Showing papers in "Journal of Economic Surveys in 2017"
TL;DR: A comprehensive and updated review of the impact of decentralization on the economy, society and politics can be found in this article, where the authors discuss the main findings in the existing literature on the effects of decentralisation on a relevant list of socioeconomic variables.
Abstract: In this paper we offer a comprehensive and updated review of the impact of fiscal decentralization on the economy, society and politics. We start with the examination of two crucial and yet unsolved issues in the literature on decentralization: its proper measurement and the potential endogeneity of fiscal decentralization with many of the variables of interest we are trying to investigate. Then we discuss the main findings in the existing literature on the effects of decentralization on a relevant list of socio-economic variables. The impact of fiscal decentralization reforms on political institutions is also considered. Complete answers to the many questions on the impact of fiscal decentralization are not likely to be certain but overall there are reasons to be optimistic about the overall positive impact of the decentralized systems that have been introduced all over the world in the past several decades. The survey offered in this paper by necessity has to be selective but it presents a balanced view of what is known and what is not yet known opening room for further research and practice on fiscal decentralization.
210 citations
TL;DR: In this article, the authors present a survey of the growing literature on pairs trading frameworks, i.e., relative value arbitrage strategies involving two or more securities, and provide an in-depth assessment of each approach, revealing strengths and weaknesses relevant for further research.
Abstract: This survey reviews the growing literature on pairs trading frameworks, i.e., relative-value arbitrage strategies involving two or more securities. Research is categorized into five groups: The distance approach uses nonparametric distance metrics to identify pairs trading opportunities. The cointegration approach relies on formal cointegration testing to unveil stationary spread time series. The time-series approach focuses on finding optimal trading rules for mean-reverting spreads. The stochastic control approach aims at identifying optimal portfolio holdings in the legs of a pairs trade relative to other available securities. The category “other approaches” contains further relevant pairs trading frameworks with only a limited set of supporting literature. Finally, pairs trading profitability is reviewed in the light of market frictions. Drawing from a large set of research consisting of over 100 references, an in-depth assessment of each approach is performed, ultimately revealing strengths and weaknesses relevant for further research and for implementation.
140 citations
TL;DR: This paper proposed a standard for classifying one study as a replication of some other study, a standard that places the burden of proof on a study to demonstrate that it should have obtained identical results to the original.
Abstract: The welcome rise of replication tests in economics has not been accompanied by a consensus standard for determining what constitutes a replication. A discrepant replication, in current usage of the term, can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct. This paper proposes a standard for classifying one study as a replication of some other study. It is a standard that places the burden of proof on a study to demonstrate that it should have obtained identical results to the original, a conservative standard that is already used implicitly by many researchers. It contrasts this standard with decades of unsuccessful attempts to harmonize terminology, and argues that many prominent results described as replication tests should not be described as such. Adopting a conservative standard like this one can improve incentives for researchers, encouraging more and better replication tests.
125 citations
TL;DR: In this article, the authors explore the rationales for national innovation policies, as laid out in the existing literature on the subject, and consider what the lessons and challenges for theory and practice in this area are.
Abstract: Innovation policy has emerged as a new field of economic policy during the last few decades. This paper explores the rationales for national innovation policies, as laid out in the existing literature on the subject, and considers what the lessons and challenges for theory and practice in this area are. Innovation policy attempts to influence innovation activity, often with the purpose of increasing economic growth. But it can also have more specific aims such as preventing unwarranted climate change, improving national health, and so on. The increasing attention given to innovation policy at the national level from the 1990s onwards went hand in hand with the development of a new, systemic understanding of innovation, which in a better way than before accounted for the 'stylised facts' of innovation activity as identified by empirical work. The system approach, as the paper shows, came to have a significant influence on the subsequent policy discourse. Drawing on recent advances in innovation-systems theory, a synthetic framework for the analysis of innovation policy is developed and used to highlight issues of particular relevance for the conduct of innovation policy and future scholarly work in this area.
116 citations
TL;DR: The stock-flow consistent (SFC) approach has been adopted by a growing number of researchers in macroeconomics, especially after the publication of Monetary Economics by Godley and Lavoie, which provided a general framework for the analysis of whole economic systems, and the recognition that macroeconomic models integrating real markets with flow-of-funds analysis had particularly successful in predicting the Great Recession of 2007-2009 as mentioned in this paper.
