nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2019‒04‒08
nineteen papers chosen by
Walter Frisch
Universität Wien

  1. Commuting and internet traffic congestion By Berliant, Marcus
  2. Determinants of Optimal Capital Structure and Speed of Adjustment: Evidence from the U.S. ICT Sector By Giorgio Canarella; Stephen M. Miller
  3. Adapting business framework conditions to deal with disruptive technologies in Denmark By Mikkel Hermansen; Valentine Millot
  4. Firm Size, Corporate Debt, R&D Activity, and Agency Costs: Exploring Dynamic and Non-Linear Effects By Giorgio Canarella; Stephen M. Miller
  5. GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy By Brynjolfsson, Erik; Collis, Avinash; Diewert, Erwin; Eggers, Felix; FOX, Kevin J.
  6. Analyzing the Transformation of Work and Its Effects on Productivity in the Age of Automatization? By Kuusi, Tero; Kulvik, Martti; Laiho, Maarit; Ropponen, Annina; Vähämäki, Maija
  7. Information shocks and provider responsiveness: evidence from interventional cardiology By Avdic, Daniel; Propper, Carol; von Hinke, Stephanie
  8. ICT sector, output and employment generation in Nigeria: Input-output approach By Aminu, Alarudeen; Raifu, Isiaka Akande
  9. GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy By Erik Brynjolfsson; Avinash Collis; W. Erwin Diewert; Felix Eggers; Kevin J. Fox
  10. Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? By Yassine Bakkar; Olivier De Jonghe; Amine Tarazi
  11. The race against the robots and the fallacy of the giant cheesecake: Immediate and imagined impacts of artificial intelligence By Naude, Wim
  12. The middle-technology trap: The case of the automotive industry in Turkey By Akçomak, Ibrahim Semih; Bürken, Serkan
  13. Does combining different types of collaboration always benefit firms? Collaboration, complementarity and product innovation in Norway By Fitjar, Rune Dahl; Haus-Reve, Silje; Rodríguez-Pose, Andrés
  14. The Mobile Phone, Information Sharing and Financial Sector Development in Africa: A Quantile Regressions Approach By Simplice A. Asongu; Nicholas M. Odhiambo
  15. Inovação em saúde: um estudo a partir da Pesquisa Sondagem de Inovação By Mônica Viegas Andrade; Kenya Noronha; Nayara Abreu Julião; Aline Souza; Leon Marques Faria Zatti; Rafael Pereira Prestes; Daniel Nogueira da Silva; Helen Carolina Soares Teixeira; Silvia Resende de Sá; Lucas Resende de Carvalho
  16. Fixed-Effect Regressions on Network Data By Jochmans, K., Weidner, M.; Weidner, M.
  17. Bits and bolts: The digital transformation and manufacturing By Matej Bajgar; Sara Calligaris; Flavio Calvino; Chiara Criscuolo; Jonathan Timmis
  18. Personality Traits and Performance in Online Labour Markets By Mourelatos, Evangelos; Giannakopoulos, Nicholas; Tzagarakis, Manolis
  19. The Relationship Dilemma: Organizational Culture and the Adoption of Credit Scoring Technology in Indian Banking By Prachi Mishra; Nagpurnanand R. Prabhala; Raghuram G. Rajan

  1. By: Berliant, Marcus
    Abstract: We examine the fine microstructure of commuting in a game-theoretic setting with a continuum of commuters. Commuters' home and work locations can be heterogeneous. A commuter transport network is exogenous. Traffic speed is determined by link capacity and by local congestion at a time and place along a link, where local congestion at a time and place is endogenous. The model can be reinterpreted to apply to congestion on the internet. We find sufficient conditions for existence of equilibrium, that multiple equilibria are ubiquitous, and that the welfare properties of morning and evening commute equilibria differ on a tree.
