Does labor diversity promote entrepreneurship?

We find evidence that workforce educational diversity promotes entrepreneurial behavior of employees as well as the formation of new firms, whereas diversity in demographics hinders transitions to self-employment. Ethnic diversity favors entrepreneurship in financial and business services.     

Price Stability in Open Economies

This paper studies the theoretical conditions under which price stability is the optimal policy in a two-country open-economy model with imperfect competition and price stickiness. Special conditions on the levels of country-specific distortionary taxation and the intratemporal and intertemporal elasticities of substitution need to be satisfied. These restrictions apply to both cooperative and non-cooperative settings. Importantly, we show that cooperative and non-cooperative solutions do not coincide despite market completeness and producer currency pricing. We study the conditions under which quadratic approximations of single countries' welfare can be correctly evaluated by relying only on log-linear approximations of the equilibrium conditions.     

Labor market rigidity and productivity growth in a model of innovation-driven growth

Empirical studies investigating the relationship between productivity performance and labor market rigidity have generated a negative result. In this paper we try to provide a theoretical explanation for this empirical result. In doing so, we construct a no-shirking model of innovation-based growth and investigate the steady-state impact of a set of active labor market policies aimed at reducing labor market rigidity and knowledge mismatch generated by innovations. We find that, while enhancing job finding activity definitively improves the equilibrium growth-unemployment mix of the economy, reducing the knowledge mismatch of innovation through active measures is less effective in reducing the equilibrium unemployment and improving growth.     

Optimal monetary policy in a currency area

This paper investigates how monetary policy should be conducted in a two-region general equilibrium model with monopolistic competition and price stickiness. This framework delivers a simple welfare criterion based on the utility of the consumers that can be used to evaluate monetary policy in a currency area. If the two regions share the same degree of nominal rigidity, the terms of trade are completely insulated from monetary policy and the optimal outcome is obtained by targeting a weighted average of the regional inflation rates. These weights coincide with the economic sizes of the region. If the degrees of rigidity are different, the optimal plan implies a high degree of inertia in the inflation rate. But an inflation targeting policy in which higher weight is given to the inflation in the region with higher degree of nominal rigidity is nearly optimal.     

Market reaction to second-hand news: inside the attention-grabbing hypothesis

This article investigates whether the market reaction to second-hand information is due to price pressure or information dissemination. We use the perspective of attention grabbing to analyse the market reaction to the dissemination of analysts’ recommendations published in print media. This perspective is able to explain the asymmetric market reaction to ‘buy’ and ‘sell’ advice, which is difficult to rationalize within the price pressure hypothesis. We base our empirical analysis on the content of a weekly column in the most important Italian financial newspaper, which publishes past information and analysts’ recommendations on listed companies. Our findings show asymmetric price and volume reactions on the publication day. Contrary to previous evidence, we document a positive relationship between the number of analysts quoted in the column and the price (volume) increase associated with positive recommendations. Because the weekly columns seem to simply attract investors’ attention, with no additional new information, observing a reaction positively related to the column’s salience (proxied by the number of quoted analysts) is natural. In addition, we find that the market reaction is higher when the order size is lower, i.e., when individual investors’ trades constitute a higher fraction of the total trading activity in the market.     

Why so Few Women on Boards of Directors? Empirical Evidence from Danish Companies in 1998–2010

This paper analyzes the determinants of women’s representation on boards of directors based on a panel of all privately owned or listed Danish firms with at least 50 employees observed during the period 1998–2010. We focus on the directors who are not elected by the employees and test three hypotheses on female board representation that we denote the female-led hypothesis, the tokenism hypothesis, and the pipeline hypothesis, respectively. We find evidence rejecting the female-led hypothesis. Firms with a female chairperson on the board of directors tend to have significantly fewer other non-employee-elected female board members. We also find clear evidence of a tokenism behavior in Danish companies. The likelihood of enlarging the share of non-employee-elected female board members is significantly smaller if one, two, or more women have sat on the board of directors. Finally, the pipeline hypothesis is partly confirmed. The relation between the female pipeline of potentially qualified directors and female directors is weaker than the similar relation for males. Our findings offer insights to policy makers interested in promoting gender diversity within boardrooms. Our empirical evidence suggests that an important way to increase the female proportion of non-employee-elected board members is that more women reach top executive positions.