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  • English
    Authors: 
    Lu, Yue; Deng, Lijing; Tang, Yao;
    Country: Germany

    Exploiting a change in policy governing the entry of foreign direct investment (FDI) in 2002, we apply the difference-in-differences model to estimate the effect of FDI on the product scope of domestic Chinese firms. In industries that experienced relaxation in FDI regulations, the average product scope increased by 5% which indicates a rise in product innovation. FDI's spillovers along vertical linkages are also important, as we find that the product scope of firms is positively affected by FDI in upstream industries, but negatively affected by FDI in downstream industries. Further analysis shows that the negative effect of FDI in downstream industries is mainly concentrated in industries with a high level of processing trade, as firms in those industries rely more on imported inputs and have less contact with domestic suppliers. The main channels of effect are firm-level R&D and industry-level technological distance, as the entry of FDI leads to an improvement in these variables. Positive effects are found in medium- and low-tech industries but not in high-tech industries, indicating that indigenous effort is important for product innovation in high-tech industries.

  • English
    Authors: 
    Medina-Cabrera, Arturo; Ortiz-Arango, Francisco; Venegas-Martínez, Francisco;
    Country: Germany

    This papers aims at examining the importance of adopting energy democracy and energy justice principles in carrying out energy projects in Mexico. These concepts have gained international relevance in recent years due to the climate change and the energy transition; however, they have not been adopted to evaluate the feasibility of Mexico’s energy projects. In this context, this research analyzes the Eurus wind farm in the state of Oaxaca, which was recognized for complying with Mexican regulations and paying particular attention to environmental and social impacts, as well as governance issues; even it has gained international recognition. Nonetheless, from its construction to its current operation it has had conflicts with the communities. The main findings are that when analyzing this project under the crucible of energy democracy and energy justice, we found several negative impacts and deficiencies in its development, the reason being the absence of these principles when evaluating this energy project.

  • English
    Authors: 
    Li, Chenxing; Maheu, John M; Yang, Qiao;
    Country: Germany

    This paper extends the Bayesian semiparametric stochastic volatility (SV-DPM) model of Jensen and Maheu (2010). Instead of using a Dirichlet process mixture (DPM) to model return innovations, we use an infinite hidden Markov model (IHMM). This allows for time variation in the return density beyond that attributed to parametric latent volatility. The new model nests several special cases as well as the SV-DPM. We also discuss posterior and predictive density simulation methods for the model. Applied to equity returns, foreign exchange rates, oil price growth and industrial production growth, the new model improves density forecasts, compared to the SV-DPM, a stochastic volatility with Student-t innovations and other fat-tailed volatility models.

  • English
    Authors: 
    Vergara-Pérez, Sami D.; Venegas-Martínez, Francisco;
    Country: Germany

