Macroprudential policy and imbalances in the euro area

Since its creation the euro area suffered from imbalances between its core and peripheral members. This paper checks whether macroprudential policy applied to the peripheral countries could contribute to providing more macroeconomic stability in this region. To this end we build a two-economy macrofinancial model and simulate the effects of macroprudential policy (regulating the loan-to-value ratio) when the core and the periphery are exposed to asymmetric shocks. We find that macroprudential policy is able to substantially lower the amplitude of credit and output fluctuations in the periphery. However, for the policy to be effective, it should be decentralized. Very similar conclusions hold when welfare is considered as the optimality criterion.     

HOLDINGS OF NATIONAL AND LOCAL GOVERNMENTS IN COMPANIES IN FINLAND: PERSISTENCE AND CHANGE IN THE LONGER TERM

Applying an approach of neo‐institutional research, this article examines the history of company holdings of the national government and local governments in Finland in the longer term. The article examines the genealogy of the institutional forms of these holdings, the diffusion, adoption and adaptation of these forms, and the political legitimacy of new forms and the political de‐legitimation of earlier forms. For theory, the results indicate that the individual tailoring of institutional forms offers flexibility but increases complexity. For practice, the results suggest that the company form may too easily marginalize alternative institutional forms such as co‐operatives, associations, and foundations.     

Gross substitutes and complements: A simple generalization

We extend the gross substitutes and complements framework (Sun and Yang, 2006). Competitive equilibrium with indivisible goods exists under significantly weaker, intuitive and interpretable conditions. A generalized dynamic double-track procedure (Sun and Yang, 2008, 2009) finds the competitive equilibrium outcome.     

EQUALITY OF OPPORTUNITY: EAST VS. WEST GERMANY

The case of German reunification has been subject to extensive research on earnings inequality and labour market integration. However, little is known about the development of equality of opportunity (EOp) in East and West Germany after 1990. Using German micro data, we empirically analyse how circumstances beyond the sphere of individual control relate to inequality in East and West Germany. Our results show that EOp is larger in East than in West Germany. However, despite increasing income inequality, EOp remained surprisingly constant.     

Occupations,fields of study and returns to education

This paper considers several possible channels behind the well‐documented effect of education on earnings. The first channel is that education makes workers more productive on a given task, as in a conventional human capital framework. The second channel is based on the idea that education helps workers get assigned to higher‐paying occupations where output is more sensitive to skill. A third and final channel is that workers are more productive and earn more when they are matched to a job related to their field of study. Using data from the 2005 National Graduate Survey and the 2006 Canadian Census, I find that channels two and three account for close to half of the conventionally measured return to education. The results indicate that the return to education varies greatly depending on occupation, field of study and the match between these two factors.     

Gender and climate change: Do female parliamentarians make difference?

This paper investigates whether female political representation in national parliaments influences climate change policy outcomes. Based on data from a large sample of countries, we demonstrate that female representation leads countries to adopt more stringent climate change policies. We exploit a combination of full and partial identification approaches to suggest that this relationship is likely to be causal. Moreover, we show that through its effect on the stringency of climate change policies, the representation of females in parliament results in lower carbon dioxide emissions. Female political representation may be an underutilized tool for addressing climate change.     

Real estate prices and systemic banking crises

The collapse of real estate prices has historically jeopardized banking stability and triggered systemic banking crises. This paper studies risk contagion in a banking system in real estate price shock by adopting complex network theory. Modelling the real estate-related asset as a common exposure of banks to the real estate market, we propose a model that incorporates two main risk contagion channels, i.e., the financial network and asset fire sales, and reveal how the real estate price shock is transmitted and propagated across banks. We demonstrate that banking stability is highly sensitive to the real estate price shock. Moreover, due to the particularly low liquidity of the real estate market, the asset fire-sales of real estate assets overwhelms the financial network, playing the dominant role in risk contagion. Our model can be adopted by regulators to conduct stress testing and to forge effective risk management strategies.     

Relative age effects in political selection

We exploit a regression discontinuity design to provide causal evidence of the relative age effect (RAE) on a long-run adult age outcome: Political selection. We find strong evidence of the RAE in politics in Finland. However, the effect is heterogeneous: We find that male candidates born early in the calendar year have a significantly higher probability of getting elected to the parliament but no similar RAE applies to female candidates nor to municipal elections. Moreover, this effect only takes place in the most competitive parliamentary districts and is present only for some parties. We also find that in all the groups where the RAE does not exist, early-born candidates are under-represented suggesting attrition of talent in the candidate placement. Overall, our results show that seemingly artificial cutoffs imposed by the government have persistent consequences even on the selection to the highest positions of power within a society.     

SHIRKING,STANDARDS AND THE PROBABILITY OF DETECTION

By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non‐shirkers, we show that the uniformly positive (negative) supply‐side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium.     

Fame and the fortune of academic economists: How the market rewards influential research in economics

We analyze the pay and position of 1009 faculty members who teach in doctoral‐granting economics departments at 53 large public universities in the United States. Using the Web of Science, we have identified the journal articles published by these scholars and the number of times each of these articles has been subsequently cited in published research articles. We find that research influence, as measured by various measures of total citations, is a remarkably strong predictor of the salary and the prestige of the department in which professors are employed. We also examine the effect of coauthorship. Surprisingly, we find no salary penalty for sharing authorship; however, in terms of prestige of employing department, coauthorship is fully discounted.