CHOOSING AMONG ALTERNATIVE LONG‐RUN EVENT‐STUDY TECHNIQUES

This paper reviews the long‐run event‐study debate by outlining the strengths and weakness of the most commonly used alternative techniques. The fist part of the discussion highlights that prior literature has failed to provide a single risk‐adjusted model of long‐run abnormal returns with no biases. Subsequently, the paper provides guidance on how one can choose among pertinent alternative techniques. As a conclusion, researchers ought to choose among alternative techniques after considering issues such as (i) the nature of dataset and market of interest, (ii) the event type (regulatory or corporate), (iii) returns’ time‐interval, (iv) association of the event with accounting data, (v) sample characteristics and prior evidence regarding similar events, as well as (vi) risk changes following the event. Robustness tests are essential, while the road for further research regarding the appropriate technique(s) is open.     

SUCCESSFUL IN THE LONG RUN: A META‐REGRESSION ANALYSIS OF PERSISTENT FIRM PROFITS

We study the profit persistence literature by applying meta‐regression analysis (MRA) to a set of 36 empirical papers, which analyze the persistence of abnormal firm profits over time. The analyzed literature provides evidence for a mediocre degree of persistence in abnormal profits. An initial analysis of the distribution of reported profit persistence estimates reveals some degree of excess variation. This points toward publication bias that favors significant results independent of their algebraic sign. The MRA, however, reveals that publication bias is particularly favoring results that indicate profit persistence and thus contradict the neoclassical model of perfect competition. Moreover, the MRA enables to control for heterogeneity driven by the study design. We find that the analyzed country (developing vs. developed), the applied econometric approach, as well as the analyzed period of time are significant drivers of heterogeneity in reported persistence estimates.     

A SURVEY OF THE HOLD‐UP PROBLEM IN THE EXPERIMENTAL ECONOMICS LITERATURE

This paper reviews experimental studies on the so‐called “hold‐up problem.” Common features in the experimental design and results are summarized. Most experimental studies show evidence of the hold‐up problem, but to an extent less severe than what standard self‐interest model predicts. Hold‐up occurs at the individual level, but exhibits a less severe pattern than theoretically predicted at the aggregate level. A positive correlation is found between the investment stage decisions and subsequent bargaining behavior. Social preferences largely influence the results in hold‐up games. Remedies that enhance the effect of social preferences can effectively alleviate the hold‐up problem. These laboratory findings are also relevant to real‐life hold‐up situations, but differences in the specific institution and environment may require more variations in the experimental design.     

INSTITUTIONAL DETERMINANTS OF VENTURE CAPITAL ACTIVITY: AN EMPIRICALLY DRIVEN LITERATURE REVIEW AND A RESEARCH AGENDA

Venture Capital (VC) was born and has flourished in the United States, yet it has only modestly developed in other geographical areas. A vast body of research has been carried out to investigate the factors which are conducive to VC activity, and that may better explain the differences in the degree of development and performance of VC industry across different geographical contexts. However, there has only been a limited effort in the literature to systematize what we know (and what we do not know) about the institutional factors that spur VC activity. This paper tries to close that gap, through a systematic survey of the existing literature on the institutional and related determinants of VC activity. Grounding on the seminal work of North (1990), we consider formal (e.g. laws and formal rules) and informal (e.g. cultural norms and tacit codes of behaviour) institutions which are found in the extant empirical economics and management literature to affect the development of the VC industry. Building on this careful review, our paper aims to propose interesting avenues for future research in this domain.     

THE ROLE OF LAW IN ECONOMIC GROWTH: A LITERATURE REVIEW

Abstract Compared with other explanatory variables, such as capital accumulation, technological innovations, geographical endowments, economic openness, and cultural factors, institutions, especially legal institutions have been regarded as a crucial condition for economic growth in recent years. The importance of legal rules is systematically revealed by a series of cross‐country econometric studies conducted by La Porta et al., who claim that legal origins are central to understanding the divergence in living standards across the regions and countries of the world and, compared with civil law countries, especially those countries with French civil law tradition, common law countries have enjoyed superior economic outcomes. The controversies set off by La Porta et al.'s proposition indicate that there are a number of questions that are difficult to explain by La Porta et al.'s theory, and hence call for more work on comparative analysis of different legal families before a consensus can be reached.     