    Keywords: Commuting; Internet traffic; Congestion externality; Efficient Nash equilibrium
    JEL: L86 R41
    Date: 2019–03–25
  2. By: Giorgio Canarella (University of Nevada, Las Vegas); Stephen M. Miller (University of Nevada, Las Vegas)
    Abstract: We employ a dynamic adjustment model (Flannery and Rangan, 2006) to investigate the determinants of capital structure and speed of adjustment (Drobetz and Wanzenried, 2006) in a panel of 85 U.S. ICT firms over the years 1990 to 2013. We estimate the capital structure using a wide range of factors commonly used in the empirical literature (growth and investment opportunities, profitability, firm size, default risk, and industry median capital structure). We expand on this literature to include two additional determinants: asset turnover, an inverse measure of firm agency costs (Morellec, et al., 2012; Ang, Cole, and Lin, 2000), and R&D activity (Aghion, et al., 2004). We find that the speed of adjustment increases with firm size, growth opportunities, and distance from the target capital structure, and decreases with default risk and agency costs. We also find that R&D expenditures and agency costs cause firms to maintain lower levels of debt. We employ four recently developed estimators in dynamic panel-data econometrics: the double-censored fractional estimator (Elsas and Florysiak, 2011), the bias-corrected least-squares dummy-variable estimator (Bruno, 2005), the iterative bootstrap-based bias correction for the fixed-effects estimator (Everaert and Pozzi, 2007), and the fixed-effects quasi-maximum-likelihood estimator (Kripfganz, 2016; Hsiao, et al., 2002). In addition, our panel-data regression results show that in the ICT sector, the leverage ratio exhibits high persistence. Moreover, it positively relates to growth and investment opportunities, firm size, capital investment, and industry median capital structure, and negatively relates to profitability and default risk.
    Keywords: ICT industry; agency costs; optimal capital structure, dynamic modeling
    JEL: G21 G28 G32 G34
    Date: 2019–03
  3. By: Mikkel Hermansen; Valentine Millot
    Abstract: Danish firms are close to the technological frontier compared to other OECD countries,making the introduction of new – potentially disruptive – technologies key to boostproductivity growth. Despite a high level of digitalisation and good framework conditions,aggregate productivity growth in Denmark has been only average compared to otheradvanced OECD countries and lags behind in less knowledge-intensive service industries.Policy needs to embrace innovative technologies by leaning against attempts to discourageor exclude them and by tackling unintended or outmoded obstacles in legislation andregulation. Analysis based on Danish firm-level data suggests that digital adoption throughinvestment in ICT capital increases firm productivity and contributes to business dynamicsand firm growth. Improving economic incentives for such investment as well as facilitatingadoption of new business models require a shift of taxation away from capital and labourincome. Ensuring supply of the right skills and maintaining effective upskilling will helpworkers cope with disruptive changes and ensure that economic growth benefits all.
    Keywords: competition, digitalisation, disruption, innovation, productivity, skills, taxation
    JEL: E24 H25 L40 L50 O16 O33 O38
    Date: 2019–04–02
  4. By: Giorgio Canarella (University of Nevada, Las Vegas); Stephen M. Miller (University of Nevada, Las Vegas)
    Abstract: This paper empirically investigates firm-specific determinants of agency costs, a relatively new and unexplored area in corporate finance. We estimate dynamic agency costs models, linking debt, firm size, and R&D activity to agency costs for a panel of U.S. information and communication technology (ICT) firms over 1990-2013. We adopt the Blundell and Bond (1998) two-step system GMM technique, which explicitly accounts for persistence, endogeneity, and unobservable firm heterogeneity. We provide the first evidence that our inverse proxy for agency costs, namely asset turnover (Ang, et al., 2000), exhibits an inverted U-shaped relationship with debt and a U-shaped relationship with firm size and R&D activity. These findings imply that agency costs experience a minimum value (in case of debt) and a maximum value (in case of firm size and R&D activity) and, therefore, that agency costs are higher at both low and high levels of debt, and lower at both low and high levels of firm size and R&D activity. We find that the level of debt of the average firm in the sample falls below the level that minimizes agency costs. We also document that, consistent with the agency literature, short-term debt provides an additional effective monitoring mechanism to alleviate agency costs. Our findings reveal that agency costs are dynamic in nature, mean-reverting, and persistent over time. This notion confirms the Florackis and Ozkan (2009) conjecture that managers behave as though an optimal level of agency costs exist that they pursue. Finally, we find a positive association between firm profitability and agency costs and a negative association between agency costs and firm growth. Extensive additional analysis confirms the robustness of our results.
    Keywords: ICT industry; agency costs; non-linearity; dynamic adjustment; system GMM
    JEL: G21 G28 G32 G34
    Date: 2019–03
  5. By: Brynjolfsson, Erik; Collis, Avinash; Diewert, Erwin; Eggers, Felix; FOX, Kevin J.
    Abstract: The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.
