Values,institutions and the rise of Eastern Europe

We study the convergence of output per capita in a sample of 37 European countries to the German real GDP per capita level during the period 1999–2014 with the aim of testing whether the speed of convergence is uniform or depends on institutions, such as membership of the European Union, the euro, or values. The results suggest that the post‐communist economies are converging more rapidly than other countries in the sample and more so the closer they are integrated into the European Union. Moreover, we find that certain values are conducive to the catching up process and that it has generated increased job satisfaction and male labour force participation.     

The rise of obesity in Europe: an economic perspective

Obesity in Europe is rising. This paper investigates the economic rationales for public intervention to control obesity. We present new empirical evidence showing that family background is related to obesity among young European adults. This evidence provides a strong basis for intervention on equity grounds, particularly targeted towards children. The case for intervention on efficiency grounds is less clear-cut and in most cases the evidence is relatively weak. We find insufficient evidence that information deficiencies are important, as the majority of Europeans appear to be aware of the bad consequences of obesity on health. We also find that the potential health insurance externality -- non-obese effectively subsidizing obese individuals -- is small. In support of policy intervention, we show that there are product and labour market imperfections. Obese employees earn less than the non-obese. We also find that there is a remarkably high proportion of individuals with self-control problems, who fail to stick to their self-declared weight-related plans. Regulations that affect fast food advertisements and the location and access to fast food vending machines and establishments may help these individuals in controlling their weight.
--- Giorgio Brunello, Pierre-Carl Michaud and Anna Sanz-de-Galdeano     

Sources of productivity differentials in manufacturing in post-transition urban South-East Europe

The paper analyses the effects of urbanization and localisation economies on manufacturing firms’ productivity across urban landscapes in post-transition South-East European (SEE) countries. Fixed-effects panel data estimations on a large sample of firms show that the factors accounting for productivity advantages of manufacturing firms in urban post-transition SEE are related to the firms and to the environment in which these firms operate. Firms located in diversified cities benefit from a productivity premium generated in this type of agglomeration, while no evidence was found that the relative specialization across industries has any effect on firm productivity levels.     

Competition and the capital-labor conflict

This paper analyzes the distributional effects of changes in the intensity of product market competition. The focus is on the interaction between imperfect competition in product markets and bargaining in the labor market. The main result is that, while a uniform intensification of product market competition increases employment, it may cause real wages to fall, in the short run as well as in the long run. This is especially likely if labor market regulations are favorable to workers. Therefore, product market and labor market regulations tend to reinforce each other politically, and compensatory fiscal transfers may be needed in order to enact employment-enhancing deregulation policies.     

Class/racial conflict,intolerance, and distortions in urban form: Lessons for sustainability from the Detroit region

In this qualitative analysis into the equity conditions of urban sustainability, an examination is presented into the complexity of one particular aspect of intra-generational equity, racial and class discrimination and its role in distorting urban form and in generating resource inefficient and environmentally destructive human activity patterns. The article, therefore, focuses on the role of discrimination itself in encouraging ecological degradation. The Detroit region shows that racial and class conflicts can facilitate the shaping of the urban built environment as one population sub-group, largely white and upper-income, attempts to distance itself from another sub-group that is largely black, lower income, and considered a threat. The outcome is not only disinvestment and decline in the urban core, but also excessive suburbanization, as whites seek homogenous urban environments and use space to increase the distance between themselves and the black population. The study shows that the lack of cooperation and tolerance across ethnic/racial and class subgroups facilitates inefficient low-density and scattered developments, and excessive degradation of natural ecological systems.     

On the escalation and de-escalation of conflict

We introduce three extensions of the Hirshleifer–Skaperdas conflict game to study experimentally the effects of post-conflict behavior and repeated interaction on the allocation of effort between production and appropriation. Without repeated interaction, destruction of resources by defeated players can lead to lower appropriative efforts and higher overall efficiency. With repeated interaction, appropriative efforts are considerably reduced because some groups manage to avoid fighting altogether, often after substantial initial conflict. To attain peace, players must first engage in costly signaling by making themselves vulnerable and by forgoing the possibility to appropriate the resources of defeated opponents.     

Economic transition and the rise of alternative institutions

The economic transition from socialism in Russia has not resulted in the emergence of impersonal, rule-based institutions. Instead, the natural demand for institutions that protect property rights has led to the emergence of alternative, inefficient institutions such as that of cronyism – the practice of appointing personal acquaintances of the political leader to key positions. A political leader not constrained by institutions appoints cronies, as competent subordinates are more prone to switching allegiance to a potential challenger. As competence makes a bigger difference in a rule-based environment, such a leader has no interest in any institutional development. In a simple empirical exercise, using a dataset that covers the richest Russians, we find a positive and significant effect of direct connections to the personal circle of President Putin on the wealth of businessmen. The magnitude of the effect varies at different levels of rents available for redistribution and ‘network centrality of a businessman’: it is higher during the years of high oil prices, but is attenuated by the prominence of the businessman in the network.     

