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This paper investigates the determinants of internal mobility across Spanish provinces of both foreigners and natives over the decade 2004-14. Building on an extended gravity model, our econometric strategy controls for multilateral resistance to migration by including different fixed effects structures. Additionally, the paper allows for some nonlinearities in the key economic determinants of migration, wages and unemployment. The main finding is that the impact of economic factors on internal migration is higher for foreigners than for natives; furthermore, the effect of these factors on internal migration is clearly nonlinear for the group of natives, while this only happens for foreigners when dyadic fixed effects of origin-destination are considered. Finally, the paper shows that the nature of the amenities with the greatest impact on internal movements differs between the two groups: foreigners look for social services and cultural amenities, whereas natives are more attracted by good climate conditions.

This paper investigates the impact of exporting and importing on productivity for UK plantsusing a combination of regression and propensity score matching. Unlike earlier papers, the data allows us to distinguish the effects of trade in goods and services. In confirmation of the results from other countries, we find that plants that both export and import have higher productivity than plants that only do one of these activities. In manufacturing, this is the case regardless of whether the trade is in goods or services (which suggests that servitisation of manufacturing is beneficial).In services, the results are more mixed and the benefits from involvement in international goods networks that are seen in manufacturing do not occur to the same extent (however, for the wholesale and retail sectors, trade in both goods and services is generally productivity enhancing).

This paper presents an essentially affine model of the term structure of interest rates making use of macroeconomic factors and their long-run expectations. The model extends the approach pioneered by Kozicki and Tinsley (2001) by modelling consistently long-run inflation expectations simultaneously with the term structure. This model thus avoids the standard pre-filtering of long-run expectations, as proposed by Kozicki and Tinsley (2001). Application to the U.S. economy shows the importance of long-run inflation expectations in the modelling of long-term bonds. The paper also provides a macroeconomic interpretation for the factors found in a latent factor model of the term structure. More specifically, we find that the standard "level" factor is highly correlated to long-run inflation expectations, the "slope" factor captures temporary business cycle conditions, while the "curvature" factor represents a clear independent monetary policy factor.

During the last decade, in many European countries and cities, area-based Urban Development Programmes have been initiated, in response to major problems of poverty and social exclusion. Urban Development Programmes are usually developed in a complex interplay between different governmental levels, and implemented by a wide variety of public and non-public parties. This paper addresses the organisation of these programmes, concentrating in particular on the form and extent of ‘public-public partnership’, i.e. on the role that the different levels of the public administration play, both through the administrative system and through policy-making. The ‘empirical’ basis for the paper consists of case studies, derived from the UGIS project (‘Urban Governance, Social Inclusion and Sustainability,’ a research project financed by the European Commission, DG RTD). The short analysis makes clear that both the model of public administration, in terms of the extent and form of decentralisation, and the presence (or lack) of a national policy framework determine the extent to which UDPs can be planned, approved and implemented at the local level. One of the main findings is that the central influence over UDPs depends more on the urban policy framework of the central government than on the model of public administration of a country. Countries with strong national (regional) urban policies, sufficient decentralisation of public administration to the municipal level and the use of governance methods at the local level open up possibilities for successful UDPs. Without upper-level urban policy frameworks UDPs might be successful as well, but their replicability and the control over their external effects will not be ensured.

In this paper, we provide novel evidence on the effect of local unemployment rate on life satisfaction. With this, we contribute to the expanding literature that aims to understand the role of the local labor market's conditions for individual well-being. This information can be used to only analyze the impact of regional economic policies, as well as to understand individuals' behavior and reactions to policy changes. In concrete, we investigate how changes in local unemployment rate affect subjective well-being in Germany, allowing for the presence of spatial spillovers and considering the role played by regional borders. The results indicate that higher unemployment in the own local area of residence has a negative effect on satisfaction. Similarly, individuals' happiness negatively correlates with the unemployment rate in contiguous local areas, but only if these areas are located in the same Federal State as the one where the individual lives. Heterogeneity analysis reveals that these negative effects of local unemployment rate are larger for individuals with stronger ties to the job market and less secure jobs., The usual disclaimers apply. Antonio Di Paolo gratefully acknowledges funding from the Spanish Ministry of Science and Innovation ECO2016-75805-R. Ada Ferrer-i-Carbonell acknowledges funding from the Spanish Ministry of Science and Innovation PID2020-114251GB-I00; the Spanish Agencia Estatal de Investigación (AEI), through the Severo Ochoa Programme for Centres of Excellence in R&D (Barcelona School of Economics CEX2019-000915-S); Catalan Agency for Management of University and Research Grants (AGAUR); and the Agency for Management of University and Research Grants (AGAUR) SGR1359.

