Does trade credit redistribution thwart monetary policy? Evidence from Italy

Italy is an ideal candidate for testing the credit view of the transmission mechanism because of a bank-centred financial structure, a sizeable trade debt, and an economy titled towards small firms. An empirical analysis of trade credit and debt on averaged panel data shows that small firms act as financially constrained and cycle-sensitive, whereas large ones aim at smoothing sales, adopt an integrated management of inventories and receivables and have a higher trade debt to purchases elasticity. On balance, the net trade credit channel does not, as implied by the credit view, shield small firms from a monetary squeeze.     

Should we tax or cap political contributions? A lobbying model with policy favors and access

This paper develops a model of political contributions in which a politician can either sell policy favors, or sell access. Access allows interest groups to share hard information with the politician in support of their preferred policy. Here selling access maximizes policy utility, while selling policy favors maximizes total contributions. Imposing a binding contribution limit makes it more likely that the politician sells access, which can improve expected constituent welfare. However, a contribution limit distorts the signals associated with the contributions, which tends to result in worse policy. Alternatively, a tax on political contributions can ensure that the politician sells access without distorting his information. Therefore, from the viewpoint of a representative constituent, a tax on contributions is strictly preferred to a contribution limit or no reform. The politician, however, may prefer regulation in the form of a contribution limit, even when a tax is better for the constituent.     

Do SPS measures matter for margins of trade? Evidence from firm-level data

According to the World Trade Organization (WTO) standards, countries are allowed to adapt regulations under the Sanitary and phyto-sanitary (SPS) and technical barriers to trade (TBT) agreements in order to protect human, animal and plant health, as well as environment and human safety. Yet, these measures can become an impediment in international trade, especially for developing countries. Therefore, using an Egyptian firm-level data set and a new database on specific trade concerns raised in the TBT and SPS committees at the WTO, we analyse the effects of product standards on two related aspects: first, the probability to export (firm-product extensive margin), and second, the value exported (firm-product intensive margin). We merge this data set with a new database on specific trade concerns raised in the TBT and SPS committees at the WTO. Our main findings show that SPS measures imposed on Egyptian exporters have a negative impact on the probability of exporting a new product to a new destination. By contrast, the intensive margin of exports is not significantly affected by such measures.     

Why do mothers breastfeed girls less than boys? Evidence and implications for child health in India

Breastfeeding is negatively correlated with future fertility because nursing temporarily reduces fecundity and because mothers usually wean on becoming pregnant again. We model breastfeeding under son-biased fertility preferences and show that breastfeeding duration increases with birth order, especially near target family size; is lowest for daughters and children without older brothers because their parents try again for a son; and exhibits the largest gender gap near target family size, when gender is most predictive of subsequent fertility. Data from India confirm each prediction. Moreover, child survival exhibits similar patterns, especially in settings where the alternatives to breastmilk are unsanitary.     

Does Autonomy Matter in State Owned Enterprises? Evidence from Performance Contracts in India

Empirical evidence on the effect of managerial autonomy on the performance of state‐owned enterprises (SOE) is surprisingly scant despite autonomy being a preferred reform instrument over partial privatization in many countries. Using longitudinal data on performance contracts of state‐owned enterprises in India, this paper finds that managerial autonomy is associated with significant increases in enterprise profitability and efficiency. Further, using India's unique reform experience where both managerial autonomy and partial privatization were pursued side by side, the paper finds that while the positive effects of autonomy continue post‐partial privatization, the effects of partial privatization on performance are ambiguous. Specifically, once autonomy is controlled for, partial privatization has a positive effect on SOE profitability only after it crosses a critical level of government disinvestment. The findings suggest that organizational reforms such as granting managerial autonomy can be an important policy instrument in improving SOE performance particularly in cases where governments are unable to make substantial disinvestments.     

Is there a role for caste and religion in food security policy? A look at rural India

This paper finds that factors such as caste and religion influence food security at the regional level. Thus defining affirmative action within food security programs may be necessary as the current practice of designing food security programs around the poverty line is shown to deliver limited results. In this regard, another lack of consideration is region-specific analysis within the rural areas which shows varied influence, thereby cautioning against a ‘one size fits all’ general policy of the central government. Evidence also shows that socio-economic factors and social assistance programs had different impacts on calorie gap depending on one's nutritional status. This nonlinear relationship has been neglected in most studies on food security and thus raises doubt on past assessment and policy implications.     

