Are voters rational?

We test whether a voter's decision to cast a vote depends on its probability of affecting the election outcome. Using exogenous variation arising at population cutoffs determining council sizes in Finnish municipal elections, we show that larger council size increases both pivotal probabilities and turnout. These effects are statistically significant, fairly large and robust. Finally, we use a novel instrumental variables design to show that the jumps in the pivotal probabilities are the likely candidate for explaining the increase in turnout, rather than the other observed simultaneous jumps at the council size cutoffs. Moreover, our results indicate that turnout responds only to within-party pivotal probabilities, perhaps because they are more salient to the voters than the between-party ones.     

Financial development,portfolio investments and the real economy in Africa

According to the conservative view, capital flows enhance economic growth. Focussing on Africa’s real economy, this study investigates the linkage between portfolio investments and real sector growth, and whether financial sector development strengthens this association. The study covers 30 countries over the period 1990–2017. We adopt the Lewbel instrumental variable general method of moments (IV-GMM) two-step robust estimator, which relies on heteroscedasticity for identification, while dealing with instrument insufficiency, unavailability, endogeneity and omitted variable bias. We found that portfolio equity has no growth impact on Africa’s real sector. Debt flows deter the growth of the overall real sector as well as the manufacturing and industrial sectors, but have no impact on agriculture and service growth. We found that financial development does strengthen the positive association between capital flows and economic growth, but this is dependent on the type of sector and portfolio investment, as well as on the degree of financial development. We control for known determinants of economic growth.     

Economic impacts of smallholder farmers’ adoption of drought-tolerant maize varieties

Drought and high temperatures are major threats to sustainable food production and consequently the livelihoods of the majority of Africans who depend on fragile agricultural systems. As a response to these threats, climate-smart agricultural technologies, such as drought-tolerant maize (DTM) varieties, have been developed and promoted on the continent. It is well-known that the adoption of improved technologies generally impacts positively on the wellbeing of adopters. Nevertheless, the magnitude of the impact of any technology or intervention is always an empirical question. Therefore, this study sought to determine the factors that influence the adoption of DTM and subsequently estimate how yield, commercialization intensity, and farm income are affected by adoption. To establish causation, we relied on observations from 200 farm households in the Northern Region of Ghana and estimated an instrumental variable regression. Consistent with findings reported in the literature, we found that DTM adoption is primarily driven by access to seed, extension service, labor availability, and location of farm households. In addition, we found that DTM adoption positively impacts on yield and commercialization intensity. The magnitude of impact is not trivial. For example, the yield of farm households increased by more than 150% (936 kg/ha) following DTM adoption. These results imply that policy-makers and development practitioners must support research and promotion of climate-smart agriculture to improve adoption and welfare indicators, such as yield and commercialization.     

The construction of a composite index for general satisfaction in Turkey and the investigation of its determinants

The goal of public enterprises is to increase the wealth and happiness of individuals. This target lets them make the investment to fulfill these expectations. However, not all citizens in a country might have the same opportunities. This case requires comparing citizens who live in cities with regard to satisfaction levels. This study consists of two stages. In the first stage, a composite index called the General Satisfaction Index (GSI), which aims to explain the satisfaction levels of citizens living in cities, is obtained by using the Benefit of the Doubt method. Contrary to the previous studies, the satisfaction indicators based on the emotions and senses of citizens are used to construct a composite index. Satisfaction indicators’ contribution to GSI is ensured using the minimum weights. In the second stage of this study, socioeconomic determinants of GSI are investigated in both countrywide and regions by using regularized regression methods. In the result of the regression analyze, it is confirmed that there are different socioeconomic determinants of satisfaction levels for countrywide and each region. For this reason, it is proposed that policymakers should follow different politicizes in each region to increase the satisfaction levels of citizens in the country.     

