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on Investment |
| By: | Marco Caliendo (University of Potsdam, CEPA, BSoE, IZA, DIW, IAB); Nico Pestel (Maastricht University, IZA, CESifo); Rebecca Olthaus (DIW, BSoE, CEPA, University of Potsdam) |
| Abstract: | We investigate the long-term effects of the introduction of the German minimum wage in 2015 and its subsequent increases on regional employment. Using comprehensive survey data, we are able to measure the regional bite of the minimum wage in 2014, just before its introduction, as well as in 2018, before it was raised substantially in several steps. The introduction mainly affected the labour market in East Germany, while the minimum wage increases increasingly affected low-wage regions in West Germany, with about one third of regions changing their (binary) treatment status between 2014 and 2018. We use different specifications and extensions of the canonical difference-in-differences approach, as well as a set of new estimators that allow unbiased effect estimation with a staggered treatment adoption and heterogeneous treatment effects. Our results show a small negative effect on total dependent employment of 0.5%, driven by a significant reduction in marginal employment of 2.4%. The extended specifications suggest additional effects of the minimum wage increases, as well as stronger negative effects for those regions that were strongly affected by the minimum wage in both periods. |
| Keywords: | minimum wage, employment, regional bite |
| JEL: | J23 J31 J38 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:80 |
| By: | Raphael Auer; David Köpfer; Josef Švéda; Raphael A. Auer |
| Abstract: | How exposed is the labour market to ever-advancing AI capabilities, to what extent does this substitute human labour, and how will it affect inequality? We address these questions in a simulation of 711 US occupations classified by the importance and level of cognitive skills. We base our simulations on the notion that AI can only perform skills that are within its capabilities and involve computer interaction. At low AI capabilities, 7% of skills are exposed to AI uniformly across the wage spectrum. At moderate and high AI capabilities, 17% and 36% of skills are exposed on average, and up to 45% in the highest wage quartile. Examining complementary versus substitution, we model the impact on side versus core occupational skills. For example, AI capable of bookkeeping helps doctors with administrative work, freeing up time for medical examinations, but risks the jobs of bookkeepers. We find that low AI capabilities complement all workers, as side skills are simpler than core skills. However, as AI capabilities advance, core skills in lower-wage jobs become exposed, threatening substitution and increased inequality. In contrast to the intuitive notion that the rise of AI may harm white-collar workers, we find that those remain safe longer as their core skills are hard to automate. |
| Keywords: | labour market, artificial intelligence, employment, inequality, automation, ChatGPT, GPT, LLM, wage, technology |
| JEL: | E24 E51 G21 G28 J23 M48 O30 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11410 |
| By: | Popp, Martin (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | Economists increasingly refer to monopsony power to reconcile the absence of negative employment effects of minimum wages with theory. However, systematic evidence for the monopsony argument is scarce. In this paper, I perform a comprehensive test of this argument by using labor market concentration as a proxy for monopsony power. Labor market concentration turns out substantial in Germany. Absent wage floors, higher concentration reduces wages and employment, reflecting monopsonistic conduct of firms. Sectoral minimum wages lead to negative employment effects in slightly concentrated or more competitive labor markets. This effect weakens with increasing concentration and, ultimately, becomes positive in highly concentrated or monopsonistic markets. Overall, the results lend empirical support to the monopsony argument, implying that conventional minimum wage effects on employment conceal heterogeneity across market forms. |
| Keywords: | minimum wage, monopsony power, labor market concentration, markdown |
| JEL: | J42 J38 D41 J23 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17357 |
| By: | Shrawan, Aakanksha (National Institute of Public Finance and Policy) |
| Abstract: | The present study attempts to assess the potential determinants of economic growth at the state-level for 27 Indian states for the period 2000-01 to 2021-22. We also incorporate a quantitative variable, unspent funds as a proportion of total budgeted expenditure, to control for the quality of governance, along with other macroeconomic and structural factors. The paper finds a negative and statistically significant impact of unspent funds on the per capita GSVA growth of the states under study at the aggregate level. In addition, we also evaluate the unique growth experiences of different states separately without assuming a homogeneous response of the explanatory variables on the growth processes of all states which might assist the policymakers in offering explanations for the better or worse performing states with respect to the same macroeconomic variable. |
| Keywords: | GSVA Growth ; Unspent Funds ; Feasible Generalised Least Squares ; Industry ; India |
| JEL: | C23 O10 O11 O14 O40 L80 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:npf:wpaper:24/420 |
| By: | Brown, Gregory W. (U of North Carolina at Chapel Hill); Goncalves, Andrei S. (Ohio State U); Hu, Wendy (MSCI Inc) |
| Abstract: | The alpha of an investment reflects its ability to increase the Sharpe ratio of a benchmark portfolio allocation based on tradable factors. We argue that, in the context of private capital, the usual approach to estimate alpha is misleading because it ignores the economic realities of investing in private markets. We then combine a large sample of 5, 028 U.S. buyout, venture capital, and real estate funds from 1987 to 2022 to estimate the alphas of private capital asset classes under realistic simulations that account for the illiquidity and underdiversification in private markets as well as the portfolio allocation of typical limited partners. We find that buyout as an asset class provided a positive and statistically significant alpha during our sample period. In contrast, over our sample period, the venture capital alpha was large and positive but statistically unreliable whereas the real estate alpha was very close to zero. |
| JEL: | G10 G11 G12 G20 G23 G24 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:ohidic:2024-20 |
| By: | Frédéric Docquier; Ariane Gordan; Michel Tenikue; Aleksa Uljarevic |
| Abstract: | We study the factors that shape attitudes toward immigration in Luxembourg, a wealthy country with a long history of immigration, where 74\% of the population has a foreign background. Overall, a large majority of respondents acknowledge that immigration enriches national identity and has a positive impact on the economy. These attitudes are shaped by characteristics such as age, education and foreign background. Pro-immigration attitudes are stronger among second-generation immigrants and even more pronounced among first-generation immigrants from Portugal, neighboring and non-European countries. In addition, we find that the total share of immigrants in the immediate neighborhood does not significantly influence attitudes towards the economic and identitarian implications of immigration. However, local exposure to immigration influences natives' perceptions of the optimal level of immigration. We provide suggestive evidence that the latter effect is largely driven by recent inflows of non-European immigrants, indicating that acceptance of diversity and multiculturalism might take time. |