The rise and decline of the Soviet economy

The reasons for the rapid growth of the Soviet Union before roughly 1970 and for its subsequent growth slowdown are analysed. The concentration of investment on heavy industry and soft budget constraints explain most of the growth in the 1930s. The growth slowdown was due to disastrous investment decisions following the elimination of surplus labour and the diversion of research and development resources to the military rather than the failure of firms to carry out plans or diminishing returns to capital.     

Information technology and the rise of household bankruptcy

Several studies have attributed the rise of household bankruptcy in the past two decades to the decline of social stigma associated with default. Stigma explanations, however, cannot account for the large increase in the use of unsecured credit during this period. I explain the simultaneous increase in bankruptcy rates and unsecured credit as the result of improvements in credit-rating technologies. Using an environment where borrowers face heterogeneous default costs (unobservable by creditors), I show that such improvements will lead to agents with high default costs, i.e., “safe” borrowers, being able to borrow more. A quantitative example illustrates that this increased access to credit can be large enough to raise both equilibrium borrowing and default rates.     

Episodic flooding and the cost of sea-level rise

Previous studies of the cost of sea-level rise focus on the economic loss to inundated property rather than increased damage from episodic flood events to non-inundated property above sea level. This study uses a unique GIS database of three geographically diverse Chesapeake Bay communities that includes 1-ft elevation contours from remote sensing data, local tax assessment records, and aerial photographs of property location. Hedonic property value models estimate the loss from complete inundation, closely following the methodology of previous studies. Increased damage from episodic flooding is estimated using elevation-rated, actuarially fair flood insurance rates. Using a 3-ft sea-level rise over 100 years scenario, damage from episodic flooding averages 9 times the estimated loss from complete inundation, and is an average of 28 times greater under a 2-ft sea-level rise scenario. Although the study areas are not representative of all coastal areas, the results suggest that current studies may substantially underestimate the cost of sea-level rise.     

Resources and conflict in the Caspian Sea

The management of resources can shape or alleviate conflict. This article examines the case of the Caspian Sea as littoral states vie for oil fields in the transboundary water body. These five states have promoted conflicting proposals for the division of Caspian resources and are staking their claims through a mix of diplomatic efforts, international agreements, commercial contracts and militarization. Geoeconomic power has not fully surpassed more traditional, military control of territory in this context which continues to be complex on several geopolitical scales.     

Identity and group conflict

We experimentally investigate the effects of real and minimal identities on group conflict. In turn we provide a direct empirical test of the hypotheses coined by Amartya Sen that the salience of a real identity escalates conflict but that of a mere classification would not do so. In a baseline treatment, two groups – East Asians and Caucasians – engage in a group contest, but information on the racial composition of the groups is not revealed. In the minimal identity treatment each group is arbitrarily given a different color code, whereas in the real identity treatment the race information is revealed. Supporting Sen׳s hypotheses, we find that compared to the baseline, free-riding declines and conflict effort increases in the real identity treatment but not in the minimal identity treatment. Moreover, this occurs due to an increase in efforts in the real identity treatment by females in both racial groups.     

Social conflict and growth

Despite the predictions of the neoclassical theory of economic growth, we observe that poor countries have invested at lower rates and have not grown faster than rich countries. To explain these empirical regularities we provide a game-theoretic model of conflict between social groups over the distribution of income. Among all possible equilibria, we concentrate on those that are on the constrained Pareto frontier. We study how the level of wealth and the degree of inequality affects growth. We show how lower wealth can lead to lower growth and even to stagnation when the incentives to domestic accumulation are weakened by redistributive considerations.     

On the social efficiency of conflict

In sharp contrast with the economic literature on conflict, this paper shows that confrontation may be efficiency enhancing. Conditions are derived under which a contest over the exclusive control of a resource Pareto dominates peaceful access.     

Financialization and the rise in co-movement of commodity prices

Between January 2000 and June 2008, the FAO food price index rose by 96%. Besides the magnitude, the price rise was remarkable for the broad range of commodities affected; prices of agriculture commodities, energy, and metals all rose and fell together. These dramatic developments coincided with a massive inflow of investment in the commodities futures market, and the rise of commodities as an investment class. In this paper, I study causal links between the increase in the co-movement between commodity prices and financialization of the commodities futures market. I extract common factors from a group of 40 commodities using the PANIC method and include it in a factor-augment VEC model along with a proxy of financialization. Results show that financialization of the commodities futures markets can explain the recent rise in co-movement between commodity prices, after accounting for macroeconomic variables.     

必须强化军队院校军事信息人才培养工作

军事信息人才是促进军队信息化建设、赢得未来信息化战争的关键。军队院校是培养军事信息人才的主体力量,应该科学构建信息主导的课程体系、立足实战的训练体系以及信息化评价考核体系,系统推进师资力量、教学管理和校园环境建设,努力提高军事信息人才培养质量。