nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒02‒17
nine papers chosen by

  1. Intangible capital and productivity: Firm-level evidence from German manufacturing By Kaus, Wolfhard; Slavtchev, Viktor; Zimmermann, Markus
  2. An analysis of the efficiency of Italian museums using a generalised conditional efficiency model By Calogero Guccio; Marco Martorana; Isidoro Mazza; Giacomo Pignataro; Ilde Rizzo
  3. Heterogeneous Effects of the de jure and de facto Business Environment : Findings from Multiple Data Sets on the Business Environment By Zhenwei Qiang,Christine; Wang,He; Xu,L. Colin
  4. Model uncertainty, nonlinearities and out-of-sample comparison: evidence from international technology diffusion By Georgios Gioldasis; Antonio Musolesi; Michel Simioni
  5. Does FDI benefit incumbent SMEs?: FDI spillovers and competition effects at the local level By Alexander C. Lembcke; Lenka Wildnerova
  6. Low Interest Rates and Bank Profits By Katherine Di Lucido; Anna Kovner; Samantha Zeller
  7. The Aggregate Consequences of Default Risk: Evidence from Firm-level Data By Timothy J. Besley; Isabelle A. Roland; John Van Reenen
  8. Gender Differences in Agricultural Productivity in Cote d'Ivoire : Changes in Determinants and Distributional Composition over the Past Decade By Donald,Aletheia Amalia; Lawin,Gabriel; Rouanet,Lea Marie

  1. By: Kaus, Wolfhard; Slavtchev, Viktor; Zimmermann, Markus
    Abstract: We study the importance of intangible capital (R&D, software, patents) for the measurement of productivity using firm-level panel data from German manufacturing. We first document a number of facts on the evolution of intangible investment over time, and its distribution across firms. Aggregate intangible investment increased over time. However, the distribution of intangible investment, even more so than that of physical investment, is heavily right-skewed, with many firms investing nothing or little, and a few firms having very large intensities. Intangible investment is also lumpy. Firms that invest more intensively in intangibles (per capita or as sales share) also tend to be more productive. In a second step, we estimate production functions with and without intangible capital using recent control function approaches to account for the simultaneity of input choice and unobserved productivity shocks. We find a positive output elasticity for research and development (R&D) and, to a lesser extent, software and patent investment. Moreover, the production function estimates show substantial heterogeneity in the output elasticities across industries and firms. While intangible capital has small effects for firms with low intangible intensity, there are strong positive effects for high-intensity firms. Finally, including intangibles in a gross output production function reduces productivity dispersion (measured by the 90-10 decile range) on average by 3%, in some industries as much as nearly 9%.
    Keywords: intangible capital,productivity,production functions
    JEL: D24 L60 O30
    Date: 2020
  2. By: Calogero Guccio (Department of Economics and Business, University of Catania); Marco Martorana (Department of Economics and Business, University of Catania); Isidoro Mazza (Department of Economics and Business, University of Catania); Giacomo Pignataro (Department of Economics and Business, University of Catania); Ilde Rizzo (Department of Economics and Business, University of Catania)
    Abstract: Museums are among the most relevant cultural institutions and assume a central role from the cultural and the economic perspectives in a country having an outstanding cultural heritage, such as Italy, which makes the evaluation of their efficiency of primary importance. However, so far, the literature evaluating museums’ efficiency has often neglected the distinction between outputs under the direct control of museums and outcomes, which depend on users’ involvement, thus providing incorrect conclusions on museums’ performance. In this paper, we employ a generalised conditional efficiency model to assess the true efficiency of Italian museums, i.e. the efficiency in the provision of museums’ service potential, and to consistently deal with the impact on the efficiency of the socio-demographic and institutional environment in which museums operate. Results show that the operational environment matters. Among other aspects, conditional estimates suggest that higher income levels and larger hospitality sectors positively influence museums efficiency.
    Keywords: Cultural heritage; Museums; technical efficiency; Non-parametric Frontier; FDH; Conditonal estimates.
