In this comment I illustrate that in the model of (Lee et al. (2019). Oxford Bulletin of Economics and Statistics. Vol. 81, pp. 80–97), firm profit maximizing implies that Assumption 2 and Equation 14 may be contradictory. More specifically, there is generally a contradiction when investment is used as the control variable, but there is generally not a contradiction when a static input like material

We study gender differences in the evaluation of submissions to economics conferences. Using data on more than 9,000 submissions from the Annual Congress of the European Economic Association (2015–17), the Annual Meeting of the Spanish Economic Association (2012–17) and the Spring Meeting of Young Economists (2018), we find that all‐female‐authored papers are 3.3% points (p.p.), or 6.8%, less likely

This paper characterizes optimal commitment policy in the New Keynesian model using a recursive formulation of the central bank's infinite‐horizon optimization problem in which promised inflation and output gap – as opposed to lagged Lagrange multipliers – act as pseudo‐state variables. Our recursive formulation is motivated by (Kydland, F. and Prescott, E. C. (1980). Journal of Economic Dynamics and

Testing the predictability of the predictive regression model is of great interest in economics and finance. Recently, (Zhu et al. (2014) Predictive regressions for macroeconomic data, Vol. 8, pp. 577–594.) proposed a unified test to account for this issue. Their test has a desirable property that its limit distribution is standard regardless of the regressor being stationary, near unit root or unit

The growth of globalization in recent decades has increased the importance of external factors as drivers of the business cycle in many countries. Globalization affects countries not just at the macro level but at the level of states and metro areas as well. This paper isolates the relative importance of global, national and region‐specific shocks as drivers of the business cycle in individual US states

This paper studies the spillover effects of the ECB's monetary policies on non‐euro area countries, using a GVAR methodology, shadow rate for advanced economies (Wu and Xia, 2016) and shock identification through Cholesky decomposition. A euro‐area shadow interest rate hike triggers a broad‐based decline in output abroad, especially in Central, Eastern and South‐Eastern European (CESEE) economies,

Using data from the Korea Labor Income Panel Study, we study the evolution of income risk and consumption insurance against transitory and permanent income shocks in South Korea over the last two decades. We find a decreasing trend in both income and consumption risks. Furthermore, we estimate that 47.6% of permanent income shocks and 9.8% of transitory income shocks pass through to consumption. We

By adopting an identification strategy of difference‐in‐difference estimation combined with propensity score matching between liberalized and closed countries, this paper provides robust evidence that opening the capital account is associated with an increase in income inequality in developing countries. Specifically, capital account liberalization, in the long run, is associated with a reduction in

We formulate a general cointegrated vector autoregressive (CVAR) model that nests both a class of consumption Euler equations and various Keynesian‐type consumption functions. Using likelihood‐based methods and Norwegian data, we find support for cointegration between consumption, income and wealth once a structural break around the time of the financial crisis is allowed for. The fact that consumption

We study the impact of Economic Policy Uncertainty (EPU) on the US Economy by using a VAR with time‐varying coefficients. The coefficients are allowed to evolve gradually over time which allows us to discover structural changes without imposing them a priori. We find three different regimes, which match the three major periods of the US economy, namely the Great Inflation, the Great Moderation and

The paper investigates the estimation bias of autoregressive models for bounded near‐integrated stochastic processes and the performance of the standard procedures in the literature that aim to correct the estimation bias. In some cases, the bounded nature of the stochastic processes worsens the estimation bias effect. The paper extends two popular autoregressive estimation bias correction procedures

In this paper, we propose a new method called the total variance method and algorithms to compute and analyse variance decomposition for nonlinear economic models. We provide theoretical and empirical examples to compare our method with the only existing method called generalized forecast error variance decomposition (GFEVD). We find that the results from the two methods are different when shocks are

The incomes of top earners are typically top‐coded in survey data. I show that the accuracy of imputed income values for top earners in longitudinal surveys can be improved significantly by incorporating information from multiple time periods into the imputation process in a simple way. Moreover, I introduce an innovative, nonparametric empirical Bayes imputation method that further improves imputation

We propose a general framework for Maximum Likelihood (ML) and Bayesian estimation of income distributions based on grouped data information. The asymptotic properties of the ML estimators are derived and Bayesian parameter estimates are obtained by Monte Carlo Markov Chain (MCMC) techniques. A comprehensive simulation experiment shows that obtained estimates of the income distribution are very precise

An asymptotic distribution is derived for the least squares (LS) estimate of a first‐order autoregression with a mildly explosive root and anti‐persistent errors. While the sample moments depend on the Hurst parameter asymptotically, the Cauchy limiting distribution theory remains valid for the LS estimates in the model without intercept and a model with an asymptotically negligible intercept. Monte