| Keywords: | Immigration; Attitudes; Well-being; Neighborhood |
| JEL: | J15 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:irs:cepswp:2024-08 |
| By: | Naïla Gallouj; Camal Gallouj (Université Sorbonne Paris Nord); Florence Rodhain (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School) |
| Abstract: | In this contribution we seek to clarify and analyze the links that exist or may exist between the world of hospitals and healthcare and that of commerce. We show that there are three ways of conceiving and analyzing these relationships. Firstly, by taking a general approach to the retailization of healthcare; secondly, by addressing the question of the retail offer in hospitals; and thirdly, by considering the diametrically opposed logic that refers to the medical and healthcare offer by retailers. In all cases, whether the rapprochement is initiated by healthcare or retail players, a similar evolution and strategic behavior can be observed. |
| Abstract: | Dans cette contribution, nous cherchons à clarifier et à analyser les liens qui existent ou peuvent exister entre le monde des hôpitaux et des soins de santé et celui du commerce de détail. Nous montrons qu'il existe trois façons de concevoir et d'analyser ces relations. Premièrement, en adoptant une approche générale de la retailisation des soins de santé ; deuxièmement, en abordant la question de l'offre de commerce détail dans les hôpitaux ; et troisièmement, en considérant la logique diamétralement opposée qui renvoie à l'offre médicale et de soins de santé par les structures commerciales. Dans tous les cas, que le rapprochement soit initié par les acteurs de la santé ou de la distribution, une évolution et un comportement stratégique similaires peuvent être observés. |
| Keywords: | gift shops, Medtail, Retailization of healthcare, Hospital retailing |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04712791 |
| By: | Ivan Ackermann; Doina Radulescu; Doina Maria Radulescu |
| Abstract: | Policies to address climate change and the energy transition are increasingly gaining ground. However, a large body of research has mainly focused on the efficiency aspect of different instruments rather than their unintended side-effects. Only recently, both policymakers as well as researchers have started to emphasise equity aspects of these policies, since the acceptability of different measures also hinges upon the redistributional implications. This paper contributes to the growing body of research on energy expenditure in-equality in advanced economies by quantifying the regressivity of energy expenditures across 19 European Union countries for the years 2010, 2015, and 2020. We reveal a consistent pattern of regressive energy expenditures across all countries and time periods, with significant variability in the degree and regressivity observed. Our analysis highlights the importance of a nuanced approach to assessing energy expenditure inequality and tailoring suitable energy and climate policies, as countries with the highest or lowest shares of disposable income spent on energy do not necessarily align with those exhibiting the most pronounced regressivity. Tailored policy instruments are essential, particularly when addressing the needs of specific groups, such as low-income households dependent on fossil-based heating systems. However, if broader population segments are affected, more complex solutions may be necessary. We also examine the contributions of various socio-demographic factors to explaining energy expenditures inequality, finding that certain characteristics, such as house-hold size or socio-economic status, contribute to a more even distribution of energy expenditures in the population. These insights suggest that policies aimed at reducing energy expenditure inequality may extend beyond income-based transfers to address the specific needs of different socio-demographic groups. |
| Keywords: | energy policy, energy expenditures, regressivity |
| JEL: | D31 H23 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11390 |
| By: | Weidmann, Ben (Harvard Kennedy School); Vecci, Joseph (Department of Economics, University of Gothenburg); Said, Farah (Lahore University of Management Sciences); Deming, David (Harvard Kennedy School and NBER); Bhalotra, Sonia (University of Warwick, IFS, CESifo, CEPR, IZA) |
| Abstract: | This paper develops a novel method to identify the causal contribution of managers to team performance. The method requires repeated random assignment of managers to multiple teams and controls for individual skills. A good manager is someone who consistently causes their team to produce more than the sum of their parts. In a large pre-registered lab experiment, we find that good managers have roughly twice the impact on team performance as good workers do. People who nominate themselves to be in charge perform worse than managers appointed by lottery. This appears to be partly because self-promoted managers are overconfident, especially about their social skills. Managerial performance is positively predicted by economic decision-making skill and fluid intelligence – but not gender, age, or ethnicity. Selecting managers on skills rather than demographics or preferences for leadership could substantially increase organizational productivity. |
| Keywords: | Management, Teamwork, Skills, Measurement, Experiment JEL Classification: M54, J24, C90, C92 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:715 |
| By: | Francesco Audrino; Jessica Gentner; Simon Stalder |
| Abstract: | This paper presents an innovative method for measuring uncertainty via large language models (LLMs), which offer greater precision and contextual sensitivity than the conventional methods used to construct prominent uncertainty indices. By analysing newspaper texts with state-of-the-art LLMs, our approach captures nuances often missed by conventional methods. We develop indices for various types of uncertainty, including geopolitical risk, economic policy, monetary policy, and financial market uncertainty. Our findings show that shocks to these LLM-based indices exhibit stronger associations with macroeconomic variables, shifts in investor behaviour, and asset return variations than conventional indices, underscoring their potential for more accurately reflecting uncertainty. |
| Keywords: | Uncertainty measurement, Large language models, Economic policy, Geopolitical risk, Monetary policy, Financial markets |
| JEL: | C45 C55 E44 G12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:snb:snbwpa:2024-12 |
| By: | Isabelle Tsakok |
