Showing papers in "Journal of Economic Surveys in 2016"

A survey of the literature on environmental innovation based on main path analysis

Abstract: This paper reviews the literature on environmental innovation (EI) and systematizes it by means of an original methodology identifying the main directions in which the literature on EI has developed over time. In order to do so, two algorithms are adopted and used to analyze a citation network of journal articles and books. The main path analysis reveals that this literature revolves around the following topics: i) determinants of EI; ii) economic effects of EI; iii) environmental effects of EI; and iv) policy inducement in EI. Each of these topics is discussed and implications from the main findings as well as possible future research extensions are outlined.

The Creation and Diffusion of Innovation in Developing Countries : A Systematic Literature Review

Abstract: In this study, we review the literature on the creation and diffusion of innovation in the private sectors (industry and services) in developing countries. In particular, we collect evidence on what are the barriers to innovation creation and diffusion and the channels of innovation diffusion to and within developing countries. We find that innovation in developing countries is about creation or adoption of new ideas and technologies; but the capacity for innovation is embedded in and constituted by dynamics between geographical, socio-economic, political and legal subsystems. We contextualize the findings from the review in the current theoretical framework of diffusion of innovations, and we emphasize how the institutional context typical of developing countries impacts the diffusion itself.

Individual determinants of self-employment entry: what do we really know?

Abstract: The analysis of the decision to enter into self-employment is a hot topic in economic literature. Among the elements that most directly influence this decision, individual factors are central. This study produces a comprehensive survey of the impact of these factors, covering both the theoretical arguments and the main conclusions emerging from the empirical studies. We analyze twelve critical determinant factors of the entry into self-employment grouped into seven categories: (i) basic individual characteristics (gender, age, and marital status and children); (ii) family background (parents and spouse); (iii) personality characteristics (risk attitude and other psychological traits); (iv) human capital (education and experience); (v) health condition; (vi) nationality and ethnicity; and (vii) access to financial resources. While for some of the factors solid conclusions can be found, for others additional research is still needed in order to shed further light on their influence.

Global value chains: a survey of drivers and measures

Abstract: Global value chains (GVCs) emerged as the paradigm for the international organisation of production. For most goods and services production is nowadays vertically fragmented across different countries and this reality gave rise to a significant new strand of research in in ternational trade. This article starts by discussing the major driving forces of GVCs in recent decades. Next, it surveys the main measures of GVCs, accounting for their different scopes and required datasets. The artic le highlights the timing of the contributions to the literature, signalling their sequential nature and the trend towards more accurate and data-demanding indicators.

Corporate governance of banks: a survey

Abstract: This paper reviews the empirical literature on the corporate governance of banks. We start by highlighting the main differences between banks and nonfinancial firms and focus on three characteristics that make banks special: (i) regulation, (ii) the capital structure of banks, and (iii) the complexity and opacity of their business and structure. Next, we discuss the characteristics of corporate governance in banks and how they differ from the governance of nonfinancial firms. We then review the evidence on three governance mechanisms: (i) boards, (ii) ownership structures, and (iii) executive compensation. Our review suggests that some of the empirical regularities found in the literature on corporate governance of nonfinancial institutions, such as the positive (negative) association between board independence (size) and performance, do not hold for banks. Also, existing work provides no conclusive results regarding the relationship between different governance mechanisms and various measures for banks' performance. We discuss potential explanations for these mixed results.

Which agglomeration externalities matter most and why

Abstract: This paper revisits the ongoing discussion on the importance of agglomeration externalities – specifically specialization, diversity and competition effects – that may contribute to innovation, productivity and urban employment growth. Previous meta-analyses suggested that the evidence on agglomeration externalities is strongly context-specific. Expanding an earlier analysis of 31 articles, we seek to draw in this paper more robust conclusions by means of the statistical evidence for agglomeration externalities presented in 73 scientific articles, all building on the seminal work of Glaeser et al. (1992). Our results confirm that the heterogeneity among studies is huge and can only be partially accounted for by means of an ordered probit analysis. Additionally, some evidence of publication bias is found. We conclude that the conventional lines of inquiry in this literature may now have reached strongly diminishing returns. New lines of inquiry, using rich micro-level data on firms and workers, dynamic general equilibrium models at the macro level, more attention for spatial and temporal variation in the impacts of agglomeration, and further investigations into the spatial scope of externalities are promising avenues for further research that can enhance our understanding of how agglomeration externalities continue to fuel our increasingly urbanized world.

