FIRM‐LEVEL INVESTMENT AND EXPORT DYNAMICS*

This article characterizes the complementarity between exporting and investment in physical capital. We argue that new investment allows young exporters to grow faster and survive longer in export markets while reducing their vulnerability to productivity or demand shocks across markets. We structurally estimate our model using detailed firm‐level data. We find that the choice of cost structure has a large impact on model performance and the estimated costs of exporting or investment. Using detailed capital and output tariff rates, we quantify the impact of policy change on aggregate export and investment growth.     

Cost of doing business index in Latin America

Quality & Quantity - The World Bank's Ease of Doing Business Index (EDBI) has been widely used in analyzes of attracting investments and formulating public policies. Despite its importance...     

Media ownership,concentration and corruption in bank lending

Building on the pioneering study by Beck, Demirguc-Kunt, and Levine (2006), this study examines the effects of media ownership and concentration on corruption in bank lending using a unique World Bank data set covering more than 5,000 firms across 59 countries. We find strong evidence that state ownership of media is associated with higher levels of bank corruption. We also find that media concentration increases corruption both directly and indirectly through its interaction with media state ownership. In addition, we find that media state ownership and media concentration both accentuate the positive link between official supervisory power and lending corruption and attenuate the negative link between the regulations that empower private monitoring and corruption in lending. Media state ownership or media concentration also accentuates the positive link between banking concentration and corruption in lending. Furthermore, the links between media structure and corruption are more pronounced when the borrowing firm is privately owned.     

Agents to the Rescue?

The advent of electronic environments is bound to have profound effects on consumer decision making. While the exact nature of these influences is only partially known it is clear that consumers could benefit from properly designed electronic agents that know individual users' preferences and can act on their behalf. An examination of the various roles agents perform is presented as a framework for thinking about the design of electronic agents. In addition, a set of goals is established that include both outcome-based measures, such as improving decision quality, as well as process measures like increasing satisfaction and developing trust.     

The relative economic efficiency of urban water utilities in regional New South Wales and Victoria

In recent times the relative economic efficiency of urban water utilities has been neglected as policymakers sought to secure urban water supplies. This paper is an effort to measure the efficiency consequences of a number of recent urban water policy initiatives. Data Envelopment Analysis (DEA) is employed in order to measure the relative technical efficiency of urban water utilities in regional New South Wales (NSW) and Victoria. We show that the almost universal policy of water restrictions is likely to reduce relative efficiency and the typically larger utilities located in Victoria are characterised by a higher degree of managerial efficiency. A number of implications for urban water policy are advanced.     

Misallocation and productivity effects of the Smoot–Hawley tariff

Using a newly created microeconomic archive of US imports at the tariff line level for 1930–1933, we construct industry-level tariff wedges incorporating the input–output structure of US economy and the heterogeneous role of imports across sectors of the economy. We use these wedges to show that the average tariff rate of 46% in 1933 substantially understated the true impact of the Smoot–Hawley (SH) tariff structure, which we estimate to be equivalent to a uniform tariff rate of 70%. We use these wedges to calculate the impact of the Smoot–Hawley tariffs on total factor productivity and welfare. In our benchmark parameterization, we find that tariff protection reduced TFP by 1.2% relative to free trade prior to the Smoot–Hawley legislation. TFP fell by an additional 0.5% between 1930 and 1933 due to Smoot–Hawley. We also conduct counterfactual policy exercises and examine the sensitivity of our results to changes in the elasticity of substitution and the import share. A doubling of the substitution elasticities yields a TFP decline of almost 5% relative to free trade, with an additional reduction due to SH of 0.4%.     

Vertical foreign direct investment: Make,buy, and sell

According to conventional wisdom, multinational enterprises (MNEs) undertake vertical FDI to take advantage of cross‐border factor cost differences and source inputs from abroad at better terms. However, recent empirical studies document many instances in which intrafirm trade between parent firms and their vertically related foreign affiliates is absent. We provide theoretical support for these findings, demonstrating that a firm can engage in vertical FDI to exploit its intangible assets in another country and improve its input sourcing terms domestically by enhancing its cross‐threat. Furthermore, we show that the welfare implications of vertical FDI on the home and host country are neither always positive nor aligned.     

Ad wearout wearout: How time can reverse the negative effect of frequent advertising repetition on brand preference

This paper reports a surprising reversal in the effect of advertising repetition over time. A field study shows higher annoyance with a more frequently advertised brand at the time of advertising, but greater preference for this same brand several weeks later. A longitudinal online experiment replicates the reversal in brand preference across four time points and tests an underlying mechanism for this reversal. It shows that initial annoyance with frequent ad repetition is highly susceptible to decay over time, whereas brand memory remains relatively stable. Through these two processes, brands with heavier advertising exposure move over time from lower preference to higher preference. Finally, a third experiment demonstrates a crucial condition for this reversal — product relevance at the time of consideration. This study shows that the reversal occurs only if at the later time the product category is relevant. We discuss the substantial implications of these findings for marketing theory and practice.