    Keywords: Welfare measurement, GDP, Productivity, mismeasurement, productivity slowdown, new goods, free goods, online choice experiments, GDP-B
    JEL: C43 D60 E23 O3 O4
    Date: 2019–03–27
  6. By: Kuusi, Tero; Kulvik, Martti; Laiho, Maarit; Ropponen, Annina; Vähämäki, Maija
    Abstract: Abstract In this policy brief, we discuss the challenges of measuring productivity effects of automatization in a governmental payment service organization (The Finnish Government Shared Services Centre for Finance and HR, Palkeet) that has developed and applied digital robotics in work processes. To this end, we combine sociologic and economic research tools and traditions to provide a full picture of the transition. First, we analyse work at the level of individual tasks by using large-scale econometric models and HR-data; an approach that provides detailed digital job profiles for assessment. Secondly, we add the understanding of digital working by qualitative inquiry of employees’ meaning making of working with robots. Our study contributes to the discourses of management control and adaptation to change.
    Keywords: Automatization, Labour, Productivity, Services
    JEL: H11 H30 O33
    Date: 2019–03–27
  7. By: Avdic, Daniel; Propper, Carol; von Hinke, Stephanie
    Abstract: We examine physician responses to global information shocks and the impact on patient outcomes. We exploit an international "firestorm" over the safety of an innovation in healthcare, drug-eluting stents. We use rich micro-data on interventional cardiologists' use of stents to de- fine and measure responsiveness to news shocks. We find substantial heterogeneity in responsiveness to both good and bad news and an association between speed of response to news and patient outcomes. Patients treated by cardiologists who respond slowly to news shocks have fewer adverse outcomes. These results cannot be attributed to financial incentives, patient-physician sorting or heterogeneity in skill.
    Keywords: Practice style; Quality of care; response to news
    JEL: H51 I11 I18 J24 O33
    Date: 2019–03
  8. By: Aminu, Alarudeen; Raifu, Isiaka Akande
    Abstract: This study assesses the contributions of ICT sector to the Nigerian economy after the reform of the sector in 2001. Using the input-output table for 2001, 2006 and 2011, the study specifically examines the output and employment contributions of ICT sector to sectors of the economy including the ICT sector itself. The study computes the contributions along the lines of direct, indirect and induced output and employment effects of the ICT sector’s activity. The study finds that ICT sector has contributed some output and employment the economy through its linkage with other sectors. Among the sectors, services sector seems to benefit much more from ICT sector reform than any other sector. While most of the benefits accrue to other sectors come from the induced effects of ICT reform, the benefits that accrue to ICT sector itself come mainly from the indirect effects that arise from the inter-sectoral linkages through the buying and selling of ICT sector products, services and contracts. Based on these findings, we propose that for the economy to continue to benefit from ICT sector growth and expansion, all stakeholders in the sector and the government through the Ministry of Communication and Nigerian Communication Commission should work out policies that would create enabling environment for the sector to thrive more efficiently and also to provide an effective framework that could further integrate the ICT sector with the rest of the sector in the economy.
    Keywords: ICT Sector, Input and Output Method, Nigerian Economy
    JEL: L0 R0
    Date: 2019–02
  9. By: Erik Brynjolfsson; Avinash Collis; W. Erwin Diewert; Felix Eggers; Kevin J. Fox
    Abstract: The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.
    JEL: D6 E2 O0 O4 O47
    Date: 2019–03
  10. By: Yassine Bakkar (Université de Limoges, LAPE); Olivier De Jonghe (Economics and Research Department, NBB and European Banking Center, Tilburg University); Amine Tarazi (Université de Limoges, LAPE and Institut Universitaire de France (IUF))
    Abstract: Frictions prevent banks to immediately adjust their capital ratio towards their desired and/or imposed level. This paper analyzes (i) whether or not these frictions are larger for regulatory capital ratios vis-à-vis a plain leverage ratio; (ii) which adjustment channels banks use to adjust their capital ratio; and (iii) how the speed of adjustment and adjustment channels differ between large, systemic and complex banks versus small banks. Our results, obtained using a sample of listed banks across OECD countries for the 2001-2012 period, bear critical policy implications for the implementation of new (systemic risk-based) capital requirements and their impact on banks’ balance sheets, specifically lending, and hence the real economy.
