Financial Instruments and Promotional Banking in the EU are Growing — But is this Justified?

Institutions and the European Investment Bank are at the forefront of EU investment policy. Their role is expanding and it is now a widely-held position that an improvement in the economy will not eliminate the need for their intervention. The proposals for the 2021–2027 MFF launch more financial instruments and present ‘InvestEU’ as a larger more powerful version of the European Fund for Strategic Investments (EFSI). However, promotional banking is often misunderstood and so is the actual size of promotional banking in Europe in which InvestEU will operate.     

Cardinality-based equality of opportunities

We study possible rankings of opportunity profiles. An opportunity profile is a list of opportunity sets, one for each agent in the society. We compare profiles on the basis of the notion of “equality of opportunities”. Our main results show the necessary and sufficient conditions for this comparison to be made using exclusively the information provided by two cardinal measures: the number of common alternatives in all sets of a given profile and the difference between the number of alternatives in the individual sets. We also show that, under additional axioms, we can combine these criteria only in a weighted procedure or in some lexicographic refinements of a weighted procedure.      

A Pearson's test for symmetry with an application to the Spanish business cycle

In this paper, we look for asymmetries in the Spanish business cycle. To that end, we firstly propose an easy nonparametric testing procedure to test for symmetry based on a Pearson's chi-squared statistic, which we call P-test. Then, we test for two popular forms of asymmetry, deepness and steepness, using a battery of nonparametric tests. In addition, we analyse possible complementarities between the tests used in this paper, and we compute p-value adjustments for multiple tests.     

A Common Pool Resource Game with Sequential Decisions and Experimental Evidence

We describe a common pool resource game in which players choose how much of the stock to extract in a sequential manner. There are two choices and one represents taking a larger proportion of the stock than the other. After a player makes a choice, the remaining stock grows at a constant rate. We consider a game with a finite number of alternating moves. It is shown that changes in the larger proportion of the stock that the players are allowed to take and the growth rate affect equilibrium, but have little effect on behavior in the laboratory. In addition to observing more cooperation than predicted, we observe that parameters that are strategically irrelevant affect behavior. The results of this research might help policy makers in developing adequate policies to prevent overexploitation of some natural renewable resources.     

Behavior in one-shot traveler’s dilemma games: model and experiments with advice

We report results of one-shot traveler’s dilemma game experiments to test the predictions of a model of introspection. The model describes a noisy out-of-equilibrium process by which players reach a decision of what to do in one-shot games. To test the robustness of the model and to compare it to other models of introspection without noise, we introduce non-binding advice. Advice has the effect of coordinating all players’ beliefs onto a common strategy. Experimentally, advice is implemented by asking subjects who participated in a repeated traveler’s dilemma game to recommend an action to subjects playing one-shot games with identical parameters. In contrast to observations, models based on best-response dynamics would predict lower claims than the advised. We show that our model’s predictions with and without advice are consistent with the data.      

Employment shifts, economic reform and the changes in public/private sector wages in Mexico: 1987–1997

Over the last decade, the public sector in Mexico experienced substantial fiscal reform, divestiture of public enterprises, and the elimination of many regulations affecting pay and employment. This study analyzes the changes in the public/private sector differences in wages during the 1987–1997 period. The results from analyzing microdata from the Encuesta Nacional de Empleo Urbano show that relative public sector wages increased from 1987 to 1997. Most of the relative wage increase in the public sector can be explained by increases in the price of skills and by changes in sorting across sectors. The results have important public policy implications since they suggest that public sector workers earn more and their wages have grown faster than those of their private sector counterparts. As such, policies contemplating public sector reform should take into account the effect of these measures on the inter-sectoral income distribution and the overall economic growth. First version received: April 2000/Final version received: December 2000     

The Weekend and 'Reverse' Weekend Effects: An Analysis by Month of the Year, Week of the Month, and Industry

In this paper, we examine whether the 'reverse' weekend effect recently documented by Brusa, Liu and Schulman (2000) is concentrated in a few industries or widely spread across all the industries. The findings in this paper indicate that the 'reverse' weekend effect exists not only in broad indices, but also in most industries . The results suggest that the 'reverse' weekend effect may be driven by economic events that affect all industries, rather than industry‐specific factors . Although the patterns of Monday returns are similar between broad indices and industry indices, they are different between the pre ‐ and the post ‐1988 periods. Monday returns tend to be negative in the pre ‐1988 period, but tend to be positive in the post ‐1988 period, for both broad market indices and industry indices. These conclusions are valid even after considering the influence of the month‐of‐the‐year and the week‐of‐the‐month effects.     

Using partial identification methods to estimate the effect of violence against women on their children’s health outcomes

A growing literature in economics seeks to estimate the costs of violence against women by examining, for example, its impact on the health outcomes of their children. However, it is difficult to assign a causal interpretation to these nonexperimental studies due to the presence of unobservable characteristics affecting violence and health outcomes simultaneously. The lack of credible instrumental variables applicable in several countries further limits our knowledge. I address this gap by using new partial identification methods to estimate the relative size of the unobservables needed to eliminate the estimated effects in nonexperimental studies. I also expand the external validity of the analysis by using data from five standardized nationally representative household surveys in Latin America. Consistent with previous studies, cross-sectional estimates show large negative associations between violence against women and an array of child health outcomes. However, when accounting for omitted variable bias, at best, two-thirds of the estimates remain robust and they are concentrated on the outcomes with the largest cross-sectional estimated impacts.     

Differential Tariffs and Income Inequality in the United States: Some Evidence from the States

Open Economies Review - This paper explores the macroeconomic and distributional consequences of consumption tariffs and materials tariffs. It highlights the contrasting effects of consumption and...     

A PRIMER ON GLOBAL GAMES APPLIED TO MACROECONOMICS AND FINANCE

This paper shows how to solve global games applied to macroeconomics and finance. We ascertain the roles of public and private information for the determination of a unique equilibrium, and discuss the informative role of market prices. We examine the impact of public information on social welfare, comparing models with and without complementarities at the aggregate level.