Showing papers in "Applied Economics Letters in 2016"
TL;DR: In this paper, the authors used a panel vector auto-regressive model to investigate the relationship between innovation, financial development and economic growth in 18 Eurozone countries between 1961 and 2013, focusing on whether causality runs between these variables both ways, one way, the other way or not at all.
Abstract: Using a panel vector auto-regressive model, we study interactions between innovation, financial development and economic growth in 18 Eurozone countries between 1961 and 2013. We focus on whether causality runs between these variables both ways, one way, the other way or not at all. Our empirical results show that development of the financial sector and enhanced innovative capacity in the Eurozone contributes to long-term economic growth in the countries in the region.
146 citations
TL;DR: In this paper, the authors explored the effect of firm maturity on corporate social responsibility (CSR) and found that more mature firms invest significantly more in CSR than younger firms.
Abstract: Motivated by the literature on corporate life cycles, we explore the effect of firm maturity on corporate social responsibility (CSR). Our results based on over 26 000 observations across 21 years reveal that more mature firms invest significantly more in CSR. Furthermore, we find that the effect of firm maturity is not uniform across different categories of CSR. As firms get older, they become much more responsible in terms of diversity and environmental awareness, whereas the effect of firm ageing is much weaker in terms of human rights and product safety. Our study is the first to link corporate life cycles to CSR.
117 citations
TL;DR: This paper sent nearly 9000 fictitious resumes to advertisements for job openings in seven major cities in the United States across six occupational categories and randomly assigned names to the resumes that convey race and gender but for which a strong socio-economic connotation is not implicated.
Abstract: We sent nearly 9000 fictitious resumes to advertisements for job openings in seven major cities in the United States across six occupational categories. We randomly assigned names to the resumes that convey race and gender but for which a strong socio-economic connotation is not implicated. We find little evidence of systematic employer preferences for applicants from particular race and gender groups.
54 citations
TL;DR: In this article, the authors explore the convergence of energy productivity across 31 countries from 1972 to 2012 by using the convergence club algorithm developed by Phillips and Sul (2007) and find that over the long run energy productivity tends to converge, indicating the strong attempts of the countries under investigation to adopt energy policies that eventually contribute to a convergence pattern.
Abstract: The goal of this study is to explore the convergence of energy productivity across 31 countries from 1972 to 2012 by using the convergence club algorithm developed by Phillips and Sul (2007). The empirical results lead to the rejection of full convergence and to the presence of a certain number of clubs. The transitional curves, however, indicate that over the long run energy productivity tends to converge, indicating the strong attempts of the countries under investigation to adopt energy policies that eventually contribute to a convergence pattern.
45 citations
TL;DR: This paper examined the effect of national sporting success on amateur sport participation in German football using longitudinal data from 1950 to 2014 and found that only World Cup title wins of the men's national team had a positive and statistically significant impact on the number of and percentage changes in individual club memberships, clubs and teams.
Abstract: The trickle-down effect assumes that sporting success at the elite sport level descends down to the amateur sport level in the sense that people are inspired by sporting success to participate themselves. Previous research failed to find convincing evidence for this relationship, mostly because the data used and the methods applied (e.g. cross-sectional data, primary data, correlations) were not adequate. This study addresses these shortcomings and examines the effect of national sporting success on amateur sport participation in German football using longitudinal data from 1950 to 2014. Since an individual’s decision to participate in sport also depends on other factors, the regression models also control for working hours, real wages etc. The results show that only World Cup title wins of the men’s national team have a positive and statistically significant impact on the number of and percentage changes in individual club memberships, clubs and teams. The coefficients of European Championship ti...
44 citations
TL;DR: This paper found evidence that people with higher education are more likely to be happier, on average, than their less educated counterparts starting in their early to mid-30s, and they also found that the extent to which education makes an individual happy depends on their current age.
Abstract: Recent research has documented a negative relationship between education and happiness. We test the hypothesis that the extent to which education makes an individual happy depends on their current age in life. We find suggestive evidence that people with higher education are more likely to be happier, on average, than their less educated counterparts starting in their early to mid-30s.
40 citations
TL;DR: In this paper, the authors estimate the impact of the discretionary fiscal consolidation actions in the Euro Area between 2011 and 2013 on output and public finances using new data by the European Commission and combine these with robust estimates from a rich meta-regression analysis on multipliers for various fiscal measures under different business cycle regimes.
