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Showing papers in "Research Papers in Economics in 2012"


Posted ContentDOI
TL;DR: In this paper, a re-make of the Interim Report World Agriculture: towards 2030/2050 (FAO, 2006) is presented, which includes a Chapter 4 on production factors (land, water, yields, fertilizers).
Abstract: This paper is a re-make of Chapters 1-3 of the Interim Report World Agriculture: towards 2030/2050 (FAO, 2006). In addition, this new paper includes a Chapter 4 on production factors (land, water, yields, fertilizers). Revised and more recent data have been used as basis for the new projections, as follows: (a) updated historical data from the Food Balance Sheets 1961-2007 as of June 2010; (b) undernourishment estimates from The State of Food Insecurity in the World 2010 (SOFI) and related new parameters (CVs, minimum daily energy requirements) are used in the projections; (c) new population data and projections from the UN World Population Prospects - Revision of 2008; (d) new GDP data and projections from the World Bank; (e) a new base year of 2005/2007 (the previous edition used the base year 1999/2001); (f) updated estimates of land resources from the new evaluation of the Global Agro-ecological Zones (GAEZ) study of FAO and IIASA. Estimates of land under forest and in protected areas from the GAEZ are taken into account and excluded from the estimates of land areas suitable for crop production into which agriculture could expand in the future; (g) updated estimates of existing irrigation, renewable water resources and potentials for irrigation expansion; and (h) changes in the text as required by the new historical data and projections. Like the interim report, this re-make does not include projections for the Fisheries and Forestry sectors. Calories from fish are, however, included, in the food consumption projections, along with those from other commodities (e.g. spices) not analysed individually. The projections presented reflect the magnitudes and trajectories we estimate the major food and agriculture variables may assume in the future; they are not meant to reflect how these variables may be required to evolve in the future in order to achieve some normative objective, e.g. ensure food security for all, eliminate undernourishment or reduce it to any given desired level, or avoid food overconsumption leading to obesity and related NonCommunicable Diseases.

2,991 citations


Book ChapterDOI
TL;DR: This paper showed that fluctuations in the volume and value of foreign trade tend to be proportionately more violent in trade of underdeveloped countries and therefore a fortiori also more important in relation to national income.
Abstract: International trade is of very considerable importance to underdeveloped countries, and the benefits which they derive from trade and any variations in their trade affect their national incomes very deeply. The opposite view, which is frequent among economists, namely that trade is less important to the underdeveloped countries than it is to industrialized countries, may be said to derive from a logical confusion — very easy to slip into — between the absolute amount of foreign trade, which is known to be an increasing function of national income, and the ratio of foreign trade to national income. Foreign trade tends to be proportionately most important when incomes are lowest. Second, fluctuations in the volume and value of foreign trade tend to be proportionately more violent in trade of underdeveloped countries and therefore a fortiori also more important in relation to national income. Third, and a fortissimo, fluctuations in foreign trade tend to be immensely more important for underdeveloped countries in relation to that small margin of income over subsistence needs which forms the source of capital formation, for which they often depend on export surpluses over consumption goods required from abroad.

