nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2021‒06‒28
thirty papers chosen by

  1. The link between Bitcoin and Google Trends attention By Nektarios Aslanidis; Aurelio F. Bariviera; \'Oscar G. L\'opez
  2. Your Uber Is Arriving Now: An Analysis of Platform Location Decisions through an Institutional Lens By MMatthijs B. Punt; Jesse van Kollem; Jarno Hoekman; Koen Frenken
  3. Economic Evaluation of Cryptocurrency Investment By Sakemoto, Ryuta
  4. Next-Day Bitcoin Price Forecast Based on Artificial intelligence Methods By Liping Yang
  5. Digital Addiction By Hunt Allcott; Matthew Gentzkow; Lena Song
  6. Can labour market digitalization increase social mobility? Evidence from a European survey of online platform workers By Martindale, Nicholas; Lehdonvirta, Vili
  7. The gig economy in Poland: evidence based on mobile big data By Ber\k{e}sewicz Maciej; Nikulin Dagmara; Szymkowiak Marcin; Wilak Kamil
  8. Proof-of-Work Cryptocurrencies: Does Mining Technology Undermine Decentralization? By Agostino Capponi; Sveinn Olafsson; Humoud Alsabah
  9. #Favoritethings: Social Media Posts and Consumer Happiness By Anirban Mukhopadhyay; Amy Daton; Jingshi (Joyce) Liu
  10. Are online markets more integrated than traditional markets? Evidence from consumer electronics By Néstor Duch-Brown; Lukasz Grzybowski; André Romahn; Frank Verboven
  11. Bukele's Bitcoin Blunder By Hanke, Steve; Hanlon, Nicholas; Chakravarthi, Mihir
  12. Distribution of the benefits of regulation vs. competition: The case of mobile telephony in South Africa By Ryan Hawthorne; Lukasz Grzybowski
  13. The Data Privacy Paradox and Digital Demand By Long Chen; Yadong Huang; Shumiao Ouyang; Wei Xiong
  14. Time-dependent relations between gaps and returns in a Bitcoin order book By Roberto Mota Navarro; Paulino Monroy Castillero; Francois Leyvraz
  15. Long-distance mode choice model estimation using mobile phone network data By Andersson, Angelica; Engelson, Leonid; Börjesson, Maria; Daly, Andrew; Kristoffersson, Ida
  16. Influencers on Economic Issues in Latin America, Spain and the United States – II By Newland, Carlos; Rosiello, Juan Carlos; Salinas, Roberto
  17. Digital Platform on Small and Medium Enterprises in Pandemic Era By Arilony, Jeftha Offel
  18. Platform mergers and antitrust By Geoffrey Parker; Georgios Petropoulos; Marshall Van Alstyne
  19. The Electricity- and CO2-Saving Potentials Offered by Regulation of European Video-Streaming Services By Madlener, Reinhard; Sheykkha, Siamak; Briglauer, Wolfgang
  20. The drivers of cyber risk By Aldasoro, Inaki; Gambacorta, Leonardo; giudici, paolo; Leach, Thomas
  21. Zahlungssicherung im Export durch Möglichkeiten der Blockchain-Technologie By Büter, Clemens; Ratkoceri, Granit
  22. Online search for retail broadband services: Who searches most? By Carthy, Philip; Lunn, Pete; Lyons, Seán
  23. From Griefing to Stability in Blockchain Mining Economies By Yun Kuen Cheung; Stefanos Leonardos; Georgios Piliouras; Shyam Sridhar
  24. Jumpstarting an International Currency By Bahaj, Saleem; Reis, Ricardo
  25. The Effect of Social Media on Elections: Evidence from the United States By Thomas Fujiwara; Karsten Müller; Carlo Schwarz
  26. : Inside the net: Women composers’ use of online communities of practice to build and support their careers By Sophie Hennekeman; Sophie Hennekam; Sally Macarthur; Dawn Bennett; Cat Hope; Talisha Goh
  27. On the Unification of Centralized and Decentralized Clearing Mechanisms in Financial Networks By Ketelaars, Martijn; Borm, Peter
  28. An Empirical Study of DeFi Liquidations: Incentives, Risks, and Instabilities By Kaihua Qin; Liyi Zhou; Pablo Gamito; Philipp Jovanovic; Arthur Gervais
  29. The Palestine Currency Board: Its History and Currency By Berlin, Howard
  30. Cyberattacks and Supply Chain Disruptions By Matteo Crosignani; Marco Macchiavelli; Andre Silva

  1. By: Nektarios Aslanidis; Aurelio F. Bariviera; \'Oscar G. L\'opez
