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on Microeconomics |
| By: | Anna Creti; Pierre-Andre Jouvet; Valerie Mignon |
| Abstract: | The aim of this paper is to investigate the determinants of the carbon price during the two phases of the European Union Emission Trading Scheme (EU ETS). More specifically, relying on daily EU allowance futures contracts, we test whether the carbon price drivers identified for Phase I still hold for Phase II and evolve toward a long-run relationship. Using cointegration techniques and accounting for the 2006 structural break on the carbon market, we show that while a cointegrating relationship exists for both phases of the EU ETS, the nature of this equilibrium relationship is different across the two subperiods, with an increasing role of fundamentals in Phase II. Deriving equilibrium values, we show that the carbon price tends to be undervalued since the end of 2009. |
| Keywords: | EU ETS; carbon price; energy prices; cointegration |
| JEL: | Q4 C22 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2011-09&r=mic |
| By: | Judith K. Hellerstein; David Neumark |
| Abstract: | Blacks in the United States are poorer than whites and have much lower employment rates. “Place-based” policies seek to improve the labor markets in which blacks – especially low-income urban blacks – tend to reside. We first review the literature on spatial mismatch, which provides much of the basis for place-based policies. New evidence demonstrates an important racial dimension to spatial mismatch, and this “racial mismatch” suggests that simply creating more jobs where blacks live, or moving blacks to where jobs are located, is unlikely to make a major dent in black employment problems. We also discuss new evidence of labor market networks that are to some extent stratified by race, which may help explain racial mismatch. We then turn to evidence on place-based policies. Many of these, such as enterprise zones and Moving to Opportunity (MTO), are largely ineffective in increasing employment, likely because spatial mismatch is not the core problem facing urban blacks, and because, in the case of MTO, the role of labor market networks was weakened. Finally, we discuss policies focused on place that also target incentives and other expenditures on the residents of the targeted locations, which may do more to take advantage of labor market networks. |
| JEL: | J15 J18 J7 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16986&r=mic |
| By: | Baird, Sarah; de Hoop, Jacobus; Ozler, Berk |
| Abstract: | In this paper, the authors investigate the effect of positive income shocks on the mental health of adolescent girls using experimental evidence from a cash transfer program in Malawi. They find that the provision of monthly cash transfers had a strong beneficial impact on the mental health of school-age girls during the two-year intervention. Among baseline schoolgirls who were offered unconditional cash transfers, the likelihood of suffering from psychological distress was 38 percent lower than the control group, while the same figure was 17 percent if the cash transfers offers were made conditional on regular school attendance. The authors find no impact on the mental health of girls who had already dropped out of school at baseline. The beneficial effects of cash transfers were limited to the intervention period and dissipated quickly after the program ended. |
| Keywords: | Health Monitoring&Evaluation,Disease Control&Prevention,Health Systems Development&Reform,Mental Health,Population Policies |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5644&r=mic |
| By: | Zhu, Erqian; Kim, Man-Keun; Harris, Thomas R. |
| Keywords: | Innovation Capacity, Natural Amenity, Community/Rural/Urban Development, O31, Q51, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:103249&r=mic |
| By: | Andrén, Daniela (Department of Business, Economics, Statistics and Informatics) |
| Abstract: | This paper analyzes the impact of the definition of part-time sick leave (PTSL) when analyzing the effect of PTSL on employees’ probability to fully recover lost work capacity. Using a random sample of 3,607 employees, we estimate an econometric model that aims to answer the hypothetical question of what happens to an employee who has lost his/her work capacity if he/she instead of continuing to be sicklisted full time starts working some hours. The estimated treatment parameters vary across definitions, yet all results show that, regardless of the timing of the intervention, PTSL had a positive effect on the probability of full recovery of lost work capacity one year after the spell started. Moreover, the most attractive definition shows the highest impact: About 48% of those with a reduced degree of sick leave from full time to part time during the spell were recovered about one year after the spell started, and only about 6% of them would have been better off had they remained on full-time. |
| Keywords: | part-time sick leave; full-time sick leave; selection; treatment and control groups; unobserved heterogeneity; treatment effects |
| JEL: | I12 J21 J28 |
| Date: | 2011–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2011_004&r=mic |
| By: | Pierre-Cyrille Hautcoeur (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris); Nadine Levratto (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre, Euromed Marseille - Ecole de management - Euromed Marseille) |