This paper considers a class of models in which rank-based payoffs are sensitive to small amounts of noise in decision making. Examples include auction, price-competition, coordination, and location games. Observed laboratory behavior in these games is often responsive to asymmetric costs associated with deviations from the Nash equilibrium. These payoff asymmetry effects are incorporated in an approach that introduces noisy behavior via probabilistic choice. In equilibrium, behavior is characterized by a probability distribution that satisfies a "rational expectations" consistency condition: the beliefs that determine player's expected payoffs match the decision distributions that arise from applying a logit probabilistic choice function to those expected payoffs. We prove existence of a unique, symmetric logit (quantal response) equilibrium and derive comparative statics results. The paper provides a unified perspective on many recent laboratory studies of games in which Nash equilibrium predictions are inconsistent with both intuition and experimental evidence.

This paper examines the extent to which real estate returns are driven by continental factors. This subject is relevant for determining the country allocation of international real estate portfolios. If returns are driven by a continental factor, investors should look for diversification opportunities outside their own continent. This paper finds strong continental factors in North America and especially in the United States. For the Asia–Pacific region, real estate returns are not driven by a continental factor. The results suggest that, for European, North American and Asia—Pacific real estate portfolio managers, the Asia—Pacific region provides attractive international diversification opportunities.

The purpose of the present paper is to analyze whether the expansion of the Chinese economy is based on an export-led growth effect or, on the contrary, Chinese development between 1964 and 2004 was driven by investment. However, since we know the relevance of the real exchange rate in an open economy such as China, we also investigate the relationship between the real exchange rate and growth. Our empirical evidence shows that both investment and exports are relevant factors in the Chinese economy. These results are consistent with the idea that not only are exports the main engine of growth, as other papers have argued, but it also seems that the significant investment effort has played a key role in accounting for China’s growth in the last few decades. Furthermore, unlike previous works, we find that the real exchange rate has been used as an additional economic policy to encourage output in the long run.

One can be independent, or subject to decisions made by others. This paper empirically tests whether individuals attach an intrinsic value to the institutional difference between independence and hierarchy. Taking self-employment as an important case of independence, it is shown that the self-employed derive more utility from their work than people employed by an organization, irrespective of income gained or hours worked. This is evidence for procedural utility: people do not only value outcomes, but also the conditions and processes leading to these outcomes. Individuals value independence and dislike hierarchy as such, over and above the associated outcomes.

This paper examines the relative degrees of risk sharing provided by demand deposit contracts and equity contracts. It is shown that in a framework in which individuals have smooth preferences and there exists some type of aggregate uncertainty (interest rate risk), the allocations obtained with a financial intermediary allow in general for greater risk sharing than those achieved in an equity economy. However, the interest rate is essential in order to determine the superiority of demand deposit contracts over equity contracts. The results of the paper contradict the ones obtained by Jacklin [1987] and Hellwig [1994], where demand deposit and equity contracts are always equivalent risk sharing instruments. Publicado

An important goal of empirical demand analysis is choice and welfare prediction on counterfactual budget sets arising from potential policy interventions. Such predictions are more credible when made without arbitrary functional‐form/distributional assumptions, and instead based solely on economic rationality, that is, that choice is consistent with utility maximization by a heterogeneous population. This paper investigates nonparametric economic rationality in the empirically important context of binary choice. We show that under general unobserved heterogeneity, economic rationality is equivalent to a pair of Slutsky‐like shape restrictions on choice‐probability functions. The forms of these restrictions differ from Slutsky inequalities for continuous goods. Unlike McFadden–Richter's stochastic revealed preference, our shape restrictions (a) are global, that is, their forms do not depend on which and how many budget sets are observed, (b) are closed form, hence easy to impose on parametric/semi/nonparametric models in practical applications, and (c) provide computationally simple, theory‐consistent bounds on demand and welfare predictions on counterfactual budge sets.

