Credit demand and supply shocks in Italy during the Great Recession

In this article, we use Structural VAR analysis to disentangle credit demand and supply shocks and their effect on real economic activity in Italy during the 2008 to 2014 crisis period. The three endogenous variables considered are the loan interest rate, the loans growth rate and the employment to population ratio. The data are observed at annual frequency for each of 103 Italian provinces. The empirical evidence suggests that the variance of the shocks varies across four Italian macro-regions: North, Centre, South and Islands, and hece heteroscedasticity is used to identify (ex ante) the structural shocks. Sign restrictions are used to interpret shocks ex post. The empirical findings suggest a prominent role of credit supply shock in shaping real activity dynamics and also that credit crunch hits the North of Italy less than the remaining macro-regions, especially the South of Italy.     

Varieties of entrepreneurship: exploring the institutional foundations of different entrepreneurship types through ‘Varieties-of-Capitalism’ arguments

While entrepreneurship researchers agree that institutions ‘matter’ for entrepreneurship, they also have a rather encompassing understanding of institutions as almost any external factor that influences entrepreneurship. Ultimately, this literature thus comes up with a long list of institutional factors that may explain entrepreneurial differences between countries. But which institutions are most influential? How do these institutions relate to different types of entrepreneurship? And to what extent are institutions complementary to each other in the way they sustain different entrepreneurship types? The literature on ‘Varieties-of-Capitalism’ (VoC) offers a parsimonious theoretical framework to address these questions. Based on the VoC literature, we theoretically derive a consistent set of institutional indicators that can explain differences in entrepreneurship types between countries. Based on principal component and cluster analyses, we illustrate how 21 Western developed economies cluster around four distinct institutional settings. Furthermore, we use simple OLS regressions to show how these institutional constellations are related to different types of entrepreneurship. We conclude that four different ‘Varieties of Entrepreneurship’ can be identified across the Western world. The main implication of our findings is that a ‘perfect’ institutional constellation, equally facilitating different types of entrepreneurship, does not exist. Policy-makers seeking to stimulate entrepreneurship are thus faced with the trade-off of targeting policy reforms to that entrepreneurship type they intend to promote—at the expense of other types of entrepreneurship and the broader societal consequences such reforms will have.     

THE WAGE IMPACT OF TEACHERS UNIONS: A META‐ANALYSIS

The literature examining the impact of teachers unions on education is very large and diverse. We meta‐analyze the literature on the wage impacts of teachers unions to try to draw out general findings, the importance of empirical model specification, and samples. A key finding of this study is that the average wage impact estimated by the included papers is modest, around 2%–4.5%. Our findings also suggest that the quality of an empirical strategy significantly affects the size of the estimated impact. We find that teachers union wage impacts have varied over time. The largest impacts appear to be following the rapid expansion of teacher unionism in the 1970s. Finally, we gain new insight into the goals of teachers unions by using the increased statistical power of meta‐analytic techniques to show that unions increase the wages of new teachers and not just senior teachers. (JEL J51, I21, I30)     

Taxation of firms with unknown mobility

We analyze optimal business tax policy when some firms are able to escape taxation by moving abroad. In contrast to the existing literature, we assume that the true number of mobile firms is ex ante unknown. While the government may learn from the firms' location responses to past tax rate changes, firms may anticipate this and adjust their choices accordingly. We find that incomplete information on mobility substantially affects the properties and the implications of equilibrium policy choices. First, the government may find it optimal to set a tax rate that triggers partial firm migration but full revelation of the true number of mobile firms. Second, we show that, if the firms' outside option is attractive (i.e., relocation cost and foreign tax rates are low), expected tax rates and expected firm migration are higher if the degree of mobility is unknown. Third, there is a positive value of learning, i.e., commitment on future tax rates cannot increase the government's expected revenue. However, if the government can commit to a rule‐based learning mechanism, i.e., credibly tie its future tax policy to present policy outcomes, it may obtain a Pareto improvement.     

Use of the THERMOCOOL SMARTTOUCH catheter for ablation of atrial fibrillation: the relationship between hospital procedure volume,re-admissions,and economic outcomes

Objective: The purpose of this study was to examine the relationship between hospital volume of prior THERMOCOOL SMARTTOUCH catheter use and health and economic outcomes among hospitalized patients with atrial fibrillation (AF) undergoing ablation using this device.

