Estimating aggregate autoregressive processes when only macro data are available

The aggregation of individual random AR(1) models generally leads to an AR(∞$\infty$) process. We provide two consistent estimators of aggregate dynamics based on either a parametric regression or a minimum distance approach for use when only macro data are available. Notably, both estimators allow us to recover some moments of the cross-sectional distribution of the autoregressive parameter. Both estimators perform very well in our Monte-Carlo experiment, even with finite samples.     

The distributional impact of large dams: Evidence from cropland productivity in Africa

We examine the distributional impact of large dams on cropland productivity in Africa. As our unit of analysis we use a hydrology based spatial breakdown of the continent that allows one to exactly define regions in terms of their upstream/downstream relationship at a highly disaggregated level. We then use satellite data to derive measures of cropland productivity within these areas. Our econometric analysis shows that while regions downstream benefit from large dams, no beneficial effects accrue to cropland within the vicinity. Moreover, we find that the productivity enhancing impact of upstream dams is dependent on the local climate. Overall our results suggest that upstream dams have quantitatively on average provided up to 12% of the minimum daily per capita amount of kilocalorie needs in downstream communities and increased agricultural production by 1%.     

Wage Differentials among Ownership Groups and Worker Quality in Vietnamese Manufacturing

Wholly foreign multinational enterprises (WFs), joint-venture multinationals (JVs), state-owned enterprises (SOEs) pay higher wages than domestic private firms in Vietnamese manufacturing. In large samples of medium–large (20+ employees) firms, conditional differentials accounting for worker education and occupation, as well as capital intensity, size, and shares of female workers, were substantially smaller, but positive and significant. Wage levels and differentials varied substantially among industries. Conditional differentials remained positive and significant for WFs and JVs in most of the 11 industries examined, but estimates of SOE-private differentials were insignificant in most industries. Robustness checks using 2007 data yielded similar results.     

Earnings Attribution and Information Transfers

Managers frequently attribute the news in their earnings forecasts to various economic events. Using textual analysis, we identify the economic factors underlying earnings news from press releases. We document a wide range of industry‐wide shocks and firm‐specific actions to which the earnings news in management forecasts is attributed. As expected, earnings attributions significantly affect peer firms’ price reactions to the earnings news. Specifically, earnings news attributed to industry‐wide trends or firm structural changes leads to positive information transfers but earnings news attributed to firm competitive moves triggers negative information transfers. Information transfers are much stronger when each economic factor is mentioned the first time in a given industry‐year. Further analysis reveals that the strength of information transfers varies with firm‐level rivalry within the industry (i.e., similar business strategies, market position, and level of competition).     

Are stricter investment rules contagious? Host country competition for foreign direct investment through international agreements

We argue that competitive diffusion is a driver of the trend toward international investment agreements with stricter investment rules, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties and preferential trade agreements that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-to-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI.     

Testing the Unstable Middle and Two Corners Hypotheses About Exchange Rate Regimes

The recent rash of international currency crises has generated considerable interest in the role that exchange rate regimes have played in contributing to these crises. Many economists have argued that efforts to operate adjustably pegged exchange rate regimes have been a major contributor to “the unstable middle” hypothesis and some have argued that this unstable middle is so broad that only the two corners of hard fixes or floating rates will be stable in a world of high capital mobility—the two corners or bipolar hypothesis. Two recent empirical studies by researchers at the International Monetary Fund reach opposing conclusions on these issues. We examine the issue further and show that conclusions can be quite sensitive to how exchange rate regimes are grouped into categories and the measures of currency crises that are used. In general we find that the dead center of the adjustable peg is by far the most crisis prone broad type of exchange rate regimes, but that countries need not go all the way to freely floating rates or hard fixes to substantially reduce the risks of currency crises.

MIGRATION,SOCIAL NETWORKS,AND CREDIT: EMPIRICAL EVIDENCE FROM PERU

We seek evidence of the causal relationship between migration, social networks, and the probability of receiving credit in a developing country where credit markets are weak and internal migration is common. Migrants may face binding asymmetric information constraints as they often lack collateral. Social networks can help mitigate these constraints. Conversely, migrants might face higher liquidity constraints and might, therefore, demand more credit than nonmigrants. The effect of migration on participation in the credit market is thus ambiguous. Compounding this, migration and credit may be jointly determined. We utilize rich data from Peru to establish the net effect of migration on credit and the role that social networks play in this relationship.