The disposition effect and loss aversion: Do gender differences matter?

This paper analyzes gender differences in the disposition effect in an experiment based on Weber and Camerer (1998). The results emphasize that female investors realize less capital losses, have significantly higher disposition effects and are more loss averse than men.     

The “export-import” effect and economic growth

This paper proposes that singular improvements in productivity and growth are a result of increased exports and imports, especially in the manufacturing sector, but that sustainable increases in growth can only emerge through industrial diversification. Trade liberalizations between Canada and the United States have caused a narrowing of manufacturing productivity differentials, a predominance of intraindustry trade, and a positive Canadian trade balance for manufactured end products and fabricated materials. Sustained growth, however, relies more on the diversification of the industrial structure. Toward this end, Canadian trade policies should: (1) concentrate productivity in the exportable, rather than importable, sectors, (2) rationalize and specialize between rather than within industries, (3) encourage two-way trade in each industry, (4) liberalize trade gradually to avoid interindustry disruptions, and (5) redirect job real- location funds toward worker retraining and firm-specific modernization programs.     

The impact of American depositary receipts on the Japanese index: Do industry effect and size effect matter?

This paper explores whether American Depositary Receipts (ADRs) affect the underlying local index (LD) for Japanese market, and such a phenomenon is considered as an adverse influence. Nonlinear Granger causality and Bayesian factor analysis are employed to investigate the nonlinear relationship between ADR and LD. The results indicate the existence of a nonlinear relationship between ADR and LD by employing Bayesian factor analysis, which has never been employed in the related issues. Next, the linear Granger causality findings reveal that the ADRs, which influence Japanese index, are not affected by industry effect rather than by size effects. Overall, most relationships between ADR and LD are nonlinear while the specific turning points of different firms influence LD. Ultimately, we also provide the related policy and economic implications.     

Do voluntary commitment mechanisms improve welfare? The effect of mandatory and voluntary oaths in a social dilemma

We investigate whether oaths can enforce property rights in a social dilemma and increase welfare. We examine the impact of mandatory and voluntary oaths in a laboratory experiment where individuals can produce wealth, protect accumulated wealth, and take wealth from others. Individuals are more productive when oaths are mandatory compared to a no-oath environment. Subjects’ voluntary signing oaths behave similarly to those who sign a mandatory oath. When the oath is voluntary, nonoath-taking individuals engage in nonproductive behavior, negating the positive impact from the voluntary oath. Our results show that altering commitment mechanisms can result in varying welfare levels.     

Making small firms happy? The heterogeneous effect of trade facilitation measures

The different facets of trade facilitation may impact heterogeneously exporters of different size and productivity. Using the cross‐sectional variation in procedures at the border, we identify how red tape affects trade through the extensive and/or the intensive margin and show that small and large exporters are affected differently. We observe that while information availability benefits both small and large exporters, other measures like advance ruling, appeal procedures and the automation of border formalities tend to favor large exporters. This result suggests that trade facilitation policies affect exporters through channels other than simply the fixed or variable cost component of the red tape barriers. Beyond affecting the size and composition of trade flows, uncertainty about the conditions of crossing borders plays an important role in shaping the demography of exporters across different destinations.     

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.     

The effect of communication and energy services reform on manufacturing firms’ innovation

Upstream services liberalization improves the efficiency and cost of communication and energy services, reducing the marginal costs of downstream manufacturing firms through input-output linkages. This study explores one possible mechanism behind this finding: innovation. I investigate the effects of communication and energy services reform in India in the mid-1990s on downstream manufacturing firms’ decisions to invest in R&D. The empirical analysis uses manufacturing-firm level data and regulation indicators in the communications and energy service sectors. The liberalization of services in India had a positive effect on manufacturing-firm innovation. These results are concentrated on firms in the middle of the initial productivity distribution. The main channel is the elimination of entry barriers into the communication sector.     

