ANTIDUMPING,INTRA‐INDUSTRY TRADE,AND QUALITY REVERSALS

We examine an export game where two (home and foreign) firms produce vertically differentiated products. The foreign firm is more R&D efficient and is based in a larger and richer market. The unique (risk‐dominant) Nash equilibrium exhibits intra‐industry trade, and the foreign producer manufactures a higher‐quality product. When transport costs are low, unilateral dumping by the foreign firm arises; otherwise, reciprocal dumping occurs. For some parameters, a domestic antidumping policy leads to a quality reversal in the international market whereby the home firm becomes the quality leader. This policy is desirable for the implementing country, though world welfare decreases.     

Fiscal Stimulus and Endogenous Firm Entry in a Monopolistic Competition Macroeconomic Model

This paper sets up a monopolistic competition model featuring the returns to production specialization. Some novel results are derived from the analysis. First, the effect of a fiscal stimulus on consumption may be positive or negative, depending crucially upon whether the production function is characterized by increasing or decreasing returns to production specialization. Second, following a fiscal expansion, increasing returns to specialization lead to a positive linkage between real wages and aggregate output, while decreasing returns to specialization result in a negative relationship between real wages and aggregate output. Third, a fiscal expansion may raise social welfare, provided that the degree of increasing returns to production specialization is sufficiently large.     

ON THE IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH: DOES COUNTRY RISK MATTER?

This study examines the nonlinear impacts of four country risk indices on the debt‐growth nexus for 61 countries in a panel data framework. Our results show evidence of the different debt‐growth nexus under the different degrees of country risk. Under a high‐risk environment, a country's economic growth is harmed by raising its public debt. The negative effects public debt has on economic growth become weak under low political and financial‐risk environments, while an increase in public debt could help to stimulate economic growth under low composite and economic risk environments. In addition, the differences of countries' income and debt levels also lead country risks to have different effects on the debt‐growth nexus, suggesting that a country should borrow appropriately based on its current risk environments while improving economic performance. (JEL C33, E02, H63, O43)     

Incentives and teacher effort

Few would contest that teachers are a very important determinant of how much students learn in school, and how to improve teacher performance has been the focus of lively policy debate in both rich and poor countries. This paper examines how teacher incentives, both pecuniary and non‐pecuniary, correlate with teacher effort. Using school survey data from Lao PDR, we estimate measures of teacher effort, including the number of hours that teachers spend preparing for classes and teacher provision of private tutoring outside of class hours, which are not the typical measures used in previous research. Estimation results fit well under the standard labour supply framework and indicate that greater teacher effort is associated with non‐pecuniary incentives such as more teacher autonomy over teaching materials and monitoring as measured by the existence of an active parent – teacher association and the ability of school principals to dismiss teachers. Methodologically, this paper provides a detailed derivation of a simultaneous OLS‐probit model with school random effects that can jointly estimate teacher work hours and tutoring provision.     

Do Education and Income Really Explain Inequalities in Health? Applying a Twin Design

We apply a twin design to examine the relationship between health and education and income. The estimated associations between health and education and income, controlling for unobserved endowments, at the twin‐pair level, are lower than estimates obtained via ordinary least‐squares (OLS) on the same sample. Thus, OLS‐based effects of education and income are biased, exaggerating the contribution of education and income to health inequality. The main part of health inequality is explained by within‐twin‐pair fixed effects, incorporating family background and genetic inheritance. It appears that education and income policies have less to offer for reducing health inequality than is usually assumed.     

EXPERIMENTAL AND SELF‐REPORTED MEASURES OF RISK TAKING AND DIGIT RATIO (2D:4D): EVIDENCE FROM A LARGE,SYSTEMATIC STUDY

We systematically investigate the links between the digit ratio (2D:4D)—a biomarker for prenatal testosterone exposure—and two measures of individual risk taking: (i) risk preferences (RP) over lotteries with real monetary incentives and (ii) self‐reported risk attitude (RA). We find that both the right‐hand and the left‐hand digit ratio are significantly associated with RP: Subjects with lower digit ratios tend to choose riskier lotteries. Neither digit ratio, however, is associated with self‐reported RA.     

State‐Dependent Forward Guidance and the Problem of Inconsistent Announcements

Forward guidance can be provided as an unconditional promise, i.e. commitment to a specific low policy rate. Alternatively, the promise may include an escape clause, i.e. a condition defining the state of the economy under which the central bank would not keep such a low rate and, instead, it would revert to setting policy under discretion. The escape clause can be expressed as a threshold in terms of a specific variable. The present paper shows that, when such a threshold is expressed in terms of an endogenous variable (e.g. output, inflation), there are cases where it becomes impossible for the central bank to act in a way that is consistent with its promise. Consistency imposes limits on the policy rate that can be set since reverting immediately to the optimal discretionary rate can be incompatible with exceeding the threshold.     

Using paradata to collect better survey data: Evidence from a household survey in Tanzania

Data are a key component in the design, implementation, and evaluation of economic and social policies. Monitoring data quality is an essential part of any serious, large‐scale data collection process. The purpose of this article is to show how paradata should be used before, during, and after data collection to monitor and improve data quality. To do this we use timestamps, global positioning system (GPS) coordinates, and other paradata collected from an 800‐household survey conducted in Tanzania in 2016. We demonstrate how key paradata can be used during each phase of a research project to identify and prevent issues in the data and the methods used to collect it. Our results corroborate the importance of collecting and analyzing paradata to monitor fieldwork and ensuring data quality for micro data collection in developing countries. Based on these findings we also make recommendations as to how researchers can make better use of paradata in the future to manage and improve data quality. We argue for an expansion in the understanding and use of varied paradata among researchers, and a greater focus on its use for improving data quality.     

Voluntary Contributions to a Mutual Insurance Pool

We study mutual‐aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution‐based coverage. The equal coverage mechanism leads to a unique no‐insurance equilibrium while contribution‐based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a “dual interior equilibrium.” That dual equilibrium is consistent with the co‐existence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a significant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.