    Abstract: This paper shows that Bitcoin is not correlated to a general uncertainty index as measured by the Google Trends data of Castelnuovo and Tran (2017). Instead, Bitcoin is linked to a Google Trends attention measure specific for the cryptocurrency market. First, we find a bidirectional relationship between Google Trends attention and Bitcoin returns up to six days. Second, information flows from Bitcoin volatility to Google Trends attention seem to be larger than information flows in the other direction. These relations hold across different sub-periods and different compositions of the proposed Google Trends Cryptocurrency index.
    Date: 2021–06
  2. By: MMatthijs B. Punt; Jesse van Kollem; Jarno Hoekman; Koen Frenken
    Abstract: The disruptive impact of platform businesses on local economies has received much attention, but virtually none has been paid to the factors that impact platforms’ decisions about where to locate their activities. The novel, disruptive nature of platforms limits the relevance of traditional theories about location decisions. We argue that local institutional conditions and global legitimacy spillovers affect the choices of platform businesses about where to operate. We analyze the controversial case of ride-hailing platform Uber, an app-based service that matches uncertified chauffeurs with passengers. We find that Uber showed a preference for cities that promote competition and innovation. A spillover analysis shows how Uber leveraged their global pool of customers by choosing cities whose visitors were already familiar with Uber’s service. Our study illuminates the key role played by the brand’s mobile customer base as global carriers of legitimacy for Uber’s controversial innovation.
    Keywords: born global, customer following, institutions, legitimacy, platform economy, trusted community
    Date: 2021–06
  3. By: Sakemoto, Ryuta
    Abstract: This study proposes a method to enhance cryptocurrency portfolios constructed by forecast models. This study forecasts returns on four liquid cryptocurrencies (Bitcoin, Litecoin, Ripple, and Dash) and determines the weights on the cryptocurrencies based upon a dynamic allocation framework. We assess the performances of the portfolios using the performance fee measure. Our results present that the proposed portfolios outperform the benchmark portfolio with the conventional level of the risk aversion parameter. The economic gain for an investor is equivalent to 12% per week. The economic gain is sensitive to a change in the risk aversion parameter, which contrasts with the studies of exchange rates which is due to the high volatility on the cryptocurrencies. Our predictors are related to the price momentum effects and they outperform widely used network factors.
    Keywords: Cryptocurrency, Bitcoin, Portfolio evaluation, Forecast model, Risk aversion
    JEL: G10 G11 G17
    Date: 2021–06–13
  4. By: Liping Yang
    Abstract: In recent years, Bitcoin price prediction has attracted the interest of researchers and investors. However, the accuracy of previous studies is not well enough. Machine learning and deep learning methods have been proved to have strong prediction ability in this area. This paper proposed a method combined with Ensemble Empirical Mode Decomposition (EEMD) and a deep learning method called long short-term memory (LSTM) to research the problem of next-day Bitcoin price forecast.
    Date: 2021–06
  5. By: Hunt Allcott; Matthew Gentzkow; Lena Song
    Abstract: Many have argued that digital technologies such as smartphones and social media are addictive. We develop an economic model of digital addiction and estimate it using a randomized experiment. Temporary incentives to reduce social media use have persistent effects, suggesting social media are habit forming. Allowing people to set limits on their future screen time substantially reduces use, suggesting self-control problems. Additional evidence suggests people are inattentive to habit formation and partially unaware of self-control problems. Looking at these facts through the lens of our model suggests that self-control problems cause 31 percent of social media use.