| Abstract: | Ghana achieved lower middle-income country status by 2011. However, its growth path in the previous decades did not lay the foundations for the economic transformation of Ghanaian agriculture and therefore its overall economy. It relied primarily on extractive and non-renewable resources (gold and oil) and cocoa exports, and it did not diversify. While much progress was made in poverty reduction, pervasive low productivity and job informality continue to condemn millions to poverty, vulnerability, and therefore to chronic food insecurity. Despite its abundant natural resource endowment, and despite decades of growth, Ghana is again on the brink. The harsh assault of the COVID-19 pandemic laid bare its structural weaknesses. Ghana must again recover: it urgently seeks an Extended Credit Facility of about $3 billion and a restructuring of its debt, to enable it ride out of its current crisis and pursue its vision of ‘Ghana Beyond Aid.’ Achieving this vision requires Ghana to reverse its long-term neglect of agriculture, a key sector still mired in low productivity, extensive poverty, and vulnerability. The challenge is investing in agriculture at a time of daunting difficulties in that funds are tight, the global economy is turbulent, and climate change is a constant stressor. However, the existence of transformative possibilities through the technologies of the Fourth Industrial Revolution (4IR), and access to a vast, unified regional market made possible by the African Continental Free Trade Area (AfCFTA) offer growth opportunities. Without transforming its agriculture, the vision of a food secure ‘Ghana Beyond Aid’ will remain a distant |
| Date: | 2023–07 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaagr:pb_28_23 |
| By: | Isabelle Tsakok |
| Abstract: | Ghana achieved lower middle-income country status by 2011. However, its growth path in the previous decades did not lay the foundations for the economic transformation of Ghanaian agriculture and therefore its overall economy. It relied primarily on extractive and non-renewable resources (gold and oil) and cocoa exports, and it did not diversify. While much progress was made in poverty reduction, pervasive low productivity and job informality continue to condemn millions to poverty, vulnerability, and therefore to chronic food insecurity. Despite its abundant natural resource endowment, and despite decades of growth, Ghana is again on the brink. The harsh assault of the COVID-19 pandemic laid bare its structural weaknesses. Ghana must again recover: it urgently seeks an Extended Credit Facility of about $3 billion and a restructuring of its debt, to enable it ride out of its current crisis and pursue its vision of ‘Ghana Beyond Aid.’ Achieving this vision requires Ghana to reverse its long-term neglect of agriculture, a key sector still mired in low productivity, extensive poverty, and vulnerability. The challenge is investing in agriculture at a time of daunting difficulties in that funds are tight, the global economy is turbulent, and climate change is a constant stressor. However, the existence of transformative possibilities through the technologies of the Fourth Industrial Revolution (4IR), and access to a vast, unified regional market made possible by the African Continental Free Trade Area (AfCFTA) offer growth opportunities. Without transforming its agriculture, the vision of a food secure ‘Ghana Beyond Aid’ will remain a distant |
| Date: | 2023–07 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbagri:pb_28_23 |
| By: | - |
| Abstract: | The United States economy expanded at an annualized rate of 3.0% in the second quarter of 2024 —more than double the 1.4% GDP growth recorded in the first quarter and well above the economy’s long-term growth potential—, driven primarily by consumer spending. The resilience of consumer spending has been supported by receding inflation and a robust labour market. Inflation slowed to 2.5% in August 2024, the lowest level in more than three years. Employment has increased for 44 consecutive months, but the labour market is softening. The Federal Reserve announced an interest rate cut of 0.50% in September, launching the first easing monetary cycle since the onset of the COVID-19 pandemic and signalling more reductions to follow, alleviating pressure on financial conditions in Latin America and the Caribbean. The United States economic outlook reports are published three times a year and follow the main macroeconomic developments of the United States economy and how they could affect financial conditions in Latin America and the Caribbean. This issue contains a special chapter with a brief description of the positions of the United States presidential candidates on key economic policy issues and what they could mean for Latin America and the Caribbean. |
| Date: | 2024–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col896:80755 |
| By: | Sandrine Michel (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier); Lauren Caquant; François Benhmad (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier) |
| Abstract: | The anthropogenic nature of GHG emissions is now accepted. Standards, taxes and markets: economists put forward a variety of instruments to fight against climate warming. In 1997, the Kyoto Protocol institutionalized market instruments to tackle climate change. A market for emissions permits would offer several advantages. It would provide a price signal to economic agents, which would be the best way to ensure effective decentralized decision-making for the energy transition. In a quantitatively constrained system of quotas, it would also enable pollution control efforts to be shared out, minimizing the collective costs of reducing emissions (Crocker 1966, Dales 1968, Montgomerry 1972). In 2005, the European Commission created the first binding carbon market (De Perthuis 2008). The European Emission Trading System (EU-ETS) is a market for tradable emissions permits that sets national caps on CO2 emissions (Gollier & Tirole, 2015), divided between different installations. For each, carbon quota holders must arbitrate between investing in clean production modes, buying quotas on the EU ETS to ensure compliance, or holding them for a later period. From the outset, the power generation sector received the majority of allocations (Cartel et al. 2017). This production emits a significant amount of CO2, which varies according to the quantity produced and the fuel used. We also note that electricity prices now include European capacities, which are part of the interconnected grid. In this context, European prices are still largely dependent on the price of fossil fuels, which play a major role in national power mixes, but also on the price of carbon. French electricity prices are linked to the European electricity market, and therefore to the electricity mixes of the other countries in the zone. This is why, despite a highly decarbonized energy mix, the question of its potential sensitivity to the EU ETS price signal is open. With European interconnection, the price of allowances on the EU-ETS market could be reflected in the price of French electricity, and in its expectations on futures markets. If this were the case, then the highly institutional nature of the electricity and carbon markets would have enabled price formation, capable of supporting the decarbonization of European electricity mixes, wherever the electrons are consumed. |
| Keywords: | Energy and Environment, Energy Demand, Energy Supply, Prices, EU ETS |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04723704 |
| By: | Oluwasola Omoju; Emily Ikhide; Augustine C. Osigwe; Rifkatu Nghargbu; Victor Nechifor (European Commission – JRC); Andrea El Meligi (European Commission – JRC); Valeria Soledad Ferreira Gregorio; Ole Boysen (European Commission – JRC); Antti Simola (European Commission – JRC); Emanuele Ferrari (European Commission – JRC) |
