nep-inv New Economics Papers
on Investment
Issue of 2023‒05‒22
eighteen papers chosen by
Daniela Cialfi
Universita' di Teramo

  1. Financial Literacy, Human Capital and Long-Run Economic Growth By Alberto Bucci; Riccardo Calcagno; Simone Marsiglio; Tiago Miguel Guterres Neves Sequeira
  2. Flip the coin: Heads, tails or cryptocurrencies? By António Manuel Portugal Duarte; Fátima Teresa Castelo Assunção Sol Murta; Nuno José Henriques Baetas da Silva; Beatriz Rodrigues Vieira
  3. The impact of public support for innovation on SME performance and efficiency By Raphaël CHIAPPINI; Sophie POMET
  4. Estimating the cost and affordability of healthy diets: How much do methods matter? By Headey, Derek D.; Hirvonen, Kalle; Alderman, Harold
  5. Management and Human Capital Employment: an overlooked Relationship By Marcelo Serra Santos; Susana Garrido Azevedo; Tiago Miguel Guterres Neves Sequeira
  6. Intrinsic Preferences for Autonomy By Freundt, Jana; Herz, Holger; KOPP, leander
  7. Bargaining-equilibrium equivalence By Bhowmik, Anuj; Saha, Sandipan
  8. MAY HUMAN CAPITAL RESCUE THE EMPTY PLANET? By Spyridon Boikos; Alberto Bucci; Tiago Miguel Guterres Neves Sequeira; Tiago Miguel Guterres Neves Sequeira
  9. Do reduced labor costs increase employment among minimum wage workers? Evidence from a Swedish payroll tax cut By Daunfeldt, Sven-Olov; Gidehag, Anton; Seerar Westerberg, Hans
  10. Intra-industry trade: Revisiting theory and Literature Survey By Aggarwal, Sakshi
  11. The strange case of Romania’s Nicolae Ceaușescu: when the liquidation of sovereign debt results in country total damaging By Georgescu, George
  12. Improving processes and ergonomics at air freight handling agents: a case study. By Diefenbach, H.; Erlemann, N.; Lunin, A; Grosse, E.H.; Schocke, K.-O.; Glock, C.H.
  13. Are Digital and Traditional Financial Services Taxed the Same? A Comprehensive Assessment of Tax Policies in Nine African Countries By Niesten, Hannelore
  14. Business group heterogeneity and firm outcomes: Evidence from Korean chaebols By Ducret, Romain; Isakov, Dušan
  15. News or Animal Spirits? Consumer Confidenceand and Economic Activity: Redux By Sangyyup Choi; Jaehun Jeong; Dohyeon Park; Donghoon Yoo
  16. The Creation and Diffusion of Knowledge: Evidence from the Jet Age By Stefan Pauly; Fernando Stipanicic
  17. Revisiting the Returns to Higher Education: Heterogeneity by Cognitive and Non-Cognitive Abilities By Oliver Cassagneau-Francis
  18. RCTs Against the Machine: Can Machine Learning Prediction Methods Recover Experimental Treatment Effects? By Prest, Brian C.; Wichman, Casey; Palmer, Karen

  1. By: Alberto Bucci (Department of Economics, Management and Quantitative Methods (DEMM) - University of Milan, and ICEA (International Center for Economic Analysis, Canada); Riccardo Calcagno (Department of Management and Production Engineering, Polytechnic University of Turin); Simone Marsiglio (Department of Economics and Management, University of Pisa); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: We extend a two-sector endogenous growth model based on human capital accumulation along two different directions. First, by postulating that individuals may invest time-resources not only in the accumulation of human capital (general knowledge) but also in the accumulation of financial literacy (specific financial knowledge). Second, we maintain that the efficiency with which savings are transferred intertemporally may improve over time, e.g. through the presence of a financial system. We use the model to analyze the relationship between financial literacy and economic growth in the long run. We show that the properties of the balanced growth path equilibrium critically depend on how human capital and financial literacy affect the efficiency of the financial system. Moreover, finance promotes long-run economic growth through two alternative channels, driven either by dynamics of financial returns or by human capital accumulation, respectively. By calibrating the model to the US economy over the 1950-2019 period, we quantitatively assess the effect of financial literacy on long-term growth and the relative magnitude of the two channels.