Bancarization and violent attacks from guerrilla and other illegal groups in Colombia

Income shocks affect violence through the opportunity cost and rapacity effects. Existing studies focus on the impact of transitory shocks, especially commodity price innovations. This paper builds on this literature and studies the causal effect of permanent income shocks on armed conflict in Colombia. Using a rich dataset reporting all guerrilla and other armed groups' attacks by municipality between 2009 and 2014 and information on the provision of banking services, it shows that increasing bancarization leads to reductions in violence. These results have important implications for public policy in countries with a long history of violence. They suggest that promoting financial inclusion is useful for reducing conflict.     

高速铁路可变编组列车开行计划优化

目前,我国高速铁路列车一般采用固定编组形式,动车组运用效率较低,而未来可变编组列车投入使用后,运营组织方式将发生很大变化,需要优化列车开行计划以充分发挥可变编组列车的优势。研究可变编组列车在各技术区段的编组内容和组合拆解计划,以动车组开行成本最小和组合拆解作业时间最短为优化目标,构建可变编组列车开行计划优化模型,设计分支定界算法求解。以京沪高速铁路进行案例分析,结果表明:相比同等条件下固定编组模式,优化的可变编组列车开行计划可以提高列车客座利用率。     

Returns to women’s education using optimal IV selection

This paper investigates returns to women’s education by applying an optimal IV selection approach, post-Lasso IV estimation, which improves the first-stage predictive relationship between an endogenous regressor and instruments. Using the 2010 American Community Survey, we find that an extra year of education increases married women’s own income by $4,480 and spouse income by $8,822. Our findings indicate that 53% of the increase in women’s consumption by education is attributed to the marriage market, and thus, we conclude that the marriage market is the primary channel through which education improves women’s well-being. The results demonstrate the advantages of the post-Lasso approach: The resulting two-stage least squares estimator maintains efficiency without increasing finite sample bias and is less subject to the inconsistency problem when some instruments are invalid; This differs from the results using the instrument of birth quarters only, which is mostly applied in studies on returns to education.     

Customer concentration and loan contract terms

We study pricing and non-pricing features of loan contracts to gauge how the credit market evaluates a firm’s customer-base profile and supply-chain relations. Higher customer concentration increases interest rate spreads and the number of restrictive covenants featured in newly initiated as well as renegotiated bank loans. Customer concentration also abbreviates the maturity of those loans as well as the relationship between firms and their banks. These effects are intensified by customers’ financial distress, the level of relationship-specific investments, and the use of trade credit in customer–supplier relations. Our evidence shows that a deeper exposure to a small set of large customers bears negative consequences for a firm’s relations with its creditors, revealing limits to integration along the supply chain.     

Public sector enterprise disinvestment in India: Efficiency gains in a political context

India instituted a program of state enterprise disinvestment in 1991 as part of a sweeping reform initiative. This study analyses the effect of disinvestment on enterprise performance, conditioned on political context as characterized by the ideological leanings of the parties in power at state and central levels. Using stochastic frontier analysis, measures of firm efficiency are generated for 238 central public sector enterprises for the period 1991–1992 to 2010–2011. The relationship between efficiency so measured and disinvestment is then estimated using a two-stage instrumental variables approach to control for endogeneity between firm efficiency and selection for disinvestment. Initial disinvestment is associated with substantial efficiency gains, but subsequent disinvestment much less so and the proportion of shares disinvested only loosely so. This may be explained by the transformative effect of initial stock market listing on accountability and profit orientation that is not repeated with further rounds of disinvestment. The effect of disinvestment on performance is stronger if the enterprise is located in a state governed by a right leaning party or one that is ideologically aligned with the party in power at the centre.     

Risk measures for variable annuities: A hermite series expansion approach

In this study, we propose an efficient approach to the calculation of risk measures for an insurer's liability from writing a variable annuity with guaranteed benefits. Our approach is based on a novel application of the Hermite series expansions on the transition density of a diffusion process to the insurance setting. We compare our method with existing methods in the literature, including the analytical method, spectral method and Green's function method, and illustrate its substantial advantages in calculating risk measures for variable annuities with different guarantee structures. The improved efficiency makes our method flexible to practical implementation in reporting risk measures on a daily basis. We also conduct a sensitivity analysis of the risk measures with respect to key parameters.