DOES CULTURE AFFECT ELECTORAL OUTCOMES? EVIDENCE FROM TRANSITION COUNTRIES

Why do some societies fail to adopt “good” economic institutions? Recent literature points to the role of complementarities between social norms and proposed formal rules in advancing institutional change. To shed light on one potential mechanism, we track election performance of executive parties in up to 18 post‐communist democracies over 1991–2015 to test whether cultural attitudes influenced voters' response to market reform. We show that in more individualistic cultures, reform is associated with greater reward for the incumbent in the next election. The implication is that in democracies, voters select policies and institutions that are in line with prevailing culture. (JEL O17, P35, Z1)     

DOES TEACHER QUALITY AFFECT STUDENT PERFORMANCE? EVIDENCE FROM AN ITALIAN UNIVERSITY

In this paper, we analyse whether the characteristics of university teaching staff matter with regard to students' performance and interest in the discipline. We use data on about 1000 students enrolled on the first-level degree course in business and economics at a medium-sized Italian university. Thanks to the random assignment of students to different teaching classes during their first year, we are able to analyse the effect that teachers with different characteristics, in terms of experience and research productivity, produce both on students' performance, measured in terms of the grades obtained at subsequent examinations, and on courses chosen. Our results suggest that teacher quality has statistically significant effects on students' grades in subsequent courses. These effects are also robust after controlling for unobserved individual characteristics. On the other hand, we find less clear evidence when relating teacher quality to student involvement with a subject. It emerges that research productivity does not produce a statistically significant effect on the probability of a student undertaking additional courses in a subject, while more experienced teachers have a negative impact. However, also this effect does not become statistically significant when we run separate regressions for different disciplines.     

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)     

DOES MONOPOLISTIC COMPETITION EXIST IN THE MENA REGION? EVIDENCE FROM THE BANKING SECTOR

The goal of this paper is to empirically assess the level of banking competition in selected Middle East and Northern African (MENA) countries. The analysis employs the estimation of a non‐structural indicator (H‐statistic) introduced by Panzar and Rosse and draws upon a panel dataset of eight MENA countries (Algeria, Egypt, Israel, Jordan, Morocco, Oman, Saudi Arabia, and United Arab Emirates) over the period 1997–2012. The empirical findings are robust towards three different panel data econometric techniques (Ordinary Least Squares, Pooled Generalized Least Squares with Fixed Effects, and Generalized Method of Moments) and consistent with other similar studies, providing sufficient evidence in favour of a banking monopolistic competition regime. Furthermore, the estimation of three other alternative measures of competition (Lerner index, adjusted Lerner index, and conduct parameter) provides similar results, revealing that the banking sector in the MENA region is characterized by a low level of Significant Market Power (SMP). Overall, the analysis shows that, despite similarities in the process of financial regulatory reforms undertaken in the eight MENA countries, the observed competition levels of banks vary substantially, with Algeria and Morocco consistently outperforming the rest of the region.     

DOES FOREIGN DIRECT INVESTMENT PROMOTE ECONOMIC GROWTH? EVIDENCE FROM EAST ASIA AND LATIN AMERICA

Although there is considerable evidence on the link between foreign direct investment (FDI) and economic growth in developing countries, causal patterns of the two variables has not been investigated yet with a reliable procedure. This article provides an empirical assessment of the issue by using data for 11 economies in East Asia and Latin America. Although FDI is expected to boost host economic growth, it is shown that the extent to which FDI is growth-enhancing appears to depend on country-specific characteristics. Particularly, FDI tends to be more likely to promote economic growth when host countries adopt liberalized trade regime, improve education and thereby human capital conditions, encourage export-oriented FDI, and maintain macroeconomic stability.     

DOES INDIAN CASINO GAMBLING REDUCE STATE REVENUES? EVIDENCE FROM ARIZONA

Critics of Indian gaming contend that reservation casinos have a negative impact on state economies. This paper tests the hypothesis that the introduction of Indian casinos caused a structural change in the formation of Arizona state revenues. Data are from Maricopa County, the largest county in Arizona. Findings suggest that Indian casinos may divert funds from taxable to non-taxable sectors. The growth in tax revenue from non-gaming sectors of the economy has masked these displacement effects. However, given the trend toward increasing the proportion of state funds from sales taxes, a diminution in the rate of economic growth could have serious implications for future state budgets.     

