Teaching teenagers in finance: Does it work?

Many initiatives worldwide aim at improving financial literacy through targeted education programs, yet there is little evidence regarding their effectiveness. We examine the impact of a short financial education program on teenagers in German high schools. Our findings reveal that the training program significantly increases teenagers’ interest in financial matters and their financial knowledge, especially their ability to properly assess the riskiness of assets. Behaviorally, we observe a decrease in the prevalence of self-reported impulse purchases, but at the same time find no evidence of a significant increase in savings.     

An application of data envelopment analysis to evaluate the efficiency level of the operational cost of Brazilian electricity distribution utilities

This paper shows efficiency indices for 60 Brazilian electricity distribution utilities. The efficiency scores are gauged by three DEA models. For both models, these quantities are evaluated under different contexts. One treats with respect to the regulator perspective. The others examine an alternative approach based on cluster analysis and restrictions on factor weights. It is worth pointing out that these developments can reduce the information asymmetry and improve the regulator's skill to compare the performance of the utilities, a fundamental in incentive regulation schemes.     

Religious minority in business history: The case of Old Believers

The role of the Old Believers (OB) in the development of Russian industry has been noted by many historians; however, empirical research on the topic is scarce. Using official censuses, archive sources, and industrial reports, the role of OB enterprises in the Moscow textile industry for the period 1832–1890 was examined. The analysis highlighted the rise and fall of the participation of OB in the textile industry, contrasting the findings of other researchers, which were often exaggerated. The findings can be explained by social networks and trust which arise from the minority status, whereas the relative decline is related to structural changes and preferences of OB to family-type of business.     

Natural disasters,growth and institutions: A tale of two earthquakes

We examine the impact of natural disasters on GDP per capita by applying the synthetic control approach and using a within-country perspective. Our analysis encompasses two large-scale earthquakes that occurred in two different Italian regions in 1976 and 1980. We show that the short-term effects are negligible in both regions, though they become negative if we simulate the GDP that would have been observed in absence of financial aid. In the long-term, our findings indicate a positive effect in one case and a negative effect in the other, largely reflecting divergent patterns of the TFP. Consistent with these findings, we offer further evidence suggesting that a quake and related financial aid might either increase technical efficiency via a disruptive creation mechanism or reduce it by stimulating corruption, distorting the markets and deteriorating social capital. Finally, we show that the bad outcome is more likely to occur in regions with lower pre-quake institutional quality. As a result, our evidence suggests that unanticipated local shocks are likely to change long run growth rates, exacerbating territorial disparities.     

Diversification and sophistication of livestock products: The case of African countries

This study assesses the level of sophistication of livestock products in Africa by evaluating technology intensity and economic complexity of each product. Using trade data from 1995 to 2012, livestock commodity exports are classified based on technology intensity. Employing a method of reflection in computing the economic complexity of export products, we find that one fifth of African livestock commodity exports are manufactured with low technology while the rest is composed of raw materials. The results also show that the ten most complex livestock commodities represent about a third of African livestock total exports while the world level is almost double this figure. Yet African countries spend a huge share of their wealth on importing complex products. The results imply that by exporting non-complex products Africa loses nearly a third of the total value of its livestock exports. To boost the value of livestock products, African countries should exploit their untapped potential while securing the domestic market to achieve import substitution. This can be done by integrating with global value chains or developing niche markets at the regional or international markets and improving productive capabilities.     

Political economy of taxation,debt ceilings,and growth

This study presents voting on policies, including labor and capital income taxes and public debt, in an overlapping-generations model with physical and human capital accumulation, and analyzes the effects of a debt ceiling on a government's policy formation and its impact on growth and welfare. The results show that the debt ceiling induces the government to shift the tax burdens from the older to younger generations, but stimulates physical capital accumulation and may increase public education expenditure, resulting in a higher growth rate. Alternatively, the debt ceiling is measured from the viewpoint of a benevolent planner and lowering the debt ceiling (i.e., tightening fiscal discipline) makes it possible for the government to approach the planner's allocation in an aging society.     

Institutional distance and Turkey’s outward foreign direct investment

This study empirically examines the relation between institutional distance (ID) and Turkey’s outward foreign direct investment (TODI). The empirical results use panel data from 2002 to 2016 to show that TODI is attracted to countries with better institutional quality. We also find that host country political stability, government effectiveness, control of corruption, and rule of law attract TODI. We also document that TODI is positively related to cultural distance (CD) and ID is not moderated by CD.     

Reelection,growth and public debt

In this work we examine how economic growth affects public debt when interacted with reelection prospects. Reelection considerations shorten political time horizons and give rise to political myopia that exacerbates debt accumulation. That laxer institutional reelection restrictions (e.g., no term limits) mitigate this effect due to electoral accountability is well known. Incorporating growth, we find that this mitigation can be reversed because less myopic, and more accountable, incumbents put more emphasis on smoothing the effects of growth across generations. We test these predictions using an annual-based panel of U.S. states over the period 1963–2010. Our identification strategy rests on constitutionally-entrenched differences in gubernatorial term limits that provide plausibly exogenous variation in reelection prospects, and aggregate national TFP shocks that are exogenous to individual states. Our estimates indicate that when reelection is possible a one standard deviation positive income shock induces, within the same year, a relative increase of approximately $40 in real per capita public debt.     

Government size,composition of public spending and economic growth in Brazil

The performance of the fiscal policy is largely affected by the relationship between government size, composition of public spending and economic growth. We use a theoretical framework to find optimal relations among these variables and confront them with a panel data for the Brazilian states. Private capital and government spending are substitute inputs in production as the Brazilian states require provision of public spending to fill gaps in the underdeveloped private sector. Public investment and current government expenditures are combined in fixed ratios in the overall government spending due to strong rigidity of the public budget. The optimal share of public investment is considerably lower than current expenditures, as occurs in developing countries characterized by low economic dynamism. Finally, the average tax burden from the data is below the estimated optimal level, meaning that there is space for increasing tax rate without harming economic growth for some Brazilian states.     

Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade

Some governments seem ambivalent towards economic crime because, on the one hand, there are adverse effects on competition and legal businesses; on the other hand, there are benefits through (shadow) employment and income in less-developed areas, as well as benefits through relations of political clientage. We focus on counterfeiting and its economic effects on trade in Italy during the economic crisis. Using a newly built regional dataset and a dynamic panel model, we find evidence of the dual impact of counterfeiting. The production (and exchange) of fake goods depresses the legal market that relies on intellectual property rights but supports shadow-economic activities for the benefit of illegal workers, criminal organisations, and political clientele. We show that the negative effects outweigh the positive effects.