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We study a motive for why individuals may hide wealth in offshore entities that has received scant attention in the academic literature and the public debate: the fear of expropriation. We use the Panama Papers and data on media reporting on expropriations and property confiscations. We document that such news reports increase the probability that offshore entities are incorporated by agents from the same country in the same month. This result is robust to the use of country-year- and month-fixed effects and the exclusion of tax havens. The effect is stronger in countries with well-functioning governments. We argue that individuals start hiding their proceeds from illegal activities in offshore entities when reasonably well-intended and well-functioning governments become more serious about law enforcement.

Understanding how prior outcomes affect risk attitudes is critical for the study of choice under uncertainty. A large literature documents the influence of prior losses on subsequent risk attitudes. The findings appear contradictory: some studies find that people become more risk seeking after a loss, whereas others assert the opposite -- that they become more risk averse. In this paper, we show that these seemingly inconsistent findings can be explained by individuals' differential responses to realized versus paper losses. Following a realized loss, individuals avoid risk; if the loss has not been realized -- a paper loss -- individuals are more likely to chase their losses and take on even greater risk. We provide support for our framework using existing data and across two experiments. We also show that giving individuals flexibility in choosing when to realize losses can lead to lower earnings in environments where loss-chasing decreases expected returns. Drawing a distinction between paper and realized losses reconciles prior findings, and has important implications for contract design and optimal monitoring.

Using a large panel for 95 countries and the 1972–2014 period, this paper analyses the interactions among globalization, political & civil rights and economic convergence, through a simultaneous estimation technique. We use a multi-dimensional, de facto, and continuous measures of Freedoms and Globalization. We find a two-way positive relationship between civil liberties & political rights and economic, political and social Globalization, as well as significant two-way relationships with the economic convergence (using as a proxy the ratio of GDP per capita to the US). In this way, we extend the test for the two-way relationship between Democracy and Globalization put forward by Eichengreen and Leblang (Econ Politics 20(3):289–334, 2008). Overall, we also find a virtuous cycle between Globalization, Freedoms and Economic convergence, except for non-OECD countries at early intermediate stages of development. This positive systemic effect can be put into question by the recent negative shocks on Globalization and Freedoms related to the Covid-19 pandemic.

This paper estimates the potential distributional consequences of the first phase of the COVID-19 lockdowns on poverty and labour income inequality in 20 Latin American and Caribbean (LAC) countries. We estimate the share of individuals that are potentially able to remain active under the lockdown by taking into account individuals’ teleworking capacity but also whether their occupation is affected by legal workplace closures or mobility restrictions. Furthermore, we compare the shares under the formal (de jure) lockdown policies assuming perfect compliance with the shares under de facto lockdowns where there is some degree of non-compliance. We then estimate individuals’ potential labour income losses and examine changes in poverty and labour income inequality. We find an increase in poverty and labour income inequality in most of the LAC countries due to social distancing; however, the observed changes are lower under de facto lockdowns, revealing the potential role of non-compliance as a coping strategy during the lockdowns. Social distancing measures have led to an increase in inequality both between and within countries. Lastly, we show that most of the dispersion in the labour income loss across countries is explained by the sectoral/occupational employment structure of the economies.

This paper aims to analyze the determinants of cash usage in a selection of European Union (EU) countries over the 2003–2016 period, based on a set of technological, socioeconomic, and socio-cultural indicators and cost components. Our results reveal the existence of both common and region-specific determinants for the EU advanced and Central and Eastern European (CEE) countries. In both groups cash usage is determined by payment system characteristics. Additionally, in the EU advanced countries cash usage can also be explained by the level of economic development and income inequalities and proliferation of Internet. In contrast, cash usage in CEE countries is negatively associated with consumer confidence and is inversely related to the technological progress, expressed in terms of mobile users.

The establishment of a sovereign debt restructuring mechanism (SDRM) is one of the important issues in the academic debate on a viable constitution for the European Monetary Union (EMU). Yet the topic seems to be taboo in official reform contributions to the debate. Against this backdrop, the article identifies the SDRM interests of key players, including the European Commission, the European Parliament, the European Central Bank and national governments. The empirical section takes advantage of the recently established EMU Positions Database. The findings confirm political economy expectations: Low-debt countries support an EMU constitution that includes an insolvency procedure whereas a coalition of high-debt countries and European institutions oppose it. The analysis points towards a possible political-economic equilibrium for coping with sovereign insolvencies: an institutional set-up without an SDRM and with hidden transfers. Recent European fiscal innovations in response to the Covid-19 solvency shock confirm this prediction.

