Sad or Happy? The Effects of Emotions on Stated Preferences for Environmental Goods

A substantial literature in behavioural science and psychology shows that emotions affect human choices and values. This paper investigates whether such emotional impacts are also present in stated choice experiments for environmental goods. If this were so, it would introduce an additional element of context dependence to the welfare measures derived from such methods, and would be at odds with the rational choice model underlying welfare economics. A laboratory experiment using three different emotion treatments was combined with a stated preference choice experiment concerned with changes in coastal water quality and fish populations in New Zealand. No statistically significant effects of changes in emotional state on estimated preference parameters, willingness to pay or the randomness of choices were found. The paper concludes by questioning, why such a contrast exists with empirical findings in behavioural science.     

The effectiveness of aid on savings and investment in Sub-Saharan Africa: do volatility and institutional quality matter?

The effectiveness of aid is somewhat subject to its volatility. This study investigates the impact of aid volatility, especially on savings and investment, with a particular focus on the role of institutional quality in 45 Sub-Saharan African (SSA) countries over the period from 1990 to 2013. We used the Generalized Method of Moments (GMM) technique combined with a measure of volatility, namely an averaged data method involving six 4-year sub-periods. Our results suggest that while aid is positively associated with savings and investment, its volatility is harmful to savings and investment. However, when higher quality institutions exist, the volatility of aid has a less negative impact on savings and investment.

The policy implications are diverse; first, donors and SSA aid-dependent countries need to take into account the diversity of shocks to which aid can respond in mitigating its unpredictability. Secondly, SSA countries should be encouraged to establish the conditions for better quality institutions to mitigate the negative effects of the volatility of aid on macroeconomic aggregates such as savings and investment.     

The effects of remittances on support for democracy in Africa: Are remittances a curse or a blessing?

We examine the effect of remittances on the legitimacy of democracy in Africa, testing whether remittance recipients are less likely to support democracy than non-recipients. We hypothesize that the effect of remittances on support for democracy varies across classes (i.e., groups or subtypes) of individuals sharing similar but unobserved background characteristics. Using the Afrobarometer surveys, we try to find out whether the respondents fall into different hidden classes in such a way that the effect of remittances on the degree of support for democracy depends on the class. Our results support that remittances may be a curse for the degree of endorsement and support for democracy, depending on the class of individuals that we consider. The analysis of the probability of being in the remittance curse class indicates that the perception of national priorities plays an important role. People who attest that freedom and rights are the main national priorities have a lower probability of belonging to the remittances curse class than individuals who choose national priorities that are oriented towards the economic conditions of their country.     

Globalisation and/or Europeanisation? The Case of Flexicurity

The relationship between globalisation and Europeanisation is conventionally studied by focusing on the domestic level. In this article we explore this relationship at the international level instead. We examine the way in which the two phenomena in the form of the ILO and the EU relate to one another. Adopting a discursive institutionalist approach and focusing on flexicurity, we investigate whether, how and under what conditions the discourse on flexicurity provides a point of convergence or divergence between globalisation and Europeanisation. Our empirical data reveals attempts by the European Commission to use globalisation as a legitimating device for a market-accommodating programme for labour market reform. The ILO remains more sceptical, both about the overall effects of globalisation and the more concrete uses of flexicurity. Meanwhile, the concept of flexicurity is subject to change and rearticulation in line with the evolving policy agenda endorsed by the Commission and/or the member states. The relationship between Europe and globalisation is thus far from neutral. ‘Europe’ is active in shaping globalisation; translated into the work undertaken here, Europeanisation could be conceived as a facet of globalisation rather than as a bulwark to it, or merely as a process running parallel to it.     

Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency

I use newly released data from the International Telecommunications Union to examine the effects of privatization and competition on network expansion and efficiency. Using a fixed-effects model, I find that during the 1986-1995 time period, those countries that have at least fifty percent of the assets of their main telecommunications provider in the private sector have significantly higher main lines per 100 inhabitants and, to a lesser degree, have higher growth in main lines per 100 inhabitants. There is no evidence, however, that privatization leads to higher growth in main lines per 100 inhabitants in those countries whose GDP per capita is less than $10,000. Privatization is positively associated with main lines per employee and growth in main lines per employee. While competition is not found to affect network expansion, it is found to positively affect efficiency as measured in main lines per employee. In order to account for the possible endogeneity of the privatization and competition dummy variables, all equations are estimated using an instrumental variable approach as well.     

Choosing Price or Quantity? The Role of Delegation and Network Externalities in a Mixed Duopoly

This paper considers a differentiated goods managerial mixed duopoly composed of one social welfare‐maximising public firm and one profit‐maximising private firm. We model the firm choice of the strategic contract. We find that when the strength of network effects is sufficiently strong, the price competition can become the unique equilibrium market structure. Furthermore, we show that there exists an area of the degree of product differentiation and the strength of network effects such that the situation wherein the public firm chooses its price contract whereas the private firm chooses its quantity contract can become the unique equilibrium structure.     