Approaches to inequality of opportunity: principles, measures and evidence

Abstract: We put together the dierent conceptual issues involved in measuring inequality of opportunity, discuss how these concepts have been translated into computable measures, and point out the problems and choices researchers face when implementing these measures. Our analysis identies and suggests several new possibilities to measure inequality of opportunity. The relevance of the conceptual issues and modelling choices are illustrated with ndings from the empirical literature on income inequality of opportunity.

Bank competition and financial stability: much ado about nothing?

Abstract: The theoretical literature gives conflicting predictions on how bank competition should affect financial stability, and dozens of researchers have attempted to evaluate the relationship empirically. We collect 598 estimates of the competition-stability nexus reported in 31 studies and analyze the literature using meta-analysis methods. We control for 35 aspects of study design and employ Bayesian model averaging to tackle the resulting model uncertainty. Our findings suggest that the definition of financial stability and bank competition used by researchers influences their results in a systematic way. The choice of data, estimation methodology, and control variables also affects the reported coefficient. We find evidence for moderate publication bias. Taken together, the estimates reported in the literature suggest little interplay between competition and stability, especially in developing and transition countries, even when corrected for publication bias and potential misspecifications. (This abstract was borrowed from another version of this item.)

Financial Fraud: A Literature Review

Abstract: Das Discussion Paper beschreibt die empirische Vielfalt des Finanzbetrugs anhand eines Literaturvergleichs. Im Einzelnen untersucht es verschiedene Formen betrugerischen Verhaltens im Kontext von Aktivitaten auf dem Finanzmarkt, die Verbreitung eines solchen Verhaltens und sich daraus ergebende und bereits durch vorhergehende Forschung bekannte Folgen sowie Wirtschafts- und Marktstrukturen, die betrugerisches Verhalten moglicherweise fordern. Um die Diskussion zu strukturieren, werden drei Formen von Finanzbetrug unterschieden: Bilanzfalschung, Finanzschwindel und Verkaufspraktiken mit betrugerischer Absicht. Es entsteht ein Bild des Finanzbetrugs als komplexes Phanomen, das sehr verschiedene Formen annehmen kann - jeweils abhangig vom Marktsegment, in dem es auftritt, von den betroffenen Finanzinstrumenten und den beteiligten Akteuren. Daruber hinaus heben die Ergebnisse dieses Literaturuberblicks eine Reihe neuerer Entwicklungen hervor, die im Verdacht stehen, Finanzbetrug zu fordern: (1) die Entstehung neuer grundsatzlicher Interessenkonflikte und Fehlanreize in der Finanzindustrie; (2) der Zustrom von uninformierten und naiven Teilnehmern in den Finanzmarkt; (3) die steigende Komplexitat von Finanzmarkttransaktionen als Ergebnis rasanter technologischer, rechtlicher und finanzieller Innovationen und einer sich standig erweiternden Palette von Finanzprodukten; (4) ein verstarkter Ruckgriff auf Geheimhaltung in Form von strengen Vertraulichkeitsregeln fur Bankgeschafte und juristische Dienstleistungen sowie von auserbilanziellen Konstruktionen und Briefkastenfirmen in Offshore-Finanzplatzen.

