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Oligopoly banking, risky investment, and monetary policy Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-03-06 Lukas Altermatt, Zijian Wang
Oligopolistic competition in the banking sector and risk in the real economy are important characteristics of many economies. We build a model of monetary policy transmission that incorporates these characteristics which allows us to analyze the long-run consequences of variations in the degree of banking competition. We show theoretically that various equilibrium cases can occur, and that the effect
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Idle liquidity, CBDC and banking Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-03-01 Mei Dong, Sylvia Xiaolin Xiao
We build models with an interest-bearing central bank digital currency (CBDC) to investigate whether the interest-bearing CBDC can lead to financial disintermediation. In the benchmark model with only CBDC, entrepreneurs can deposit their idle CBDC and banks can hold CBDC to satisfy the reserve requirement. CBDC and bank deposits become complements. A higher CBDC interest rate always promotes investment
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Labor market power and worker turnover Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-27 Raja Kali, Andrew Yizhou Liu
The last two decades have seen a significant decrease in labor market turnover and an increase in labor market concentration. We investigate whether labor market power, as manifested by employer concentration and outside options, affect turnover rates. Utilizing online vacancy posting data, we find that moving from the 25th percentile to 75th percentile of employer concentration reduces the turnover
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Public expenditure multipliers and informality Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-25 Emilio Colombo, Davide Furceri, Pietro Pizzuto, Patrizio Tirelli
This paper investigates the role of informality in affecting the magnitude of the public expenditure multiplier in a panel of 142 countries, using the local projections method. We find a strong negative relationship between the degree of informality and the size of the multiplier. This result holds irrespective of the level of economic development and institutional quality and is robust to additional
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Security auctions with cash- and equity-bids: An experimental study Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-23 Elnaz Bajoori, Ronald Peeters, Leonard Wolk
We study the performance of cash- and equity-bid security auctions in an experiment using first- and second-price pricing rules. Theory predicts revenue equivalence between first- and second-price formats, equity auctions to generate more revenue than cash auctions, and for all formats to be efficient. We find that, on average, the first-price equity auction produces higher revenues than the other
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The negative impact of disintegration on trade: The case of Brexit Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-15 Juan de Lucio, Raúl Mínguez, Asier Minondo, Francisco Requena
Using firm-level export and import transactions and by applying an event study methodology, we quantify the impact of the UK’s withdrawal from the EU’s single market and customs union on Spain–UK trade flows. We find that Spanish exports and imports to the UK decreased by 24% and 27%, respectively, compared to the period before the Brexit referendum. The probability of Spanish exporters and importers
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Persistence in power of long-lived parties Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-14 Álvaro Delgado-Vega
This paper presents a dynamic model of electoral competition in which parties are long-lived organizations. In each period, the incumbent chooses between two policies. The competitive policy yields a greater reelection probability, but absent electoral effects, the incumbent would prefer the accommodative policy. The analysis reveals that parties’ incentives to win reelection feed on themselves via
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Trade liberalization versus protectionism: Dynamic welfare asymmetries Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-06 B. Ravikumar, Ana Maria Santacreu, Michael Sposi
We investigate whether the losses from an increase in trade costs (protectionism) are equal to the gains from a symmetric decrease in trade costs (liberalization). We incorporate dynamics through capital accumulation into a multicountry trade model and show that the welfare changes are asymmetric: Losses from protectionism are smaller than the gains from liberalization. In contrast, standard static
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Capital controls and the global financial cycle Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-02-01 Marina Lovchikova, Johannes Matschke
Capital flows into emerging markets are volatile and risky, which sparked interest in active capital flow management. We first revisit the use of capital controls and discover a new stylized fact: emerging markets, which actively revaluate their capital flow restrictions, increase capital inflow controls during episodes of major international financial distress when investors are very risk averse and
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Gravity, globalization and time-varying heterogeneity Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-24 Scott Baier, Samuel Standaert
As data availability improves, the gravity model of international trade is used to study the flow of trade over increasingly long periods of time. This puts pressure on the standard assumption that constant bilateral fixed effects are sufficient to control for unobserved heterogeneity. When looking across decades rather than years, changes in the economic landscape will affect both explanatory and