| Abstract: | In this paper, we try to measure the impact of the changes in French bankruptcy law in the 19th century focusing on the behaviour of economic agents as users of bankruptcy law for the sake of finding the best solution to their economic problems. Debtors used bankruptcy law in order to minimize their debt level when facing difficulties in servicing it, but they had to convince their creditors and/or the courts of their good faith, and faced the adverse effects of bankruptcy on their reputation and on the smooth functioning of their business. Creditors used bankruptcy law in order to force their debtors to pay, if they could. Judges - who in the French system of specialized commercial courts were elected entrepreneurs - applied the law within a specific economic context (both a specific local context and at a specific moment in the business cycle) which could affect them. The first part of the paper presents the evolution of French bankruptcy law during the 19th century in its historical context. The second part briefly describes the theoretical model we use in order to understand the choices facing debtors and creditors in the face of financial distress. The last part proposes some major stylized facts concerning bankruptcies during that period (based on contemporary official statistics) and tries to understand their relationship with the legal evolution described before. |
| Keywords: | bankruptcy law ; failure ; firm size ; law implementation ; legal origin ; merchant courts ; France ; 19th century |
| Date: | 2011–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00587828&r=mic |
| By: | Domenica Tropeano (University of Macerata) |
| Abstract: | <p>The paper investigates whether the current decline of the Italian economy could be traced back to financialization. In principle financialization could not be so important for an economy in which many firms are not quoted in the stock exchange and for which shareholders' interests should not matter. The author argues that financialization may have deep effects in such an environment by changing the perceived financial norm and the target return on capital.<br />The author draws on a model by Lavoie (1995) extending it to an open economy. She uses this model by looking at the effects of an appreciation, thus replicating the appreciation of the euro in the last years and its possible effects on the Italian economy. The results of such an appreciation would be a fall in the rate of growth, accumulation and in the realized rate of profit. This picture, however, does not fit in well with some stylized facts. In Italy, the rate of growth and the capital accumulation have slowed down while the rate of profit and the profit share have clearly increased. The increase concerns the average profit share and the average profit rate while indeed the profit rate is declining in the manufacturing sectors, but rising in the services sector. At this point a different interpretation is presented, which is no more based on the financialization hypothesis but rather on the increase in the degree of monopoly power in the Italian industrial sectors, given the increase in the mark-up. This process would have been favoured by the privatization process of previously public enterprises. The author shows what might have happened<br />by using a model by Dutt (1995) with two sectors. In this model in the long-run the accumulation of capital is still governed by aggregated utilization and profitability, but the allocation of capital among sectors and their growth depends on the profit rate differential. The profit rate differential might have shifted resources to the service sectors, which would have been favoured by the privatization process. In this case, financialization would be a consequence of the increase in monopolistic competition, which in turn could be responsible for the decline.</p> |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:mcr:wpdief:wpaper00065&r=mic |
| By: | Li, Wei; Mengistae, Taye; Xu, Lixin Colin |
| Abstract: | Although it had a a lower income level than India in 1980, China's 2006 per capita gross domestic product stands more than twice that of India's. This paper investigates the role of the business environment in explaining China's productivity advantage using recent firm-level survey data. The analysis finds that China has better infrastructure, more skilled workers, and more labor-hiring flexibility than India, but a worse access to finance and higher regulatory burden. Infrastructure appears to be a key constraint for India: it lags significantly behind China, yet it has important indirect effects for the effectiveness of labor flexibility. Labor flexibility is also likely a major constraint for India, as evident in the predominance of small firms, the importance of firm size in accounting for India's disadvantage in productivity, and the complementarity of proxies of labor flexibility with infrastructure and access to finance. Interestingly, regulatory uncertainty has adverse effects in India but not in China. The empirical analysis suggests that it is important to consider country-specific growth bottlenecks and the indirect effects of policy reforms. |
| Keywords: | Environmental Economics&Policies,Labor Policies,Labor Markets,Banks&Banking Reform,E-Business |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5641&r=mic |
| By: | Pierre Courtois; Tarik Tazdaït |