| Abstract: | The African Continental Free Trade Area (AfCFTA) is aimed at boosting intra-African trade and promoting regional development. However, the distribution of its benefits and costs are uneven, and it presents opportunities and threats to different sectors of the economy. This report assesses the impact of the AfCFTA on the Nigerian economy, with particular reference to the agri-food sectors. Using the MAGNET and DEMETRA models calibrated on the GTAP 10 database and Nigeria’s 2019 Social Accounting Matrix (SAM) respectively, the analysis shows that the AfCFTA has a negligible impact on GDP, and the impact is much larger under the tariff and NTM scenarios than under the tariff only scenario. Contrary to expectations, government revenue increase significantly as revenue from other sources offset the fall in customs revenue, and this effect is larger under the intermediate input liberalisation schedule. The outputs of industry, utilities, construction, services and agriculture sectors increase while outputs of public services, extractive and processed food sectors reduce. The reduction in the output of the processed food sector leads to an increase in imports of processed food commodities. The increase in output is bigger under the agricultural trade liberalisation schedule. The employment effects also mirror the output effect, with sectors that experience output contraction also experiencing fall in employment and vice versa. Low-skilled labour will be mostly affected. The welfare impact is higher for rural households compared to urban households. For urban households, some outlier households face some welfare losses in 2025 and 2030. But the negative welfare effects turn positive in the transition to 2035 as the AfCFTA benefits expand. In terms of the trade flows, the results show that trade between Nigeria and other AfCFTA member states will increases significantly by 2035. Based on the findings of the study, it is recommended that complementary policies be implemented to stimulate growth. Policies to protect key sectors that are negatively affected, including processed food sector, be implemented. |
| Keywords: | Trade, Nigeria, Africa, general equilibrium model, food security |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc138312 |
| By: | Fairlie, Robert W. (University of California, Los Angeles); Oliver, Daniel (Washington State Student Achievement Council); Millhauser, Glenn (University of California, Santa Cruz); Roland, Randa (University of California, Santa Cruz) |
| Abstract: | An extensive literature in the social sciences analyzes peer effects among students, but estimation is complicated by several major problems some of which cannot be solved even with random assignment. We design a field experiment and propose a new estimation technique to address these estimation problems including the mechanical problems associated with repeated observations within peer groups noted by Angrist (2014). The field experiment randomly assigns students to one-to-one partnerships in an important gateway STEM course at a large public university. We find no evidence of peer effects from estimates of exogenous peer effect models. We push further and estimate outcome-on-outcome models which sometimes reveal peer effects when exogenous models do not provide good proxies for ability. We find some limited evidence of small, positive outcome-on-outcome peer effects (which would have been missed without our new estimation technique). Standard estimation methods fail to detect peer effects and even return negative estimates in our Monte Carlo simulations because of the downward bias due to mechanical problems. Simulations reveal additional advantages of our technique especially when peer group sizes are fixed. Estimates of non-linear effects, heterogeneous effects, and different measures of peer ability and outcomes reveal mostly null effects but we find some evidence that low-ability peers negatively affect low-ability and medium-ability students. The findings in this setting of long-term, intensive interactions with classroom random assignment and "throwing everything at it" provide evidence of, at most, small positive peer effects contrasting with the common finding of large peer effects in previous studies in education. |
| Keywords: | peer effects, higher education, STEM, field experiment |
| JEL: | I21 I23 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17358 |
| By: | Sophie Gulliver (Independent consultant); Anastassia Demeshko (Center for Global Development); Jon Harle (INASP); Tom Drake (Center for Global Development) |
| Abstract: | In today’s digitally interconnected world, the swift exchange of knowledge and research should be commonplace and should drive substantial advancements in health, well-being, and prosperity globally. Yet our current research publishing system is holding us back, deliberately restricting access to research to generate profit and impeding collaboration and innovation, particularly for researchers in lower-income countries. While organisations like UNESCO and cOAlition S have made some progress towards Open Access research, reforms have been slow and, in certain ways, counterproductive. These reforms have too often substituted one set of barriers for another or focused too narrowly on individual or institutional changes, neglecting the broader political and policy environment. Strategic, high-level political and diplomatic engagement is critical, yet underutilised, in uniting behind a vision and driving substantial research publishing reform. In this paper, we propose a vision for a reformed research publishing system that is accessible, high quality, and useable, with targeted reforms in the three domains of financing, infrastructure, and governance. We outline a theory of change in order to use science diplomacy to elevate research publishing reform to the international agenda and drive more effective global leadership and governance of this important global digital system. We note that the G20, as a broad and globally representative international forum, is well-positioned to spearhead research publishing reform efforts. We provide a case study to illustrate how the theory of change could be applied to the G20 to achieve national open access policy reform through science diplomacy, thereby reducing barriers to research access and creating a more inclusive and effective global research publishing system. |
| Date: | 2024–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:ppaper:344 |
| By: | Lachowska, Marta (Upjohn Institute for Employment Research); Mas, Alexandre (University of California, Berkeley); Saggio, Raffaele (University of British Columbia); Woodbury, Stephen A. (Michigan State University) |
| Abstract: | Using a revealed preference approach applied to administrative data from Washington we document that workers have limited discretion over hours at a given employer, there is substantial mismatch between workers who prefer long hours and employers that provide short hours, and hour constraints are prevalent. Voluntary job transitions imply that a ratio of the marginal rate of substitution of earnings for hours to the wage rate is on the order of 0.5-0.6 for prime-age workers. The average absolute deviation between observed and optimal hours is about 15%, and constraints on hours are particularly acute among low-wage workers. On average, observed hours tend to be less than preferred levels, and workers would require a 12% higher wage with their current employer to be as well off as they would be after moving to an employer offering ideal hours. These findings suggest that hour constraints are an equilibrium feature of the labor market because long-hour jobs are costly to employers. |
