Showing papers in "Applied Economics Letters in 2013"
TL;DR: In this paper, the authors argue that entrepreneurs out of necessity tend to have low education, run smaller firms, expect their firms to grow less, but are likely to stay in the market.
Abstract: ‘Entrepreneurs out of necessity’ as identified by the Global Entrepreneurship Monitor (GEM) survey are a sizeable group across countries. This article documents that they tend to have low education, run smaller firms, expect their firms to grow less, but are likely to stay in the market. This evidence matters for policy supporting small businesses. It is a challenge for existing theories of heterogeneous firms and points to the importance of heterogeneous outside options.
129 citations
TL;DR: The authors examined the influence of corruption on migration for 111 countries between 1985 and 2000 and found that corruption tends to diminish the returns to education, which is particularly relevant to the better educated.
Abstract: We examine the influence of corruption on migration for 111 countries between 1985 and 2000. Robust evidence indicates that corruption is among the push factors of migration, especially fuelling skilled migration. We argue that corruption tends to diminish the returns to education, which is particularly relevant to the better educated.
74 citations
TL;DR: In this article, the relative importance of international collaboration and intramural R&D for innovation performance and how they interact in determining it is investigated using Norwegian innovation survey data and quantile regression.
Abstract: In the current global economic landscape, it is virtually impossible for any single firm to stay abreast of all relevant technological advances. Thus integration in global innovation networks is becoming more and more important for competitiveness and growth. However, the fact that international collaboration is organizationally demanding raises important questions concerning the relative importance of international collaboration and intramural R&D for innovation performance, and how they interact in determining it. These questions are particularly relevant in the context of SMEs due to the narrower internal knowledge bases of smaller organizations. In the following they are investigated using Norwegian innovation survey data and quantile regression. Firms in the upper quantile of the innovation performance distribution face a trade-off between engaging in global innovation collaboration and engaging in systematic R&D, where both individually have a positive effect. This is consistent with baseline OLS fi...
68 citations
TL;DR: In this article, the authors estimate the cost effects of different institutional modes using panel data for almost all Dutch municipalities between 1998 and 2010, including private enterprises, inter-municipal cooperation, municipality-owned enterprises and in-house collection.
Abstract: For refuse collection, we estimate the cost effects of different institutional modes using panel data for almost all Dutch municipalities between 1998 and 2010. The modes we consider are private enterprises, intermunicipal cooperation, municipality-owned enterprises and in-house collection. For private companies, the cost advantage becomes substantially smaller and nonsignificant if municipal fixed effects are included. The cost advantage of intermunicipal cooperation is larger in this case than that of privatization.
66 citations
TL;DR: This paper showed that the Poisson Quasi-Maximum Likelihood (QML) estimator applied to the gravity model produces estimates in which, summing across all partners, actual and estimated total trade flows are identical.
Abstract: This article shows that the Poisson Quasi-Maximum Likelihood (QML) estimator applied to the gravity model produces estimates in which, summing across all partners, actual and estimated total trade flows are identical. Other methods such as OLS do not have this desirable property. Indeed, Poisson is the only QML estimator that preserves total trade flows. This result is an additional reason for preferring Poisson as a workhorse gravity model estimator.
63 citations
TL;DR: This article found that statements about restructuring, bailout and the involvement of the European Financial Stability Facility (EFSF) have impacted bond spreads of countries in the periphery vis-a-vis Germany.
Abstract: Using thousands of news agencies reports from May 2010 to June 2011, we find that statements about restructuring, bailout and the involvement of the European Financial Stability Facility (EFSF) have impacted bond spreads of countries in the periphery vis-a-vis Germany. Our findings also indicate that the more different euro area governments issued statements at the same time, the more bond spreads have increased. Finally, statements from politicians from AAA-rated countries seemed to have a particularly strong impact on spreads.
63 citations
TL;DR: This paper investigated the formation of entrepreneurial skills in two data sets on innovative new firms and found that those entrepreneurs who exhibit a varied set of work experience have higher entrepreneurial skills relevant for starting and growing a firm.
Abstract: Applying Lazear's jack-of-all-trades theory, we investigate the formation of entrepreneurial skills in two data sets on innovative new firms. Our results suggest that traditional human capital indicators individually have little or no influence on entrepreneurial skills. However, consistent with Lazear's theory, those entrepreneurs who exhibit a varied set of work experience have higher entrepreneurial skills relevant for starting and growing a firm. This supports the notion that a varied set of work experiences rather than depth of any particular type of experience or education is important for the development of entrepreneurial skills.
59 citations
TL;DR: In this paper, the authors explore the crime-uncertainty interaction impacts on economic growth and find evidence suggesting that increased crime has an asymmetric effect on growth depending on the future prospects of the economy as reflected in the degree of macroeconomic uncertainty.