    JEL: D12 D61 D90 D91 I31 L86 O33
    Date: 2021–06
  6. By: Martindale, Nicholas; Lehdonvirta, Vili
    Abstract: Children tend to inherit their parents’ social class through the types of jobs they get. However, digital technologies are now transforming the way labour markets work. Candidates are increasingly screened using algorithmic decision making. Skills are validated with online tests and customer feedback ratings. Workplace communications take place over digital media. Could these transformations be undermining the advantages that have accrued to workers with posh accents, family connections, and expensively acquired educational qualifications? We examine this question with survey data from the online (remote) platform economy, a labour market segment in which these digital transformations have progressed furthest (N = 983). The results reveal that online platform workers come largely from privileged class backgrounds. Class also influences (via education) what types of online occupations workers do, from professional services to data entry. However, class background has surprisingly little influence on job quality, which is instead shaped by individual digital metrics such as feedback ratings. These findings cannot be fully reconciled with theories of a shift towards meritocracy nor with theories of a persisting influence of class origins. Instead, labour market digitalization may be decoupling inherited occupation from job quality.
    Date: 2021–05–07
  7. By: Ber\k{e}sewicz Maciej; Nikulin Dagmara; Szymkowiak Marcin; Wilak Kamil
    Abstract: In this article we address the question of how to measure the size and characteristics of the platform economy. We propose a~different, to sample surveys, approach based on smartphone data, which are passively collected through programmatic systems as part of online marketing. In particular, in our study we focus on two types of services: food delivery (Bolt Courier, Takeaway, Glover, Wolt and transport services (Bolt Driver, Free Now, iTaxi and Uber). Our results show that the platform economy in Poland is growing. In particular, with respect to food delivery and transportation services performed by means of applications, we observed a growing trend between January 2018 and December 2020. Taking into account the demographic structure of apps users, our results confirm findings from past studies: the majority of platform workers are young men but the age structure of app users is different for each of the two categories of services. Another surprising finding is that foreigners do not account for the majority of gig workers in Poland. When the number of platform workers is compared with corresponding working populations, the estimated share of active app users accounts for about 0.5-2% of working populations in 9 largest Polish cities.
    Date: 2021–06
  8. By: Agostino Capponi; Sveinn Olafsson; Humoud Alsabah
    Abstract: Does the proof-of-work protocol serve its intended purpose of supporting decentralized cryptocurrency mining? To address this question, we develop a game-theoretical model where miners first invest in hardware to improve the efficiency of their operations, and then compete for mining rewards in a rent-seeking game. We argue that because of capacity constraints faced by miners, centralization in mining is lower than indicated by both public discourse and recent academic work. We show that advancements in hardware efficiency do not necessarily lead to larger miners increasing their advantage, but rather allow smaller miners to expand and new miners to enter the competition. Our calibrated model illustrates that hardware efficiency has a small impact on the cost of attacking a network, while the mining reward has a significant impact. This highlights the vulnerability of smaller and emerging cryptocurrencies, as well as of established cryptocurrencies transitioning to a fee-based mining reward scheme.
    Date: 2021–06
  9. By: Anirban Mukhopadhyay (Chair Professor, Department of Marketing, Hong Kong University of Science and Technology Technology.Author-Email:; Amy Daton (Associate Professor, Department of Marketing, Hong Kong University of Science and Technology Technology.Author-Email:; Jingshi (Joyce) Liu (Associate Professor, Department of Marketing, City University of London Technology.Author-Email:
    Abstract: Use of social media is rapidly growing in emerging markets, yet relatively little is known about how the contents people post on social media affect their happiness. We find that posting photos of one's favorite possessions, under hashtags such as #Favoritethings or #Favoriteshirt, leads to greater happiness than posting photos of one's cumulative possessions or the baseline happiness level. This effect occurs because reminders of favorite possessions tend to reduce unfavorable social comparisons, which is otherwise prominent on social media. While social media users often post their material possessions on social media, they do not have the "right" intuitions about the type of possession-related content they should post to make themselves happier. Happier users tend to like the social media platform better. Thus, promoting trends for #favoritethings and similar hashtags can create a win-win situation, which benefit both the wellbeing of social media users and that of marketers and social media platforms.
