The Neutrality Illusion: Biased Economics,Biased Training,and Biased Monetary Policy. Testing the Role of Ideology on FOMC Voting Behaviour

This research is trying to shed light on two myths that are usually widespread: the first one being the idea of the academic economist as a neutral scientist finding uncontestable consensual truths, thanks to uncontestable empirical methods, the second, the idea of the central banker as a Weberian neutral bureaucrat setting aside personal beliefs to act mechanically for the common good. Deconstructing this ‘neutrality illusion’, this work argues that economics is actually a divided and ideologically marked discipline despite its aim at natural-science-type-legitimacy. It argues in a related discussion that such ideological bias also impedes a purely neutral conduct of monetary policy, undermining the very idea of central bank independence. Linking these two arguments, it argues that graduate training in economics is the first place for the formation of biased preferences, because of the substantial ideological sorting that exists across universities. Using a unique database on FOMC members’ votes and ideology, the paper tests this idea empirically and despite unavoidable caveats, finds robust evidence of a systematic impact of the ideological features of their alma mater on FOMC members’ voting behaviour – impact that we found more important than the other traditional determinants of central bankers’ actions.     

LEADERSHIP IN CLIMATE CHANGE MITIGATION: CONSEQUENCES AND INCENTIVES

Initiatives in favor of unilateral action on climate change are frequently challenged by concerns over free riding. Nevertheless, we observe an increasing number of unilateral efforts at different administrative levels and in different parts of the world. Previous academic literature described various individual mechanisms where emissions abroad may increase or decrease as a reaction to unilateral emission reductions. In this paper, we collect a comprehensive set of both positive and negative reactions and analyze them in stylized models. This allows us to identify the most important characteristics that determine the potential of a leader to boost mitigation efforts abroad. We find that this potential depends on (i) a strong ability to generate knowledge through leadership, (ii) a high degree of credibility in the international community, and (iii) a similar economic structure to the most important emitters. While most effects are difficult to quantify, this comprehensive assessment suggests that leakage effects resulting from unilateral mitigation may well be outweighed by positive reactions.     

中国北方大规模生猪养殖技术效率研究

[目的]通过对我国北方地区大规模生猪养殖技术效率进行测度,以期发现影响其技术效率增长的主要因素,为我国现阶段生猪养殖业战略性区划调整"南猪北进"工作提供实践指导和理论支持。[方法]根据随机前沿分析方法 (SFA)基本原理,运用对数型柯布—道格拉斯生产函数及我国北方大规模生猪养殖数据构建中国北方大规模生猪养殖随机前沿分析模型,对我国北方大规模生猪养殖技术效率进行测度并据此提出相关建议。[结果]北方地区大规模生猪养殖技术效率值纵向上来看整体在不断下降,而从地域上来看内蒙古自治区和东北地区技术效率值较高,北京与西北地区技术效率值较低。[结论]内蒙古自治区与东北地区适宜作为大规模生猪养殖承载地,与国家政策具有一致性;华北地区与西北地区大规模生猪养殖技术效率测度值较低,存在较大改进空间;针对该现状提出构建经济效益与环境保护并重的规模生态生猪养殖体系。     

A tale of two clusters: knowledge and emergence

Cluster emergence is an important topic but weakly conceptualized in the literature. Focusing on the interaction of the local knowledge pool and firm growth, the paper develops a comprehensive framework to understand cluster emergence. In the framework, the cluster formation process starts with the collision of local and external knowledge which generates an innovation and stimulates the creation of local pioneering firms in a new field. To support the growth of follow-up entrants in the new industry, the local knowledge pool needs to be expanded and deepened through local knowledge sharing and external knowledge inflows. The enlarged local knowledge pool enables local firms to grow and explore other fields further. To promote cluster emergence, public policies need to facilitate the interaction of the local knowledge pool and firm growth. The paper illustrates the interactive framework with two aluminum extrusion clusters in China that emerged in different ways over different time periods.     

Effects of scale economies and production seasonality on optimal hub locations: the case of regional fresh produce aggregation

Interest in supporting local and regional food systems is rising and food hubs have attracted considerable attention among Federal, State, and local policymakers. This study explores the problem of endogenous hub location in fresh produce value chains in the Northeastern United States. To overcome limitations in the literature, we incorporate the effects of economies of scale and production seasonality into our models. Three experimental models are designed to examine the effects of alternatively applying yearly, quarterly, and monthly data on model solutions. We explicitly assess how interactions of scale economies and seasonality influence the structure and spatial attributes of an optimal regional produce aggregation hub system. The three models generate marketed different solutions and in many respects they lead to different conclusions about developing local/regional supply chains. The monthly model allows for production seasonality and actual hub operation cycle frequency and thus leads to more efficient hub solution with rich policy implications.     