I revisit the 1918–20 pandemic and ask whether it led to a reversal in the rise of trade and financial globalization that preceded it. Using annual data for 17 countries for the 1870–1928 period, a variety of tests and techniques are used to draw some robust conclusions. Overall, the pandemic a century ago interrupted, but did not put an end, to the first globalization of the twentieth century. However, two blocs consisting of combatant and non-combatant countries, experienced significantly different consequences. Globalization was sharply curtailed for the combatant countries while there were few, if any, consequences for globalization in the non-combatant group of countries. That said, there was considerable resilience especially in trade openness among several of the combatant economies. Perhaps changes in the make-up of economic blocs, post-pandemic, is a fallout from shocks of this kind. While there are lessons for the ongoing COVID pandemics differences between the 1920s and today also play a role. Supplementary Information The online version contains supplementary material available at 10.1007/s10368-021-00526-1.

We document a causal effect of the conservative Fox News Channel in the USA on physical distancing during COVID-19 pandemic. We measure county-level mobility covering all US states and District of Columbia produced by GPS pings to 15–17 million smartphones and zip-code-level mobility using Facebook location data. Using the historical position of Fox News Channel in the cable lineup as the source of exogenous variation, we show that increased exposure to Fox News led to a smaller reduction in distance traveled and a smaller increase in the probability of staying home after the national emergency declaration in the USA. Our results show that slanted media can have a harmful effect on containment efforts during a pandemic by affecting people’s behavior.

After scrutinizing technical, legal, financial, and actuarial aspects of cyber risk, a new approach for modelling cyber risk using marked point processes is proposed. Key covariates, required to model frequency and severity of cyber claims, are identified. The presented framework explicitly takes into account incidents from malicious untargeted and targeted attacks as well as accidents and failures. The resulting model is able to include the dynamic nature of cyber risk, while capturing accumulation risk in a realistic way. The model is studied with respect to its statistical properties and applied to the pricing of cyber insurance and risk measurement. The results are illustrated in a simulation study.

Many governments have implemented social distancing and lockdown measures to curb the spread of the novel coronavirus (COVID-19). Using province-level geolocation data from Italy, we document that political disbelief can limit government policy effectiveness. Residents in provinces leaning towards extreme right-wing parties show lower rates of compliance with social distancing order. We also find that, during the Italian lockdown, provinces with high protest votes virtually disregarded all social distancing orders. On the contrary, in provinces with higher political support for the current political legislation, we found a higher degree of social distancing compliance. These results are robust to controlling for other factors, including time, geography, local COVID-19 cases and deaths, healthcare hospital beds, and other sociodemographic and economic characteristics. Our research shows that bipartisan support and national responsibility are essential to implement and manage social distancing efficiently. From a broader perspective, our findings suggest that partisan politics and discontent with the political class (i.e., protest voting) might significantly affect human health and the economy.

This paper develops a theoretical framework to assess the feasibility of global environmental sustainability solutions based on one or more value changes. The framework represents four sustainability paradigms (weak sustainability WS, a-growth AG, de-growth DG, strong sustainability SS) and five value changes (i.e. a sense of responsibility for nature, future generations, or the current generation in developing countries; aversion to inequality for the current generation or future generations). It defines solutions in terms of consumption, environment use, and welfare for representative individuals in both developed (OECD) and developing (non-OECD) countries. Solutions are characterised by efficiency (i.e. Pareto and Kaldor–Hicks) with respect to welfare and by intra- and inter-generational equality for consumption, environment use, and welfare, by confirming internal consistency and consistency with alternative equity approaches for utilitarianism (i.e. Harsanyi), egalitarianism (i.e. Arneson for welfare; Dworkin for consumption or environment use; Sen for consumption and environment use), and contractarianism (i.e. Rawls). Theoretical and operational insights are described for alternative sustainability paradigms and equity approaches. In terms of feasibility based on improved technology, decreased population, and modified consumption, the ordering is responsibility for future generations > responsibility for the current generation in developing countries > aversion to inequality for the current generation > aversion to inequality for future generations and AG > SS > DG > WS: responsibility for nature is unfeasible. In terms of internal consistency, responsibility for future generations > responsibility for the current generation in developing countries = aversion to inequality for the current generation = aversion to inequality for future generations and SS > AG > DG; WS is internally inconsistent. In terms of consistency with an equity approach, responsibility for future generations > responsibility for the current generation in developing countries = aversion to inequality for future generations > aversion to inequality for the current generation and SS > AG > DG > WS.

