Trade,FDI, migration,and the place premium: Mexico and the United States

Large wage differences between countries (“place premiums”) are well documented. Theory suggests that factor price convergence should follow increased migration, capital flows, and commercial integration. All three have increased between the United States and Mexico over the last 25 years. This paper evaluates the degree of wage convergence between these countries during the period 1988 and 2011. We match survey and census data from Mexico and the United States to estimate the change in wage differentials for observationally identical workers over time. We find very little evidence of convergence. What evidence we do find is most likely due to factors unrelated to US–Mexico integration. While migration, trade, and FDI may reduce the US–Mexico wage differential, these effects are small when compared to the overall wage gap.     

Can Fiscal Decentralization Alleviate Government Consumption Volatility?

This paper assesses the effect of fiscal decentralization on government consumption volatility using data for 97 developed and developing countries from 1971 to 2010. The results suggest that a higher degree of fiscal decentralization leads to lower government consumption volatility. This result holds for the sub-sample of advanced economies, while it is not confirmed for those less-developed. This mechanism seems to work mainly through a lower volatility of the non-discretionary spending, which typically belongs to the central government’s policy. We also confirm existing findings according to which country size lowers government spending volatility. Thus, given a minimum level of development, fiscal decentralization reforms can reduce spending volatility by distributing power to sub-central governments, particularly in smaller countries which are usually more prone to volatility.     

Aggregated analysis of in-depth accident causation data

Data collected from in-depth road accident investigations are very informative and may contain more than 500 accident-related variables for a single investigated case. These data may be used to get a more detailed knowledge on accident and injury causation associated with a specific accident scenario. However, due to their complexity, studies using in-depth data at aggregated levels are not common. The objective of this paper is to propose a methodology to analyse aggregated accident causation charts in order to highlight strong and weak relationships between crash causes and pre-crash scenarios. These relationships can be taken into account when developing or assessing new road safety measures (e.g. in-vehicle systems). The methodology has been applied to an in-depth accident dataset derived from the European project SafetyNet. Four different pre-crash scenarios associated with the accident scenario ‘vehicles encountering something while remaining in their lane’ have been investigated. Even if generalization of these results should be done with care because of database representativeness issues, the methodology is promising, highlighting, for example, a well-defined causation pattern related to vehicles striking a vehicle in rear-end accidents.     

On the World Distribution of Income

In this paper we demonstrate that the size distribution of the world income may be reasonably approximated by a log‐normal distribution rather then by a power law, as has previously been believed. This result has been shown to be quite persistent as we move from 1985 to 2011.     

Valuing investment projects under interest rate risk: empirical evidence from European firms

In this article, we perform an empirical investigation of the effect of the interest rate uncertainty on the valuation of investment projects. The analysis is carried out by employing a real option approach and by considering a set of firms that operate in various production sectors in the euro area. In particular, the revenues generated by the investment projects are modelled using a geometric Brownian motion, whereas the interest rate is specified as a stochastic process of Vasicek type. Moreover, using the volatility of the equity return as a proxy, the volatility of the revenues is calibrated to real firm data, while the parameters of the interest rate model are estimated by fitting the Euribor time series. To this aim, an ad hoc calibration procedure is developed which is based on the maximum likelihood principle and thus has the merit of being simple, fast and suitable for practical purposes. Our study reveals that the interest rate uncertainty reduces the valuation of investment projects. However, stochastic interest rates do not provide a substantial improvement with respect to constant interest rates, or at least the differences are not statistically significant.     

Firms' Technological Trajectories and the Creation of Foreign Subsidiaries

Multinational firms are traditionally considered as firms possessing some technological lead and which are exploiting this proprietary advantage in international markets, but a growing literature has been arguing that multinational firms set up foreign subsidiaries not only as a means to exploit their own technology but also to enrich it. This paper provides some empirical evidence for this. The aim of the paper is to assess the effects of the creation of foreign subsidiaries on firms' technological trajectories.The idea is that by setting up subsidiaries in foreign countries, multinational firms can achieve some form of reverse technology transfer that can be expected to affect their technological trajectories.The empirical investigation uses data from 1992 to 1996 for a sample of 2185 Italian manufacturing firms. Results support the view that the creation of manufacturing subsidiaries has a positive impact on firms' productivity trajectories and this positive impact is greater when subsidiaries are created in regions where knowledge spillovers are expected to be relatively higher, such as the US.     

Entrepreneurial education and learning at universities: exploring multilevel contingencies

Abstract

Despite the worldwide increase in entrepreneurship education offered at universities, there is an ongoing debate whether and under which conditions this type of education contributes to students’ entrepreneurial learning. Building on human capital theory, we hypothesize that the exposure to various entrepreneurship education initiatives has an inverted U-shaped relationship with entrepreneurial learning outcomes. We also argue that this relationship is moderated by the entrepreneurial experience of the students, the teaching pedagogy applied in entrepreneurial initiatives offered at the university and the prevalence of opportunity-driven entrepreneurship in the country. A multi-level analysis on a cross-country sample of 87,918 students resulting from GUESSS (‘Global University Entrepreneurial Spirit Students’ Survey’) strongly confirms our hypotheses, and allows us to discuss implications for researchers, educators and policy makers with respect to the nature of entrepreneurial learning, the design of entrepreneurial education programs, as well as the contextual conditions that impact entrepreneurial learning outcomes.     

The effect of episodes of large capital inflows on domestic credit

This paper analyses the effect of capital inflow surges on the evolution of domestic credit. Using a panel of developed and emerging economies from 1970 to 2007, it is shown that in the two years following the beginning of a capital inflow surge the credit-to-GDP ratio increases by about 2 percentage points. The effect is reversed in the medium-term with the credit-to-GDP ratio decreased by almost 4 percentage points seven years after the initial surge. The paper also finds that the effect is different depending on the type of flows characterising the episode (debt vs. portfolio equity vs. FDI), with large capital inflows that are debt-driven having the largest effect. The results of the paper also suggest that the short-term effect of capital inflow surges on domestic credit depends on countries’ macroeconomic policy stances. In particular, it is found that this effect is lower in countries with higher real exchange rate flexibility and fiscal policy counter-cyclicality.     

Financial Integration and Fiscal Policy

The aim of this paper is to assess the impact of financial integration on fiscal policy. Using an unbalanced panel of 31 OECD countries from 1970 to 2009, the paper shows that financial integration has significant disciplinary effects by reducing fiscal deficits and (discretionary) spending volatility. In addition, we find that financial integration affects the composition of government debt and enhances risk-sharing by increasing the share of foreign debt to the total. The results are robust to both de jure and de facto measures of financial integration, different measures of budget balance, and different estimation strategies.     

Multinational experience and the creation of linkages with local firms: evidence from the electronics industry

This paper focuses on multinational companies' creation of linkageswith local firms in the electronics industry. Evidence is drawnfrom a novel data-set, covering international operations ofthe top European and US electronics companies, over the period1984–95. Econometric tests are provided to highlight howfirms' multinational experience, measured by the extent of theirpresence in foreign countries, affects cooperative agreements,as opposed to licensing and foreign direct investments. It ishighlighted that multinationals' subsidiary accumulation hasa positive and significant impact on collaborative linkageswith local firms. This contrasts with the transaction cost viewunderlying most market-entry literature, but is consistent witha dynamic efficiency perspective which emphasises the role oflinkages in learning and knowledge accumulation and exploitation.