The microstructure of exchange rate management: FX intervention and capital controls in Brazil

This article uses a microstructure approach to analyse the effectiveness of capital controls introduced in Brazil to counter an appreciation of the Real. Based on a rich data set from the Brazilian foreign exchange market, we estimate a reduced-form VAR to characterize the interaction of the central bank, financial and commercial customers in times of regulatory policy measures. We find that capital controls change market participants’ behaviour, and that central bank interventions elicit a significant response in financial order flow. Referring to the source of order flow, we find no direct price impact by financial flows and thus no evidence that the appreciation of the Real is driven by financial customers’ activity. Instead, commercial customers seem to be a primary driver of the Real within our model.     

Wirtschaftsordnung und Statistik

Ohne Zusammenfassung     

An example of multiple minima in a Cochrane-Orcutt procedure with multiple autocorrelation

We provide an example, based on an equation of the Canadian-US exchange rate, of multiple minima in a generalized Cochrane-Orcutt procedure. Our experiments suggest the need for search procedures in order to correctly identify autocorrelation structures.     

How do financial frictions affect the spending multiplier during a liquidity trap?

We show that credit market imperfections substantially increase the government-spending multiplier when the economy enters a liquidity trap. This finding is explained by the tight association between capital goods and firms? collateral, a relationship that we highlight as the capital-accumulation channel. During a liquidity trap, a government spending expansion reduces the real interest rate, leading to a period of cheap credit. Entrepreneurs use this time to accumulate capital, which persistently improves their balance sheets and reduces their future costs of credit. A public spending expansion can thus encourage private investment, yielding consequently a large spending multiplier. This effect is further reinforced by Fisher?s debt-deflation channel.     

Gender and regional inequality in human development: the case of Spain1

In this paper, we present estimates of the Human Development Index and the Gender-Related Development Index in the Autonomous Communities of Spain. Our case study of Spain, a developed country with clear gender and regional differences, demonstrates the importance of adjusting human development indices in accordance with gender discrimination and regional inequalities. We also show the significance of the income component in assessing the development level of women in countries like Spain, where lack of employment or low remuneration are the chief characteristics of women's inequality. Our analysis makes clear that the Gender-Related Human Development Index has limited applicability in developed countries; it also illustrates the need for alternative variables or models to assess inequality in those countries.     

The impact of science and technology parks on firms’ product innovation: empirical evidence from Spain

Science and Technology Parks (STP) have attracted considerable attention and public funds in recent years. However, the conclusions on their effectiveness remain mixed. This work evaluates the impact of STP on firm product innovation in the Spanish context, as an example of a less developed innovation system in which regional and national governments are prioritizing STP initiatives. This work draws on a large sample of firms provided by the Spanish Survey on Technological Innovation that is conducted annually by the National Statistical Institute. We explore alternative econometric methods to obtain average treatment effects for firms located in 22 Spanish STPs. Our results show that Spanish STPs have a strong and positive impact on the probability and amount of product innovation achieved by STP located firms. These results hold when the endogeneity of STP location is taken into account.     

On the test score gap between Roma and non‐Roma students in Hungary and its potential causes

Using unique data from Hungary, the gap in reading and mathematics test scores between Roma and non‐Roma 8th grade students is assessed and a substantial gap between them revealed. Standardized test scores as well as the fraction of students with competences considered inadequate are examined. Regardless of measurement and subject area, the bulk of the gap is explained by social differences in income, wealth and parental education. Using reduced‐form regressions, two major mediating mechanisms are identified: first, on average the home environment of Roma children is less favourable for cognitive development; second, the educational environment of the average Roma student is different from the average non‐Roma student. Comparing students with similar home environments from the same school and class, the ethnic gap in test scores is found to be insignificant. Ethnic differences in the home environment are explained by social disparity, and ethnicity seems to play no additional role in that regard. The unequal distribution of Roma students in schools and classes is found to be explained predominantly by social difference, too, with a significant residual portion, indicating the effect of ethnic segregation.     

DISCRIMINATION IN A MODEL OF CONTESTS WITH INCOMPLETE INFORMATION ABOUT ABILITY

We study contests with private information and identical contestants, where contestants' efforts and innate abilities generate output of varying qualities. The designer's revenue depends on the quality of the output, and she offers a reward to the contestant achieving the highest quality. We characterize the equilibrium behavior, outcomes, and payoffs for both nondiscriminatory and discriminatory (where the reward is contestant‐dependent) contests. We derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings, where these conditions are satisfied.     

Endorse or Not to Endorse: Understanding the Determinants of Newspapers’ Likelihood of Making Political Recommendations

This article investigates the determinants of newspapers’ provision for political opinion. I empirically examine the role of newspapers’ political preferences and market competition on newspapers’ decision to make endorsements. Regression results suggest that market competition turns newspapers more likely to make endorsements. Results from a simple model show that newspapers’ ideology determine their endorsements, making partisan papers more likely to make political recommendations and endorse challengers than non‐partisan newspapers.     

Stock exchange mergers and market efficiency

The aim of this article is to examine the impact of stock exchange mergers on the degree of informational efficiency. For this purpose, we apply the generalized spectral shape test for the martingale difference hypothesis to the stock returns before and after the 31 domestic and cross-border mergers completed from 1997 to 2011. The test is conducted with moving subsample windows, allowing us to detect the periods of (in)efficiency, and thus to conduct a comparative analysis for pre-merger and post-merger periods. We find that higher levels of efficiency are less frequent than lower levels of efficiency after a stock exchange merger. We also find that the impact on the level of efficiency depends on a range of merger characteristics such as the level of development, size, geographical diversification and industrial diversification of stock exchange.