    Date: 2021–05
  10. By: Néstor Duch-Brown (Joint Research Centre of the European Commission); Lukasz Grzybowski (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IP Paris - Institut Polytechnique de Paris); André Romahn (University of Dusseldorf); Frank Verboven (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven)
    Abstract: Did the Internet make international markets more integrated? To address this question, we study long-term international price differences and their speed of convergence, based on a unique data base for identical goods sold in both online and traditional "brick-and-mortar" distribution channels, covering ten European countries. We find that long-term international price differences are closely comparable between both distribution channels. Furthermore, international price differences converge only slightly faster online than offline, and the differences in the international price differences between online and offline converge at a very fast rate. Finally, regardless of the distribution channel, long-term price differences are lower and converge faster within the same currency union. Our findings imply that online markets are currently not more integrated than traditional markets.
    Keywords: L13,L68,L86
    Date: 2021–07
  11. By: Hanke, Steve (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Hanlon, Nicholas (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Chakravarthi, Mihir (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: El Salvador’s President Nayib Bukele has blessed El Salvador’s Bitcoin Law, a law that will make bitcoin legal tender. Among other things, the President has asserted that bitcoin is a cheaper method of sending and receiving remittances than the methods currently used for the transmission of greenbacks to El Salvador. We examine the validity of the President’s assertion, and conclude that the assertion is false.
    Keywords: bitcoin; remittances
    JEL: F24
    Date: 2021–06–23
  12. By: Ryan Hawthorne (University of Cape Town); Lukasz Grzybowski (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IP Paris - Institut Polytechnique de Paris)
    Abstract: We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation. We find that, in the South African context, regulation benefits consumers significantly more than entry does, and that high-income consumers and city-dwellers benefit more in terms of increased consumer surplus.
    Keywords: Mobile telecommunications,Regulation,Entry,Termination rates,Discrete choice JEL Classification: L13,L40,L50,L96
    Date: 2021–01
  13. By: Long Chen; Yadong Huang; Shumiao Ouyang; Wei Xiong
    Abstract: A central issue in privacy governance is understanding how users balance their privacy preferences and data sharing to satisfy service demands. We combine survey and behavioral data of a sample of Alipay users to examine how data privacy preferences affect their data sharing with third-party mini-programs on the Alipay platform. We find that there is no relationship between the respondents’ self-stated privacy concerns and their number of data-sharing authorizations, confirming the puzzling data privacy paradox. Instead of attributing this paradox to the respondents’ unreliable survey responses, resignation from active protection of their data privacy, or behavioral factors in making their data-sharing choices, we show that this phenomenon can be explained by a curious finding that users with stronger privacy concerns tend to benefit more from using mini-programs. This positive relationship between privacy concerns and digital demands further suggests that consumers may develop data privacy concerns as a by-product of the process of using digital applications, not because such concerns are innate.
    JEL: D03 D12 M15
    Date: 2021–05
  14. By: Roberto Mota Navarro; Paulino Monroy Castillero; Francois Leyvraz
    Abstract: Several studies have shown that large changes in the returns of an asset are associated with the sized of the gaps present in the order book In general, these associations have been studied without explicitly considering the dynamics of either gaps or returns. Here we present a study of these relationships. Our results suggest that the causal relationship between gaps and returns is limited to instantaneous causation.