Abstract: We estimate the impact of the fiscal consolidation actions in the Euro Area between 2011 and 2013 on output and public finances. We identify the discretionary fiscal consolidation effort based on new data by the European Commission. We combine these data with robust estimates from a rich meta-regression analysis on multipliers for various fiscal measures under different business cycle regimes. The frontloaded consolidation came at a considerable cost with an output loss of 7.7% and only a small gain to the primary balance of 0.2% of GDP. Backloading would have been much less costly due to lower multipliers.
40 citations
TL;DR: In this article, the causal relationship between financial development measured as the domestic credit to private sector (% of GDP) and human development measured by the Barro-Lee index in Bangladesh is investigated.
Abstract: This note investigates the causal relationship between financial development measured as the domestic credit to private sector (% of GDP) and human development measured by the Barro–Lee index in Bangladesh. The bootstrap causality tests with leverage adjustments are implemented in order to avoid any distributional assumption. It is found that human development is causing financial development. However, there is no significant causality running from financial development on human development. The policy implication of these empirical findings is also elaborated.
39 citations
TL;DR: This paper examined the presence of political cycles inside the Portuguese governments' aggregate expenditures by using annual data for 10 expenditure components and found that the choice of the expenditure components to be increased during election periods by Portuguese governments generally relates to more visible items such as general public services, social protection and health care.
Abstract: This article examines the presence of political cycles inside the Portuguese governments’ aggregate expenditures by using annual data for 10 expenditure components. The results indicate that the choice of the expenditure components to be increased during election periods by Portuguese governments generally relates to more visible items such as general public services, social protection and health care.
38 citations
TL;DR: In this paper, the authors analyzed the impact of corruption on government effectiveness for a sample of 130 countries and found that less-corrupt countries have better quality of public service, better quality in the formulation and adoption of policies and greater credibility and government's commitment to such policies.
Abstract: This study analyses the impact of corruption on government effectiveness for a sample of 130 countries. The findings suggest that less-corrupt countries have better quality of public service, better quality in the formulation and adoption of policies and greater credibility and government's commitment to such policies. The findings also suggest that the effect of corruption on government effectiveness is higher in developed countries. Moreover, the estimates also reveal that countries with the most indebted governments and with higher inflation rates have less-efficient governments, and an increase in rule of law represents a good strategy to improve government effectiveness. In turn, regarding developing countries, the findings show that countries with more democratic regimes have a higher degree of government effectiveness.
35 citations
TL;DR: In this article, the authorship of papers is related to the number of citations, the JEL classification, the journal pages, and the length of the title of a paper.
Abstract: This article investigates the recent trends in co-authorship in economics. Using data from more than 700000 journal articles we show that the average number of authors per article has increased over the last years. This process is likely to be continued in the future. In a regression analysis, we present evidence how the authorship of papers is related to the number of citations, the JEL classification, the number of journal pages and the length of the title.
TL;DR: This note explores the crossover between smart city and world city network literature and shows that besides territorial measures, network measures, e.g. indegree and inward distance, are important in explaining the smartness of cities.
Abstract: A substantiated definition of smart cities is urgently required. In this note, we explore the crossover between smart city and world city network literature. We argue that this crossover can contribute to the theoretical and empirical development of smart city literature. The results show that indeed, besides territorial measures, network measures, e.g. indegree and inward distance, are important in explaining the smartness of cities. Based on this, we recommend that smart cities include city network characteristics in future planning.
TL;DR: In this paper, the authors provide evidence for a greater cooperative attitude in women compared to men in both college students and coastal fishing communities of Baja California, Mexico, by means of game theory experiments.
Abstract: There is active debate on gender issues in natural resource management. For example, it is proposed that women are more cooperative than men when dealing with natural resources decisions; however, few scientific studies have directly addressed this hypothesis. We provide evidence for a greater cooperative attitude in women compared to men in both college students and coastal fishing communities of Baja California, Mexico, by means of game theory experiments. In both laboratory and field experiments, women changed their behaviour towards lower extraction compared to men, when regulations, sanctions or social scolding were introduced in the games. These results suggest that raising the role of women in decision-making, along with an adequate institutional framework, may lead to a more sustainable use of natural resources.