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Financial markets and legal challenges to unconventional monetary policy Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-24 Stefan Griller, Florian Huber, Michael Pfarrhofer
This paper studies the empirical effects of legal challenges to monetary policy. Several policy measures of the European Central Bank have come under scrutiny before national courts and the European Court of Justice. These lawsuits have the potential to impact the scope and flexibility of central bank policies with important consequences for the economy. The number of relevant legal challenges is small
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Remote talks: Changes to economics seminars during COVID-19 Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-23 Marcus Biermann
This paper analyzes the consequences of the change in the presentation mode of economics seminars triggered by the COVID-19 pandemic. The composition of seminar speakers changed significantly. The share of seminars held by women increased. Several indicators of speaker productivity show that speakers at the top of the distribution also gained shares. The geography of knowledge dissemination shifted
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Addressing vaccine hesitancy using local ambassadors: A randomized controlled trial in Indonesia Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-23 Asad Islam, Gita Kusnadi, Jahen Rezki, Armand Sim, Giovanni van Empel, Michael Vlassopoulos, Yves Zenou
In settings where resistance and rampant misinformation against vaccines exist, the prospect of containing infectious diseases remains a challenge. Can delivery of information regarding the benefits of vaccination through personal home visits by local ambassadors increase vaccine uptake? We conduct a door-to-door randomized information campaign targeted towards COVID-19 unvaccinated individuals in
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Worker mobility and UI extensions Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-23 Johannes Goensch, Andreas Gulyas, Ioannis Kospentaris
We develop an equilibrium search model with a labor force participation decision, job-to-job transitions, and endogenous separations. The calibrated model perfectly matches the observed labor market flows in US data. We use the model to simulate the effects of an extension of unemployment insurance benefits to 99 weeks. The reform leads to a decrease in employment, an increase in the labor force participation
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Cooperation, punishment, and group change in multilevel public goods experiments Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-20 Kasper Otten, Vincent Buskens, Wojtek Przepiorka, Boaz Cherki, Salomon Israel
Peer punishment is regarded as an important element in sustaining human cooperation for public good provision. Many behavioral experiments have shown that public good provision is higher if cooperation norms can be enforced by peer punishment. However, these experiments predominantly focus on single-group public goods, in which people have to choose between their private interests and the interests
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Climbing the ladder? The gender gap in art prices across artists’ cohorts in the Dutch art market Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-20 Marilena Vecco, Juan Prieto-Rodriguez, Simone Teerink
This study focuses on gender-based price differences across age cohorts in the primary art market, where art is sold for the first time, largely by living artists. This is an area that remains underexplored due to a lack of data on artwork sales. We use an exclusive dataset from the Mondriaan Fund, consisting of 10,922 paintings sold, under the Kunstkoopregeling scheme, by 663 Dutch artists from 2000
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Minimum wages, wage dispersion and financial constraints in firms Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-18 Hamzeh Arabzadeh, Almut Balleer, Britta Gehrke, Ahmet Ali Taskin
This paper studies how minimum wages affect the wage distribution if firms face financial constraints. Using German employer-employee data and firm balance sheets, we document that the within-firm wage dispersion decreases more with higher minimum wages when firms are financially constrained. We introduce financial frictions into a search and matching labor market model with stochastic job matching
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Does education prevent job loss during downturns? Evidence from exogenous school assignments and COVID-19 in Barbados Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-15 Diether W. Beuermann, Nicolas L. Bottan, Bridget Hoffmann, C. Kirabo Jackson, Diego Vera-Cossio
Canonical human capital theories posit that education, by enhancing worker skills, reduces the likelihood that a worker will be laid-off during times of economic change. Yet, this has not been demonstrated . We link administrative education records from 1987 through 2002 to nationally representative surveys conducted before and after the COVID-19 onset in Barbados to explore the causal impact of improved
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Covid and productivity in Europe: A responsiveness perspective Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-12 Russell Cooper, Carl-Wolfram Horn, Leonardo Indraccolo
This paper studies the effects of Covid-19 on manufacturing output, employment and productivity across a set of European countries. Using a quantitative firm dynamics model with endogenous entry and exit, key parameters of adjustment costs and market power are estimated to match country-specific responsiveness of firms to exogenous shocks. The estimated model is used to simulate the effects of the