An empirical analysis of disinvestment policy in India: does ideology matter?

Using panel data estimation for limited dependent variables and sample selection models, we identify political, industry specific, firm specific and macroeconomic variables which influenced the decision to divest central public enterprises in India between 1991–2010. We find that higher partial privatization is driven by a more right-winged coalition, lower ideological spread in the coalition and lower ideological difference between the center and the state in which the public enterprise is located. We also find that after the government selects larger, more experienced and more profitable firms, it divests the relatively less experienced and less profitable firms to a larger extent.     

Does distance matter for institutional delivery in rural India?

This article estimates the causal effect of distance to health facility on in-facility birth in rural India, taking into account the endogenous placement of the health facility. We find that women living farther away from the health facilities are less likely to give birth at a health facility. Each additional kilometre from the nearest health facility is associated with a 4.4% decline in the probability of in-facility birth. Policy simulation results indicate that providing access to a health facility within 5 km would increase institutional delivery by 10%. Overall, our findings confirm that distance is an important barrier to in-facility births in rural India.     

The real exchange rate in Brazil Mean reversion or random walk in the long run?

This paper studies the behavior of the real exchange rate in Brazil over the longest possible period for which data are available: 1855–1990. Does the real exchange rate follow a random walk or does it revert to its mean, possibly nonstationary, level? The evidence is mixed. Formal tests can not reject the hypothesis of nonstationary behavior, although the judgement is borderline. However, time-series identification favors a stationary interpretation, and simple autoregressive processes for the real exchange rate yield extremely robust and satisfactory estimates.     

Renewable energy subsidies: Second-best policy or fatal aberration for mitigation?

This paper evaluates the consequences of renewable energy policies on welfare and energy prices in a world where carbon pricing is imperfect and the regulator seeks to limit emissions to a (cumulative) target. The imperfectness of the carbon price is motivated by political concerns regarding distributional effects of increased energy prices. Hence, carbon prices are considered to be temporarily or permanently absent or endogenously constrained by their effect on energy prices. We use a global general equilibrium model with an intertemporal fossil resource sector and calculate intertemporally optimal policies from a broad set of policy instruments including carbon taxes, renewable energy subsidies and feed-in-tariffs, among others. If carbon pricing is permanently missing, mitigation costs increase by a multiple (compared to the optimal carbon pricing policy) for a wide range of parameters describing extraction costs, renewable energy costs, substitution possibilities and normative attitudes. Furthermore, we show that small deviations from the second-best subsidy can lead to strong increases in emissions and consumption losses. This confirms the rising concerns about the occurrence of unintended side effects of climate policy – a new version of the green paradox. Smart combinations of carbon prices and renewable energy subsidies, however, can achieve ambitious mitigation targets at moderate additional costs without leading to high energy price increases.     

Does the role of observer countries in the regional trade agreement matter for intra-regional trade ?

This article investigates the effects of trade by observed economies on the intra-regional trade by South Asian Association for Regional Cooperation (SAARC) members using Poison pseudo maximum likelihood estimator (PPML) gravity models with panel data over the period 2008–2014. Eight SAARC members and eight observed countries, including the EU, are analysed in capturing the trade effect of observed economies on intra-regional trade in SAARC. This article provides an empirical measure of observers’ trade, FDI and Official development assistance (ODA) with SAARC if the exports and imports of observers to/from SAARC have positive or negative signs for intra-regional exports and imports. The results show that the exports and imports of observers to SAARC members have positive effects on bilateral exports among the members. The FDI of observers reduces the bilateral intra-imports in SAARC and ODA also has a negative effect on bilateral exports among the members. These results imply that the imports by SAARC members from observer countries increase intra-regional trade in the region. The FDI and ODA increase and decrease intra-regional trade in SAARC, respectively, implying that the policies for both FDI inflow from observers and efficient aid management are needed to increase regional welfare. The study also recommends that trade between SAARC members and its observers help to increase intra-regional trade in SAARC.     

Does microfinance empower women? Evidence from self‐help groups in India

Microfinance programmes like the Self Help Bank Linkage Program in India have been increasingly promoted for their positive economic impact and the belief that they empower women. However, only a few studies rigorously examine the link between microfinance and women’s empowerment. This article contributes to this discussion by arguing that women’s empowerment takes place when women challenge the existing social norms and culture, to effectively improve their well‐being. It empirically validates this hypothesis by using quasi‐experimental household sample data collected for five states in India for 2000 and 2003. A general model is estimated by employing appropriate techniques to treat the ordinal variables in order to estimate the impact of the Self Help Group (SHG) on women’s empowerment for 2000 and 2003. The results strongly demonstrate that on average, there is a significant increase in the empowerment of women in the SHG members group. No such significant change is observed however, for the members of the control group. The elegance of the result lies in the fact that the group of SHG participants show clear evidence of a significant and higher empowerment, while allowing for the possibility that some members might have been more empowered than others.     