| Keywords: | hour constraints, mismatch, sorting, labor supply, willingness to pay, wage premiums, hour policies |
| JEL: | J22 J23 J31 J40 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17363 |
| By: | Cody Hyman (Bentley University); Henry Dao (Bentley University); Gregory Vaughan (Bentley University); Fred D. Ledley (Bentley University) |
| Abstract: | The Inflation Reduction Act of 2022 contains landmark provisions authorizing the government to negotiate the price of selected drugs covered by Medicare Part D. The biopharmaceutical industry has criticized these provisions as a threat to innovation arguing that reducing future revenues could disincentivize equity investment in biotechnology. This research examines the sensitivity of private and public equity investment in the biotechnology industry to drug price indices and market conditions from 2000-2022. The analysis shows that equity financing and valuation in the biotechnology industry were strongly associated with equity market conditions but not indices of either producer or consumer drug prices. These results do not support claims of an association between changing drug prices and the availability of equity capital to emerging biotechnology companies, which currently sponsor the majority of all clinical trials. These results add to evidence that the IRA may not have a negative impact on pharmaceutical innovation. |
| Keywords: | Inflation Reduction Act, drug prices, biotechnology, finance, valuation, investment |
| JEL: | I1 I18 H43 H51 I10 |
| Date: | 2024–06–28 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp223 |
| By: | Katharina Erhardt; Apoorva Gupta |
| Abstract: | This paper aims to understand the pathways by which exporters become entities that sell multiple goods to multiple customers. To understand firms’ export strategies, we analyse new trade flows – new seller-buyer-product combinations – of individual exporters. Our first finding highlights that these new trade flows are an important margin for firms of all size classes, accounting for approximately 62% of their overall trade flows. Classifying new trade flows into going-wide (introducing new products) and going-deep (reaching new buyers for existing products), we find that the dominant margin of export expansion depends on the size and life-cycle stage of exporters; smaller firms rely relatively more on going-wide and large firms more on going-deep. We also demonstrate that selling new products is different from selling existing products: Firms target new products to a single, often new, buyer. To rationalize these facts, we propose a conceptual framework where firms allocate scarce sales personnel between selling existing products to more buyers and matching with new buyers for introducing new products. We empirically test and confirm the model’s key predictions. In particular, we use the 2015 Swiss exchange rate shock and show that going-deep is more pronounced as an export strategy when a firm’s effective market size is relatively larger. The findings suggest varying scope and size for firms born in different phases of globalisation. |
| Keywords: | export strategies, product introduction, customer accumulation, buyer-seller relationships, multi-product firms |
| JEL: | F10 F14 L25 O31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11269 |
| By: | Elsby, Michael W.L.; Smith, Jennifer C.; Wadsworth, Jonathan |
| Abstract: | This article provides a first synthesis of population flows and labor market dynamics across immigrant and native-born populations. We devise a novel dynamic accounting methodology that integrates population flows from two sources-changes in birth cohort size and immigrant flows-with labor market dynamics. We illustrate the method using data for the United Kingdom, where population flows have been large and cyclical, driven first by the maturation of baby boom cohorts in the 1980s and later by immigration in the 2000s. New measures of labor market flows by migrant status uncover the flow origins of disparities in the levels and cyclicality of immigrant and native labor market outcomes and their more recent convergence. An application of our accounting framework reveals that population flows have played a nontrivial role in the volatility of labor markets among the UK-born and, especially, immigrants. |
| Keywords: | immigration; labor market dynamics; worker flows |
| JEL: | R14 J01 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125889 |
| By: | Fleischhacker, Jan |
| Abstract: | In this paper, I explore how fiscal policy decisions relate to the business cycle and, building on that, how the effects of policy interventions may vary depending on when policy is conducted in the business cycle. To assess this, I estimate a small to medium-sized DSGE model with expressive non-linear fiscal and monetary rules using a higher-order approximation. The estimation procedure employed in this paper combines several existing approaches developed by Herbst and Schorfheide (2016), Jasra et al. (2010), Buchholz, Chopin and Jacob (2021) and Amisano and Tristani (2010) to trade off computation time and inference quality. The model is estimated using Sequential Monte Carlo techniques to estimate the posterior parameter distribution and particle filter techniques to estimate the likelihood. Together, the estimation procedure reduces the estimation from weeks to days by up to 94%, depending on the comparison basis. To assess the behaviour of the effects of fiscal policy interventions, I sample impulse responses conducted along the historical data. The results present time-varying policy rules in which the effects of fiscal shocks go through deep cycles depending on the initial conditions of the economy. Among the set of fiscal instruments, government consumption goes through the most persistent cycles in its effectiveness in stimulating output. In particular, the effects of government consumption stimulus are estimated to be more effective during the financial crisis and, later, the Covid crisis, while being less effective in periods of above steady state output like the early 2000s. Relating the effects of specific stimulating shocks to the initial conditions using regression techniques, I show that fiscal policy is more effective at stimulating output if the interest rate and debt are low. Furthermore, the effects of government consumption are estimated to be increasing in output while tax cuts are decreasing. As a last contribution, I explore how the behaviour of the central bank and government varies depending on the business cycle by analysing sampled policy rule gradients constructed on historical data. For the central bank, the results show that in phases of high output growth, the central bank puts more emphasis on controlling inflation and less on output. As the economy shifts into crisis, the central bank reduces its focus on inflation and shifts towards bringing output growth back to target. For the fiscal side, the behaviour is heavily governed by the current debt level, and, for example, during the high debt periods of the 1990s, labour taxation became increasingly responsive to debt to stabilize the budget. |