Reinventing foreign aid for inclusive and sustainable development: kuznets, piketty and the great policy reversal

Abstract: This survey essay reviews over 200 papers in arguing that in order to achieve sustainable and inclusive development, foreign aid should not orient developing countries towards industrialisation in the perspective of Kuznets but in the view of Piketty. Abandoning the former’s view that inequality will fall with progress in industrialisation and placing more emphasis on inequality in foreign aid policy will lead to more sustainable development outcomes. Inter alia: mitigate short-term poverty; address concerns of burgeoning population growth; train recipient governments on inclusive development; fight corruption and mismanagement and; avoid the shortfalls of celebrated Kuznets’ conjectures. We discuss how the essay addresses post-2015 development challenges and provide foreign aid policy instruments with which discussed objectives can be achieved. In summary, the essay provides useful policy measures to avoid past pitfalls. ‘Output may be growing, and yet the mass of the people may be becoming poorer’ (Lewis, 1955). ‘Lewis led all developing countries to water, proverbially speaking, some African countries have so far chosen not to drink’ (Amavilah, 2014). Piketty (2014) has led all developing countries to the stream again and a challenging policy syndrome of our time is how foreign aid can help them to drink.

Referee bias: referee bias

Abstract: This paper surveys the empirical literature on the behavior of referees in professional football and other sports. Referees are typically appointed by a principal to be impartial, especially when unbiased referee judgment is vital for the accomplishment of the principal's objective. Answering whether referees make biased decisions and understanding the causes that lead referees to digress from their principal duty of impartiality is therefore fundamental from a theoretical point of view. At the same time, assessing the prevalence and origin of referee bias is germane to various domains of life. Referee bias is particularly relevant in sports, where partial decision‐making can determine competition outcomes, which can have strong repercussions on athletes' careers and supporters' well‐being.

Walking down Wall Street with a tablet: A survey of stock market predictions using the web

Abstract: ‘A blindfolded chimpanzee throwing darts at The Wall Street Journal could select a portfolio that would do as well as the (stock market) experts’ [Malkiel (2003) The efficient market hypothesis and its critics. Journal of Economic Perspectives 17(1): 59–82)]. However, what if this chimpanzee could browse the Internet before throwing any darts? In this paper, we ask whether online news has any influence on the financial market, and we also investigate how much influence it has. We explore the burgeoning literature on the predictability of financial movements using online information and report its mixed findings. In addition, we collate the efforts of various disciplines, including economics, text mining, sentiment analysis and machine learning, and we offer suggestions for future research.

Wealth effects and macroeconomic dynamics

Abstract: The effect of wealth on consumption is an issue of long‐standing interest to economists. Conventional wisdom suggests that fluctuations in household wealth have driven major swings in economic activity both in the United States and abroad. This paper considers the so‐called consumption wealth effects. There is an extensive existing literature on wealth effects that has yielded some insights. For example, research has documented the relationship between aggregate household wealth and aggregate consumption over time, and a large number of household‐level studies suggest that wealth effects are larger for households facing credit constraints. However, there are also many unresolved issues regarding the influence of household wealth on consumption. We review the most important of these issues and argue that there is a need for much more research in these areas as well as better data sources for conducting such analysis.

Creating a lab in the field: economics experiments for policymaking

Abstract: In this paper, I focus on the role that artefactual and certain framed field experiments (what I term “lab-like field experiments” or LFEs) play in informing policymaking. Using examples, primarily from rural contexts in developing countries, I identify four main purposes of LFEs: (1) to test theories or heuristic principles; (2) to identify and estimate parameters associated with characteristics; (3) to explore the structural nature of parameters derived from empirical methods including other types of experiments; and (4) to assess methodological difficulties associated with LFEs and how these can impact parameter estimates. I address the importance of generalizability for LFEs that are intended to inform policymaking and in the process, emphasize the complementary role between LFEs and other empirical methods, in particular other experiments. Finally, I discuss nine basic principles for conducting LFEs and suggest four directions for future research.