TL;DR: In this article, the authors explain the degree of cooperation by a combination of four motives: efficiency, conditional cooperation, fear and greed, and explain why players cooperate in the prisoner's dilemma with personality.
Abstract: This experimental article helps to understand the motives behind cooperation in the prisoner’s dilemma. It manipulates the pay-off in case both players defect in a two-player, one-shot prisoner’s dilemma and explains the degree of cooperation by a combination of four motives: efficiency, conditional cooperation, fear and greed. All motives are significant but some become only significant if one controls for all remaining ones. This seems to be the reason why earlier attempts at explaining choices in the prisoner’s dilemma with personality have not been successful.
TL;DR: In this paper, the authors investigated the effect of managerial ability on the propensity to pay dividends and found that firms with more talented executives are more likely to pay higher dividends and, among firms that pay dividends, pay significantly larger dividends.
Abstract: We contribute to the literature on dividend policy by relaxing Miller and Modigliani’s (1961) perfect capital market assumptions and incorporating a factor that has not been investigated before, that is, variation in managerial ability. Based on more than 24 000 observations across over 20 years (1989–2011), our results show that firms with more talented executives are more likely to pay dividends and, among firms that pay dividends, pay significantly larger dividends. A rise in managerial ability by one SD raises the propensity to pay dividends by 27% and, for firms that pay dividends, increases dividend payouts by 29%. Our results are consistent with the notion that talented managers, confident in their ability to keep the firm profitable, are more willing to pay larger dividends because they are less concerned about having to reduce dividends in the future. Further analysis shows that our results are not likely vulnerable to endogeneity.
TL;DR: In this paper, the authors contribute to the growing evidence of corporate tax base erosion and profit-shifting by testing multinational companies' ownership links to individual tax havens rather than to groups of them, as is the case with most previous research.
Abstract: Although tax havens have been affecting other countries for decades, only in recent years have the associated challenges been subject to intensive scrutiny in both research and policy areas. We contribute to the growing evidence of corporate tax base erosion and profit-shifting by testing multinational companies’ ownership links to individual tax havens rather than to groups of them, as is the case with most previous research. Our company-level analysis suggests that profit shifts through debt financing from the Czech Republic to Luxembourg, Switzerland and, to a lesser extent, the Netherlands. We have ascertained that tax havens are not limited to tiny islands and may actually be found among European countries. We also provide rough estimates of the impact of this profit-shifting on tax revenues as well as a policy recommendation.
TL;DR: In this paper, the authors examined the environmental R&D (E-R&D) of Cournot duopolists with end-of-pipe technology under a regulator's precommitment to an emissions tax.
Abstract: This study examines the environmental R&D (E-R&D) of Cournot duopolists with end-of-pipe technology under a regulator’s precommitment to an emissions tax. Under technological spillover effect, the government invariably prefers E-R&D cartelization to E-R&D competition. Highly contrary to earlier studies, consumer surplus is not necessarily maximized by environmental research joint venture cartelization, although this offers private and social incentives.
TL;DR: This article examined the relationship between credit ratings and bond yield spreads of peripheral countries in the euro area (Greece, Ireland, Italy, Portugal and Spain) for the period 1995-2014.
Abstract: We examine the relationship between credit ratings and bond yield spreads of peripheral countries in the euro area (Greece, Ireland, Italy, Portugal and Spain) for the period 1995–2014. Since 2012, bond spreads of those countries have come down very fast, whereas credit ratings have hardly changed. Our results suggest that credit rating agencies have become more cautious and have changed their approach to assess credit risk of sovereigns, and that the impact of sovereign credit risk ratings on sovereign bond spreads has changed.
TL;DR: In this article, a triple difference strategy using an imperfect control category improves on the double difference strategy for estimating an average treatment effect, where a product is treated in one place and not another leading to a double-difference strategy.
Abstract: This article shows when a triple difference strategy using an imperfect control category improves on the double difference strategy for estimating an average treatment effect. For example, a product is treated in one place and not another leading to a double difference strategy. When does comparison with an untreated product in triple difference strategy improve accuracy?
TL;DR: In this paper, the authors show that the probability of an appeal can be predicted based on easily observable exogenous factors and that judges also tend to decrease their effort when the ex ante probability of appeal is low.
