nep-inv New Economics Papers
on Investment
Issue of 2023‒10‒30
ten papers chosen by
Daniela Cialfi, Università degli Studi di Teramo

  1. The Causal Impact of Covid-19 Government-backed Loans on MSMEs Liquidity and Earnings By Cerda, Maikol; Gertler, Paul; Higgins, Sean; Montoya, Ana María; Parrado, Eric; Undurraga, Raimundo
  2. Measuring governments’ R&D funding response to COVID-19: An application of the OECD Fundstat infrastructure to the analysis of R&D directionality By OECD
  3. Defining, measuring, and rewarding scholarly impact: mind the level of analysis By Ramani, Ravi S.; Aguinis, Herman; Coyle-Shapiro, Jacqueline A.M.
  4. How much work experience do you need to get your first job? The macroeconomic implications of bias against labor market entrants By Shisham Adhikari; Athanasios Geromichalos; Ioannis Kospentaris
  5. Privacy violations, security breaches and other threats of Web3 and the metaverse By Kshetri, Nir
  6. Nachhaltigkeit im Handwerk: DHI-Gemeinschaftsprojekt Forschungs- und Arbeitsprogramm 2022/2023 By Bizer, Kilian (Ed.); Thonipara, Anita (Ed.); Meub, Lukas (Ed.); Proeger, Till (Ed.)
  7. European evidence on the effects of audit office changes on clients' financial reporting quality By AYOUB, Maysam
  8. Long-term effects of early adverse labour market conditions: A Causal Machine Learning approach By Petru Crudu
  9. Resilience in Vertical Supply Chains By Gene M. Grossman; Elhanan Helpman; Alejandro Sabal
  10. Catch me if you can: Gaps in the Register of Overseas Entities By Advani, Arun; Poux, Cesar; Powell-Smith, Anna; Summers, Andy

  1. By: Cerda, Maikol; Gertler, Paul; Higgins, Sean; Montoya, Ana María; Parrado, Eric; Undurraga, Raimundo
    Abstract: We conducted two randomized controlled trials (RCTs) to evaluate the impact of government-guaranteed loans offered by the Chilean and Colombian governments. The public funds of these programs greatly expanded following the start of the Covid-19 pandemic and offered loans to Micro, Small and Medium Enterprises to mitigate the negative impact of the shock. Through a collaboration with private banks, we launched two experiments which offered loans to a sub-set of the 10, 072 Chilean and 3, 079 Colombian small businesses that took part in our experiments. Most of these firms had previously applied for a loan during the pandemic--but prior to the RCTs--but were rejected by banks due to their risk analysis of the firms. With take-up rates of 27% and 29%, respectively, we find that Covid-19 loans had a significant positive impact on the total liquidity that treated MSMEs could access: total liquidity with the formal banking system increased by 15.7% (statistically significant at the 1% level). The results of our RCTs will inform Latin American governments concerning their strategies to support MSMEs via government-backed loan programs and will shape similar public policies in the future.
    Keywords: RCT;Government-guaranteed loans;COVID-19 pandemic;Eventstudy;Impact Evaluation
    JEL: J16 L26 P52
    Date: 2023–02
  2. By: OECD
    Abstract: This paper presents new evidence on the size and direction of governments’ R&D funding response to the COVID-19 pandemic through the exploration of a novel data infrastructure, the OECD Fundstat initiative for the analysis of government-funded R&D projects. The document reports on the exploratory development and application of automatic classification tools to detect relevant COVID-19 R&D funding, map salient topics and classify and allocate project funding according to priorities in the WHO COVID-19 R&D Blueprint, as well as comparing results with similar analysis of scientific publication output data. The results provide new insights on which areas of enquiry were prioritised by governmental R&D funding bodies.
