Global Imbalances and Petrodollars

Oil exporters have run large current account surpluses. We explore oil exporters’ role in the global imbalances debate. Current account dynamics are estimated for oil‐exporting countries and the rest of the world. We find that fiscal policy has a much stronger effect on the current account of oil exporters than on current accounts of other countries. The current account adjustment of oil‐exporting countries is also faster. Fiscal policy of oil exporters can have a significant and speedy impact on global imbalances. The impact via the adjustment of exchange rates might not be effective.     

A Clustering Approach to Some Monetary Facts: A Long-Run Analysis of Cross-Country Data

Long-run dependencies among inflation, growth rates of money, real output and real output per capita are analysed. For a cross-section of 119 countries, clusters are obtained, and correlations among these variables within each cluster are calculated. Unlike the correlations obtained using data from the full sample, correlations of growth rates of real output and real output per capita with money growth and inflation are dissimilar across clusters. In particular, for some clusters of countries positive long-run relationships of money growth and inflation with growth rates of real output are observed.
JEL Classification Numbers: E5, F01, C69.     

Merger waves,entry-timing,and cross-border acquisition completion: A frictional lens perspective

We study the impact of deal announcement and entry-timing within a cross-border acquisition (CBA) wave on the likelihood of acquisition completion. Drawing upon the frictional lens perspective, we identify two types of frictional forces- wave-friction and partner-friction within merger waves. We follow a simulation-based methodology and identify three CBA waves for Indian acquirers between 1995 and 2015. Our findings suggest that acquisition announcement within a merger wave as compared to outside of a wave is negatively related to the likelihood of deal completion. Further, within a merger wave, we find an inverted U-shaped relationship between entry-timing and the likelihood of deal completion.     

Social capital and entrepreneurial process

The paper examines the relationship between social capital and entrepreneurial engagement of individuals in 35 nations from Europe and Asia. To the best of our knowledge, this is the first empirical research that attempts to investigate the influence of three-dimensional social capital concept – trust, networks and norms – on three stages of entrepreneurial process – preference, trial and success – using such large and comprehensive cross-sectional micro data. In general, we find that all three dimensions of social capital matter in the entrepreneurship context, albeit differently. They become beneficial in different ways and at different stages of entrepreneurial involvement. For example, among trust variables, institutional trust in general, and trust in business-oriented and business-supporting actors in particular, exert significant positive effect on entrepreneurial process. Individuals with formal membership in professional associations are more likely to perceive entrepreneurial opportunities, while some close or strong-tie networks might prevent them from progressing in the entrepreneurship ladder. Finally, individual level civic norms appear to be negatively associated with early-stage entrepreneurship, while the success in becoming an entrepreneur is not found to be bound by people’s civic norms.     

Public debt dynamics: the effects of austerity,inflation, and growth shocks

We study the impact of macroeconomic shocks on US public debt dynamics using a VAR with debt feedback. Following a primary balance, or austerity, shock, the debt ratio initially declines but at a cost of lower growth. The debt ratio then rises to its pre-shock path, suggesting the austerity shock could be self-defeating. An inflation shock reduces the debt ratio initially, while a positive growth shock unambiguously lowers debt. Our specification, properly incorporating the debt equation, produces different debt impulse responses and forecasts from VAR models either excluding debt or including debt linearly.     

Yet Another View on Why a Home Is One's Castle

We compute equity-based real after-tax rates of return for homeowners and landlords in the United States for 1952–2005. The study confirms that a combined aggregate for residential housing provides a high average net return and low volatility, has low correlation with financial assets and can provide hedge against inflation. The efficient frontier analysis shows that the optimal portfolio for a household with a coefficient of relative risk aversion of four to five is one which contains a bit larger amount of housing than stocks, close to what one observes in the real world.     

Entry-timing,business groups and early-mover advantage within industry merger waves in emerging markets: A study of Indian firms

Merger waves are periods of intense and concentrated merger activity which exhibit a wave-like pattern. Drawing upon the resource-based view, we examine the timing of entry and early-mover advantage within merger waves. Following a robust simulation-based methodology of wave analysis, we identify merger waves in eight industries during the time period 2000–2014. Firms affiliated to business groups were found to be early movers. A higher degree of internationalization is also associated with early movement of a firm. Within business groups, their multi-entity character is positively associated with early entry whereas their board interlock was negatively related with entry-timing. Further, early moving acquirers reap superior post-acquisition performance, thereby suggesting that early-mover advantages exist within merger waves.