SOCIAL COMPARISON AND SUBJECTIVE WELL‐BEING: DOES THE HEALTH OF OTHERS MATTER?

The importance of social comparison in shaping individual utility has been widely documented by subjective well‐being literature. So far, income and unemployment have been the main dimensions considered in social comparison. This paper aims to investigate whether subjective well‐being is influenced by inter‐personal comparison with respect to health. Thus, we study the effects of the health of others and relative health hypotheses on two measures of subjective well‐being: happiness and subjective health. Using data from the Italian Health Conditions survey, we show that a high incidence of chronic conditions and disability among reference groups negatively affects both happiness and subjective health. Such effects are stronger among people in the same condition. These results, robust to different econometric specifications and estimation techniques, suggest the presence of some sympathy in individual preferences with respect to health and reveal that other people's health status serves as a benchmark to assess one's own health condition.     

HAS INTERNATIONAL CAPITAL MOBILITY INCREASED IN ASIA? EVIDENCE FROM THE POST‐1997 FINANCIAL CRISIS PERIOD

This paper examines whether international capital mobility in Asia has increased after the 1997 Asian financial crisis by estimating the Feldstein‐Horioka (FH) coefficients using panel cointegration and dynamic OLS regressions. In the benchmark estimation, we find that the FH coefficients of ten Asian economies decrease significantly from 0.65 during the pre‐crisis period to 0.32 during the post‐crisis period. Furthermore, the coefficient for the post‐crisis period is less statistically significant than that for the pre‐crisis period. The extended model estimations with additional control variables controlling for the business cycle, different foreign exchange rate systems, and capital control also show the results which are consistent with the benchmark estimation results. Rolling regressions show a consistently declining trend of the FH coefficients in Asia during our sample period. These results provide consistent evidence, according to the FH proposition, of increasing international capital mobility in Asia during the post‐1997 Asian financial crisis period. (JEL F36, F37, F21)     

ARE LONG‐TERM INFLATION EXPECTATIONS WELL‐ANCHORED? EVIDENCE FROM THE EURO AREA AND THE UNITED STATES

This paper analyses the stability of long‐term inflation expectations and uncertainty, based on their sensitivity to innovations to observed inflation, short‐ and medium‐term forecast news. News is defined in a subjective sense and derived from revisions to shorter‐term fixed‐target forecasts. The assessment tests for presence of non‐linear effects, including regime changes during disinflation in the USA in the 1990s and the recent financial crisis. Stability is also investigated in terms of level evolution, based on a structural non‐linear and non‐Gaussian learning model to uncover the presence of a common trend underlying the long‐term dynamics of inflation, individual expectations, and uncertainty.     

DOES THE CLARITY OF CENTRAL BANK COMMUNICATION AFFECT VOLATILITY IN FINANCIAL MARKETS? EVIDENCE FROM HUMPHREY‐HAWKINS TESTIMONIES

By applying readability statistics to the Humphrey‐Hawkins testimonies given by the Federal Reserve Chairman, it is tested whether the clarity of central bank communication affects volatility in financial markets. There are three results. First, when clarity matters, it has a diminishing effect on volatility. Second, clarity of communication matters mostly for volatility of medium‐term interest rates. Third, the effects of clarity vary over time. Clarity mattered especially, but not exclusively during Alan Greenspan's Chairmanship. Overall, the analysis illustrates the importance of transparent communication on monetary policy. (JEL E44, E52, E58)     

IS MARKET‐ORIENTED REFORM PRODUCING A ‘TWO‐TRACK’ EUROPE? EVIDENCE FROM ELECTRICITY AND TELECOMMUNICATIONS

ABSTRACT: The European Commission has formally recognized that adequate provision of basic household services, including energy, communications, water and transport, is key to ensuring equity, social cohesion and solidarity. Yet little research has been done on the impact of the reform of these services in this regard. This article offers an innovative way to explore such questions by analyzing and contrasting stated and revealed preferences on citizen satisfaction with and expenditure on two services, telecommunications and electricity, in two large countries, Spain and the UK. We find evidence that in telecommunications, but not in electricity, reform has led to a ‘two‐track’ Europe, where citizens who are elderly, not working or the less‐educated behave differently in the market, with the result that they are less satisfied with these services than their younger, working, better‐educated, counterparts.     

WHAT DETERMINES TRADE BETWEEN CHINA AND INDIA DURING THE RECESSION OF 2008–2012?

Despite the international status of China and India rising dramatically in the previous decades, trade between the two countries did not grow accordingly. This paper investigates the determinants of the bilateral trade performance during the period of 2008–2012 from two perspectives: comparative advantage and trade protection. Two cases, Chinese exports to India, and Indian exports to China, are analyzed by using product‐level data. The results suggest that (1) the law of comparative advantage and trade protection explain the pattern of China–India trade, while (2) in a time of crisis, the adverse forces become prominent which explains the declining trend of the bilateral trade. (JEL F13, F14)     

DOES THE MISSION OF PROVIDERS MATTER ON A QUASI‐MARKET? THE CASE OF THE BELGIAN ‘SERVICE VOUCHER’ SCHEME

ABSTRACT 1 : In 2001, the Belgian government introduced a ‘service voucher’ scheme in the field of domestic (housework) services, following a quasi‐market mechanism which fosters competition between providers of different types as regards sector (for‐profit, public, third sector) and mission (seeking profits, home care provision to vulnerable groups and work integration of the unemployed). Empirical evidence suggests that third sector organizations focusing on a social mission recognized by a tutelary regulation are the best performing with regards to the quality of jobs and service organization, leading to a better ‘triangulation’ of the service relationship. On the other hand, for‐profit providers, especially temporary work agencies, seem to favour their capacity of adaptation to the desiderata of their clients and costs’ minimization to the detriment of the quality of jobs which are made as flexible as possible.     