    JEL: Z1 C14 C61 I21
    Date: 2020–02
  3. By: Zhenwei Qiang,Christine; Wang,He; Xu,L. Colin
    Abstract: Using multiple sources of national- and firm-level data around the world, this paper investigates how the effects of the business environment depend on whether the measure is de jure or de facto, and how business environment effects differ by ownership and size. The paper compares estimates of business environment effects from three data sources, and modifies the priors on the relative importance of various elements of the business environment. Among four aspects of the business environment, at least two sets are robust and a third set does not contradict the other two: access to finance, electricity, internet, and human capital. The effects of de jure business environment indicators on firm performances depend on measures of contract enforcement. Foreign-owned firms benefit more from the maintenance of physical safety and ease in obtaining construction permits, and gain competitive advantage in productivity when domestic infrastructure or access to finance is worse. Relatively small firms benefit more from corruption control, basic and modern infrastructure, human capital, and land access. Relatively large firms benefit more from physical safety. Access to finance is important for the expansion of smaller firms and the productivity of large firms.
    Keywords: Business Environment,Access to Finance,Energy Policies&Economics,Labor Markets
    Date: 2020–01–21
  4. By: Georgios Gioldasis (Università degli Studi di Ferrara); Antonio Musolesi (Università degli Studi di Ferrara); Michel Simioni (MOISA, INRA, University of Montpellier, Montpellier, France)
    Abstract: This paper reconsiders the international technology diffusion model. Because the high degree of uncertainty surrounding the Data Generating Process and the likely presence of nonlinearities and latent common factors, it considers alternative nonparametric panel specifications which extend the Common Correlated Effects approach and then contrasts the out-of-sample performance of them with those of more common parametric models. To do so, we adopt an approach recently proposed within the literature of nonparametric regression. This approach is based on a pseudo Monte Carlo experiment that takes its roots on cross validation and aims at testing whether two competing approximate models are equivalent in terms of their expected true error. Our results indicate that the adoption of a nonparametric approach provides better performances. This work also refines previous results by showing threshold e ects, nonlinearities and interactions, which are obscured in parametric specifications and which have relevant implications for policy.
    Keywords: large panels; cross-sectional dependence; factor models; nonparametric regression; spline functions; approximate model; predictive accuracy, international technology diffusion
    JEL: C23 C5 F0 O3
    Date: 2020–01
  5. By: Alexander C. Lembcke; Lenka Wildnerova
    Abstract: That global networks provide positive externalities to participating firms is a well‑documented fact. Less is known about how the performance of non-participating firms, especially those that are small or medium-sized, changes with exposure to an increase in the presence of globally integrated firms in their vicinity. With global trade being dominated by large firms, the benefits for SMEs are often indirect, e.g. through input relationships with larger companies or through knowledge spillovers that facilitate the adoption of best practices in firms with access to globally integrated peers. This paper combines industry and regional exposure to global links in form of foreign ownership. It uses firm-level microdata for 13 OECD countries, allowing for local spillovers (or crowding out) within the same industry and across industries. Foreign investment in the firm in the same region is associated with increasing productivity of local firms, especially in form of cross-sector externalities. Horizontal (same sector) externalities are negative, especially if they are coming from foreign firms locating in distanced regions. FDI tends to be associated with employment decline in manufacturing firms, but some growth in small firms.
    Keywords: Employment, FDI, Firms, Productivity, SME
    JEL: D22 F14 F23 F21 R12
    Date: 2020–02–12
  6. By: Katherine Di Lucido (Research and Statistics Group); Anna Kovner (Harvard University; Federal Reserve Bank); Samantha Zeller (Research and Statistics Group)
    Abstract: The Fed?s December 2015 decision to raise interest rates after an unprecedented seven-year stasis offers a chance to assess the link between interest rates and bank profitability. A key determinant of a bank?s profitability is its net interest margin (NIM)?the gap between an institution?s interest income and interest expense, typically normalized by the average size of its interest-earning assets. The aggregate NIM for the largest U.S. banks reached historic lows in the fourth quarter of 2015, coinciding with the ?low for long? interest rate environment in place since the financial crisis. When interest rates fall, interest income and interest expenses tend to fall as well, but the relative changes?and the impact on NIM?are less clear. In this post, we explore how NIM fell during the low-interest-rate period, finding that banks mitigated some, but not all, of the impact of lower rates by shifting into less costly types of liabilities. Our analysis also gives insight into how NIM may respond to the new rising interest rate environment.