1,841 citations


Posted Content
TL;DR: New estimates of the global economic burden of non-communicable diseases in 2010 are developed, and the size of the burden through 2030 is projected, to capture the thinking of the business community about the impact of NCDs on their enterprises.
Abstract: As policy-makers search for ways to reduce poverty and income inequality, and to achieve sustainable income growth, they are being encouraged to focus on an emerging challenge to health, well-being and development: non-communicable diseases (NCDs). After all, 63% of all deaths worldwide currently stem from NCDs – chiefly cardiovascular diseases, cancers, chronic respiratory diseases and diabetes. These deaths are distributed widely among the world’s population – from highincome to low-income countries and from young to old (about one-quarter of all NCD deaths occur below the age of 60, amounting to approximately 9 million deaths per year). NCDs have a large impact, undercutting productivity and boosting healthcare outlays. Moreover, the number of people affected by NCDs is expected to rise substantially in the coming decades, reflecting an ageing and increasing global population. With this in mind, the United Nations is holding its first High-Level Meeting on NCDs on 19-20 September 2011 – this is only the second time that a high-level UN meeting is being dedicated to a health topic (the first time being on HIV/ AIDS in 2001). Over the years, much work has been done estimating the human toll of NCDs, but work on estimating the economic toll is far less advanced. In this report, the World Economic Forum and the Harvard School of Public Health try to inform and stimulate further debate by developing new estimates of the global economic burden of NCDs in 2010, and projecting the size of the burden through 2030. Three distinct approaches are used to compute the economic burden: (1) the standard cost of illness method; (2) macroeconomic simulation and (3) the value of a statistical life. This report includes not only the four major NCDs (the focus of the UN meeting), but also mental illness, which is a major contributor to the burden of disease worldwide. This evaluation takes place in the context of enormous global health spending, serious concerns about already strained public finances and worries about lacklustre economic growth. The report also tries to capture the thinking of the business community about the impact of NCDs on their enterprises. Five key messages emerge: • First, NCDs already pose a substantial economic burden and this burden will evolve into a staggering one over the next two decades. For example, with respect to cardiovascular disease, chronic respiratory disease, cancer, diabetes and mental health, the macroeconomic simulations suggest a cumulative output loss of US$ 47 trillion over the next two decades. This loss represents 75% of global GDP in 2010 (US$ 63 trillion). It also represents enough money to eradicate two dollar-a-day poverty among the 2.5 billion people in that state for more than half a century. • Second, although high-income countries currently bear the biggest economic burden of NCDs, the developing world, especially middle-income countries, is expected to assume an ever larger share as their economies and populations grow. • Third, cardiovascular disease and mental health conditions are the dominant contributors to the global economic burden of NCDs. • Fourth, NCDs are front and centre on business leaders’ radar. The World Economic Forum’s annual Executive Opinion Survey (EOS), which feeds into its Global Competitiveness Report, shows that about half of all business leaders surveyed worry that at least one NCD will hurt their company’s bottom line in the next five years, with similarly high levels of concern in low-, middle- and high-income countries – especially in countries where the quality of healthcare or access to healthcare is perceived to be poor. These NCD-driven concerns are markedly higher than those reported for the communicable diseases of HIV/AIDS, malaria and tuberculosis. • Fifth, the good news is that there appear to be numerous options available to prevent and control NCDs. For example, the WHO has identified a set of interventions they call “Best Buys”. There is also considerable scope for the design and implementation of programmes aimed at behaviour change among youth and adolescents, and more costeffective models of care – models that reduce the care-taking burden that falls on untrained family members. Further research on the benefits of such interventions in relation to their costs is much needed. It is our hope that this report informs the resource allocation decisions of the world’s economic leaders – top government officials, including finance ministers and their economic advisors – who control large amounts of spending at the national level and have the power to react to the formidable economic threat posed by NCDs.

1,697 citations


Posted Content
TL;DR: In this paper, the authors proposed a new factor model that consists of the market factor, a size factor, an investment factor, and a return-on-equity factor.
Abstract: Motivated from investment-based asset pricing, we propose a new factor model that consists of the market factor, a size factor, an investment factor, and a return-on-equity factor The new model [i] outperforms the Carhart (1997) four-factor model in pricing portfolios formed on earnings surprise, idiosyncratic volatility, financial distress, equity issues, as well as on investment and return-on-equity; [ii] performs similarly as the Carhart model in pricing portfolios on momentum as well as on size and book-to-market; but [iii] underperforms in pricing the total accrual deciles Our model's performance, combined with its clear economic intuition, suggests that it can serve as a new workhorse model for academic research and investment management practice

1,277 citations


Posted Content
TL;DR: In this paper, a simple test of Granger (1969) non-causality for hetero- geneous panel data models is proposed, based on the individual Wald statistics of Granger non causality averaged across the cross-section units.
Abstract: This paper proposes a very simple test of Granger (1969) non-causality for hetero- geneous panel data models. Our test statistic is based on the individual Wald statistics of Granger non causality averaged across the cross-section units. First, this statistic is shown to converge sequentially to a standard normal distribution. Second, the semi- asymptotic distribution of the average statistic is characterized for a fixed T sample. A standardized statistic based on an approximation of the moments of Wald statistics is hence proposed. Third, Monte Carlo experiments show that our standardized panel statistics have very good small sample properties, even in the presence of cross-sectional dependence.