    Keywords: classification, COVID-19, directionality, Government funding, large language models, R&D, Research and Development, topic modelling
    JEL: C38 C45 O32 O38
    Date: 2023–10–16
  3. By: Ramani, Ravi S.; Aguinis, Herman; Coyle-Shapiro, Jacqueline A.M.
    Abstract: We address the grossly incorrect inferences that result from using journal impact factor (JIF) as a proxy to assess individual researcher and article scholarly impact. This invalid practice occurs because of confusion about the definition and measurement of impact at different levels of analysis. Specifically, JIF is a journal-level measure of impact, computed by aggregating citations of individual articles (i.e., upward effect), and is therefore inappropriate when measuring impact at lower levels of analysis, such as that of individual researchers, or of individual articles published in a particular journal (i.e., downward effect). We illustrate the severity of the errors that occur when using JIF to evaluate individual scholarly impact, and advocate for an immediate moratorium on the exclusive use of JIF and other journal-level (i.e., higher level of analysis) measures when assessing the impact of individual researchers and individual articles (i.e., lower level of analysis). Given the importance and interest in assessing the scholarly impact of researchers and articles, we delineate level-appropriate and readily available measures.
    JEL: J50
    Date: 2022–09–21
  4. By: Shisham Adhikari; Athanasios Geromichalos; Ioannis Kospentaris (Department of Economics, University of California Davis)
    Abstract: The first step in a worker’s career is often particularly hard. Many firms seeking workers require experience in a related field, so a vicious circle is created, whereby an entry level job is required in order to get an entry level job. Consequently, entrant workers have lower job-finding rates and longer unemployment durations than the unemployed who have looked for a job in the past. To study the welfare implications of these observations, we consider a version of the DMP model where firms who match with entrant workers have to incur training costs. As a result, firms are biased against entrant workers, who, in turn, stay unemployed for a prolonged period of time, exposing themselves to a persistent skill loss shock. In this environment, an obvious market failure arises. Firms who hire entrant workers provide a benefit to society by helping these workers stay unemployed for a shorter period of time, thus reducing the probability of skill loss. But since firms cannot internalize this societal contribution, they choose to discriminate against entrant workers causing a welfare loss. We use a calibrated version of the model to quantitatively assess the effectiveness of three government interventions, whose common goal is to reduce bias against entrant workers. We find that the most effective intervention takes the form of an “internship”, where firms can hire entrant workers at an (exogenous) lower wage.
    Keywords: search and matching, unemployment, labor market entrants, training, skills
    JEL: E24 E60 J24 J64
    Date: 2023–10–10
  5. By: Kshetri, Nir
    Abstract: Web3 and the metaverse present several unique challenges from security and privacy standpoints. This paper looks at key features of these technological innovations from privacy and security angles and discusses how they are vulnerable to various types of breaches, bugs and attacks as well as other types of scams, frauds, and deceits. It offers a detailed description of technological environment and institutional level factors that can lead to increased privacy violations and security breaches in Web3 and the metaverse. The paper will discuss how newness, novelty and complexity of technologies involved and weak architectural security of Web3, and the metaverse are likely to provide a fruitful environment for cybercriminals and other perpetrators. On the regulatory front, it points out that privacy and security laws of the Web2 era are not sufficient to deal with the environments of Web3 and the metaverse. The paper also argues that the preparedness to provide security and privacy in the metaverse's multidimensional and multi-sensory environment is currently lacking at the industry level. It analyzes the level and nature of the impacts of privacy violations and security breaches on consumers and victims in the Web 3 and the metaverse environments. It gives special consideration to the multisensory environment of the metaverse which can lead to more adverse impacts on users and victims in case of privacy violations and security breaches. The paper also demonstrates how security breaches in Web3 and the metaverse are likely to lead to immediate harms to victims. It promotes an understanding of how blockchain, which is the key building block of Web 3 and the metaverse, can be vulnerable under certain conditions. The paper also delves into cyberattacks and other malicious behaviors targeting crypto-assets such as cryptocurrencies and non-fungible tokens (NFTs), which are key enabling technologies of Web3 and the metaverse economies. It provides guidelines and suggestions for consumers, businesses, industries and nations to enhance security of Web3 and the metaverse.