    Date: 2021–06
  15. By: Andersson, Angelica (Research Programme in Transport Economics); Engelson, Leonid (Research Programme in Transport Economics); Börjesson, Maria (Research Programme in Transport Economics); Daly, Andrew (Research Programme in Transport Economics); Kristoffersson, Ida (Research Programme in Transport Economics)
    Abstract: In this paper we develop two methods for the use of mobile phone data to support the estimation of long-distance mode choice models. Both methods are based on logit formulations in which we define likelihood functions and use maximum likelihood estimation. Mobile phone data consists of information about a sequence of antennae that have detected each phone, so the mode choice is not actually observed. In the first trip-based method, the mode of each trip is inferred by a separate procedure, and the estimation process is then straightforward. However, since it is usually not possible to determine the mode choice with certainty, this method might give biased results. In our second antenna-based method we therefore base the likelihood function on the sequences of antennae that have detected the phones. The estimation aims at finding a parameter vector in the mode choice model that would explain the observed sequences best. The main challenge with the antenna-based method is the need for detailed resolution of the available data, i.e., that the mobile phone operator might not be willing or able to provide the modeller with sequences of antennae that have detected the phones. In this paper we show the derivation of the two methods, that they coincide in case of certainty about the chosen mode and discuss the validity of assumptions and their advantages and disadvantages. Furthermore, we apply the first trip-based method to empirical data and compare the results of two different ways of implementing it.
    Keywords: Demand model; Mode choice; Mobile phone network data; Travel behaviour; Long-distance travel
    JEL: C18 C35 R41 R42
    Date: 2021–06–16
  16. By: Newland, Carlos (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Rosiello, Juan Carlos (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Salinas, Roberto (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The technological progress in our modern societies has witnessed the emergence of persons who deploy different means of communication across social networks, seeking to generate an impact among their audiences. These efforts in social media communications attempt to alter consumption preferences and patterns, political choices, as well as reinforce or modify opinions of all sorts and stripes. Individuals who attain greater relevance due to effects they trigger on third parties are characterized as influencers, and one of their preferred means of communication are online platforms or social media. Among them, Twitter stands out as the most conducive space for debates on ideas, political parties, or public policies. This social media platform is a microblogging service that allows a person to send short messages (up to 280 characters) that are displayed on a user’s individual page, and that are replicated on their followers’ pages. In this paper, we aim to identify the most important influencers in Latin America, the United States and Spain, who use this social media network to debate issues primarily related to economics and economic policy. On this subject, there is a very strong discussion about the role that the government should play in economic life, the pros and cons of greater regulation, the problem of income distribution, the impact of inflation, and the nature of free markets and capitalism. We will first describe the methodology we employed, in order to then proceed to illustrate a ranking of the ten most relevant influencers, in terms of number of followers, from Argentina, Brazil, Colombia, Chile, Mexico, Spain, and the United States. We then explore their profiles and present an analysis of the economic issues debated on the relevant Twitter accounts on a per country basis. Based on this analysis, we present a hypothesis on the positioning of influencers in economic matters. Finally, the global reach of the universe of influencers that are considered in this essay is described and measured.
    Date: 2021–06–18
  17. By: Arilony, Jeftha Offel
    Abstract: During the Covid-19 pandemic, companies must use the latest business platforms and technology. However, there are still many companies that have not been able to keep up with the latest business trends. In transforming the digital era, many companies apply the values of good corporate governance to avoid threats and risks of failure. To understand this problem further, a qualitative research was conducted using a case study approach. The analysis carried out focuses on efforts to foster MSMEs that have a contribution to improving the Indonesian economy. This study found that credit, training and assistance programs for MSMEs were still not able to strengthen the position of SMEs but increase the index of financial literacy and inclusion to accelerate income distribution in Indonesia.
