The Feldstein–Horioka puzzle revisited: Is the home-bias much less?

The large correlation between domestic savings and investment is well documented and is known as the Feldstein–Horioka puzzle. We demonstrate that estimates of the FH coefficients using the standard framework are biased upward in the presence of highly positively correlated inward and outward capital flows. Using data for the 14 OECD countries, the analysis shows that the significant home bias documented by FH and others is also consistent with much higher levels of capital mobility when capital outflows and inflows are highly positively correlated. Taking account for these correlations reduces the estimated home bias somewhere between 45% and 90%.     

Forward-premium puzzle: is it time to abandon the usual regression?

The forward premium puzzle is usually evidenced by the rejection of the null hypothesis in the uncovered interest parity (UIP) regression. Because this parity need only hold in a risk-neutral world, a risk adjustment term is missing from the equation if speculation in foreign exchange markets is risky. We deal with this issue following the literature which assumes that discounted returns on foreign government bonds are log-normal, so we can linearize the Euler pricing equations (in level) and obtain a modified UIP system for which the risk adjustment term is obtained by applying to the pricing kernel-based relations a generalized autoregressive conditional heteroscedasticity-in-mean model. However, here we innovate by adopting a methodology which differs from all these related works. We construct and use a stochastic discount factor that does not depend on a specific model, by residing in the space of returns which we extract from the data by simply imposing the orthogonality restrictions represented by the Euler equations. So, we devise a purely statistical pricing kernel that performs well in in-sample level equations. Somewhat disappointingly, the risk premium inclusion in the conventional regression changes neither the significance nor the magnitude of the forecasting power of the forward premium for most currencies we study. The contrasting performance of the tests in level and in logs suggests that linearization may be to blame.     

Are distance effects really a puzzle?

Given the distance proxies for trade costs, the onset of globalization implies that geographical distance would matter less for trade. However, year-on-year regressions of a log-linearized gravity model estimated by the ordinary least squares (OLS) method usually suggest that the negative impact of distance on trade is rising since the 1950s during the late 20th century. These seemingly counter-intuitive results may occur due to the omission of the extensive margin as well as the neglect of the Jensen's inequality. This paper investigates these two potential solutions but that only the second seems to work. After considering Jensen's inequality, the distance effects declined over the period 1950–1999. In addition, this paper proposes a simple theoretical model to identify trade costs. The empirical results also show a declining trend of trade costs over the same time period.     

Diversification versus optimality: is there really a diversification puzzle?

In this paper, we provide a general valuation of the diversification attitude of investors. First, we empirically examine the diversification of mean-variance optimal choices in the US stock market during the 11-year period 2003–2013. We then analyze the diversification problem from the perspective of risk-averse investors and risk-seeking investors. Second, we prove that investors’ optimal choices will be similar if their utility functions are not too distant, independent of their tolerance (or aversion) to risk. Finally, we discuss investors’ attitude towards diversification when the choices available to investors depend on several parameters.     

Nursing overtime: why, how much, and under what working conditions?

To provide the best care to patients, the physical wellness of nursing staff is essential. Current evidence indicates long work hours can lead to adverse nurse and patient outcomes. To provide quality and safe patient care, both staff nurses and nurse managers need to recognize the adverse effects of overtime, whether it is mandatory or voluntary. Results of this study showed overtime was not used more when there was an increase in nursing shortages. Further, overtime was not used to control shortages; rather, understaffing was an underlying condition of the nursing practice, at least in the study sample. Thus, efforts must be made not only to prevent nurses from working long hours, but also to resolve the problem of understaffing in order to retain qualified nurses in hospitals.     

Does unemployment lead to a less healthy lifestyle?

In this article, we use 22 years of data from the German Socio-Economic Panel and information on plant closures to investigate the effects of unemployment on four indicators of unhealthy lifestyles: diet, alcohol consumption, smoking and (a lack of) physical activity. In contrast to much of the existing literature, which unlike our analysis is unable to assess causality, our results provide little evidence that unemployment gives rise to unhealthy lifestyles.     

Reciprocity under moral wiggle room: Is it a preference or a constraint?

We analyze reciprocal behavior when moral wiggle room exists. Dana et al. (Econ Theory 33(1):67–80, 2007) show that giving in a dictator game is inconsistent with distributional preferences as the giving rate drops when situational excuses for selfish behavior are provided. Our binary trust game closely follows their design. Only a preceding stage (safe outside option vs. enter the game) is added in order to introduce reciprocity. We find significantly lower rates of selfish choices in the trust baseline in comparison to our treatments that feature moral wiggle room manipulations and a dictator baseline. It seems that reciprocal behavior is not only due to people liking to reciprocate but also because they feel obliged to do so.     

Why do women still earn less than men? Decomposing the Dutch gender pay gap, 1996–2006

Despite major improvements in women's labour market attachment, women still earn considerably less than men. International research shows that the persistence of the gender pay gap may be due to the fact that although the gap in characteristics between men and women is diminishing, changes in the wage structure counteract this change. This article will study whether this ‘swimming upstream’ phenomenon is also playing a role in the rather slow convergence between male and female wages in the Netherlands. Our results indicate that this is not the case; most of the changes in the Dutch wage structure have been rather favourable to women. The lacking convergence in wages has to be explained from the fact that despite the favourable changes, the Dutch wage structure still contains a considerable implicit gender bias.     