This paper investigates the optimal currency composition for a country's foreign reserves. In the context of China, we examine the asymmetric, fat-tail and complex dependence structure in distributions of currency returns. A skewed, fat-tailed and pair-copula construction is then built to capture features of higher moments. In a D-vine copula approach, we show that under the disappointment aversion effect, the central bank in our model can achieve sizeable gains in expected economic value from switching from the mean-variance to copula modelling. We find that this approach will lead to an optimal currency composition that allows China to have more space for international currency diversification while maintaining the leading position of the US dollar in the currency shares of China's reserves.

Alphabetical name ordering on multi-authored academic papers, which is the convention in economics and various other disciplines, is to the advantage of people whose last name initials are placed early in the alphabet. Professor A, who has been a first author more often than Professor Z, will have published more articles and experienced a faster productivity rate over the course of her career as a result of reputation and visibility. Authors know that name ordering matters and take ordering seriously. Several characteristics of an author-group composition determine the decision to deviate from the default alphabetical name order to a significant extent.

Over the last decade, the study of social interactions in economic decision making has become an important area of research. The main objective of this paper is to survey the extent to which recent empirical contributions have succeeded in overcoming the identification problems as first formulated by Manski (1993). This discussion is followed by a comparison of empirical studies in three key areas of research: neighborhood effects, substance use among teenagers, and peer effects among university roommates. Finally, I discuss questions like: Can economists restrict attention to a specific subcategories of social interactions? How do we define social groups, and what is the importance of social interactions for public policy?

This paper summarises the vast evidence on micro price-setting recently obtained for euro area countries. We consider studies with micro data on consumer and producer prices, as well as survey information. The main findings are: (1) prices in the euro area are sticky and stickier than in the US; (2) downward price rigidity is only slightly more marked than upward price rigidity; (3) heterogeneity and asymmetries are observed in price-setting; and (4) the relevance of theories that explain price stickiness, such as implicit or explicit contracts, marginal costs, and coordination failure, is confirmed, whereas menu costs, pricing thresholds, and costly information explanations are judged much less relevant by firms. (JEL: C25, D40, E31)

This paper has two aims. The first is to exposit the various forms of the LM statistic and to collect together some of the relevant research reported in the mathematical statistics literature. The second is to illustrate the construction of LM tests by considering a number of particular econometric specifications as examples. It will be found that in many instances the LM statistic can be computed by a regression using the residuals of the fitted model which, because of its simplicity, is itself estimated by OLS. The paper contains five sections. In Section 2, the LM statistic is outlined and some alternative versions of it are discussed. Section 3 gives the derivation of the statistic for several econometric specifications. Applications in this section are the testing for a liquidity trap, autocorrelation, the error components model, diagonality of a covariance matrix in seemingly unrelated equation systems and choice between models generated by separate families of distributions. Section 4 considers the construction of a pseudo-LM statistic when estimation is difficult even under the null hypothesis and discusses the derivation of the exact distribution of the statistic. A concluding summary is given as Section

Over the past decade or so, aggregate data suggest a trend increase in housing equity withdrawal in Australia, potentially stimulating household spending. However, there has been little disaggregated information on how equity is being withdrawn and injected, the characteristics of households altering housing equity, and how funds from withdrawn equity are being used. This paper uses a survey of 4 500 households commissioned by the Reserve Bank of Australia (RBA) to address these questions. The results suggest that, during 2004, the most common method of withdrawing equity was for a household to increase the level of debt secured against a property they already owned. In contrast, most of the value of equity withdrawn was associated with property transactions, with the typical property transaction resulting in a net equity withdrawal. Turnover in the property market is therefore likely to be an important driver of cycles in aggregate housing equity withdrawal. Bivariate and logit analysis suggests a significant life-cycle influence, with the bulk of equity withdrawal being undertaken by older households, while younger households typically inject, primarily through mortgage repayments or deposits for property purchase. Finally, the results suggest that the bulk of the value of withdrawn equity was used to increase non-housing assets, although a significant proportion of households used the funds for consumption expenditure.

The paper reviews existing allocation mechanisms in the five tuna regional fisheries management organizatins and shows that although they have adopted different approaches all have failed to prevent overcapacity and, or some stocks, overexploitation. As an alternative, it is proposed that each tuna regional fishing management organization establish total allowable catches by species and area, and then allocate non-transferable and permanent country shares (as a proportion of the total harvest) to member countries. Each country would be free to use or sell its annual allocation of fish that would be determined by the permanent country shares, but the sales could only be to fellow member countries. A two-tier allocation to countries of permanenet shares of a total allowable catch, and then annual harvest allocations to vessels of member countries, offers the promise of mitigating, and possibly overcoming, the twin problems of overcapacity and overexploitation in the highly migratory and high seas tuna fisheries.