| Abstract: | Assuming that a North-South transfer is the key to climate cooperation, we ask when and how much the North should o¤er to the South in return for a commitment to reduce deforestation and forest degradation. In light of the risk of irreversible damage over time, we examine a negotiation with a deadline. We assess the conditions for an agreement to be immediate or delayed, and discuss situations likely to result in negotiation failure. Despite the risk of irreversible damage over time, we show that cooperation is likely to be delayed and characterize situations where North and South fail to agree within the deadline. Although Pareto-improving, cooperation may collapse because of inefficiencies related to incomplete information. We show that in negotiations with a deadline, uncertainty about the benefi ts deriving from cooperation and the irreversibility of the damage that will be caused if cooperation is delayed, are the two key components affecting choice. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:11-07&r=mic |
| By: | Simplice A., Asongu |
| Abstract: | The recent waves of political crises in Africa and the Middle East have inspired the debate over how political instability could pose a risk of financial contagion to emerging countries. With retrospect to the Kenyan political crisis, our findings suggest stock markets in Lebanon, Mauritius and Nigeria were contaminated. |
| Keywords: | Political crisis; Contagion; Developing countries; Equity Markets |
| JEL: | F30 G15 G10 |
| Date: | 2011–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30391&r=mic |
| By: | K. Anundsen, André (Dept. of Economics, University of Oslo); S. Jansen, Eilev (Statistics Norway) |
| Abstract: | The interaction between housing prices and household borrowing in Norway is estimated in a simultaneous setting in the long and the short run.The long run dependence is analyzed within a cointegrated vector autoregression in real housing prices, real disposable household income and real household debt, conditioning on the real after tax interest rate, the number of house transactions and the volume of housing capital. We identify two cointegrating equations which determine equilibrium housing prices and household debt, respectively. The long run equations are embedded in a system of two error-correction equations which is estimated simultaneously. The model yields meaningful short and long term effects when estimated on the sample 1986q2-2008q4 and impulse responses demonstrate that there are selfreinforcing feedback effects between the two variables of interest. |
| Keywords: | Housing prices; household borrowing; financial accelerator |
| JEL: | C32 C52 E44 G21 G28 |
| Date: | 2011–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2011_013&r=mic |
| By: | Dan Usher (Queen's University) |
| Abstract: | People vote from self-interest or from a sense of duty. Voting from self-interest requires there to be some chance, however small, that one’s vote swings the outcome of the election from the political party one opposes to the political party one favours. This paper is a discussion of three models of how that chance might arise: the common sense model inferring the probability of a tied vote today from the distribution of outcomes in past elections, person-to-person randomization where each voter looks upon the political preferences of rest of the electorate as analogous to drawings from an urn with given proportions of red and blue balls, and nation-wide randomization where voters are lined up according to their valuations (positive or negative) of a win for one of the two competing parties, but where chance shifts the entire schedule of preferences up or down. Emphasis is on the third model about which this paper may have something new to say. |
| Keywords: | Pivotal voting, Duty to vote, Compulsory voting |
| JEL: | D72 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1265&r=mic |
| By: | Viral V. Acharya; Alberto Bisin |
| Abstract: | We model the opacity of over-the-counter (OTC) markets in a setup where agents share risks, but have incentives to default and their financial positions are not mutually observable. We show that this setup results in excess "leverage" in that parties take on short OTC positions that lead to levels of default risk that are higher than Pareto-efficient ones. In particular, OTC markets feature a "counterparty risk externality" that we show can lead to ex-ante productive inefficiency. This externality is absent when trading is organized via a centralized clearing mechanism that provides transparency of trade positions, or a centralized counterparty (such as an exchange) that observes all trades and sets prices competitively. While collateral requirements and subordination of OTC positions in bankruptcy can ameliorate the counterparty risk externality, they are in general inadequate in addressing it fully. |
| JEL: | D52 D53 D62 G14 G2 G33 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17000&r=mic |
| By: | Alberto F. Alesina; Eliana La Ferrara |
| Abstract: | This paper proposes a test of racial bias in capital sentencing based upon patterns of judicial errors in lower courts. We model the behavior of the trial court as minimizing a weighted sum of the probability of sentencing an innocent and that of letting a guilty defendant free. We define racial bias as a situation where the relative weight on the two types of errors is a function of defendant and/or victim race. The key prediction of the model is that if the court is unbiased, ex post the error rate should be independent of the combination of defendant and victim race. We test this prediction using an original dataset that contains the race of the defendant and of the victim(s) for all capital appeals that became final between 1973 and 1995. We find robust evidence of bias against minority defendants who killed white victims: In Direct Appeal and Habeas Corpus the probability of error in these cases is 3 and 9 percentage points higher, respectively, than for minority defendants who killed minority victims. |
