Trade networks and economic fluctuations in Asian countries

The paper presents a new methodology, based on tensor decomposition, to map dynamic trade networks and to assess its strength in forecasting economic fluctuations at different periods of time in Asia. Using the monthly merchandise import and export data across 33 Asian economies, together with the US, EU and UK, we detect the community structure of the evolving network and we identify clusters and central nodes inside each of them. Our findings show that data are well represented by two communities, in which People's Republic of China and Japan play the major role. We then analyze the synchronisation between GDP growth and trade. Furthermore we apply our model to the prediction of economic fluctuations. Our findings show that the model leads to an increase in predictive accuracy, as higher order interactions between countries are taken into account.     

Public service motivation and public sector employment preference: Comparing Italian and British students

ABSTRACT

Previous research has suggested that an individual’s public service motivation (PSM) is positively linked to a preference for public sector employment. The authors explore this link using a sample of British and Italian undergraduate students. They found a positive relationship between PSM and public sector job preferences among Italian students but not with the British students. The UK has implemented more NPM-style reforms than Italy and this could be impacting on public sector recruitment. Implications for recruitment and retention the public sector are discussed.     

Interregional Migration of Human Capital and Unemployment Dynamics: Evidence from Italian Provinces

Since the mid‐1990s interregional migration flows in Italy have dramatically increased, especially from the South to the North. These flows are characterized by a strong component of human capital, involving a large number of workers with secondary and tertiary education. Using longitudinal data for the period 2002–2011 at NUTS‐3 territorial level, we document that long‐distance (i.e., South‐North) net migration of high‐skill workers has increased the unemployment at origin and decreased it at destination, thus deepening North–South unemployment disparities. On the other hand, long‐distance net migration of low‐skill workers has had the opposite effect, by lowering the unemployment at origin and raising it at destination. Further evidence also suggests that the diverging effect of high‐skill migration dominates the converging effect of low‐skill migration. Thus, concerns for an ‘internal brain drain’ from Southern regions look not groundless.     

Trust and foreign ownership: Evidence from intra‐European foreign direct investments

We use a novel firm‐level dataset to test whether trust affects the volume and the ownership structure FDI across Europe. Our methodology deals with the endogeneity of trust from the investor to the recipient country. We expect such a trust measure to affect investment decisions, and the associated knowledge capital, differently across types of foreign investors. In particular, this effect is expected to be stronger for industrial investors who possess transferable knowledge capital. The data confirm our predictions. Higher trust increases the number and volume of FDIs, but also the probability of co‐investing with a partner from the recipient country.     

Child Labour Education and Nutrition in Rural India

Decisions concerning child labour, education and nutrition are taken by parents simultaneously with decisions affecting fertility and infant mortality. This implies that child labour cannot be abolished without altering the conditions that make it optimal for parents to make their children work. Such conditions can be altered not only by educational policies, such as free or subsidized provision of school facilities, but also by more broadly aimed policies, such as sanitation or preventive medicine.     

The cyclical behaviour of inventories: European cross-country evidence from the early 1990s recession

This paper employs data for a panel of firms from France, Italy and the UK to study the effect of the recession of the early 1990s on inventory investment, controlling for cyclical fluctuations at the firm level. The results clearly show some common patterns across countries, pointing to the relevance of financial factors (namely, the level of leverage) in propagating initial recessionary shocks. Moreover, Italian firms, especially if ‘small and young’, seem more likely to suffer from a reduction in the value of collateralizable assets possibly originated by restrictive policy actions.     

Beauty contested: how much of Keynes' remains in behavioural economics' beauty contests?

Abstract

In one of the most famous passages of the economic literature, John Maynard Keynes likens the stock market to a beauty contest (BC), in which the winners are those who anticipate the average opinion. In behavioural economics there have recently been attempts at investigating the BC experimentally. We argue that there exist important differences between Keynes' and behavioural economics' BCs. We identify several types of BCs and propose a taxonomy. We also suggest that, in spite of these differences, Keynes' theory of decision under uncertainty is central to understanding the actual behaviour observed in experimental BCs.     

THE IMPACT OF ABSORPTIVE CAPACITY ON SMEs' COLLABORATION

Absorptive capacity plays a key role in determining firms' capability to access and make use of external knowledge. However, little evidence has been provided about this important determinant of knowledge acquisition in the context of small and medium-sized enterprises (SMEs). This article investigates the importance of absorptive capacity created and accumulated in R&D efforts and in qualified human resources, on SMEs' capabilities to collaborate with other firms, with universities and with technology transfer centres. The empirical evidence is based on a survey of interviews with 276 manufacturing SMEs located in the Lombardy region (Italy). Probit model estimations demonstrate that even in SMEs absorptive capacity has a relevant impact on the ability of firms to establish collaborations with external organisations.     

The Carbon Bubble: climate policy in a fire-sale model of deleveraging∗

Credible implementation of climate change policy, consistent with the 2 °C limit, requires a large proportion of current fossil-fuel reserves to remain unused. This issue, named the Carbon Bubble, is usually presented as a required asset write-off, with implications for investors. We embed the Carbon Bubble in a macroeconomic model exhibiting a financial accelerator: if investors are leveraged, then the Carbon Bubble might precipitate a fire-sale of assets across the economy, and generate a large and persistent fall in output and investment, impairing the economy's ability to invest in the zero carbon assets it needs to produce output in the post-climate-transition world. We find a role for macroeconomic policy protecting investors' balance sheets in mitigating the macroeconomic effects of the Carbon Bubble, and enhancing welfare.