    Keywords: Economic Growth, Financial Literacy, Financial Return, Human Capital.
    Date: 2023–12
  2. By: António Manuel Portugal Duarte (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics); Fátima Teresa Castelo Assunção Sol Murta (Univ of Coimbra, CeBER, Faculty of Economics); Nuno José Henriques Baetas da Silva (Ph.D. Student at Faculty of Economics, University of Coimbra); Beatriz Rodrigues Vieira (Univ Coimbra, Faculty of Economics)
    Abstract: This paper analysis and compares the volatility of seven cryptocurrencies – Bitcoin, Dogecoin, Ethereum, BitcoinCash, Ripple, Stellar and Litecoin – to the volatility of seven centralized currencies – Yuan, Yen, Canadian Dollar, Brazilian Real, Swiss Franc, Euro and British Pound. We estimate GARCH models to analyze their volatility. The results point to a considerably high volatility of cryptocurrencies when compared to that of centralized currencies. Therefore, we conclude that cryptocurrencies still fall far short of fulfilling all the requirements to be considered as a currency, specifically regarding the functions of store of value and unit of account.
    Keywords: Centralized currencies, cryptocurrencies; GARCH models; volatility.
    Date: 2023–03
  3. By: Raphaël CHIAPPINI; Sophie POMET
    Abstract: This article examines the impact of two types of financial support for innovation granted by French public institutions to French SMEs on a set of firm performance measures. Using an original database that provides information on repayable advances and subsidies obtained by 5, 448 French SMEs over the period 2010-2016, we evaluate the effectiveness of such financial support using a quasi-experimental design. Our findings indicate that both repayable advances and subsidies significantly improve targeted SMEs’ turnover, level of intangible assets and total employment at one year and three years after support is granted. The impact on firm-level TFP is only positive and significant after three years, while being negative in the very short run. Our results also provide evidence that the combination of both instruments for a given innovation project within a year does not entail significantly higher effects. A heterogeneous analysis reveals that the impact of financial support instruments for innovation is significantly higher for young, micro and small firms. Furthermore, our analysis shows that innovation support benefits more to firms located in the Paris region than in other regions and this tends to exacerbate regional inequalities. Finally, our findings indicate that the transformation of Oséo into Bpifrance in December 2012 has led to an increase in the effectiveness of the innovation policy.
    Keywords: Innovation policy, firm performance, policy evaluation, Mahalanobis distance matching, difference-in-difference.
    JEL: O33 O38 C14 C21
    Date: 2023
  4. By: Headey, Derek D.; Hirvonen, Kalle; Alderman, Harold
    Abstract: Cost and affordability of healthy diet (CoAHD) metrics developed in a handful of academic studies have quickly become mainstream food security indicators among major development institutions. The World Bank and FAO now report CoAHD statistics in their widely used databanks, and the UN’s State of Food Insecurity and Nutrition in the World (SOFI) reports CoAHD metrics on an annual basis, with the headline conclusion being that over 3 billion people worldwide cannot afford a healthy diet. While quantifying affordability constraints is indeed a vital addition to the suite of global food security indicators, there is a dearth of scientific analysis on the accuracy and sensitivity of CoAHD methods. Published global CoAHD estimates rely on three implicit assumptions: that demographic differences across countries have little effect on average diet costs; that non-food expenditure requirements have little systematic variation across countries; and that international food price data is representative in a population sense and product coverage sense. Testing these assumptions on the cost of the EAT-Lancet reference diet, we find sizable sensitivity of baseline methods to adjusting diet affordability estimates for systematic cross-country differences in demographic profiles and non-food expenditure requirements, smaller effects of adjusting for inadequate food product coverage in international price data, and inconclusive evidence on issues of urban bias in price surveys. Our proposed methodological improvements significantly change country, regional and global estimates of healthy diet affordability, though not the headline conclusion that several billion people cannot afford a healthy diet. Even so, the accuracy, rigor, and reliability of CoAHD statistics warrant closer investigation given their widespread adoption and utilization.