This paper explores whether unconventional monetary policy operations have redistributive effects on household wealth. Drawing on household balance sheet data from the Wealth and Asset Survey, we construct monthly time series indicators on the distribution of different asset types held by British households for the period that the monetary policy switched, as the policy rate reached the zero‐lower

This paper introduces a new class of tractable asymmetric heteroskedastic models, the good and bad volatility (GBV). Asymmetry is recognized in the dynamics of GBV components that correspond to positive and negative shocks respectively. The GBV model allows both conditional semivariances to evolve according to two separate functional forms with different semi‐definite distributions. An empirical application

Most existing methods for testing cross‐sectional dependence in fixed effects panel data models are actually conducting tests for cross‐sectional uncorrelation, which are not robust to departures of normality of the error distributions as well as nonlinear cross‐sectional dependence. To this end, we construct two rank‐based tests for (static and dynamic) fixed effects panel data models, based on two

We provide novel evidence on the effects of ill‐health on the dynamics of labour state transitions by considering retirement as mobility between full‐time work, part‐time work, self‐employment and inactivity. We employ a dynamic multi‐state model which accounts for state dependence and different types of unobservables. Our model allows for both individual heterogeneity and labour‐state gravity as well

We analyse the welfare impact of greater wage flexibility in the presence of an occasionally binding zero lower bound (ZLB) constraint on the nominal interest rate. We show that the ZLB constraint generally amplifies the adverse effects of greater wage flexibility on welfare when the central bank follows a conventional Taylor rule. When demand shocks are the driving force, the ZLB implies that an increase

Using firm‐level data, this paper shows that the Portuguese financial crisis was a period of intensified productivity‐enhancing reallocation. Aggregate productivity gains, both in manufacturing and services, came from relatively higher contributions of entering and exiting firms and from reallocation of resources between surviving firms. At the micro level, the crisis reduced the probability of survival

Boys typically initiate delinquent behaviour during their teenage years, and many go on to be arrested. We show that engaging in delinquency and being arrested in youth are each associated with early school leaving. The effect of delinquency on school leaving is largely driven by crimes that produce a monetary return, and the increase in school leaving is greater when onset of these types of crime

We estimate state‐dependent government spending multipliers for the United States. We use a factor‐augmented interacted vector autoregression (FAIVAR) model. This allows us to capture the time‐varying monetary policy characteristics including the recent zero interest rate lower bound (ZLB) state, to account for the state of the business cycle and to address the limited information problem typically

We present a newly designed market experiment to study regulatory measures in markets with advice inspired by two recently developed theoretical models. In line with our predictions, our experimental markets create conflicts of interest and unsuitable advice biased towards high‐commission products. We examine whether two frequently discussed regulation measures – disclosure and fines for ex post unsuitable

Can an increase in uncertainty generate a fall in labour force participation? This paper supports an affirmative answer to this question. Using a structural vector autoregressive model, I show that: (i) a surge in uncertainty leads to a decrease in participation; (ii) uncertainty shocks account for a considerable proportion of participation fluctuations; and (iii) uncertainty shocks have in recent

This paper stresses the bimodality of the likelihood function of the Mixed causal–noncausal AutoRegressions (MAR), and it is shown that the bimodality issue becomes more salient as the causal root approaches unity from below. The consequences are important as the roots of the local maxima are typically interchanged, attributing the noncausal component to the causal one and vice‐versa. This severely

We consider the popular ‘bounds test’ for the existence of a level relationship in conditional equilibrium correction models. By estimating response surface models based on about 95 billion simulated F‐statistics and 57 billion t‐statistics, we improve upon and substantially extend the set of available critical values, covering the full range of possible sample sizes and lag orders, and allowing for

This paper examines whether and to what extent markups can influence structural transformation in a developing country by creating entry barriers. We exploit information from the Ethiopian annual census of manufacturing establishments to estimate markups and their dispersion at industry and woreda‐industry‐wide levels. We then analyse the relationship between markup dispersion and firm entry rates

This paper takes the locally collected price quotes used to construct the CPI index in the UK for the period 1996–2013 and explores the impact of the Great Recession (2008‐9) on the pricing behaviour of firms. We develop a time series framework which captures the link between macroeconomic variables and the behaviour of prices in terms of the frequency of price change, the dispersion of price levels

Studies of childhood development have suggested human capital is accumulated in complex and nonlinear ways. Nonetheless, empirical analyses of this process often impose a linear functional form. This paper investigates which technology assumptions matter in quantitative models of human capital production. I propose a general‐to‐restricted procedure to test the production technology, placing constraints