    Date: 2021–06–01
  18. By: Geoffrey Parker; Georgios Petropoulos; Marshall Van Alstyne
    Abstract: This is an updated version of the Working Paper- Platform mergers and antitrust published by Bruegel in January 2021. Platform ecosystems rely on economies of scale, data-driven economies of scope, high quality algorithmic systems, and strong network effects that frequently promote winner-takes-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Big platforms’ market dominance has generated competition concerns...
    Date: 2021–06
  19. By: Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Sheykkha, Siamak (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Briglauer, Wolfgang (Vienna University of Economics and Business)
    Abstract: Massive increases in Internet data traffic over the last years have led to rapidly rising electricity demand and CO2 emissions, giving rise to environmental externalities and network congestion costs. One particular concern is the rise in data traffic generated by video-streaming services. We analyze the electricity-saving potential related to video streaming in Europe from 2020 to 2030. To this end, three trend scenarios (Business-as-usual, Gray, and Green) are considered and modeled bottom-up, taking specific energy consumption (and trends) of data transmission networks, end-use devices, and data centers into account. Using these scenarios, we examine in more detail the approximate energy-saving impact that regulatory interventions and technical standards can have on the electricity consumption of end-users, network operators, and data centers. The model results reveal that regulatory intervention can have a significant impact on energy consumption and CO2 emissions. As technical regulation carries the risk of stymieing innovation and dynamic efficiency, we propose economic regulation in terms of a mandatory transit fee as a long-term solution.
    Keywords: Video streaming; Scenario analysis; Electricity-saving potential; Energy efficiency improvement; User behavior; Market failure; Internet traffic regulation
    JEL: D62 L82 L96 O33 O52 P48 Q47 Q48
    Date: 2021–05
  20. By: Aldasoro, Inaki; Gambacorta, Leonardo; giudici, paolo; Leach, Thomas
    Abstract: Cyber incidents are becoming more sophisticated and their costs difficult to quantify. Using a unique database of more than 100,000 cyber events across sectors, we document the characteristics of cyber incidents. Cyber costs are higher for larger firms and for incidents that impact several organisations simultaneously. The financial sector is exposed to a larger number of cyber attacks but suffers lower costs, on average, thanks to proportionately greater investment in information technology (IT) security. The use of cloud services is associated with lower costs, especially when cyber incidents are relatively small. As cloud providers become systemically important, cloud dependence is likely to increase tail risks. Crypto-related activities, which are largely unregulated, are particularly vulnerable to cyber attacks.
    Keywords: Bitcoin; cloud services; cryptocurrencies; cyber cost; cyber regulation; cyber risk; financial institutions
    JEL: D5 D62 D82 G2 H41
    Date: 2020–05
  21. By: Büter, Clemens; Ratkoceri, Granit
    Abstract: Die Zahlungssicherung im Export ist ein wesentlicher Aspekt in internationalen Geschäftsbeziehungen. In Abschnitt 2 werden internationale Zahlungsrisiken behandelt und es wird ein Überblick über internationale Zahlungsbedingungen gegeben. Der Schwerpunkt dieses Kapitels liegt in der Behandlung der dokumentieren Zug-um-Zug Geschäfte, über welche unter Einschaltung von Banken internationale Zahlungsrisiken besichert werden können. In Abschnitt 3 werden die Grundlagen der Blockchain Technologie vorgestellt. Kapitel 4 beschreibt Anwendungsmöglichkeiten der Blockchain Technologie im Rahmen der Zahlungssicherung im Überseeverkehr. Die Ausarbeitung endet mit einem Ausblick auf Vorteile aber auch auf Probleme, welche bei einer Anwendung der Blockchain Technologie im Rahmen der internationalen Zahlungssicherung zu erwarten sind.