Do regional trade agreements stimulate FDI? Evidence for the Agadir,MERCOSUR and AFTA regions

The integration of emerging markets into the global economy is heavily promoted by foreign direct investment (FDI ) inflows. Among the factors explaining the location of FDI , regional trade agreements (RTA s) can be relevant for emerging markets, as they can promote economic integration and increase the attractiveness of the region for foreign investors. This paper investigates the impact of South–South trade agreements on the FDI decision of multinationals, where the Agadir, mercado comun del sur (MERCOSUR), and ASEAN free trade area (AFTA) agreements are considered. Three panels of countries are defined, where the members joined a specific agreement or not. Non‐Gulf Arab states are compared to better performing regions in Latin America and Southern and Eastern Asia. The analysis provides evidence that openness to foreign trade and financial markets are among the main catalysts to attract FDI , provided that business‐friendly institutions exist in the host country. Other variables, like the size of the industrial sector, urbanization rates, and external debt appear to be important in some cases. The integration of China into the world economy is a specific trigger for FDI to Asian destinations. Since RTA s influence the market size by reducing barriers to trade, their impact operates via GDP growth and openness. Gains from the agreement are striking for Latin America and Asia, but not for Arab states. To attract more FDI , business‐friendly institutional reforms and mechanisms to support new firm foundation should be implemented in this region.     

Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit

Does the selection effect of trade work solely through competition from imports, or does the export market further contribute to firm selection? This paper provides a re-interpretation of the different mechanisms in terms of selection on profitability—rather than productivity—and derives novel predictions regarding the export market and the role of product differentiation. Empirical results for a sample of Danish manufacturing industries confirm the import-“push” hypothesis as well as the export-“pull” hypothesis, but also reveal differences across industries. The selection effect of trade is mainly driven by the “import-push” if product differentiation is high, whereas it is driven by the “export-pull” if goods are homogeneous.     

Bargaining or Backlash? Evidence on Intimate Partner Violence from the Dominican Republic

This essay explores the role of economic, political, and social factors in the incidence of intimate partner violence (IPV). It considers the extent to which two prominent theses on the determinants of IPV – (1) the household bargaining model (HBM), and (2) the male backlash model (MBM) – best explain this phenomenon in the case of the Dominican Republic. Drawing on the 2007 Demographic and Health Survey (DHS), which differentiates between physical and sexual IPV, results from logistic regressions reveal that the HBM better explains physical IPV, while the MBM better predicts sexual IPV. Further, the HBM does better accounting for IPV among wealthier women, while the MBM best explains IPV among poorer women. The findings suggest the need to reconsider broad programs and policies intended to prevent and ameliorate IPV in the Dominican Republic, and to implement targeted initiatives focusing on the economic factors motivating them.     

Voting on the environment: Price or ideology? Evidence from Swiss referendums

Studies on preferences for environmental quality usually posit that price and income explain most of the observed choices. Incorporating recent advances in the economics of non-selfish behavior into the traditional public choice approach, we argue that the willingness to contribute to public goods as well as social norms need to be taken into account when analyzing environmental voting outcomes. We study aggregate results of three ballot proposals in Switzerland put to vote in the year 2000 which foresaw different tax schemes on fossil energy. Our main results show that the aggregate level choice pattern is to be explained by income as well as structural attributes that make costs and benefits of the projects vary. More importantly, our results underline the importance of including variables pertaining to the notion of ideology, both in terms of statistical fit and obtaining unbiased estimates for price and income determinants.     

Are children an incentive or a disincentive for migration? Evidence from Vietnam

This study analyzes the influence of children on household migration decisions using data on current internal movement in Vietnam a country that has experienced significant rural–urban migration in the recent years. Families with children usually have three migration choices: move together, stay together or send only one parent to work afar. Using an instrumental variable approach, we show that having an additional child reduces the probability of household migration by 0.0115, while it increases the likelihood of fathers’ migration by 0.0121. These effects suggest that households with more children may be less mobile but may have a greater economic need for migration.