Entrepreneurship and Liquidity Constraints: Evidence from Sweden

Hurst and Lusardi (2004) use a specification with higher‐order polynomials to estimate the relationship between wealth and entrepreneurship. They find evidence against the existence of extensive liquidity constraints in the United States. In this paper, their approach is replicated on Swedish data. A positive relationship between wealth and entrepreneurship is found, which supports the liquidity constraints hypothesis. Alternative methods for handling the endogeneity problem and distinguishing between absolute decreasing risk aversion and liquidity constraints lend further support to the hypothesis. The analysis suggests that there exist liquidity constraints in Sweden, which are possibly more extensive than in the United States.     

Wealth in Latin America: Evidence from Chile,Colombia, Mexico and Uruguay

Drawing on recently-available microdata from financial surveys, this paper presents harmonized indicators for household wealth, its components, and its determinants in four Latin American countries (Chile, Colombia, Mexico and Uruguay), using Spain as a comparison benchmark. The paper analyzes the relationship between wealth indicators and sociodemographic characteristics of household heads (age, education, gender, marital status). For Uruguay, we are also able to analyze wealth patterns and intergenerational mobility (inheritance, family businesses and parental education).     

Non-profit differentials in crowd-based financing: Evidence from 50,000 campaigns

We use data from approximately 50,000 crowdfunding projects to assess the relative funding performance of for-profit and non-profit campaigns. We find that non-profit projects are significantly more likely to reach their minimum funding goals and that they receive more money from the average funding provider. At the same time, however, they have fewer funding providers and obtain lower total funding amounts. Our analysis shows that these results are driven by a small number of very successful for-profit projects. We argue that the findings are consistent with a simple selection mechanism in which entrepreneurs make the non-profit/for-profit decision based on expected project payoffs.     

Environmental disasters and mental health: Evidence from oil spills in the Peruvian Amazon

Using a difference-in-difference approach, we test the causal link between environmental disasters and mental health indicators in rural areas of Peru by exploiting the spatial variation in exogenous oil spills and the differences in their timing for the period 2014 to 2018. We find that, after controlling for time-varying controls and year fixed effects, oil spills lead to a significantly higher probability of suffering psychological distress. We also explore likely mechanisms that explain this causal impact. Finally, we present an event study and apply robustness tests that further support our findings.     

Private Wealth in a Developing Country:Evidence from South Africa

The point of departure of Piketty's influential Capital in the Twenty‐First Century (2014) was the dramatic growth of private wealth‐income ratios in advanced economies between 1970 and 2010. Using official balance sheet data for South Africa—the first country to publish such data in the developing world—, this paper examines to what extent this re‐emergence of private wealth was also experienced in the developing‐country context. First, we find that the South African current wealth‐income ratio is very close to its 1975 level, and much lower than those of Piketty's sample of advanced economies. Second, we show that the discrepancy is explained not only by South Africa's relatively low savings rates, but also by the reduction of wealth before and during the transition to democracy in the 1990s. Since then, private wealth recovered significantly, but the U‐shaped relationship does not support the argument that there is a clear correlation between the capital‐income ratio and capital share.     

Wealth,Natural Capital,and Sustainable Development: Contrasting Examples from Botswana and Namibia

Theoretical work has demonstrated that sustainable development requires non-declining per capita wealth, where wealth is defined to include produced, natural, human and social capital. Several studies have attempted to measure total national wealth or changes in wealth, but have been seriously hampered by a lack of data, especially for natural and human capital. To address this problem, the UN and other international statistical agencies developed a standardized framework for environmental accounts, the System of integrated Environmental and Economic Accounts (SEEA). Using the newly available asset accounts for natural capital, national wealth accounts are constructed and used to assess the contrasting development paths of Botswana and Namibia. Botswana, with an explicit policy of reinvestment of resource rents, has roughly tripled per capita wealth and national income over the past two decades. Namibia, with no explicit policy to use natural capita to build wealth, has seen per capita wealth and income decline.     

Determinants of the distance between sovereign credit ratings and sub-sovereign bond ratings: Evidence from emerging markets and developing economies

This article explores factors that affect the distance between sovereign credit ratings and the ratings assigned to new foreign-currency bonds issued by sub-sovereign entities (such as private non-financial corporations, financial firms, and public sector enterprises) in 47 emerging markets and developing economies. Censored and double-hurdle regression models are used to estimate the relative contributions of bond-level, issuer-level, and macroeconomic factors that determine this distance, separately for those rated at or below the sovereign rating and those rated above. For the three quarters or more of sub-sovereign bond ratings that are constrained by the sovereign rating ceiling, a Tobit regression model shows a smaller distance – suggesting stronger sovereign–corporate linkages – for public sector enterprises and financial firms relative to other firms. Riskier global financial conditions are also associated with sub-sovereign bonds being rated closer to the sovereign rating. For the small number of sub-sovereign bonds rated higher than the sovereign rating, a double-hurdle model shows that certain debt features – such as bonds backed by future-flow receivables or other collateral or structured as Special Purpose Vehicles (SPV) – significantly raise the likelihood of piercing the sovereign rating ceiling and also increase the distance above the sovereign ceiling.     