Weighted-average least squares (wals): a survey

Abstract: Model averaging has become a popular method of estimation, following increasing evidence that model selection and estimation should be treated as one joint procedure. Weighted- average least squares (WALS) is a recent model-average approach, which takes an intermediate position between frequentist and Bayesian methods, allows a credible treatment of ignorance, and is extremely fast to compute. We review the theory of WALS and discuss extensions and applications.

Globalization and climate change: new empirical panel data evidence

Abstract: Whether globalization is good or bad for the environment has been studied intensively in recent years. However, few studies have explicitly provided a general picture of globalization around the world or considered the rich dimensions of globalization outside of economic globalization. By applying the new KOF globalization index in a panel data sample of 166 countries over the 1990–2009 period, our results suggest that, on average, overall carbon emissions rise with higher levels of economic, social and political globalization, although the effect varies by OECD and non-OECD country group. After decomposing the main contributors of carbon emissions, our further data from the manufacturing and construction sector yield evidence consistent with a pollution haven effect in terms of climate change.

The governance of financial supervision: recent developments

Abstract: This paper examines the evolution of financial supervision as a policy tool over the last three decades, with a focus on the issues raised by the Global Crisis. It considers a sample of advanced and emerging economies to discuss the four main questions debated in the literature, and addressed in the economic policy arena: the architecture of supervision, the role of the central bank as supervisor, the governance of supervision, and financial supervision vs. the internationalization of finance. Our survey finds that, on each of these issues, theory and practice do not offer clear‐cut answers and unambiguous optimal solutions. At the same time, the most promising approach is to tackle financial supervision as a principal‐agent problem, where economics and political economy approaches must be used in combination to improve both positive and normative analyses of supervisory governance.

The decomposition and dynamics of industrial carbon dioxide emissions for 287 chinese cities in 1998–2009

Abstract: 85% of China's GHG emissions are attributed to urban economic activities, and this share is expected to rise given China's fast urbanization process. This paper provides estimates of city-level industrial CO2 emissions and their growth rates for all 287 Chinese prefecture-level and above cities during the years 1998–2009. We decompose the CO2 emission changes into scale, composition and technique effects. The decomposition results show that these three effects differ significantly across the three tiers of cities in China. The scale effect contributes to rising CO2 emissions, while the technique effect leads to declining CO2 emissions in all cities. The composition effect leads to increasing CO2 emissions in the third-tier cities, while it reduces CO2 emissions in the first and second-tier cities, due to the relocation of energy-intensive industries from the latter to the former type of cities. Based on these decomposition results, we identify the separate channels through which the inflow of FDI and the environmental regulations affect city-level CO2 emissions. The decomposition framework in our paper can help policy makers and scholars to better understand Chinese cities’ trade-offs between economic growth and environmental goals.

One without the other? behavioural and incentive policies for household waste management

Abstract: This paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems. We discuss the factors that influence selective sorting behaviour, and the most appropriate policies for their promotion. Based on the works analysed, our survey shows the original features of waste as an environmental problem requiring regulation. The traditional approach in which decisions respond to rational behaviour, particularly cost savings, has some limits. Although not all public policies seem justified, we argue that there might be a need for specific policies to promote recycling, preferably based on the provision of information to consumers or on behavioural instruments. Indeed, personal factors specific to each individual – such as emotions and the influence of social interaction – should be taken into account in the development of public policies. We review the literature related to different rationales and identify some avenues for future research.

Detecting Volcanic Eruptions in Temperature Reconstructions by Designed Break-Indicator Saturation

Abstract: We present a methodology for detecting breaks at any point in time-series regression models using an indicator saturation approach, applied here to modelling climate change. Building on recent developments in econometric model selection for more variables than observations, we saturate a regression model with a full set of designed break functions. By selecting over these break functions using an extended general-to-specific algorithm, we obtain unbiased estimates of the break date and magnitude. Monte Carlo simulations confirm the approximate properties of the approach. We assess the methodology by detecting volcanic eruptions in a time series of Northern Hemisphere mean temperature spanning roughly 1200 years, derived from a fully coupled global climate model simulation. Our technique demonstrates that historic volcanic eruptions can be statistically detected without prior knowledge of their occurrence or magnitude- and hence may prove useful for estimating the past impact of volcanic events using proxy reconstructions of hemispheric or global mean temperature, leading to an improved understanding of the effect of stratospheric aerosols on temperatures. The break detection procedure can be applied to evaluate policy impacts as well as act as a robust forecasting device.