Fiscal consolidation by intergovernmental transfers cuts? The unpleasant effect on expenditure arrears

For the period 2003–2014, we investigate unexplored effects of fiscal consolidation in decentralized public finance on a large dataset of Italian municipalities. Based on a simple, realistic theoretical model, we show that municipalities increase arrears on committed investment expenditure as a response to intergovernmental transfer cuts. Then, we test our predictions controlling for potential sources of endogeneity, and find that a reduction in intergovernmental transfers causes a significant increase in arrears, in addition to other common adjustments to local fiscal policies (e.g., tax revenues). Our results highlight a perverse effect of fiscal consolidation packages implemented by centrally imposed fiscal restraints.     

The productive effect of transport infrastructures: does road transport liberalization matter?

In this paper we analyze the impact of motorway networks on production for a panel of twenty one manufacturing and service sectors of eleven EU countries observed over the period 1980–2003. In particular, we analyze if the degree of regulation of the road transport sector affects the link between productivity and motorway infrastructures. Overall results suggest that output elasticity with respect to motorway is found to be lower for countries characterised by a high degree of entry barriers in the road transport sector. This result is found to be more evident for industries which rely more heavily on transport services.     

The quality effect: Does financial liberalization improve the allocation of capital?

We document evidence of a “quality effect” of financial liberalization on allocative efficiency, as measured by dispersion in Tobin's Q across firms. We predict that financial liberalization, by equalizing access to credit, is associated with reduced variation in expected marginal returns. We test this prediction using a new financial liberalization index and firm-level data for five emerging markets: India, Jordan, Korea, Malaysia, and Thailand. We find robust evidence that financial liberalization, rather than financial deepening, is associated with improved allocative efficiency.     

Mandate-based welfare policies and the effect on real wage – The case of Taiwan

This study estimates the relationship between statutory welfare programs and workers’ compensation. Employing monthly macroeconomic data from 1982 to 2016 and wage rates in several private industrial sectors in Taiwan, the relationships between pay variations and policy interventions are explored after controlling for the economic growth rate, labor productivity, and time fixed effects. The seasonal autoregressive integrated moving average (SARIMA) and multivariate adaptive regression splines (MARS) were adopted in the panel analyses. The findings of this study suggest that social welfare policies have negative effects on employees’ wage rates. The magnitudes of the effects are directly linked to the burden borne by the employers. National Health Insurance has the greatest negative effects on workers’ pay in all selected industrial sectors. The statutory welfare benefits explain approximately 23% of the pay deviation from the trend predicted by the models. A non-payroll-based financing method could be considered in the future to alleviate this impact.     

The effect of subsistence on collapse and institutional adaptation in population–resource societies

We extend the Brander–Taylor model of population and resource development in an isolated society by adding a resource subsistence requirement to people's preferences. This improves plausibility; amplifies population overshoot and collapse, and can destabilize the steady state; and allows for complete cessation of non-harvesting activities, in line with archaeological evidence for many societies. We then use bifurcation techniques to give a global analysis of four types of institutional adaptation: an ad valorem resource tax, and quotas on total resource harvest, total harvest effort and per capita effort. In all cases, we find that a higher subsistence requirement makes it harder, or often impossible, for adaptation to avoid overshoot and collapse.     

The causal effect of compulsory voting laws on turnout: Does skill matter?

A very important, yet unsettled, question is whether mandatory voting affects political participation. This paper exploits a natural experiment to assess the causal impact of compulsory voting on turnout and, more importantly, to test whether the impact is different across skill groups. I find that compulsory voting increases voter turnout by 18 percentage points (28%) and the increase is twice as much in the unskilled citizens than that in the skilled citizens. This study is the first to show, with rigorous empirical evidence, that compulsory voting laws are effective in reducing the skill/socioeconomic gap in political participation. Furthermore, by shaping the electorate, these laws have relevant consequences in terms of the economic policies applied.     

The effect of science and technology parks on firms’ performance: how can firms benefit most under economic downturns?

The objective of this research is to evaluate the effect of the economic recession on the performance of firms located in science or technological parks. Compared to off-park firms, we propose that under an economic crisis park benefits are more noticeable, since firms located inside parks have less resource restraints and access to external sources of information and knowledge. Moreover, we observe that as firms invest on internal R&D, they tend to reinforce these park benefits. Empirical evidence gathered data on employment and sales from 2007 to 2012 for the group of firms which participated in the Spanish Technological Innovation Panel. The results confirm the positive role played by science and technology park locations under economic downturn environments, especially when firms investing in internal R&D.     

