages |
| JEL: | D12 G21 G51 G53 |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0926&r= |
| By: | Böck, Maximilian |
| Abstract: | This paper studies how non-rational risk shocks affect the macroeconomy. Using a novel identification design which exploits survey data on expectations of financial executives in the US, I identify non-rational risk shocks via distortions in beliefs. Belief distortions are measured through surprises in beliefs of credit spreads, defined as the difference between subjective and objective forecasts. They are then used as a proxy for exogenous variation in the risk premium. Belief distortions elicit due to overreaction of credit spreads, eventually leading to exaggerated beliefs on financial markets. Results indicate that the constructed shocks have statistically and economically meaningful effects. This has sizeable consequences for the U.S. economy: A positive non-rational risk shock moves credit spreads remarkably while real activity and the stock market decline. |
| Keywords: | Business Cycles, Risk Shocks, Belief Distortions |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:8197&r= |
| By: | Malick Fall (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Waël Louhichi (ESSCA Research Lab - ESSCA - Groupe ESSCA); Jean Viviani (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The bid-ask spread refers to the tightness dimension of liquidity and can be used as a proxy for transaction costs. Despite the importance of the bid-ask spread in the financial literature, few studies have investigated its forecastability. We propose a new methodology to predict the bid ask spread by combining density forecasts of two types of models: Multiplicative Errors Models and ARMA-GARCH models. Our method is employed to predict the effective intra-day bid-ask spread series of all shares pertaining to the CAC40 index. Using a one-step-ahead out-of-sample framework, we resort on the Model Confidence Set procedure of Hansen et al. (2004) to classify models and we found that the proposed model appears to beat all the benchmark specifications. |
| Keywords: | Effective bid-ask spread,High-Frequency,Multiplicative Errors Models,Forecasting |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03257268&r= |
| By: | Aye, Goodness C; Odhiambo, Nicholas M |
| Abstract: | Oil plays a pivotal role in the growth of agriculture as a combustion lubricant for machineries and equipment used in the farming enterprise. Several studies have shown that a relationship exists between oil prices and agricultural growth without clear boundaries beyond which these prices are detrimental to the growth. Therefore, this study is conducted to identify the threshold above which oil prices will adversely affect agricultural growth in South Africa. Real West Texas Intermediate (WTI) and Real Brent crude oil prices in both Dollars and Rands were used as threshold variables in the threshold regression model of agricultural growth. The findings showed that beyond the threshold values of 12.99%, 15.68%, 15.69% and 15.70%, the prices of Real WTI crude oil in Dollars, Real Brent crude oil in Dollars, Real WTI crude oil in Rands and Real Brent crude oil in Rands respectively will have significant negative effects on agricultural growth in South Africa. |
| Keywords: | Oil prices; agricultural growth; threshold effect |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:27561&r= |
| By: | Szymon Lis (Faculty of Economic Sciences, University of Warsaw); Marcin Chlebus (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | No model dominates existing VaR forecasting comparisons. This problem may be solved by combine forecasts. This study investigates the daily volatility forecasting for commodities (gold, silver, oil, gas, copper) from 2000-2020 and identifies the source of performance improvements between individual GARCH models and combining forecasts methods (mean, the lowest, the highest, CQOM, quantile regression with the elastic net or LASSO regularization, random forests, gradient boosting, neural network) through the MCS. Results indicate that individual models achieve more accurate VaR forecasts for the confidence level of 0.975, but combined forecasts are more precise for 0.99. In most cases simple combining methods (mean or the lowest VaR) are the best. Such evidence demonstrates that combining forecasts is important to get better results from the existing models. The study shows that combining the forecasts allows for more accurate VaR forecasting, although it’s difficult to find accurate, complex methods. |
| Keywords: | Combining forecasts, Econometric models, Finance, Financial markets, GARCH models, Neural networks, Regression, Time series, Risk, Value-at-Risk, Machine learning, Model Confidence Set |
| JEL: | C51 C52 C53 G32 Q01 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2021-11&r= |
| By: | Antonio Mele (University of Lugano; Swiss Finance Institute; Centre for Economic Policy Research (CEPR)) |