Discouraging Rainforest Transformation: An Ex-ante Policy Impact Analysis

Despite extensive efforts made by national and international certification agencies, Indonesian smallholder farmers’ participation in palm oil certification schemes adoption remains low. A fundamental obstacle is the smallholder practice of rainforest transformation into oil palm plantation which is forbidden by the agencies. In this context, we investigate three policies that could lead to a reduction in rainforest deforestation by smallholders: price premium on certified palm oil; the provision of environmental information; contributor recognition. In order to evaluate the influence of the policies ex-ante, we conduct a social dilemma experiment involving rubber and oil palm smallholders in Jambi Province, Sumatra, Indonesia. The findings indicate that the price premium and provision of context-specific environmental information could reduce rainforest transformation. However, a statistically significant effect of contributor recognition was not found.     

The signaling effects of education in the online lending market: Evidence from China

In this study, we use data from an online lending platform named Xinxindai in China to empirically study the signaling effects of education for the default risk of borrowers. Three dependent variables are created, namely, the probability of default, overdue payments and overdue amount, and probit models, count models and Tobit models are employed correspondingly. The number of universities in the “211 Project” of China at the city level is employed as the instrumental variable. The empirical evidence shows that education generally plays a strong signaling role in the identification of borrowers’ default risk in China. The negative marginal effect of education declines as borrowing times increase and as the marketization of regions deepens. This study helps to fill an important gap in the existing literature. Platforms and lenders can use educational level for reference in identifying the default risk of borrowers.     

Economic policy uncertainty and mergers and acquisitions: Evidence from China

This study examines the relationship between economic policy uncertainty and mergers and acquisitions (M&As) in China. Using all listed Chinese companies on the Shanghai and Shenzhen Stock Exchanges as well as 4188 ​M&A deals from the period of 2001–2018, we show that Chinese firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the behavior of US firms. We further show that state-owned enterprises (SOEs) are less likely than non-SOEs to make acquisitions during periods of high economic policy uncertainty. SOEs are less likely to use only cash for their acquisitions during periods of high economic policy uncertainty. These results indicate the prudence of SOEs regarding acquisitions relative to non-SOEs during periods of high economic policy uncertainty. Moreover, acquisitions during periods of high economic policy uncertainty are associated with an increase in shareholder wealth for acquirers, and this wealth effect is more pronounced for SOEs.     

Insolvency regimes and firms' default risk under economic uncertainty and shocks

One of the arguments often advanced for implementing a stronger insolvency and bankruptcy framework is that it enhances credit discipline among firms. Using a large cross-country firm-level dataset, we empirically test whether a stronger insolvency regime reduces firms' likelihood of defaulting on their debt. In particular, we examine whether it reduces default risk during increased economic uncertainty and various external shocks. Our results confirm that a stronger insolvency regime moderates the adverse effects of economic shocks on firms' default risk. The effects are more pronounced for firms in the top half of the size distribution. We also explore channels through which improved creditor rights influence firms' default risk, including dependence on external finance, corporate leverage, and managerial ethics. Our main results are robust to an alternative measure of default risk, inclusion of currency and sovereign debt crisis episodes, and alternative estimations.     

Institutions and the financial development–economic growth nexus in sub-Saharan Africa

Using a sample splitting approach that does not impose an exogenous quadratic term, we examine the effect of financial development on economic growth in sub-Saharan Africa by allowing the link to be mediated by the level of institutions. Our findings reveal a disproportionate growth-enhancing effect of finance, given countries’ distinct level of institutional quality. More specifically, when the International Country Risk Guide-based measure of institutions is used as the threshold variable, below the optimal level of institutional quality, financial development does not significantly promote economic growth. For countries with institutional quality above the threshold, higher finance is associated with growth. However, when institutions are measured by World Governance Indicators proxy, we find a significant effect of financial development, irrespective of whether a country is below or above the threshold. Interestingly, the growth-enhancing effect of finance is greater for low-institution countries relative to high-institution countries. Thus, through its ability to provide some crucial roles, the well-developed financial sector may also perform the function of sound institutions in influencing economic growth.