| Keywords: | DSGE fiscal policy non-linear state-space business cycle particle filter bayes SMC MH RWMH Kalman state-dependend |
| JEL: | C1 C11 C4 C5 C6 E62 |
| Date: | 2024–10–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122497 |
| By: | Dang, Hai-Anh H.; Kilic, Talip; Abanokova, Kseniya; Carletto, Calogero |
| Abstract: | Survey-to-survey imputation has been increasingly employed to address data gaps for poverty measurement in poorer countries. We refine existing imputation models, using 14 multi-topic household surveys conducted over the past decade in Ethiopia, Malawi, Nigeria, Tanzania, and Vietnam. We find that adding household utility expenditures to a basic imputation model with household-level demographic and employment variables provides accurate estimates, which even fall within one standard error of the true poverty rates in many cases. The proposed imputation method performs better than several commonly used multiple imputation and machine learning techniques. Further adding geospatial variables improves accuracy, as does including additional community-level predictors (available from data in Vietnam) related to educational achievement, poverty, and asset wealth. Yet, within-country spatial heterogeneity exists, with certain models performing well for either urban areas or rural areas only. These results offer cost-saving inputs into future survey design. |
| Keywords: | Ethiopia; Malawi; Nigeria; Tanzania; Vietnam; consumption; household surveys; poverty; Sub-Saharan Africa; survey-to-survey imputation |
| JEL: | N0 |
| Date: | 2024–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125798 |
| By: | Ping, Guo; Hamzah, Hanny Zurina; Chin, Lee |
| Abstract: | The current study aims to discover the impact of cross-border e-commerce (CBEC) exports on regional economic growth in China. A benchmark regression via the fixed panel effect model was conducted based on Chinese provincial data from 2015 to 2020. The results demonstrated that CBEC exports significantly increased regional economic growth in China. The heterogeneity test also revealed CBEC exports have a significant positive impact in less developed regions rather than in more developed regions. Furthermore, the threshold effect test discovered that the technological input of manufacturing enterprises produced a non-linear significant impact on CBEC exports to elevate economic growth. When the proportion of technological input to GDP is less than the threshold of 0.031, the significant impact of CBEC exports on economic growth was larger; and then the impact became smaller and insignificant after the threshold. The findings suggested the Chinese government should vigorously develop CBEC export in terms of improvements in trade facilitation, CBEC talent training, and encouraging enterprises to explore different oversea markets. Simultaneously, attention should be paid to providing more policy support for the development of CBEC exports in less developed areas, and emphasis should be placed on guiding manufacturing enterprises to make rational use of Research and Development(R&D) funds. The empirical parts of this study are conducted by STATA 16 software. |
| Keywords: | Cross-border e-commerce, exports, economic growth, Research and Development Intensity, •Market environment quality, Technological developing level |
| JEL: | F14 F63 R11 |
| Date: | 2024–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122405 |
| By: | Andrea Ascani (Gran Sasso Science Institute); Lakshmi Balachandran Nair (LUISS Guido Carli University) |
| Abstract: | Whilst most governments’ supportive measures have kept businesses afloat during the most depressing stages of the COVID-19 pandemic, these massive liquidity injections can also hide the risk of keeping financially fragile firms alive artificially, thus starting a process that turns them into zombie firms (zombies). In this article, we investigate whether and under what circumstances the presence of zombies in an industry constitutes a barrier to the innovativeness of non-zombies in the same sector. By analysing matched patent-firm data from Bureau van Dijk ORBIS Intellectual Property on 426, 130 Italian firms from 2012 to 2018, we find evidence in favour of negative intraindustry spillovers. Nonetheless, this general relationship is subject to various contingencies connected to both industry and firm characteristics. Specifically, we highlight that the retention of zombies can congest the innovative activities of healthy firms, especially when they depend on external sources of finance, operate in highly competitive markets, are more exposed to the erosion of their market shares, and do not possess a pre-existing strong knowledge base. Our findings have relevant policy and managerial implications. |
| Keywords: | zombie firms, innovation, Italy, spillovers, poisson, instrumental variable |
| JEL: | O31 L20 D22 |
| Date: | 2023–06 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp40 |
| By: | Frech, Maria; Maideu-Morera, Gerard |
| Abstract: | Empirical evidence highlights women’s demand for flexible working hours as a crit-ical cause of the persistent gender disparities in the labor market. We propose a theory of how hidden demand for flexibility drives gendered employment dynamics. We de-velop a dynamic contracting model between an employer and an employee whose time availability is stochastic and unverifiable. We model men and women only to differ in their probability of having low time availability, which we measure in the ATUS. We explore contracts designed specifically for each gender (gender-tailored) and the polar case where a male-tailored contract is given to both men and women. For the latter, we show that contracting frictions endogenously give rise to well-documented gendered labor market outcomes: (i) the divergence and non-convergence of gender earnings differentials over the life-cycle, and (ii) women’s shorter job duration and weaker labor force attachment. |
| Keywords: | Gender wage gap; child penalty; flexible working hours; recursive con-tracts |
| JEL: | J16 J22 J41 D82 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129894 |
| By: | Fetzer, Thiemo (University of Warwick and University of Bonn); Palmou, Christina (Office for National Statistics (ONS)); Schneebacher, Jakob (Competition and Markets Authority (CMA), and affiliated with King’s College London (KCL) and the Economic Statistics Centre of Excellence (ESCoE)) |
| Abstract: | We study how businesses adjust to significant rises in energy costs. This matters for both the current energy crisis and the longer-term shift towards Net Zero. Using firm-level real-time survey and administrative data backed by a pre-registered analysis plan, we examine how firms respond to the energy price shock triggered by Russia’s invasion of Ukraine along output, price, input, process and survival margins. We find that, on average, firms pass on some cost increases, build up cash reserves, and face higher debt, but do not yet see layoffs or bankruptcies. However, effects are highly heterogeneous by size and industry: for instance, small firms tend to increase cash reserves and prices, while large firms invest more in capital. We estimate separate elasticities for many small industry cells and subsequently use k-means clustering techniques on the estimated effects to identify high-dimensional firm-adaptation archetypes. These estimates can help tailor firm support in the energy transition both in the short and the long term. More generally, the machinery developed in this paper enables policymakers to evaluate and adjust economic policy in near-real time. |