Random utility models are widely used to estimate preference parameters. In the case of intertemporal choice, the two most common models are the discounted logit and one we call the discounted Luce. Due to their apparent similarity, the choice to use one model or the other seems irrelevant. In this paper, we argue that the discounted Luce is superior to the discounted logit in two significant aspects. First, in relevant applications, the discounted Luce is monotone in the sense of Apesteguia and Ballester (2018), while the discounted logit is not. Second, we show that the discounted logit is incompatible with a property of choice probabilities we call “weak stationarity”. The latter is compatible with common assumptions on the random nature of choices and is often not falsifiable with commonly available data. Fitting a logit model to weakly stationary choice probabilities biases the time-preference estimates. On the contrary, the discounted Luce can be safely used when choice probabilities are weakly stationary. An application to an existing dataset supports the theoretical results.

Do claims on the private sector serve the role of safe assets? We answer this question using high-frequency panel data on prices and quantities of certificates of deposit (CD) and commercial paper (CP) issued in Europe. We show that only very short-term private securities benefit from a premium for safety. Using several identification strategies, we show that the issuance of short-term CDs, but not of CPs, strongly responds to measures of safety demand. The private production of safe assets is stronger for issuers with high credit worthiness, and breaks down during episodes of market stress. We conclude that even very short-term private assets are sensitive to changes in the information environment and should not be treated as equally safe at all times.

International audience; In this paper the authors show that, in the presence of buyer and seller power, a monopolist can enter into a costly contractual relationship with a low-quality supplier with the sole intention of improving its bargaining position relative to a high-quality supplier, without ever selling the good produced by that firm.

In this paper we analyze the private and public incentives towards skill acquisition when the skill level of workers determines the quality level of goods, and both labor and product markets are non competitive. We delve into the mechanisms that determine the equilibrium skill acquisition outcomes and show that both "pure" (training set by either firms or unions only) and "mixed" (training set by firms and unions) training scenarios may emerge at equilibrium. We show that firms have generally greater training incentives than unions, resulting in a higher product quality. In line with empirical evidence, we also find that the wage di fferential between high-skill workers and low-skill workers is lower when the training levels of the workforce are selected by unions than by firms. Finally, we analyze the optimal public training skill levels and demonstrate that both unions and fi rms under-invest in training in comparison with the social optimum. Yet, in this case the skill premium is the lowest.

This paper studies cross-border intellectual property rights (IPR) as a North-South contract using a Nash bargaining approach and distinguishes between the outcome and its actual enforcement. The absorptive capacity of the Southern country to exploit technology transfer plays a key role in the negotiated level of IPRs and its post-treaty enforcement. The optimal level of IPR protection relates positively to absorptive capacity. This provides a rationale for the longer time-frame provided to least developed countries in Article 66 of TRIPS to implement its provisions. In addition, monitoring is only effective in preventing contract violation up to a critical level of absorptive capacity. We relate this to the US Trade Representative “Special 301” report, which flags countries that deny adequate IPR protection as “priority watch list”. While disputes with less developed economies are promptly resolved, emerging economies, where most losses from copyright piracy originates from, continue to remain on the list.

In this paper we empirically assess the evolution for the EU regions of both employment and unemployment before and after the Global Crisis. After a review of the literature on the theories and key determinants of regional unemployment, we shall overview the main findings concerning the labour market impact of the Global Crisis. The empirical analysis will initially be carried out at the national level including all EU countries; subsequently, we shall focus on the EU regions (at the NUTS-2 level), in order to detect possible changes in the dispersion of regional unemployment rates after the crisis. Our econometric investigations aim to assess the effect, on labour market performance, of previous developments in regional labour markets time series, as well as the importance of structural characteristics of the labour markets, in terms of the sectoral specialization of the regional economies. In fact, the local industry mix may have played a crucial role in shaping labour market performance in response to the crisis. In addition, we consider further characteristics of the regional labour markets, by including indicators of the level of precarization of labour and of the share of long-term unemployed, as indicators of the efficiency of the local labour markets. From a methodological viewpoint, we exploit eigenvector decomposition-based spatial filtering techniques, which allow us to greatly reduce unobserved variable bias – a significant problem in cross-sectional models – by including indicators of latent unobserved spatial patterns. Finally, we render a geographical description of the heterogeneity influence of past labour market performance over the crisis period, showing that the past performance has a differentiated impact on recent labour market developments.