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The effects of free trade agreements on product-level trade Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-08 Scott French, Tom Zylkin
We use highly disaggregated trade data to test whether “least traded products”–products either not traded previously or only traded in small amounts–experience faster trade growth after the signing of trade agreements and whether this is important for the aggregate trade creation effects of trade agreements. Because we use PPML, an estimator with unique aggregation properties, our product-level estimates
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COVID angels fighting daily demons? Mental well-being of healthcare workers and religiosity Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-04 Emilia Barili, Paola Bertoli, Veronica Grembi, Veronica Rattini
Relying on a unique survey of more than 15,000 healthcare workers conducted from June to August 2020 in Italy, we show that religious priming caused participants to have a less dramatic recollection of their distressful experience during the first wave of COVID-19. Consistent with the view that religiosity serves as a coping mechanism, this effect was stronger for those who were more exposed to the
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Trick or treat? The Brexit effect on immigrants’ mental health in the United Kingdom Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-03 Cinzia Rienzo
This paper investigates changes in the mental health of immigrants living in the United Kingdom (UK) during the European Union (EU) referendum. Using the UK Household Longitudinal Study, this paper assesses how the mental health of immigrants has changed before and after the referendum, compared to natives. Findings suggest that following the EU referendum result, mental health significantly improved
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Cooperation and norm enforcement differ strongly across adult generations Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-03 Matthias Praxmarer, Bettina Rockenbach, Matthias Sutter
Cooperation of different generations is crucial to meet many important societal challenges, including climate change or the sustainability of the welfare state. Little is known, however, about different generations’ ability to cooperate in social dilemma situations, and their willingness to enforce social norms of cooperation. We present an experiment with two generations – juniors in their 20ies,
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The normative permissiveness of political partyism Eur. Econ. Rev. (IF 2.445) Pub Date : 2024-01-03 Tom Lane, Luis Miller, Isabel Rodriguez
Political party identity has become one of the strongest social divides within many Western societies. This paper employs experiments to measure discrimination along different dimensions of social identity, and replicates previous findings showing the strongest discrimination against out-groups occurs in the political party domain. Moreover, we explore a possible explanation for this phenomenon based
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The tripartite auction folk theorem Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-29 David K. Levine, Andrea Mattozzi, Salvatore Modica
We formally study two bidder first-price, second-price, and all-pay auctions with known values, deriving the equilibrium payoffs and strategies and showing when all three yield the same equilibrium payoffs to the bidders. This latter result, the tripartite auction theorem, does not hold for all auctions, in particular it can fail for symmetric auctions with high stakes and in auctions with very low
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Historical pathogen prevalence and the radius of trust Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-27 Pantelis Kammas, Vassilis Sarantides
Why do people exhibit different levels of trust between strangers and those who are socially close to them? This study tests the hypothesis that societies with a historical prevalence of infectious diseases develop strategies to minimise contact with potentially unhealthy or contaminated out-groups, while emphasising strong local networks of in-groups to manage infections effectively, ultimately leading
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Costly voting in weighted committees: The case of moral costs Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-27 Nicola Maaser, Thomas Stratmann
We develop a theoretical model of voting behavior in committees when members differ in influence and receive payoffs that condition on the individual vote and the collective decision. Applied to a group decision involving moral costs, the model predicts that the distribution of decision-making power affects committee members’ incentives to make immoral choices: More influential agents tend to support
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Bargaining with own-preference uncertainty: An experiment Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-23 Regev Bar, Aaron Nicholas
While ‘standard’ theory argues that more information typically increases efficiency from exchange, the literature on fairness and bargaining suggests that information may inhibit agreements. However, the literature has typically focussed on information related to the payoffs of the party. In many real-world interactions, a buyer is uncertain about their value for a good they are purchasing. We consider
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Lives versus livelihoods in the middle ages: The impact of the plague on trade over 400 years Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-21 Jakob B. Madsen, Peter E. Robertson, Longfeng Ye