The effects of pension funds on markets performance: a review

Abstract: The worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi‐pillar pension systems and enhance pension funds. For this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades. In this paper, we provide an updated review of the empirical advances in this field of study, with particular focus on the effects that pension funds produce on labour markets, financial markets and economic growth.

Contributions of the gatt/wto to global economic welfare: empirical evidence

Abstract: This paper surveys estimates of the value of the GATT/WTO's contributions to global welfare through providing a forum for negotiating reductions in policy‐induced distortions to trade flows, including through the process of accession by new members. After reviewing measures of the price‐distorting effects of trade‐related policies, it assesses estimates from global simulation models of the welfare effects of trade liberalizations prior to the WTO's Doha round, including the net benefits and transfers associated with implementing the Uruguay Round agreement on trade‐related intellectual property rights, and then reviews estimates of the potential welfare effects of a Doha round agreement to cut tariffs and subsidies. Econometric estimates of past trade and related effects of the GATT/WTO are then examined, before turning to estimates of the benefits of WTO accession and of potential benefits from WTO‐sponsored trade facilitation. The paper concludes that while it remains difficult to attribute reforms directly to the GATT/WTO, the overall body of evidence presented supports the economic profession's consensus that this institution has contributed substantially to global economic welfare.

Stabilisation policy, rational expectations and price-level versus inflation targeting: a survey

Abstract: We survey literature comparing inflation targeting (IT) and price-level targeting (PT) as macroeconomic stabilisation policies. Our focus is on New Keynesian models and areas that have seen significant developments since Ambler's (2009, Price-level targeting and stabilisation policy: a survey. Journal of Economic Surveys 23(5): 974–997) survey: optimal monetary policy; the zero lower bound; financial frictions and transition costs of adopting a PT regime. Ambler's conclusion that PT improves social welfare in New Keynesian models is fairly robust, but we note an interesting split in the literature: PT consistently outperforms IT in models where policymakers commit to simple Taylor-type rules, but results in favour of PT when policymakers minimise loss functions are overturned with small deviations from the baseline model. Since the beneficial effects of PT appear to hang on the joint assumption that agents are rational and the economy New Keynesian, we discuss survey and experimental evidence on rational expectations and the applied macro literature on the empirical performance of New Keynesian models. Overall, the evidence is not clear-cut, but we note that New Keynesian models can pass formal statistical tests against macro data and that models with rational expectations outperform those with behavioural expectations (i.e. heuristics) in direct statistical tests. We therefore argue that policymakers should continue to pay attention to PT.

What's to know about time use?

Abstract: Stimulated by the availability of large sets of microeconomic data, research on the economics of time use has been a growth industry in the past 20 years. That growth has included studies that have focused on the effect of people's value of time; on the mix of nonmarket activities that they undertake; on the interactions of spouses’ choices of time use; on the valuation of nonmarket time, and on the timing of nonmarket and market activities. By laying out these research questions and indicating their importance, this essay provides a framework for a series of meta-analyses.

Globalization and climate change: new empirical panel data evidence: globalization and climate change

Abstract: Whether globalization is good or bad for the environment has been studied intensively in recent years. However, few studies have explicitly provided a general picture of globalization around the world or considered the rich dimensions of globalization outside of economic globalization. By applying the new KOF globalization index in a panel data sample of 166 countries over the 1990–2009 period, our results suggest that, on average, overall carbon emissions rise with higher levels of economic, social and political globalization, although the effect varies by OECD and non‐OECD country group. After decomposing the main contributors of carbon emissions, our further data from the manufacturing and construction sector yield evidence consistent with a pollution haven effect in terms of climate change.

