nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒06‒11
thirteen papers chosen by

  1. Resource Misallocation and Productivity: Evidence from Mexico By Florian Misch; Christian Saborowski
  2. Outside Board Directors and Start-Up Firms’ Innovation By Baum, Christopher F; Lööf, Hans; Stephan, Andreas; Viklund-Ros, Ingrid
  3. Innovation and business performance for Spanish SMEs: new evidence from a multi-dimensional approach. By Alfonso Expósito; Juan A. Sanchis-Llopis
  4. The Cobb-Douglas function as a flexible function: Analysing the sustitution between capital, labor and energy By Frédéric Reynès
  5. Foreign Capital and Domestic Productivity in the Czech Republic By Mojmir Hampl; Tomas Havranek
  6. Spatial competition and quality: Evidence from the English family doctor market By Gravelle, Hugh S; Liu, Dan; Propper, Carol; Santos, Rita
  7. Slower Productivity and Higher Inequality: Are They Related? By Jason Furman; Peter Orszag
  8. Where Have All the Profits Gone? European Bank Profitability Over the Financial Cycle By Enrica Detragiache; Thierry Tressel; Rima Turk-Ariss
  9. Super-Efficiency of Education Institutions: An Application to Economics Departments By Matthias Gnewuch; Klaus Wohlrabe
  10. Energy in Economic Growth: Is Faster Growth Greener? By Gregor Semieniuk
  11. A Bayesian dynamic model to test persistence in funds' performance By Emmanuel Mamatzakis; Mike Tsionas
  12. Do the financial sources of external funds affect research productivity? -A departmental level analysis of seven former imperial universities of Japan By Miki Miyaki; Yuko Okajima
  13. The Impact of Formal Networking on the Performance of SMEs By Davide Vannoni

  1. By: Florian Misch; Christian Saborowski
    Abstract: This paper explores the role for specific structural distortions in explaining Mexico’s weak productivity growth through the resource misallocation channel. The paper makes two contributions. First, we validate the approach of measuring misallocation indirectly (Hsieh and Klenow, 2009) by illustrating a close correlation between misallocation and per capita incomes across Mexican states. Second, we exploit the large variation in resource misallocation within industries and across states together with unusually rich data at the firm, local, and industry level to shed light on its determinants. We identify several well-defined distortions that have a statistically and economically meaningful effect on productivity via resource misallocation.
    Date: 2018–05–15
  2. By: Baum, Christopher F (Boston College and DIW Berlin); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Stephan, Andreas (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Viklund-Ros, Ingrid (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: We exploit increased access to detailed employer-employee data to assess whether outside board members affect innovation performance among start-up firms. Using data for all new limited companies in Sweden born during 1999–2013 which have no more then 10 employees when formed, we provide structural equation estimates that deal with the endogenous selection of board directors. Our empirical findings show that an increase in the board’s expertise, measured by the relative productivity of the firms where outsiders are employed, has a significant and positive impact on the new firm’s propensity to apply for both patents and trademarks.
    Keywords: Start-ups; outside directors; innovation; patents; trademarks; productivity; endogeneity
    JEL: D24 O33
    Date: 2018–06–01
  3. By: Alfonso Expósito (Department of Economic Analysis and Political Economy, University of Seville, Calle San Fernando 4, 41004 Sevilla (Spain).); Juan A. Sanchis-Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This paper examines the impacts of product, process, and organisational innovations on two alternative dimensions of business performance: finance and operations. Two indicators capture financial performance: sales increase and production cost reduction. Operational firm performance is captured by two alternative indicators: productive capacity augmentation and quality improvement of product/service provided by the firm. Using a wide-ranging sample of Spanish SMEs, our findings highlight the existence of significant impacts of innovation on both these dimensions of business performance, although these impacts differ regarding the type of innovation and the performance indicator considered. Furthermore, our results indicate that the relationship between innovation choices in SMEs and business performance should be analysed from a multidimensional approach. These findings reveal significant implications for innovation policies and innovation strategies for SMEs.
    Keywords: innovation, business performance, multi-dimensional analysis, SME, Spain
    JEL: O32 L25 C25
    Date: 2018–05
  4. By: Frédéric Reynès (Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek)
    Abstract: By defining the Variable Output Elasticities Cobb-Douglas function, this article shows that a large class of production functions can be written as Cobb-Douglas function with non-constant output elasticity. Compared to standard flexible functions such as the Translog function, this framework has several advantages. [1] It does not requires the use of a second order approximation. [2] This greatly facilitates the deduction of linear input demands function without the need of involving the duality theorem. [3] It allows for a generalization of the CES function to the case where the elasticity of substitution between each pair of inputs is not necessarily the same. [4] This provides a more general and more flexible framework compared to the traditional nested CES approach while facilitating the analyze of the substitution properties of nested CES functions. The case of substitutions between energy, capital and labor is provided.