Choosing price or quantity? The role of delegation and network externalities

We consider a differentiated duopoly and endogenise the firm choice of the strategy variable (price or quantity) to play on the product market in the presence of network externalities. We model this choice by assuming both competition between entrepreneurial (owner-managed) firms and competition between managerial firms in which market decisions are delegated from owners to revenue-concerned managers. While network externalities are shown not to alter the symmetric equilibrium quantity choice arising in the no-delegation case, sufficiently strong network effects allow us to eliminate the multiplicity of equilibria under delegation and lead to a unique equilibrium in which both firms choose price.     

Nonparticipation or Misspecification? The Impacts of Nonparticipation on Dichotomous Choice Contingent Valuation

Dichotomous choice (or Referendum) contingent valuation surveys have become the predominate choice for valuing goods and services otherwise not valued in a standard market (nonmarket goods and services). A number of researchers have recently recommended that dichotomous choice contingent valuation studies include a follow-up question to all no responses to determine whether the no response is a result of unwillingness to pay, or nonparticipation. If the goal of the study is to investigate the impact of covariates on either mean willingness to pay or the probability of nonparticipation, simple identification of indifferent individuals will not suffice. A simulation study shows that existing econometric models designed to account for nonparticipation are extremely sensitive to misspecification bias. Accurate identification of the probability of nonparticipation is hampered by potential misspecification of the distribution of willingness to pay.     

Now or later? The political economy of public investment in democracies

This paper explores the impact of elections on public investment. Working with a sample of 67 presidential and parliamentary democracies between 1975 and 2012, we find that the growth rate of nominal public investment is higher at the beginning of electoral cycles and decelerates thereafter. The peak in public investment growth occurs 28 months before elections, and each month closer to the next election the growth rate of public investment declines by 0.7 percentage points. Other political variables, such as cabinet ideology and government fragmentation have less influence on short-term public investment dynamics. Fiscal rules and stronger institutions seem to attenuate the impact of elections on investment, but available information is insufficient to draw definitive conclusions. These results are robust to a number of controls, including for fixed elections.     

Older or Wealthier? The Impact of Age Adjustment on Wealth Inequality*

Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross‐sectional data, a concern is that older is confused with wealthier. We propose a new method to adjust for age effects in cross‐sections, which eliminates wealth inequality due to age, yet preserves inequality arising from other factors. Using a new cross‐country comparable database, we examine the impact of age adjustments on wealth inequality across countries and over time. We find that the most widely used method yields a substantially different picture of age‐adjusted wealth inequality than our method.     

International Trade and Manufacturing Employment: Is India following the Footsteps of Asia or Africa?

The Indian manufacturing sector has rapidly increased its integration with the world economy since the 1991 trade reforms. We examine whether trade integration created or destroyed jobs in the Indian manufacturing sector, and compare India's employment outcomes with four other countries—Bangladesh, Kenya, South Africa, and Vietnam. We find that the impact of international trade on manufacturing employment seems to be similar to those found for the two African countries rather than the two Asian countries, a surprising result for a country with an apparent comparative advantage in labor-intensive manufacturing goods, and a large excess supply of unskilled labor.     

The political economy of corporatism in medicine: Self-regulation or cartel management?

This paper seeks to explain why delegation of regulatory authority to medical associations (medical Corporatism) is so prominent in health care. It argues that the interests of politicians and physicians in limiting access to medical markets rather than the interests of patients in the control of quality of medical care determines this delegation. Recent trends in physician densities, their impacts on physician incomes, and rates of return to a medical career in several industrialized countries are adduced as evidence to support this claim.     

Deeds or words? The local influence of anti-immigrant parties on foreigners’ flows

We investigate the influence of anti-immigrant parties on foreigners' location choices. Considering Italian municipal elections from 2000 to 2018, we create a comprehensive database that includes a classification of the anti-/pro-immigration axis of leading political parties based on specialists' assessments. Adopting a bias-corrected regression discontinuity design, we find that the election of a mayor supported by an anti-immigrant coalition significantly affects immigrants' location choices only when considering the most recent years. This finding is not driven by the enactment of policies against immigrants but by an ‘inhospitality effect’, which has become stronger over time due to the exacerbation of political propaganda. Therefore, foreigners' flows are influenced by the local political environment only when immigration is central to the political debate.     

The role of economics in global management of whales: re-forming or re-founding IWC?

The global management of whale species, identified as an economic mixed good, is addressed by means of economic theory of bargaining and institution making. I will analyse (i) why it is important to take into account explicitly both (consumptive) use and non-use values within international conventions on global mixed goods; (ii) the role and nature of institutions dealing with global issues; (iii) the role of bargaining between conflicting interests as a focal feature of the institution-making process; and, (iv) the role of economic thinking in international conventions. Co-operative and non co-operative solutions are discussed, and instruments aimed at achieving co-operative bargaining, analysed. The study has both positive and normative implications, with insights on social welfare enhancing institutional reforms. Although the study is broad yet special focus is given to the International Whaling Commission (IWC). This paper concludes that we should make economic theory operational within the realm of global institutions. On the basis of the bargaining model, the conclusion is that IWC should necessarily be re-founded or at least re-formed, changing the convention from ‘whaling’ to a ‘whale’. It is suggested that the possibility of introducing compensatory side payments into the bargaining arena in order to increase social welfare and enforceability with respect to a ‘ban’ scenario be investigated. Ethical implications of monetary compensations are considered in parallel with economic efficiency. The limits and potentialities of economics and economic instruments are also tested globally with respect to the whale and other environmental issues.     