Abstract: This article contributes to the crime literature by exploring how the crime–uncertainty interaction impacts on economic growth. Using a panel of 25 countries over the period 1991 to 2007, we find evidence suggesting that increased crime has an asymmetric effect on growth depending on the future prospects of the economy as reflected in the degree of macroeconomic uncertainty. In particular, our results indicate that higher-than-average macroeconomic uncertainty enhances the adverse impact of crime on growth implying that a 10% increase in the crime rate can reduce annual per-capita GDP growth by between 0.49% and 0.62%.
59 citations
TL;DR: In this paper, the determinants of gender political quota and enforcement sanctions, two key policy instruments for increasing female participation in politics, were studied and the pervasiveness of gender distinctions in grammar was found to be the most significant related variable to quota adoption.
Abstract: This article studies the determinants of gender political quota and enforcement sanctions, two key policy instruments for increasing female participation in politics. We find a novel empirical fact: language (the pervasiveness of gender distinctions in grammar) is the most significant related variable to quota adoption, more than traditional explanations such as economic development, political system and religion.
57 citations
TL;DR: Considering the period since 1870s up to 2011 for a set of 23 countries, it is found that worldwide synchronization has increased over the last decades and it has attained an unprecedented level during the Great Recession.
Abstract: Resorting to wavelet analysis, a novel measure is used to assess synchronization of economic activity across a large set of countries. As it has long been acknowledged in the literature that synchronization can vary over time and may depend on the type of fluctuation, the use of a wavelet-based measure of synchronization becomes particularly useful as it can capture both time and frequency varying features within a unified framework. Considering the period since 1870s up to 2011 for a set of 23 countries, it is found that worldwide synchronization has increased over the last decades and it has attained an unprecedented level during the Great Recession.
57 citations
TL;DR: In this paper, the authors examined the relationship between oil production and economic growth based on time-series data of Saudi Arabia from 1971 to 2010, and the Autoregressive Distributed Lag (ARDL) model approach for cointegration has been used.
Abstract: This article examines the relationship between oil production and economic growth based on time-series data of Saudi Arabia from 1971 to 2010, and the Autoregressive Distributed Lag (ARDL) model approach for cointegration has been used. The innovative contribution of this study is to determine long-run relationship between oil production and economic growth by disaggregating oil production into domestic consumption of oil in industrial sector and revenues earned from export of oil. Results show that oil revenues have a strong positive impact on real Gross Domestic Product (GDP) in both the short and the long runs, and this positive relationship holds for different specification of the model. Domestic consumption of oil in industrial sector has negative impact on GDP in both the short and the long runs.
TL;DR: In this paper, the authors investigated volatility spillovers in commodity markets by following the methodology pioneered in Diebold and Yilmaz (2012) by using a broad data set during 1995-2012, and found that agricultural commodities are the commodities exhibiting the lowest spillovers whereas precious metals and energy are the biggest net contributors.
Abstract: This article investigates volatility spillovers in commodity markets by following the methodology pioneered in Diebold and Yilmaz (2012). By using a broad data set during 1995–2012, we address three key research questions: are there volatility spillovers within commodities? between standard assets and commodities? between commodities and commodity currencies? The main results indicate first that commodities exhibit weaker than other asset classes volatility spillovers. These spillovers have, however, been increasing over the period. Second, agricultural commodities are the commodities exhibiting the lowest spillovers, whereas precious metals and energy are the biggest net contributors. In a diversified portfolio, including commodities – and especially agricultural products – helps decreasing the total spillover index. This stylized fact has, however, been less and less valid over the years. Third, some currencies are more responsive than others to commodity volatility spillovers.
TL;DR: In this article, the effects of remittances on economic growth and the sources of growth were investigated, focusing on the transmission mechanism instead of the impact of the remittance on the economic growth.
Abstract: This article studies the effects of remittances on economic growth and the sources of growth:capital accumulation and Total Factor Productivity (TFP) growth. This approach is different from previous studies, in that, it focuses on the transmission mechanism instead of the impact of remittances on economic growth. We find that remittances have conflicting effects on the two sources of growth: capital accumulation and productivity growth. Remittances have a significantly positive impact on capital accumulation while the impact on TFP growth is insignificant. These findings suggest that while remittances enhance investment and contribute to physical capital accumulation, the lack of efficiency enhancing effect or possible adverse impact on TFP growth would make the net effect on economic growth ambiguous.
TL;DR: In this paper, the authors investigated the long-run relationship between spot and futures prices for corn and soybeans and found that fundamentals are important in explaining the 2007/08 food price increase.