Abstract: The stock-flow consistent (SFC) modelling approach, grounded in the pioneering work of Wynne Godley and James Tobin in the 1970s, has been adopted by a growing number of researchers in macroeconomics, especially after the publication of Monetary Economics by Godley and Lavoie, which provided a general framework for the analysis of whole economic systems, and the recognition that macroeconomic models integrating real markets with flow-of-funds analysis had been particularly successful in predicting the Great Recession of 2007–2009. We introduce the general features of the SFC approach for a closed economy, showing how the core model has been extended to address issues such as financialization and income distribution. We next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing SFC empirical models for whole countries. We review the contributions where the SFC approach is being adopted as the macroeconomic closure of microeconomic agent-based models, and how the SFC approach is at the core of new research in ecological macroeconomics. Finally, we discuss the appropriateness of the name ‘SFC’ for the class of models we survey.
107 citations
TL;DR: In this paper, a meta-analysis of the impact of publication bias on productivity spillovers from foreign direct investment (FDI) in 31 developing countries through a larger more comprehensive data set is presented.
Abstract: This meta-analysis reviews the intrasector heterogeneity of productivity spillovers from foreign direct investment (FDI) in 31 developing countries through a larger more comprehensive data set. We investigate how the inconsistencies in the reported spillover findings are affected by publication bias, characteristics of the data, estimation techniques, and empirical specification, analyzing 1450 spillover estimates from 69 empirical studies published in 1986–2013.
Our findings suggest that reported FDI spillover estimates are affected by publication bias. In combination with model misspecification of the primary studies, the bias overstates the genuine underlying meta-effect, but the meta-effect remains economically and statistically significant.
Our results emphasize that spillovers and their sign largely depend systematically on specification characteristics of the primary studies and publication bias. Publication bias is not caused by “best practice” choices.
Future research needs to cover more developing countries and to investigate not only whether spillovers occur, but also to explore inside the black box of how spillovers actually emerge.
97 citations
TL;DR: The authors provides an overview of the recent analytical and empirical literature on middle-income traps and discusses the various arguments that have been put forward to explain the existence, and persistence, of middle income traps.
Abstract: This paper provides an overview of the recent analytical and empirical literature on middle-income traps. The first part examines the descriptive and statistical evidence on these traps. The second discusses the various arguments that have been put forward to explain the existence, and persistence, of middle-income traps. These arguments include diminishing returns to physical capital, exhaustion of cheap labor and imitation gains, insufficient quality of human capital, inadequate contract enforcement and intellectual property protection, distorted incentives and misallocation of talent, lack of access to advanced infrastructure, and lack of access to finance, especially in the form of venture capital. The third part considers public policies aimed at avoiding, and escaping from, middle-income traps. The concluding part identifies a number of directions in which the empirical and theoretical literature could fruitfully evolve.
84 citations
TL;DR: Awards are a widespread phenomenon and serve as a valuable incentive to influence behaviour as mentioned in this paper, and the study of awards such as medals, prizes and titles has gained momentum in economics, complementing the longstanding focus on material incentives.
Abstract: Awards are a widespread phenomenon. They cater to the fundamental desire for social recognition and serve as a valuable incentive to influence behaviour. The study of awards such as medals, prizes and titles has in recent years gained momentum in economics, complementing the longstanding focus on material incentives. To evaluate the effectiveness of awards as a motivator is difficult as the effect of awards must be separated from the fact that awards are meant to be given to the best. We show how research on awards has advanced over the last couple of years, thus providing points of departure for future work.
72 citations
TL;DR: In this article, the effects of government spending on income inequality are explored, with a particular focus on low-and middle-income countries, and the results show that there is a moderate negative relationship between government spending and income inequality.
Abstract: In this paper findings of a meta-regression analysis are presented exploring the effects of government spending on income inequality, with a particular focus on low- and middle-income countries. We identify a total of 84 separate studies containing over 900 estimates of the effect of one or more measures of spending on one or more measures of income inequality. The results show some evidence of a moderate negative relationship between government spending and income inequality, which is strongest for social welfare and other social spending, and when using the Gini coefficient or the top income share as the measure of inequality. However, both the size and direction of the estimated relationship between government spending and income inequality is affected by a range of other factors, including the control variables and estimation method used. We also find evidence of publication bias, in that negative estimates of the relationship appear to be under-reported in the literature.