Abstract: The appellate review system is intended to serve as an efficient remedy for imperfect judicial decision making. However, it can fulfil this task only when appeals are ex ante unpredictable to the judge, and thus can be expected to occur primarily in case of a bad verdict. Using data from case records of a German trial court, we show that the probability of appeal can be predicted based on easily observable exogenous factors. Controlling for the complexity of a legal case, we find that judges also tend to decrease their effort when the ex ante probability of appeal is low. Thus, our empirical evidence indicates an inefficiency in the appellate review system because trial judges allocate their effort to cases not exclusively according to case complexity, but particularly according to the ex ante probability of being reviewed.
TL;DR: In this article, the authors investigated how corruption, an external factor, and risk aversion, a personal characteristic, may simultaneously affect individuals' entrepreneurial intentions and found that risk aversion decreases the individual's probability of having an entrepreneurial intention by 6.67 percentage points.
Abstract: The literature on entrepreneurship has suggested that an individual’s entrepreneurial intention depends on three types of factor: personal characteristics, the individual’s expertise and professional background, and external factors. Our study investigates how corruption, an external factor, and risk aversion, a personal characteristic, may simultaneously affect individuals’ entrepreneurial intentions. With data on 76 203 individuals in 53 countries, our estimation results indicate that risk aversion decreases the individual’s probability of having an entrepreneurial intention by 6.67 percentage points. In addition, an increase in 1 SD in the perceived level of corruption in a country decreases the individual’s probability of having an entrepreneurial intention by 0.96 percentage points.
TL;DR: In this paper, the authors use a boosting algorithm to forecast the returns of gold and silver prices and then study the implications of using different information criteria to terminate the boosting algorithm in terms of the statistical and economic performance of a forecasting model.
Abstract: We use a boosting algorithm to forecast the returns of gold and silver prices. We then study the implications of using different information criteria to terminate the boosting algorithm in terms of the statistical and economic performance of a forecasting model. Our findings demonstrate that information criteria that select parsimonious forecasting models perform better in statistical terms than information criteria that select relatively complex forecasting models, but this good performance does not necessarily survive an economic performance evaluation.
TL;DR: In this article, the authors examined the dynamic interdependence between economic activity, health quality and environmental degradation for Greece over the period 1960-2012 and employed Kuznets-type models and apply several co-integration techniques along with Granger causality tests.
Abstract: Increasing economic activity ignoring environmental quality may distort economic growth, leading to a negative rate. The expected deterioration of health in the near future may lead to further environmental degradation, with a continuation of a spiral-type path towards worsening growth and efforts to catch up with the developed economies. Τhis article examines the dynamic interdependence between economic activity, health quality and environmental degradation for Greece over the period 1960–2012. We employ Kuznets-type models and apply several co-integration techniques along with Granger causality tests. The results reveal strong causal effects, running from income towards CO2 and infant mortality. In the multivariate context, a significant long-run impact is directed towards infant mortality, with economic growth performing rather exogenously.
TL;DR: In this paper, the authors provide evidence that both human capital and R&D increase the likelihood that a firm will be a high-growth firm in the industry, and they show that human capital is growth-enhancing for all firms, hence also those located in lower quantiles of the distribution of growth rates across firms.
Abstract: We provide evidence that both human capital and R&D increase the likelihood that a firm will be a high-growth firm in the industry. However, different from human capital, being an R&D active firm also increases the probability of substantial decline or failure, underscoring the risky nature of innovation. Quantile regression results show that, different from R&D, human capital is growth-enhancing for all firms, hence also those located in the lower quantiles of the distribution of growth rates across firms.
TL;DR: In this article, the authors examined the economic freedom and economic growth nexus in 28 European Union countries and found a positive relationship between economic growth and four of the five aspects of economic freedom: security of property rights, quality of monetary policy, freedom to trade and regulatory policies.
Abstract: This study examines the economic freedom and economic growth nexus in a panel of 28 European Union countries. We investigate the relationship between growth and different components of economic freedom, measured in five major areas of the Economic Freedom of the World index. The aim of the article is to assess which aspects of economic freedom – and to what extent – contribute to economic growth in the EU. Our empirical analyses suggest that the results are sensitive to the method of estimation. Using the Generalized Method of Moments estimator which allows addressing endogeneity, we found a positive relationship between economic growth and four of the five aspects of economic freedom: security of property rights, quality of monetary policy, freedom to trade and regulatory policies.