| JEL: | K42 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16981&r=mic |
| By: | Viral V. Acharya; Sergei A. Davydenko; Ilya A. Strebulaev |
| Abstract: | Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for saving cash. In our model endogenously determined optimal cash reserves are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads are negatively related to the "exogenous'' component of cash holdings that is independent of credit risk factors. Similarly, although firms with higher cash reserves are less likely to default over short horizons, endogenously determined liquidity may be related positively to the longer-term probability of default. Our empirical analysis confirms these predictions, suggesting that precautionary savings are central to understanding the effects of cash on credit risk. |
| JEL: | G32 G33 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16995&r=mic |
| By: | Bayraci, Selcuk; ARI, YAKUP; YILDIRIM, YAVUZ |
| Abstract: | In this paper, we develop a vector autoregressive (VAR) model of the Turkish financial markets for the period of June 15 2006 – June 15 2010 and forecasts ISE100 index, TRY/USD exchange rate, and short-term interest rates. The out-of-sample forecast performance of the VAR model is compared with the results from the univariate models. Moreover, the dynamics of the financial markets are analyzed through Granger causality and impulse response analysis. |
| Keywords: | multivariate financial time series; vector auto-regressive (VAR) model; impulse response analysis; Granger causality |
| JEL: | C51 C01 |
| Date: | 2011–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30475&r=mic |
| By: | Marcel-Cristian Voia (Department of Economics, Carleton University); J. Stephen Ferris (Department of Economics, Carleton University) |
| Abstract: | This paper examines the regularity that business cycle peaks and federal elections often arise together in parliamentary democracies as it applies to Canadian data over the post Confederation time period (1870 onwards). Breaking the simultaneity of these two events and properly identifying causality is possible we argue only if we address carefully the selection issue associated with observed events. Our results suggest that it is business cycle peaks that lead federal elections rather than the other way around. While such a finding reinforces the hypothesis of strategic election timing, the result is also insightful because it helps to explain why the predicted presence of a political business cycle is harder to find in parliamentary governments where the date of the next election is under the control of the governing political party than in democratic systems where governing durations and election dates are fixed. |
| Keywords: | election timing, political business cycles, selection models, election hazard |
| JEL: | D72 D78 C41 |
| Date: | 2011–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:11-03&r=mic |
| By: | Andrew Ang; Francis A. Longstaff |
| Abstract: | We study the nature of systemic sovereign credit risk using CDS spreads for the U.S. Treasury, individual U.S. states, and major European countries. Using a multifactor affine framework that allows for both systemic and sovereign-specific credit shocks, we find that there is considerable heterogeneity across U.S. and European issuers in their sensitivity to systemic risk. U.S. and Euro systemic shocks are highly correlated, but there is much less systemic risk among U.S. sovereigns than among European sovereigns. We also find that U.S. and European systemic sovereign risk is strongly related to financial market variables. These results provide strong support for the view that systemic sovereign risk has its roots in financial markets rather than in macroeconomic fundamentals. |
| JEL: | E44 F21 F34 F36 G12 G13 G15 G18 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16982&r=mic |
| By: | Jean BELIN (GREThA, CNRS, UMR 5113); Jens HORBACH (University of Applied Sciences Augsburg); Vanessa OLTRA (GREThA, CNRS, UMR 5113) |
| Abstract: | Many recent papers deal with exploring and explaining the determinants of eco-innovations for different countries supporting the formulation of efficient policy measures to trigger eco-innovation activities of firms. Unfortunately, there is still a lack of cross-country analyses allowing recognizing “international” stylized facts, but also regional characteristics of eco-innovations. Based on data from the fourth Community Innovation Survey (CIS) for France and Germany, the present paper tries to contribute to fill this gap. Using econometric methods, we are able to detect remarkable similarities between the different determinants of eco-innovation in the two countries. The results confirm the central role of regulation and cost savings as motivations for eco-innovation. Furthermore, eco-innovative activities seem to require more external sources of knowledge and information than innovation in general. |
| Keywords: | Eco-Innovation, Industry, Discrete Choice Models |
| JEL: | Q55 O33 O38 C25 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2011-17&r=mic |