    Date: 2021
  22. By: Carthy, Philip; Lunn, Pete; Lyons, Seán
    Date: 2020
  23. By: Yun Kuen Cheung; Stefanos Leonardos; Georgios Piliouras; Shyam Sridhar
    Abstract: We study a game-theoretic model of blockchain mining economies and show that griefing, a practice according to which participants harm other participants at some lesser cost to themselves, is a prevalent threat at its Nash equilibria. The proof relies on a generalization of evolutionary stability to non-homogeneous populations via griefing factors (ratios that measure network losses relative to deviator's own losses) which leads to a formal theoretical argument for the dissipation of resources, consolidation of power and high entry barriers that are currently observed in practice. A critical assumption in this type of analysis is that miners' decisions have significant influence in aggregate network outcomes (such as network hashrate). However, as networks grow larger, the miner's interaction more closely resembles a distributed production economy or Fisher market and its stability properties change. In this case, we derive a proportional response (PR) update protocol which converges to market equilibria at which griefing is irrelevant. Convergence holds for a wide range of miners risk profiles and various degrees of resource mobility between blockchains with different mining technologies. Our empirical findings in a case study with four mineable cryptocurrencies suggest that risk diversification, restricted mobility of resources (as enforced by different mining technologies) and network growth, all are contributing factors to the stability of the inherently volatile blockchain ecosystem.
    Date: 2021–06
  24. By: Bahaj, Saleem; Reis, Ricardo
    Abstract: Monetary and financial policies that lower the cost of credit for working capital in a currency outside of its country can provide the impetus for that currency to be used in international trade. This paper shows this in theory, by exploring the complementarity in the currency used for financing working capital and the currency used for invoicing sales. Financial policies by a central bank can jump-start the use of its currency outside a country's borders. In the data, the creation of 38 swap lines by the People's Bank of China between 2009 and 2018 provides a test of the theory. Signing a swap line with a country is significantly associated with increases in the use of the RMB in payments to and from that country in the following months.
    JEL: E44 E58 F33 F41 G15
    Date: 2020–05
  25. By: Thomas Fujiwara; Karsten Müller; Carlo Schwarz
    Abstract: We study how social media affects election outcomes in the United States. We use variation in the number of Twitter users across counties induced by early adopters at the 2007 South by Southwest (SXSW) festival, a key event in Twitter's rise to popularity. We show that this variation is unrelated to observable county characteristics and electoral outcomes before the launch of Twitter. Our results indicate that Twitter lowered the Republican vote share in the 2016 and 2020 presidential elections, but had limited effects on Congress elections and previous presidential elections. Evidence from survey data, primary elections, and a text analysis of millions of tweets suggests that Twitter's relatively liberal content may have persuaded voters with moderate views to vote against Donald Trump.
    JEL: D72
    Date: 2021–05
  26. By: Sophie Hennekeman (Audencia Recherche - Audencia Business School); Sophie Hennekam (Audencia Recherche - Audencia Business School); Sally Macarthur (School of Humanities and Communication Arts, Western Sydney University); Dawn Bennett (CBS - Curtin Business School - Curtin University [Perth] - PATREC - Planning and Transport Research Centre); Cat Hope (Sir Zelman Cowen School of Music, Monash University); Talisha Goh (Western Australian Academy of Performings Arts, Edith Cowan University)
    Abstract: Purpose The purpose of this paper is to examine women composers' use of online communities of practice (CoP) to negotiate the traditionally masculine space of music composition while operating outside its hierarchical structures. Design/methodology/approach The authors employed a mixed methods approach consisting of an online survey ( n =225) followed by 27 semi-structured in-depth interviews with female composers to explore the concept and use of CoP. Content analysis was used to analyze the survey responses and interpretative phenomenological analysis was used to interpret respondents' lived experiences as relayed in the interviews. Findings The findings reveal that the online environment can be a supportive and safe space for female composers to connect with others and find support, feedback and mentorship, increase their visibility and develop career agency through learning and knowledge acquisition. CoP emerged as an alternative approach to career development for practicing female music workers and as a tool which could circumvent some of the enduring gendered challenges. Originality/value The findings suggest that online CoP can have a positive impact on the career development and sustainability of women in male-dominated sectors such as composition.