Materials and methods: Patients aged ≥18 years with a primary diagnosis of AF undergoing ablation treatment using the THERMOCOOL SMARTTOUCH catheter between January 2014 and June 2016 were identified from the Premier hospital database with the first date of such a procedure being defined as the index date. Hospital volume of prior THERMOCOOL SMARTTOUCH catheter use was determined during the 12-month pre-index period, and was classified into five groups: no volume (0), low volume (1–50), mid volume (51–100), high volume (101–150), and very high volume (≥151). Outcomes, including length of stay (LOS; for inpatient procedure only), hospital costs (total, hospital pharmacy, supply), and all-cause re-admission were evaluated. A generalized estimating equation (GEE) with exchangeable correlation structure was used to examine the impact of hospital volume on LOS, hospital costs, and re-admissions controlling for hospital clustering and other covariates.

Results: The study population included 640 hospitalized AF patients. The adjusted mean LOS was significantly shorter in very high-volume hospitals than hospitals with no volume (mean LOS 2.30 vs 4.33 days; p?=?.0377). As volume increased, the mean adjusted supply cost tended to decrease, although these changes emerged as non-significant. The 12-month all-cause re-admission was significantly lower among patients undergoing ablation in low (Odds ratio [OR]?=?0.27; confidence interval [CI]?=?0.08–0.85) and mid (OR?=?0.12; CI?=?0.02–0.61) volume hospitals compared to hospitals with no volume.

Limitations: Study results may not be generalizable to all US hospitals.

Conclusions: Among AF patients undergoing ablation, increased hospital volume of prior THERMOCOOL SMARTTOUCH catheter use was associated with shorter LOS and a lower likelihood of all-cause re-admission.     

Microeconomic mechanisms behind export spillovers from FDI: evidence from Bulgaria

This paper studies how the presence of multinational enterprises affects the export performance of Bulgarian manufacturing firms—export spillovers from FDI. Using export data at the firm/product/destination level for the period 2004–2006, it finds positive forward spillover on export value and quantity, related to quality upgrading. Conversely, it finds negative (or insignificant) backward and horizontal spillover on export flows, related to quality downgrading. When aggregating data at the firm level and considering that a firm can operate in several sectors, the paper shows that the presence of foreign input suppliers allows domestic firms to export additional varieties of lower quality and upgrade the average quality of existing varieties, whereas the presence of foreign customers generates the opposite effect.     

Infrastructure Development and Regulatory Reform in Sub‐Saharan Africa: The Case of Air Transport

This paper analyses the main policy issues raised by regulatory reform in air transport in sub‐Saharan Africa. Its basic premise is that improving ait infrastructure is of paramount importance for the region as it tries to integrate more thoroughly into the world economy. On the basis of the experience of OECD countries with privatisation, liberalisation, and regulatory design, the author analyses progress being made in sub‐Saharan Africa and identifies three important case studies: the restructuring of the regional airline of Francophone Western Africa, the sell‐off of the state‐owned airline of Kenya, and the overall reform process in South Africa, by far the largest market in the sub‐continent. The analysis highlights the importance of regional dynamics in the upgrading of the air transport industry in developing and emerging areas. Sub‐Saharan Africa has made smaller progress in this respect than, for instance, Central America. As the start of the Millennium Round and the first WTO air transport review approach, these issues will gain policy priority for all countries, and may become powerful bargaining tools for non‐OECD countries to press for more open access into OECD markets for the South's traditional exports.     

Investment shocks and business cycles

The origins of business cycles are still controversial among macroeconomists. This paper contributes to this debate by studying the driving forces of fluctuations in an estimated new neoclassical synthesis model of the U.S. economy. In this model, most of the variability of output and hours at business cycle frequencies is due to shocks to the marginal efficiency of investment. Imperfect competition and, to a lesser extent, technological frictions are the key to their transmission. Although labor supply shocks explain a large fraction of the fluctuations in hours at very low frequencies, they are irrelevant over the business cycle. This finding is important because the microfoundations of these disturbances are widely regarded as unappealing.     

Differences in beliefs and currency risk premiums

This paper studies the importance of heterogeneous beliefs for the dynamics of asset prices. We focus on currency markets, where the absence of short-selling constraints allows us to perform sharper tests of theoretical predictions. Using a unique data set with detailed information on foreign-exchange forecasts, we construct an empirical proxy for differences in beliefs. We show that this proxy has a strong effect on the implied volatility of currency options beyond the volatility of macroeconomic fundamentals. We document that differences in beliefs impact also on the shape of the implied volatility smile, on the volatility risk-premiums, and on future currency returns.