    ABSTRACT: Empirical evidence for Mexico suggests that markets are not always perfect and complete since there are nominal rigidities and the public sector does not always displace the private sector. For this reason, a Dynamic Stochastic General Equilibrium (DSGE) model is used with the following assumptions: 1) monopolistic competition in the goods and labor markets, 2) non-Ricardian consumers, 3) rigid prices and wages, and 5) the role of government in the economy is driven by fiscal and monetary policy rules. We develop a system of nonlinear equilibrium equations to obtain the steady state of the economy through a linear approximation to the long-term trend. From the reduced form solution of the linear structural model, the corresponding state space system is formulated to evaluate the likelihood function associated with the Kalman filter. Once the prior distribution of the structural parameters is provided, the posterior distribution is obtained from Bayes' theorem. In this way, the Random Walk Metropolis-Hastings (RWMH) algorithm is implemented to obtain simulated samples in Markov chains from the posterior distribution. A statistical inference is made about the structural parameters. With the above, the theoretical model shows the insufficiency of aggregate demand, involuntary unemployment and the rejection of full compliance with Ricardian equivalence. We find empirical evidence in favor of price stability, the displacement effect of private spending due to the public deficit, and the non-neutrality of fiscal and monetary policies. Finally, we find evidence on the unsustainability of public debt for the Mexican economy. // RESUMEN: La evidencia empírica para México sugiere que los mercados no siempre son perfectos y completos ya que existen rigideces nominales y el sector público no siempre desplaza al sector privado. Por esta razón, se utiliza un modelo de Equilibrio General Estocástico Dinámico (EGED) con los siguientes supuestos: 1) competencia monopolística en los mercados de bienes y de trabajo, 2) consumidores no Ricardianos, 3) precios y salarios rígidos, y 5) el papel del gobierno en la economía está impulsada por las reglas de política fiscal y monetaria. Desarrollamos un sistema de ecuaciones de equilibrio no lineal para obtener el estado estacionario de la economía mediante una aproximación lineal a la tendencia de largo plazo. A partir de la solución en forma reducida del modelo estructural lineal, se formula el correspondiente sistema de espacio de estados para evaluar la función de verosimilitud asociada al filtro de Kalman. Una vez proporcionada la distribución previa de los parámetros estructurales, se obtiene la distribución posterior a partir del teorema de Bayes. De esta forma, se implementa el algoritmo Random Walk Metropolis-Hastings (RWMH) para obtener muestras simuladas en cadenas de Markov a partir de la distribución posterior. Se hace una inferencia estadística sobre los parámetros estructurales. Con lo anterior, el modelo teórico muestra la insuficiencia de la demanda agregada, el desempleo involuntario y el rechazo al pleno cumplimiento de la equivalencia Ricardiana. Encontramos evidencia empírica a favor de la estabilidad de precios, el efecto desplazamiento del gasto privado por el déficit público y la no neutralidad de las políticas fiscal y monetaria. Finalmente, encontramos evidencia sobre la insostenibilidad de la deuda pública para la economía mexicana.

  • English
    Authors: 
    Popov, Vladimir;
    Country: Germany

    Even before the war in Ukraine of 2022 and even before the ‘Russian-hackers-undermine-US-democracy’ campaign of 2016, Russian-American relations had degraded to a level not seen since the 1950s. Why? Today the US has fewer ideological disagreements with Russia than it had with the USSR during the Cold War. Nowadays Russia is a capitalist market economy and a more democratic country than the USSR. Also, Russia is much weaker than the USSR – the size of its population and territory, and economic and military potential are about 60 to 80 percent of that of the Soviet Union. Its influence simply cannot be compared to the global impact of the USSR. But today the rhetoric and the actions of the US towards Russia are much harsher than they were in the 1970s, in the era of détente. The case in point is 1968 Czechoslovakia crisis, when the USSR together with its Warsaw pact allies moved the troops into the heart of Europe, de facto replacing the old leadership of the country with a new pro-Soviet regime. Not only the West refrained from imposing sanction, it started the détente only 3 years later. But sanctions were imposed in 1980, right after the Soviet Union moved the troops into Afghanistan in 1979, and in 2014 after Crimea became part of Russia. Why the difference? It is argued that the US and Western policy towards USSR/Russia is driven by perceptions of the political class about the prospects of the strengthening/weakening of the regime. In the 1960s it was perceived that the role of the USSR will continue to rise in the world economy and international politics, so there was a need to find modus vivendi and rules of co-existence, which eventually resulted in détente. In the 1980s, however, and especially in the 2010s it was perceived that the USSR/Russia is not catching up with the West economically and is likely to be on the decline, not on the rise.

  • English
    Authors: 
    Guerrazzi, Marco;
    Country: Germany

    In this paper, I build on the Keynesian analysis of the market for goods to draw some implications on the behaviour of some typical labour market magnitudes. Specifically, without invoking the assumption of constant nominal wages but making instead the distinction between the aggregate expected demand function and the aggregate expenditure function, I discuss the implied "daily" adjustments of expected and actual real wages that allow to achieve a short-run equilibrium. In addition, I offer a microfoundation for equilibrium unemployment due to deficient demand grounded on modern searching-and-matching theory.