    Keywords: diet; costs; metrics; food security; development; affordability; demography; expenditure; urban areas; nutrition; poverty; food prices
    Date: 2023
  5. By: Marcelo Serra Santos (CeBER); Susana Garrido Azevedo (Univ of Coimbra, CeBER, Faculty of Economics); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics, CeBER and Faculty of Economics)
    Abstract: We look at data for Management and Skills demand of firms in existing databases and we highlight the strong positive relationship between both variables. We devise a model that explains this relationship and calibrate it in order to present quantitative results and compare those results with the estimated ones. We discover that a simple model with Management as Technology can replicate well the estimated influence of Management in the skills demand of firms. We also present evidence of the influence of the subitems of Management on skills’ demand and discovered that aside from the talent component of Management, target and performance components greatly influence the demand for skills.
    Keywords: management practices, productivity, human capital
    Date: 2023–01
  6. By: Freundt, Jana (University of Fribourg, Switzerland); Herz, Holger (University of Fribourg, Switzerland); KOPP, leander (University of Fribourg, Switzerland)
    Abstract: Personal autonomy has been argued to be fundamental to well-being and is often discussed as an important driver of economic and political behavior. Yet, preferences for autonomy are not well understood, because their identification requires the separation of instrumental value attached to autonomous choice. We propose a novel elicitation method that solves this identification challenge. We establish the existence of intrinsic preferences for choice autonomy and show substantial heterogeneity in a large online sample. We further study their antecedents by relating them to existing personality scales and socioeconomic characteristics. Finally, we test their association with other preferences, attitudes and beliefs.
    Keywords: autonomy, delegation, experiment design, choice consistency
    JEL: C91 D01 D90
    Date: 2023–04–07
  7. By: Bhowmik, Anuj; Saha, Sandipan
    Abstract: The paper tries to answer one of the more nascent questions in the literature on general equilibrium theory by investigating the equivalence between the set of club equilibrium states and the bargaining set for a club economy. Clubs in this framework are treated in a parallel fashion to private goods as articles of choice. Each club membership is composed of three components: (i) the individual's characteristics; (ii) the profile of the club. and (iii) the club project. Thus clubs are identified through their profile and the particular project they undertake. We introduce the bargaining set for such an economy in lieu of Mas-Colell \cite{Mas : 89} and define a two-step veto mechanism. In this paper we establish that non-equilibrium states are those against which there exist a set of agents who agree upon a mutually beneficial trade agreement amongst themselves or in other words there exists a Walrasian objection to such states. In what follows from the literature is that Walrasian objections are justified as well which thereby helps us establish our equivalence.
    Keywords: Club goods, Bargaining set, Walrasian objection, Justified objection, Bargaining-Equilibrium equivalence.
    JEL: D5 D6 D62 H4
    Date: 2023–04–29
  8. By: Spyridon Boikos (University of Macedonia (Department of Economics), Thessaloniki, Greece); Alberto Bucci (Department of Economics, Management and Quantitative Methods (DEMM) - University of Milan, and ICEA (International Center for Economic Analysis, Canada); Tiago Miguel Guterres Neves Sequeira (Department of Economics and Management, University of Pisa); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: Recent evidence suggests that fertility rates are (and will be expected to remain in the future) below the replacement level for several countries and especially for the most technological advanced ones, which indicates that the World population will start decreasing sooner or later. In the light of this, we reconsider the Empty Planet result – Jones (2022) – and include human capital and class size effects in R&D endogenous growth models with decreasing population. We find that the introduction of human capital mitigates, or even overcomes, the Empty Planet result. In particular, under some mild conditions, our setting allows obtaining simultaneous long-run economic growth and secular productivity stagnation.
    Keywords: Endogenous economic growth, R&D, Human Capital, Declining Population, Empty Planet.
