Does Peacetime Military Service Affect Crime?

Draft lottery data combined with Danish longitudinal administrative records show that military service can reduce criminal activity for youth offenders. For this group, property crime is reduced, and our results indicate that the effect is unlikely to be the result of incapacitation only. We find no effect of military service on violent crime, on educational attainment, or on employment and earnings, either in the short run or in the long run. These results suggest that military service does not upgrade productive human capital directly, but rather affects criminal activity through other channels (e.g., by changing attitudes to criminal activity).     

Austerity in the Baltic states during the global financial crisis

The Baltic states were arguably the countries most severely affected by the global financial crisis. This article discusses the boom preceding the crisis, the ensuing austerity policies and the economic effects of these policies. All three countries maintained fixed exchange rates, but the degree of fiscal austerity varied across the countries, with Estonia undertaking the strongest fiscal consolidation in 2009. The downturn was so swift and deep that expansionary policies were unlikely to affect short-term outcomes. Growth returned towards the end of 2009, largely driven by exports. The export performance cannot be directly linked to the austerity policies. The main lesson from the Baltics is that increased macroeconomic stability must be attained by avoiding overheating and unsustainable financial exposure. The challenge for the future is to ensure that austerity policies are implemented during economic booms.     

Worker Flows and Job Flows in Danish Manufacturing, 1980-91

We map turnover of workers and jobs in Danish manufacturing over the 1980 to 1991 period, using information about all individual manufacturing plants. We examine the relation between worker flows and job flows and we study separations from and hires to existing jobs ('replacement hiring') in detail. Our results reveal large heterogeneity among workers as well as plants, even adjusting for the level of job flows. The cyclical properties of worker reallocation point to worker flow dynamics being driven by workers quitting in upturns to find better jobs, rather than by plants upgrading the labour force in recessions.     

Total factor productivity growth in Central and Eastern Europe before,during and after the global financial crisis

This article presents growth accounting results for 11 EU countries from Central and Eastern Europe for the years 1996–2016. Its contributions include the estimation of new capital stock series and adjustment for the utilisation of capital stock. Before the crisis, growth in total factor productivity (TFP) was the main contributor to output growth in Slovenia, Hungary and Slovakia, while capital deepening was more important in the Czech Republic, Croatia and Poland. During the global financial crisis the contributions of TFP and capital growth differed markedly across the countries, reflecting the very diverse dynamics of the crisis. After the crisis the contribution of TFP growth has been negligible in all of the sample countries coinciding with generally weak output growth. The results are generally robust to changes in estimation methods and parametrisations, but some assumptions regarding the construction of the capital stock series are critical for the results.     

The European Venture Capital and Private Equity country attractiveness indices

We calculate composite indices to compare the attractiveness of 27 European countries for institutional investments into the Venture Capital and Private Equity asset class. To achieve this we use 42 different parameters, and propose an aggregation structure that allows for benchmarking on more granulated levels. The United Kingdom leads our ranking, followed by Ireland, Denmark, Sweden, and Norway. While Germany is slightly above the average European attractiveness level, the scores are rather disappointing for France, Italy, Spain, and Greece. Our analyses reveal that while the UK is similar to the other European countries with respect to many criteria, there are two major differences, which ultimately affect its attractiveness: its investor protection and corporate governance rules, and the size and liquidity of its capital market. The state of the capital market is likewise a proxy for the professionalism of the financial community, for deal flow and exit opportunities. We determine a reasonable correlation between our attractiveness index scores and actual Venture Capital and Private Equity fundraising activities and prove the robustness of our calculations. Our findings across all the European countries suggest that, while investor protection and capital markets are in fact very important determinants for attractiveness, there are numerous other criteria to consider.     

Partnerships, lemons, and efficient trade

We analyze the possibility of efficient trade with informationally interdependent valuations and with a dispersed ownership. A main role is played by the effects of adverse selection on incentive payments and budget constraints. Variations in the degree of interdependence directly influence the incentive payments and ultimately lead to a tightening or relaxation of the budget constraint, thus affecting the ability to achieve efficient trade. We derive precise possibility conditions for efficient trade, and we offer a framework in which the interplay of insights previously obtained by Akerlof (Quart. J. Econom. 89 (1970) 488), Myerson and Satterthwaite (J. Econom. Theory 28 (1983) 265), and Cramton et al. (Econometrica 55 (1987) 615) can be analyzed. In addition, we discuss to what extent possibility results previously obtained for private values environments can be generalized.     

Do fundamental indexes produce higher risk-adjusted returns than market cap indexes? Evidence for European stock markets

A fundamental index weighs stocks proportionally to fundamentals such as book value, dividends, or sales. We investigate risk/return characteristics of fundamentally-weighted and market-cap-weighted indexes and employ various risk-adjustment approaches to ensure that return differences are not driven by risk. Based on stocks in the DJ Stoxx 600 index from July 1993 to April 2007, we show that fundamentally-weighted indexes achieve higher risk-adjusted returns than market-cap-weighted indexes. Our results provide empirical evidence for former theoretical findings that cap weighting may result in suboptimal risk/return characteristics.     

Age-dependent skill formation and returns to education

This study investigates the distribution of returns to investments in cognitive and self-regulatory skills over the life cycle. In our simulation model, the distribution of returns to education results from the interaction of neurobiological and socioeconomic factors in age-dependent skill formation. A novel feature of our extension of the technology of skill formation [Cunha, F., Heckman, J.J., 2007. The technology of skill formation. The American Economic Review 97 (2), 31–47] is a life span model that integrates skill depreciation at older ages and calibrates it to German data. Our evidence quantitatively illustrates the role early childhood plays in the shaping of human capital formation, inequality and economic growth.     

Dialectics, Functionalism, and Structuralism, in Economic Thought

A bstract . "Structuralism" and "functionalism" facilitate an analysis of the evolution oi economic thought as a series of cultural, institutional , and socioeconomic challenges and responses. The methodologies of "structuralism" and "functionalism," like Hegelian dialectics, ¹ to which they are closely related, do not consider thought systems or socioeconomic systems in terms of fixed and stable relationships but in the light of dynamic processes of change. They emphasize communication, feedback , and continuity. The aim of these methodologies is to facilitate the analyses of changes in interrelationships which constitute the processes of evolution. The economist is concerned with the theoretical analysis of socioeconomic processes. His task can be facilitated by describing and analyzing structural-functional relationships of the economy and its parts. However, the methodologies of structuralism and functionalism cannot be used to predict theoretical developments. At best they can be utilized to select from some set of possible alternatives.