Bitcoin and entrepreneurship: breaking the network effect

This paper explores the question of whether the market process is capable of bringing about a spontaneous monetary switch to a new currency in the presence of strong network effects of the incumbent currency as well as the absence of contingencies such as extreme inflation or political instability. It does so by examining current happenings around Bitcoin. It finds that two mechanisms stand out: the coordinating efforts of the profit-maximizing entrepreneur as well as the ability to use the old and the new currency simultaneously. Specifically, it finds that marginal decisions made by rational agents merely seeking to maximize net private benefit irrespective of the network effect, be it entrepreneurs or users of the new currency, are capable of setting in motion a switch to a new currency. Whether or not these mechanisms play out fully in the case of Bitcoin still remains to be seen.     

Do Extrinsic Incentives Undermine Social Norms? Evidence from a Field Experiment in Energy Conservation

Policymakers use both extrinsic and intrinsic incentives to induce consumers to change behavior. This paper investigates whether the use of extrinsic financial incentives is complementary to intrinsic incentives, or whether financial incentives undermine the effect of intrinsic incentives. We conduct a randomized controlled trial that uses information interventions to residential electricity customers to test this question. We find that adding economic incentives to normative messages not only does not strengthen the effect of the latter but may reduce it. These results are consistent with recent theoretical work that suggests a tension between intrinsic motivation and extrinsic incentives.     

Using FRED data to teach price elasticity of demand

In this article, the authors discuss the use of Federal Reserve Economic Data (FRED) statistics to teach the concept of price elasticity of demand in an introduction to economics course. By using real data in its computation, they argue that instructors can create a value-adding context for illustrating and applying a foundational concept in economics. Additionally, this pedagogical strategy contributes to developing an expected proficiency for economics majors related to “interpreting and manipulating data” (Hansen 2009, 2012). The authors provide step-by-step instructions on how to use FRED to compute the price elasticity of demand for motor vehicle fuels and gasoline as well as examples of in-class discussion questions and take-home assignments related to this instructional technique.     

Household Satellite Account for France

We estimate in a household satellite account (HHSA) the value of French domestic production in 2010 and 1998, using the input method and following Eurostat's recommendations. In line with previous studies, we find that extending the system of national accounts (SNA) frontier of production to domestic activities (house chores, cooking, care …) has a sizeable effect on key macroeconomic indicators (+33 percent GDP, ?5 p.p. GDP growth, +50 percent disposable income, +58 percent consumption, and ?10 p.p. of purchasing power growth). We conduct a sensitivity analysis to various methodological issues which have not yet been settled by an international benchmark. Quantitatively, the two most important issues are the boundary of household production—we favor a relatively narrow definition—and the use of a gross or a net wage—we prefer gross wage‐. However, estimates are much less sensitive to otherwise greatly debated issues such as which substitute wage to use.     

Tax and transfer programs,retirement behavior,and work hours over the life cycle

In this paper, we use a computable overlapping generations model economy to analyze the quantitative effects of some reforms on tax and transfer programs, aimed at easing the tax burden on the labor supply of older workers. We focus on retirement behavior, work hours over the life cycle, and efficiency gains. We find that the labor supply of older workers is very responsive to changes in tax and transfer programs and show that the gains, in terms of old-age work hours, are non-trivial. However, we also find that longer careers may not substantially increase aggregate hours because workers may reallocate labor supply over the life cycle in response to retiring later. Moreover, since longer careers may also reduce saving rates, we also find that changes in tax and transfer programs aimed at boosting the employment rates of the elderly may reduce output per head.     

Shareholder wealth responses to European legislation on bank executive compensation

This paper uses an event study approach to investigate the shareholder wealth responses to European legislation on bank executive compensation. Using a sample of 124 banks over 2009–2010 and over 20 legislative and related events, we find that in early stages bank shareholders react positively to broad discussion at the EU level on executive pay. When plans to regulate the pay process are considered, however, this results in a negative stockholder reaction. We also find that large bank shareholders are most affected by remuneration policy.     

Modelling the volatility of commodities prices using a stochastic volatility model with random level shifts

We use the approach of Qu and Perron (Econom J 16(3):309–339, 2013) for the modeling and inference of volatility of a set of commodity prices in the presence of random level shifts of unknown timing, magnitude and frequency. Our approach contributes to the study of commodities in several aspects. First, we test for the presence of a genuine long-memory process in the volatility of commodities. Second, we determine that the random level shifts are certainly the main source of variation in the commodity price volatility. Finally, we estimate the volatility and its components as latent variables, thereby making it possible to evaluate their level of correlation with macroeconomic variables in small open economies such as Latin-American countries where the dependence on commodity price volatility is high. We use six commodity series: agriculture, livestock, gold, oil, industrial metals and a general commodity index. All series cover the period from January 1983 until December 2013 in daily frequency. The results show that although the occurrence of a level shift is rare, (about once every 1.5 or 1.8 years), this component clearly contributes most to the variation in the volatility. Furthermore, isolating the level shift component from the overall volatility indicates a strong relationship of this component with a set of business cycle indicators of several Latin American countries.     

The price of broadband quality: tracking the changing valuation of service characteristics

This paper investigates how retail broadband prices, choice and quality are changing over time. Using a data set containing daily observations of plans offered in Ireland from 2007 to 2013, this paper applies hedonic modelling techniques to observe the changing pricing of service characteristics. Although we find that average nominal prices remain static throughout our sample period, quality of service has risen dramatically over time, particularly with respect to download speed. Some characteristics of broadband plans exhibit broadly stable valuations over time, but the elasticity of price with respect to advertised download speed and the premium on bundled services declined for most types of broadband plans during the sample period. In addition, the retail price premium enjoyed by the incumbent operator fell significantly since 2007.