70 citations
TL;DR: A comprehensive review of the main developments on the inferential aspects of the Gini concentration ratio can be found in this article, where the main directions of analysis proposed in the literature are discussed.
Abstract: More than a century ago, Corrado Gini proposed his well-known concentration index for measuring the degree of inequality in the distribution of income and wealth. His index is still extremely relevant and widely used in several fields of research and application. In this paper, we focus on the inferential properties of the Gini index, and discuss the main directions of analysis proposed in the literature. The aim of the paper is to provide a comprehensive review of the main developments on the inferential aspects of the Gini concentration ratio. We feel that this work can provide a valuable contribution to those scholars who are approaching the large amount of literature on the inferential properties of the Gini index.
66 citations
TL;DR: The authors survey the empirical literature on financialization and investment to take stock of where we are and to identify questions for further research, and propose three approaches to measuring financialization in the context of investment.
Abstract: An expanding literature analyses the implications of the post†1980 expansion of finance in advanced economies – a process summarized as ‘financialization’ – for capital accumulation. This paper surveys the empirical literature on financialization and investment to take stock of where we are and to identify questions for further research. Because ‘financialization’ is widely recognized to be ambiguously defined, I first introduce empirical indicators of financialization in this literature. This categorization elucidates three approaches to measuring financialization in the context of investment. The first two approaches emphasize rising income flows between nonfinancial corporations (NFCs) and finance: first, growth in NFCs’ financial incomes and, second, growth in NFCs’ payments to creditors and shareholders. Rising financial profits are, notably, widely used to suggest financial assets and incomes ‘crowd out’ physical investment. I contend that these flow†based indicators of financialization capture important relationships between changes in firm financial behaviour and investment, but also raise questions about determinants underlying NFCs’ changing portfolio and financing decisions. The third approach to defining financialization emphasizes the best†developed behavioural explanation linking financialization to reduced investment: shareholder value orientation. In future research, scope remains for further attention to behavioural drivers of the empirical trends summarizing financialization.
TL;DR: The authors survey the empirical literature on financialization and investment to take stock of where we are and to identify questions for further research, and propose three approaches to measuring financialization in the context of investment.
Abstract: An expanding literature analyses the implications of the post‐1980 expansion of finance in advanced economies – a process summarized as ‘financialization’ – for capital accumulation. This paper surveys the empirical literature on financialization and investment to take stock of where we are and to identify questions for further research. Because ‘financialization’ is widely recognized to be ambiguously defined, I first introduce empirical indicators of financialization in this literature. This categorization elucidates three approaches to measuring financialization in the context of investment. The first two approaches emphasize rising income flows between nonfinancial corporations (NFCs) and finance: first, growth in NFCs’ financial incomes and, second, growth in NFCs’ payments to creditors and shareholders. Rising financial profits are, notably, widely used to suggest financial assets and incomes ‘crowd out’ physical investment. I contend that these flow‐based indicators of financialization capture important relationships between changes in firm financial behaviour and investment, but also raise questions about determinants underlying NFCs’ changing portfolio and financing decisions. The third approach to defining financialization emphasizes the best‐developed behavioural explanation linking financialization to reduced investment: shareholder value orientation. In future research, scope remains for further attention to behavioural drivers of the empirical trends summarizing financialization.
TL;DR: The authors argue that there is a disconnect between the theory and practice of forward guidance, as theory assumes commitment on the part of the central bank, while in practice central banks generally do not commit.
Abstract: We discuss the theoretical rationale for central bank communication about future policy rates, either as part of inflation targeting or in the form of forward guidance. We also summarize both actual central bank communication about future policy rates and empirical evidence on the effectiveness of these types of communication. We argue that there is a disconnect between the theory and practice of forward guidance, as theory assumes commitment on the part of the central bank, while in practice central banks generally do not commit. Future theoretical research on forward guidance should therefore take the absence of commitment by central banks into account.
TL;DR: A survey of non-neoclassical literature on endogenous technical change and the functional income distribution can be found in this paper, where the authors distinguish between classical-Marxian and post-Keynesian models and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness.