EDUCATION AND ENTREPRENEURSHIP SELECTION AND PERFORMANCE: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract This paper provides a review of empirical studies into the impact of formal schooling on entrepreneurship selection and performance in industrial countries. We describe the main effects found in the literature, we explain the variance in results across almost a hundred studies, and we put the empirical results in the context of related economic theory and the much further developed literature in labor economics (studying the rate of return to education among wage employees). Five main conclusions result from this meta‐analysis. First, the impact of education on selection into entrepreneurship is insignificant. Second, the effect of education on performance is positive and significant. Third, the return to a marginal year of schooling is 6.1% for an entrepreneur. Fourth, the effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA. Fifth, the returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non‐whites or immigrants. In conclusion, we offer a number of suggestions to move the research frontier in this area of inquiry. The entrepreneurship literature on education can benefit from the technical sophistication used to estimate the returns to schooling for employees.     

INTEREST RATE PASS‐THROUGH: A META‐ANALYSIS OF THE LITERATURE

The interest rate pass‐through describes how changes in a reference rate (the monetary policy, money market or T‐bill rate) transmit to bank lending rates. We review the empirical literature on the interest rate pass‐through and systematize it by means of meta‐analysis and meta‐regressions. Using the pass‐through to corporate lending rates as the baseline, we find systematically lower estimated pass‐through coefficients in studies that focus on the pass‐through to consumer lending rates and rates on long‐term loans. Also studies estimating the pass‐through by averaging all lending rates into one category report a lower pass‐through. Importantly, the interest rate pass‐through is significantly influenced by the country's macro‐financial environment. In economies with deepening stock markets, the estimated pass‐through strengthens significantly. Interestingly, after the global financial crisis, the pass‐through weakened across the board, including because of growing trade openness and supply chain financing, rising volatility and stock market turnovers, as well as declining central bank independence. Inflation targeting frameworks, if in place, helped diminish this pass‐through weakening.     

META‐ANALYSIS OF ECONOMICS RESEARCH REPORTING GUIDELINES

Meta‐regression analysis (MRA) can provide objective and comprehensive summaries of economics research. Their use has grown rapidly over the last few decades. To improve transparency and to raise the quality of MRA, the meta‐analysis of economics research‐network (MAER‐Net) has created the below reporting guidelines. Future meta‐analyses in economics will be expected to follow these guidelines or give valid reasons why a meta‐analysis must deviate from them.     

A SURVEY OF THE LITERATURE ON HUMAN CAPITAL‐INTENSIVE FIRMS

The aim of this paper is to provide an exhaustive survey of the academic research dedicated to the study of human capital‐intensive firms (HCIFs). We use a bibliometric analysis based on the three widely used databases (Econlit, Science Direct and Wiley) over the period 1992–2015. We are adapting a methodology developed in previous works to our specific object of study, and we generate a bottom‐up clustering on keywords, titles and abstracts. Our examination of the data sheds a light on five main clusters of works that respectively focus on (1) critical human resource management, (2) intellectual capital assessment, (3) funding risk and innovation (4) high‐skilled employees supporting economic development and (5) internal and external valuable social networks. In a critical appraisal of our results, we stress that the bibliometric analysis remains silent on how the different clusters are linked with each other. Based on our own appreciation of the HCIFs literature, we propose a further step in the identification of a central question linking up these clusters: a transversal review of the five clusters reveals that HCIFs appear as a network of specialized agents whose complementary human resources are decisive for the value‐creation process.     

REAL‐TIME DATA AND FISCAL POLICY ANALYSIS: A SURVEY OF THE LITERATURE

This paper surveys the empirical research on fiscal policy analysis based on real‐time data. This literature can be broadly divided into four groups that focus on: (1) the statistical properties of revisions in fiscal data; (2) the political and institutional determinants of projection errors by governments; (3) the reaction of fiscal policies to the business cycle and (4) the use of real‐time fiscal data in structural vector autoregression (VAR) models. It emerges that, first, fiscal revisions are large and initial releases are biased estimates of final values. Secondly, strong fiscal rules and institutions lead to more accurate releases of fiscal data and smaller deviations of fiscal outcomes from government plans. Thirdly, the cyclical stance of fiscal policies is estimated to be more ‘counter‐cyclical’ when real‐time data are used instead of ex post data. Fourthly, real‐time data can be useful for the identification of fiscal shocks. Finally, it is shown that existing real‐time fiscal data sets cover only a limited number of countries and variables. For example, real‐time data for developing countries are generally unavailable. In addition, real‐time data on European countries are often missing, especially with respect to government revenues and expenditures. Therefore, more work is needed in this field.     