| Abstract: | This paper introduces a tractable model of sovereign debt where governments cannot default strategically, but face intertemporal tradeoffs between (i) preferring more primary deficits to less and (ii) avoiding costly defaults. Governments run deficits when debt and, then, the marginal costs of increasing debt are low. However, after an extended period of debt accumulation, default probabilities begin to rise quickly, and so do the marginal costs of running debt. Eventually, debt reaches a critical level relative to the size of the economy, a fiscal tipping point, after which debt accumulation stops, with governments cycling between deficits and surpluses, until perhaps a time of default. The main conclusions are that (i) fiscal tipping points typically occur when distanceto- default is between 10% and 20%; (ii) tipping points are pushed back in a stable macroeconomic environment, such that default premiums are higher in countries that implement austerity earlier and remain positive even when exogenous risk is very small (two “volatility paradoxes”); (iii) liquidity conditions and fiscal reforms may affect default probabilities in an ambiguous way; (iv) fiscal austerity may arrive too late: “debt intolerance” arises around the fiscal tipping point. |
| Keywords: | government debt; default; fiscal tipping points; austerity; deficit cycles, volatility paradox. |
| JEL: | G01 G15 G38 E43 E44 E61 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2138&r= |
| By: | X. Henry Wang (Department of Economics, University of Missouri); Jingang Zhao (Economics Department, University of Saskatchewan) |
| Abstract: | This paper draws on recent results from the study of hybrid games and multi-product oligopolies to analyze horizontal mergers under Bertrand competition. We identify a set of linear Bertrand models in which a horizontal merger will reduce both the outsiders' profits and consumer surplus when the insiders' cost savings are sufficiently large. We also show that mergers in Bertrand models will normally increase the insiders' profits even without generating any cost-savings. Such results suggest that the increase in the insiders' profits may arise at the expense of rival firms and consumers, and thus raise new concerns about the anti-competitive effects of mergers under price competition. |
| Keywords: | Horizontal merger, Bertrand competition, consumer surplus |
| JEL: | D43 L13 L41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:2108&r= |
| By: | Jongrim Ha (World Bank, Prospects Group); M. Ayhan Kose (World Bank, Prospects Group; Brookings Institution; CEPR; CAMA); Franziska Ohnsorge (World Bank, Prospects Group; CEPR; CAMA) |
| Abstract: | We analyze the evolution and drivers of inflation during the pandemic and the likely trajectory of inflation in the near-term using an event study of inflation around global recessions and a factor-augmented vector auto-regression (FAVAR) model. We report three main results. First, the decline in global inflation during the 2020 global recession was the most muted and shortest-lived of any of the five global recessions over the past 50 years and the increase in inflation since May 2020 has been the fastest. Second, the decline in global inflation from January-May 2020 was four-fifths driven by the collapse in global demand and another one-fifth driven by plunging oil prices, with some offsetting inflationary pressures from supply disruptions. The subsequent surge in inflation has been mostly driven by a sharp increase in global demand. Third, both model-based forecasts and current inflation expectations point to an increase in inflation for 2021 of just over 1 percentage point. For virtually all advanced economies and one-half of inflation-targeting emerging market and developing economies (EMDEs), an increase of this magnitude would leave inflation within target ranges. If the increase is temporary and inflation expectations remain well-anchored, it may not warrant a monetary policy response. If, however, inflation expectations risk becoming unanchored, EMDE central banks may be compelled to tighten monetary policy before the recovery is fully entrenched. |
| Keywords: | Global Inflation; COVID-19; Global Recession; FAVAR; Oil Prices; Global Shocks. |
| JEL: | E31 E32 Q43 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:2108&r= |
| By: | Manthos D. Delis; Fulvia Fringuellotti; Steven Ongena |
| Abstract: | Access to credit plays a central role in shaping economic opportunities of households and businesses. Access to credit also plays a crucial role in helping an economy successfully exit from the pandemic doldrums. The ability to get a loan may allow individuals to purchase a home, invest in education and training, or start and then expand a business. Hence access to credit has important implications for upward mobility and potentially also for inequality. Adverse selection and moral hazard problems due to asymmetric information between lenders and borrowers affect credit availability. Because of these information issues, lenders may limit credit or post higher lending rates and often require borrowers to pledge collateral. Consequently, relatively poor individuals with limited capital endowment may experience credit denial, irrespective of the quality of their investment ideas. As a result, their exclusion from credit access can hinder economic mobility and entrench income inequality. In this post, we describe the results of our recent paper which contributes to the understanding of this mechanism. |
| Keywords: | credit constraints; income; business loans; economic mobility; income inequality; regression discontinuity design |
| JEL: | E51 D63 |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:92835&r= |