    Keywords: Flexible production functions; Cobb-Douglas function; CES function; Substitution capital-labor-energy
    JEL: D24 E23
    Date: 2017–04
  5. By: Mojmir Hampl (Czech National Bank, Na prikope 28, 115 03 Prague 1, Czech Republic); Tomas Havranek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic; Czech National Bank, Na prikope 28, 115 03 Prague 1, Czech Republic)
    Abstract: In this paper we take stock of the evidence concerning the effect of foreign direct investment (FDI) on the productivity of locally owned firms in the Czech Republic. To this end, we collect 332 estimates previously reported in journal articles, working papers, and PhD theses. We find that the mean reported externality arising for domestic firms due to the presence of foreign firms (the “FDI spillover”) is zero. There is no evidence of publication bias, i.e., no sign of selective reporting of results that are statistically significant and show an intuitive sign. Nevertheless, we find that the overall spillover effect is positive and large when more weight is placed on estimates that conform to best-practice methodology. Our results suggest that, as of 2018, a 10-percentage-point increase in foreign presence is likely to lift the productivity of domestic firms by 11%. The effect is even larger for joint ventures, reaching 19%.
    Keywords: Foreign direct investment, productivity, spillovers, meta-analysis
    JEL: C83 F23
    Date: 2018–05
  6. By: Gravelle, Hugh S; Liu, Dan; Propper, Carol; Santos, Rita
    Abstract: We examine whether family doctor firms in England respond to local competition by increasing their quality. We measure quality in terms of clinical performance and patient-reported satisfaction to capture its multi-dimensional nature. We use a panel covering 8 years for over 8000 English general practices, allowing us to control for unobserved local area effects. We measure competition by the number of rival doctors within a small distance. We find that increases in local competition are associated with increases in clinical quality and patient satisfaction, particularly for firms with lower quality. However, the magnitude of the effect is small.
    Keywords: Quality; healthcare; choice; competition; family physicians
    JEL: I11 I18
    Date: 2018–05
  7. By: Jason Furman (Peterson Institute for International Economics); Peter Orszag (Lazard Freres & Co.)
    Abstract: Income growth for typical American families has slowed dramatically since 1973. Slower productivity growth and an increase in income inequality have both contributed to this trend. This paper addresses whether there is a relationship between the productivity slowdown and the increase in inequality, specifically exploring the extent to which reduced competition and dynamism can explain both of these phenomena. Productivity growth has been uneven across the economy, with top firms earning increasingly skewed returns. At the same time, the between-firm disparities have been important in explaining the increase in labor income inequality. Both these findings are consistent with the observed reductions in competition, as evidenced by increasing concentration and economic rents, and business dynamism. The authors also explore the scenarios under which government policies can help mitigate, or contribute to, declining competition and dynamism.
    Keywords: competition, productivity, inequality, economic dynamism
    JEL: D24 D31 D40 E25 K20 L40
  8. By: Enrica Detragiache; Thierry Tressel; Rima Turk-Ariss
    Abstract: The paper investigates EU banks’ profitability through the recent financial cycle using banklevel balance sheet and income statement data. We find that banks that were more successful at protecting their profits had a less pronounced deterioration in loan quality and a larger improvement in cost efficiency. They also downsized their assets more aggressively during the crisis, and reduced reliance on wholesale funding more markedly post-crisis. Net interest margins remained broadly stable over the financial cycle, including post-crisis, and there is no clear evidence that aspects of bank business model, such as higher reliance on fees and commission income, were associated with better profitability post-crisis.
    Date: 2018–05–09
  9. By: Matthias Gnewuch; Klaus Wohlrabe
    Abstract: This paper investigates the efficiency of 188 economics departments around the world using data from RePEc. We go beyond the heavily used data envelopment analysis and utilize partial frontier analysis - specifically order-α and order-m - which addresses some of the drawbacks of the standard efficiency frontier analysis and allows for so-called super-efficient departments. We examine the particularities of these approaches and find that the super-efficient departments are not only the “usual suspects”. Furthermore, standard output rankings are not well correlated with our estimated efficiency rankings, which themselves are rather similar.