The choice of dilemmas in Hungary's transition: Westernization or latin americanization?

This paper deals with Hungary on the basis of selected characteristics regarding European Union accession conditions. In most cases, there are no exact criteria which must be fulfilled. Therefore, the difference between the real and expected levels of performance cannot be measured. The chances for stabilization and growth, reintegration, or periphery are under investigation. This statistical analysis concentrates on the similarity between members of the European Union (and the Organization for Economic Cooperation and Development) and new applicants. The structural similarity and closeness can statistically prove economic success or failure.     

The Impact of Climate Change on China＇s Grain Market and Food Security-- A CGE Model Approach

This paper examines the impact of climate change on China＇s grain production and food security. The research is one of the four studies on future conditions of China＇s food production system under the influence of climate change using numerical simulation methods, carried out under a national 973 project entitled ＂impacts of climate change on food systems in China and its adaptation＂. The other three studies focus on changes in cultivated land area and food production, while this study incorporates their grain yield results into a general equilibrium model to simulate future conditions of the grain market. Our simulation analysis arrives at the impact of climate change by comparing such economic variables as grain production, consumption, and GDP growth rate between a baseline scenario and two climate change scenarios. Our results are summarized as follows： （1） In 2050, the total grain production will reach 689.683 million tons--584.264 million tons of total grain consumption and 42.808 million tons of exports. Without considering losses and inventory demand, in 2050 China＇s grain supply and demand will remain well balanced, with a slight surplus expected. （2） Climate change is expected to benefit China＇s macro economy and individual sectors. In comparison with the baseline scenario of no climate change, real wage, real GDP, investment, household consumption, exports, and other macroeconomic indicators will rise under the climate change scenarios. As far as the agricultural, manufacturing, and service sectors are concerned, production, consumption, imports, and exports will each be favorably affected by climate change. （3） The favorable impact of climate change on China＇s macroeconomy and individual sectors under the high emissions scenario （A2） is stronger than that under the low emissions scenario （B2）. （4） In the grain market, climate change is expected to increase supply, reduce imports, increase supply, and demand; and supply will increase more than demand does. All in     

The impact of monetary announcements on forward interest rates: Movements in term premia or expected future rates?

Evidence is presented on how the response of forward interest rates to money supply and monetary base announcements is decomposed into movements in term premia and expected future interest rates. A significant movement of each component is found for at least one sample period.     

Innovation or imitation? The effect of spillovers and competitive pressure on firms’ R&D strategy choice

In this paper a firm’s R&D strategy is assumed to be endogenous and allowed to depend on both internal firm characteristics and external factors. Firms choose between two strategies, either they engage in R&D or abstain from own R&D and imitate the outcomes of innovators. This yields three types of equilibria, in which either all firms innovate, some firms innovate and others imitate, or no firm innovates. Firms’ equilibrium strategies crucially depend on external factors. We find that the efficiency of intellectual property rights protection positively affects firms’ incentives to engage in R&D, while excessive competitive pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators when the product is homogeneous and the level of spillovers is high. Regarding social welfare our results indicate that strengthening intellectual property protection can have an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual property rights protection can discourage innovative performance substantially. However, a reduction of patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics.     

Sand in the wheels or spanner in the works? The Tobin tax and global finance

This paper presents a radical critique of the Tobin tax—atax on currency transactions—by undercutting certain assumptionsabout the size and character of the world's foreign exchangemarkets which furnish the tax with its basic rationale. Whileit is acknowledged that only a fraction of the massive volumesof FX transactions relate directly to trade in goods and servicesor to cross border investments, it is denied that all the residualtransactions are motivated purely by exchange rate considerations(speculative or hedging activities). Rather, the argument isthat a significant proportion of FX trades have money marketcharacteristics and that these trades, together with domesticmoney market transactions, play an important role in the dayto day operation of the global financial system. This perspectiveis used to show that the imposition of a Tobin tax would causeextensive material damage to the system, with consequences thatmay run counter to the expectations of supporters of the tax.     

Class or caste? A study on the role of caste and wealth status in school choice decision

There is a strong political opinion in India in favour of replacing caste based affirmative action with an economic class based one. We contribute to this debate by looking at the interaction of caste and wealth in school choice. We show that too rich and too poor parents behave in the same way irrespective of their caste identities—rich parents sending their children to private schools while poor parents choosing public schools for their children. The caste identity, we find, plays a role for the school choice decision made by the parents belonging to the economic middle class. Among the economic middle class parents, the ones from the privileged castes send their children to private schools, while the children of the parents from the disadvantaged castes are sent to public schools. The result is robust to alternative definitions of privileged and disadvantaged castes. For school quality choice, however, we find a monotonic relationship between wealth and school quality.