Do Institutions Affect Citizens' Selection into Politics?

Abstract: Traditional political economy has paid primary attention to the structuring of the principal-agent relationship between citizens and politicians and the role of competition and institutions in disciplining political agents. However, as the electoral control of politicians and the credibility of policy commitments are limited, this perspective needs to be complemented with an economics of political selection that takes into account the quality of those elected to political office. We review the emerging literature which investigates institutional conditions that impact the selection of politicians. We discuss pay in politics, electoral rules, institutions enhancing transparency in politics, and institutions which govern dual office holding in different branches of government. We argue that further comparative analyses are essential in order to gain an improved understanding of the impact that institutions have on political outcomes, not only via the channel of accountability, but also via the channel of selection.

Household Cooperation in Waste Management: Initial Conditions and Intervention

Abstract: The need to divert municipal solid waste away from landfill is an important policy goal in many countries, and the possibility that households cooperate in this endeavor, an oft pursued solution. There is a vast body of theoretical and empirical work which provides insights on the kind of household conditions and intervention that may stimulate such cooperation. This paper reviews the relevant literature in environmental and behavioural economics and synthesizes it around two themes: (1) initial conditions conducive to cooperation (including household motives and constraints and, by association, the demographics of cooperative households) and (2) intervention that may stimulate (or suppress) cooperation. Three distinct attributes of intervention are examined in particular detail, namely convenience, charges and communication. The paper concludes by providing a succinct set of cues for policy‐makers and scheme‐operators wishing to stimulate household cooperation in waste management, and by identifying gaps in the literature which merit further research.

Commercial property price indexes and the system of national accounts

Abstract: The paper studies the problems associated with the construction of price indexes for commercial properties that could be used in the System of National Accounts. Property price indexes are required for the stocks of commercial properties in the Balance Sheets of the country. Related service price indexes for the land and structure input components of a commercial property are required in the Production Accounts of the country if the Multifactor Productivity of the Commercial Property Industry is calculated as part of the System of National accounts. The paper reviews existing methods for constructing an overall Commercial Property Price Index (CPPI) and concludes that most methods are biased (due to their neglect of depreciation) and more importantly, not able to provide separate land and structure subindexes. A class of hedonic regression models that is not subject to these problems is discussed.

Structural equation modelling and the causal effect of permanent income on life satisfaction: the case of air pollution valuation in switzerland

Abstract: This study examines the relationship between air quality and life satisfaction. Moreover, a panel structural equation modelling (SEM) is applied in order to capture the causal effect of permanent income on life satisfaction. Swiss Household Panel (SHP) Survey (2000–2013), which is a detailed micro level survey, is used for the analysis controlling for personal and household characteristics. Five air pollutants are examined in the entire analysis; ozone (O3), particulate matter (PM), carbon monoxide (CO), sulphur dioxide (SO2) and nitrogen dioxide (NO2). Furthermore, the marginal willingness-to-pay (MWTP) values for reducing air pollution are calculated. For the robustness checks, the SEM estimates are compared with those derived by the adapted Probit Fixed Effects (FE) model. Overall results show that MWTP values are higher for SO2 followed by O3 and NO2, while the lowest values are reported for CO and PM10. Moreover, it is found that the permanent income has a positive significant effect on life satisfaction. However, considering the SEM estimations, findings for the income effects on life satisfaction are stronger than those found from the adapted Probit FE estimates that lead to lower MWTP values.

Macro‐finance linkages

Abstract: In this survey, I review the academic and policy-oriented literature on the linkages between financial markets and the rest of the economy. First, I summarize the leading economic theories for why the financial sector can influence the macroeconomy. Second, I consider empirical research on spillovers from the financial sector to the rest of the economy, as well as across financial markets in different countries. Third, I discuss key monetary policy debates regarding the appropriate response of central banks to financial conditions. Finally, I conclude with an overview of the major gaps in the existing literature.