El pdf del artículo es el documento de trabajo., This paper studies human capital investment in a spatial setting with interpersonal complementarities. A mixture of local and global social interactions affects the cost of acquiring education, and the return to human capital is determined endogenously in the market. We study how spatially segregated investment equilibria are affected by an increase in the relative importance of global vis-à-vis local interactions. Per capita income level, equality, and welfare are shown to improve if the skilled constitute a majority to begin with, and if not, these implications are reversed. We also examine the effects of wider local neighborhoods, and lower mobility costs, and study a related two-group model based on social distance., Mookherjee and Ray acknowledge funding from NSF Grant Nos. SES-0617874 and 0617827 respectively. We thank Omer Moav and Rajiv Sethi for comments., Mookherjee and Ray acknowledge funding from NSF Grant Nos. SES-0617874 and 0617827 respectively.

The price of a real estate is based on its value. The real estate market, where the real estate price is established, is dynamic and undergoes continuous change. Considering the fact that nothing is fully deterministic or fully stochastic in nature, the author has put forward a compromise based on the conducted analyses in order to better diagnose the “live spatial structures”. The considerations presented in this paper provide grounds for the claim that integration of geo-deterministic inference (represented by the geostatistical model) and geo-stochastic inference (represented by maps of residuals), linked to space valuation, makes it possible to dynamically diagnose and characterise spatial phenomena and to make rational forecasts (and, consequently, planning) of changing in space and, therein, on the real estate market.

This paper presents an empirical analysis of the role of trust in the relationship between venture capitalist and entrepreneur. Following the social sciences literature, we try to differentiate between trust as an affective, value-based category from confidence which is understood as a backward-looking, evidence-based mechanism. Using data from a survey among German venture capitalists conducted in 2003, we analyze 111 financing relationships from 75 respondents. We find a significant reciprocal positive relationship between trust and success. Other significant determinants of trust include the perceived quality of the entrepreneur and credibility of information (two proxy variables for measuring confidence), the perceived importance of reputation and the stage of the entrepreneur's venture. The level of monitoring and control is identified as a substitute for trust. We address a potential endogeneity of trust and success by estimating a system of two simultaneous equations by 3SLS and find the results to be robust. Finally, we use data from a second survey conducted in 2006 to assess whether trust predicts success. In fact, our results indicate that a higher level of trust in 2003 is associated with a higher success rate in 2006.

This paper investigates the impact of the introduction of Universal Stock Futures (USFs) on underlying market dynamics (volatility and the level of feedback trading). Analysis of USFs provides a number of advantages compared to investigation of index futures, leading to reliable and wider ranging insights into the impact of derivatives. Specifically: (i) any impact of derivatives is more likely to be evident in the behaviour of individual stocks; (ii) with USFs it is possible to directly trade the underlying; (iii) USFs have multiple introduction dates within a given market; (iv) differential country/industry effects can be identified; and (v) the endogeneity issue can be addressed using control stocks. Findings suggest limited feedback trading in USF stocks, but listing has reduced this further. While news has less impact and persistence and asymmetry effects are more evident post-futures, control stock results suggest these changes are not futures induced. Differences are evident across industries. The need for analysis of an appropriate (industry based) control sample is highlighted if reliable policy conclusions are to be reached.

This paper studies the price dynamics induced by strategic firm behavior in the presence of consumer learning about the uncertain quality differential of the products offered by a duopoly. It is found that consumers learn slowly and that prices converge also slowly to full-information levels. A consequence is that the incentives of firms to manipulate consumers' beliefs are persistent. Although pricing tends to be aggressive at the early stages, and average prices eventually increase over time, price wars may occur at intermediate stages of the product life cycle., We thank the Spanish Ministry of Education for partial financial support through DGCYT grants PB95-0130 and PB93-0679.

In this paper we analyse the optimal infinite-horizon advertising policy of a monopolist firm in a market for durable goods, based on classic models by Vidale–Wolfe (Oper. Res. 1957; 5(3):370–381) and Nerlove–Arrow (Economica 1962; 29 (114):129–142). A set of necessary conditions for optimality generalizing previous results is provided for the resulting non-convex system. In addition, we establish local (and in some cases global) asymptotic convergence of an optimal trajectory towards the unique optimal steady state.