Measuring the effectiveness of US monetary policy during the COVID-19 recession

The COVID-19 recession that started in March 2020 led to an unprecedented decline in economic activity across the globe. To fight this recession, policy makers in central banks engaged in expansionary monetary policy. This paper asks whether the measures adopted by the US Federal Reserve (Fed) have been effective in boosting real activity and calming financial markets. To measure these effects at high frequencies, we propose a novel mixed frequency vector autoregressive (MF-VAR) model. This model allows us to combine weekly and monthly information within a unified framework. Our model combines a set of macroeconomic aggregates such as industrial production, unemployment rates, and inflation with high-frequency information from financial markets such as stock prices, interest rate spreads, and weekly information on the Fed's balance sheet size. The latter set of high-frequency time series is used to dynamically interpolate the monthly time series to obtain weekly macroeconomic measures. We use this setup to simulate counterfactuals in absence of monetary stimulus. The results show that the monetary expansion caused higher output growth and stock market returns, more favorable long-term financing conditions and a depreciation of the US dollar compared with a no-policy benchmark scenario.     

Financing the sustainable management of Rwanda's protected areas

Rwanda's Nyungwe National Park is a biodiversity hotspot with the most endemic species in the ecoregion and the highest number of threatened species internationally. Nyungwe supplies critical ecosystem services to the Rwandan population including water provisioning and tourism services. Tourism in the Park has strong potential for financing enhanced visitor experiences and the sustainable management of the Park. This paper explores quantitatively the economic impacts of adjustment in Park visitation fees and tourism demand as a source of revenues to improve Park tourism opportunities and ongoing operations and maintenance. The methods developed in this paper are novel in integrating the results of stated preference techniques with a regional computable general equilibrium modelling approach to capture multisectoral, direct, indirect and induced impacts. Such methods have strong potential for assessing revenue generation alternatives in other contexts where park managers are faced with the need to generate additional revenue for sustainable park management while facing diminishing budget allocations. Results of this analysis demonstrate that adjustment of Park fees has a relatively small impact on the regional economy and well-being when compared with a strategy aimed at generating increased tourism demand through investment in improving the visitor experience at Nyungwe National Park.     

Estimating the gravity model when zero trade flows are frequent and economically determined

ABSTRACT

Since the 1950s, we have known that the presence of zero-valued dependent variables can seriously bias econometric estimates whether the zeros are included or excluded. Yet the widely-used gravity model is frequently estimated on samples that include large fractions of zeros. An influential paper by Santos Silva and Tenreyro – based on simulations that include no economically-determined zeros – concludes that the bias problems resulting from zeros and those resulting from heteroscedasticity and nonlinearity can be solved using the Poisson Pseudo-Maximum-Likelihood (PPML) model including the zero values. This paper begins by adapting the Santos Silva and Tenreyro experimental design to include economically-determined zeros to see whether this conclusion continues to hold. With this design, it finds that alternative estimators have lower bias than PPML. Changing to a Monte Carlo design that replicates the much-higher real-world frequency of predicted values near zero restores the finding of lower bias with the PPML estimator. The results highlight the need for very careful design of Monte Carlo experiments when evaluating alternative estimators of the gravity model.     

Hubristic Start-up Founders – The Neglected Bright and Inevitable Dark Manifestations of Hubristic Leadership in New Venture Creation Processes

The hubris tradition of research has been criticized for limiting its scope by associating hubris predominantly with detrimental leadership behaviours. To counteract this bias, we provide a more nuanced exploration of hubris and consider both beneficial and detrimental manifestations of hubris in start-up founders’ leadership behaviours. Our analysis, based on qualitative data from expert interviews and two case studies, indicates that, whilst hubristic start-up founders are likely to fail overall, they also excel in creating and communicating visionary scenarios, steering employees through critical situations, and extracting commitment from third parties. These under-researched ‘bright’ manifestations of hubris allow start-up founders to lead their venture towards a stage, in which their visionary power and resilience become crucial prerequisites for economic progress. Our findings extend knowledge on hubristic leadership, offer new directions for the hubris tradition of research, and open up avenues for future research with a more balanced view of hubris.     

What's on the Menu? Policies to Reduce Young People's Sugar Consumption

Young people in the UK consume far above the maximum recommended levels of added sugar. It is likely that neither they nor their parents fully take account of the future health, social and economic costs of this high sugar consumption. This provides a rationale for policy intervention. The majority of young people's added sugar consumption occurs in the home, where purchases are typically made by parents. This means that understanding the purchase decisions of adults is important for policy design, even if the policies aim to reduce the consumption of young people. We discuss the merits of popular policies, including taxes, advertising restrictions and restrictions on the availability of specific foods, and we identify promising avenues for future research.     

DOES SPEED MATTER? THE ROLE OF HIGH-FREQUENCY TRADING FOR ORDER BOOK RESILIENCY

We analyze limit order book resiliency following liquidity shocks initiated by large market orders. Based on a unique data set, we investigate whether high-frequency traders are involved in replenishing the order book. Therefore, we relate the net liquidity provision of high-frequency traders, algorithmic traders, and human traders around these market impact events to order book resiliency. Although all groups of traders react, our results show that only high-frequency traders reduce the spread within the first seconds after the market impact event. Order book depth replenishment, however, takes significantly longer and is mainly accomplished by human traders’ liquidity provision.     

The So-Called 2015 Migration Crisis and Euroscepticism in Border Regions: Facing Re-Bordering Trends in the Danish–German Borderlands

ABSTRACT

This paper examines the role of Euroscepticism on regional cross-border cooperation between Germany and Denmark. It demonstrates that Euroscepticism, while absent from local mainstream politicians, had already caused civic unrest in the 1997 attempts to construct a return to history Euro-region Schleswig. It resulted in a re-scaling of the Euro-Region to Region and Schleswig to “Sønderjylland/Schleswig”, omitting any reference to Europe, European identity or a commitment to a closer European union in the relevant agreements. Border controls, on the agenda in 2011 and again since 2015, have demonstrated the institutional weakness of cross-border politics when faced with determined initiatives from the national center. Furthermore, the Eurosceptic Danish People’s Party had its best results in the border precincts both at the latest European and Danish national elections. Euroscepticism, even though difficult to measure on a regional level, seems to have been an ever present underneath current despite a political rhetoric of successful cooperation and cross-border reconciliation. The Danish-German case’s development might be more distinct, but nonetheless representative for European border (and cross-border) regions. While European metropolises develop into thriving cosmopolitan post-nation state societies, this is not necessary the case at Europe’s borders, where categorization and bordering remain common social practices by the large majority of national borderlanders with only a small portion of transnational borderlanders or ‘regionauts’ getting involved in border crossing social practices on a larger scale.     

Knowledge Spillovers,Competition and Innovation Success

We study the relationship between a patent-based measure of knowledge spillovers that calculates technological proximity based on technologically relevant firms and innovation success. We find – for a representative sample of Swiss firms – that knowledge spillovers have a positive and significant association with the commercial success of innovative products. The paper shows the importance of market conditions for the relationship of spillovers with innovation performance: It is only positive and significant in markets with a medium number of competitors in the main product market, but not in monopolistic or polypolistic market structures.