Political connections, financing and firm performance: Evidence from Chinese private firms

This paper examines the role of affiliation with the ruling Communist Party in the operation of private enterprises in China. Using a nationwide survey of private firms, we find that the Party membership of private entrepreneurs has a positive effect on the performance of their firms when human capital and other relevant variables are controlled. We further find that Party membership helps private entrepreneurs to obtain loans from banks or other state institutions, and affords them more confidence in the legal system. Finally, we find Party membership to be more important to firm performance in regions with weaker market institutions and weaker legal protection.     

国家主权信用评级、跨国传染与股票市场回应?--基于全球48个经济体的事件研究

掌握主权信用评级变动的市场影响及其传染机制,对于投资者、国家金融安全及政府采取应对措施来说都意义重大。文章采用事件研究法,以1990-2013年全球48个经济体发生的评级事件和每日股指收益率数据为样本,实证研究了事件国评级变动对非事件国股票市场的影响及其传染渠道,结果表明：(1)评级下调会对股票市场产生显著为负的超额收益,但评级上调产生的超额收益不显著;(2)股票市场可以提前预测评级下调事件,但不能预测评级上调事件;(3)季风效应对评级调整的市场传染有一定的解释力;(4)净传染效应基本不显著,这说明评级事件的市场传染应该有经济基础,而不是由投资者心理预期这类非基本面因素造成的;(5)溢出效应可以较好地解释评级的市场传染,是评级变动影响市场及传染的主要渠道。文章的结论深化了我们对评级调整如何影响股票市场及其传染渠道的认识,也为中国防范国外主权信用评级变动风险提供了有益启示。     

企业高管的政府背景与企业社会责任事件的溢出效应——基于“环保风暴”下金沙江水电项目紧急叫停案的研究

2009年6月11日中国两大电力公司华能与华电在金沙江的项目被环境保护部紧急叫停,这是一起典型的环境保护社会责任事件。这一事件不仅对涉事两家企业产生了影响,而且具有显著的行业溢出效应。本文运用事件研究法发现,电力行业的投资者对该事件普遍做出消极的市场反应,而且对企业高管曾担任过政府官员的电力行业企业,投资者的反应更为消极。具体表现为股价下跌更厉害、资金流出率更高。这一研究结果意味着,在面临社会责任事件所引发的政府管制时,企业通过高管建立的政治关系对股东而言可能具有负面效应。本文认为,政治关系对股东的负面效应是因为具有政治背景的高管的激励来自于其所任职企业的财富激励较低,而主要取决于政治升迁激励,相应地,他们会更有动力去执行政府的意志。     

Disasters,Household Decisions,and Insurance Mechanisms: A Review of Evidence and a Case Study from a Developing Country in Asia

This article investigates whether and how Asian people's exposure to a variety of disasters undermine their decisions and welfare. Our case study from Vietnam, based on household panel data, shows that households adopt a variety of coping strategies against the damages caused by disasters especially through credit and labor markets. While the consumption risk sharing networks function effectively at the commune level, market and non‐market insurance mechanisms are not sufficient, especially at the regional, national, and international levels. Hence, it is imperative to strengthen market, government, and community based insurance mechanisms to diversify aggregate disaster risks at the individual, national, and regional levels in Asia.     

House Prices,Wealth and Consumption: New Evidence from Australia and Canada

Over the past two decades, a number of countries have experienced appreciation in house prices at the same time that aggregate consumption has increased. This paper tests alternative hypotheses for this phenomenon by using repeated household surveys from Australia and Canada to identify the transmission mechanism that links consumption and household wealth. The empirical analysis suggests that neither a direct wealth effect nor a common causal factor likely accounts for the observed correlation between wealth and consumption in these two countries. Rather, indirect factors such as collateral effects arising from relaxation of credit constraints are a more likely explanation.     

Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market

In this study, we investigated global economic and environmental resilience in the presence of climate change. In particular, we examine the possibility of mitigating carbon dioxide (CO₂) emissions without stressing standards of living. Here, we set up a cross-country CO₂ market constrained by a quota, where CO₂ is optimally re-allocated based on relative shadow prices of the pollutant. The objective is to stabilize global emissions without hindering global incomes and in the process achieve a single CO₂ price. We introduce a re-allocation model that takes into account each country’s underlying polluting technology. The model solutions are then used to investigate whether a single, global price for CO₂ is attainable. Our results suggest that global CO₂ emissions could stabilize without stressing global incomes, with a global CO₂ market achieving equilibrium. With a CO₂ market, countries would then have the incentive to consider adopting, improving, or investing in additional abatement technologies to move beyond current capabilities, while continuing to increase standards of living.     