  • English
    Authors: 
    Padder, Altaf-Hussain; Bommayasamy, Mathavan;
    Country: Germany

    The present study aims to examine the structural transformation path across the broad economic sectors among the states of the Indian economy which is a key feature of economic development in the relevance of Simon Kuznets perspective. The movement of sectoral output is a crucial regularity of the data for this study, to examine whether the middle- and low-income states have a similar structural transformation path through which the high-income states have passed, and if not, what are the characteristics of the different paths being followed. Polynomial Regression Functions were applied to fit the association between the share of sectoral output and per-capita income. The present study identified that some middle- and low-income states are following a different path of structural transformation that deviate from those of high-income states and grow faster than high-income states in the process of structural transformation, and there is great heterogeneity within each state.

  • English
    Authors: 
    Akin, Zafer;
    Country: Germany

    This paper experimentally explores playing the victim behavior, how prevalent it is, its determinants, and potential mechanisms to mitigate it with a subject pool from two regions (UAE and North America). The possibility of playing the victim is introduced by letting some participants receive a negative shock to their initial endowments, after which they can apply for extra compensation even when they do not receive the shock. We find that the majority of participants play the victim. We then test whether defaults and signing an honesty oath influence this behavior. We find, contrary to intuitions, that the omission treatments, where lying is a default, failed to increase misrepresentation, and if anything decreased it, while the oath substantially reduced it as expected. Moreover, the extent of pro-sociality and perceived social norms are found to be strongly related to playing the victim behavior. The findings are very similar across regions. Our findings offer some insights to design better policies to support victims, especially during crises such as the Covid-19 pandemic.

  • English
    Authors: 
    Dumont, Michel;
    Country: Germany

    Belgium met its Europe 2020 target that Research and Development (R&D) expenditures should equal 3% of Gross Domestic Product. This report presents the results of an evaluation of the extent to which public support to business R&D has been instrumental in reaching this target, by stimulat-ing additional R&D expenditures of firms. Regional direct support (subsidies), and the federal par-tial exemption from payment of the withholding tax on the wages of R&D personnel, appear to en-courage firms to increase their investment in R&D activities, in addition to the amount of public support that they receive. By contrast, some incentives provided through corporate income taxation (CIT) seem to have no additionality effect or even result in the crowding out of firms’ own R&D ex-penditures. As the CIT incentives claim the lion’s share of the rapidly rising budgetary cost of public support to business R&D, the efficiency of tax incentives for R&D activities could be increased by introducing a cap on the total amount of public support that companies can receive, as suggested by the findings of a cross-country OECD study.

  • English
    Authors: 
    Kono, Tatsuhito; Tatano, Hirokazu; Ushiki, Kenji; Nakazono, Daisuke; Sugisawa, Fumihito;
    Country: Germany

    The construction of seawalls changes the risk of tsunami inundation and the locations of firms behind the seawalls. In order to estimate the benefits of seawalls and to design land use planning behind seawalls, it is necessary to know the impact of risk reduction on the location of firms. To capture such impacts, we estimate the effects of changes in tsunami inundation risk information on the number of firms behind the seawalls. The data is from Japanese areas with a high possibility of a tsunami. There are regional fixed effects by industry and spatial heterogeneities in risks due to the topographic conditions. We first rigorously derive a fixed-effects model in uncertain situations with expected profits of firms, and theoretically find that, unlike in situations of certainty, we should factor in the interaction between regional fixed effects and the change in risks besides the usual regional fixed effects. Our empirical estimation finds that awareness of a high inundation risk has a negative impact on industries with demand in a wide range of areas, such as manufacturing and wholesale, but no impact on industries with localized demand, such as education and clinics.

Advanced search in
Research products
arrow_drop_down
Searching FieldsTerms
Any field
arrow_drop_down
includes
arrow_drop_down
Include:
50,054 Research products, page 3 of 5,006
  • English
    Authors: 
    Lu, Yue; Deng, Lijing; Tang, Yao;
    Country: Germany

    Exploiting a change in policy governing the entry of foreign direct investment (FDI) in 2002, we apply the difference-in-differences model to estimate the effect of FDI on the product scope of domestic Chinese firms. In industries that experienced relaxation in FDI regulations, the average product scope increased by 5% which indicates a rise in product innovation. FDI's spillovers along vertical linkages are also important, as we find that the product scope of firms is positively affected by FDI in upstream industries, but negatively affected by FDI in downstream industries. Further analysis shows that the negative effect of FDI in downstream industries is mainly concentrated in industries with a high level of processing trade, as firms in those industries rely more on imported inputs and have less contact with domestic suppliers. The main channels of effect are firm-level R&D and industry-level technological distance, as the entry of FDI leads to an improvement in these variables. Positive effects are found in medium- and low-tech industries but not in high-tech industries, indicating that indigenous effort is important for product innovation in high-tech industries.