    Keywords: , capital structure, speed of adjustment, systemic risk, systemic size, bank regulation, lending, balance sheet composition
    JEL: G20 G21 G28
    Date: 2019–03
  11. By: Naude, Wim (UNU-MERIT, Maastricht University and MSM, and RWTH Aachen, and IZA Bonn)
    Abstract: After a number of AI-winters, AI is back with a boom. There are concerns that it will disrupt society. The immediate concern is whether labor can win a `race against the robots' and the longer-term concern is whether an artificial general intelligence (super-intelligence) can be controlled. This paper describes the nature and context of these concerns, reviews the current state of the empirical and theoretical literature in economics on the impact of AI on jobs and inequality, and discusses the challenge of AI arms races. It is concluded that despite the media hype neither massive jobs losses nor a `Singularity' are imminent. In part, this is because current AI, based on deep learning, is expensive and dificult for (especially small) businesses to adopt, can create new jobs, and is an unlikely route to the invention of a super-intelligence. Even though AI is unlikely to have either utopian or apocalyptic impacts, it will challenge economists in coming years. The challenges include regulation of data and algorithms; the (mis-) measurement of value added; market failures, anti-competitive behaviour and abuse of market power; surveillance, censorship, cybercrime; labor market discrimination, declining job quality; and AI in emerging economies.
    Keywords: Technology, artificial intelligence, productivity, labor demand, innovation, inequality
    JEL: O47 O33 J24 E21 E25
    Date: 2019–03–07
  12. By: Akçomak, Ibrahim Semih (TEKPOL, Middle East Technical University); Bürken, Serkan (TEKPOL, Middle East Technical University)
    Abstract: This paper argues that Turkey has fallen into a middle-technology trap on the borders of a weak innovation system (IS) and strong global value chains (GVCs). Detailed information from a primary R&D and innovation funding agency is used to show that the technological characteristics of the funded automotive R&D and innovation projects remained reasonably stable between 1995 and 2011. This result is cross-validated with two qualitative designs on beneficiary firms and automotive industry experts. The qualitative designs aided in identifying three mechanisms that explain how the Turkish automotive industry has fallen into a middle-technology trap. Analysis at the project, firm, and expert levels indicate that despite extensive upgrading and learning in manufacturing, the automotive industry has failed to build innovation capabilities. Turkey's delegated role in the automotive GVC, the joint venture (JV) structure and the lack of complementarities collectively work in creating a trap that impedes further technological development.
    Keywords: Middle-technology trap, automotive industry, technology, innovation, Turkey
    JEL: O12 O25 O33 L62
    Date: 2019–03–07
  13. By: Fitjar, Rune Dahl; Haus-Reve, Silje; Rodríguez-Pose, Andrés
    Abstract: Product innovation is widely thought to benefit from collaboration with both scientific and supply-chain partners. The combination of exploration and exploitation capacity, and of scientific and experience-based knowledge, are expected to yield multiplicative effects. However, the assumption that scientific and supply-chain collaboration are complementary and reinforce firm-level innovation has not been examined empirically. This paper tests this assumption on an unbalanced panel sample of 8337 firm observations in Norway, covering the period 2006â??2010. The results of the econometric analysis go against the orthodoxy. They show that Norwegian firms do not benefit from doing "more of all" on their road to innovation. While individually both scientific and supply-chain collaboration improve the chances of firm-level innovation, there is a significant negative interaction between them. This implies that scientific and supply-chain collaboration, in contrast to what has been often highlighted, are substitutes rather than complements. The results are robust to the introduction of different controls and hold for all tested innovation outcomes: product innovation, new-to-market product innovation, and share of turnover from new products.
    Keywords: firms; Innovation; Interaction; Norway; scientific and supply-chain collaboration
    JEL: O31 O32 O33
    Date: 2019–03
  14. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study investigates linkages between the mobile phone, information sharing offices (ISO) and financial sector development in 53 African countries for the period 2004-2011. ISO are private credit bureaus and public credit registries. The empirical evidence is based on contemporary and non-contemporary quantile regressions. Two main hypotheses are tested: mobile phones complement ISO to enhance the formal financial sector (Hypothesis 1) and mobile phones complement ISO to reduce the informal financial sector (Hypothesis 2). The hypotheses are largely confirmed. This research adds to the existing body of literature by engaging hitherto unexplored dimensions of financial sector development and investigating the role of mobile phones in information sharing for financial sector development.
