R&D and productivity growth: Evidence from the UK

Although the econometric evaluation of R&D has attracted wide interest in many countries, it has not attracted much in the UK. The main objective of this paper is to fill this void, i.e., to estimate the impact of R&D on productivity growth of the UK manufacturing sector. However, there are some additional objectives. Firstly, we estimate the impact of R&D on productivity growth of large and small firms and we discuss a number of theoretical arguments regarding the role of firm size. Secondly, given that the technological infrastructure influences the innovative capacity of a firm, we compare the impact of R&D on productivity growth of high-tech firms with the corresponding impact on productivity growth of low-tech firms. Thirdly, we investigate whether the contribution of R&D to productivity growth has changed over time.

Based on firm-level data (78 firms, 1989–2002), we find that the contribution of R&D is approximately 0.04. Although the R&D-elasticity of large firms (0.044) is higher than the corresponding elasticity of small firms (0.035), the difference is small. In contrast, the R&D-elasticity is considerably high for high-tech sectors (0.11), but statistically insignificant for low-tech sectors. Finally, the investigation of the elasticity of R&D over time revealed an interesting discontinuity showing that although until 1995 the R&D-elasticity was approximately zero, after 1995 it increased dramatically to 0.09. We investigate the potential causes of such non-linearity and we suggest a number of possible explanations.     

Using bounds to investigate household debt repayment behaviour

Understanding the factors that influence arrears is crucial if policy makers wish to alleviate the problems caused by debt. But conventional estimates of repayment behaviour impose implausible assumptions about lender behaviour. However, an upper and lower bound for the effect of the determinants of repayment behaviour can be estimated. Reasonable assumptions about the behaviour of economics agents narrow these bands. We use administrative data from a leading Italian lender to the household sector to demonstrate the methodology, and we show that conventional estimates under-estimate the true default probability.     

Impacts of transportation infrastructure on single-family property values

New or long-standing public infrastructure such as highways, airports, and ports of entry (POE) can increase adjacent property values generating a value premium for private developers and adjacent property owners. States and local governments aim to determine the geographic footprint and anticipate the economic value created by transportation infrastructure proximity and accessibility since it represents an opportunity to capture some infrastructure costs. Hence, it is desirable to understand the degree of correlation between transportation infrastructure proximity and changes in real property values in a spatial context particularly when defining economic development zones where transportation investments are planned and where governments expect to recover some of the infrastructure cost from increases in real property values. This research applies geographically weighted regression (GWR) analysis to determine the geographic footprint and quantify the impacts of transportation infrastructure proximity and accessibility on real property values in El Paso, Texas using a 2013 cross-sectional data set. The presence of spatial nonstationarity and heterogeneity confirms that transportation infrastructure proximity and accessibility might generate premiums on real property values, but that such premiums are not always positive and are occasionally negative. GWR shows that benefits from a transportation facility can be capitalized by non-adjacent parcels. Finally, GWR maps can help better policy development by estimating how much value is added by infrastructure proximity and accessibility throughout particular locations.     

Determinants of Capital Structure: United Kingdom Versus Continental European Countries

In this paper, we analyze how country‐specific differences influence capital structure indirectly through firm‐specific variables. We apply a system Generalized Method of Moments technique to a panel data sample of companies from five countries (France, Germany, Italy, Spain and the United Kingdom) during the period 1998–2008. As the different financial systems of European economies (bank‐oriented or market‐oriented) may influence capital structure differently through firm‐specific variables, we first examine the determinants of capital structure for each country separately and we then analyze whether the observed differences between the United Kingdom and the continental European countries are relevant. The results show that there are substantial differences in the capital structure choices of firms across five major European countries. These differences are motivated by the type of financial systems of the countries (bank‐oriented and market‐oriented) and influence the capital structure indirectly through the firm‐specific variables. Overall, our results support the relevance of the differences in the capital structure choices of firms across five major European countries, and in particular, the singularity of the United Kingdom (a market‐oriented economy) as opposed to continental European countries (bank‐oriented economies).     

一个标谁一次检验全球接受

标准与检验携手并进,缺一不可,已成为推动全球大市场发展的重要力量.标准为产品、服务、相关体系、生产过程及相关材料等提供了相应的技术规范和质量要求.检验则是验证这些标准是否可靠地得到实现.一旦标准在国际上得到广泛的认可,它就成为相关产品或服务的国际市场的发展依据,这就表明这个市场建立在可靠的质量基础之上,有较高的消费者信任度.     