The Henderson Question? The Melbourne Institute and 50 Years of Welfare Policy

I discuss selected research contributions of the Melbourne Institute of Applied Economic and Social Research to 50 years of welfare policy for those of workforce age and focus particularly on the policy focus of R. F. Henderson, the inaugural director. Following the spirit of his 1960s poverty research, in the mid‐1970s, government doubled unemployment allowances in real terms and increased pensions by approximately 40 per cent. Both income support payments were to be indexed by average wage increases. At the time, unemployment was typically around 1 per cent and the pension take‐up for those of workforce age was also limited. Today, income support take‐up rates have probably increased fivefold. In response, government has adopted a ‘make work pay’ policy over the last two decades and indexed allowances for Consumer Price Index increases and allowances have fallen by 25–35 per cent, relative to community living standards. Pensions continue to be indexed by average wage changes. I address a range of questions arising from this experience, including: Why has government abandoned the Henderson recommendations?; Is there any evidence that a ‘make work pay’ policy is working?

     

Technological progress and sustainable development: what about the rebound effect?

Sustainability concepts that rest on the idea of resource- or energy-efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements. Efficiency improvements also affect the demand for resources and energy, and often an increase in efficiency by 1% will cause a reduction in resource use that is far below 1% or, sometimes, it can even cause an increase in resource use. This phenomenon is commonly labeled the rebound effect, which is well-known among energy economists, but never attracted much attention in ecological economics. The paper starts with the traditional neoclassical analysis of the rebound effect in a partial equilibrium framework that concentrates on the demand of one particular energy service such as mobility or room temperature. It also provides an overview of some of the main empirical studies based on this model that mostly confirm the existence of the rebound effect, but are controversial about its actual importance. However, we have to go beyond the neoclassical single-service model in order to take care of the variety of possible feedback affecting energy use. The paper presents two important expansions of the single-service model in order to show the potential relevance of the rebound effect to ecological economics. First, it is shown that in a multi-services model it proves to be difficult to make general statements about the relevance of the rebound effect. In this case, the overall effect of an increase in energy efficiency on total energy use depends on the on the assumptions about the substitutability between the services considered and the direction of the income effect. Second, the paper also tries to take care of the fact that changes in resource use or energy use are frequently just ‘side-effects’ of other forms of technological progress. Especially technological change of a time-saving nature can have a large influence on energy use as many time-saving devices (for example, faster modes of transport) require an increase in energy consumption that is frequently reinforced by a ‘rebound effect with respect to time’. This effect will be especially strong when wages are high and, at the same time, energy prices are low, as is currently the case in most industrialized countries. Consequently, the paper also provides a strong argument for the introduction of energy taxes.     

Shatterbelts and conflict behaviour: The effect of globalisation on ‘high risk’ states

This article ties together seemingly disparate literatures (those of globalisation and ‘shatterbelt states') as a means of investigating the changing conflict behaviour of high‐risk states. The objective of this research is to ascertain empirically whether the circumstances that generate aggression by high‐risk states are the same as those for others. In addition, by examining how conflict behaviour has changed over time, and in conjunction with trade openness, these tests speak to the importance of economic interdependence as a mitigating counterforce to aggressive tendencies. The results indicate that domestic instability and fragmentation are more directly tied to high‐risk state behaviour than are systemic influences. In contrast, the probability that low‐risk states originate or participate in conflicts, and resort to violence, is tied to international factors. Surprisingly, increased repression seems to result from the opposite circumstances. For high‐risk states, changes in repressive behaviour are tied to the external environment while low‐risk states seem prone to change levels of repression in conjunction with their internal conditions. Lastly, and most importantly, trade openness has an important pacifying effect on high‐risk states, but appears to be irrelevant to the conflict behaviour of all others. Globalisation, it appears, mitigates the violence that is often initiated by high‐risk states. These results offer important preliminary evidence for understanding high risk‐states and the strategies that may reduce their aggressiveness.