Using a longitudinal dataset built merging administrative and survey data, we contribute to the literature on intergenerational inequality providing the first estimate of the intergenerational earnings elasticity (IGE) in Italy based on actual father–son pairs, taking into account issues related to measurement biases and comparing the size of the lifecycle bias when sons are selected by age or by potential

This study examines how a new billing process of the Thai Civil Servant Medical Benefit Scheme affects outpatient care utilization. Unlike policy changes considered in most existing studies, there is no change in cost‐sharing for the scheme considered here. Previously, the beneficiaries had to pay out of pocket and receive their reimbursement later. The new billing system allows hospitals to charge

We study the relationship between a patent‐based measure of knowledge spillovers that calculates technological proximity based on technologically relevant firms and innovation success. We find – for a representative sample of Swiss firms – that knowledge spillovers have a positive and significant association with the commercial success of innovative products. The paper shows the importance of market

We compare non‐blind teacher assessments with blind national test scores in maths to examine teacher‐test score disparities by children's height and weight. Relative to test scores, shorter and heavier children are rated less favourably by teachers. This teacher‐test score discrepancy cannot be explained by the child's behaviours, motivation to learn or cognitive ability. Unobserved student fixed effects

This paper analyses the effects of unemployment insurance benefits on unemployment exits and subsequent labour market outcomes. We exploit a piecewise linear relationship between the previous wage and benefits in Finland to identify the causal effects of the benefit level by using a regression kink design. Although we only find weak evidence of an effect on the time to the next job, higher benefits

Zero‐inflated ordered probit (ZIOP ) and middle‐inflated ordered probit (MIOP ) models are finding increasing favour in the discrete choice literature. We propose generalizations to these models – which collapse to their ZIOP /MIOP counterparts under a set of simple parameter restrictions – with respect to the inflation process. These generalizations form the basis of a new specification test of the

The logic of the ‘smile curve’ in the context of global value chains (GVCs) has been widely used in case studies of individual firms, but rarely identified at the country‐industry level by using real data. This paper puts forward a proposal, based on an inter‐country input–output model, to consistently measure both the gain of value added and the position of countries and industries when they join

Copulas are distributions with uniform marginals. Non‐parametric copula estimates may violate the uniformity condition in finite samples. We look at whether it is possible to obtain valid piecewise linear copula densities by triangulation. The copula property imposes strict constraints on design points, making an equi‐spaced grid a natural starting point. However, the mixed‐integer nature of the problem

Most analyses linking task content of jobs to income inequality focus on the effects between occupations, e.g. the growing dispersion between lousy and lovely jobs. The theory, meanwhile, provides insights on links between task content of jobs and inequality also within occupations: models predict compression of wages in more routine jobs, that is those where capital is a direct substitute for labour

We evaluate the usefulness of satellite‐based data on night‐time lights for forecasting GDP growth across a global sample of countries, proposing innovative location‐based indicators to extract new predictive information from the lights data. Our findings are generally favourable to the use of night lights data to improve the accuracy of model‐based forecasts. We also find a substantial degree of heterogeneity

The importance of apprenticeships for early labour market transitions varies across countries and over time. In recent times, there has been a policy drive to increase the number of people undertaking apprenticeships in England. This is regarded as important for addressing poor productivity. We investigate whether there is a positive return to undertaking an apprenticeship for young people. We use

What happens to crime after an increase in income inequality? The microeconomics literature that attempts to answer this question often employs identification strategies that exploit external sources of variation that provide quasi‐experiments to identify causal effects. In contrast, this paper tackles this question by using structural vector autoregressions (SVAR), a methodology typically employed

The canonical approach to analyse the poverty impact of growth is based on the comparison of poverty before and after growth. Measurement tools endorsing this approach fail to capture the different experiences of poverty dynamic in the population: there can be groups of the population made poorer or non‐poor made poor by growth. We propose an approach that allows measuring this individual poverty incidence

This paper investigates the economic consequences of workplace accidents in the British labour market. For the empirical analysis, I use data on employment and earnings from the British Household Panel Survey and exploit fixed effects estimators to control for time‐invariant unobserved workers’ characteristics. I provide evidence that accidents at work negatively affect both job opportunities and workers’

Network formation is often characterized by homophily, i.e. the tendency of agents to connect with others who have similar attributes. However, while most agents are homophilous, others could be heterophilous; they aim to create ties with dissimilar agents. This study provides empirical evidence supporting this hypothesis by applying a random coefficient approach to data on the information‐sharing