    Date: 2023–12
  9. By: Daunfeldt, Sven-Olov (Confederation of Swedish Enterprise); Gidehag, Anton (Swedish Agency for Growth Policy Analysis); Seerar Westerberg, Hans (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: We use a youth payroll tax cut in Sweden to investigate whether retail firms that were exposed to substantial labor cost savings increased employment of minimum wage workers more than firms that received smaller labor cost savings. Our dataset includes information on both contracted wages and working hours for most employees in the Swedish retail trade industry. The fact that a large portion of retail employees had contracted wages near the negotiated minimum wage levels at the time of the reform suggests that the minimum wage levels were binding to a great extent. We also find that retail firms with large labor cost savings due to the youth payroll tax cut significantly increased both the number of minimum wage hourly employees and their working hours. We observe no such effects for employees with long-term contracts or wages well above the negotiated minimum wages. This suggests that the relatively high minimum wage levels of the Swedish retail industry prevent the employment of workers who are perceived to have low productivity.
    Keywords: Retail trade industry; minimum wages; payroll tax reform; natural experiments; collective bargaining
    JEL: D24 L25 L26
    Date: 2023–01–26
  10. By: Aggarwal, Sakshi
    Abstract: Early references to intra-industry trade were mostly ignored for many years. It was only in the past two decades that intra-industry trade has received significant attention and has become a leading area for international economists. It has become increasingly common in recent decades due to the growth of international trade, globalization, and the integration of economies. Intra-industry trade can benefit countries by allowing them to specialize in their areas of comparative advantage and to access a wider range of products and services at lower prices. However, it can also pose challenges for some industries and workers who may face increased competition from foreign producers. The purpose of this paper is to review the extensive literature on intra-industry trade, assess the accomplishments of researchers in this area and predict future research directions. The paper evaluates intra-industry trade as a research program and assesses whether it can continue to advance in the future. To organize the paper, the authors evaluate current perspectives in four distinct areas: theory, measurement, empirical evidence, and policy aspects.
    Keywords: Intra-industry trade, imperfect competition, classical theories of trade
    JEL: F11 F12 F14 F16
    Date: 2023–04–27
  11. By: Georgescu, George
    Abstract: The study focuses on 1980s sovereign debt crisis in Romania under the impact of internal and external factors, intending to provide a more realistic image of this dramatic episode. The global economy faced a severe economic and financial crisis at the beginning of the 1980s, when more than 30 developing countries entered default or restructured the sovereign debt. In the case of Romania, the impact of the crisis triggered in 1981-1982 has proved extremely hard worsened by the domestic vulnerabilities accumulated in the previous decade and the external shock coming from the major changes in the global economic, financial and geopolitical context at the end of 1979. The FED monetary policy at that time (twenty percent funds rate in order to fight inflation), has led to the explosive rise in interest rates of the outstanding loans contracted from international commercial banks, to which Romania was highly indebted. The decision of simple-minded Nicolae Ceaușescu to liquidate the foreign debt and other errors concerning the crisis management had a destructive impact on the country, which degenerated in a system crisis ended with its implosion in December 1989. Some lessons from this crisis could be learned for the current indebtedness situation of Romania, amid international circumstances characterized by two-digit inflation, high interest rates and government bond yields, energy crisis, climate changes, Ukraine war, global geopolitical tensions.
    Keywords: foreign debt crisis; oil crisis shocks; IMF; FED monetary policy; inflation; interest rates; sovereign debt restructuring; Romania
    JEL: B22 E44 E62 F34 H63 N44
    Date: 2023–04
  12. By: Diefenbach, H.; Erlemann, N.; Lunin, A; Grosse, E.H.; Schocke, K.-O.; Glock, C.H.
    Date: 2021–07–26
  13. By: Niesten, Hannelore
    Abstract: Several African countries have introduced taxes on digital financial services (DFS) during the past decade. Given the size and rapid growth of the telecom and DFS sector, DFS taxation is considered an opportunity to broaden the government’s revenue base. These recent developments need to be considered alongside the framework for taxation of traditional financial services (TFS) delivered by banks and other formal financial institutions – such as credit unions, insurance companies and microfinance institutions. The working paper analyses key legislative, tax and regulatory policy instruments, comparing the tax framework in nine countries in Africa: Burundi, Côte d’Ivoire, Ghana, Kenya, Rwanda, South Sudan, Tanzania, Uganda and Zimbabwe. Summary of Working Paper 162 by Hannelore Niesten.
