Individual values and household finances

We create individual cultural values measures for households and show that this is an important determinant of their financial behaviour. To date, personal cultural values have only been indirectly measured through religion and trust. But these are, at best, an approximation of true cultural values. Applying a holistic framework from the World Values Survey (WVS), we create individual measures of cultural values, and show that the self-expression values of this framework are positively associated with households’ financial decisions. Examining the individual cultural values that make up the WVS model, we further show that happiness, trust, and playing an active role in society, are individually important determinants of household financial decision-making. Our study shows that cultural values can be brought from a generalized national level to the individual level in order to improve our understanding of household financial decision-making.     

Partial credibility and policy announcements: The problem of time inconsistency in macroeconomics revisited

This paper studies the credibility of policy announcements in macroeconomics. This issue is exemplified by the problem of monetary policy design in light of an expectations-augmented Phillips curve. In contrast to reputational models of the repeated games literature, the credibility problem between the central bank and the private sector, which results from the policymaker's temptation to create surprise inflation to raise employment, cannot be eliminated. The paper shows that credibility in any sequential equilibrium is generally only partial, in that market participants do not fully believe policy announcements of low inflation rates, even if forthright policies have been implemented in all periods. Indicating reputation-building, credibility improves over time. The example is then used to show the policy implications of partial credibility.     

Micro-and macroeconomic theory: The contested boundaries reconsidered

Summary One of the major themes in contemporary economics is, as we have observed, theoretical priority of value theory as a foundation for macroeconomic analysis. A number of authors have clarified the influence of general equilibrium analysis on the work of Keynes, and have developed systematic reformulations of his ideas with this branch of pure theory as a point of departure. The tendency in this work has been to dismiss psychologically oriented hypotheses, such as those that were stressed by Keynes, as mereobiter dicta which at best serve to state an argument imprecisely in provisional form, and have no permanent role in rigorously formulated theory. An alternative view, which discards less of Keynes' macro methodology than much of modern exegesis, has been put forward in this paper.A schema for macroeconomic theory which retains the utility and profit maximizing assumptions of pure theory, has been advanced. It has been called heterogeneous reduction of macroeconomics and is seen to find support in the literature of economics and the philosophy of science. Now that the necessity for developing the pure theory of macroeconomic activity is widely recognized, perhaps there is a greater opportunity for establishing a complementary role for behavioral hypotheses, whose current position of eclipse may one day be re-examined in a more favorable light.     

The predictability of aggregate returns on commodity futures

This paper provides evidence that aggregate returns on commodity futures (without the returns on collateral) are predictable, both in-sample and out-of-sample, by various lagged variables from the stock market, bond market, macroeconomics, and the commodity market. Out of the 32 candidate predictors we consider, we find that investor sentiment is the best in-sample predictor of short-horizon returns, whereas the level and slope of the yield curve have much in-sample predictive power for long-horizon returns. We find that it is possible to forecast aggregate returns on commodity futures out-of-sample through several combination forecasts (the out-of-sample return forecasting R² is up to 1.65% at the monthly frequency).     

Innovation and productivity in the food vs. the high-tech manufacturing sector

ABSTRACT

The food sector is considered a mature industry characterized by low research and development (R&D) intensity. Nevertheless, food companies face numerous challenges and cannot do without innovation activity if they want to keep their competitiveness. In this study, we examine the impact of innovation on labor productivity in European food companies and compare it to results for firms operating in high-tech sectors. The central motivation of our study is that the low R&D intensity observed in the food sector should be mirrored in different productivity effects of innovation when compared to the high-tech sector. We use microdata from the European Union's ‘Community Innovation Survey’ (CIS) and apply an endogeneity-robust multi-stage model that has been applied by various recent studies. Our results point out major differences between the examined subsectors. While we find strong positive effects of innovation on labor productivity for food firms, we find insignificant effects in the high-tech sector. This might suggest that the returns to innovation might be best evaluated separately by sector rather than for the manufacturing sector as a whole.     

Auctions versus negotiations: the effects of inefficient renegotiation

For the procurement of complex goods, the early exchange of information is important to avoid costly renegotiation. If the buyer can specify the main characteristics of possible design improvements in a complete contingent contract, scoring auctions implement the efficient allocation. If this is not feasible, the buyer must choose between a price‐only auction (discouraging early information exchange) and bilateral negotiations with a preselected seller (reducing competition). Bilateral negotiations are superior if potential design improvements are important, if renegotiation is very costly, and if the buyer's bargaining position is strong. Moreover, negotiations provide stronger incentives for sellers to investigate design improvements.     

The great Canadian recovery: The impact of COVID-19 on Canada's labour market

The Canadian labour market experienced a period of unprecedented turmoil following the onset of the COVID-19 pandemic. We analyze the main changes using standard labour force statistics and new data on job postings. Envisaging a phase of temporary severing of employment relationships followed by a phase of more standard labour market search and matching, we use stock and flow data to understand key developments. We find dramatic changes in employment, unemployment and labour market attachment in the first few months of the pandemic and a broad though gradual recovery through to the end of 2021.     

Approaches to learn about employer learning

The empirical literature on employer learning assumes that employers learn about unobserved ability differences across workers as they spend time in the labour market. This article describes testable implications that arise from this basic hypothesis and how they have been used to quantify the contribution of job market signalling and human capital in measured returns to education. While the empirical basis is still thin, the results suggest that signalling contributes at most about 25% to the observed returns to education.