Environmental awareness and household energy saving of Chinese residents: Unity of knowing and doing or easier said than done?

Household energy saving is important for the realization of emission peak, carbon neutrality, and energy security goals in China. However, no conclusion has been reached on whether public environmental awareness can promote household energy saving. There are two major defects in previous studies. One is that they focus on the public intention to save energy rather than the real behavior; the other is that the endogenous problem caused by the measurement bias of environmental awareness is ignored. Based on China Family Panel Studies (CFPS) database, this study selects the change in average monthly household electricity charge and electricity consumption as the proxy variables of energy saving, and introduces the public perception level of social security and government corruption as the instrumental variable of environmental awareness. It is found that improvement of environmental awareness has statistical significance for household energy saving and there is still a lot of room for improvement. This conclusion keeps valid in several robustness tests. Further analysis shows that improvement of environmental awareness is more likely to promote energy saving in rural households, male household heads, and young people; and that education and income have a joint moderating effect on the energy saving effect of environmental awareness.     

Belief-driven growth slowdowns and zero-bounded risk-free rate

The literature presents mounting evidence that global long-run growth has been declining since the recession of 2008. Thus, to explore possible reasons for the growth slowdown and its risk-free rate and risk premium implications, this study constructs an endogenous growth model to examine the US economy before the 2008 recession and during the subsequent recovery period. The model features technological externalities that imply multiple perfect foresight balanced growth paths. In this setup, a change in agents’ beliefs may trigger persistent slumps, low interest rates, and elevated risk premium, consistent with the recent US experience. Numerically, using the Epstein and Zin preferences, the model calibration suggests that the historical data moments can be accommodated by persistent regimes and high intertemporal elasticity of substitution. Notably, the study’s simple-structured model with multiplicity and a regime-switching structure is a preliminary contribution to the field of economics, paving the way for future empirical studies.     

The signaling role of trade credit: Evidence from a counterfactual analysis

We quantify the signaling effect of trade credit on bank credit in a sample of US firms. Our identification strategy relies on the signaling model by Biais and Gollier (1997) and accounts for the endogeneity due to the possibility of self-selection and the simultaneity between banks’ and firms’ credit decisions. We find that: (i) firms’ self-select into trade credit; (ii) firms’ decision to use trade credit results in a higher chance of obtaining bank credit and a lower cost than the counterfactual ones they would have faced if not using trade credit.     

Impact of infectious disease pandemics on individual lifetime consumption: An endogenous time preference approach

This paper considers the impact of the coronavirus disease 2019 (COVID-19) pandemic on long-term individual lifetime consumption profiles. The framework for the analysis is a model that extends Strulik (2021) to include the government sector, where time preference is determined by individual health damage (deficit) distinct from normal aging. Thus, the health damage caused by COVID-19 changes the rate of time preference and consequently affects the Euler equation for consumption. Our theoretical contribution is the consistent incorporation of public health investment into the existing model to understand the effect of government measures against a pandemic. Numerical analysis based on this model is used to estimate changes in health status over time, trends in the rate of time preference, and individual lifetime consumption profiles, taking into account differences in age at the time of the pandemic and the nature of the government responses. Because the long-term negative economic impact would be enormous, we should avoid advocating for “living with COVID-19” without due consideration. The reopening of the economy must be accompanied by a commitment to the containment and elimination of infections with future novel coronaviruses.     

Impact of information and communication technologies on agricultural households’ welfare in Benin

Information technologies are very important to transform the agricultural sector and improve economic performance. Nevertheless, does the use of information and communication technologies (ICT) improve agricultural households' welfare? To answer this, the study used a nationally representative household survey, the Comprehensive Food Security and Vulnerability Analysis (CFSVA) carried out in 2017 in Benin. The survey covered a sample of 15 000 households, however, the analysis focused on the 6502 agricultural households. An endogenous switching regression model was employed to control for selection bias and endogeneity issues. Results indicated that the use of ICT increases households' consumption expenditure by 89.6%. This implies that the use of ICT improves agricultural households' welfare. Other variables that affect agricultural households’ welfare include age, marital status, farm size, access to credit, ownership of livestock, membership in a farmer-based organization, and region of residence. Furthermore, the decision to use ICT in agricultural households depends on the level of education, age, sex, marital status, farm size, access to credit, ownership of livestock, membership in a farmer based organization, and location. These findings suggest that policies that promote the use of ICT are key to improving welfare of agricultural households in Benin. These policies must consider demographic, socio-economic, and institutional characteristics of households.     