| By: | Marie Daumal (UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Abstract: | In 2008, the financial system of the United States teetered on the brink of collapse. Major banks failed or would have failed had it not been for financial support from the U.S. government. A vast literature composed of official reports, books, and academic papers cites multiple reasons why it occurred: inappropriate deregulation, weak supervision, excessive risk and leverage, growing inequality, etc. Reviewing the report by the Financial Crisis Inquiry Commission and other research, my purpose is to list and to synthesize the most commonly cited major causes. In a first part, this paper gives a short overview of the economic causes of the U.S. financial crisis. The second part deals with the political causes of the financial crisis. Indeed, since the 1980s, there was a remarkable bipartisan consensus in Washington in favor of deregulation, which, in turn, led to the financial crisis. I provide a few hypotheses and qualitative data to explain this consensus. Ideology, campaign contributions by private firms, lobbying, and the system of revolving doors between Wall Street and Washington might explain the past and current political decisions in favor of deregulation. This paper shows that the financial crisis was partly due to inappropriate deregulation, which might have been the result of flaws in the political system of the United States. |
| Keywords: | Financial Crisis,Campaign Contributions,Lobbying |
| Date: | 2021–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03261070&r= |
| By: | Klemperer, Paul; Gilbert, Richard |
| Keywords: | Economics |
| Date: | 2021–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:econwp:qt59j1m229&r= |
| By: | Jose Barrales-Ruiz, Ivan Mendieta-Muñoz, Codrina Rada, Daniele Tavani, Rudiger von Arnim |
| Abstract: | This paper surveys current debates on the distributive cycle. The literature builds on R.M. Goodwin’s seminal 1967 chapter titled “A growth cycle.” We review theoretical motivations for the distributive cycle, which, despite signif-icant differences, all imply that macroeconomic activity leads the labor share in a counter-clockwise cycle in the activity-labor share plane. Subsequently, we summarize and update evidence on the existence of a distributive cycle, with a focus on the post-war US macroeconomy. We analyze activity and labor share series and their interaction in the frequency domain, and also employ stan-dard vector autoregressions. Results confirm the distributive cycle for the US post-war period. We contextualize results vis-`a-vis current debates: (1) we consider a financial cycle, to rebut the theoretical possibility of “pseudo-Goodwin” cycles, (2) demonstrate that a suppressed labor share and stagnation are com-patible with short run Goodwin cycles, and argue that this link presents the way forward for research on secular stagnation. |
| Keywords: | Distributive cycle; US labor share of income; neo-Goodwin. JEL Classification:E12; E24; E25; E32. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2021-01&r= |
| By: | Joshua Brault (Department of Economics, Carleton University); Hashmat Khan (Department of Economics, Carleton University); Louis Phaneuf (Department of Economics, Universite du Quebec a Montreal); Jean Gardy Victor |
| Abstract: | We estimate a multi-shock DSGE model with a Bayesian method that differentiates between states of determinacy and indeterminacy. Determinacy is statistically preferred to indeterminacy before and after 1980. Key to this finding is a Taylor rule wherein the Fed targets output growth relative to trend instead of the level of the output gap or a mix of output gap and output growth. This allows us to revisit postwar macroeconomic fluctuations without indeterminacy. Relative to the pre-1980s, we find that the post-1983 contribution of shocks to the marginal efficiency of investment to the cyclical variance of output growth fell from 50% in the pre-1980s to 20% during the Great Moderation. Greater nominal wage flexibility was a main source of decline in the volatility of output and working hours during the Great Moderation, a finding which appears consistent with the post-1980 large deunionization in the private sector. Lower inflation variability resulted mostly from the Fed’s hawkish stance against inflation and changes in preference parameters. Lower trend inflation and smaller shocks were not major factors driving the Great Moderation. |
| Keywords: | Monetary Policy; Determinacy; Bayesian Estimation; Sources of Business Cycle; Changes in Aggregate Volatility |
| JEL: | E31 E32 E37 |
| Date: | 2021–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:21-01&r= |
| By: | Yuta Takahashi (Institute of Economic Research, Hitotsubashi University and CIRJE, The University of Tokyo); Naoki Takayama (Institute of Economic Research, Hitotsubashi University) |
| Abstract: | The average labor productivity, ALP, growth rates have declined among developed countries since around 2005. We argue that the declines were caused by the universal technological stagnation, which is reflected in the relative investment price movements. In the last decade, the declines of the relative investment prices have slowed down among developed countries, which was largely driven by equipment prices. We construct a multi-capital growth model and apply a growth accounting decomposition in order to back out the technology of each asset class. Our analysis reveals that the estimated technological stagnation of equipment greatly explains the declines of the ALP growth rate across the developed countries. Technological stagnation is especially severe for the US and explains 77% of the decline of the ALP growth rate after 2005. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2021cf1171&r= |