945 citations


Posted Content
TL;DR: The report, published by the Earth Institute and co-edited by the institute's director, Jeffrey Sachs, reflects a new worldwide demand for more attention to happiness and absence of misery as criteria for government policy.
Abstract: The report, published by the Earth Institute and co-edited by the institute’s director, Jeffrey Sachs, reflects a new worldwide demand for more attention to happiness and absence of misery as criteria for government policy. It reviews the state of happiness in the world today and shows how the new science of happiness explains personal and national variations in happiness.

911 citations


Posted Content
TL;DR: This article examined how participation in a micro-finance program diffuses through social networks and found that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants.
Abstract: We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances.

867 citations


Posted Content
TL;DR: In this article, the authors uncover institutional voids as the source of market exclusion and identify two sets of activities: redefining market architecture and legitimizing new actors as critical for building "inclusive" markets.
Abstract: Much effort goes into building markets as a tool for economic and social development, often overlooking that in too many places social exclusion and poverty prevent many, especially women, from participating in and accessing markets. Building on data from rural Bangladesh and analyzing the work of a prominent intermediary organization, we uncover institutional voids as the source of market exclusion and identify two sets of activities – redefining market architecture and legitimating new actors – as critical for building ‘inclusive' markets. We expose voids as ‘analytical spaces' and illustrate how they result from conflict and contradiction among institutional ‘bits and pieces' from local political, community, and religious spheres. Our findings put forward a perspective on market building that highlights the ‘on the ground' dynamics and attends to the ‘institutions at play', to their consequences, and to a more diverse set of ‘inhabitants' of institutions.

739 citations


Posted Content
TL;DR: In this paper, the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth was investigated, and it was shown that proximity to a transportation network has a moderate positive causal effect on per capita GDP levels across sectors, but no effect on overall GDP growth.
Abstract: This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.

671 citations


Posted Content
TL;DR: The World Input-Output Database (WIB) as mentioned in this paper was developed to analyse the effects of globalization on trade patterns, environmental pressures and socio-economic development across a wide set of countries.
Abstract: The World Input-Output Database has been developed to analyse the effects of globalization on trade patterns, environmental pressures and socio-economic development across a wide set of countries. The database covers 27 EU countries and 13 other major countries in the world for the period from 1995 to 2009. It is downloadable at http://www.wiod.org/database/index.htm. Length: 74 pages

669 citations


Report SeriesDOI
TL;DR: In this article, the authors present the findings from an OECD International Network on Financial Education pilot study undertaken in 14 countries, focusing on variations in financial knowledge, behaviour and attitude across countries and within countries by socio-demographics.
Abstract: This paper presents the findings from an OECD International Network on Financial Education pilot study undertaken in 14 countries. The analysis focuses on variations in financial knowledge, behaviour and attitude across countries and within countries by socio-demographics.The results highlight a lack of financial knowledge amongst a sizeable proportion of the population in each of the countries surveyed. Furthermore, there is considerable room for improvement in terms of financial behaviour. Attitudes are shown to vary widely.These results will enable countries to identify needs and gaps in financial education provision and develop national policies or strategies. They also provide a sound evidence base for developing OECD recommendations and principles.

Posted Content
TL;DR: In this paper, an attempt has been made to develop a theoretical framework and then to study the framework by means of an empirical study using perceptions and practices of selected French companies, and a summary of findings and conclusions are reported.
Abstract: Sustainable business development has received much attention over the past decade owing to the significant attention given by governments and both profit and not-for-profit organizations to environmental, social and corporate responsibility. The emergence of a changing economic order has also made companies around the world seriously think about manufacturing and service sustainability. Global markets and operations have prompted companies to revisit their corporate, business and functional strategies in addition to focusing on outsourcing, virtual enterprise and supply chain management. Sustainability research on supply management has received limited attention. Nevertheless, considering the physically disbursed enterprise environment, supply management is critical for organizational competitiveness. Realizing the importance of sustainability in supply management, an attempt has been made to develop a theoretical framework and then to study the framework by means of an empirical study using perceptions and practices of selected French companies. Finally, a summary of findings and conclusions are reported.

