Innovation and export performance of emerging market enterprises: The roles of state and foreign ownership in China

This article examines the role of ownership for the relationship between innovation and exports. Analyzing a large firm-level data set on Chinese manufacturing firms during 2000–2007, we find that state ownership has a positive moderating effect on the innovation–export relationship. We ascribe this effect to state-owned firms’ privileged access to complementary resources and networks that strengthen their ability to use innovation to generate exports. In contrast to many earlier studies, we also find that foreign ownership has a negative moderating effect. One likely reason is that indicators of local innovation do not reflect the flows of knowledge between foreign-owned firms and their parent companies. This finding highlights the fact that innovation and production may be geographically separated within multinational enterprises. A policy implication of the analysis is that public support to innovation is likely to have stronger effects on exports when it targets firms that carry out most of their activities in domestic market.     

Nowcasting German GDP: Foreign factors,financial markets,and model averaging

This paper develops a nowcasting model for the German economy. The model outperforms a number of alternatives and produces forecasts not only for GDP but also for other key variables. We show that the inclusion of a foreign factor improves the model’s performance, while financial variables do not. Additionally, a comprehensive model averaging exercise reveals that factor extraction in a single model delivers slightly better results than averaging across models. Finally, we estimate a “news” index for the German economy in order to assess the overall performance of the model beyond forecast errors in GDP. The index is constructed as a weighted average of the nowcast errors related to each variable included in the model.     

Accounting policies in the public sector: Characteristics and consequences of accounting for capital assets

We study the evolution of American state and local governments’ capital asset accounting policies from the initial adoption of Governmental Accounting Standards Board Statement No. 34 through the fiscal year ending in 2016. We document substantial cross-sectional and time-series variation in capital asset accounting policies, which potentially diminishes the comparability of capital asset accounting information across governments and over time. We also explore the economic implications of those policies in terms of capital investment decisions and capital asset condition ratios, as reported in governments’ annual financial reports. Our findings, which are relevant to the Governmental Accounting Standards Board and its constituents, extend prior research examining the adoption and application of generally accepted accounting principles in the public sector.     

Measuring performance: Ranking state success over two decades in India

This paper proposes new composite measures of relative and dynamic state performance to improve governance and delivery of public programs in developing countries with a federal structure. We illustrate the use of the indices to rank the performance of 19 major Indian states on two large development programs launched by the Indian government over the last two decades using publicly available data. Although we find volatility in performance over time, there exists a positive correlation between measures of initial (administrative) state capacity, development and accountability with program outcomes. Our findings have important implications for both the design and implementation of large-scale public programs across developing countries.     

The state capital investing and operating company pilot reform and SOE bailouts

This paper explores the influence of the State Capital Investing and Operating Company (SCIOC) pilot reform on SOE bailout using a staggered difference-in-differences model. Based on a sample of listed SOEs during 2011–2018, we find that when the real controllers of listed SOEs enter the list of SCIOCs, soft budget constraints are alleviated and listed subsidiaries are less likely to become distressed. Mechanism tests indicate that SCIOCs help distressed firms through exiting the market, reducing bank loans, enhancing corporate governance, and improving operating efficiency. Heterogeneity tests show that the effect of SCIOC establishment is more significant in central and western regions, in public welfare and special function industries, for central SCIOCs, for state capital investing companies, when firms are organized in more layers, and for firms that engage in M&As. The empirical results show that the implementation of SCIOCs benefits both micro-enterprise development and state capital layout optimization.     

Are the supporters of socialism the losers of capitalism? Conformism in East Germany and transition success

The empirical literature is inconclusive about whether a country’s democratization has a long-lasting impact on former supporters or opponents of the bygone regime. With newly available individual-level data of former residents of the socialist German Democratic Republic (GDR), we analyze how supporters and opponents of the socialist system performed within the market-based democracy after reunification. Protesters, who helped to overthrow the socialist regime in the Peaceful Revolution, show higher life satisfaction and better labor market outcomes in the new politico-economic system. Former members of the ruling socialist party and employees in state-supervised sectors become substantially less satisfied. These results do not seem to be driven by differential reactions in the post-transition period, but rather by the removal of discriminatory practices in the GDR. Additional results indicate that conformism in the GDR also explains political preferences over the almost three decades after the reunification of Germany.