Hail to the chief: The effect of political alignment with the presidency on corporate investment

We examine the effect of political alignment between the CEO and the US president on corporate investment. We find that when the CEO is from the same party as the President that the adverse effects of policy uncertainty on corporate investment are significantly reduced or eliminated. We arrive at this result after having controlled for investment opportunities, economic uncertainty, and political alignment with Congress. We also find that the political alignment between the CEO and the President has a greater effect on corporate investment for firms in industries with significant exposure to government spending. Our results go to confirm the effects of a country's politics and the occupier of the White House on CEOs’ business and economic outlooks. The results also point out that the effect of the behavioral traits of executives changes depending on the external environment.     

New evidence on factors affecting the level and growth of US health care spending

The dual problems of high and rising medical care expenditures and substantial differences in spending across geographic regions have long plagued the US health care system. We provide new evidence to explain why some states and regions of the country spend much more on medical care than others, and why health care spending for the nation as a whole has been growing rapidly over the last several decades. To do this, we estimate a health care spending panel data model using annual data on all 50 states for the period 1993–2009. Our model includes a number of socio-economic, health care provider, lifestyle and environmental variables that past studies indicate may affect the level or growth of aggregate health care spending. We exploit the time effect component of our model to obtain an upper-bound estimate of the effect of advances in medical technology. Our findings indicate that the most important factors influencing the level of spending are availability of providers, income, excessive alcohol consumption, Medicaid coverage, HMO health plans and the proportion of the population elderly and African-American. The principal drivers of growth have been the continual introduction of new medical technologies, and the growth of providers and income.     

Patents and R&D expenditure effects on equity returns in pharmaceutical industry

As costs of pharmaceutical R&D soar and productivity falls, the role of research pipelines in firm valuations is changing. To date, surprisingly little work has been published on the effects of R&D pipeline performance on equity returns, while controlling for coincident factors, such as legacy patents and presence of blockbuster drugs in production. Using 1996–2013 data for nine largest pharmaceutical companies in the world, this article assesses the role of the above factors on returns to pharmaceutical companies equity. We show significant positive link between changes in the number of blockbusters on patent six months prior and returns in excess of pharmaceutical equity index. The number of patents granted by United States Patent and Trademark Office in a quarter is also a significant factor. On the other hand, we find that increases in R&D expenditure in large-cap pharmaceutical companies are viewed negatively by investors in the short term.     

地方政府财政支出结构影响农村居民消费的实证研究

地方政府财政支出可划分为投资性支出、消费性支出和福利性支出.通过构建适合我国农村居民消费特征的理论模型,运用1995-2009年省际面板数据,实证检验地方政府财政支出对农村居民消费的影响.结果显示:政府投资性支出和福利性支出对农村居民消费具有正向促进作用,政府消费性支出对农村居民消费则具有负向抑制作用.因此,政府应该进一步优化财政支出结构来促进农村居民消费的增长.     

The patterns and determinants of longevity in Russia's regions: Evidence from panel data

In this paper we examine whether regions of Russia have been converging or diverging in their longevity levels during the 1990s and evaluate the divergence effect of the 1998 financial crisis. We also estimate the impact of changes in poverty and public health spending on inter-temporal variations in longevity using regional-level panel data for 77 Russian regions from 1994 to 2000. Finally, we investigate the extent to which the gradual recovery in longevity observed after 1994 was derailed by the 1998 financial crisis and the public policy shifts required for regions to regain their Soviet-era levels of longevity. We find a significant negative effect of the 1998 crisis on longevity independently of the factors related directly to poverty and public health spending. In addition, a permanent negative shock to the incidence of poverty and the amount of publicly-provided health care in a region has enduring consequences on the population's health. Finally, the effect of increases in public health spending on longevity is related positively to the incidence of poverty. Journal of Comparative Economics 33 (4) (2005) 788–813.     

The unintended composition effect of the subnational government fiscal rules: The case of Italian municipalities

Although numerical fiscal rules may be introduced to achieve several objectives, to date the maintenance of fiscal sustainability is their predominant goal. This is particularly true at subnational level; maintaining fiscal discipline in a decentralized setting is challenging and subnational government fiscal rules are considered one of the most valid solutions to the problem. While theoretical and empirical literature has mainly focused on their effectiveness in containing subnational deficit and/or debt, little attention has been paid to the possible trade–offs and side effects of the rules on the composition of subnational expenditure. The aim of this paper is to fill this gap by exploiting the case of Italian municipalities, which have been subject for fifteen years (1999–2015) to a set of rules called Domestic Stability Pact. The Italian DSP framework – imposing rules only on municipalities above a population threshold (5000 inhabitants) – allows us to implement a quasi–experimental technique to investigate the unintended composition effects of the rules. A difference–in–discontinuities design permits to find rigorous empirical evidence that the switching in 2007 to rules which are more binding in terms of fiscal discipline leads to a recomposition of municipal expenditure against investment spending. The analysis is then integrated by evaluating the impact of the rules on six categories of investment expenditure. Investment in human capital and infrastructure seems to be the most affected.     

Geographic Cross-Sectional Fiscal Spending Multipliers and the Role of Local Autonomy: Evidence from European Regions

Using a panel of 268 European regions during 1990–2014, we document that the degree of local government's autonomy, measured with the “Local Autonomy Index,” has a significant positive effect on the fiscal spending multiplier. The estimated geographic cross-sectional fiscal spending multiplier is on average close to zero in countries with the lowest degree of local autonomy, and around unity in countries with the highest degree of local autonomy. Multipliers are state-dependent: larger when gross domestic product is below trend and when there is slack in the labor market; in those states, local autonomy has a particularly large positive effect on the multiplier. To interpret the empirical findings, we build a Dynamic Stochastic General Equilibrium (DSGE) model where both local and central government spending contribute to a public good that enhances private labor productivity. Local governments are more efficient in producing the public good and the multiplier is higher in countries where local government spending has a larger share in the production of the public good.