    Keywords: banks; NIM; low interest rates; bank profitability
    JEL: G2
  7. By: Timothy J. Besley; Isabelle A. Roland; John Van Reenen
    Abstract: This paper studies the implications of perceived default risk for aggregate output and productivity. Using a model of credit contracts with moral hazard, we show that a firm’s probability of default is a sufficient statistic for capital allocation. The theoretical framework suggests an aggregate measure of the impact of credit market frictions based on firm-level probabilities of default which can be applied using data on firm-level employment and default risk. We obtain direct estimates of firm-level default probabilities using Standard and Poor’s PD Model to capture the expectations that lenders were forming based on their historical information sets. We implement the method on the UK, an economy that was strongly exposed to the global financial crisis and where we can match default probabilities to administrative data on the population of 1.5 million firms per year. As expected, we find a strong correlation between default risk and a firm’s future performance. We estimate that credit frictions (i) cause an output loss of around 28% per year on average; (ii) are much larger for firms with under 250 employees and (iii) that losses are overwhelmingly due to a lower overall capital stock rather than a misallocation of credit across firms with heterogeneous productivity. Further, we find that these losses accounted for over half of the productivity fall between 2008 and 2009, and persisted for smaller (although not larger) firms
    JEL: D24 E32 L11 O47
    Date: 2020–01
  8. By: Donald,Aletheia Amalia; Lawin,Gabriel; Rouanet,Lea Marie
    Abstract: This paper analyzes changes in agricultural productivity gender gaps in Côte d'Ivoire between 2008 and 2016 using decomposition methods. The analysis finds that the unconditional gender gap between male- and female-headed households has decreased by 14 percent over the past decade. The conditional gender gap has decreased by 32 percent and becomes statistically insignificant once accounting for whether households farm export crops. This transition is driven by improvements across crop types, but it is particularly remarkable for export crop productivity, likely due to increased adoption of fertilizer and pesticide by female-headed households. Despite these substantial improvements, female-headed households in the bottom half of the distribution remain disadvantaged. Moreover, over the past decade, female-headed households did not transition into commercial agriculture and have witnessed greater reductions in land area compared with their male counterparts. The results show that helping these female-headed households access agricultural labor, strengthen their land rights, and adopt export crops are the three most promising policy options to reach gender parity in agriculture in Côte d'Ivoire.
    Keywords: Climate Change and Agriculture,Crops and Crop Management Systems,Economics and Gender,Gender and Economic Policy,Gender and Poverty,Gender and Economics,Gender and Development,Inequality,Educational Sciences
    Date: 2020–01–21
  9. By: Imène Berguiga (University of Sousse); Philippe Adair (University Paris Est Créteil); Nadia Zrelli (University of Sousse); Ali Abdallah (University of Sousse)
    Abstract: Islamic banks face specific risks related to Sharia-compliant contracts. We provide an exhaustive literature review addressing the methodological issues of the measurement of performance and document the main stylised facts regarding the performance of Islamic banks (IBs) in the MENA region. We investigate 53IBs in 11 MENA countries over 2007-2014, first using cross-sectional analysis as of year 2013. A panel data model with instrumental variables estimates the impact of risks upon the returns on assets and equity of Islamic banks. Four salient results emerge: Sharia compliance exerts an ambiguous effect upon performance; Islamic specificity is a minor attribute according to the insignificant share of profit and loss sharing (PLS) contracts in total assets; there is no relationship between Sharia compliance and specific risk; loan loss provisions do not restrict to specific risks (PLS), hedging all risks.
    Date: 2019–12–20

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