THE EFFECTS OF PENSION FUNDS ON MARKETS PERFORMANCE: A REVIEW

The worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi‐pillar pension systems and enhance pension funds. For this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades. In this paper, we provide an updated review of the empirical advances in this field of study, with particular focus on the effects that pension funds produce on labour markets, financial markets and economic growth.     

THE MULTIDIMENSIONAL EFFECTS OF RELIGION ON SOCIOECONOMIC DEVELOPMENT: A REVIEW OF THE EMPIRICAL LITERATURE

Religion plays a fundamental role in most people's lives with profound implications for socioeconomic development. This survey provides a comprehensive and systematic overview of the causal mechanisms between religion and development discussed and tested in the economics literature, and reviews quantitative empirical evidence on the actual effects of religion on economic and social dimensions of development. We start by disaggregating the concept of religion into four religious dimensions and propose a framework to conceptualize causal mechanisms. Numerous mechanisms are possible but only a few uncontested findings exist. Religion is ambivalent vis‐à‐vis development: although religious ideas can foster certain forms of human capital acquisition and labor market participation, scholars have found a negative relationship between religious dimensions and both income and gender equality as well as innovation activities. Religious identity is also a source of labor market discrimination and has ambivalent effects on economic growth and social cohesion. Methodological challenges refer to the availability of fine‐grained data, especially for developing countries, the use of concepts and definitions, and the lack of causal inference.     

CONDITIONAL DURATION MODELS FOR HIGH‐FREQUENCY DATA: A REVIEW ON RECENT DEVELOPMENTS

This paper reviews the recent literature on conditional duration modeling in high‐frequency finance. These conditional duration models are associated with the time interval between trades, price, and volume changes of stocks, traded in a financial market. An earlier review by Pacurar provides an exhaustive survey of the first and some of the second generation conditional duration models. We consider almost all of the third‐generation and some of the second‐generation conditional duration models. Notable applications of these models and related empirical studies are discussed. The paper may be seen as an extension to Pacurar.     

IMPACT ON FIRMS OF THE USE OF KNOWLEDGE EXTERNAL SOURCES: A SYSTEMATIC REVIEW OF THE LITERATURE

This study summarizes the main conclusions from a systematic review of the empirical literature regarding the impact on firms of the use of knowledge external sources (universities, research institutes and knowledge intensive business services). With the aim to organize the literature, we classify the different works according to the research question addressed: (i) which firms use knowledge external sources?; (ii) Do firms using knowledge external sources achieve better results?; And (iii) which firms benefit the most from using knowledge external sources? Stylized facts are that larger, more R&D intensive and high tech firms are more likely to use knowledge external sources and that use of knowledge external sources is associated to firms higher technical results. Less attention has been paid to the third question and evidence is not conclusive. Several recommendations for future research emerge. First, to take in greater consideration methodological issues so that potential biases in the results caused by sample selection and endogeneity are handled properly. Second, to pay more attention to heterogeneous outcomes. Third, to use continuous indicators of depth and breadth of links allowing for non‐linear relationships and fourth, to extend evidence for developing countries and service industries.     

SYSTEMATIC LITERATURE REVIEW OF TOURISM GROWTH NEXUS: AN OVERVIEW OF THE LITERATURE AND A CONTENT ANALYSIS OF 100 MOST INFLUENTIAL PAPERS

This study performs the first citation-based systematic literature review of the tourism-growth nexus. The citation analysis provides a bird's eye view of this literature, which, in turn, identifies the sources of knowledge in terms of most influential journals, authors, and articles. A detailed content analysis of 100 most influential papers has been generated on the nature of the study, variables used, country of analysis, type of analysis, the methodology, and the direction of causality. In total, 284 papers were found relevant in the Scopus database using a comprehensive list of keywords. The citation analysis reveals that Tourism Management is the leading journal with a total of 2527 citation counts, whereas Tourism Economics is the leading journal with a total of 41 publications on this topic. Juan Gabriel Brida is the most prolific author, whereas Lee and Chang (2008) is recognized as the most influential paper. The content analysis reveals that 58% have applied time series, and 38% have used panel data analysis. Tourism causing growth is the leading result of both time-series and panel studies. International tourism receipts/earnings/expenditure and the number of international tourist arrivals are the most widely used variables to measure tourism.     