We revisit the relationship between market power and firms’ investment incentives in a noncooperative differential oligopoly game where firms sell differentiated goods and invest in advertising to increase the brand equity of their respective goods. The feedback equilibrium obtains under open-loop rules, and aggregate expenditure on goodwill takes an inverted-U shape under both Cournot and Bertrand behaviour, provided product differentiation is sufficiently high. Total industry expenditure is higher under Cournot competition.

Powerful currents have reshaped the structure of families over the last century. There has been (1) a dramatic drop in fertility and greater parental investment in children; (2) a rise in married female labor-force participation; (3) a significant decline in marriage; (4) a higher degree of positive assortative mating; (5) more children living with a single mother; and (6) shifts in social norms governing premarital sex and married women’s roles in the workplace. Macroeconomic models explaining these aggregate trends are surveyed. The relentless flow of technological progress and its role in shaping family life are stressed. (JEL D13, J12, J13, J16, J22, O33, Z13)

We use credit-arbitrage asset-backed commercial paper vehicles as a laboratory to empirically examine financial institutions’ motivations to take bad-tail systematic risk. By comparing the characteristics of global banks that sponsored credit-arbitrage vehicles prior to the global financial crisis to those that did not, we show that owner–manager agency problems, government safety nets, and government ownership of banks are associated with bad-tail systematic risk-taking. Although good governance is associated with less risk-taking on average, well-governed banks that also have a high ex ante expectation of being bailed out by the government take more risk. Lastly, we find mixed evidence that tougher bank capital regulation deters bad-tail risk-taking.

We propose a Markov-switching dynamic factor model to construct an index of global business cycle conditions, to perform short-term forecasts of world GDP quarterly growth in real time and to compute real-time business cycle probabilities. To overcome the real-time forecasting challenges, the model accounts for mixed frequencies, for asynchronous data publication and for leading indicators. Our pseudo real-time results show that this approach provides reliable and timely inferences of the world quarterly growth and of the world state of the business cycle on a monthly basis.

We model the perspective faced by nuclear powers involved in a supergame where nuclear deterrence is used to stabilise peace. This setting allows us to investigate the bearings of defensive weapons on the effectiveness of deterrence and peace stability, relying on one-shot optimal punishments. We find that the sustainability of peace is unaffected by defensive shields if the latter are symmetric across countries, while asymmetric endowments of such weapons have clear-cut destabilising consequences.

We develop a theory of intergenerational transmission of preferences that rationalizes the choice between alternative parenting styles (as set out in Baumrind 1967). Parents maximize an objective function that combines Beckerian altruism and paternalism towards children. They can affect their children's choices via two channels: either by influencing children's preferences or by imposing direct restrictions on their choice sets. Different parenting styles (authoritarian, authoritative, and permissive) emerge as equilibrium outcomes, and are affected both by parental preferences and by the socioeconomic environment. Parenting style, in turn, feeds back into the children's welfare and economic success. The theory is consistent with the decline of authoritarian parenting observed in industrialized countries, and with the greater prevalence of more permissive parenting in countries characterized by low inequality.

This paper considers the impact of takeover (or acquisition) likelihood on firm valuation. If firms are more likely to acquire during times when they have free cash and/or when the required rate of return is low, takeover targets become more sensitive to shocks to aggregate cash flows and/or to the price of risk. Thus, ceteris paribus, firms that are exposed to takeovers will have a different rate of return from firms that are protected from takeovers. Using estimates of the likelihood that a firm will be acquired, we create a takeover-spread portfolio that buys firms with a high likelihood of being acquired and shorts firms with low likelihood of being acquired. Relative to the Fama-French model, the takeover-spread portfolio generates annualized abnormal returns of up to 12% between 1980 and 2004. Further, the takeover-spread portfolio is shown to be important in explaining cross-sectional differences in equity returns. Additionally, using a two-beta model that distinguishes cash flow shocks from discount rate shocks, we show that firms more likely to be taken over have higher betas on the aggregate cash factor. Finally, we provide an explanation for the existence of abnormal returns associated with governancespread portfolios (Gompers, Ishii and Metrick, 2003 and Cremers and Nair, 2005), and relate the takeover-spread portfolio returns to takeover activity in the economy.

