The Effect of Endogenous Regulation on Telecommunications Expansion and Efficiency in Latin America

I examine the effect of reform on telecom performance using a second-generation regulatory framework index and panel data techniques to test how regulatory governance affected sector performance in 22 Latin American countries during the period 1980–1997. Sound regulatory governance in telecommunications has a positive impact on network expansion and efficiency, in both the static and dynamic specifications. Openness of markets to competition and divestment of former state-owned telco operators also contributed positively to better sector performance. The dynamic specification shows that past performance has its own strong effect on present (and perhaps future) performance.     

Shareholder Value Creation in European M&As

This paper looks at the value generated to shareholders by the announcement of mergers and acquisitions involving firms in the European Union over the period 1998–2000. Cumulative abnormal shareholder returns due to the announcement of a merger reflect a revision of the expected value resulting from future synergies or wealth redistribution among stakeholders. Target firm shareholders receive on average a statistically significant cumulative abnormal return of 9% in a one‐month window centred on the announcement date. Acquirers’ cumulative abnormal returns are null on average. When distinguishing in terms of the geographical and sectoral dimensions of the merger deals, our main finding is that mergers in industries that had previously been under government control or that are still heavily regulated generate lower value than M&A announcements in unregulated industries. This low value creation in regulated industries becomes significantly negative when the merger involves two firms from different countries and is primarily due to the lower positive return that shareholders of the target firm enjoy upon the announcement of the merger. This evidence is consistent with the existence of obstacles (such as cultural, legal, or transaction barriers) to the successful conclusion of this type of transaction, which lessen the probability of the merger actually being completed as announced and, therefore, reduce its expected value.     

A tale of two civilizations in the era of Facebook and blockchain

Five billion people in the world do not have the kind of ledgers that provide the documented information that allows them to transfer, partition, and aggregate assets and talents in such a way that they can be scaled up, secure investment, guarantee credit, certify reputation, and capture abstract surplus value. The difficulty that most people have in making combinations is a major cause of global inequality and unnecessary poverty.     

The Reaction by Industry Insiders to M&;As in the European Financial Industry

This paper looks at the reaction by industry insiders, industry analysts and competing firms, to the announcement of M&As that took place in the European Union financial industry in the period 1998–2006. Analysts covering firms involved in an M&A transaction do not significantly alter their recommendation. This is consistent with the hypothesis that the transaction on average is “fairly priced” and that stock market prices reflect all relevant information on the assets. We also find that the correlation between excess returns for merging and competing firms is positive and, in some cases, significantly higher for domestic mergers than for international deals. This is consistent with the idea that domestic deals are more likely to have a negative impact on industry competition.

Determinants of domestic and cross-border bank acquisitions in the European Union

This paper analyzes the determinants of bank acquisitions both within and across countries in the EU-25 over the period 1997–2004. Our results suggest poorly managed banks (high cost to income) and larger banks are more likely to be acquired by other banks in the same country. The probability of being a target in a cross-border deal is larger for banks that are quoted in the stock market. Finally, banks operating in more concentrated markets are less likely to be acquired by other banks in the same country but are more likely to be acquired by banks in other EU-25 countries.     

Labour Demand,Flexible Contracts and Financial Factors: Firm‐Level Evidence from Spain*

We estimate models of labour demand for a panel of 3,400 Spanish manufacturing firms over the period 1985–2001. We examine the roles of fixed‐term contracts, financial factors and a policy reform in 1997 affecting permanent contracts by lowering payroll taxes and dismissal costs. Compared with permanent employment, the demand for flexible labour displays: (i) greater sensitivity to financial factors; (ii) greater cyclical sensitivity; (iii) a larger average wage elasticity; and (iv) less inertia. Our analysis of the 1997 policy reform suggests that a 5 percentage point reduction in the payroll tax is associated with an 8% increase in permanent labour demand.     

Factor shares,inequality, and capital flows

I present an endogenous growth model where innovations are factor saving and model the choice of technologies in an Overlapping Generations framework. Markets are competitive and factor prices are determined by marginal productivity of factors; therefore, the income share of reproducible factors increases with the stage of development. Beyond the standard results of this type of model I find that (i) without bequests long‐run growth is not possible, (ii) if the economy presents long‐run growth then intrageneration inequality may last forever but if the economy does not present long‐run growth then in steady state, there is no intrageneration inequality, (iii) when the economy is open, the pattern of capital flows depends not only on the relative abundance of factors but also on the technologies and, for this reason, capital may not flow from rich to poor economies, and (iv) consistently, capital flows may not help to break poverty traps.     

Golden Rules of Wages

We consider a neoclassical growth model where labor collectively chooses labor share to maximize its steady‐state wage rate. In the basic two‐factor model, labor maximizes the steady‐state wage rate by setting labor share equal to the elasticity of output with respect to labor. This is precisely the competitive outcome. Only when we consider the model with organized and unorganized labor types can organized labor raise its steady‐state wage by choosing a higher than competitive labor share. Organized labor can benefit by choosing a higher labor share only at the expense of unorganized workers; not capital. We also analyze a version of the model that incorporates a tradeoff between collective bargaining opportunities and skill acquisition. All else equal, a higher skill premium leads organized labor to choose a higher labor share. Organized labor benefits again at the expense of skilled workers; not capital.     

Legal dispossession and civil war in Colombia

How are institutions that regulate property rights related to the massive coercive dispossession of land that took place during the Colombian conflict? How did the workings of these institutions change during the conflict? We answer these questions through an analysis of a unique data set of rulings on land restitution issued between 2012 and 2015. The paper argues that the exclusionary nature of the institutions that regulate the access and assignment of property rights preceded the onset and escalation of the Colombian conflict, but shows how and why once the conflict began, the set of techniques used to promote coercive dispossession through those institutions could be significantly broadened and escalated. By doing so, it intends to advance the knowledge of how institutions are transformed, in this case in a deeply anti‐egalitarian and violent sense, during war.     

Why labor income shares seem to be constant?

Abstract

The common assumptions that labor income share does not change over time or across countries and that factor income shares are equal to the elasticity of output with respect to factors have had important implications for economic theory. However, there are several theoretical reasons for why the elasticity of output with respect to reproducible factors should be correlated with the stage of development. In particular, the behavior of international trade and capital flows and the existence of factor saving innovations imply such a correlation. If this correlation exists and if factor income shares are equal to the elasticity of output with respect to factors then the labor income share must be negatively correlated with the stage of development. The existence of a labor intensive sector that produces non-tradable goods would explain why labor income share has no correlation with income per capita.