    Keywords: Metaverse, privacy, security, self-sovereign identity, Web3
    Date: 2023
  6. By: Bizer, Kilian (Ed.); Thonipara, Anita (Ed.); Meub, Lukas (Ed.); Proeger, Till (Ed.)
    Abstract: Deutschland und alle anderen Länder der Welt stehen vor einer sich stetig verschärfenden Rohstoff- und Energiekrise, die erhebliche ökologische, ökonomische und soziale Auswirkungen hat, deren Folgen sich erst langsam abzeichnen und die kommenden Jahrzehnte prägen werden. Vor dem Hintergrund eines Zusammenlaufens verschiedener Krisenlinien im Zuge von 'Peak Everything' (R. Heinberg) wird erst eine tiefere Bedeutung der sprichwörtlichen drei Säulen der Nachhaltigkeit deutlich: in jeder der drei Säulen werden die Folgen der Grenzen des Wachstums akut und erzwingen Anpassungsreaktionen. Dabei ist kein Bereich einzeln betroffen, sondern Gegenstand komplexer Wechselwirkungen und gegenseitiger Abhängigkeiten. Die Anpassungsreaktionen innerhalb der deutschen und europäischen Wirtschaft zielen dabei auf den Versuch einer Transformation der industriellen Produktionsweise hin zur Klimaneutralität durch Nutzung regenerativer Energie in geschlossenen Stoffkreisläufen ab. Das Handwerk hat für diese ambitionierte Zielsetzung des 'Green Growth'-Pfades eine Schlüsselrolle inne, da das Schließen von Stoffkreisläufen und auch der Auf- und Umbau einer auf regenerativen Energien beruhenden Lebens- und Produktionsweise ohne die spezifischen Fähigkeiten des Handwerks schwer vorstellbar sind. Die Eigenwahrnehmung und -darstellung des Handwerks als zentraler Akteur sowohl der Energiewende als auch der Transformation zur Nachhaltigkeit und der Schließung von Stoffkreisläufen über die Reparaturtätigkeit bieten einen wichtigen Ansatzpunkt für eine konstruktive Rolle von Handwerksbetrieben und -organisationen in der Bewegung hin zu einer klimaneutralen Produktionsweise bei gleichzeitiger Aufrechterhaltung funktionsfähiger Regional- und Sozialstrukturen. Die Aufgabe der Handwerksforschung ist es, mit wissenschaftlicher Methodik in zentralen Fragestellungen objektive Informationen zur Unterstützung dieser Herausforderungen zu liefern. Vor diesem Hintergrund ist auch dieser Sammelband zu verstehen, der die Expertise aller fünf Forschungsinstitute innerhalb des Deutschen Handwerksinstituts (DHI) verbindet, um empirisch fundierte Forschungsergebnisse zu präsentieren und gleichzeitig Implikationen dieser Erkenntnisse zu formulieren, die den Handwerksbetrieben und -organisationen sowie der Handwerkspolitik bei der Umsetzung nachhaltigkeitsbezogener Ziele und Vorhaben dient. Dabei greifen die Institute Forschungsthemen auf, die für sie aus ihrer disziplinären Perspektive von besonderer Relevanz sind. Gleichzeitig beziehen sie als roten Faden in den Einzelthemen das Thema der Reparatur im Handwerk ein und formulieren darauf aufbauend Handlungsempfehlungen. Mein herzlicher Dank gilt allen beteiligten Autorinnen und Autoren und ihren Forschungsinstituten für ihre Beiträge zu diesem Sammelband, die als Meilenstein und Grundlage künftiger Forschung zur Nachhaltigkeit im Handwerk dienen können. Ebenso sei allen Betrieben und Personen innerhalb der Handwerksorganisationen gedankt, die für die empirische Forschung und Diskussion der Ergebnisse zur Verfügung standen. Ich bin überzeugt, dass die Forschungsergebnisse dieses Sammelbands einen wichtigen Beitrag für die Betriebe, Organisationen und politische Vertretung des Handwerks leisten können. Aus diesem Grund wünsche ich den Beiträgen des Bandes eine weite Verbreitung und fruchtbare Diskussionen zur Nachhaltigkeit im Handwerk. Göttingen, im September 2023, Prof. Dr. Kilian Bizer, Direktor des Volkswirtschaftlichen Instituts für Mittelstand und Handwerk an der Universität Göttingen (ifh Göttingen)
    Date: 2023
  7. By: AYOUB, Maysam
    Abstract: Prior research suggests that the financial reporting quality may be influenced by audit office-level characteristics. Yet, many factors are likely to influence whether within-firm office changes result in a positive or negative association with reporting quality. When clients switch to a different office within the same audit firm, they can potentially benefit from fresh perspectives and insights from the new audit team and partners. On the contrary, this transition may compromise the quality of the audit due to a decline in the team’s understanding of the client’s specific needs and the initial cost pressures required for the new team to prepare for the new assignment. Nevertheless, the ability of an audit office to provide a high-quality audit depends partly on how it relates to the network