Posted Content
TL;DR: In this paper, the authors conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall index insurance, or a combination of the two Demand for index insurance is strong and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture.
Abstract: The investment decisions of small-scale farmers in developing countries are conditioned by their financial environment Binding credit market constraints and incomplete insurance can reduce investment in activities with high expected profits We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall index insurance, or a combination of the two Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture The salient constraint to farmer investment is uninsured risk: when provided with insurance against the primary catastrophic risk they face, farmers are able to find resources to increase expenditure on their farms Demand for insurance in subsequent years is strongly increasing in a farmer’s own receipt of insurance payouts, and with the receipt of payouts by others in the farmer’s social network Both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance, and with imperfect trust that promised payouts will be delivered

Posted Content
TL;DR: In this article, the authors review the literature on financial literacy, financial education, and consumer financial outcomes, and examine how well the existing literature addresses whether financial education improves financial literacy or personal financial outcomes.
Abstract: In this article we review the literature on financial literacy, financial education, and consumer financial outcomes. We consider how financial literacy is measured in the current literature, and examine how well the existing literature addresses whether financial education improves financial literacy or personal financial outcomes. We discuss the extent to which a competitive market provides incentives for firms to educate consumers or offer products that facilitate informed choice. We review the literature on alternative policies to improve financial outcomes, and compare the evidence to evidence on the efficacy and cost of financial education. Finally, we discuss directions for future research.

Posted Content
TL;DR: This article found that competitiveness is as important a predictor of profile choice as gender and up to 23 percent of the gender difference in profile choice can be attributed to gender differences in competitiveness, which lends support to the extrapolation of laboratory findings on competitiveness to labor market settings.
Abstract: Gender differences in competitiveness are often discussed as a potential explanation for gender differences in education and labor market outcomes We correlate an incentivized measure of competitiveness with an important career choice of secondary school students in the Netherlands At the age of 15, these students have to pick one out of four study profiles, which vary in how prestigious they are While boys and girls have very similar levels of academic ability, boys are substantially more likely than girls to choose more prestigious profiles We find that competitiveness is as important a predictor of profile choice as gender More importantly, up to 23 percent of the gender difference in profile choice can be attributed to gender differences in competitiveness This lends support to the extrapolation of laboratory findings on competitiveness to labor market settings

Posted Content
TL;DR: xtivreg2 as mentioned in this paper is a wrapper for ivreg28, which can be installed on Stata versions 9+ and can be used to estimate fixed-effects and first-difference panel data models with possibly endogenous regressors.
Abstract: xtivreg28 implements IV/GMM estimation of the fixed-effects and first-differences panel data models with possibly endogenous regressors. It is essentially a wrapper for ivreg28, which must be installed for xtivreg28 to run. Users of Stata versions 9+ should use xtivreg2. xtivreg28 supports all the estimation and reporting options of ivreg28; see help ivreg28 for full descriptions and examples. In particular, all the statistics available with ivreg28 (heteroskedastic, cluster- and autocorrelation-robust covariance matrix and standard errors, overidentification and orthogonality tests, first-stage and weak/underidentification statistics, etc.) are also supported by xtivreg2 and will be reported with any degrees-of-freedom adjustments required for a panel data estimation.

Posted Content
TL;DR: In this paper, a Stata-specific treatment of generalized linear mixed models, also known as multilevel or hierarchical models, is presented, which allow fixed and random effects and are appropriate not only for continuous Gaussian responses but also for binary, count, and other types of limited dependent variables.
Abstract: This text is a Stata-specific treatment of generalized linear mixed models, also known as multilevel or hierarchical models. These models are "mixed" in the sense that they allow fixed and random effects and are "generalized" in the sense that they are appropriate not only for continuous Gaussian responses but also for binary, count, and other types of limited dependent variables.

Posted Content
TL;DR: In this article, the impact of real estate prices on corporate investment was studied and the sensitivity of investment to real estate values was found to be a function of local variations in real estate price as shocks to the collateral value of firms that own real estate.
Abstract: What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. To compute the sensitivity of investment to collateral value, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. Over the 1993-2007 period, the representative US corporation invests $0.06 out of each $1 of collateral.

Posted Content
TL;DR: This article updated the widely used banking crisis database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e., fiscal costs, output losses, and increases in public debt).
Abstract: We update the widely used banking crises database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e. fiscal costs, output losses, and increases in public debt). We also update our dating of sovereign debt and currency crises. The database includes all systemic banking, currency, and sovereign debt crises during the period 1970-2011. The data show some striking differences in policy responses between advanced and emerging economies as well as many similarities between past and ongoing crises.