Abstract: This paper surveys the last two and a half decades of non-neoclassical literature on endogenous technical change and the functional income distribution. We distinguish between classical-Marxian and post-Keynesian models, and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness. The balanced growth implications of alternative models are compared with neoclassical exogenous and endogenous growth theories. Despite the strong differences in the assumptions regarding the substitutability between capital and labor, the role of different classes in society, and whether or not productive factors are fully employed, the various alternative models can be classified in a way that highlights remarkable similarities with their neoclassical counterparts. Both neoclassical and alternative theories of endogenous growth: (i) have shown that long-run growth is sensitive to investment decisions, and (ii) rely on a linear spillover from the stock of knowledge to the production of innovations. The comparison highlights the different channels emphasized by competing theories: saving behavior and market structure in the neoclassical theories, as opposed to income distribution, the state of the labor market, and investors' behavior in alternative theories.
TL;DR: In this paper, the authors survey the literature and identify differences and similarities in the ways through which Minskyan ideas have been formalised and distinguish between the models that focus on the dynamics of debt or interest, with no or a secondary role for asset prices, and the models in which asset prices play a key role in the dynamic behaviour of the economy.
Abstract: Minsky’s ideas have recently gained prominence in the mainstream as well as in the heterodox literature. However, there exists no agreement upon the formal presentation of Minsky’s insights. The aim of this paper is to survey the literature and identify differences and similarities in the ways through which Minskyan ideas have been formalised. We distinguish between the models that focus on the dynamics of debt or interest, with no or a secondary role for asset prices, and the models in which asset prices play a key role in the dynamic behaviour of the economy. Within the first category of models we make a classification between (i) the Kalecki-Minsky models, (ii) the Kaldor-Minsky models, (iii) the Goodwin-Minsky models, (iv) the credit rationing Minsky models, (v) the endogenous target debt ratio models and (vi) the Minsky-Veblen models. Within the second category of models, we distinguish between (i) the equity price Minsky models and (ii) the real estate price Minsky models. Key limitations of the models and directions for future research are outlined.
TL;DR: The authors reviewed the status quo of the empirical literature about the elasticity of intertemporal substitution (EIS) in consumption and discussed several recent advances of the theory and highlights challenges for the estimation, showing that several deviations from the time-additive constant relative risk aversion model speak in favor of considerably higher values.
Abstract: This paper reviews the status quo of the empirical literature about the elasticity of intertemporal substitution (EIS) in consumption. Aiming to answer the question what the true magnitude of the parameter really is, it discusses several recent advances of the theory and highlights challenges for the estimation. Although the general discussion still seems to be prevailed by Hall's early EIS estimates close to zero, we show that several deviations from the time-additive constant relative risk aversion model speak in favor of considerably higher values. Our treatment is supposed to provide researchers a hint at which parameter is a reasonable and incontrovertible choice for the calibration of models in macroeconomics and finance.
TL;DR: In this paper, the authors present an integrated overview of the literature linking institutions, financial development and economic growth and present the stock of empirical evidence quantifying the impact of institutions on growth through financial development.
Abstract: This paper presents an integrated overview of the literature linking institutions, financial development and economic growth. From the large body of research on institutional development, the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating/worsening the information frictions and transaction costs that characterize the development of financial markets. The paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development.
TL;DR: In this paper, a review of methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing, including completely missing and partially missing consumption data in cross-sectional household surveys, to missing panel household data.
Abstract: This paper reviews methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing. These contexts range from completely missing and partially missing consumption data in cross-sectional household surveys, to missing panel household data. The paper focuses on methods that aim to compare trends and dynamic patterns of poverty outcomes over time. It presents the various methods under a common framework, with pedagogical discussion on the intuition. Empirical illustrations are provided using several rounds of household survey data from Vietnam. Furthermore, the paper provides a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques.
TL;DR: In this article, a hybrid method comprised of sophisticated scientometric analysis to summarise scientific developments in the massive text corpus of the SaW literature in conjunction with a more traditional literature review to categorise the "fuzzy" details that remain.