Comment on “On the Uniqueness of Stable Marriage Matchings” [Economic Letters 69(1):1–8, 2000]

We prove with the help of a counterexample that Lemma 6 and Corollary 7 from Eeckhout (2000) are incorrect.     

Vicarelli’s Keynes (and today’s international disorder)

The article speculates about the legacy of Fausto Vicarelli’s interpretation of John Maynard Keynes’s work in the times of a major global crisis. In particular, it puts an emphasis on those aspects of Keynes’s “method” that Vicarelli rightly considered as revolutionary in his Keynes, of 1977, as well as in other writings. The article then turns to Vicarelli’s reconstruction of Keynes’s early work in international economics (Indian Currency and Finance, Economic Consequences of the Peace) and reflects upon the continuing relevance of the philosophy inspiring Keynes’s plans of global reform in the Forties, also in the light of Vicarelli’s (Keynes-inspired) vision of the problem of policy space at the international level.     

An unlikely Phoenix: The recovery of Argentina’s monetary and financial system from its ashes in the 2000s and its lessons

The study discusses the recovery of the Argentine financial system after the crisis of the so called convertibility regime of the 1990s. The Argentine macroeconomic regime established in 1991 and based on the hard peg of the peso to the dollar at a 1 to 1 parity ended in a multiple crisis in 2001–2. Beyond the default on the public debt, the crisis also involved the breakdown of the domestic financial system, and an almost complete isolation of the country from the international financial markets as a consequence of the default. Under such a deep crisis and the consequent uncertainty, the recovery of the solvency of the financial institutions was an almost insurmountable enterprise. However, with a gradualist approach (contrary to the advice of the International Monetary Fund) and a degree of “regulatory forbearance,” the financial and monetary authorities were able to recover the health of the financial system, which became much more resilient to shocks, even if its development has been very slow and, as a consequence, the contribution of domestic credit to the economic expansion of the 2000s can be considered almost negligible.     

Russia’s invasion of Ukraine: assessment of the humanitarian,economic, and financial impact in the short and medium term

What are the economic effects of the Ukraine war for Ukraine, Russia, and the rest of Europe? In this study, the Vienna Institute for International Economic Studies (wiiw) sheds light on the immediate consequences on the one hand, but also on the medium-term structural changes caused by the largest armed conflict in Europe since the Second World War. The Russian invasion of Ukraine has triggered a humanitarian crisis. Pre-war, almost 19 m people lived in those regions that are currently directly affected. Refugee inflows to the rest of Europe are likely to be at least three times greater than in 2015/2016. As Black Sea ports come under Russian assault, Ukraine has lost its ability to sell more than half of its exports, primarily agricultural commodities and metals. Western financial support will become ever more important as the war continues. Turning to Russia, sanctions will have a very serious impact on that country’s economy and financial sector. Despite being partly hamstrung by the fact that a large proportion of Russian reserve assets are frozen in the EU and G7, the central bank managed to stabilise financial markets by a combination of confidence-building and hard-steering measures: capital controls, FX controls, regulatory easing for financial institutions, and a doubling of the key policy rate. The medium-term and long-term outlook is negative. As a result of the war and the sanctions, the rest of Europe faces a surge in already high inflation; this will weigh on real incomes and will depress economic growth. Many European countries rely heavily on Russia for oil and gas imports: import shares are over 75% in Czechia, Latvia, Hungary, Slovakia, and Bulgaria with respect to natural gas; Slovakia, Lithuania, Poland, and Finland with respect to oil and petroleum; and Cyprus, Estonia, Latvia, Denmark, Lithuania, Greece, and Bulgaria with respect to solid fuels. Aside from energy, the fallout via trade for the rest of Europe is likely to be small. Non-energy trade and investment links between Russia and many European countries have declined in importance since 2013. There are four main areas of structural change and lasting impact for the EU (and Europe more broadly) as a result of Russia’s invasion of Ukraine. First, the EU will get more serious about defence. Second, the green transition will gather pace. Third, broader Eurasian economic integration will be unwound. And fourth, the EU accession prospects for countries in Southeast Europe could (and should) improve.