    Keywords: Information sharing; Banking sector development; Africa
    JEL: G20 G29 L96 O40 O55
    Date: 2019–01
  15. By: Mônica Viegas Andrade (Cedeplar-UFMG); Kenya Noronha (Cedeplar-UFMG); Nayara Abreu Julião (Cedeplar-UFMG); Aline Souza (Cedeplar-UFMG); Leon Marques Faria Zatti (Cedeplar-UFMG); Rafael Pereira Prestes (Cedeplar-UFMG); Daniel Nogueira da Silva (Cedeplar-UFMG); Helen Carolina Soares Teixeira (Cedeplar-UFMG); Silvia Resende de Sá (Cedeplar-UFMG); Lucas Resende de Carvalho (Cedeplar-UFMG)
    Abstract: The objective of this study is to analyze the dynamics of innovation in the industrial sectors of the Economic and Industrial Health Complex, compared to other sectors of the manufacturing industry in Brazil. For that purpose, data of Survey of Innovation Survey, realized by the the Brazilian Industrial Development Agency (ABDI, acronym in Portuguese), from 2010 to 2016, was used. This is a descriptive study focusing on the characterization of company innovation processes in terms of product and process innovation, professional qualification, the composition of of spending and the main factors that influence the decision of future investments by companies. The results is in agreement with the literature that suggest a slowdown of economic activity after the economic crisis. Furthermore, it is possible to notice that more aggressive strategies of innovation by the companies are relatively rare over every segment, pointing to the low capacity of innovation of the national industry.
    Keywords: Innovation; Economic and Industrial Health Complex; P&D.
    JEL: O14 O31 O32
    Date: 2019–03
  16. By: Jochmans, K., Weidner, M.; Weidner, M.
    Abstract: This paper considers inference on fixed effects in a linear regression model estimated from network data. An important special case of our setup is the two-way regression model. This is a workhorse technique in the analysis of matched data sets, such as employer-employee or student-teacher panel data. We formalize how the structure of the network affects the accuracy with which the fixed effects can be estimated. This allows us to derive sufficient conditions on the network for consistent estimation and asymptotically-valid inference to be possible. Estimation of moments is also considered. We allow for general networks and our setup covers both the dense and sparse case. We provide numerical results for the estimation of teacher value-added models and regressions with occupational dummies.
    Keywords: connectivity, fixed effects, graph, Laplacian, limited mobility, teacher value-added, two-way regression model
    JEL: C23
    Date: 2019–04–01
  17. By: Matej Bajgar (OECD); Sara Calligaris (OECD); Flavio Calvino (OECD); Chiara Criscuolo (OECD); Jonathan Timmis (OECD)
    Abstract: The digital transformation forces a re-think of government policy as manufacturing business models increasingly transition from “bolts” to “bits”. The road to Industry 4.0 implies important and pervasive changes in business dynamics, firm growth and the nature of competition. This report presents a framework for measuring the digital transformation of manufacturing industries, and maps the impact of digital technologies across these several dimensions: firm productivity growth, business dynamism, industry concentration, firm mark-ups and mergers and acquisition activity. It suggests policies that governments can use to facilitate digital adoption and reap the benefits of the digital revolution in manufacturing.
    Date: 2019–04–05
  18. By: Mourelatos, Evangelos; Giannakopoulos, Nicholas; Tzagarakis, Manolis
    Abstract: In this paper we investigate the impact of non-cognitive skills on the quality of task-specific outcomes by conducting a quasi-experiment on a well-known online crowdsourcing platform. We show that a worker’s performance varies with personality traits, gender, human capital, crowdsourcing experience and work effort. Regarding the effects of non-cognitive skills, we find that workers’ performance in online microtasks is positively related to extraversion and agreeableness. The positive impact of extroverts is also revealed when performance is adjusted for task completion time. These findings provide implications regarding the integration of selection mechanisms in online labour matching platforms aiming in uncovering microworkers soft skills to improve performance and consequently the allocation of resources in online microtasks.
    Keywords: Crowdsourcing,online labour,quality of work,cognitive abilities,personality traits,workers
    JEL: O33 J40 J24
    Date: 2019
  19. By: Prachi Mishra; Nagpurnanand R. Prabhala; Raghuram G. Rajan
    Abstract: Credit scoring was introduced in India in 2007. We study the pace of its adoption by new private banks (NPBs) and state-owned or public sector banks (PSBs). NPBs adopt scoring quickly for all borrowers. PSBs adopt scoring quickly for new borrowers but not for existing borrowers. Instrumental Variable (IV) estimates and counterfactuals using scores available to but not used by PSBs indicate that universal adoption would reduce loan delinquencies significantly. Evidence from old private banks suggests that neither bank size nor government ownership fully explains adoption patterns. Organizational culture, possibly from formative experiences in sheltered markets, explains the patterns of technology adoption.
    JEL: G21 O32 P5
    Date: 2019–03

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