DOES FINANCIAL MARKET DEVELOPMENT STIMULATE SAVINGS? EVIDENCE FROM EMERGING STOCK MARKETS

This paper examines the empirical relation between financial market development, as measured by the stock market, and gross private savings rates in 16 emerging markets over 1982-1993. With data from all 16 countries, there is evidence of a significant positive relation between savings and stock market size and liquidity. When countries with outlying values for the stock market measures are excluded, however, all significance disappears. The results suggest that a growing or deepening stock market will not necessarily be associated with higher savings rates. ( JEL E21, 016)     

DO TARGETED VOUCHERS INSTILL HABITS? EVIDENCE FROM WOMEN,INFANTS, AND CHILDREN

We examine whether programs that provide vouchers to households continue to influence behavior after the household leaves the program. Using detailed scanner data, we test whether benefit vouchers received through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) change household purchasing decisions and whether these changes persist even after households are no longer eligible to participate in the program. In 2009, the package of goods available through WIC vouchers changed. Examining variation due to this package change, we show that the WIC vouchers change purchasing decisions during eligibility, but that effects fade after eligibility ends. (JEL I38, I18, J13)     

DOES FOREIGN INTELLECTUAL PROPERTY RIGHTS PROTECTION AFFECT US EXPORTS AND FDI?

Several previous studies have examined the relationship between intellectual property rights (IPR) protection, exports, and FDI independently. However, very few prior analyses jointly examined the linkages between IPR protection and multiple modes of international transactions. This paper investigates how foreign IPR protection affects how US firms jointly serve overseas markets through exports and FDI. Using both static pooled regressions and a dynamic panel GMM estimator on a panel data of 53 countries, we examine whether stronger foreign IPR protection stimulates US international transactions. The empirical results suggest that foreign countries that strengthen their IPR protection, especially those with strong imitative ability, can attract more international transactions from the USA.     

MONETARY POLICY AND INEQUALITY: HOW DOES ONE AFFECT THE OTHER?

This article studies a labor-supply-side channel affecting the relationship between monetary policy and income inequality. To this end, I build a heterogeneous-agent New Keynesian economy with indivisible labor in which both macro and micro labor supply elasticities are endogenously generated. First, I find that monetary policy shocks have distributional consequences due to a substantial heterogeneity in labor supply elasticity across households. Second, a more equal economy is associated with more effective monetary policy in terms of output. I document supporting empirical evidence for the key mechanism of the model using microlevel data and state-level data in the United States.     

DOES TELEVISION VIEWING AFFECT CHILDREN'S BEHAVIOUR?

Using three‐period panel data drawn from the National Longitudinal Survey of Youth 1979, we investigate whether television (TV) viewing at ages 6–7 and 8–9 years affects children's social and behavioural development at ages 8–9 years. Dynamic panel data models are estimated to handle the unobserved child‐specific factor, endogeneity of TV viewing, and the dynamic nature of the causal relation. Special emphasis is placed on this last aspect, focusing on how early TV viewing affects interim child behavioural problems and in turn affects future TV viewing. Overall, we find that TV viewing during ages 6–7 and 8–9 years increases child behavioural problems at ages 8–9 years, and that the effect is economically sizable.     

DOES COBRA'S RETROACTIVE COVERAGE FEATURE ENCOURAGE DELAYED ENROLLMENT?

The Consolidated Omnibus Reconciliation Act (COBRA) of 1985, which aimed to protect individuals experiencing employment separation from losing employer‐provided health insurance, contains a feature that is unusual among health insurance markets. Individuals eligible for COBRA have 60 days following employment separation to elect coverage, and if they elect, coverage is retroactive back to the date of employment separation. This paper investigates whether employment separators take advantage of COBRA's retroactive coverage provision by delaying enrollment until after incurring medical expenses. Results indicate that an individual whose household incurs medical expenses during the months after employment separation is approximately 1?10 percentage points more likely to subsequently enroll in COBRA, depending on the magnitude of expenses. (JEL I18, I11)     

DOES CONTRACEPTION BENEFIT WOMEN? STRUCTURE,AGENCY, AND WELL-BEING IN RURAL MEXICO

The authors of this paper examine Amartya Sen's contributions to the concept of human well-being from a gender perspective and argue that this concept is particularly useful for explaining women's decisions on contraceptive use. The study draws on data collected in six rural communities of Chiapas, Mexico. It emphasizes the ways in which public discourse articulates the apparent benefits of having small families; the context of the household and community in which rural women make reproductive decisions; and the impact of family planning programs on women's sense of subjective well-being. In particular, it questions the assumption that reduced fertility through contraception necessarily enhances women's well-being and points to the importance that women attach to being a party to reproductive decisions. The authors also explore the links between women's assessment of these decisions and of paid work, and their actual education levels and real possibilities of employment.     