WOULD AUSTRALIA–NEW ZEALAND BE A VIABLE CURRENCY UNION? EVIDENCE FROM INTERSTATE RISK‐SHARING PERFORMANCES

In this article, we first measure the potential welfare gains from perfect risk sharing among Australian states and New Zealand regions under possible unification. We show that New Zealand regions reap moderate gains from perfect risk sharing when they form a union with Australia, whereas for Australian states, the gains are somewhat similar to what they have attained at the intranational level. Second, we measure the extent of interstate risk sharing and intertemporal smoothing between the two countries. We are able to observe a substantial degree of intertemporal smoothing among Australian states and New Zealand regions, either alone or jointly, thus confirming the permanent income hypothesis. Further, unique to the risk‐sharing literature, we decompose the aggregate (nondiversifiable) output shocks into positive and negative components, in order to assess the strength of risk‐sharing mechanisms across business cycles. The study finds a virtual absence of risk sharing when Australia and New Zealand face negative aggregate fluctuations, raising doubts about the feasibility of the union, particularly during economic downturns. (JEL F41, F36)     

THE 2007–2008 U.S. RECESSION: WHAT DID THE REAL‐TIME GOOGLE TRENDS DATA TELL THE UNITED STATES?

In the extant literature of business cycle predictions, the signals for business cycle turning points are generally issued with a lag of at least 5 months. In this paper, we make use of a novel and timely indicator—the Google search volume data—to help to improve the timeliness of business cycle turning point identification. We identify multiple query terms to capture the real‐time public concern on the aggregate economy, the credit market, and the labor market condition. We incorporate the query indices in a Markov‐switching framework and successfully “nowcast” the peak date within a month that the turning occurred. (JEL E37, G17)     

DO SCHOOL LUNCH SUBSIDIES CHANGE THE DIETARY PATTERNS OF CHILDREN FROM LOW‐INCOME HOUSEHOLDS?

This article examines the effects of school lunch subsidies provided through the means‐tested component of the National School Lunch Program on the dietary patterns of children aged 10–13 years in the United States. Analyzing data on 5,140 public school children in fifth grade during spring 2004, we find significant increases in the number of servings of fruit, green salad, carrots, other vegetables, and 100% fruit juice consumed in 1 week for subsidized children relative to unsubsidized children. The effects on fruit and other vegetable consumption are stronger among the children receiving a full subsidy, as opposed to only a partial subsidy, and indicate the size of the subsidy is an important policy lever underlying the program's effectiveness. Overall, the findings provide the strongest empirical evidence to date that the means‐tested school lunch subsidies increase children's consumption over a time period longer than one school day. (JEL H51, I12, I38)     

HOW DO SPOUSES SHARE THEIR FULL INCOME? IDENTIFICATION OF THE SHARING RULE USING SELF‐REPORTED INCOME

The paper applies the collective model to the analysis of intra-household inequality using one of the subjective-qualitative questions available in the RLMS (Russia Longitudinal Monitoring Survey) data, and provides a test for its assumptions. Interpreting the individual answers as reported budget scales we assume a correspondence between the budget level that household members report and their true income sharing. We first show that this assumption is supported by the data, and then use couples who report the same level of budget to identify the full sharing rule for the whole sample.     

DID THE GREAT RECESSION REDUCE VISITOR SPENDING AND WILLINGNESS TO PAY FOR NATURE‐BASED RECREATION? EVIDENCE FROM 2006 AND 2009

Outdoor recreation is a large industry that can diversify public land‐based economies that have traditionally relied upon resource extraction. However, what happens to nature‐based recreation visitor spending and benefits during times of national economic recession? To address this question, we replicate a 2006 high mountain recreation study in the same region 3 years later during the 2009 recession. Results indicate that nature‐based public land recreation in this area did not experience reductions in most categories of visitor spending or total number of visits during the recession. These results imply that nature‐based recreation may represent an economically stable industry in public land mountain economies. Total benefits to the visitors are also quite stable, only dropping from $129 per person per trip in 2006 to $120 in 2009. This 7% drop in willingness to pay is not statistically significant at conventional levels. (JEL Q26)     

DOES EDUCATION LOAN DEBT INFLUENCE HOUSEHOLD FINANCIAL DISTRESS? AN ASSESSMENT USING THE 2007–2009 SURVEY OF CONSUMER FINANCES PANEL

Families with student loans in 2007 have higher levels of financial distress than families without such loans, and these families also transitioned to financial distress at higher rates during the early stages of the Great Recession. This correlation persists once we control for a host of other demographic, work‐status, and household balance sheet measures. Families with an average level of student loans were 3.1 percentage points more likely to be 60 days late paying bills and 3 percentage points more likely to be denied credit. Families with other types of consumer debt were no more or less likely to be financially distressed. (JEL D14, H81, I22)     

HOW DO HIGH SCHOOL GRADUATES IN JAPAN COMPETE FOR REGULAR,FULL‐TIME JOBS? AN EMPIRICAL ANALYSIS BASED UPON AN INTERNET SURVEY OF THE YOUTH*

We use a survey of Japanese youth within 10 years after high school graduation to investigate impacts of academic and social skills on their success in the job market. We find three major factors account for the job market outcome immediately after school: school characteristics and job‐placement services, academic performance, and social skills, including negative impacts of problematic behaviors at school. Second, when we run a probit regression on whether or not the surveyed individuals hold regular, full‐time jobs, we find the persistent but declining (over age) impact of the job placement immediately after school. Moreover, we find that the impact of variables pertaining to social skills remain significant even after controlling for the job‐placement outcome after school, whereas other variables, such as grade point average or attributes of high schools, are largely irrelevant to the current employment status.