Posted Content
TL;DR: This article used multivariate volatility models to investigate the relationship between the price of oil and the level of economic activity, focusing on the role of uncertainty about oil prices, using a fully specified multivariate framework, based on both structural and reduced form VARs that are modified to accommodate GARCH-in-Mean errors.
Abstract: The relationship between the price of oil and the level of economic activity is a fundamental issue in macroeconomics. There is an ongoing debate in the literature about whether positive oil price shocks cause recessions in the United States (and other oil-importing countries), and although there exists a vast empirical literature that investigates the effects of oil price shocks, there are relatively few studies that investigate the direct effects of uncertainty about oil prices on the real economy. The book uses recent advances in macroeconomics and financial economics to investigate the effects of oil price shocks and uncertainty about the price of oil on the level of economic activity. Contents: Introduction Univariate Volatility Models Multivariate Volatility Models Oil Price Uncertainty The Asymmetric Effects of Oil Price Shocks Evidence from Canada Readership: Scholars & industry professionals interested in the effects of oil pricing. Key Features: The book uses multivariate volatility models to investigate the relationship between the price of oil and the level of economic activity, focusing on the role of uncertainty about oil prices It uses a fully specified multivariate framework, based on both structural and reduced form VARs that are modified to accommodate GARCH-in-Mean errors It investigates the robustness of the results to i) alternative measures of the price of oil, ii) alternative measures of the level of economic activity, and iii) alternative data frequencies and model specifications

Posted Content
TL;DR: This paper derived a micro-founded measure of bilateral trade costs that indirectly infers trade frictions from observable trade data and showed that this trade cost measure is consistent with a broad range of leading trade theories including Ricardian and heterogeneous firms models.
Abstract: Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded measure of bilateral trade costs that indirectly infers trade frictions from observable trade data. I show that this trade cost measure is consistent with a broad range of leading trade theories including Ricardian and heterogeneous firms models. In an application I show that U.S. trade costs with major trading partners declined on average by about 40 percent between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.

Posted Content
TL;DR: In this article, the authors develop and estimate a long-run risks model with time-varying volatilities of expected growth and inflation, which simultaneously accounts for bond return predictability and violations of uncovered interest parity in currency markets.
Abstract: We show that bond risk-premia rise with uncertainty about expected inflation and fall with uncertainty about expected growth; the magnitude of return predictability using these two uncertainty measures is similar to that by multiple yields. Motivated by this evidence, we develop and estimate a long-run risks model with time-varying volatilities of expected growth and inflation. The model simultaneously accounts for bond return predictability and violations of uncovered interest parity in currency markets. We find that preference for early resolution of uncertainty, time-varying volatilities, and non-neutral effects of inflation on growth are important to account for these aspects of asset markets.

Posted Content
TL;DR: In this paper, the authors construct new series for common native language and common spoken language for 195 countries, which they use together with series for the common official language and linguis-tic proximity in order to draw inferences about the aggregate impact of all linguistic factors on bilateral trade, whether the linguistic influences come from ethnicity and trust or ease of communication, and in so far they come from ease-of-communication, to what extent trans-lation and interpreters play a role.
Abstract: We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguis-tic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) whether the linguistic influences come from ethnicity and trust or ease of communication, and (3) in so far they come from ease of communication, to what extent trans-lation and interpreters play a role. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication is far more important than ethnicity and trust. Further, so far as ease of communication is at work, translation and inter-preters are extremely important. Finally, ethnicity and trust come into play largely because of immigrants and their influence is otherwise difficult to detect.

Posted Content
TL;DR: The authors study whether natural disasters affect risk-taking behavior exploiting geographic variation in exposure to natural disasters and find that individuals who recently suffered a flood or earthquake exhibit more risk aversion than individuals living in otherwise like villages.
Abstract: We study whether natural disasters affect risk-taking behavior exploiting geographic variation in exposure to natural disasters We conduct standard risk games (using real money) with randomly selected individuals in Indonesia and find that individuals who recently suffered a flood or earthquake exhibit more risk aversion than individuals living in otherwise like villages The impact persists for several years, particularly if the disaster was severe Some, but not all, of this effect is due to income losses While we cannot rule out fundamental changes in risk preferences, data on subjective beliefs of the probability of a disaster occurring and the expected severity of such a disaster suggest that changes in perceptions of background risk are driving the more risk-averse behavior we observe We show that access to insurance can partly offset this effect Finally, we relate the observed experimental behavior to the propensity of respondents to take risks in their daily lives and show that an increase in risk-aversion has important implications for economic development

Posted Content
TL;DR: Based on a worldwide survey of global freight forwarders and express carriers, the Logistics Performance Index is a benchmarking tool developed by the World Bank that measures performance along the logistics supply chain within a country.
Abstract: Based on a worldwide survey of global freight forwarders and express carriers, the Logistics Performance Index is a benchmarking tool developed by the World Bank that measures performance along the logistics supply chain within a country. Allowing for comparisons across 167 countries, the index can help countries identify challenges and opportunities and improve their logistics performance. The World Bank conducts the survey every two years.