Abstract: Interdisciplinary research on measuring the progress towards sustainability and well-being (SaW) from different perspectives and in various contexts has developed dramatically over recent decades. This growth in the literature has not only added an enormous number of dimensions to the SaW debate, but the sheer scale of the expansion has challenged researchers to be able to conduct a comprehensive analysis of the available SaW indicators. In this work, we have proposed a hybrid method comprised of sophisticated scientometric analysis to summarise scientific developments in the massive text corpus of the SaW literature in conjunction with a more traditional literature review to categorise the ‘fuzzy’ details that remain. Scientometric analysis highlights that the developed OECD countries play a vital role in the development and applications of SaW indicators and we describe key developments in this regard via a range of graphical approaches. Using an extensive collection of existing SaW indicators, the analysis is then summarised in a matrix of ranked indicators which serve as a powerful tool to compare, contrast, filter and select indicators for SaW assessment with minimum redundancies between indicators. The approach undertaken in this study is intended to be flexible and can be extended and applied to other fields of research.
TL;DR: In this paper, a survey of the emerging literature on macro-dynamic models of animal spirits is presented, where discrete choice and transition probability approaches are considered, where individual agents face a binary decision and choose one of them with a certain probability.
Abstract: This paper is a survey of the burgeoning literature that seeks to take the enigmatic concept of the animal spirits more seriously by building heterodox macro-dynamic models that can capture some of its crucial aspects in a rigorous way. Two approaches are considered: the discrete choice and the transition probability approach, where individual agents face a binary decision and choose one of them with a certain probability. These assessments are adjusted upward or downward in response to what the agents observe, which leads to changes in the aggregate sentiment and the macroeconomic variables resulting from the corresponding decisions. Typical applications of the two approaches alternatively give rise to what will be called a weak and a strong form of animal spirits. On the whole, the literature included in this survey provides examples of applications of a modelling tool that demonstrates a considerable flexibility within a canonical framework.
TL;DR: In this paper, the authors assemble and critically review extant literature on the choice of management controls in family firms and conclude this review paper by providing avenues for future research that can advance our understanding of both the determinants and the outcomes of choosing MCS.
Abstract: Family firms play a significant role in the global economy. Although family firm literature has devoted much time and effort to investigating topics concerning corporate governance, leadership, ownership and succession, accounting issues have received relatively scant attention. In this paper, we assemble and critically review extant literature on the choice of management controls. This is an essential topic for firms as management control systems (MCS) are used to make sure subordinates behave in function of the goals of the firm. Family firms, however, have distinct features, such as differences in governance structures and goals, which can have a significant impact on whether and how MCS are used. We conclude this review paper by providing avenues for future research that can advance our understanding of both the determinants and the outcomes of the choice of MCS.
TL;DR: In this article, two widely used approaches in the New Empirical Industrial Organization (NEIO) literature and examines the strengths and weaknesses of the Production-Theoretic Approach (PTA) and the General Identification Method (GIM) for the econometric analysis of market power in agricultural and food markets.
Abstract: This study discusses two widely used approaches in the New Empirical Industrial Organization (NEIO) literature and examines the strengths and weaknesses of the Production-Theoretic Approach (PTA) and the General Identification Method (GIM) for the econometric analysis of market power in agricultural and food markets. We provide a framework that may help researchers to evaluate and improve structural models of market power. Starting with the specification of the approaches in question, we compare published empirical studies of market power with respect to the choice of the applied approach, functional forms, estimation methods and derived estimates of the degree of market power. Thereafter, we use our framework to evaluate several structural models based on PTA and GIM to measure oligopsony power in the Ukrainian dairy industry. The PTA-based results suggest that the estimated parameters of oligopsony power are significantly different from zero, while GIM-based results do not indicate any evidence of oligopsony market power in the Ukrainian dairy industry. Moreover, estimations results vary substantially due to the employed estimation procedure.
TL;DR: A survey of recent advances in the literature on proposed African monetary unions is presented in this article, which comprises about 60 empirical papers published during the past fifteen years, including four main strands: WAMZ, EAMU, SAMU and AMU.
