Growth and convergence: A profile of distribution dynamics and mobility

In this paper we focus primarily on the dynamic evolution of the world distribution of growth rates in per capita GDP. We propose new concepts and measures of “convergence,” or “divergence” that are based on entropy distances and dominance relations between groups of countries over time.     

Robust results on the sharing of firm-specific information: Incentives and welfare effects

Contrary to much of the existing literature, we obtain robust and clear-cut results for the incentives and welfare effects of information sharing when information is firm-specific. We show that firms’ incentives to share this type of information are aligned with social welfare. Whenever revealing information is the dominant strategy (such as for Cournot firms revealing costs or Cournot and Bertrand firms revealing demand), it is socially beneficial. Only cost information in Bertrand competition will not be revealed but this is socially desirable, too. These findings are independent of distributional assumptions on random shocks and signals and hold for general asymmetric oligopoly with any mixture of substitute, complementary and independent goods.     

Fiscal policy,entry and capital accumulation: Hump-shaped responses

In this paper we consider the entry and exit of firms in a Ramsey model with capital and an endogenous labour supply. At the firm level, there is a fixed cost combined with increasing marginal cost, which gives a standard U-shaped cost curve with optimal firm size. The costs of entry (exit) are quadratic in the flow of new firms. The number of firms becomes a second state variable and the entry dynamics gives rise to a richer set of dynamics than in the standard case: in particular, there is likely to be a hump shaped response of output to a fiscal shock with maximum effect after impact and before steady-state is reached. Output and capital per firm are also likely to be hump shaped.     

The phantom of the opera: Cultural amenities, human capital, and regional economic growth

We analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, we draw on a quasi-natural experiment in German history and exploit the exogenous spatial distribution of baroque opera houses built as a part of rulers' competition for prestigious cultural sights. Robustness tests confirm our strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. A cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.     

The heterogeneous impact of taxation on economic development: New insights from a panel cointegration approach

In this paper, we study the role of taxation on long-run income performance. In the theoretical part of the study, we develop a stylized model based on Barro (1990), in which income taxation has two contradictory roles in the standard Solow (1956) setup: on the one hand, taxation appropriates resources that would otherwise be used for physical capital accumulation, and on the other, it is the source of government spending, which is used to support private production. In the empirical part of the study, the impact of consumption tax, personal income tax, corporate profit tax and property tax on income is estimated using the common correlated effects (CCE) panel cointegration approach, which allows for cross-sectional dependencies and provides both panel- and country-specific results. The panel findings for 30 OECD countries for the period of 1995–2016 indicate that only consumption tax has a statistically significant negative effect on long-run income. However, because the type and sign of the tax coefficients are heterogeneous for the country-specific results, we conclude that taxation has heterogeneous effects on income.     

Anticipation,learning and welfare: the case of distortionary taxation

We study the impact of anticipated fiscal policy changes in a Ramsey economy where agents form long-horizon expectations using adaptive learning. We extend the existing framework by introducing distortionary taxes as well as elastic labor supply, which makes agents’ decisions non-predetermined but more realistic. We detect that the dynamic responses to anticipated tax changes under learning have oscillatory behavior that can be interpreted as self-fulfilling waves of optimism and pessimism emerging from systematic forecast errors. Moreover, we demonstrate that these waves can have important implications for the welfare consequences of fiscal reforms.     

The Effectiveness of Delhi's Fire Safety Regulation Amidst Poverty,Ignorance, Corruption and Non‐Compliance

This paper considers the effectiveness of fire safety regulation in Delhi, India. Ten theories are summarised that are used to explain why regulation does or does not work, or why fires might increase. Can imperfect markets generate institutions outside of the political process that produce reasonable results despite challenges of poverty, rising population density, social chaos, widespread corruption and non‐compliance with rules? In Delhi, city fire departments, albeit hampered by dysfunctional or non‐existent regulation, along with social and individual incentives provided by markets, have produced a relatively high level of safety.     

The political economy of regional integration projects at borders where poor and rich meet: The role of cross-border shopping and community sorting

At borders between poor and rich countries, huge service price differentials could be exploited to mutual benefit, offering better-paid job opportunities to the poor as well as better shopping opportunities to the rich. However, cross-border shopping is often limited by the substantial transaction costs of crossing the border. Moreover, countries and regions frequently fail to cut these transaction costs even when they have the opportunity to do so. We provide a politico-economic analysis of cross-border integration projects. More specifically, we show how the political outcome depends on (i) intra-country mobility, (ii) decision making and housing ownership regimes, and (iii) federal grants and international border regulations. Our analysis builds on two key characteristics in which individuals differ: interregional mobility and intercultural ability.     

Growth,deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries

We examine the relationship between fiscal deficits and per-capita income growth in a panel of 27 European countries, allowing for perceived risks, in terms of fiscal sustainability, associated with additional government spending. Such risks are proxied by the conditional variability of manufacturing production and stock market returns and by the unconditional variability of two survey-based economic-sentiment indicators. To help clarifying how fiscal variables impact on growth and to provide a point of reference for the interpretation of the empirical results a structural growth model is first identified. We find evidence of an asymmetric relationship, in that fiscal deficits give rise to adverse growth effects if they coincide with high uncertainty regarding the prospects of the economy and no significant negative growth effects in the low-uncertainty case.     

