Delegation and the regulation of U.S. financial markets

We analyze the institutional determinants of U.S. financial market regulation with a general model of the policy-making process in which legislators delegate authority to regulate financial risk at both the firm and systemic levels. The model explains changes in U.S. financial regulation leading up to the financial crisis. We test the predictions of the general model with a novel, comprehensive data set of financial regulatory laws enacted specifically between 1950 and 2009. The theoretical and empirical analysis finds that economic and political factors impact Congress’ decision to delegate regulatory authority to executive agencies, which in turn impacts the stringency of financial market regulation, and our estimation results indicate that political factors may have been stronger and resulted in inefficiencies.     

Political booms and currency crises

This paper shows evidence that political booms, defined as the rise in governments’ popularity, are associated with a higher likelihood of currency crises. The reasoning behind this finding is that prudent economic policies to address underlying weaknesses in the economy may be political costly for incumbent governments in the short-term. Hence, popularity-concerned governments may not have enough incentives to take such corrective actions in a timely manner. This approach, in turn, can deteriorate economic fundamentals and increase related risks in the economy which can eventually lead to crises. This paper sheds light on this phenomenon in the case of currency crises, suggesting that currency crises can be viewed as “political booms gone bust” events. Moreover, it finds that higher international reserves, higher exports, and a higher degree of financial openness alleviate the effect of political booms on currency crises.     

Time-varying pricing may increase total electricity consumption: Evidence from Costa Rica

We study the implementation of a time-varying pricing (TVP) program by a major electricity utility in Costa Rica. Because of particular features of the data, we use recently developed understanding of the two-way fixed effects differences-in-differences estimator along with event-study specifications to interpret our results. Similar to previous research, we find that the program reduces consumption during peak-hours. However, in contrast with previous research, we find that the program increases total consumption. With a stylized economic model, we show how these seemingly conflicted results may not be at odds. The key element of the model is that previous research used data from rich countries, in which the use of heating and cooling devices drives electricity consumption, but we use data from a tropical middle-income country, where very few households have heating or cooling devices. Since there is not much room for technological changes (which might reduce consumption at all times), behavioral changes to reduce consumption during peak hours are not enough to offset the increased consumption during off-peak hours (when electricity is cheaper). Our results serve as a cautionary piece of evidence for policy makers interested in reducing consumption during peak hours—the goal can potentially be achieved with TVP, but the cost is increased total consumption     

The market-based dissemination of energy-access technologies as a business model for rural entrepreneurs: Evidence from Kenya

Improving access to more modern forms of energy requires supply chains that reach further into rural areas. This paper studies a supply-side intervention intended to foster last-mile distribution of energy-access technologies through local small-scale entrepreneurship. We use a staggered-implementation evaluation design to assess the impact on employment and income outcomes of the intervention, which is a large-scale program in Kenya that supports the diffusion of improved cookstoves and small solar products. The results demonstrate how trained entrepreneurs intensify and diversify their income-generating activities, often by shifting away from subsistence farming as a main source of income. For cookstove entrepreneurs, this goes along with improvements in individual and household incomes as well as perceived economic well-being. Our estimates suggest that impacts do not only differ between the two technologies but also across subgroups including gender, age, and baseline occupation. Our findings substantiate that market-based interventions can foster energy access in rural areas by supporting the establishment of local businesses. We highlight several contextual factors that are of relevance when considering the adoption of this approach.     

双支柱调控的金融稳定效应研究*

本文基于全球42个主要经济体1991—2016年的面板数据，系统考察了双支柱政策框架的金融稳定效应。实证结果表明：（1）货币政策和宏观审慎政策在抑制家庭信贷增长上具有显著作用，双支柱政策在缓解金融风险顺周期性上具有显著的金融稳定效应；（2）盯住贷款的宏观审慎工具和针对借款人、贷款人的宏观审慎组合具有更为显著的金融稳定效应；（3）新兴经济体的货币政策在抑制家庭信贷扩张上的作用不显著，但其宏观审慎政策的金融稳定效应相较发达经济体更为显著，发达经济体双支柱政策的金融稳定效应总体显著，其中货币政策效应更为突出；（4）发达经济体的货币政策效应在下行周期优于上行周期，宏观审慎政策及其与货币政策的交互效应在上行周期优于下行周期；（5）只有个别宏观审慎工具会对失业率、消费和物价产生微弱的负效应。     

Political forecast cycles

A moral hazard model is used to show why overly optimistic revenue forecasts prior to elections can be optimal: Opportunistic governments can increase spending and appear more competent; ex post deficits emerge in election years, thereby producing political forecast cycles – as also found for US states in the empirical literature. Additionally, we obtain three theoretical results which are tested with panel data for Portuguese municipalities. The extent of manipulations is reduced when (i) the winning margin is expected to widen; (ii) the incumbent is not re-running; and/or (iii) the share of informed voters (proxied by education) goes up.     