    Date: 2019–09–23
  27. By: Ketelaars, Martijn (Tilburg University, Center For Economic Research); Borm, Peter (Tilburg University, Center For Economic Research)
    Keywords: Clearing mechanisms; decentralization; nancial networks and contagion; mutual claims rules; composition.
    Date: 2021
  28. By: Kaihua Qin; Liyi Zhou; Pablo Gamito; Philipp Jovanovic; Arthur Gervais
    Abstract: Financial speculators often seek to increase their potential gains with leverage. Debt is a popular form of leverage, and with over 39.88B USD of total value locked (TVL), the Decentralized Finance (DeFi) lending markets are thriving. Debts, however, entail the risks of liquidation, the process of selling the debt collateral at a discount to liquidators. Nevertheless, few quantitative insights are known about the existing liquidation mechanisms. In this paper, to the best of our knowledge, we are the first to study the breadth of the borrowing and lending markets of the Ethereum DeFi ecosystem. We focus on Aave, Compound, MakerDAO, and dYdX, which collectively represent over 85% of the lending market on Ethereum. Given extensive liquidation data measurements and insights, we systematize the prevalent liquidation mechanisms and are the first to provide a methodology to compare them objectively. We find that the existing liquidation designs well incentivize liquidators but sell excessive amounts of discounted collateral at the borrowers' expenses. We measure various risks that liquidation participants are exposed to and quantify the instabilities of existing lending protocols. Moreover, we propose an optimal strategy that allows liquidators to increase their liquidation profit, which may aggravate the loss of borrowers.
    Date: 2021–06
  29. By: Berlin, Howard (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: When the British defeated the Ottoman Turks and the armistice was signed on October 31, 1918, Palestine, part of the defeated Ottoman Empire, was administratively divided into the Mutasarrifate (a sub province) of Jerusalem and the Vilayets (a major administrative district or province) of Beirut and Damascus. Palestine was then governed by the British, first as a military occupation, and then as a Mandate granted to them as a Trust by the League of Nations. Prior to 1927, Palestine had no currency that was solely its own, but rather coins and banknotes of many other countries that were used in Palestine. These were mostly those of Turkey, Egypt, France, Great Britain, India, Germany, Russia, Austria, and the United States. The author of this working paper traces the need for a Palestine currency and the formation of the Palestine Currency Board, which remained in effect until March 31, 1952, nearly four years after the State of Israel was established on May 14, 1948. Parts of this working paper was adapted from the author’s book: The Coins and Banknotes of Palestine Under the British Mandate, 1927-1947, McFarland & Company, Inc. (2001) and is built on the writings of numismatic researchers Jack H. Fisher, Esq. (deceased) and Raphael Dabbah, both of whom the author has had the pleasure of knowing for many years. Where verbatim passages are taken from British sources, the British spellings have been retained. Unless credited otherwise, all images of coins and currency notes were from the author’s collection.
    Keywords: Palestine Mandate; currency board; coins; currency notes
    JEL: E58 N15
    Date: 2021–06–18
  30. By: Matteo Crosignani; Marco Macchiavelli; Andre Silva
    Abstract: Cybercrime is one of the most pressing concerns for firms. Hackers perpetrate frequent but isolated ransomware attacks mostly for financial gains, while state-actors use more sophisticated techniques to obtain strategic information such as intellectual property and, in more extreme cases, to disrupt the operations of critical organizations. Thus, they can damage firms’ productive capacity, thereby potentially affecting their customers and suppliers. In this post, which is based on a related Staff Report, we study a particularly severe cyberattack that inadvertently spread beyond its original target and disrupted the operations of several firms around the world. More recent examples of disruptive cyberattacks include the ransomware attacks on Colonial Pipeline, the largest pipeline system for refined oil products in the United States, and JBS, a global beef processing company. In both cases, operations halted for several days, causing protracted supply chain bottlenecks.
    Keywords: cyberattacks; supply chains
    JEL: G3
    Date: 2021–06–22

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.