Regional integration: an empirical assessment of Russia

Using a statistical model of commodity trade, we quantify the evolution of regional economic integration within Russia during 1995–1999, and explore potential determinants of this evolution. Our integration measure exhibits rich regional variation that, when aggregated to the national level, fluctuates substantially over time. In accounting for this behavior, we draw in part on theoretical models that emphasize the potential role of openness to international trade and regional disparities in income in threatening economic integration. Controlling for a host of additional regional- and national-level variables, we find a strong negative correspondence between openness to international trade and internal economic integration.     

Employee experience –the missing link for engaging employees: Insights from an MNE's AI-based HR ecosystem

Analyzing multiple data sources from a global information technology (IT) consulting multinational enterprise (MNE), this research unpacks the configuration of a digitalized HR ecosystem of artificial intelligence(AI)-assisted human resource management (HRM) applications and HR platforms. This study develops a novel theoretical framework mapping the nature and purpose of a digitalized AI-assisted HR ecosystem for delivering exceptional employee experience (EX), an antecedent to employee engagement (EE). Employing the theoretical lenses of EX, EE, AI-mediated social exchange, and engagement platforms, this study's overarching aim of this article is to establish how AI-assisted HRM fits into an organization's ecosystem and, second, how it impacts EX and EE. Our findings show that AI-assisted applications for HRM enhance EX and, thus, EE. We also see increases in employee productivity and HR function's effectiveness. Implications for research and practice are also discussed.     

Do employment subsidies work? Evidence from regionally targeted subsidies in Turkey

This paper studies the effects on registered employment and number of registered establishments of two employment subsidy schemes in Turkey. We implement a difference-in-differences methodology to construct appropriate counterfactuals for the covered provinces. Our findings suggest that both subsidy programs did lead to significant net increases in registered jobs in eligible provinces (5%–13% for the first program and 11%–15% for the second). However, the cost of the actual job creation was high because of substantial deadweight losses, particularly for the first program (47% and 78%). Because of better design features, the second subsidy program had lower, though still significant, deadweight losses (27%–46%). Although constrained by data availability, the evidence suggests that the dominant effect of subsidies was to increase social security registration of firms and workers rather than boosting total employment and economic activity. This supports the theory that in countries with weak enforcement institutions, high labor taxes on low-wage workers may lead to substantial incentives for firms and workers to operate informally.     

Unit root testing via the stationary bootstrap

A nonparametric, residual-based stationary bootstrap procedure is proposed for unit root testing in a time series. The procedure generates a pseudoseries which mimics the original, but ensures the presence of a unit root. Unlike many others in the literature, the proposed test is valid for a wide class of weakly dependent processes and is not based on parametric assumptions on the data-generating process. Large sample theory is developed and asymptotic validity is shown via a bootstrap functional central limit theorem. The case of a least squares statistic is discussed in detail, including simulations to investigate the procedure's finite sample performance.     

Evaluating expectations of <Emphasis Type="Italic">L</Emphasis>-statistics by the Steffensen inequality

By combining the Moriguti and Steffensen inequalities, we obtain sharp upper bounds for the expectations of arbitrary linear combinations of order statistics from iid samples. The bounds are expressed in terms of expectations of the left truncated parent distribution and constants that depend only on the coefficients of the linear combination. We also present analogous results for dependent id samples. The bounds are especially useful for L-estimates of the scale parameter of the distribution.     

The Feldstein–Horioka puzzle in Latin American and Caribbean countries: a panel cointegration analysis

In this paper, the recently developed panel unit root and the Pedroni cointegration tests are applied to empirically examine the validity of the Feldstein–Horioka puzzle (F–H puzzle) for a heterogeneous panel of 14 Latin American and five Caribbean countries over the period, 1960–2002. The findings indicate that in these countries, the long-run solvency condition is maintained. Finally, employing the Pedroni panel group FM-OLS estimator (2000, 2001), it is found that the statistically significant estimated savings-retention coefficient for the panel is relatively small indicating that the F–H Puzzle is not valid and thus implying the prevalence of a moderate degree of capital mobility.

An application of nonparametric volatility estimators to option pricing

We discuss the impact of volatility estimates from high frequency data on derivative pricing. The principal purpose is to estimate the diffusion coefficient of an Itô process using a nonparametric Nadaraya–Watson kernel approach based on selective estimators of spot volatility proposed in the econometric literature, which are based on high frequency data. The accuracy of different spot volatility estimates is measured in terms of how accurately they can reproduce market option prices. To this aim, we fit a diffusion model to S&P 500 data, and successively, we use the calibrated model to price European call options written on the S&P 500 index. The estimation results are compared to well-known parametric alternatives available in the literature. Empirical results not only show that using intra-day data rather than daily provides better volatility estimates and hence smaller pricing errors, but also highlight that the choice of the spot volatility estimator has effective impact on pricing.     

The Eisner Puzzle,the Unemployment Threshold and the Range of Equilibria

Using a two-regime model of the inflation-unemployment process for US data 1960:2 to 2000:2, this paper finds strong evidence to support the Eisner puzzle, which occurs when the short-run Phillips curve (SRPC) is flatter at low rates of unemployment than at higher rates. The puzzling aspect of this pattern is the expectation of excess demand to become apparent at very low rates of unemployment causing the SRPC to be steep rather than fairly flat. We show the puzzle can be resolved by estimating a three-regime model which reveals a steep SRPC at very low rates of unemployment. The estimates of the three regime model also reveal a horizontal SRPC at intermediate rates of unemployment, implying the existence of a range of equilibrium rates of unemployment at those intermediate rates.

Fiscal consolidation with high growth: A policy simulation model for India

In this paper a fiscal consolidation program for India has been presented based on a policy simulation model that enables us to examine the macroeconomic implications of alternative fiscal strategies, given certain assumptions about other macro policy choices and relevant exogenous factors. The model is then used to estimate the outcomes resulting from a possible strategy of fiscal consolidation in the base case. The exercise shows that it is possible to have fiscal consolidation while at the same time maintaining high GDP growth of around 8% or so. The strategy is to gradually bring down the revenue deficit to zero by 2014–15, while allowing a combined fiscal deficit for centre plus states of about 6% of GDP. This provides the space for substantial government capital expenditure, which translates to a significant public investment program. This in turn leads to high overall investment directly and indirectly, via the crowding in effect on private investment, which drives the high GDP growth. The exercise has also tested the robustness of this strategy under two alternative scenarios of higher and lower advanced country growth compared to the base case.