| By: | Compagnoni, Marco; Stadler, Manfred |
| Abstract: | We present a model of natural resources and growth that stresses the influence of an incomplete circularity of exhaustible natural resources. In particular, we analyze the recycling process and the material balance principle, two fundamental aspects of a circular economy. When market failures arise or complete recycling is not possible for technical reasons, then the equilibrium outcomes in terms of output, consumption, and prices for the material inputs are distorted compared to the socially optimal solution. However, the introduction of a market for waste and a system of subsidies/taxes on virgin and recycled resources enables an internalization of the externalities. The importance of technological progress in order to foster "circularity", i.e. both to improve resource efficiency in the production process and to enhance the backflow of materials from waste to production, is highlighted. |
| Keywords: | Circular economy,economic growth,natural resources,recycling |
| JEL: | O41 Q01 Q32 Q53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:145&r= |
| By: | Fernando Alexandre; Sara Cruz; Miguel Portela |
| Abstract: | In this paper, we focus on the managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams’ human capital on the probability of firms becoming financially distressed and their subsequent recovery. Our estimates show that the relevance of management teams’ formal education on the probability of firms becoming financially distressed depends on firms’ size and the type of education. We show that management teams’ formal education and tenure reduce the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, enhancing the economy’s resilience against shocks. |
| Keywords: | Financial distress, firm performance, human capital |
| JEL: | G32 J24 L25 |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaac:27-en&r= |
| By: | Garnero, Andrea (European Commission, Joint Research Centre); Lucifora, Claudio (Università Cattolica del Sacro Cuore) |
| Abstract: | Turning a "blind eye" to non-compliance with minimum wage standards is sometimes presented as a pragmatic way to accommodate higher wages while not harming employment opportunities for workers employed in marginal firms. In this paper, we model firms' wage and employment decisions, and show that there may be a trade-off between non-compliance and employment. The main prediction of the model are empirically tested using data from the Italian labour force survey. We find evidence of a positive employment non-compliance effect, though elasticities are smaller than typically thought as employers internalize the expected costs of non-compliance. We also show that employment effects are larger at low levels of non-compliance (when the risk of being referred to court is very low). The implications for policy and the role of regulators in monitoring and sanctioning non-compliance are discussed. |
| Keywords: | collective bargaining, sectoral minimum wages, compliance |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14456&r= |
| By: | Raghunathan, Kalyani; Ramani, Gayathri; Rubin, Deborah; Pereira, Audrey; Ahmed, Akhter; Malapit, Hazel J.; Quisumbing, Agnes R. |
| Abstract: | Increased market inclusion through participation in agricultural value chains may increase employment and household incomes, but evidence on its empowerment impacts is mixed. In societies with restrictive social norms, greater market inclusion can enhance existing income and empowerment inequalities by relegating marginalized groups, including women, to low value chains or lower value nodes within those chains. We use primary data from rural Bangladesh to investigate the associations between households’ primary economic activity – agricultural wage-earning, production, or entrepreneurship – and absolute and relative levels of men’s and women’s empowerment. Women in producer households, on average, fare better on empowerment outcomes than women in wage-earner or entrepreneur households; the opposite is true for men. The gap between men’s and women’s empowerment scores is also lowest in producer households. A decomposition of these results into composite indicators yields insights into potential trade-offs, while accompanying qualitative work highlights the importance of social and cultural norms in shaping the economic roles women can adopt. With a push towards diversification of agriculture into higher value market-oriented crops, more careful programming is needed to ensure that market inclusion translates into an increase in women’s empowerment. |
| Keywords: | BANGLADESH; SOUTH ASIA; ASIA; empowerment; gender; women; women's empowerment; agriculture; livelihoods; mixed model method; value chains; rural areas; households; market inclusion |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2008&r= |
| By: | Shafiullah Qureshi (Department of Economics, Carleton University); Ba Chu (Department of Economics, Carleton University); Fanny S. Demers (Department of Economics, Carleton University) |