Abstract: This article investigates the long-run relationship between spot and futures prices for corn and soybean. We apply cointegration methodology, allowing for the presence of potentially unknown structural breaks and then study the causality relationships between spot and futures prices within each specific subperiod identified with the aim of analysing the price discovery. Empirical estimates highlight (i) multiple breaks exist in the cointegrating relationship between prices and (ii) subperiods consequently identified express different dynamics in the causal relationship between spot and futures prices and support the idea that fundamentals are important in explaining the 2007/08 food price increase.
TL;DR: In this article, the authors examined "growth, conservation, neutrality, feedback or feedback" hypotheses in 12 Asian countries for the period 1970 to 2010, using panel causality analysis, which accounts for dependency and heterogeneity across countries, supports evidence on the direction of causality and is consistent with the neutrality hypothesis in two-thirds of these 12 Asia countries.
Abstract: This study examines ‘growth, conservation, neutrality or feedback’ hypotheses in 12 Asian countries for the period 1970 to 2010, using panel causality analysis, which accounts for dependency and heterogeneity across countries, supports evidence on the direction of causality and is consistent with the neutrality hypothesis in two-thirds of these 12 Asian countries. Growth hypothesis and conservation hypothesis hold for India and Philippines, respectively. However, a feedback was found for both Thailand and Vietnam. Thereby, the findings provide important policy implication for 12 Asian countries under study.
TL;DR: In this article, the role of institutional quality on FDI inflows into ASEAN was analyzed, with the emergence of China as a new attractive location for FDI, and as part of the alternatives to further enhance the attractiveness of Asean.
Abstract: The importance of Foreign Direct Investment (FDI) as a driver of economic development is no longer a secret. As a result, the competition to attract FDI is getting stiffer as any economy in the world is currently eyeing for FDI, including the Association of Southeast Asian Nations (ASEAN). With the emergence of China as a new attractive location for FDI, and as part of the alternatives to further enhance the attractiveness of ASEAN, this study analyses the role of institutional quality on FDI inflows into ASEAN.
TL;DR: In this article, the authors estimate Okun's coefficients for five different age cohorts for several Eurozone countries and find a stable pattern for all countries: the relationship between business cycle fluctuations and the unemployment rate is the strongest for the youngest cohort and gets smaller for the elderly cohorts.
Abstract: We estimate Okun's coefficients for five different age cohorts for several Eurozone countries. We find a stable pattern for all countries: the relationship between business cycle fluctuations and the unemployment rate is the strongest for the youngest cohort and gets smaller for the elderly cohorts.
TL;DR: In this article, the authors show how stigma effects and discouragement counterbalance as sources of state dependence in unemployment throughout the business cycle, and how to counterbalance these sources of dependence.
Abstract: This article shows how stigma effects and discouragement counterbalance as sources of state dependence in unemployment throughout the business cycle.
TL;DR: This paper investigated the information shares of the two main centres of gold trading over a 25-year period, using nonoverlapping 4-month windows, and found that neither London nor New York is dominant in terms of price IS, that the dominant market switches from time to time and that these switches do not appear to be very clearly linkable to macroeconomic or political events.
Abstract: We investigate the Information Shares (ISs) of the two main centres of gold trading, over a 25-year period, using nonoverlapping 4-month windows. We find that neither London nor New York is dominant in terms of price IS, that the dominant market switches from time to time and that these switches do not appear to be very clearly linkable to macroeconomic or political events.
TL;DR: In this article, the relationship between gender diversity and firm performance has been investigated using a regression quantile approach for the largest Turkish firms, and the results show that gender diversity has a different effect on firm performance over the different points of the conditional distribution.
Abstract: The relationship between gender diversity and firm performance has been investigated using a regression quantile approach for the largest Turkish firms. Overall, results show that gender diversity has a different effect on firm performance over the different points of the conditional distribution. Moreover, the type of industry seems to be important for the sign and significance of the impact of gender diversity on performance.
TL;DR: In this article, the authors examined the response of gasoline prices in France to shocks to crude oil prices in the international market using the Autoregressive Distributed Lag (ARDL) bounds testing approach of cointegration, and investigated potential price asymmetries in the French diesel and premium gasoline markets using weekly data over the period from May 1990 to April 2011.
Abstract: This article examines the response of gasoline prices in France to shocks to crude oil prices in the international market. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach of cointegration, we investigate potential price asymmetries in the French diesel and premium gasoline markets using weekly data over the period from May 1990 to April 2011. We find that gasoline prices gradually adjust towards a long-term equilibrium after a shock to the crude oil price, but this adjustment is lower when the crude oil price decreases than when it increases. We also find that the estimates differ slightly depending on the chosen gasoline price.
TL;DR: In this paper, the authors investigate whether female political representation affects economic growth in 119 democracies using fixed-effects specifications and a system generalized method of estimating the effect of women's political representation on economic growth.