Posted Content
TL;DR: In this article, the authors examine how prices, markups and marginal costs respond to trade liberalization and find that trade liberalisation lowers factory-gate prices and that output tariff declines have the expected procompetitive effects, however, the price declines are small relative to the declines in marginal costs.
Abstract: This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with mult-product firms. This apporoach does not require assumptions on the market structure or demand curves faced by the firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India's trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices and that output tariff declines have the expected pro-competitive effects. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of input tariff liberalization. The reason is that firms offset their reductions in marginal costs by raising markups. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms. Long-term gains to consumers may be higher to the extent that higher firm profits lead to new product introductions and growth. Indeed, firms with larger increases in markups had a higher propensity to introduce new products during this period.

Posted Content
TL;DR: In this paper, the authors measure the amount of repurchase funding extended by money market funds (MMF) and securities lenders to the shadow banking system, including quantities, haircuts, and repo rates by type of underlying collateral.
Abstract: We measure the repo funding extended by money market funds (MMF) and securities lenders to the shadow banking system, including quantities, haircuts, and repo rates by type of underlying collateral We find that repo played only a small role in funding private sector assets prior to the crisis, as most repos are backed by Treasury and Agency collateral Repo with private sector collateral contracts during the crisis, but the magnitude is relatively insignificant compared with the contraction in asset-backed commercial paper (ABCP) While relatively small in aggregate, the contraction in repo particularly affected key dealer banks with large exposures to private sector securities, which then had knock-on effects on security markets, and led these dealer banks to resort to the Fed's emergency lending programs We also find that haircuts in MMF-to-dealer repo rise less than the dealer-to-dealer or dealer-to-hedge fund repo haircuts reported in earlier papers This finding suggests that the contraction in repo led dealers to take defensive actions, given their own capital and liquidity problems, raising credit terms to their borrowers The picture that emerges from these findings looks less like a traditional bank run of depositors and more like a credit crunch among dealer banks

Posted Content
TL;DR: In this paper, a randomized control trial conducted in rural Orissa, India (one of the poorest places in India), on the benefits of a commonly used improved stove that laboratory tests showed to reduce indoor air pollution and require less fuel.
Abstract: It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease greenhouse gas emissions in the rural areas of developing countries through the adoption of improved cooking stoves This belief is largely supported by observational field studies and engineering or laboratory experiments However, a new evidence is provided, from a randomized control trial conducted in rural Orissa, India (one of the poorest places in India), on the benefits of a commonly used improved stove that laboratory tests showed to reduce indoor air pollution and require less fuel Households are tracked for up to four years after they received the stove [BREAD Working Paper No 338] URL:[http://iplecondukeedu/bread/papers/working/338pdf]

Posted Content
TL;DR: The authors show that wrongful discharge laws, particularly those that prohibit employers from acting in bad faith ex post, limit employers' ability to hold up innovating employees after the innovation is successful by reducing the possibility of hold-up.
Abstract: We show that wrongful discharge laws - laws that protect employees against unjust dismissal - spur innovation and new firm creation Wrongful discharge laws, particularly those that prohibit employers from acting in bad faith ex post, limit employers' ability to hold up innovating employees after the innovation is successful By reducing the possibility of hold-up, these laws enhance employees' innovative efforts and encourage firms to invest in risky, but potentially mould-breaking, projects We develop a model and provide supporting empirical evidence of this effect using the staggered adoption of wrongful discharge laws across the US states

Posted Content
TL;DR: In this paper, the authors analyzed the effects of the unprecedented rise in trade between Germany and "the East" - China and Eastern Europe - in the period 1988-2008 on German local labor markets.
Abstract: "We analyze the effects of the unprecedented rise in trade between Germany and 'the East' - China and Eastern Europe - in the period 1988-2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of 'the East' in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships." (Author's abstract, IAB-Doku) ((en))