This paper considers the effect of a continuous treatment on the entire distribution of outcomes after adjusting for differences in the distribution of covariates across different levels of the treatment. Our methodology encompasses dose‐response functions, counterfactual distributions, and ‘distributional policy effects’ depending on the assumptions invoked by the researcher. We propose a three‐step

This paper examines the effect of inheritances on labour supply, distinguishing between unanticipated and anticipated inheritances. We use household and individual level micro‐data for Germany to investigate the effect of inheritances on a number of labour market outcomes. Women are less likely to work full‐time after an inheritance and their desired and actual hours of work decrease by 1–2 per week

We examine the effect of domestic violence on child mortality using Demographic and Health Surveys from thirty‐two developing countries. We first examine conditional associations between violence faced by the mother and child mortality after controlling for observable confounders. Children of (ever) physically victimized mothers are 0.4, 0.7, and 1.0 pp more likely to die within thirty days, a year

The goal of this paper is to assess how the wage penalty for career interruptions by married women changed between the 1970s and the 1990s. We estimate the wage penalty for career interruptions using the work‐history model and PSID data. We use several approaches to control for various forms of endogeneity and selection bias. Our empirical results suggest that (i) the wage penalty for married women's

Tax‐benefit policies affect changes in household incomes through two main channels: discretionary policy changes and automatic stabilizers. We study their role in the EU countries in 2007–14 using an extended decomposition approach. Our results show that the two policy actions often reduced rather than increased inequality of net incomes, and so helped offset the inequality‐increasing impact of growing

We analyse the role played by data and specification choices as determinants of the size of the fiscal multipliers obtained using structural vector autoregressive models. The results, based on over twenty million fiscal multipliers estimated for European countries, indicate that many seemingly harmless modelling choices have a significant effect on the size and precision of fiscal multiplier estimates

We organize a real‐effort field experiment with varying piece rates to assess the impact of wages and social comparisons on productivity. In addition to analyzing how piece rates and social comparisons affect productivity during the ‘paid stage’ of the experiment, we also consider how they affect effort supply during a voluntary and unpaid follow‐up task. Our main results are that effort supply is

How are top earners affected by productivity shocks? We address this question using a unique longitudinal data set on the universe of professional football players in the Italian Serie A, representing 20% of top earners in Italy. We use traumatic injuries and adopt an IV strategy to provide causal estimates of the impact of productivity shocks on several labour market outcomes. We find that a 30‐day

This paper proposes a new procedure for estimating the number of structural changes in the persistence of a univariate time series. While the extant literature primarily assumes (regime‐wise) stationarity, our framework also allows the underlying stochastic process to switch between stationary [I(0)] and unit root regimes [I(1)]. We develop a sequential testing approach that maintains correct asymptotic

We characterize the response of U.S. real GDP to monetary policy shocks conditional on the level of private sector debt and the degree to which financial constraints are binding. To incorporate state‐dependent effects of monetary policy, we use the local projection framework. We find that although the amount of private sector debt potentially weakens the monetary policy transmission mechanism, policy

The paper contributes to the limited literature on job reallocation dynamics in Indian manufacturing. The study uses annual data from the Annual Survey of Industries (ASI) for the years 2000–01 to 2015–16. The study finds job reallocation in India to be quite high compared to flexible labour markets such as the United States and Canada. Gross job reallocation shows a rising trend over time, which is

This paper presents evidence on the macroeconomic adjustment of a resource‐rich country to a resource boom using the effects of Chinese industrialization on Australia from 1988 to 2016. An SVAR model is specified, incorporating a proxy for Chinese resource demand and commodity prices to identify the effects of commodity supply and demand shocks on the Australian macroeconomy. We develop a multivariate

Using a highly comprehensive new data set on Swedish researchers, we investigate the effects of inter‐university mobility on researcher productivity. Our study suggests substantial gains from mobility on scientific output. The empirical analysis addresses selection using inverse probability treatment censoring weights. We find that mobility induces a long‐lasting increase in a researcher's publications

Liquidity constraints prompt the unemployed to intensify their job search, but does that produce better labour market outcomes? Using longitudinal Australian data, we test the effect of objective proxy indicators of liquidity constraints on job search and concomitant labour market outcomes. We find that liquidity constraints, specifically their severe form ‘hardship’, intensify job search without improving

Women's increasing participation in the labor force since the 1950s demands that knowledge about their labor supply needs to keep pace with the changing world. One important change has occurred among mothers of small children, they are increasingly working for pay in successive generations, as the break in their employment has become increasingly shorter. Legislation was enacted in the UK to outlaw