To what extent did outbreaks of bubonic plague disrupt trade? We estimate the impact of epidemics on trade between regional wheat markets over four centuries — from the Black Death in the 14th century, until the medieval form of the plague became extinct in the 17th century. Using a gravity model, we find that outbreaks had a statistically significant, but relatively modest, impact on local variations
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Following beliefs or excluding the worst? The role of unfindable state in learning Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-20 Tatiana Mayskaya
An agent learns in continuous time from two information sources, each associated with a hypothesis. If a hypothesis is true, the associated source confirms it at a positive rate. False hypotheses are never confirmed. Among the two hypotheses, either exactly one is true or both are false. The agent’s optimal learning strategy has two phases. During the first phase, the agent follows his beliefs; that
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Financial technologies and the effectiveness of monetary policy transmission Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-16 Iftekhar Hasan, Boreum Kwak, Xiang Li
This study investigates whether and how financial technologies (FinTech) influence the effectiveness of monetary policy transmission. We use an interacted panel vector autoregression model to explore how the effects of monetary policy shocks change with regional-level FinTech adoption. Results indicate that FinTech adoption generally mitigates the transmission of monetary policy to real GDP, consumer
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Beliefs about social norms and gender-based polarization of COVID-19 vaccination readiness Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-12 Silvia Angerer, Daniela Glätzle-Rützler, Philipp Lergetporer, Thomas Rittmannsberger
Social norms affect a wide range of behaviors in society. We conducted a representative experiment to study how beliefs about the existing social norm regarding COVID-19 vaccination affect vaccination readiness. Beliefs about the norm are on average downward biased, and widely dispersed. Randomly providing information about the existing descriptive norm succeeds in correcting biased beliefs, thereby
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Uncertainty shocks, financial frictions, and business cycle asymmetries across countries Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-11 Pratiti Chatterjee
I show that uncertainty shocks trigger sharper declines in consumption, investment, and GDP – and a sharper increase in trade balances – in emerging countries relative to advanced countries during recessions. Using an open-economy model – estimated on a set of advanced and emerging countries – I demonstrate that these facts can be explained by an interaction between uncertainty and financial frictions
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The international impact of a fragile EMU Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-10 Demosthenes Ioannou, Maria Sole Pagliari, Livio Stracca
This paper aims at quantifying the international impact of euro area stress shocks, which arise also from the incomplete nature of the European Economic and Monetary Union (EMU). We first disentangle such shocks from more general global risk aversion shocks by using sign, magnitude and narrative restrictions in a daily Structural Vector Autoregression (SVAR) model with financial variables. We then
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Conflict initiation function shapes the evolution of persistent outcomes in group conflict Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-12-09 Ennio Bilancini, Leonardo Boncinelli, Pablo Marcos-Prieto
We take an evolutionary perspective to explore the implications of different relationships between power and initiation of conflicts (i.e., conflict initiation function) for the long-run distribution of power between groups. So far, attention has focused on how the role played by the relationship between power and success in conflicts (i.e., conflict success function) affects the long-run distribution
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Back to the future: Gravity at sixty Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-29 James E. Anderson
This essay travels back from its origin to the future with gravity. The return to (what we would now call) gravity’s non-parametric origin in Tinbergen (1962) takes a clue forward to improved non-parametric practice. In between, gravity became a structural parametric object widely used for policy projections and other counterfactuals. Non-parametric gravity described in Anderson (2023) leads to sufficient
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Fixed rate versus adjustable rate mortgages: Evidence from euro area banks Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-23 Ugo Albertazzi, Fulvia Fringuellotti, Steven Ongena
Why do residential mortgages carry a fixed or an adjustable interest rate? To answer this question we study unique data from 103 banks belonging to 73 different banking groups across twelve countries in the euro area. To explain the large cross-country and time variations observed, we distinguish between household conditions that determine the local demand for credit and the characteristics of banks
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Asymptotically robust permutation-based randomization confidence intervals for parametric OLS regression Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-24 Alwyn Young
Randomization inference provides exact finite sample tests of sharp null hypotheses which fully specify the distribution of outcomes under counterfactual realizations of treatment, but the sharp null is often considered restrictive as it rules out unspecified heterogeneity in treatment response. However, a growing literature shows that tests based upon permutations of regressors using pivotal statistics
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Banking supervision with loopholes Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-17 Jianxing Wei, Tong Xu