DOES CHINA'S RURAL COOPERATIVE MEDICAL SYSTEM ACHIEVE ITS GOALS? EVIDENCE FROM THE CHINA HEALTH SURVEILLANCE BASELINE SURVEY IN 2001

The Chinese government is in the process of providing health insurance to the uninsured rural population by expanding the rural Cooperative Medical System (CMS) to every rural county. Using the China Health Surveillance Baseline Survey in 2001, we conducted a case study on two CMS pilot programs and investigated whether or not enrolling in these CMS pilot programs has led to an increase in health care utilization and a decrease in the likelihood of catastrophic health spending for rural residents. Matched data sets are produced using propensity score and the instrumental variable (IV) method is used. We have found that the CMS pilot programs have had a significant and positive effect on the probability of seeking medical care and the number of visits. However, the CMS programs did not seem to have had a significant impact on households' out‐of‐pocket health expenditure and on reducing catastrophic spending. The findings generated from the matched data are consistent with those obtained from the full set of data and those obtained from the IV method. (JEL I18)     

DOES RELIGIOSITY AFFECT SUPPORT FOR POLITICAL COMPROMISE?

Does religiosity affect adherents' attitude toward political compromise? To address this question and overcome the potential simultaneity of religious activity and political attitudes, we exploit exogenous variation in the start date of the Selichot (“Forgiveness”), a period in which many Jews, including nonadherents, take part in an intense prayer schedule. Using a two‐wave survey, we find that an increase in the salience of religiosity leads to the adoption of more hard‐line positions against a land‐for‐peace compromise. Examining several potential mechanisms for this attitudinal shift, our evidence points to the impact of the intensified prayer period on adherents' tolerance for risk.     

WHAT DETERMINES RELIGIOUS SCHOOL CHOICE? THEORY AND EVIDENCE FROM RURAL BANGLADESH

This paper looks at the determinants of school selection in rural Bangladesh, focusing on the choice between registered Islamic and non‐religious schools. Using a unique dataset on secondary school‐age children from rural Bangladesh, we find that madrasah enrolment falls as household income increases. At the same time, more religious households, and those that live further away from a non‐religious school are more likely to send their children to madrasahs. However, in contrast to the theory, we find that Islamic school demand does not respond to the average quality of schools in the locality.     

DOES MARKET‐ORIENTED ECONOMIC TRANSITION ENHANCE ENTERPRISE PRODUCTIVITY? EVIDENCE FROM CHINA'S ENTERPRISES

Using a panel of China's enterprises from 1999 to 2007, this paper examined how market‐oriented economic transition affects the productivity of China's enterprises given the various stages of enterprises in the commercialization process and given the market segmentation among Chinese different regions. The main findings are that: (i) enterprises with higher degrees of commercialization have relatively higher productivity, whereas enterprises with higher degrees of market segmentation have relatively lower productivity; (ii) the commercialization process and market segmentation act indirectly affect productivity through enterprises' capacity to export, innovate and obtain business loans; and (iii) the indirect effects are found to be significantly different between the commercialization process and market segmentation, highlighting the effects of the market‐oriented economic transition on enterprises' productivity. This paper provides reliable enterprise‐level evidence regarding the sources and evolution of enterprise productivity during different stages of market‐oriented economic transition in China.     

WHO VOTES EXPRESSIVELY,AND WHY? EXPERIMENTAL EVIDENCE

Experiments have shown that some people behave more altruistically in collective decisions than they do in individual ones, which could be interpreted as an ‘expressive voting’ effect. However, there is substantial variation in the behaviour of experimental participants. We conduct experiments to explore the reasons for this variation, and find that certain characteristics are sometimes associated with a propensity for expressive voting. However, the strength of these effects depends on the ordering of individual and collective choices. The ‘warm glow’ of expressive voting can influence subsequent individual decisions, and the ‘cold shower’ of individual selfishness can influence subsequent collective decisions.