    Keywords: Finance,
    Date: 2023
  14. By: Ducret, Romain (Faculty of Economics and Social Sciences); Isakov, Dušan
    Abstract: This paper examines the impact of business group affiliation on the performance and corporate policies of Korean listed firms over the period 2007-2019. This study proposes a novel approach allowing the observation of heterogeneity in the affiliation effects. Overall, we conclude that business group characteristics are reflected in firm outcomes. We find that investors perceive group membership positively as they pay a premium to hold affiliated firms. The premium is related to profitability and size of business groups, consistent with resourcebased theories. The analysis also identifies significant group specific effects on firm policies. These findings suggest that several business groups follow group-level strategies and apply homogeneous financial and investment policies to all their affiliates.
    Keywords: Business groups; performance; financing policies; investment; Korea
    JEL: G30 G32 G35 L22
    Date: 2023–04–07
  15. By: Sangyyup Choi (School of Economics, Yonsei University); Jaehun Jeong (Department of Economics, Duke University); Dohyeon Park (School of Economics, Sogang University); Donghoon Yoo (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: Barsky and Sims (2012, AER) demonstrated, via indirect inference, that confidence in-novations can be viewed as noisy signals about medium-term economic growth. They high-lighted that the connection between confidence and subsequent activity, such as consumption and output, is primarily driven by news shocks about the future. We expand upon their research in two significant ways. First, we incorporate the Great Recession and ZLB episodes, and second, we employ unique state-level data to offer insights into how to interpret the relationship between consumer confidence and economic activity. Our results confirm the main finding of Barsky and Sims (2012) that this relationship is predominantly driven bynews about the future.
    Date: 2023–04
  16. By: Stefan Pauly (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Fernando Stipanicic (UC Berkeley - University of California [Berkeley] - UC - University of California)
    Abstract: Click here for the latest version This paper provides new causal evidence of the impact of air travel time on the creation and diffusion of knowledge. We exploit the beginning of the Jet Age as a quasi-natural experiment. We digitize airlines' historical flight schedules and construct a novel data set of the flight network in the United States. Between 1951 and 1966, travel time between locations more than 2, 000 km apart decreased on average by 41%. The reduction in travel time explains 33% of the increase in knowledge diffusion as measured by patent citations. The increase in knowledge diffusion further caused an increase in the creation of new knowledge. The results provide evidence that jet airplanes led to innovation convergence across locations and contributed to the shift in innovation activity towards the South and the West of the United States.
    Date: 2022–10–21
  17. By: Oliver Cassagneau-Francis (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Recent work has highlighted the significant variation in returns to higher education across individuals. We develop a novel methodology-exploiting recent advances in the identification of mixture models-which groups individuals according to their prior ability and estimates the wage returns to a university degree by group. We prove the non-parametric identification of our model. Applying our method to data from a UK cohort study, our findings reflect recent evidence that skills and ability are multidimensional. Our flexible model allows the returns to university to vary across the (multi-dimensional) ability distribution, a flexibility missing from commonly used additive models, but which we show is empirically important. The returns to higher education are 3-4 times larger than the returns to prior cognitive and non-cognitive abilities. Returns are generally increasing in ability for both men and women, but vary non-monotonically across the ability distribution.
    Keywords: Mixture models, Distributions, Treatment effects, Higher education, Wages, Human capital, Cognitive and non-cognitive abilities
    Date: 2022–05–19
  18. By: Prest, Brian C. (Resources for the Future); Wichman, Casey (Resources for the Future); Palmer, Karen (Resources for the Future)
    Abstract: We investigate how well machine learning counterfactual prediction tools can estimate causal treatment effects. We use three prediction algorithms—XGBoost, random forests, and LASSO—to estimate treatment effects using observational data. We compare those results to causal effects from a randomized experiment for electricity customers who faced critical-peak pricing and information treatments. Our results show that each algorithm replicates the true treatment effects, even when using data from treated households only. Additionally, when using both treatment households and nonexperimental comparison households, simpler difference-in-differences methods replicate the experimental benchmark, suggesting little benefit from ML approaches over standard program evaluation methods.Click "Download" above to read the full paper.
    Date: 2021–09–29

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