This paper develops a model of financial intermediation focusing on the interaction between banks and a regulator. In the model, the regulator chooses its supervision capacity to monitor banks and prevent excessive risk-taking. Meanwhile, banks can engage in loophole innovation to circumvent supervision, diminishing the value of the regulator’s accumulated expertise. In equilibrium, as the regulator’s
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The effect of workplace vs school-based vocational education on youth unemployment: Evidence from France Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-22 Pierre Cahuc, Jérémy Hervelin
We conducted a field experiment in France which shows that employers exhibit little preference when deciding whom to invite for job interviews: unemployed apprentices or vocational students, both of whom have earned the same diploma. By merging the results of this experiment with a search and matching model which accounts for the selection of apprentices retained by their training firms, we provide
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Sharing with minimal regulation? Evidence from neighborhood book exchange Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-15 Anouk L. Schippers, Adriaan R. Soetevent
Informal peer-to-peer services to share or barter goods often succumb to free riding behavior because they lack the tools to enforce compliance and reciprocity. We collect unique quantitative data on a form of unregulated peer-to-peer in-kind exchange that appears internationally viable: the free exchange of books via privately owned public bookcases, also known as little free libraries. Other than
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The dynamics of importer–exporter connections Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-11 Victor Gimenez-Perales
This paper studies the dynamics of importer–exporter connections when importers source inputs from multiple exporters. I first develop a trade model in which heterogeneous importers invest in expanding the set of potential exporters they know and from which they can source. The model delivers three novel predictions. The lower the degree of substitutability among final goods and the higher the degree
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How has Brexit changed EU–UK trade flows? Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-13 Janez Kren, Martina Lawless
This paper estimates how Brexit has affected goods trade between the United Kingdom and European Union. Using product-level trade flows between the EU and all other countries in the world as a comparison group, we find a sharp decline in trade from the UK to the EU and significant but smaller reductions in trade from the EU to the UK. However, when we estimate the size of the Brexit impact on trade
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Macro welfare effects of flexible labor contracts Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-10 José Gabo Carreño, Burak Uras
We develop a Dynamic-Stochastic-General-Equilibrium model to study the macro welfare effects of flexible labor contracts. Capturing the empirical properties observed in the data, we incorporate two labor sectors in our DSGE framework: a fixed sector and a flexible sector. The fixed sector offers contracts that exhibit rigidities in working-hours and wages while the flexible sector offers flexible contracts
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Wage and employment cyclicalities at the establishment level Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-10 Christian Merkl, Heiko Stüber
Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across establishments. Based on this heterogeneity, we estimate the relationship between employment cyclicality and wage
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Altruism, social interactions, and the course of a pandemic Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-03 Laura Alfaro, Ester Faia, Nora Lamersdorf, Farzad Saidi
Externalities and social preferences, such as altruism, play a key role in the choice of social interactions, which in turn affect the diffusion of a pandemic. We build a dynamic epidemiological model with endogenous social interactions in a frictional environment, also in a variant with heterogeneous agents and a network structure. Taking into account agents’ endogenous behavior and altruism generates
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On the stability of preferences: Experimental evidence from two disasters Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-04 Yusuke Kuroishi, Yasuyuki Sawada
We investigate the impacts of two disasters in Japan and the Philippines on preferences using the convex time budget experiments and multiple price list experiments with monetary rewards. By exploiting natural experiments which are combined with lab-in-the-field experiments, we aim to investigate whether and how long preferences are affected by extreme events. We find evidence supporting preference
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Overreaction and the value of information in a pandemic Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-11-04 Keyvan Eslami, Hyunju Lee
This paper studies optimal mitigation and testing during a pandemic in the presence of partial information. We develop a stylized dynamic epidemiological model where the true number of infected individuals can only be partially inferred from two noisy signals: hospitalization and positivity rate. An egalitarian planner chooses the level of mitigation and testing, which respectively affect the infection
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Supply or demand? Policy makers’ confusion in the presence of hysteresis Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-31 Antonio Fatás, Sanjay R. Singh
