Ülo Ennuste Economics

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Interesting macro from CEPR


Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt Zheng Michael Song
Kjetil Storesletten
Fabrizio Zilibotti
IM DP8738 PDF www.cepr.org/DP8738

Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework Michael Zschille IO DP8737 PDF www.cepr.org/DP8737

Taxing Women: A Macroeconomic Analysis Nezih Guner
Remzi Kaygusuz
Gustavo Ventura
IM
PP
DP8735 PDF www.cepr.org/DP8735

Women Empowerment and Economic Development Esther Duflo DE DP8734 PDF www.cepr.org/DP8734

Premise-Based versus Outcome-Based Information Aggregation Geoffroy de Clippel
Kfir Eliaz
IO DP8733 PDF www.cepr.org/DP8733

Network Cognition Roberta Dessí
Edoardo Gallo
Sanjeev Goyal
IO DP8732 PDF www.cepr.org/DP8732

Innovation, Spillovers and Venture Capital Contracts Roberta Dessí IO DP8731 PDF www.cepr.org/DP8731

Consumer Arbitrage Across a Porous Border Ambarish Chandra
Keith Head
Mariano Tappata
IM
IT
DP8730 PDF www.cepr.org/DP8730

A Theory of Income Smoothing When Insiders Know More Than Outsiders Viral V. Acharya
Bart Lambrecht
FE DP8729 PDF www.cepr.org/DP8729

Institutions and Business Cycles Sumru G. Altug
Mustafa Emin
Bilin Neyapti
IM DP8728 PDF www.cepr.org/DP8728

Is the Financial Safety Net a Barrier to Cross-Border Banking? Ata Can Bertay
Asli Demirguc-Kunt
Harry Huizinga
PP DP8712 PDF www.cepr.org/DP8712

Summary of Discussion Papers uploaded to our web site week ending 01/01/2012 (for details see below).
This email lists all the CEPR Discussion Papers uploaded to www.cepr.org in the last week. Clicking on the Discussion Paper number in the list below will take you to the abstract page for that paper and clicking on the PDF link will take you directly to the paper itself if you are a Corporate Member of CEPR, a CEPR Research Fellow or Affiliate or a subscriber to CEPR Discussion Papers.
Journalists are entitled to free access on request; if you have not yet registered, please contact pressoffice@cepr.org.

DP8738 Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8738.asp

Author(s): Zheng Michael Song, Kjetil Storesletten, Fabrizio ZilibottiDate of Publication: January 2012

Programme Area(s): IM

Keyword(s): Fiscal discipline, Fiscal policy, General equilibrium, Government debt, High debt in Greece and Italy, Intergenerational conflict, Markov equilibrium, Political economy, Public goods, Repeated voting

Abstract: This paper proposes a dynamic politico-economic theory of fiscal policy in a world comprising a set of small open economies, whose driving force is the intergenerational conflict over debt, taxes, and public goods. Subsequent generations of voters choose fiscal policy through repeated elections. The presence of young voters induces fiscal discipline, i.e., low taxes and low debt accumulation. The paper characterizes the Markov-perfect equilibrium of the voting game in each economy, as well as the stationary equilibrium debt distribution and interest rate of the world economy. The equilibrium can reproduce some salient features of fiscal policy in modern economies.

PDF: This paper is available for download in electronic (PDF) format.


DP8737 Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8737.asp

Author(s): Michael ZschilleDate of Publication: January 2012

Programme Area(s): IO

Keyword(s): water supply, horizontal integration, data envelopment analysis, conditional efficiency, nonparametic estimation

Abstract: The German potable water supply industry is regarded as being highly fragmented, thus inhibiting high potentials for efficiency improvements through consolidation. Focusing on a hypothetical restructuring of the industry, we apply Data Envelopment Analysis (DEA) to analyze the potential efficiency gains from mergers between water utilities at the county level. A conditional efficiency framework is used to account for the operating environment. Highest efficiency improvement potentials turn out to result from reducing individual inefficiencies. The majority of the 84 merger cases is characterized by merger gains, which are decomposed into a technical efficiency effect, a harmony effect and a scale effect. The results suggest to improve incentives for efficient operations in water supply and a consolidation of the industry structure.

