Contagion across Eurozone’s sovereign spreads and the Core-Periphery divide

This paper investigates the causes of disproportionate increases of sovereign yields with respect to the interest rate on the 10 years German Bund within the Eurozone. Empirical evidence drawn from the Bank for International Settlements dataset on banks’ portfolios shows that rapid financial integration, following the launch of the monetary union, resulted in excess exposure of Core countries’ banks in the Peripheral countries’ financial assets. In order to endogenize the possibility of contagion effects, we conduct econometric estimates through a Global Vector Autoregressive model, where each country’s spread depends upon all Eurozone countries’ spreads. Results show that after the burst of the financial crisis the Core countries’ sovereign yields are essentially determined by the international risk aversion, whereas the spreads of Peripheral countries mainly depend on fundamentals, namely the public debt/GDP ratio and the Real Effective Exchange Rate values with respect to the Eurozone average. These results are supported by the estimate of an impulse response analysis. Macroeconomic failures in public finances and competitiveness seem to originate the exceptional increases in sovereign spreads of the Periphery, through a contagion effect which is limited to this group of Eurozone countries.     

Risk allocation and the costs and benefits of public‐‐private partnerships

We study the agency costs of delegated public service provision, focusing on the link between organizational forms and uncertainty at project implementation. We consider a dynamic multitask moral hazard environment where the mapping between effort and performance is ex ante uncertain but new information may arise during operations. Our analysis highlights the costs and benefits that bundling planning and implementation—as under public‐‐private partnerships—can bring in terms of project design and operational costs under various scenarios, possibly allowing for asymmetric information, moral hazard and renegotiation. It also shows that relying on private finance enhances the benefits of bundling only if lenders have enough expertise to assess project risks.     

Mandatory IFRS adoption: the trade-off between accrual-based and real earnings management

This paper examines whether firms substituted real earnings management for accrual-based earnings management after the International Financial Reporting Standards (IFRS) became mandatory. Using a sample of 101,331 firm-year observations from 33 countries between 2000 and 2010, we show that IFRS adoption came with the unintended consequence of certain firms substituting real earnings management for accrual-based earnings management, especially among firms in countries with strict enforcement regimes. Furthermore, we document that the trade-off is confined to EU countries in which strong firm-level characteristics (i.e. the firm-level mechanism of control, the market’s level of scrutiny, and firm-specific incentives to provide transparency) are coupled with strong enforcement. We also show that IFRS had an effect in countries outside the EU, albeit at a different time. Overall, the results suggest that accounting regulators’ efforts to increase earnings quality might have had the unintended consequence of increasing real earnings management activities.     

Relationships with managers and harassment: the Italian nurse experience

This paper examines the link between workplace relationships with management and work harassment for Italian nurses. The relationship with the supervisor was a key predictor of work harassment, and work harassment was found to have a major negative effect on engagement. There are significant differences in nurses’ perceptions of work harassment, engagement and job satisfaction for public and private sector nurses.     

Does Tax Evasion Affect Economic Crime?*

This paper examines the effect of tax evasion on criminal activities in Italy. Specifically, we consider three types of crime that are related to economic determinants: property crimes (including robbery, theft and car theft), fraud and usury. We estimate different econometric models using annual data from the Italian provinces (NUTS-3 level) for the 2004–12 period. We find that tax evasion positively affects economic crimes, and our results suggest that tax evasion is an incentive to engage in criminal activities, in addition to more standard determinants that we include in the analysis, such as labour market opportunities and deterrence. Moreover, these crimes demonstrate different levels of persistence over time and reflect different adjustment costs.     

Is an Increase in the Minimum Retirement Age Always Desirable? The Case of Notional Defined Contribution Systems

Several countries have recently introduced reforms that aim to increase the neutrality of their pension system by introducing an incentives‐disincentives mechanism or by replacing their traditional defined‐benefit system with a Notional Defined Contribution method. This paper evaluates the financial effects of an increase in the minimum retirement age in countries where a Notional Defined Contribution system exists. We show that such a reform produces a positive effect on the financial situation of the pension system (by generating surpluses or by reducing deficits) in the short and in the medium run, but it becomes completely ineffective in the long run. This result implies that in countries where the pension system is sufficiently neutral such a reform is not appropriate to solve the problem of population ageing which is a long‐run problem.     

The market for lawyers and quality layers in legal services

We study the functioning of the market for lawyers, considering the strategic interaction among litigants, lawyers, and judges. We investigate the value of legal representation and of systems of quality certification, such as the Queen’s Counsel system. In our setting, higher quality lawyers obtain better‐quality evidence and are better able to interpret it. Judges receive information from the lawyers and have reputational concerns. We show that reputational concerns generate a decision bias in favor of certified lawyers and that this causes misallocation of lawyers at the market equilibrium. As a result, whereas a higher quality of lawyers increases welfare, public information over quality may be welfare reducing.     

On the ‘Disclosure Initiative – Principles of Disclosure’: The EAA Financial Reporting Standards Committee’s View

Abstract

This paper summarises the contents of a comment letter produced by a working group of 12 academics in response to the International Accounting Standards Board (IASB) Discussion Paper on principles of disclosure. The comment letter was submitted by the Financial Reporting Standards Committee (FRSC) of the European Accounting Association (EAA). The work includes reviews of relevant academic literature of areas related to the various questions posed by the IASB in the Discussion Paper, including the ‘disclosure problem’ and the objective of the project, the suggested principles of effective communication, the roles of the primary financial statements and notes, the location of information and the use of performance measures. The paper also discusses the disclosure of accounting policies, the objectives of centralised disclosure, and the New Zealand Accounting Standards Board staff’s approach to disclosure.     

Home gardens,household nutrition and income in rural farm households in Odisha,India

Home gardens have been an integral part of the recent food-based interventions aimed at stimulating changes in dietary patterns and improving nutrition. However, evidence of their effects on food security, dietary quality, child anthropometry and incomes is limited, particularly among vulnerable populations groups. Using panel data from a sample of approximately 1900 households from vulnerable population groups in Odisha, India, difference-in-differences and other econometric techniques, we analyse the effects of home gardens on food security, dietary quality, child anthropometry and income. On average, home gardens contribute to better household food security, higher dietary quality of men and women but do not contribute to higher children's dietary quality and anthropometry. Also, home gardens increase monthly per adult equivalent incomes by 37% and reduce the prevalence of poverty by 11.7 percentage points. Quantile regression results suggest that home gardens enhance food security and incomes in all quantiles, but richer farmers benefit more than poorer farmers. Overall, home gardens can enhance household food security, dietary quality of men and women, and income gains among vulnerable farming population groups, but they may not suffice to improve child dietary quality and anthropometry.