Abstract: This study provides a survey of recent advances in the literature on proposed African monetary unions. The survey comprises about 60 empirical papers published during the past fifteen years. Four main strands are discussed individually and collectively, notably, the proposed: West African Monetary Zone (WAMZ), East African Monetary Union (EAMU), Southern African Monetary Union (SAMU) and African Monetary Union (AMU). We observe a number of issues with establishing the feasibility and/or desirability of potential monetary unions, inter alia, variations in: choice of variables, empirical strategies, sampled countries and considered periodicities. We address this ambiguity by reviewing studies with scenarios that are consistent with Hegelian dialectics and establish selective expansion as the predominant mode of monetary integration. Some proponents make cases for strong pegs and institutions as viable alternatives to currency unions. Using cluster analysis, disaggregating panels into sub-samples and distinguishing shocks from responses in the examination of business cycle synchronisation provide more subtle policy implications. We caution that for inquiries using the same theoretical underpinnings, variables and methods just by modifying the scope/context and periodicity may only contribute to increasing the number of conflicting findings. Authors should place more emphasis on new perspectives and approaches based on caveats of, and lessons from the European Monetary Union (EMU) and CFA zones.
TL;DR: In this article, the authors review the theoretical and empirical literature examining the economic arguments and motivations underlying market fragmentation, the resulting implications for liquidity and price efficiency, and the role for public policy.
Abstract: Technological advances and regulatory initiatives have led to the emergence of a competitive, but fragmented, equity trading landscape in several markets around the world. While these changes have coincided with benefits like reduced transaction costs, advancements in trading technology, and access to a diverse array of execution venues, regulators and market participants have also raised concerns about the welfare implications of innovations like dark pools as well as the resulting increase in execution complexity. Exchanges are often viewed as natural monopolies due to the presence of network externalities and economies of scale. However, heterogeneity in traders' preferences means that no single venue can serve the interests of all investors. Fragmentation of the marketplace can be seen as a direct outcome of this heterogeneity. In this article we review the theoretical and empirical literature examining the economic arguments and motivations underlying market fragmentation, the resulting implications for liquidity and price efficiency, and the role for public policy. Beyond the concerns for equity markets, the lessons from this literature are relevant for other asset classes experiencing an increase in competition between trading venues.
TL;DR: In this paper, the authors surveyed more than 20 contributions that address the optimality of joint ventures under contract incompleteness and revealed the circumstances in which JVs outperform sole ownership.
Abstract: Joint ventures (JVs) are a common form of inter-firm collaboration and, unsurprisingly, the subject of a vast literature, extending from economics to management and business studies.
Issues of control are central to the definition of JVs, and this naturally calls for an interpretation in the context of the property rights theory (PRT) of the firm. In a series of seminal papers, Grossman, Hart and Moore (GHM) offer a rigorous framework to predict the allocation of control rights. Notably, under the standard assumptions of GHM, JVs are suboptimal. However, JVs are not suboptimal in more general settings where a number of the original framework's assumptions are relaxed. In the context of PRT, this paper surveys more than 20 contributions that address the optimality of JVs under contract incompleteness. The surveyed papers question the assumptions of GHM and reveal the circumstances in which JVs outperform sole ownership. Although contributions are scattered over time and bibliographical sources, we believe sufficient material has accumulated over 25 years of economic modelling to encourage some systematization. The discussion is organized in an intuitive and non-technical way; in particular, effort is devoted to analysing each paper in detail and providing a unified framework.
TL;DR: In this article, the authors put into perspective the recent literature which points to inequality as a possible cause of credit bubbles, by reintegrating it into a more general analysis on the two-way relationship between inequality and finance.
Abstract: In this paper, we put into perspective the recent literature which points to inequality as a possible cause of credit bubbles, by reintegrating it into a more general analysis on the two-way relationship between inequality and finance. We focus more specifically on situations where high inequalities and widespread access to credit coexist, and argue that, even when institutions maintain more or less equal access to finance, there may be a dynamic, positive circular relationship between inequality and financial development. However, even if there is some evidence in the literature of a positive causal impact of inequality on credit, this does not preclude other important, cofounding factors. The conclusions concerning the distributional impact of finance are more ambiguous. A survey of the empirical literature highlights several issues that must be tackled. First, endogeneity: reverse causality and coincidental factors are major concerns. Second, the choice of consistent measurements for the key variables (both credit and inequality) has strong empirical implications, and must be grounded on relevant theoretical channels. Third, those circular dynamics have substantial policy implications for emerging economies, since an increasing number face a joint increase in inequality and credit.