Policy makers need to separate between temporary demand-driven shocks and permanent shocks in order to design optimal aggregate demand policies. In this paper we study the case of a central bank that ignores the presence of hysteresis when identifying shocks. By assuming that all low-frequency output fluctuations are driven by permanent technology shocks, monetary policy is not aggressive enough in
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On the coevolution of cooperation and social institutions Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-28 Verónica Salazar, Balázs Szentes
This paper examines an environment inhabited by self-interested individuals and unconditional cooperators. The individuals are randomly paired and engage in the Prisoner’s Dilemma Game. Cooperation among players is incentivized by institutional capital, and selfish individuals incur a cost to identify situations where defection goes unpunished. In this environment, we explore the coevolution of types
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The last temptation: Is group-based voting resilient to pivotal considerations? Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-30 Nikolas Tsakas, Dimitrios Xefteris
Group-based reasoning asserts that a voter will adopt the strategy that maximizes their payoff, assuming that this strategy will also be employed by all voters of their type. In this paper, we examine a general model involving multiple candidates and voter types, and we demonstrate that, in mandatory or costless elections, group-based voting remains resilient to pivotal considerations (i.e. the impulse
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On portfolio frictions, asset returns and volatility Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-29 Aurélien Eyquem, Céline Poilly, Anna Belianska
We rationalize the observed short-run differences in corporate and long-term government bond yields in an financial-accelerator model with frictions that restrict changes in portfolio shares. We estimate the model on quarterly data for the Euro Area from 1999 to 2019, and show that the portfolio friction parameter is positive and significant. Portfolio frictions not only generate a time-varying wedge
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Religion, Covid-19 and mental health Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-28 Girish Bahal, Sriya Iyer, Kishen Shastry, Anand Shrivastava
Covid-19 and the resulting lockdowns affected various aspects of people’s lives, including their mental health. Using data from an online survey, we investigate the role of religiosity in mediating the effect of Covid-19 on mental health. From February-March 2021, we conducted online surveys in the USA among 5178 individuals. These surveys elicited responses on (i) the incidence of Covid-19 infections
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Job security, asymmetric information, and wage rigidity Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-27 Andy Snell, Heiko Stüber, Jonathan P. Thomas
We consider a labour market with risk averse workers, directed search and asymmetric information in which firms can commit to wage contracts but not to retain workers. The model predicts that in downturns (i) there is equal treatment of incumbents and new hires, (ii) wages are insensitive to the severity of the downturn, (iii) this leads to an amplified employment effect, and (iv) wages are determined
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Managers’ risk preferences and firm training investments Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-26 Marco Caliendo, Deborah A. Cobb-Clark, Harald Pfeifer, Arne Uhlendorff, Caroline Wehner
This study analyses the impact of managers’ risk preferences on their training allocation decisions. We begin by providing nationally representative evidence that managers’ risk-aversion is negatively correlated with the likelihood that their firms engage in any worker training. Using a novel vignette study, we then demonstrate that risk-tolerant and risk-averse decision makers have significantly different
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Temporary foreign work permits: Honing the tools to defeat human smuggling Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-17 Emmanuelle Auriol, Alice Mesnard, Tiffanie Perrault
We study how temporary visa schemes can be designed to drive smugglers out of business while meeting labor market needs in host countries. After discussing their compatibility with a large range of policy objectives, we show how combining internal and external controls with a regulated market for temporary visas alleviates the policy trade-off between migration control and ending human smuggling. We
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Were jobs saved at the cost of productivity in the COVID-19 crisis? Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-20 Jaanika Meriküll, Alari Paulus
Economic recessions can boost the productivity-enhancing reallocation of jobs, yet the COVID-19 crisis has provided limited and mixed evidence of that. The paper studies the link between productivity and reallocation and investigates the role of job retention schemes in it, using a rich administrative dataset for Estonia that covers the whole population of firms from 2004 to 2020. We find persistent
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Lying aversion and vague communication: An experimental study Eur. Econ. Rev. (IF 2.445) Pub Date : 2023-10-13 Keh-Kuan Sun, Stella Papadokonstantaki
An agent may strategically employ a vague message to mislead an audience’s belief about the state of the world, but this may cause the agent to feel guilt or negatively impact how the audience perceives the agent. Using a novel experimental design that allows participants to be vague while at the same time isolating the internal cost of lying from the social identity cost of appearing dishonest, we