Does ICT adoption improve access to credit for small enterprises?

Using data at the bank–firm level collected through the 9th UniCredit Survey conducted in 2012 on a large sample of small businesses, we investigate the extent to which a large international bank offers better credit conditions to enterprises that use ICT more extensively. The results, which are robust to selection and endogeneity issues, show that banks tend to grant increasing volumes of credit to such enterprises. We interpret this evidence as the ceteris paribus effect of ICT adoption by small businesses on the quality of information transmitted to banks. Another possible interpretation is that banks consider ICT adoption as a signal of firms’ willingness to innovate. We also discuss implications concerning the key role that technology plays in changing the ‘arm’s length’ versus ‘relationship’ lending paradigms.     

The Minimum Economic Dividend for Joining a Currency Union

A two‐country model is developed to show how the optimality of a currency union depends on whether it brings an economic dividend in terms of potential growth and the Balassa–Samuelson (BS) effect (the steady appreciation of the real exchange rate due to cross‐country differences in intersectoral productivity gaps). The model shows that such dividend needs to be larger, the higher the BS effect, the smaller the size of the economy, the larger the cross‐country difference in the standard deviation of the supply shocks, the smaller their correlation and the larger the standard deviation of real exchange rate shocks. We calibrate the model to quantify such dividend as a function of plausible ranges of the parameter values. The results suggest that both the BS effect and the size of real exchange rate shocks play a key role in evaluating the optimality of accessing the currency union.     

Panel cointegration with global stochastic trends

This paper studies estimation of panel cointegration models with cross-sectional dependence generated by unobserved global stochastic trends. The standard least squares estimator is, in general, inconsistent owing to the spuriousness induced by the unobservable I(1) trends. We propose two iterative procedures that jointly estimate the slope parameters and the stochastic trends. The resulting estimators are referred to respectively as CupBC (continuously-updated and bias-corrected) and the CupFM (continuously-updated and fully-modified) estimators. We establish their consistency and derive their limiting distributions. Both are asymptotically unbiased and (mixed) normal and permit inference to be conducted using standard test statistics. The estimators are also valid when there are mixed stationary and non-stationary factors, as well as when the factors are all stationary.     

CREDIT MARKETS AND HOUSING CHOICES

This paper analyses how individual characteristics and credit market conditions interact and determine homeownership. The impact of the lifetime profile of resources on homeownership is larger when credit market imperfections are more severe. We combine data from the Bank of Italy's Survey on Household Income and Wealth with information on regional differences in interest rate spreads. We find that an increase in current resources by 10,000 euros increases the probability of homeownership by five (two) percentage points under the least (most) favourable credit market conditions.     

Wage inequality between and within groups: trade-induced or skill-bias technical change? Alternative age models for the UK

According to recent econometric studies, technical progress is the main source of the increasing skill premium in the UK and the US. However, it is not yet clear if technical progress is skill-bias or sector-bias and, most importantly, if the use of foreign technology has a role to play. By using alternative AGE models for the UK economy, I show that both trade-induced sector-bias technical change and skill-bias technical change can explain the stylised facts of the UK economy: tertiarisation; deindustrialisation; openness to foreign markets; increased skill premium; rise in wage inequality within the skilled; and unskilled labour groups. However, the model with sector-bias technical change due to trade performs better, because it can also explain two other important stylised facts: the decline of the wage rate of unskilled workers; and the large increase of imported capital goods.     

The 1990 Trade Liberalisation Policy of Turkey: An Applied General Equilibrium Assessment

I use a static multi-sector, multi-labour, multi-household Applied General Equilibrium (AGE) model for Turkey to show that the trade policy implemented by Turkish policy-makers in the 1990s is not trade diverting. Aggregate welfare rises by 0.6% of the consumer income. Most importantly, since agriculture and traditional the rural income), while urban groups are worse off (-0.5% of the urban income). It is also shown that overall income inequality declines by 1.1-1.7%, and that its main source is the inter-income inequality between urban and rural areas, which decreases by 8.9- 14.7%. [D58, F14, F17]