The authors present an integrated macroeconomic approach to monitoring progress toward achieving the Millennium Development Goals (MDGs) in Sub-Saharan Africa. At the heart of their approach is a macroeconomic model that captures key linkages between foreign aid, public investment (disaggregated into education, infrastructure, and health), the supply side, and poverty. The model is linked through cross-section regressions to indicators of malnutrition, infant mortality, life expectancy, and access to safe water. A composite MDG indicator is also calculated. The functioning of the framework is illustrated by simulating the impact of an increase in aid and a debt write-off for Niger at the MDG horizon of 2015, under alternative assumptions about the degree of efficiency of public investment. The authors'approach can serve as the building block of Strategy Papers for Human Development (SPAHD), a more encompassing concept than the current"Poverty Reduction"Strategy Papers.

This paper studies the presence of hours constraints on the UK labor market and its effect on older workers labor supply, both at the extensive and the intensive margin. Using panel data for the period 1991-2004, the results from a competing risks model show that over-employed male workers can freely reduce working hours with their current employer prior to full retirement. However, some over-employed women are observed to leave the labor market early due to hours constraints. Despite the fact that hours constraints may shorten working lives of older women, this paper presents some explorative results which illustrate that increasing working hours flexibility does not seem to increase older workers total labor supply as is often suggested.

This paper studies whether an increase in women's intrahousehold bargaining power causes couples to allocate more resources to their child's education, and, if so, what the underlying mechanisms for this might be. We conduct a between‐subject lab experiment with couples and vary the relative bargaining power between spouses. The paper provides two main insights. First, increasing the wife's bargaining power improves gender equality in allocation to children's education. However, it does not increase the amount invested in the child's education. Second, we show that the difference in time preferences between spouses matters for how much the household invests in the child's education. It benefits the child that the most patient spouse has more relative bargaining power. This implies that increasing the wife's bargaining power may reduce the allocation to the child's education if she is the less patient spouse. The results provide new insights into the current debate on female empowerment, and highlight the importance of incorporating a broader set of preferences in the analysis of intrahousehold decision‐making.

This paper contributes to the literature on fiscal decentralization by presenting a formal model of the interaction between the central and local governments (CG and LGs, respectively) where LGs may differ in their degree of political alignment with CG. The non-cooperative optimal behaviour of the agents reveals that optimal tax increases with the extent of fiscal decentralization (FD), political unison and spillovers across localities, while LGs’ optimal tax collection effort is negatively associated with all of these parameters. The first novel finding of our study is that both welfare peaks and income distribution are more equitable at a lower level of FD in the case of spillovers than in the case of no spillovers, which supports the decentralization theorem. The second novel finding is that both the amount of redistributable income and central government utility increase with the degree of political unison. © 2022, University of Economics - Prague. All rights reserved.

Short-cycle higher education programs (SCPs) can play a central role in skill development and higher education expansion, yet their quality varies greatly within and among countries. This paper explores the relationship between programs’ practices and inputs (quality determinants) and student academic and labor market outcomes. It designs and conduct a novel survey to collect program-level information on quality determinants and average outcomes for Brazil, Colombia, Dominican Republic, Ecuador, and Peru. Categories of quality determinants include training and curriculum, infrastructure, faculty, link with productive sector, costs and funding, and practices on student admission and institutional governance. The paper also collects administrative, student-level data on higher education and formal employment for SCP students in Brazil and Ecuador and match it to survey data. Machine learning methods are used to select the quality determinants that predict outcomes at the program and student levels. Estimates indicate that some quality determinants may favor academic and labor market outcomes while others may hinder them. Two practices predict improvements in all labor market outcomes in Brazil and Ecuador—teaching numerical competencies and providing job market information—and one practice— teaching numerical competencies—additionally predicts improvements in labor market outcomes for all survey countries. Since quality determinants account for 20-40 percent of the explained variation in student-level outcomes, quality determinants might have a role shrinking program quality gaps. Findings have implications for the design and replication of high-quality SCPs, their regulation, and the development of information systems.