Deconstructing distressed-property spillovers: The effects of vacant,tax-delinquent,and foreclosed properties in housing submarkets

In this empirical analysis, we estimate the impacts of property-tax delinquency, vacancy, and foreclosures on the value of neighboring homes. We demonstrate that these externalities differ in high- and low-poverty submarkets. Numerous studies have estimated the externality of foreclosures. These papers theorize that the foreclosure impact works partially through creating vacant and neglected homes. To our knowledge, this is only the second attempt to estimate the impact of vacancy itself and the first to use tax-delinquency as a measure of property neglect. We link vacancy observations from Postal Service data with property-tax delinquency and sales data from Cuyahoga County, Ohio. We find that an additional property within 500 ft that is vacant or delinquent reduces a home’s selling price by 1 to 2%. In low-poverty submarkets, the negative impact of a home that is both vacant and delinquent is ?4.6%. Low-poverty submarkets penalize a sale near a tax-current recent foreclosure by 4 to 8%. In high-poverty submarkets, we observe positive correlations of sale prices with vacant foreclosures. This may reflect lenders selectively foreclosing only on relatively well-maintained properties.     

Property rights protection,financial access and corporate R&D: Evidence from a large representative sample of Chinese firms

The motivation of this paper is to explore why corporate R&D investments are significantly different under similar institutional backgrounds. Our estimates not only confirm a positive relationship from property rights protection (hereafter PRP) to corporate R&D, but also show the mediation effect of financial access on this positive relationship. Thus, we use financial access to explain the variant effect of PRP on corporate R&D. With exogenous instrumental variables, our estimates are robust to endogeneity issues.     

Deirdre Mccloskey,Kirznerian Growth and The Role of Social Networks

This article expands on the view of Deirdre McCloskey that the economic growth of the Western world since the end of the eighteenth century can be explained by the process of entrepreneurial change as expounded by Israel Kirzner. This article argues that while Kirzner's approach to economic development is indeed fruitful, it should be augmented through the study of social networks, which McCloskey has largely ignored. When social networks are seen in the light of the Kirznerian process of entrepreneurship, they represent an important institution that relays information about the proper identification and perception of opportunities.     

Investment and Growth: The Impact of Britain's Post‐War Trunk Roads Programme

In Great Britain, a basic inter‐urban network of motorways was completed in a very short period between the end of 1959 and 1972. We calculate that this substantial investment had the potential to reduce most inter‐urban journey times by about one third. In spite of this, a recent OECD study suggested that the investment had no discernible positive impact on the trend rate of economic growth. We attribute this outcome to a serious misalignment of the early investments with the then predominant flows of industrial and commercial traffics and a significant, and probably endogenous, increase in real wages in a road transport industry in which labour productivity was slow to improve. We conclude with a number of policy recommendations.     

Gender,family and career in the era of boundarylessness: determinants and effects of intra- and inter-organizational mobility

Changes in patterns of long-term employment make understanding the determinants of different career forms increasingly important to careers research. At the same time, the rise of dual-earner families demands greater attention to the ways in which gender and family characteristics shape careers than has been paid by traditional research. This paper addresses these issues, examining the determinants and consequences of intra-organizational and inter-organizational mobility, using a sample of employees from dual-earner couples. We find significant gender differences in these different types of career mobility, and in the effect of family relations on different forms of mobility. Women experience more inter-organizational mobility, while men experience more intraorganizational mobility. Having more children positively influences men's intra-organizational mobility, but increases inter-organizational mobility for women. Marital instability increases intra-organizational mobility among women, but has no effect among men. Each form of mobility has distinctive effects on objective and subjective indicators of career success for both men and women. Moving between organizations tends to depress earnings, but has no effect on how successful people feel in their careers. Job changes within an organization increase earnings, but have a negative effect on perceived success.     

Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis

We review a large body of literature dealing with the effects of Foreign Direct Investment (FDI) on economies during their transformation from a command economic system toward a market system. We report the results of a meta-analysis based on the literature on externalities from FDI. The studies on emerging European markets covered in our survey report direct and indirect FDI effects weakening over time, similarly as in other FDI destination countries. This is imputable to a publication bias that is detected and to the fact that more sophisticated methods and more controls can be used once a sufficient time span is available. Panel studies are likely to find relatively lower spillover effects. The choice of the research design (definition of firm performance and foreign firm presence) matters. More specific to the sampled studies is the role played by forward and backward spillovers which dominate other channels in driving FDI externalities.     

Forecasting another’s enjoyment versus giving the right answer: Trust, shared values, task effects, and confidence in improving the acceptance of advice

In two experiments, participants received advice from another participant on a task either with a correct answer (intellective tasks) or without a correct answer (judgmental task), in which the participant had to make a forecast. In both experiments, the level of trust in the advisor and a perception of the advisor having similar values were important predictors of the acceptance of advice for a judgmental, taste forecast task, whereas advisor confidence was a more important predictor of the acceptance of advice on the intellective task. In Experiment 2, the face-to-face interactions between the decision-maker and the advisor were videotaped and coded. Advisors provided more information to decision-makers for the taste forecast than for the intellective task. Further, whether the advisor provided information to supplement their recommendation or not was a significant predictor of the acceptance of advice on the taste forecast, but not on the intellective task. The results are discussed in the context of previous research on advice, which has predominately used intellective tasks.