Plague and long‐term development: the lasting effects of the 1629–30 epidemic on the Italian cities

This article aims to analyse the effects of plague on the long‐term development of Italian cities, with particular attention to the 1629–30 epidemic. By using a new dataset on plague mortality rates in 56 cities covering the period c. 1575–1700, an economic geography model verifying the existence of multiple equilibria is estimated. It is found that cities severely affected by the 1629–30 plague were displaced to a lower growth path. It is also found that plague caused long‐lasting damage to the size of Italian urban populations and to urbanization rates. These findings support the hypothesis that seventeenth‐century plagues played a fundamental role in triggering the process of relative decline of the Italian economies.     

Management Quality, Ownership, Firm Performance and Market Pressure in Russia

We investigate whether management quality explains firm performance in Russia. We find that it explains relatively little in terms of firm performance, but it does explain some of the differences between firms in Russia’s Far East and the rest of Russia. Firms that have always been in private ownership perform better than state-owned firms. While management practices may not yet affect firm performance in a measurable way, they may do so in the future. This conjecture motivates us to look at the determinants of firms’ adoption of good management practices. We find that market pressure, both in the product and the labour market, has some impact on adoption of management practices, in particular in the Far East. It thus appears that the economy in Russia’s Far East may function according to different rules than in the rest of Russia, as market forces seem to be stronger there, in particular, because the Far East is more exposed to foreign competition than the rest of Russia.     

SCARCE NATURAL RESOURCES AND INCOME DISTRIBUTION*

: Introduction. SECTION I: Differential rent - 1. The production system with lands of different qualities; 2. Relations between the rates of profit, wage and rent; 3. Order of fertility and income distribution. SECTION II: Rent on land of a single quality - 1. The production system with land of the same quality; 2. Relations between the rates of profit, wage and rent; 3. Possibility of an upward-sloping wage-profit frontier     

Financial instruments with sports betting components: Marketing gimmick or a domain for behavioral finance?

We examine theoretically and experimentally a certain class of new financial instruments which are designed as lotteries on the outcome of prominent sports events like the Soccer World Cup 2006. From a theoretical point of view, sports betting products may be superior to a fixed rate investment because of heterogeneous expectations, risk-loving behavior of investors or additional non-monetary utility components. In comparison to the direct placement of bets at bookmakers’, sports betting products may be preferable in cases of hedonic framing. Our experimental section, however, reveals the limited practical relevance of these theoretical arguments for “average” decision makers. Despite this, financial instruments with sports betting components offer a certain profit potential due to the diversity of preferences across individuals. Summarizing, the issuance of sports betting products may actually be mainly driven by marketing aspects, nevertheless sports betting products may be considered to be “viable” niche products with low cost of capital for banks.     

Long difference instrumental variables estimation for dynamic panel models with fixed effects

This paper proposes a new instrumental variables estimator for a dynamic panel model with fixed effects with good bias and mean squared error properties even when identification of the model becomes weak near the unit circle. We adopt a weak instrument asymptotic approximation to study the behavior of various estimators near the unit circle. We show that an estimator based on long differencing the model is much less biased than conventional implementations of the GMM estimator for the dynamic panel model. We also show that under the weak instrument approximation conventional GMM estimators are dominated in terms of mean squared error by an estimator with far less moment conditions. The long difference (LD) estimator mimics the infeasible optimal procedure through its reliance on a small set of moment conditions.     

A note on CEO compensation, elimination tournaments and bankruptcy risk

We investigate an economy in which firms have different risks to go bankrupt. We observe two things: first, workers in firms with higher bankruptcy risk (bad firms) always work less than workers in good firms. Second, the CEOs of bad firms may nonetheless receive larger wages.JEL Classification: J40, L20, M50Alexander Matros: We are grateful to Karl Wärneryd and an anonymous referee for helpful suggestions. Much of this paper was written while Matros was a Research Fellow at University College London and Friebel was at SITE, Stockholm. We are grateful for their research environmennt. The support of the Economic and Social Research Council (ESRC) is gratefully acknowledged. This work was part of the programme of the ESRC Research Center for Economic Learning and Social Evolution.