Large-scale shocks directly affect some firms and households and indirectly affect others through general equilibrium spillovers. In this paper, I describe how researchers can directly estimate spillovers using quasi-experimental or experimental variation. I then argue that spillover estimates suffer from distinct sources of mechanical bias that standard empirical tools cannot resolve. These biases are particularly relevant in finance and macroeconomics, where multiple spillover channels and nonlinear effects are common. I offer guidance on how to detect and overcome mechanical biases. An application and several examples highlight that the suggested methods are broadly relevant and can inform policy and multiplier calculations. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

This paper proposes a Bayesian estimation framework for panel data sets with binary dependent variables where a large number of cross-sectional units are observed over a short period of time and cross-sectional units are interdependent in more than a single network domain. The latter provides for a substantial degree of flexibility towards modeling the decay function in network neighborliness (e.g., by disentangling the importance of rings of neighbors) or towards allowing for several channels of interdependence whose relative importance is unknown ex ante. Besides the flexible parameterization of cross-sectional dependence, the approach allows for simultaneity of the equations. These features should make the approach interesting for applications in a host of contexts involving structural and reduced-form models of multivariate choice problems at micro-, meso-, and macro-economic levels. The paper outlines the estimation approach, illustrates its suitability by simulation examples, and provides an application to study exporting and foreign ownership among potentially interdependent firms in the specialized and transport machinery sector in the province of Guangdong., Journal of Applied Econometrics, 37 (7), ISSN:0883-7252, ISSN:1099-1255, ISSN:0021-8901, ISSN:1365-2664

Despite the growing interest in global inequality, assessing inequality trends is a major challenge becauseindividual data on income or consumption is not often available. Nevertheless, the periodic release of cer-tain summary statistics of the income distribution has become increasingly common. Hence, groupeddata in form of income shares have been conventionally used to construct inequality trends based onlower bound approximations of inequality measures. This approach introduces two potential sourcesof measurement error: first, these estimates are constructed under the assumption of equality of incomeswithin income shares; second, the highest income earners are not included in the household surveysfrom which grouped data is obtained. In this paper, we propose to deploy a flexible parametric model,which addresses these two issues in order to obtain a reliable representation of the income distributionand accurate estimates of inequality measures. This methodology is used to estimate the recent evolutionof global interpersonal inequality from 1990 to 2015 and to examine the effect of survey under-coverageof top incomes on the level and direction of global inequality. Overall, we find that item non-response atthe top of the distribution substantially biases global inequality estimates, but, more importantly, itmight also affect the direction of the trends. The authors hereby acknowledge UNU-WIDER and the project World Inequality where an earlier version of this study was published. The authors are grateful to Stephen Jenkins, Branko Milanovic, Nora Lustig, Juan Gabriel Rodriguez, Gustavo Marrero, Roy Van der Weide and participants at the UM Sustainability and Development Conference, Seventh ECINEQ Meeting, the 33th Annual Congress of the European Economic Association, and UNU-WIDER internal seminar series for helpful comments on earlier versions of this paper. Vanesa Jorda wishes to acknowledge financial support from the Ministerio de Economía y Competitividad (Project ECO2016-76203-C2-1-P).

As the COVID-19 pandemic has shaped public policies and government finances, it has also influenced the topics that public finance economists are researching. Because the 2020 International Institute of Public Finance Congress featured papers that were submitted prior to the start of the pandemic, the Congress allows us to reflect on the state of research prior to the pandemic's shock to both fiscal policies and our worldview. In this article, the Editors of International Tax and Public Finance reflect on interesting papers that were presented at this internationally representative conference in public economics. The exercise provides insight on where the field of public economics was heading prior to the pandemic and will provide a yardstick to see how the field evolves in the coming years afterward.

This paper presents empirical models of Mexican government bond (MGB) yields based on monthly macroeconomic data. The current short-term interest rate has a decisive influence on MGB yields, after controlling for inflation and growth in industrial production. John Maynard Keynes claimed that government bond yields move in lockstep with the short-term interest rate. The models presented in the paper show that Keynes’s claim holds for MGB yields. This has important policy implications for Mexico. The empirical findings of the paper are also relevant for ongoing debates in macroeconomics.

This paper examines evidence on colocation dates and their impact on market efficiency. International colocation dates can be sourced from a number of avenues including: [1] an 'exchange's news announcements and reports, [2] news media, and [3] by direct communication with the officers of an exchange. Boehmer et al. (2021) report colocation dates based on [1] and [2] and do not reference prior work that reports colocation dates that are primarily sourced from [3]. The consequence is that the discrepancies between prior studies and Boehmer et al. are significant and economically meaningful: the errors average 12.75 months with the largest being 46 months. This paper documents these discrepancies and provides evidence of how these differences in colocation dates matter for evidence of their impact on market efficiency. We document that colocation is not exogenously determined and highly correlated with the changes in market quality measures, counter to claims of Boehmer et al.