Public debt and welfare in a quantitative Schumpeterian growth model with incomplete markets

This paper quantifies the welfare effects of counterfactual public debt policies using an endogenous growth model with incomplete markets. The economy features public debt, Schumpeterian growth, infinitely-lived agents, uninsurable income risk, and discount factor heterogeneity. Two versions of the model are specified, one with households holding equity in the group of innovating firms. The model is calibrated to the U.S. economy to match the degree of wealth inequality, the share of R&D expenditure in GDP, the firms’ exit rate, the average growth rate, and other standard long-run targets. When comparing balanced growth paths, I find large welfare gains in equilibria characterized by governments accumulating public wealth. The result is robust to the mechanism used to generate a highly concentrated wealth (i.e., preference heterogeneity or “superstar” income shocks). Welfare effects decompositions show that level effects and growth effects reinforce each other. The responses of both the intermediate goods and their market conditions are key in explaining the large level effects. The version of the model without equity is computationally easier to solve, allowing to consider transitional dynamics. Taking into account the dynamic adjustment to the new long-run equilibrium, I show that the transitional welfare costs are not large enough to change the sign of the welfare effects stemming from a change in public debt. I find that eliminating public debt would lead to a 0.8% increase in welfare, while moving to a debt/GDP ratio of 100% would entail a welfare loss of 0.5%. A decomposition analysis shows that growth accounts for approximately 50% of the overall welfare effects.     

Government expenditure and economic growth: A heterogeneous-agents approach

This study examines the relationship between productive government expenditures and economic growth. An R&D-based model of endogenous growth is used, in which agents have heterogeneous entrepreneurial abilities. We show that if the number of high-ability entrepreneurs is non-negligible, then the relationship between the government expenditure/GDP ratio and the economic growth rate is depicted by an inverted U-shaped curve with a flat top. The flat top of the curve indicates that changes in the size of the government expenditures have a limited impact on growth. We calibrate the model using U.S. data and empirically confirm our theoretical predictions. The theoretical and numerical results suggest that the debate on the relationship between the size of the government and economic growth may be off the mark unless the size of the government is extremely large or small.     

Social effects of topic propagation on Weibo

Weibo, China’s largest microblogging platform, has become one of the key information-sharing platforms in modern society. This study examines topic propagation in relation to microblogging from the perspective of the “peer effect.” Using data of hot topics from Weibo, we analyze how the social effect and propagation pathway influence the topic propagation process. We propose a spatial and temporal heterogeneity diffusion model that includes endogenous and exogenous social effects and is based on but different from the Bass diffusion model. We find that most propagation pathways end after a single level of propagation. The endogenous social effect in microblogs primarily influences the inflow of topics. Such endogenous social effect, combined with the multiplier effect, motivates most users to share a microblog topic in a short period of time. The exogenous social effect primarily influences the outflow of topics, and therefore, the microblog topics of a small number of popular users’ account for most of the share volume. Our results are robust to potential serial correlation, reflection problem, and potential self-selection due to user status.The findings reveal that group characteristics affect individuals’ behaviors and choices in relation to the topic propagation process on microblogging platforms. The use of a spatial and temporal heterogeneity diffusion model and the robustness of the analysis process provide new information for scholars in this field.     

Socio-political instability and growth dynamics

We develop an overlapping generations (OLG) monetary endogenous growth model characterized by socio-political instability, with the latter being specified as a fraction of output lost due to strikes, riots and protests. We show that growth dynamics arise in this model when socio-political instability is a function of inflation. In particular, two distinct growth dynamics emerge, one convergent and the other divergent contingent on the strength of the response of socio-political instability to inflation. Since our theoretical results hinge on socio-political instability being a function of inflation, we test the prediction that inflation affects socio-political instability positively by using a panel of 156 countries for the 1980–2012 period, and allowing for country and time fixed effects. The results indicate that inflation relates positively with socio-political instability. Policy makers should be cognisant that it is crucial to maintain long-run price stability, as failure to do so may result in high inflation emanating from excessive money supply growth, leading to high (er) socio-political instability, and ultimately, the economy being on a divergent balanced growth path.     

A political economy approach to endogenous industrial policies

This paper uses a political economy perspective to study the endogenous formation of economic policies and its interplay with political institutions. This paper provides a novel view that both the institutions and economic development status are essential factors in endogenously determining economic policies. The model aims to explain both the differences in the degree of adopting industrial policies as well as the differences in the types of industrial policies being implemented. Using a concise framework with two country-specific characteristics, the baseline model can capture three main types of industrial policy platforms of interest. In a country where voters’ political awareness is positively skewed and press freedom is relatively low, pro-heavy industry policies would be present most of the time; South Korea is representative of this type of countries. In a country where voters’ political awareness is positively skewed and press freedom is relatively high, there is usually an active industrial policy, though the target of the policy changes over time. Specifically, the policy is favoring the industry of which the industry-specific TFP is relatively high; Japan is representative of this type of countries. In a country where voters’ political awareness is negatively skewed and press freedom is relatively high, there is usually no active industrial policy; the U.S. is representative of this type of countries.