| Abstract: | This paper applies state-of-the-art machine learning (ML) algorithms to forecast monthly real GDP growth in Canada by using both Google Trends (GT) data and official macroeconomic data (which are available ahead of the release of GDP data by Statistics Canada). We show that we can forecast real GDP growth accurately ahead of the release of GDP figures by using GT and official data (such as employment) as predictors. We first pre-select features by applying up-to-date techniques, namely, XGBoost’s variable importance score, and a recent variable-screening procedure for time series data, namely, PDC-SIS+. These pre-selected features are then used to build advanced ML models for forecasting real GDP growth, by employing tree-based ensemble algorithms, such as XGBoost, LightGBM, Random Forest, and GBM. We provide empirical evidence that the variables pre-selected by either PDC-SIS+ or the XGBoost’s variable importance score can have a superior forecasting ability. We find that the pre-selected GT data features perform as well as the pre-selected official data features with respect to short-term forecasting ability, while the pre-selected official data features are superior with respect to long-term forecasting ability. We also find that (1) the ML algorithms we employ often perform better with a large sample than with a small sample, even when the small sample has a larger set of predictors; and (2) the Random Forest (that often produces nonlinear models to capture nonlinear patterns in the data) tends to under-perform a standard autoregressive model in several cases while there is no clear evidence that the XGBoost and the LightGBM can always outperform each other. |
| Date: | 2021–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:21-05&r= |
| By: | Pineda-Hernández, Kevin; Rycx, François; Volral, Mélanie |
| Abstract: | Although many studies point to the significant influence of collective bargaining institutions on earnings inequalities, evidence on how these institutions shape poverty rates across developed economies remains surprisingly scarce. It would be a mistake, though, to believe that the relationship between earnings inequalities and poverty is straightforward. Indeed, whereas earnings inequalities are measured at the individual level, poverty is calculated at the household level using equivalised (disposable) incomes. Accordingly, in most developed countries poverty is not primarily an issue of the working poor. This paper explicitly addresses the relationship between collective bargaining systems and working-age poverty rates in 24 developed countries over the period 1990-2015. Using an up-to-date and fine-grained taxonomy of bargaining systems and relying on state-of-the-art panel data estimation techniques, we find that countries with more centralised and/or coordinated bargaining systems display significantly lower working-age poverty rates than countries with largely or fully decentralised systems. However, this result only holds in a post-tax benefit scenario. Controlling for country-fixed effects and endogeneity, our estimates indeed suggest that the poverty-reducing effect of collective bargaining institutions stems from the political strength of trade unions in promoting public social spending rather than from any direct effect on earnings inequalities. |
| Keywords: | Collective bargaining systems,poverty rates,social security expenditures,panel data,advanced economies |
| JEL: | C23 C26 I32 I38 J51 J52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:877&r= |
| By: | Bakari, Sayef |
| Abstract: | We examine the effect of the Internet on the relationship between domestic investment and economic growth. Data for G7 countries over the period 1991–2018 are used for panel data analysis. Empirical analaysis prove that domestic investment affect positively on economic growth, however the internet dont has any effect on economic growth. Also, the effect of domestic investment on economic growth proves to be not affected by the Internet. |
| Keywords: | Domestic Investment, Economic Growth, Internet, G7 Countries, Panel Data Analysis |
| JEL: | O31 O32 O38 O47 O5 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108383&r= |
| By: | Guillaume Gruère; Makiko Shigemitsu |
| Abstract: | Measuring policy progress on agriculture and water policies is essential to help decision makers identify necessary policy changes and understand how further progress may be achieved to improve agricultural water management. A thorough review of existing evaluations of agriculture and water policies suggests three types of progress to be measured: policy design, policy implementation capacity and policy results. The quality and robustness of these measures of policy progress depends upon three main factors. First, assessment of policy design requires matching policy alignment with cross cutting objectives or with a reference text. Second, assessment of progress in implementation capacity requires gauging evolution towards predefined capacity needs or identified governance gaps. Third, evaluation of policy results requires clearly defined objectives, timelines and scales for assessments. Seven practical options are identified for applying these principles to agriculture and water policies, illustrated by applying them to assessing progress in the sustainable management of water for irrigation under climate change and in controlling diffuse nutrient pollution. |
| Keywords: | Agricultural policy, Policy evaluation, Reform process, Water policy, Water pollution, Water risks, Water scarcity |
| JEL: | Q18 Q25 Q28 Q58 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:162-en&r= |