Linking Innovation and Firm Performance: A New Approach

Using the second Community Innovation Survey (CIS-2) for the Netherlands, we analyse the input and output stages of the innovation process and the links between the innovation process and overall economic performance. We investigate the existence of feedback links running from past economic performance to the input and the output stage of the innovation process and compare the results of a single-equation approach with the results obtained from a simultaneous-equation model.     

Subsidizing power

This study explores whether the amount of fossil fuel subsidies paid by the government is subject to an election cycle. Theoretically, it is not a priori directly clear whether the provision of fossil fuel subsidies should go up or down when elections are upcoming. On the one hand, governments may reap electoral benefits from offering additional support in an election year since voters generally prefer candidates from whom they expect to receive greater material well-being by reducing the prices of basic goods. On the other hand, if the number of recipients is only small or when they are politically not well organized, reducing fossil fuel subsidies to finance a tax cut or an increase in other public spending areas that benefit and attract more voters might be a more successful re-election strategy. My main empirical findings clearly show a U-shaped election effect. It turns out that election cycles encourage fossil fuel support only in countries that have either a large or small fossil fuel demand. In these countries, governments are more inclined to provide additional fossil fuel support in an election year. In turn, I do not find any significant evidence for the notion that upcoming elections create a window of opportunity to reduce fossil fuel subsidies. Finally, the significant election effects are in particular visible during presidential elections.     

Gibrat's Law: Are the Services Different?

Several noted surveys on intra-industry dynamics have reached the conclusion from a large body of evidence that Gibrat's Law does not hold. However, almost all of these studies have been based on manufacturing or large scale services such as banking and insurance industries. There are compelling reasons to doubt whether these findings hold for small scale services such as the hospitality industries. In this paper we examine whether the basic tenet underlying Gibrat's Law– that growth rates are independent of firm size – can be rejected for the services as it has been for manufacturing. Based on a large sample of Dutch firms in the hospitality industries the evidence suggests that in most cases growth rates are independent of firm size. Validation of Gibrat's Law in some sub-sectors of the small scale services suggests that the dynamics of industrial organization for services may not simply mirror that for manufacturing. The present paper includes a survey of nearly 60 empirical studies on firm growth rates.     

Earthquakes and Economic Outcomes: Does Central Bank Independence Matter?

Open Economies Review - This study explores whether the degree of central bank independence influences the economic performance in the period immediately following an earthquake. Earthquakes create...     

Innovation Performance and Innovation Policy: the Case of the Netherlands

Recent productivity growth has been sluggish in the Netherlands. Baumol suggests that future productivity performance might be hampered by inadequate arrangements and institutions between the four sectors that drive innovation and growth: large firms, small firms, the universities and the government. In this paper we present the facts and figures of innovation and growth performance in the Netherlands. We also discuss Dutch innovation policies. While our findings show that the Netherlands still ranks highly in terms of actual levels of productivity and innovation, the developments in both areas are reason for concern. A structural reform of the industry-science interface in the Netherlands could lead to an improvement in the situation for the Netherlands in the medium term.JEL classification: E61, O10, O30     

Climate change,weather shocks,and violent conflict: a critical look at the evidence

We use cross‐country data to explore whether temperature and rainfall shocks trigger violent conflict, or not. We include a wide range of country and time samples, and explore whether the impact of weather shocks is conditional on income or political regimes. Our overall conclusion is sobering. Notwithstanding the attention this topic has attracted from the media and policy makers, we find little robust evidence linking weather shocks to the onset of conflict.     

INFLATION AND CENTRAL BANK INDEPENDENCE: A META‐REGRESSION ANALYSIS

Abstract Using 59 studies, we perform a meta‐regression analysis of studies examining the relationship between inflation and central bank independence (CBI). The studies considered are very different with respect to the CBI indicator used, the sample of countries and time periods covered, model specification, estimators used and publication outlet. We conclude that there is a significant publication bias. However, we also find a significant genuine effect of CBI on inflation. Differences between studies are not caused by differences in CBI indicators used.     

The measurement of human capital: a multivariate macro-approach

We examine the human capital status of 123 countries by employing factor analysis on various national human capital indicators for the period 2000–2008 to construct two new measures. The first measure is based on advanced human capital, while the second is based on basic human capital. Our measures differ substantially from indicators used in previous studies on human capital and also lead to different rankings of countries. As rankings are not that informative without further information, we analyzed the distance between each country and the sample mean. Differences between countries are much more pronounced for our measure on advanced human capital than for our measure on basic human capital. Using cluster analysis, we classified the countries in four homogenous groups.     

Small business and job creation: A comment

Davis, Haltiwanger and Schuh (1996) claim to dissect the myth and reassess the facts on the job creation prowess of small businesses. We disagree with the authors. In this comment we discuss their five chief findings and conclusions and in particular, the use of a regression-to-the-mean correction.     

Do central bank law reforms affect the term in office of central bank governors?

In this paper we confirm the hypothesis that central bank independence reforms reduce the likelihood that a central bank governor will be replaced. However, the strength of this effect depends on the rule of law and the degree of political polarization.