Linking Knowledge to Productivity: A Germany-Italy Comparison Using the CIS Database

This paper employs micro-aggregated data from the FirstCommunity Innovation Survey for assessing the contribution of the level and type of R & D spending, the purchase of new machinerywith embodied technological change, economies of scale, and information sharing with client and suppliers to productivity(total sales per employee) in German and Italian firms in 20 manufacturing industries. The regression analysis confirms theresults of previous studies that R & D and technological change embodied in new machinery and capital equipment aremajor factors affecting productivity at the firm level. However, the elasticity of productivity to both R & D and embodiedtechnological change is higher in Germany than in Italy. Conversely, information sharing with clients and suppliersrelated to innovation projects does not result in higher productivity, with the exception of a few industries (inparticular those producing traditional consumer goods) in Germany.     

Unionization structure, licensing and innovation

We show the effects of the unionization structure (viz., decentralized and centralized unions) on a firm's incentive for technology licensing and innovation. The incentive for technology licensing is stronger under decentralized unions. We identify circumstances under which the benefit from licensing creates a stronger incentive for innovation under decentralized unions. If the union's preference for employment is high, the benefit from licensing may create higher incentive for innovation under decentralized unions. However, if the union's preference for wage is high enough, the incentive for innovation is higher under a centralized union irrespective of licensing ex-post innovation. If the centralized union decides whether or not to supply workers to all firms, the possibility of higher innovation under decentralized unions increases. We further show that perfectly substitutable workers can be better off under decentralized unions if the labor productivity depends on the unionization structure, which occurs in our analysis when, e.g., licensing after innovation occurs only under decentralized unions or innovation (with no licensing) occurs only under a centralized union.     

Low-cost airlines and online price dispersion

This paper presents a new form of online pricing tactic where airlines post, at the same time and for the same flight, fares in different currencies that violate the Law of One Price. Unexpectedly for an online market, price dispersion may be accompanied by a hidden discount that tends to persist in the period preceding a flight's departure. The econometric analysis reveals that airlines post dispersive fares in less competitive routes with more heterogeneous demand. Furthermore, temporal persistence of intra-firm fare dispersion suggests that it is an equilibrium phenomenon engendered by the airlines' need to manage stochastic demand conditions for a specific flight.     

An Explanation of the Dynamics of Protectionism

Trade policy has been the rule during this century. Traditional theories, however, fail to provide convincing explanations about why the nature of trade policy has changed over time and about why protectionist pressures have not always been successful. This article suggests that change in the nature and intensity of protectionism depends on the deviation of economic performance from expectations, on the demand for institutional change, and on the size of the existing distortions. This view is then applied in order to shed new light on the role of trade policy before and after World War II.     

Efficiency Wages, Deferred Payments, and Direct Incentives in Agriculture

Empirical evidence from agricultural labor markets is consistent with efficiency–wage theory and inconsistent with several alternative explanations. According to this theory, the higher wage or deferred payment (benefits) that direct–hire growers pay relative to that of farm labor contractors is an efficiency wage. Growers use this extra compensation to lower their monitoring expenses and reduce shirking by workers.     

Monetary policy regimes: Implications for the yield curve and bond pricing

We develop a multivariate dynamic term structure model, which takes into account the nonlinear (time-varying) relation between interest rates and the state of the economy. In contrast to the classical term structure literature, in which nonlinearities are captured by increasing the number of latent state variables or by latent regime shifts, in our no-arbitrage framework the regimes are governed by thresholds and are directly linked to economic fundamentals. Specifically, starting from a simple monetary policy model for the short rate, we introduce a parsimonious and tractable model for the yield curve, which takes into account the possibility of regime shifts in the behavior of the Federal Reserve. In our empirical analysis, we show the merit of our approach three dimensions: interpretable bond dynamics, accurate short end yield curve pricing, and yield curve implications.     

Ownership as R&D incentive in business groups

Small and medium-sized enterprises (SMEs) are supposed to be less likely to conduct formal R&D because of the lack of financial resources, weaker competencies, and the absence of scale and scope economies. These limitations may be overcome when an SME belongs to a business group. Empirical studies have shown that firms belonging to business groups have a higher propensity to engage in R&D. We demonstrate that this higher propensity depends on the ownership of controlled companies, besides the presence of coordination mechanisms. We develop a model, and we empirically test its predictions using a data set of Italian SMEs operating in the manufacturing sector. From the model we derive three main implications: (1) there is no difference in R&D propensity between standalone firms and firms at the bottom of groups; (2) head and intermediate firms have a higher R&D propensity than standalone firms and firms at the bottom of the group; (3) the intensity of R&D depends on the ownership of controlled firms and on their size. Overall, the results of the empirical analysis are in accordance with the implications of the model.     

Is the abandonment of traditional livestock farming systems the main driver of mountain landscape change in Alpine areas?

Agricultural land abandonment and the consequent natural forest regrowth in areas once cultivated has significantly transformed Alpine ecosystems and landscapes. In this paper, we estimated the loss of agricultural areas due to reafforestation in the Belluno Province (Eastern Italian Alps) and integrated socioeconomic indicators with topographical features to evaluate the drivers of this change. Land use mapping, obtained from photo-interpretation of aerial photographs and technical maps, was used to quantify changes in forest and agricultural areas (crops, meadows and pastures) during the period of 1980–2000. On average, the forest surface expanded by 21%, while the agricultural areas decreased by 40%. This loss increased in areas with steeper slope, which confirms that the areas that would be first abandoned are those that are less productive and more difficult to manage. The reafforestation rate was particularly strong in the north of the province, where the livestock sector experienced a dramatic decline. In light of this situation and using multiple regression models with a large set of socioeconomic and agricultural indicators, we found that the loss of agricultural areas in 69 municipalities was primarily counterbalanced by the maintenance of livestock farming. The loss of steeper agricultural areas was counteracted by traditional extensive systems; however, it was not counteracted by modern intensive systems, which has important implications because steeper areas have higher landscape and biodiversity values. In addition, tourism development had a positive, although smaller, effect on the maintenance of agricultural areas, while industry development had a negative effect. The results of this study suggest that efforts are needed to maintain a territorial network of traditional extensive farms to avoid further landscape deterioration in Alpine areas. Likewise, certain choices toward the economic development of local communities might have an impact on land conservation.     

Ancestry and development: New evidence

We revisit the relationship between ancestral distance and barriers to the diffusion of development by replicating previous results with a new genomic dataset on human microsatellite variation. We find a statistically and economically significant effect of ancestral distance from the technological frontier on income per capita. The historical pattern of the effect is hump shaped, peaking between 1870 and 1913, and declining steeply afterwards. This suggests that ancestral distance acts as a temporary barrier to the diffusion of development. We also find that ancestral distance from the frontier is a barrier to the spread of specific technologies and institutions in modern times.     

The money creation process: A theoretical and empirical analysis for the United States

The aim of this paper is to assess—on both theoretical and empirical grounds—the two main views regarding the money creation process, namely the endogenous and exogenous money approaches. After analysing the main issues and the related empirical literature, we will apply a vector autoregression model and a vector error‐correction model methodology to the United States for the period 1959–2017 to assess the causal relationship between a number of critical variables that are supposed to determine the money supply, that is, the monetary base, bank deposits, bank loans and the nominal level of economic activity. The empirical analysis supports several propositions related to the endogenous money approach. In particular, it shows that for the United States in the years 1959–2017 (a) bank loans determine bank deposits and (b) bank deposits in turn determine the monetary base. Our conclusion is that money supply is mainly determined endogenously by the lending activity of commercial banks and the nominal level of economic activity.