| Keywords: | energy price shock; firm dynamics; climate change; high-dimensional analysis JEL Classification: D22; D24; H23; L11; O30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:722 |
| By: | Mukiri-Smith, Hellen; Mann, Laura; Azmeh, Shamel |
| Abstract: | Data has become a core part of our economic and social infrastructures, transforming how we produce and exchange goods, services and information. Debates over data governance have intensified, and encompass issues such as data protection, privacy, surveillance, competition, taxation and digital trade flows. With its 2021 World Development Report, Data for Better Lives, the World Bank enters the fray, offering a data governance model which, its authors argue, will help harness the power of data for ‘better lives’ while limiting risks of misuse. This Assessment provides a brief summary of its main claims and recommendations, before critiquing it on three grounds, namely that its evidence base is weak; that its data market-centric data governance framework serves the interests of existing incumbents while undermining data rights; and that it misrepresents the nature of global debates on data governance and thus undermines the actual positions taken by representatives from developing countries. Overall, we argue that the World Bank is using this report to represent one heavily contested governance framework that advances the interests of high-income countries as the standard common-sense approach while occluding alternative models and frameworks. |
| JEL: | J1 |
| Date: | 2022–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:117686 |
| By: | Vahid Saadi; Omar Rachedi |
| Abstract: | We show in this paper that tax exemptions on income from municipal bonds distort bank mortgage lending standards. Banks in states with a larger tax exemption hold more municipal bonds on their balance sheets. These holdings expose banks to local risks, in particular to real estate risk as municipal bonds are financed to a large extent via property tax revenues with a large elasticity with respect to house prices. We show that banks with a higher share of municipal bonds on their balance sheets divert their mortgage originations out of their home states by relaxing their mortgage lending standards. We provide evidence that this geographical diversification is costly in that banks with higher municipal bond holdings lend to low FICO score and high debt-to-income ratio borrowers away from their home states without a corresponding risk premium in interest rates charged. |
| Keywords: | Geographical diversification; Lending standards; Mortgage originations; municipal bonds |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-042 |
| By: | Ion Anghel; Costin Ciora; Elena Ionascu |
| Abstract: | Urban economic theory predicts that house prices decline with distance from the central business district. Although the price premium in the housing market has been extensively researched, it remains unclear what the influence of central business district (CBD) has on housing prices. This paper aims to provide new insights into the impact of the CBD proximity to dwellings on house prices by focusing on the Bucharest residential market. Over the past few years, Bucharest’s office space market experienced significant growth, but with a greater concentration in certain city areas, affecting the entire real estate market surrounding the office centers. Using transaction data on the Bucharest residential market, this study explores, for the first time, the influence of proximity to the central business district on housing prices, quantifying the price premium and the difference in market time for residential apartments. |
| Keywords: | central business district; housing market; pricing premium |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-202 |
| By: | Heidi Falkenbach; Islam Ibrahim |
| Abstract: | At heightened market volatility, investors migrate to safer investments prioritizing risk avoidance over gaining higher returns. Hence the value of safer, less volatile investment appreciates. As diversification diminishes volatility, we investigate whether diversified REITs is considered a safer investment at high market volatility. We find that the effect of diversification on the value and public debt cost of REITs varies with market volatility. At low level of market volatility geographical diversification has a negative net effect on the REIT value. However, as the market volatility increases, this negative impact diminishes. Similarly, we find that at low level of market volatility, geographical diversification has a yield-increasing effect on the debt issues of REITs. But, also, as market volatility increases the yield-increasing effect diminishes. These findings indicate that the value of diversification increases with market volatility. |
| Keywords: | Diversification; firm value; market volatility; REIT |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-083 |
| By: | Nurfatima Jandarova (Tampere University, Finnish Centre of Excellence in Tax Systems Research (FIT)); Aldo Rustichini (University of Minnesota) |
| Abstract: | Political behavior of citizens includes political participation and preferences. We show with UK data that political behavior is affected by individual characteristics that are also determining educational attainment, including cognitive abilities and intelligence. Our analysis reconciles the rational choice assumption with the acquisition of costly political information, which would otherwise give only negligible benefits. We disentangle the causal pathways by identifying effects operating directly and those operating indirectly, in particular through education and income. We address the issue of endogeneity of cognitive skills using polygenic scores, and show that an important component of the causal factors is genetic. |
| Keywords: | political participation, party preferences, human capital, intelligence, individual characteristics, polygenic score |
| JEL: | D72 I25 J31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:25 |
| By: | Afaf Zarkik |
| Abstract: | This year, the Conference of the Parties (COP27) will be held in in Sharm el-Sheikh, Egypt. On the outset of this auspicious occasion, it is befitting to reflect upon contemporary climate adaptation and mitigation policies, from a southern and African point of view. Indeed, climate change is one of the stickiest policy problems of the 21st century, because it is inherently a global and multidimensional problem entailing a bundle of policy features. Following the consecutives shocks to the global economy caused by fossil fuels, the timing has never been better to melt the polarization around climate change politics and propose innovative solutions to surf the uncertainty and complexity of this intractable policy problem. |
| Date: | 2022–11 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpcoen:pb_63-22 |
| By: | Dominik Wasiluk |