THE CREATION AND DIFFUSION OF INNOVATION IN DEVELOPING COUNTRIES: A SYSTEMATIC LITERATURE REVIEW

In this study, we review the literature on the creation and diffusion of innovation in the private sectors (industry and services) in developing countries. In particular, we collect evidence on what are the barriers to innovation creation and diffusion and the channels of innovation diffusion to and within developing countries. We find that innovation in developing countries is about creation or adoption of new ideas and technologies; but the capacity for innovation is embedded in and constituted by dynamics between geographical, socio‐economic, political and legal subsystems. We contextualize the findings from the review in the current theoretical framework of diffusion of innovations, and we emphasize how the institutional context typical of developing countries impacts the diffusion itself.     

ECONOMETRICS FOR GRUMBLERS: A NEW LOOK AT THE LITERATURE ON CROSS‐COUNTRY GROWTH EMPIRICS

Abstract Since the seminal contribution of N. Gregory Mankiw, David Romer and David N. Weil in 1992 the growth empirics literature has used increasingly sophisticated methods to select relevant growth determinants in estimating cross‐section growth regressions. The vast majority of empirical approaches, however, limit cross‐country heterogeneity in production technology to the specification of total factor productivity, the ‘measure of our ignorance’. In this survey, we present two general empirical frameworks for cross‐country growth and productivity analysis and demonstrate that they encompass the various approaches in the growth empirics literature of the past two decades. We then develop our central argument, that cross‐country heterogeneity in the impact of observables and unobservables on output as well as the time‐series properties of the data are important for reliable empirical analysis.     

AN ANALYSIS OF THE WELFARE CUTS IN THE COMPREHENSIVE SPENDING REVIEW AND THE BUDGET 2010

In the Comprehensive Spending Review and in the Budget 2010, the Liberal–Conservative coalition has announced cost‐cutting measures in the benefit system. Some of these measures can be interpreted as ‘random cuts’, where the given scope and structure of a spending programme is retained, while bits and pieces are chopped off here and there. Others can be interpreted as more strategic measures, or reconsiderations of the proper role of government in the respective area. However, where the coalition has pursued a more strategic approach, it has not followed it through consistently. The coalition's consolidation strategy relies too much on temporary caps and freezes, which will eventually expire and give way to renewed spending pressures.     

THE IMPACT OF LABOR MARKET REGULATION ON EMPLOYMENT IN LOW‐INCOME COUNTRIES: A META‐ANALYSIS

Controversy over labor market policy often centers on achieving a balance between preventing worker exploitation, and avoiding loss of productivity or employment through excessive regulation. Although the literature documenting the impact of labor market regulation on employment is extensive, there is a dearth of evidence on the impact of such policies in low‐income countries (LICs). Since it is easier for workers, especially women, to slip into the informal sector in LICs, regulations are likely to have stronger impacts on formal employment in these countries (but lower impacts on unemployment). We systematically reviewed available research from countries that are, or were until recently, LICs. Most studies document that more stringent labor regulations are associated with lower formal sector employment and higher informal sector employment. We also conducted a metaregression analysis of the impact of minimum wages on formal and informal employment. After controlling for publication bias, higher minimum wages are associated with lower formal employment and a higher share of informal workers.     

THE DEBATE ABOUT THE REVIVED BRETTON‐WOODS REGIME: A SURVEY AND EXTENSION OF THE LITERATURE

This paper surveys the literature dealing with the thesis put forward by Dooley, Folkerts‐Landau and Garber (DFG) that the present constellation of global exchange‐rate arrangements constitutes a revived Bretton‐Woods regime. DFG also argue that the revived regime will be sustainable, despite its large global imbalances. While much of the literature generated by DFG's thesis points to specific differences between the earlier regime and revived regime that render the latter unstable, we argue that an underlying similarity between the two regimes renders the revived regime unstable. Specifically, to the extent that the present system constitutes a revived Bretton‐Woods system, it is vulnerable to the same set of destabilizing forces – including asset‐price bubbles and global financial crises – that marked the latter years of the earlier regime, leading to its breakdown. We extend the Markov switching model to examine the relation between global liquidity and commodity prices. We find an evidence of commodity‐price bubbles in both the latter stages of the earlier Bretton‐Woods regime and the revived regime.