    Keywords: super-efficiency, economics departments, data envelopment analysis, order-α, order-m, free disposal hull, RePEc
    JEL: I21 I23 D61
    Date: 2018
  10. By: Gregor Semieniuk (Department of Economics, SOAS University of London, UK)
    Abstract: An influential theoretical hypothesis holds that if aggregate productivity growth accelerates, then so does the decline in energy intensity. Whether faster growth is greener in this sense is crucial for modeling future growth and climate change mitigation, but empirical evidence is lacking. This paper characterizes the global, long-run historical relationship between changes in energy intensity and labor productivity growth rates. Basing estimates on an unbalanced panel of 180 countries for the period 1950-2014 and the world as a whole, it captures a significantly larger historical window than previous studies. The paper finds a stylized fact whereby the rate at which energy intensity changes is constant or even increases as labor productivity accelerates. Faster growth is not greener. This provides important new information for calibrating integrated assessment models, many of which make a green growth assumption in near term projections.
    Keywords: energy intensity, labor productivity, decoupling, green growth, stylized fact
    JEL: O44 O47 Q43 E17
    Date: 2018–04
  11. By: Emmanuel Mamatzakis (Department of Business and Management, University of Sussex, UK; Rimini Centre for Economic Analysis); Mike Tsionas (Lancaster University Management School, UK; Athens University of Economics and Business, Greece)
    Abstract: We provide a Bayesian panel model to take into account persistence in US funds' performance while we tackle the important problem of errors in variables. Our modelling departs from prior strong assumptions such as error terms across funds being independent. In fact, we provide a novel, general Bayesian model for (dynamic) panel data that is stable across different priors as reported from the mapping of the prior to the posterior of the Bayesian baseline model with the adoption of different priors. We demonstrate that our model detects previously undocumented striking variability in terms of performance and persistence across funds categories and over time, and in particular through the financial crisis. The reported stochastic volatility exhibits a rising trend as early as 2003-2004 and could act as an early warning of future crisis.
    Keywords: Bayesian panel model, time-varying stochastic heteroskedasticity, time-varying covariance, general autocorrelation, US mutual fund performance
    Date: 2018–05
  12. By: Miki Miyaki (Rikkyo University, Collage of Business); Yuko Okajima (Osaka University, Office of Management and Planning)
    Abstract: This study examines research productivity of departments of seven former imperial universities of Japan. In this study, we categorize the departments into five academic fields: engineering, health science, economics, science, and agriculture. The study examines whether fundamental and external research funds positively affect the research productivity, which is measured by the number of papers accepted in international academic journals. Additionally, we investigate whether the financial sources of external research funds can affect productivity differently and if there is any variation among the five academic fields. The estimation results showed that, first, the increase of fundamental and external funds per faculty member is positively correlated with research productivity in the fields of engineering and health science. Second, considering the results of further investigation into the effects of external funding, research funding by the public sector can increase productivity in all the five academic fields. Third, the results pertaining to private research funds show that research funding provided by firms can increase productivity in engineering and health science. However, for economics, the increase in external funding from firms is negatively correlated with research productivity. This is possibly because the purpose of industry-university collaboration differs according to the academic field. Regarding economics, the output from the resulting collaboration might not result in the production of an academic paper from the department but rather lay the groundwork for effective policy making or consulting in favor of the firm on the basis of quantitative analysis. This study is the first attempt by Japanese universities to analyze research productivity at the plurality departmental level. The empirical results show that depending on the discipline, the same resources of research funding can have different impact on research productivity. Nowadays, the Japanese central government has been reforming the resource allocation systems of universities by evaluating their research performance, basing them more on the quantitative indicators such as KPI (Key Performance Indicators). However, a key result of this study implies that when the relative evaluation of universities is applied, each university fs situation must be more carefully considered, especially in terms of what kinds and shares of academic departments it has.
    Keywords: external funds, financial sources, research productivity, departmental analysis, five academic fields
    JEL: I22 I23 I28
    Date: 2018–06
  13. By: Davide Vannoni (Department of Economics and Statistics)
    Abstract: Using a large sample of Italian small and medium enterprises (SMEs), we investigate the effect of membership in a formal business network (?contratto di rete?) on firms? economic performance. We find that network participation has a positive effect on value added and exports, but not on profitability. The advantages of networking are stronger in the case of: smaller SMEs, firms operating in traditional and in more turbulent markets, firms located in less developed areas and firms not already exploiting the weaker ties offered by industrial districts. Network characteristics, such as size, geographical dispersion and diversity, are also found to influence performance.
    Keywords: formal business network, small and medium firms, economic performance
    JEL: D22 L25 M21
    Date: 2018–04

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