PDF: This paper is available for download in electronic (PDF) format.


DP8735 Taxing Women: A Macroeconomic Analysis

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8735.asp

Author(s): Nezih Guner, Remzi Kaygusuz, Gustavo VenturaDate of Publication: January 2012

Programme Area(s): IM, PP

Keyword(s): Labour Force Participation, Taxation, Two-earner Households

Abstract: Based on well-known evidence on labor supply elasticities, several authors have concluded that women should be taxed at lower rates than men. We evaluate the quantitative implications and merits of this proposition. Relative to the current system of taxation, setting a proportional tax rate on married females equal to 4% (8%) increases output and married female labor force participation by about 3.9% (3.4%) and 6.9% (4.0%), respectively. Gender-based taxes improve welfare and are preferred by a majority of households. Nevertheless, welfare gains are higher when the U.S. tax system is replaced by a proportional, gender-neutral income tax.

PDF: This paper is available for download in electronic (PDF) format.


DP8734 Women Empowerment and Economic Development

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8734.asp

Author(s): Esther DufloDate of Publication: January 2012

Programme Area(s): DE

Keyword(s): gender equality, women’s empowerment

Abstract: Women empowerment and economic development are closely related: in one direction, development alone can play a major role in driving down inequality between men and women; in the other direction, empowering women may benefit development. Does this imply that pushing just one of these two levers would set a virtuous circle in motion? This paper reviews the literature on both sides of the empowerment-development nexus, and argues that the interrelationships are probably too weak to be self-sustaining, and that continuous policy commitment to equality for its own sake may be needed to bring about equality between men and women.

PDF: This paper is available for download in electronic (PDF) format.


DP8733 Premise-Based versus Outcome-Based Information Aggregation

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8733.asp

Author(s): Geoffroy de Clippel, Kfir EliazDate of Publication: January 2012

Programme Area(s): IO

Keyword(s): Common Interest, Discursive Dilemma, Doctrinal Paradox, Information Aggregation, Voting

Abstract: A group of rational individuals with common interest need to select one of two outcomes. The optimal decision depends on whether certain premises or pieces of evidence are established as being true, and each member receives a noisy signal of the truth value of the relevant premises. Should the group reach a decision by voting whether each premise is true or false, or should they simply vote on the outcome? We show that for any finite number of individuals, the premise-based voting rule is more efficient in aggregating information than the outcome-based rule. However, generically, the gain from using the premise-based over the outcome-based rule can only be marginal when numerous individuals express independent opinions. Indeed, the outcome-based game is almost always asymptotically efficient.

PDF: This paper is available for download in electronic (PDF) format.


DP8732 Network Cognition

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8732.asp

Author(s): Roberta Dessí, Edoardo Gallo, Sanjeev GoyalDate of Publication: January 2012

Programme Area(s): IO

Keyword(s): cognition, social networks

Abstract: We study individual ability to memorize and recall information about friendship networks using a combination of experiments and survey-based data. In the experiment subjects are shown a network, in which their location is exogenously assigned, and they are then asked questions about the network after it disappears. We find that subjects exhibit two main cognitive biases: (i) they underestimate the mean degree compared to the actual network and (ii) they underestimate (overestimate) the number of frequent (rare) degrees. We then analyze survey data from two ‘real’ friendship networks from a Silicon Valley firm and from a University Research Center. We find, somewhat remarkably, that individuals in these real networks also exhibit these biases. The experiments yield three further findings: (iii) network cognition is affected by the subject’s location, (iv) the accuracy of network cognition varies with the nature of the network, and (v) limitations in network cognition have payoff implications.

PDF: This paper is available for download in electronic (PDF) format.


DP8731 Innovation, Spillovers and Venture Capital Contracts

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8731.asp

Author(s): Roberta DessíDate of Publication: January 2012

Programme Area(s): IO

Keyword(s): innovation, spillovers, venture capital, incomplete contracts

Abstract: Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more ‘incomplete’. This paper explores the economic link between these observations. In the presence of significant spillovers, it becomes optimal for an innovative start-up and its financier to adopt contracts with fewer contingencies: these contracts maximize their ability to extract (part of) the surplus they generate through positive spillovers. This relaxes ex-ante financing constraints and makes it possible to induce higher innovative effort.