TL;DR: In this article, the authors investigated the asymmetric effects of monetary policy shocks on the macroeconomic variables of exchange rate, output and inflation for an emerging economy (Turkey) by using monthly data between 1990 and 2014.
Abstract: This study investigates the asymmetric effects of monetary policy shocks on the macroeconomic variables of exchange rate, output and inflation for an emerging economy ‒ Turkey ‒ by using monthly data between 1990 and 2014. We employ the innovative nonlinear vector autoregressive model of Kilian and Vigfusson (2011), which allows us to observe the effect of different stances (tight or loose) and different sizes (small or large) of monetary policy actions. Our empirical evidence reveals that tight monetary policy, which, in this case, is captured with a positive shock to interest rate, decreases exchange rate, output and prices, as economic theory suggests. Loose monetary policy, which is captured with a negative shock to interest rate, has the opposite effect on these variables. However, the effects of loose monetary policy are weaker than the effects of tight monetary policy because loose monetary policy shocks are less effective than tight monetary policy shocks. Moreover, as the magnitude of a s...
TL;DR: This article examined the relation between organizational identification and age using five large sports consumer surveys as a snapshot of the age distribution of team identification and found evidence of robust U-shaped age profiles, with a probable turning point in the 40s.
Abstract: Although identification is critical to organizational survival, knowledge on how identification changes and evolves over time is still limited. Not only can tastes and choices vary across both social context and time, but individuals can change or choose their identity, as well as their ideals, group loyalty and/or social category. Hence, in this letter, we examine the relation between organizational identification and age using five large sports consumer surveys as a snapshot of the age distribution of team identification. Our results provide evidence of robust U-shaped age profiles, with a probable turning point in the 40s.
TL;DR: This paper proposed a random intercept model to estimate exporter-and importer-invariant variables in the Anderson and van Wincoop gravity model, which not only provides identical estimates like a fixed-effects approach, but also allows for the estimation of exporter and importer invariant variables.
Abstract: The standard Anderson and van Wincoop gravity model has typically been estimated using a fixed-effects approach. However, a fixed-effects approach has a major drawback: it does not allow for the estimation of exporter- and importer-invariant variables. Thus, at least in a cross-sectional context, economically relevant variables such as exporter and importer gross domestic product are disregarded. We propose a random intercept model to address this gap. For large datasets, this approach not only provides identical estimates like a fixed-effects approach, but also allows for the estimation of exporter- and importer-invariant variables.
TL;DR: There is little evidence that the ACA has caused the shift across hours categories, or led to an increase in part-time employment, but the ACA could cause a shift towards part- time work in the future as the mandate takes effect.
Abstract: We examine the impact of the Affordable Care Act (ACA) on part-time employment. Because the ACA’s employer health insurance mandate applies to individuals who work 30 or more hours per week, employers may try to avoid the mandate by cutting workers’ hours below the 30-hour threshold in order to avoid having to provide them with health insurance. Although the employer mandate only went into effect in 2015, many observers have argued that forward-looking employers began to shift towards a part-time workforce well in advance of the mandate. To test this hypothesis, we examine relative shifts across two categories of part-time workers (25–29 hours and 31–35 hours). We find some evidence of a shift from the 31–35-hour category into the 25–29-hour category after the passage of ACA in March 2010. However, that shift is not more pronounced among low-wage workers or among workers in industries and occupations most likely to be affected by the mandate. Thus, there is little evidence that the ACA has caused ...
TL;DR: In this paper, the authors test the perception of monetary policy in Poland among professional forecasters using the Taylor rule framework and employing micro-level data set, and show that the Taylor principle is violated in the forward guidance period, which provides evidence for forward guidance credibility.
Abstract: Forward guidance effectiveness is conditional upon its credibility. This policy, when taken as credible, should reduce the perceived impact of macroeconomic variables on the interest rate. Using the Taylor rule framework and employing micro-level data set, we test the perception of monetary policy in Poland among professional forecasters. Our results show that the Taylor principle is violated in the forward guidance period, which provides evidence for forward guidance credibility.