Wealth inequality and financial inclusion: Evidence from South African tax and survey records

Theoretical models show that financial inclusion reduces wealth inequality. Existing empirical models are restricted to estimates using income inequality because of a lack of cross country wealth inequality data. We used 2010-11 and 2014-5 waves of the National Income Dynamics Study combined with South African tax records to estimate wealth and income inequality. Using Re-centered Influence Function regressions on the micro-level records, we confirmed the negative cross-country relationship between financial inclusion and income inequality. Wealth inequality is different. Financial inclusion improved wealth shares of only the middle class. Because of predatory lending, expansion of credit reduced the wealth share of the poor. Improved savings by the middle class, providing better oversight over financial services targeted at the poor and removing impediments to the small business sector are pre-conditions for financial inclusion to reduce wealth inequality.     

Wealth inequality in Central and Eastern Europe: Evidence from household survey and rich lists’ data combined*

We study how the problem of the ‘missing rich’, the underrepresentation of the wealthiest in household surveys, affects wealth inequality estimates for the post‐socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide the first estimates of the top‐corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post‐1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth‐unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income inequality, and the role of inheritances and wealth taxes in the region.     

Policy induced increases in private healthcare financing provide short-term relief of total healthcare expenditure growth: Evidence from OECD countries

Healthcare reforms have long been advocated as a cure to the increasing healthcare expenditures in advanced economies. Nevertheless, it has not been established whether a market solution via private financing, rather than public financing, curb aggregate healthcare expenditures. To our knowledge, this paper is the first that quantifies the impact of reforms that significantly increases (decreases) the private (public) share of healthcare financing on total healthcare expenditures relative to income in 20 OECD countries. Our reform measure is based on structural break testing of the private share of total expenditures, and verification using evidence of policy reforms. To quantify the effect of these reforms we apply Propensity Score Matching and Inverse Probability Weighted regression analysis. Over a 5-year evaluation period the reforms lead to an accumulated cost saving 0.45 percentage points of GDP. The yearly effects of the reforms are largest in the first years in the post-reform period and decreases in size as a function of time since the reform. Our findings suggest that the investigated healthcare reforms have a relatively short-lived effect on aggregate health spending relative to GDP. The findings are robust to various sensitivity tests.     

Variation in the effects of government spending shocks with methods of financing: Evidence from the U.S.

Using annual data for the United States, the paper investigates the evidence of variation in the fiscal multiplier with the method of financing government spending. The fiscal multiplier varies in the face of positive and negative shocks and across methods of financing. In general, fiscal expansion appears insignificant on aggregate demand and economic activity. In contrast, the evidence presents a number of significant negative multipliers in the face of fiscal contraction. The combined evidence challenges the effectiveness of fiscal policy and supports arguments to restrain fiscal expansion in an effort to stimulate the economy.     

The impact of smart meters on residential water consumption: Evidence from a natural experiment in the Canary Islands

Smart meters can promote behavioral changes and water conservation by improving information and providing feedback about water consumption to households. In this paper, we evaluate a large-scale programme implemented by the municipal water company of La Laguna (Tenerife). Exploiting quasi-experimental variation brought about program, we estimate the effect of water meter replacement on measured water consumption and the behavioral effect of the installation of the smart metering technology allowing households to access daily water consumption and real-time feedback through an online portal. Our main empirical analysis employs a difference in differences identification strategy and uses annual consumption data from 51,674 households observed over 10 years. We find a positive effect of water meter replacement on measured water consumption. Our main finding is that providing access to the smart metering technology induces households to reduce consumption by around 2% on average. Our results point to consumers’ engagement with the information portal as the main mechanism behind the observed behavioral response.     

Precautionary Savings in Mexico: Evidence From the Mexican Health and Aging Study

Precautionary saving is the additional saving done by individuals to protect them financially in situations of uncertainty and reduce their vulnerability for negative shocks that may affect their consumption levels. This paper investigates the existence and extent of savings motivated by precaution in Mexico for people aged between 50 and 75, using data from the Mexican Health and Ageing Study 2003. The empirical strategy is based on a test of the direct relationship between the accumulated wealth and the uncertainty generated by the social security status, in particular the availability of health insurance, accounting also for the expectation to receive a retirement pension. The endogeneity‐corrected estimates do not yield results that unequivocally support the existence of private savings as a risk protection mechanism, implying that the public protection system has an important role in reducing the vulnerability of the population studied.