PDF: This paper is available for download in electronic (PDF) format.


DP8730 Consumer Arbitrage Across a Porous Border

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8730.asp

Author(s): Ambarish Chandra, Keith Head, Mariano TappataDate of Publication: January 2012

Programme Area(s): IM, IT

Keyword(s): market segmentation, travel costs, cross-border travel, real exchange rate

Abstract: National borders, including the easily crossed US-Canada border, have been shown to separate markets and sustain price differences. The resulting arbitrage opportunities vary temporally with the exchange rate and cross-sectionally with travelers’ distance to the border. We estimate a structural model of the border crossing decision using data on the location of Canadian crossers and their date of travel. Price differences motivate cross-border travel; a 10% exchange rate appreciation raises the average crosser’s welfare by 2.1%. Distance strongly inhibits crossings, with an implied cost of $0.9 per mile. These costs prevent consumers from fully arbitraging price differences, leading to partial segmentation.

PDF: This paper is available for download in electronic (PDF) format.


DP8729 A Theory of Income Smoothing When Insiders Know More Than Outsiders

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8729.asp

Author(s): Viral V. Acharya, Bart LambrechtDate of Publication: January 2012

Programme Area(s): FE

Keyword(s): payout policy, asymmetric information, under-investment, accounting quality, measurement error

Abstract: We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders’ expectations based on publicly available information rather than true income, resulting in an observed income and payout process that adjust partially and over time towards a target. Insiders under-invest in production and effort so as not to unduly raise outsiders’ expectations about future income, a problem that is more severe the smaller is the inside ownership and results in an ‘outside equity Laffer curve’. A disclosure environment with adequate quality of independent auditing mitigates the problem, implying that accounting quality can enhance investments, size of public stock markets and economic growth.

PDF: This paper is available for download in electronic (PDF) format.


DP8728 Institutions and Business Cycles

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8728.asp

Author(s): Sumru G. Altug, Mustafa Emin, Bilin NeyaptiDate of Publication: January 2012

Programme Area(s): IM

Keyword(s): institutions, business cycles, synchronization, nonparametric analysis

Abstract: This paper investigates the relationship between the main features of business cycles and the institutional and structural characteristics of countries of up to 62 industrial, emerging and formerly centrally planned economies from all continents. We derive the business cycle characteristics using the nonparametric Harding-Pagan approach. Our analysis reveals that institutional factors have significant associations with the duration and amplitude of business cycles. Examining the determinants of business cycle synchronization for the countries in our sample, we also demonstrate that the bilateral proximity of institutional and policy environments matters in addition to the gravity arguments, trade intensity and bilateral financial linkages used in earlier studies.

PDF: This paper is available for download in electronic (PDF) format.


DP8712 Is the Financial Safety Net a Barrier to Cross-Border Banking?

URLhttp://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8712.asp

Author(s): Ata Can Bertay, Asli Demirguc-Kunt, Harry HuizingaDate of Publication: December 2011

Programme Area(s): PP

Keyword(s): Bank bailouts, Cross-border banking, International burden sharing

Abstract: A bank’s interest expenses are found to increase with its degree of internationalization as proxied by its share of foreign liabilities in total liabilities or a Herfindahl index of international liability concentration, especially if the bank is performing badly. Our benchmark estimation suggests that an international bank’s cost of funds raised through a foreign subsidiary is between 1.5% and 2.4% higher than the cost of funds for a purely domestic bank, which is a sizeable difference given an overall mean cost of funds of 3.3%. These results are consistent with limited incentives for national authorities to bail out an international bank, but also with an international bank recovery and resolution process that is inefficient. In any event, the operation of the financial safety net appears to be a barrier to cross-border banking.

PDF: This paper is available for download in electronic (PDF) format.


Total Papers listed: 11

Samantha Eyler Reid
CEPR/VoxEU.org
Press and Publications Assistant
3rd floor, 77 Bastwick Street
London EC1V 3PZ
+44 (0) 207 183 8810
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January 3, 2012 - Posted by | Uncategorized

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