Financing energy efficiency retrofits in Chilean households: The role of financial instruments,savings and uncertainty in energy transition

High firewood consumption for heating produces high levels of pollution in cities in central and southern Chile, with serious consequences for health and quality of life. Energy efficiency measures (EEMs) have been identified as the best strategy to reduce air pollution and maximize social benefits. However, their adoption has been slow. The objective of this article is to investigate household preferences for financial incentives needed to promote private investments in EEMs in Central-Southern Chilean households and study the role of energy savings and the uncertainty about potential savings in the investment decision, with the aim of finding solutions to increase the adoption of these technologies. We use a choice experiment to explore the trade-off between the investment costs, financial instruments, energy savings, and the uncertainty about achieving the theoretical savings provided by engineering and architectural models. The results show that financial instruments play the most important role in this decision, followed by the savings achieved by the retrofit. Householders prefer to finance their investments with a mix of their personal resources and medium-term credits, trying to avoid long-term commitments. Although uncertainty was found to be a significant variable, it seems to play a small role in the investment decision.     

Individualism and political instability

This paper examines the relationship between the individualism-collectivism dimension of culture and political instability using a dataset covering around 100 countries. To shed light on the causal effect of culture on political instability, the identification strategy exploits the variation in historical pathogen prevalence and the information provided by the genetic distance between countries. The results reveal that individualism has a negative and statistically significant impact on the degree of political instability, which means that this cultural trait contributes to making the political environment more stable. This finding is robust to the inclusion in the analysis of a substantial number of controls that may be correlated with both individualism and political instability, including other cultural dimensions. In fact, the relationship between individualism and political instability does not depend either on the specific measures used to quantify the level of individualism and political instability within the various countries or the estimation strategy adopted. The estimates also show that part of the observed effect of individualism is due to the impact of institutional quality, which acts as a transmission channel linking this cultural trait and political instability.     

Capital Flows to Latin America (2003–17): A Critical Survey from Prebisch’s Business Cycle Theory

ABSTRACT

The economic literature on capital flows to developing countries has shared two important commonalities since the 1990s. Published works (whether they focus on the external situation or stress the domestic determinants of capital flows) tend to assume a beneficial effect of capital inflows, which leads to an improvement of peripheral institutions, whose deficiencies are ostensibly the main cause of economic turmoil and/or failure in attracting capital flows, in continuity with New Institutional Economics. In doing so, mainstream economists deliberately overlook the asymmetric characteristics of the international monetary system and the persisting hegemony of dollar. Raul Prebisch’s pioneering work on business cycles in Latin America provide an alternative view, one capable of amending the existing mainstream literature. On the one hand, Prebisch stressed the destabilizing role of capital inflows on Latin American economies, particularly short-term speculative capital. On the other hand, Prebisch designed a set of counter cyclical monetary policies in order to contrast capital volatility, particularly during downturns. An analysis of stylized facts shows that, when correctly updated, Prebisch’s theory has remarkable explanatory potential when applied to Latin America’s current economic and financial situation.     

失败学习对企业绩效的影响机制研究

已有文献认为失败学习对企业绩效具有重要作用，但失败学习通过何种途径促进企业绩效提升的研究并不完善。基于失败学习理论，引入资源拼凑和机会识别作为中介变量，构建失败学习影响企业绩效的多路径模型，探索失败学习对企业绩效的驱动路径及内在机理。实证结果表明：失败学习对企业绩效具有显著积极作用，资源拼凑和机会识别分别在失败学习与企业绩效之间起中介作用，资源拼凑和机会识别在失败学习对企业绩效驱动过程中存在链式中介作用，战略柔性能够强化资源拼凑与企业绩效之间的关系，并正向调节资源拼凑的中介作用。研究结论拓展了失败学习对企业绩效的影响路径，对企业复苏和成长具有重要启示。