of offices in which it operates. Considering that changes in offices within the same audit firm reflect a challenge in efficiently allocating audit resources, we investigate whether there is a decline in financial reporting quality when a client changes to a different audit office within the same firm. We also examine whether teams from more connected offices are more capable of managing the transition and preserving reporting quality. Contrary to expectations, our analysis did not reveal any indication of a decline in financial reporting quality in a European context, and we did not find evidence that the adverse impact of changes in audit offices within the same firm, if any, on financial reporting quality lessens with greater network connectedness. Further, the additional testing results demonstrate that alterations in the auditor-client distance, as well as office upsizing, downsizing, upgrading, or downgrading of specialization, do not lead to a deterioration in financial reporting quality
    Date: 2023–05
  8. By: Petru Crudu (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: This study estimates the long-term causal effects of completing education during adverse labour market conditions, measuring outcomes 35 years post-education. To achieve this, the study combines historical regional unemployment rates with detailed SHARE microdata for European cohorts completing education between 1960 and 1990 in a novel database. A systematic heterogeneity analysis is conducted by leveraging the Causal Forest, a causal machine learning estimator that allows estimates at various aggregation levels. Furthermore, the causal link is validated using an instrumental variable approach. The main findings reveal that a one-percentage-point increase in the unemployment rate at the time of completing education leads to a significant decline in earnings (-5.2%) and self-perceived health (-2.23%) after 35 years. The heterogeneity analysis uncovers that the results are primarily driven by less educated individuals and highlights a permanent disadvantage for women in labour market participation. This study also provides evidence that systematic divergence in life trajectories can be explained by search theory and human capital models. Overall, the research suggests that the consequences of limited post-education opportunities can be permanent, underscoring the importance of identifying vulnerable groups for effective policy interventions.
    Keywords: Long-term Effects, Unemployment, Heterogeneous Effects, GRF
    JEL: J31 I1 J24 I24 E24
    Date: 2023
  9. By: Gene M. Grossman; Elhanan Helpman; Alejandro Sabal
    Abstract: Forward-looking investments determine the resilience of firms' supply chains. Such investments confer externalities on other firms in the production network. We compare the equilibrium and optimal allocations in a general equilibrium model with an arbitrary number of vertical production tiers. Our model features endogenous investments in resilience, endogenous formation of supply links, and sequential bargaining over quantities and payments between firms in successive tiers. We derive policies that implement the first-best allocation, allowing for subsidies to input purchases, network formation, and investments in resilience. The first-best policies depend only on production function parameters of the pertinent tier. When subsidies to transactions are infeasible, the second-best subsidies for resilience and network formation depend on production function parameters throughout the network, and subsidies are larger upstream than downstream whenever the bargaining weights of buyers are non-increasing along the chain.
    JEL: D21 D62
    Date: 2023–09
  10. By: Advani, Arun (Associate Professor, University of Warwick Economics, CAGE, IFS, III); Poux, Cesar (LSE International Inequalities Institute (III)); Powell-Smith, Anna (Visiting Fellow, LSE III; Director, Centre for Public Data); Summers, Andy (Associate Professor, LSE Law, III, IFS)
    Abstract: The Register of Overseas Entities (ROE) was introduced by the government in Spring 2022 with the commitment that it would “require anonymous foreign owners of UK property to reveal their real identities†. We use data released by Companies House and HM Land Registry to assess to what extent the ROE is currently delivering on this aim. We identify and quantify several major ‘gaps’ in the scope and operation of the register and make recommendations for how the register could be improved.
    Keywords: JEL Classification:
    Date: 2023

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