  • English
    Authors: 
    Medina-Cabrera, Arturo; Ortiz-Arango, Francisco; Venegas-Martínez, Francisco;
    Country: Germany

    This papers aims at examining the importance of adopting energy democracy and energy justice principles in carrying out energy projects in Mexico. These concepts have gained international relevance in recent years due to the climate change and the energy transition; however, they have not been adopted to evaluate the feasibility of Mexico’s energy projects. In this context, this research analyzes the Eurus wind farm in the state of Oaxaca, which was recognized for complying with Mexican regulations and paying particular attention to environmental and social impacts, as well as governance issues; even it has gained international recognition. Nonetheless, from its construction to its current operation it has had conflicts with the communities. The main findings are that when analyzing this project under the crucible of energy democracy and energy justice, we found several negative impacts and deficiencies in its development, the reason being the absence of these principles when evaluating this energy project.

  • English
    Authors: 
    Li, Chenxing; Maheu, John M; Yang, Qiao;
    Country: Germany

    This paper extends the Bayesian semiparametric stochastic volatility (SV-DPM) model of Jensen and Maheu (2010). Instead of using a Dirichlet process mixture (DPM) to model return innovations, we use an infinite hidden Markov model (IHMM). This allows for time variation in the return density beyond that attributed to parametric latent volatility. The new model nests several special cases as well as the SV-DPM. We also discuss posterior and predictive density simulation methods for the model. Applied to equity returns, foreign exchange rates, oil price growth and industrial production growth, the new model improves density forecasts, compared to the SV-DPM, a stochastic volatility with Student-t innovations and other fat-tailed volatility models.

  • English
    Authors: 
    Vergara-Pérez, Sami D.; Venegas-Martínez, Francisco;
    Country: Germany

    ABSTRACT: Empirical evidence for Mexico suggests that markets are not always perfect and complete since there are nominal rigidities and the public sector does not always displace the private sector. For this reason, a Dynamic Stochastic General Equilibrium (DSGE) model is used with the following assumptions: 1) monopolistic competition in the goods and labor markets, 2) non-Ricardian consumers, 3) rigid prices and wages, and 5) the role of government in the economy is driven by fiscal and monetary policy rules. We develop a system of nonlinear equilibrium equations to obtain the steady state of the economy through a linear approximation to the long-term trend. From the reduced form solution of the linear structural model, the corresponding state space system is formulated to evaluate the likelihood function associated with the Kalman filter. Once the prior distribution of the structural parameters is provided, the posterior distribution is obtained from Bayes' theorem. In this way, the Random Walk Metropolis-Hastings (RWMH) algorithm is implemented to obtain simulated samples in Markov chains from the posterior distribution. A statistical inference is made about the structural parameters. With the above, the theoretical model shows the insufficiency of aggregate demand, involuntary unemployment and the rejection of full compliance with Ricardian equivalence. We find empirical evidence in favor of price stability, the displacement effect of private spending due to the public deficit, and the non-neutrality of fiscal and monetary policies. Finally, we find evidence on the unsustainability of public debt for the Mexican economy. // RESUMEN: La evidencia empírica para México sugiere que los mercados no siempre son perfectos y completos ya que existen rigideces nominales y el sector público no siempre desplaza al sector privado. Por esta razón, se utiliza un modelo de Equilibrio General Estocástico Dinámico (EGED) con los siguientes supuestos: 1) competencia monopolística en los mercados de bienes y de trabajo, 2) consumidores no Ricardianos, 3) precios y salarios rígidos, y 5) el papel del gobierno en la economía está impulsada por las reglas de política fiscal y monetaria. Desarrollamos un sistema de ecuaciones de equilibrio no lineal para obtener el estado estacionario de la economía mediante una aproximación lineal a la tendencia de largo plazo. A partir de la solución en forma reducida del modelo estructural lineal, se formula el correspondiente sistema de espacio de estados para evaluar la función de verosimilitud asociada al filtro de Kalman. Una vez proporcionada la distribución previa de los parámetros estructurales, se obtiene la distribución posterior a partir del teorema de Bayes. De esta forma, se implementa el algoritmo Random Walk Metropolis-Hastings (RWMH) para obtener muestras simuladas en cadenas de Markov a partir de la distribución posterior. Se hace una inferencia estadística sobre los parámetros estructurales. Con lo anterior, el modelo teórico muestra la insuficiencia de la demanda agregada, el desempleo involuntario y el rechazo al pleno cumplimiento de la equivalencia Ricardiana. Encontramos evidencia empírica a favor de la estabilidad de precios, el efecto desplazamiento del gasto privado por el déficit público y la no neutralidad de las políticas fiscal y monetaria. Finalmente, encontramos evidencia sobre la insostenibilidad de la deuda pública para la economía mexicana.

