Macroprudential policy in a currency union

Review of World Economics - The past 20 years in Europe have seen large swings in real and financial markets, and sudden stops of capital flows have exposed the fault lines of the European...     

Information in stock prices: the case of the 2016 U.S. presidential election

On the day before the 2016 U.S. presidential election, the odds of Hillary Clinton winning the presidency, according to political prediction markets, were above 90%. Surprisingly, Donald Trump won the Electoral College handily. In this study, we examine how movements in specific stock prices foreshadowed the eventual outcome. Specifically, we conduct a series of standard event-study tests focused on pharmaceutical companies, which became a focal point during the presidential campaign. Results show that while stocks of pharmaceutical companies significantly underperformed the market prior to the election, prices substantially increased beginning three days before the election outcome. This increase is both statistically significant and economically meaningful and robust to various event-study methodologies. These results suggest that some sectors of the stock market seemed to anticipate the election outcome.     

IS FINANCIAL SUPPORT FOR PRIVATE R&D ALWAYS JUSTIFIED? A DISCUSSION BASED ON THE LITERATURE ON GROWTH

Many economists have long held that market failures create a gap between social and private returns to research and development (R&D), thereby limiting private incentives to invest in R&D. However, this common belief that firms significantly underinvest in R&D is increasingly being challenged, leading the rationale behind public support for private R&D to be questioned. In this paper, we attempt to clarify the perspectives of two sources: the theoretical literature on endogenous growth, and its recent developments in integrating a geographical dimension, and the empirical literature that measures the social returns to R&D in relation to the private returns. Ultimately, we are able to clearly distinguish among different types of market failures and compare their relative impact on the gap between the private and social returns to R&D. Two main conclusions are reached. First, systematic firm underinvestment in R&D is not demonstrated. Second, even though instances of underinvestment do occur, they are mainly explained by surplus appropriability problems rather than by knowledge externalities. This suggests the need for a new policy mix that employs more demand‐oriented instruments and is more concentrated on identifying efficient allocations among activities rather than merely increasing global private R&D investment.     

Boys do not cry: the negative effects of brand masculinity on brand emotions

Marketing Letters - Building on the literature on gender role theory and brand gender, this research examines how gender-based stereotypes regarding emotional behaviors can influence...     

Remanufacturing for the Circular Economy: An Examination of Consumer Switching Behavior

For the circular economy to be tenable, consumers need to not only return products after use, but also purchase products that are remanufactured. However, research finds that consumers have a poor opinion of remanufactured products and are typically not prepared to adopt them. Thus, development of the circular economy is dependent upon deeper understanding of consumers’ attitudes and behaviors. Research typically considers either micro‐level or macro‐level factors when assessing consumer perceptions of remanufactured products. The current research incorporates macro‐level factors of price, government incentives and environmental benefits with the moderating influence of micro‐level consumer attitudes to examine consumers’ intention to switch from purchasing new products to remanufactured products. The findings suggest that a consumer's attitude toward remanufactured products is an important moderating factor predicting consumer switching behavior to remanufactured products. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

The rhetorical fantasy of energy transitions: implications for energy policy and analysis

This article explores the rhetoric of four energy transitions. It begins by summarising research on the intersection of fantasy, technology and the sociology of expectation. It then looks at how ideas of progress, modernity, cheapness, abundance and hope influence the way society perceives new energy technologies, causing them to overestimate benefits and underestimate challenges. Our rhetorical analysis finds in case studies of steam engines, gasoline automobiles, hydroelectric dams and nuclear reactors that newly ‘discovered’ sources of energy or newly invented technologies are always assumed to provide infinitely abundant energy and to have the potential to create positive utopian changes in society. We conclude by noting the salient implications of these rhetorical themes for energy planners, analysts and scholars.     

Regulation and taxation: A complementarity

I show how quantity regulation can lower elasticities and thereby increase optimal tax rates. Such regulation imposes regulatory incentives for particular choice quantities. Their strength varies between zero (laissez faire) and infinite (command economy). In the latter case, regulation effectively eliminates any intensive behavioral responses to taxes; a previously distortionary tax becomes a lump sum. For intermediate regulation (where some deviation is feasible), intensive behavioral responses are still weaker than under zero regulation, and so quantity regulation reduces elasticities, thereby facilitating subsequent taxation. I apply this mechanism to labor supply and present correlational evidence for this complementarity: hours worked in high-regulation countries are compressed, and these countries tax labor at higher rates.     

Reasonable and Risk‐Based? Replacing NFIP Generally Subsidized Rates with a Means‐Tested Subsidy

The National Flood Insurance Program was created to seek two often conflicting goals: (i) shifting risks from federal taxpayers to those who choose to live in flood plains and (ii) ensuring flood insurance is available to everyone at “reasonable” rates. Efforts to accomplish the second goal currently take the form of subsidies based on location and the date a home was constructed. The resulting revenue from subsidized insurance premiums is not sufficient to cover the true cost of flood insurance, and federal taxpayers have paid the difference: $30 billion to date. Based on a detailed survey of households in the high‐risk flood zones of New York City (NYC), we find that replacing existing premium subsidies with risk‐based prices and a subsidy for low‐income housing‐burdened households could better meet both goals by ensuring low‐income individuals have access to affordable flood insurance while still saving the federal taxpayer up to $183 million per year in NYC alone.