Abstract: This article investigates whether female political representation affects economic growth. Panel estimates for 119 democracies using fixed-effects specifications and a system generalized method of ...
TL;DR: In this article, the authors used the Norwegian employer-employee register data to investigate whether the likelihood of achieving high growth as defined by the OECD is contingent on the location of the firm, the educational background of its employees and their employment performance prior to the period 2006-2009 for which growth and survival probabilities are estimated.
Abstract: There is a long-standing tradition of attributing the growth of enterprises to unique capabilities expressed through entrepreneurial activities. These are contingent on their exposure to information that signals opportunities, access to external resources that enable capabilities to be built and the existence of prior related knowledge and routines within the firm. This article uses the Norwegian employer–employee register data to investigate whether the likelihood of achieving high growth as defined by the OECD is contingent on the location of the firm, the educational background of its employees and their employment performance prior to the period 2006–2009 for which growth and survival probabilities are estimated.
TL;DR: In this article, the most common implementation of the method based on a distance criterion is discussed, which demonstrates the high sensitivity of the return to changes in the length of the formation period.
Abstract: Pairs trading is a simple and popular relative value trading strategy. This article deals with the most common implementation of the method based on a distance criterion. It demonstrates the high sensitivity of the return to changes in the length of the formation period and shows that a reasonable modification of this parameter may lead to generate positive excess returns which are robust to data snooping. This empirical result underlines the difficulty in understanding pairs trading returns, dynamics and sources of profitability through time.
TL;DR: In this paper, the causal relationships between internet, economic growth, government expenditure and inflation in 34 OECD countries during the period 1990 to 2010 were investigated using panel co-integration.
Abstract: The article investigates the causal relationships between internet, economic growth, government expenditure and inflation in 34 OECD countries during the period 1990 to 2010. Using panel co-integration, empirical results show that they are co-integrated. Moreover, there exists bidirectional causality between internet and economic growth, inflation and economic growth and inflation and internet.
TL;DR: In this article, the authors apply the newsboy inventory optimization to interpret the factors related to the optimal size of a currency swap, and find that the mean value of foreign exchange demand, its volatility and the distribution form are important for the optimal swap size.
Abstract: Currency swaps are used by central banks to provide short-term liquidity to help enhance financial stability for both counterparts. We apply the newsboy inventory optimization to interpret the factors related to the optimal size of a currency swap, and we find that the mean value of foreign exchange demand, its volatility and the distribution form are important for the optimal swap size. Empirical studies regarding swap arrangements between China and its trading partners show that total trade volume and its long-term SD are robust explanatory variables.
TL;DR: In this article, the authors analyzed how policy changes affect shareholder wealth by exploiting the unexpected German reaction to the Japanese nuclear disaster and found that energy companies' shareholder wealth was affected by the policy reaction and not by the disaster.
Abstract: This article analyses how policy changes affect shareholder wealth by
exploiting the unexpected German reaction to the Japanese nuclear
disaster. Event study results show that energy companies’ shareholder
wealth was affected by the policy reaction and not by the disaster.
TL;DR: This article used Bayesian Model Averaging to overcome the problem of model uncertainty and found that growth-enhancing policies and cuts in public wages are the most appropriate ingredients for successfully reducing debt levels and budget deficits.
Abstract: Fiscal consolidations are currently in the agenda of fiscal authorities in many countries. Using Bayesian Model Averaging to overcome the problem of model uncertainty, we find that growth-enhancing policies and cuts in public wages are the most appropriate ingredients for successfully reducing debt levels and budget deficits.
TL;DR: In this article, the authors investigated the short-term dynamics of public debts in the United States and the United Kingdom over more than four decades, and found that multiple structural breaks due to economic downturns, oil shocks and financial and political instability.
Abstract: This article investigates the short-term dynamics of public debts in the United States and the United Kingdom over more than four decades. We check for structural changes in the data and assess nonlinearity and switching-regime hypotheses using several linearity tests. Our findings point to multiple structural breaks due to economic downturns, oil shocks and financial and political instability. We also identify different regimes for which the adjustment is asymmetric and nonlinear, in particular, since 2003 and around the Great Recession.
TL;DR: In this paper, the role of economic diplomacy on the export market entry decisions of Dutch firms is analyzed and it is shown that the presence of government support offices in middle-income countries and government trade missions stimulate Dutch firms to enter export markets in these countries.
Abstract: This article analyses the role of economic diplomacy on the export market entry decisions of Dutch firms. We show that the presence of government support offices in middle-income countries and government trade missions stimulate Dutch firms to enter export markets in these countries. These conclusions follow from using detailed international trade data combined with firm and export market characteristics.