This paper proposes an approach to guide statistical capacity building in developing countries using an analysis based on components of the World Bank’s Statistical Performance Indicator on a sample of 215 countries. The approach demonstrates the importance of expanding traditional capacity-building activities to include programs to strengthen and better monitor the ability of National Statistical Systems (NSS) to respond to user data needs. Based on this analysis, the paper recommends a two-step strategy for building and enhancing the statistical capacity of national statistical systems in developing countries. The strategy creates a sustainable trajectory for developing NSSs that meets the growing demands of local and global data users. The paper emphasizes the importance of donor coordination and South-South learning initiatives for international capacity-building efforts.

Big data is revolutionizing the finance industry and has the potential to significantly shape future research in finance. This special issue contains papers following the 2019 NBER-RFS Conference on Big Data. In this introduction to the special issue, we define the “big data” phenomenon as a combination of three features: large size, high dimension, and complex structure. Using the papers in the special issue, we discuss how new research builds on these features to push the frontier on fundamental questions across areas in finance—including corporate finance, market microstructure, and asset pricing. Finally, we offer some thoughts for future research directions.

Inspired by the field experiment in Bertrand and Morse (2011), the state of Texas adopted an information disclosure for consumers taking out payday loans starting in January, 2012. The disclosure compares the cost of payday loans with other credit products, and presents their likelihood of renewal in easy-to-understand terms. Simultaneously, Austin and Dallas implemented stricter supply restrictions through city ordinances. We analyze both types of regulations, and find that the statewide disclosures led to a significant and persistent 13% decline in loan volume in the first six months after implementation. The city ordinances led to a 62% decline in loan volume in Austin and a 20% decline in Dallas, with the timing of the effect driven by the start of enforcement rather than the effective date of regulation. The results show that both behaviorally-motivated disclosures and city-level supply restrictions can have a significant impact on equilibrium loan quantities, with no effect on prices or evidence of evasive income falsification. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

We study a simple savings scheme that allows workers to defer receipt of part of their wages for three months at zero interest. The scheme significantly increases savings during the deferral period, leading to higher post-disbursement spending on lumpy goods. Two years later, after two additional rounds of the savings scheme, we find that treated workers have made permanent improvements to their homes. The popularity of the scheme implies a lack of good alternative savings options. The results of a follow-up experiment suggest that demand for the scheme is partly due to its ability to address self-control issues. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

This paper attempts to study the relationship between firm legal form and firm performance in the Middle East and North Africa Region (MENA) using the World Bank Enterprise Survey (WBES) database. Our analysis shows that open shareholding, closed shareholding, partnership, and limited partnership companies demonstrate an advantage in terms of annual sales and annual productivity growth rates over sole proprietorship firms, and that medium-sized and large-sized firms also demonstrate an advantage over small ones. Our analysis also shows that foreign ownership, exporting activities, the usage of the web in communication with clients and suppliers, and the presence of full-time workers positively affect firm performance. These findings are robust when running the analysis for firms with female participation in ownership. This paper provides directions for strategists targeting at improving the performance of firms.

International audience; We examine how corporate real estate market participants adjust to the take-off of teleworking. We develop an indicator of the exposure of counties to teleworking in France by combining teleworking capacity with incentives and frictions to its deployment. We study how this indicator relates to prices and quantities in the corporate real estate market. We find that for offices in counties more exposed, the Covid-19 crisis has led to (1) higher vacancy rates, (2) less construction, (3) lower prices. Our findings reveal that teleworking has already an impact on the office market. Furthermore, forward-looking indicators suggest that market participants are anticipating the shift to teleworking to be durable.

This paper examines the impact of the COVID-19 crisis on the reallocation of economic activity across firms, and whether this reallocation depends on the competition environment. Using the World Bank’s Enterprise Surveys (ES) COVID-19 Follow-Up Surveys for about 8,000 firms in 23 emerging and developing countries in Europe and Central Asia, matched with 2019 ES data, the paper finds that economic activity was reallocated toward firms with higher pre-crisis labor productivity during the COVID-19 crisis. Countries with a strong competition environment experienced more reallocation from less productive to more productive firms than countries with a weak competition environment. The evidence also suggests that reallocation from low to high productivity firms during the COVID-19 crisis was stronger compared to pre-crisis times. Finally, the analysis shows that government support measures implemented in response to the crisis may have adverse effects on competition and productivity growth since they went to less productive and larger firms, regardless of their pre-crisis innovation.

