The Factor Content of Heterogeneous Firm Trade

The present paper studies the factor content of heterogenous firm trade in the presence of market imperfections and transaction costs. The conceptual framework builds on a relative factor endowment model, which we extend to account for firm heterogeneity and transaction costs. Using a large panel of firm‐level data for the EU, we are able to examine not only the aggregate factor content of trade but also to identify differences in the factor of trade between heterogenous firms. Our empirical results suggest that because of transaction costs and market imperfections, the factor content of agricultural trade is heavily distorted in the CEE transition economies. To increase the gains of trade and the employed factor rewards, the policy should first address the transaction costs and market imperfections.     

Voluntary Cooperation in Terms of International Financial Supervision

This article analyzes the issue of voluntary cooperation in terms of international financial supervision. A simple modeling framework is provided where financial supervision is an international public good and thus may be underprovided globally. The article asks a simple question: would national supervisors cooperate and increase the level of global supervision, and by how much? I use coalition formation game theory to address this question. The main results are the following. If the situation is completely symmetric (identical‐sized countries and symmetric externalities), the amount of cooperation is relatively high and full cooperation could be achieved for particular numbers of countries involved in the negotiations. However, in general, full cooperation would not be an equilibrium because countries have incentives to free ride on the cooperation of other countries. Introducing asymmetries in the size of the countries and/or in the externalities between countries reduces the scope for cooperation. However, higher asymmetries are not necessarily related to lower cooperation if the distribution of asymmetries has a particular shape, such that big countries are generating large externalities on small countries, as it might be the case in reality.     

Should Bangladesh Export to Countries with Better Institutional or Comparatively Similar Institutional Form?

Using panel data for the years 2006–2015, this study empirically investigates the effect of rule of law as an institution on Bangladesh's exports to 28 European Union countries (EU28) based on gravity model analysis. Two-step econometric results suggest that institutional rule of law is strongly associated with Bangladesh's exports, and institutional quality provides evidence of this significant effect. Furthermore, exports of Bangladesh are driven by economic size, market size, and the real exchange rate as well as rule of law. These results are suggestive of an important joint role for both trade and institutions in the long run.     

(Gender-differentiated) Effects of Changes in Personal Income Taxation

Intereconomics - One of the most important areas of taxation is the personal income tax, which may have a gender-differentiated effect on work incentives and infl uence the distribution of paid and...     

Stock returns after major price shocks: The impact of information

This paper focuses on stocks that experience major price changes. Using analyst reports as a proxy, I find that price events accompanied by information are followed by drift, while no-information ones result in reversals. One interpretation of these results is that investors underreact to news about fundamentals and overreact to other shocks that move stock prices. Consistent with this hypothesis, information-based price changes are more strongly correlated with future earnings surprises than no-information ones. Furthermore, drift exists only when the direction of the price move and of the change in analyst recommendations have the same sign. Finally, the ratio of no-information to information-based price shocks is strongly correlated with aggregate implied volatility and also forecasts momentum returns.     

The Capitalization of Area Payments into Farmland Rents: Micro Evidence from the New EU Member States

This study investigates the impact of the Single Area Payment Scheme (SAPS) on farmland rental rates in the New EU Member States. Using a unique set of farm level panel data with 20,930 observations for 2004 and 2005 we are able to control for important sources of endogeneity. According to our results, the SAPS has a positive and statistically significant impact on land rents in the EU. However, the estimated incidence is smaller than predicted theoretically. Land rents capture only 19 cents of the marginal SAPS EUR, and around 10% of the SAPS benefit nonfarming landowners through higher farmland rental prices. As the share of rented land is higher in corporate farms than individual ones, family farms benefit more from the SAPS than corporate farms do. Dans la présente étude, nous avons étudié les répercussions du Régime de paiement unique à la surface (RPUS) sur les taux de location de terres agricoles dans les nouveaux États membres de l’Union européenne. À l’aide d’un ensemble unique de données de panel sur les exploitations agricoles renfermant quelque 20 930 observations recueillies en 2004 et en 2005, nous avons pu maîtriser des sources d’endogénéité importantes. Nos résultats montrent que le RPUS a des répercussions positives et statistiquement significatives sur les loyers fonciers dans les pays de l’Union européenne. L’incidence estimative est toutefois inférieure à la valeur prévue théoriquement. Les loyers fonciers ne s’emparent que de 19 cents l’euro du RPUS marginal, et près de 10 p. 100 du RPUS profitent aux propriétaires fonciers non exploitants en raison des prix de location de terres plus élevés. Comme la part des terres louées est plus élevée dans le cas des fermes constituées en société que dans le cas des fermes individuelles, les fermes familiales profitent davantage du RPUS.     

Credit Market Imperfections and the Distribution of Policy Rents

This article shows that credit market imperfections have important implications for the distribution of policy rents. In a model with land as fixed factor and credit market imperfections, when an area payment is given, land rents go up by more than the subsidy. On aggregate farms may lose from the subsidy. The results depend on the extent to which subsidies have direct and indirect effects on the credit constraints, on whether farms rent or own land, and on farm heterogeneity.     

The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values

We assess the effects of the 2013 CAP reform on the capitalisation of decoupled payments in land rental values. Our estimates suggest that the reform leads to an increase in the capitalisation of decoupled payments by an additional 18 cents for each Euro of decoupled payments relative to the pre‐reform situation. However, there is an important variation in the reform effects between Member States (MS) particularly between Old Member States (OMS) and New MS (NMS). In NMS, the capitalisation rate slightly reduces from 83% in the pre‐reform period to 79% in the post‐reform period. Although, the rate is significantly lower in OMS, it doubles (from 21% to 43%) due to the reform. The main sources of the post‐reform capitalisation in the European Union (EU) are the pre‐reform capitalisation accounting for 69% of the total post‐reform capitalisation, followed by the entitlement stock change with 19%, by the internal convergence of payments with 18%, the budget change (including external convergence) with 1%, and the differentiation of payments (redistributive payment) with ?7%. Overall, our estimates suggest that on average in the EU, the non‐farming landowners’ policy gains are 27% of the total decoupled payments in the post‐reform period compared to 18% in the pre‐reform period.     

Is the Fed’s news perception different from the private sector’s?

The recent literature on monetary policy has dedicated considerable attention to modelling agents’ processing of information about the future in real time. This paper contributes to this growing strand by investigating the implied differences in the so-called news shocks estimated from the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model using the real-time data sets from the Survey of Professional Forecasters (SPF) and the Federal Reserve’s Greenbook (GB) forecasts. Alternative specifications with either the SPF or GB forecasts aim to delineate the differences in the private sector’s and the Fed’s expectations of future macroeconomic outcomes and identify the differences in their perception of news shocks. Our results indicate that while the demand news shocks have very similar distributions in the two datasets, the monetary and cost-push news shocks from the models estimated on the GB data tend to be larger than those from the SPF. These findings suggest that the Federal Reserve’s forecasting methods allow for more variation in future outcomes than the SPF’s. These findings mesh well with the extant literature on the superiority of the Fed’s forecasts relative to the private sector’s and provide a structural explanation for the source of this superiority.     

The new financial framework for the Cuban non-state sector

A cornerstone of the current Cuban economic model reforms is its opening to the non-state small-scale sector. Using the results of a survey of non-state businesses, we look at the provision of financial services to the small- and medium-sized enterprises in the non-state sector from two perspectives: first, the nature of the new credit regulations and bank policies and how they accomplish the evaluation of credit to a hitherto non-existent sector; and second, how these small business clients view their relationship with their lender state banks. We look at Cuba from the perspective of a socialist economy in transition and compare it to microfinance in China and India.