| Abstract: | AI-based automated valuation models (AVMs) exhibit best among all types of AVMs and truly commercially-viable qualities. Therefore for many professionals the use of AI algorithms for property valuation seems to be a natural progress and a necessity in this field. However the application of AI to property valuation raises a number of questions of a legal nature. First and foremost, is the use of AVM by appraisers to perform valuation reports allowed under current legal regulations? In my paper, I will present an analysis of Polish legal provisions regarding real estate valuation and prove that, unlike in many other European countries, they have almost explicitly allowed the use of AVMs by appraisers, including those based on artificial intelligence, for many years. In the second part of the report, I will present my conclusions on the professional liability of an appraiser for possible AVM errors. In order to investigate both research problems, I use linguistic and hermeneutical analysis of law, which I supplement with sociological methods - in-depth interviews with Polish property appraisers. Finally, based on an extensive literature review and international industry standards, I will present a proposal on how an appraiser should assess the quality of an AI-based AVM, both before and during its use. |
| Keywords: | Artificial Intelligence; Automated Valuation Models; Property Valuation; Real estate appraisers |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-184 |
| By: | Bettio, Francesca; Tavares, Fernando Flores; Ticci, Elisa |
| Abstract: | We revisit the issue of Intimate Partner Violence (IPV) during the COVID-19 pandemic asking three questions: whether IPV increased with lockdown, what pandemic-specific 'shocks' or 'stressors' had the greatest impact and how the results change when different measures of IPV are used. Leveraging a large telephone survey conducted in 2021 in the Italian region of Tuscany as part of a mixed-method research project on IPV during the first lockdowns, we show that IPV intensified. As regards pandemic-specific shocks or stressors, we find that parental overburden due to the presence of minors had the largest impact, followed by job loss, whereas confinement to crowded spaces lacking privacy appeared to have a weak effect, if any. Finally, and unsurprisingly, we find that using a fuzzy measure of violence outcomes that accounts for severity as well as prevalence of violence modifies the findings in important respects. In particular, job loss appeared to trigger less severe abuse than parental overburden. Our empirical strategy principally relies on the exogeneity of pandemic-specific shocks to attribute causal interpretation to our estimates. However, our dependent variables (IPV outcomes) are binary or fractional, and endogeneity cannot be ruled out. To address these aspects, we estimate average marginal effects using a two-step Control function (CF) approach combined with a quasilikelihood method. |
| Keywords: | Intimate partner violence, COVID-19 pandemic, Fuzzy set theory, Control-function method, Italy, Gender |
| JEL: | C49 D63 J16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1507 |
| By: | Christl, Michael; De Poli, Silvia; Ivaškaitė-Tamošiūnė, Viginta |
| Abstract: | This paper examines the extent to which fiscal policy protected household incomes in the second year of the COVID-19 pandemic in EU countries. Using microsimulation techniques and detailed Eurostat data, we analyse this impact separately for employees and the selfemployed. We show that while on average income protection was similar for employees and the self-employed at the EU level, the heterogeneity both between and within countries was much higher for self-employed households in 2021. For employees, both monetary compensation schemes and unemployment benefits played a similar role in absorbing the income shock, whereas for the self-employed it was mainly monetary compensation schemes and much less so unemployment benefits that stabilised their income. Overall, we find that monetary compensation schemes, together with automatic stabilisers, absorbed a substantial part (67%) of the market income shock in 2021, albeit with a reduced cushioning effect compared to the previous year (74%). Monetary compensation schemes alone account for almost a third of this cushioning effect in 2021. Our paper underlines the importance of targeted policies to ensure comprehensive support for vulnerable households amid ongoing economic uncertainties. |
| Keywords: | COVID-19, Self-employed, Income stabilisation, Microsimulation, EUROMOD |
| JEL: | D31 E24 H24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1509 |
| By: | Andrew Dillon; Nicoló Tomaselli |
| Abstract: | Making markets is central to theories of development. In a randomized controlled trial, we vary an agricultural input market's organization to test whether time-inconsistent preferences, hard or soft commitments, and liquidity are constraints to market formation. The results show that markets organized earlier raise market sales consistent with farmer's measured time-inconsistent preferences. Liquidity in later spot markets are a substitute for earlier market timing. Farmer's demand is relatively inelastic to deposit levels in forward contracts. The experiment also directly tests the separability hypothesis where we find creating input markets alone does not lead to welfare improvements. |
| Keywords: | agriculture, market formation, welfare improvements, randomized controlled trial, development, farmers. |
| JEL: | Q12 L10 G21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_18.rdf |
| By: | DONATELLO Shane; PEREZ CAMACHO M Nati (European Commission - JRC); WOLF Oliver (European Commission - JRC) |
| Abstract: | The EU Ecolabel and EU GPP are two European policy instruments that can be used by public procurers in a synergistic manner by matching supply and demand signals to green the market. Suppliers receive general demand signals for greener products. However public procurers are often reluctant to state specific green criteria in calls for competition because of uncertainty about what exactly to ask for and the availability of compliant products on the market. These practical guidelines help procurers to draw up technical specifications and award criteria in calls for the green public procurement of hard covering products. Compliance with the recommended EU GPP criteria can be verified simply by products carrying the EU Ecolabel and, in some cases, by products carrying other ISO 14024 type I ecolabels. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc131862 |
| By: | Bo Hu (Fudan University) |
| Abstract: | Online appendix for the Review of Economic Dynamics article |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:red:append:24-41 |
| By: | Herbert Dawid; Domenico Delli Gatti; Luca Eduardo Fierro; Sebastian Poledna |
| Abstract: | In this paper we examine the role of the design of behavioral rules in agent-based macroeconomic modeling. Based on clear theoretical foundations, we develop a general representation of the behavioral rules governing price and quantity decisions of firms and show how rules used in four main families of agent-based macroeconomic models can be interpreted as special cases of these general rules. We embed the four variations of these rules into a calibrated agent-based macroeconomic framework and show that they all yield qualitatively very similar dynamics in business-as-usual times. However, the impact of demand, cost, and productivity shocks differ substantially depending on which of the four variants of the price and quantity rules are used. |
| Keywords: | agent-based macroeconomics, behavioral rules, pricing, forecasting |
| JEL: | C63 E37 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11411 |