This paper presents a novel agent-based model of land use and technological change in the agricultural sector under environmental boundaries, finite available resources and changing land productivity. In particular, we model a spatially explicit economy populated by boundedly-rational farmers competing and innovating to fulfill an exogenous demand for food, while coping with a changing environment shaped by their production choices. Given the strong technological and environmental uncertainty, farmers learn and adaptively employ heuristics which guide their decisions on engaging in innovation and imitation activities, hiring workers, acquiring new farms, deforesting virgin areas and abandoning unproductive lands. Such activities in turn impact on land productivity, food production, food prices and land use. We firstly show that the model can replicate key stylized facts of the agricultural sector. We then extensively explore its properties across several scenarios featuring different institutional and behavioral settings. Finally, we showcase the properties of model in different applications considering deforestation and land abandonment; soil degradation; and climate impacts.

We quantify the role of global production linkages in explaining spillovers of U.S. monetary policy shocks to stock returns across countries and sectors using a newly constructed dataset. Our estimation strategy is based on a standard open-economy production network model that delivers a spillover pattern consistent with a spatial autoregression (SAR) process. We use the SAR model to decompose the overall impact of U.S. monetary policy on global stock returns into a direct and a network effect. We find that nearly 70% of the total impact of U.S. monetary policy shocks on country-sector stock returns are due to the network effect of global production linkages. Empirical counterfactuals show that shutting down global production linkages would reduce the total global impact of U.S. monetary policy shocks by half. Our results are robust to changes in the definitions of stock returns and monetary policy shocks, to controlling for correlates of the global financial cycle, foreign monetary policy shocks, and to alternative empirical specifications. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

The paper discusses the moments of Wishart matrices, in both the central and noncentral cases. The first part of the paper shows that the expectation map has certain homogeneity and equivariance properties which impose considerable structure on the moments, hitherto unrecognised. The second part of the paper explains how the moments may be computed efficiently. The two parts of the paper are completely independent, but the computations produce precisely the algebraic structure predicted in the first part, as well as reproducing all previously known formulae. A number of examples are given for the more manageable cases.

Mental health problems among the elderly have attracted increasing attention. The most serious mental health problems may result in suicide, and lack of family companionship is often speculated to be a major cause. In this paper, we use high-frequency suicide rate data and utilize a novel temporal variation in the lunisolar calendar to provide evidence on the protective effects of the Chinese Lunar New Year (when the elderly people receive unusually high level of family companionship) on elderly suicide. We find that elderly suicide rate decreases by 8.7% during the Chinese Lunar New Year. In addition, the protective effects are stronger in counties where the typical level of daily family companionship for the elderly is lower. By contrast, we do not find similar protective effects for young and middle-age cohorts. We consider a variety of alternative mechanisms, and conclude that family companionship is an important channel for the protective effects of the Chinese Lunar New Year. Our study calls for greater attention to the mental health status and suicide problem of the elderly, especially with the rapid population aging and increasing prevalence of the “empty-nest” elderly in developing countries. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

This paper extends my research applying statistical decision theory to treatment choice with sample data, using maximum regret to evaluate the performance of treatment rules. The specific new contribution is to study as-if optimization using estimates of illness probabilities in clinical choice between surveillance and aggressive treatment. Beyond its specifics, the paper sends a broad message. Statisticians and computer scientists have addressed conditional prediction for decision making in indirect ways, the former applying classical statistical theory and the latter measuring prediction accuracy in test samples. Neither approach is satisfactory. Statistical decision theory provides a coherent, generally applicable methodology.

International audience; Despite the dramatic reduction of poverty in China over the past 35 years, poverty has not been fully eradicated in rural areas and, in the context of growing inequalities, it remains a national concern. This paper examines a local cash-for-work program launched in mountainous areas of the Beijing municipality in December 2004, with a view to understanding both the challenges and achievements of pro-poor programs in China. Using original household survey data, we first highlight the fairly good targeting performance of the program towards the local poor Second, participation equations provide evidence of increasing local income without crowding out local agricultural activities. Finally, a decomposition of household income inequality by source highlights the strongly equalizing effect of the program on peasants' income.

The paper presents the economic literature on gender bias, illustrating the underpinnings in the psychology of bias and stereotyping; the incorporation of these insights into current theoretical and empirical research in economics; and the literature on methods to contrast bias, presenting evidence (where it exists) of their effectiveness. The second part of the paper presents results of an experiment in revealing unconscious bias.