Association of financial or professional conflict of interest to research outcomes on health risks or nutritional assessment studies of genetically modified products

Since the first commercial cultivation of genetically modified crops in 1994, the rapidly expanding market of genetically modified seeds has given rise to a multibillion dollar industry. This fast growth, fueled by high expectations towards this new commercial technology and shareholder trust in the involved industry, has provided strong incentives for further research and development of new genetically modified plant varieties. Considering, however, the high financial stakes involved, concerns are raised over the influence that conflicts of interest may place upon articles published in peer-reviewed journals that report on health risks or nutritional value of genetically modified food products. In a study involving 94 articles selected through objective criteria, it was found that the existence of either financial or professional conflict of interest was associated to study outcomes that cast genetically modified products in a favorable light (p = 0.005). While financial conflict of interest alone did not correlate with research results (p = 0.631), a strong association was found between author affiliation to industry (professional conflict of interest) and study outcome (p < 0.001). We discuss these results by comparing them to similar studies on conflicts of interest in other areas, such as biomedical sciences, and hypothesize on dynamics that may help explain such connections.     

Determination of expected cost of equity with the CAPM: Theoretical extension using the law of error propagation

The determination of the expected return on equity based on the capital asset pricing model (CAPM) is an internationally recognized method, although the underlying theory is not without criticism and therefore leaves sufficient room for interpretation. Strictly speaking, the expected return on equity cannot be determined per se, as all parameters of the CAPM have to be estimated and contain measurement errors. The statistical measurement errors would have to be included in the calculation of the expected return on equity. The paper discusses the current view on how the expected return on equity is determined in the Germen‐speaking countries and presents an approach to transfer the measurement errors of the parameter risk‐free rate, market risk premium, and company beta to the calculated return on equity using the Gaussian law of error propagation.     

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues associated with the three‐way (exporter‐time, importer‐time, and country pair) fixed effects currently recommended in the gravity literature have heretofore limited the choice of estimator, leaving an important methodological gap. To address this gap, we introduce an iterative poisson pseudo‐maximum likelihood (PPML) estimation procedure that facilitates the inclusion of these fixed effects for large data sets and also allows for correlated errors across countries and time. When applied to a comprehensive sample with more than 200 countries trading over 65 years, these innovations flip the conclusions of an otherwise rigorously specified linear model. Most importantly, our estimates for both the overall CU effect and the Euro effect specifically are economically small and statistically insignificant. We also document that linear and PPML estimates of the Euro effect increasingly diverge as the sample size grows.     

Higher Taxes for Fiscal Consolidation? Expected and Unexpected Effects of Municipal Tax Policy

International Advances in Economic Research - During episodes of fiscal consolidation in public budgets, there are different instruments to choose from. The literature shows broad consensus that...     

Which Vested Interests Do Central Banks Really Serve? Understanding Central Bank Policy Since the Global Financial Crisis

Inspired by Thorstein Veblen’s ideas, I analyze the behavior of central banks from the perspective of how institutions are captured by vested interests. Since the global financial crisis in 2008, there has been a shift in the conduct of monetary policy. Much like the behavior of asset holders themselves, who, in times of crisis, sought to trade off lower returns with more stable asset values, monetary policy changed from a de facto policy of stabilizing rentier income to one of preserving asset prices or rentier wealth. I analyze this particularly through the lenses of what happened with quantitative easing (QE) in the US, which coincided with a collapse of real interest rates, while asset prices were stabilized. This can also be seen in the way the banking sector was supported by QE where the market for mortgage-backed securities was sustained even as it actually meant a lower profitability for the overall U.S. banking sector during the QE interventions.     

Does confidence enhance performance? Causal evidence from the field

We analyze the effect of self‐confidence on performance using data from top‐level professional biathlon competitions. We exploit this dual nature of the sport by using snow conditions affecting performance on the skiing track as exogenous variation in confidence on the shooting range. Using round‐level data on 254 competitions between 2009 and 2013, we show that the less confident athletes are, the worse their performance is on the shooting range. Effects for women are estimated to be generally smaller and less robust. We show that our results are not driven by fatigue or exhaustion specific to the competitive setting we analyze.     

Warehouse receipt financing for smallholders in developing countries: Challenges and limitations

A warehouse receipt is a document issued by a warehouse operator as evidence that a specified commodity of stated quantity and quality has been deposited at a particular warehouse by a named depositor. When backed by an appropriate legal and regulatory framework, a warehouse receipt becomes a formal financial instrument that allows the depositor to confer a security interest in the stored commodity to another party without requiring physical delivery, allowing the warehouse receipt to serve as possessory collateral for a loan. Warehouse receipt financing, in theory, permits smallholders farmers in developing countries to store their surplus safely in a modern warehouse to sell at a later date when prices are higher, while allowing them to use the stored commodity as collateral to secure a loan to finance household consumption and investment needs in the interim. However, in practice, warehouse receipt financing generally has not been embraced by smallholders in developing countries in which it is available. Here, we develop and analyze a formal stochastic dynamic model of seasonal commodity marketing that exposes the transaction cost and risk reallocation problems that undermine the benefits of warehouse receipt financing to smallholders.     

Chasing the carrot – actual working hours of fixed-term employees

Fixed-term contracts can serve as a screening device to reveal the true ability of workers. To achieve promotion to a permanent position, fixed-term employees have an incentive to prove themselves by providing higher effort than competing co-workers by means of longer working hours. Applying fixed effects estimation to the German register data, we find that employees work longer hours on fixed-term contracts. This effect is stronger for labour market entrants and employees that are newly hired. We further show that actual hours of work are particularly large when there is competition among co-workers to receive promotion to a permanent position.     

The German generation internship and the minimum wage introduction: evidence from big data

The new German minimum wage applies a specific exemption clause for internships, where internships that last up to three months are exempted while internships that exceed three months are due to the minimum wage. Negative minimum wage effects on internships are heavily debated as internships are mostly non-productive. Difference-in-difference analyses that exploit establishment and regional variation in the bite of the minimum wage do not show a reduction in the number of internships. In addition, we pursue an innovative approach by using Google search data to analyse how the search intensity for internships changed in course of the minimum wage introduction. Difference-in-difference comparisons with other countries in Europe do not reveal an effect on the search for internship positions in general, but we observe a significant reduction in Google search for ‘generation internship’. This suggests that the underlying societal phenomenon of a generation entering internships without a perspective for regular jobs has lost in relevance.     

The Government Spending Multiplier at the Zero Lower Bound: Evidence from the United States

We estimate state‐dependent government spending multipliers for the United States. We use a factor‐augmented interacted vector autoregression (FAIVAR) model. This allows us to capture the time‐varying monetary policy characteristics including the recent zero interest rate lower bound (ZLB) state, to account for the state of the business cycle and to address the limited information problem typically inherent in VARs. We identify government spending shocks by sign restrictions and use a government spending growth forecast series to account for the effects of anticipated fiscal policy. In our baseline specification, we find that government spending multipliers in a recession range from 3.56 to 3.79 at the ZLB. Away from the ZLB, multipliers in recessions range from 2.31 to 3.05. Several robustness analyses confirm that multipliers are higher, when the interest rate is lower and that multipliers in recessions exceed multipliers in expansions. Our results are consistent with theories that predict larger multipliers at the ZLB.