Uncovered interest parity puzzle: does it really exist?

Most studies indicate the violation of the Uncovered Interest Parity (UIP) restrictions, and indeed, there are many who find a statistically significant and negative interest rate differential slope. This finding has now become known in international economics as the UIP puzzle. Using recent data on four major currencies vis-à-vis the US dollar and employing the Generalized Method of Moments (GMM) technique, our estimation results indicate the absence of any relationship between the interest rate differential and the expected change in the exchange rate, rather than the presence of the UIP puzzle.     

Deprivation of Women and Men Living in a Couple: Sharing or Unequal Division?

In standard poverty analyses, all household members are assumed to share equal living conditions. Though a few national studies exist, this paper is the first to present empirical evidence on this issue for the EU, using the 2015 wave of the EU Statistics on Income and Living Conditions. We map the extent of intra-couple inequality in deprivation, and analyze its determinants. We find that for most items, the gender difference in lack between partners, though generally small, is significant and at the disadvantage of women. When aggregating the individual items into a deprivation scale, couples where the number of enforced lacks is higher for the woman (9.2 percent) are (significantly) more numerous than couples where the man is disadvantaged (6.5 percent), at the EU level. Econometric analysis shows that the work status of the partners and their relative contribution to the joint income are important determinants of the intra-couple gender deprivation gap.     

Buy local, pollute less: What drives households to join a community supported farm?

This paper examines which factors determine the participation of households in long term contracting with local farmers. Are households motivated by reducing the environmental impacts of their food consumption? A discrete-choice model of community supported agriculture (CSA) participation is applied to a sample of 264 French households. The findings suggest that difficult-to-measure attributes, notably environmental considerations play a major role in explaining CSA participation.     

Pirates and fishermen: Is less patrolling always bad?

Motivated by the Somali fishermen-pirates, I explore the time allocation decision of potential pirates between piracy and an alternative non-violent occupation, fishing, when the returns of both piracy and fishing are sensitive to patrolling intensity. For a range of parameters, the static model yields multiple equilibria, an “efficient” one with no patrolling and low piracy, a less efficient equilibrium with intermediate levels of both piracy and patrolling and a highly inefficient high-patrolling high-piracy equilibrium. Analyzing the dynamic analogue, I obtain the surprising result that sufficiently low patrolling can be a good strategy.     

The risk elicitation puzzle revisited: Across-methods (in)consistency?

Experimental Economics - With the rise of experimental research in the social sciences, numerous methods to elicit and classify people’s risk attitudes in the laboratory have evolved....     

The puzzle of aid and growth: any role for investment?

This paper explores the relationship between aid and growth, through the explicit inclusion of the investment component. We construct a new database, which adds to the previous papers’ variables (policy, institutional quality and civil unrest) some capital accumulation indicators. Partly based on the main literature, a simultaneous equations model is constructed to account for endogeneity and different methods are applied for a robustness check. Although in line with previous literature, in this paper we find that the capital accumulation process is a significant and fundamental channel to understand the link between development assistance and growth. In low-income countries aid effectiveness seems to be significantly lower.     

Austrian exporters: unique or alike? New insights and missing puzzle pieces

In this paper we provide detailed evidence on the performance of exporters compared to non-exporters in Austrian manufacturing industries based on firm-level data. The centrepiece of the study is the issue of the export premium, i.e. the size and productivity advantages of exporting firms compared to their purely domestic peers. We present evidence for the existence of sales, labour productivity and wage premia. These results are largely in line with the results found for other European countries. Furthermore we document the existence of large differences in these premia across industries and provide explanations for this finding. Our results are robust with regards to including additional firm control variables such as employment and R&D-related variables though the magnitudes of the export premia become much smaller. We also propose a new interpretation of the export premium estimation with firm fixed effects which we interpret as a result on export switchers. Finally, we employ a probit model to document the importance of sunk export costs for the decision to export.     

What happens after working part time? Integration, maintenance or exclusionary transitions in Britain and western Germany

We address the issues raised by Günther Schmid's proposalto develop transitional labour markets, by examining theoreticalexplanations and empirical evidence affecting transitions throughpart-time work. By analysing British and German Household Paneldata, we outline the changing characteristics of part-time employmentand employees in the early 1990s. We show that only a tiny numberof women were able to use part-time work as a bridge back intoa full-time job. A substantial proportion ends up dropping outof employment, especially in Germany. Having previous employmentexperience is more likely to hinder exclusionary transitionpatterns, whereas the presence of more than one child, especiallyin Germany, is associated with dropping out. We conclude byassessing the implication of these findings for both policyreform and theoretical developments.     

More stringent BITs, less ambiguous effects on FDI? Not a bit!

We show that the effectiveness of bilateral investment treaties in promoting FDI inflows remains elusive even when accounting for the strength of investor-state dispute settlement provisions contained in various, though far from all, BITs.