TL;DR: In this paper, the authors survey prominent theories that have shaped the literature on sterilized foreign exchange interventions, identifying three main strands of literature: (1) that deems interventions futile; (2) that requires some market friction (i.e., limited arbitrage) in order for interventions to be effective; and (3) that advocates the use of interventions as long as they convey signals on the stance of future monetary policy.
Abstract: In this paper, we survey prominent theories that have shaped the literature on sterilized foreign exchange interventions. We identify three main strands of literature: (1) that which deems interventions futile; (2) that which requires some market friction (i.e. limited arbitrage) in order for interventions to be effective; and (3) that which advocates the use of interventions as long as they convey signals on the stance of future monetary policy. We contribute to the literature in three important ways. First, by reviewing new theoretical models that have surfaced within the last decade. Second, by further penetrating into the theory of interventions in order to analyze the key features that make each model distinct. And third, by only focusing on sterilized operations, which allows us to sidestep the effects induced by changes in the stock of money supply. In addition, the models that we present comprise both a macro and microstructure approach so as to provide a comprehensive view of the theory behind exchange rate intervention.
TL;DR: The authors surveys a broad range of studies and highlights the main findings of the empirical literature regarding business finance and productivity, concluding that financial development likely has favorable effects on productivity growth, while financial frictions that impede the efficient flow of finance can mitigate the positive effects through a variety of channels.
Abstract: This paper surveys a broad range of studies and highlights the main findings of the empirical literature regarding business finance and productivity. Numerous studies analyse the productivity effects of financial development and frictions. The results suggest: 1) Financial development likely has favourable effects on productivity growth; 2) financial frictions that impede the efficient flow of finance can mitigate the positive effects through a variety of channels; and 3) the magnitudes of productivity costs of financial frictions generally appear modest in financially developed economies but are considerably larger in developing economies. The paper also reviews studies of the influence of specific mechanisms on productivity, such as human capital, corporate finance, financial sector efficiency, equity finance and venture capital. Some policies that hamper productivity growth include inefficient insolvency regimes that impede exit of low-productivity firms, poorly developed contract monitoring and enforcement systems between banks and firms, collateral constraints that impair resource reallocation and imperfect bank supervisory practices that diminish productive capital reallocation through distorted lending practices.
TL;DR: In this paper, a survey of non-neoclassical literature on endogenous technical change and the functional income distribution is presented, and the authors distinguish between classical Marxian and post-Keynesian models, and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness.
Abstract: This paper surveys the last two and a half decades of non‐neoclassical literature on endogenous technical change and the functional income distribution. We distinguish between classical‐Marxian and post‐Keynesian models, and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness. The balanced growth implications of alternative models are compared with neoclassical exogenous and endogenous growth theories. Despite the strong differences in the assumptions regarding the substitutability between capital and labor, the role of different classes in society, and whether or not productive factors are fully employed, the various alternative models can be classified in a way that highlights remarkable similarities with their neoclassical counterparts. Both neoclassical and alternative theories of endogenous growth: (i) have shown that long‐run growth is sensitive to investment decisions, and (ii) rely on a linear spillover from the stock of knowledge to the production of innovations. The comparison highlights the different channels emphasized by competing theories: saving behavior and market structure in the neoclassical theories, as opposed to income distribution, the state of the labor market, and investors' behavior in alternative theories.
TL;DR: In this paper, the authors discuss the literature on delisting, drawing on USA and international evidence, and review the economic consequences of delisting in terms of value creation or value destruction for shareholders.
Abstract: This paper discusses the literature on delisting, drawing on USA and international evidence. Given the great heterogeneity in delisting operations, we first consider the standard existing typology based on the initiator of the delisting (the stock market authorities, or the firm itself). Second, while managers often cite high compliance costs (especially due to Sarbanes–Oxley Act implementation) as the official reason for the voluntary delisting of their firm, we highlight that firms face different trade-offs in their delisting decision. We also examine the reasons for involuntary delisting, especially the delisting dilemma faced by stock market authorities when the firm violates the listing requirements. Next, we review the economic consequences of delisting in terms of value creation or value destruction for shareholders. Finally, noting gaps in the literature and other contrasting results, we propose suggestions for future research.