  • English
    Authors: 
    Popov, Vladimir;
    Country: Germany

    Even before the war in Ukraine of 2022 and even before the ‘Russian-hackers-undermine-US-democracy’ campaign of 2016, Russian-American relations had degraded to a level not seen since the 1950s. Why? Today the US has fewer ideological disagreements with Russia than it had with the USSR during the Cold War. Nowadays Russia is a capitalist market economy and a more democratic country than the USSR. Also, Russia is much weaker than the USSR – the size of its population and territory, and economic and military potential are about 60 to 80 percent of that of the Soviet Union. Its influence simply cannot be compared to the global impact of the USSR. But today the rhetoric and the actions of the US towards Russia are much harsher than they were in the 1970s, in the era of détente. The case in point is 1968 Czechoslovakia crisis, when the USSR together with its Warsaw pact allies moved the troops into the heart of Europe, de facto replacing the old leadership of the country with a new pro-Soviet regime. Not only the West refrained from imposing sanction, it started the détente only 3 years later. But sanctions were imposed in 1980, right after the Soviet Union moved the troops into Afghanistan in 1979, and in 2014 after Crimea became part of Russia. Why the difference? It is argued that the US and Western policy towards USSR/Russia is driven by perceptions of the political class about the prospects of the strengthening/weakening of the regime. In the 1960s it was perceived that the role of the USSR will continue to rise in the world economy and international politics, so there was a need to find modus vivendi and rules of co-existence, which eventually resulted in détente. In the 1980s, however, and especially in the 2010s it was perceived that the USSR/Russia is not catching up with the West economically and is likely to be on the decline, not on the rise.

  • English
    Authors: 
    Guerrazzi, Marco;
    Country: Germany

    In this paper, I build on the Keynesian analysis of the market for goods to draw some implications on the behaviour of some typical labour market magnitudes. Specifically, without invoking the assumption of constant nominal wages but making instead the distinction between the aggregate expected demand function and the aggregate expenditure function, I discuss the implied "daily" adjustments of expected and actual real wages that allow to achieve a short-run equilibrium. In addition, I offer a microfoundation for equilibrium unemployment due to deficient demand grounded on modern searching-and-matching theory.

  • English
    Authors: 
    Padder, Altaf-Hussain; Bommayasamy, Mathavan;
    Country: Germany

    The present study aims to examine the structural transformation path across the broad economic sectors among the states of the Indian economy which is a key feature of economic development in the relevance of Simon Kuznets perspective. The movement of sectoral output is a crucial regularity of the data for this study, to examine whether the middle- and low-income states have a similar structural transformation path through which the high-income states have passed, and if not, what are the characteristics of the different paths being followed. Polynomial Regression Functions were applied to fit the association between the share of sectoral output and per-capita income. The present study identified that some middle- and low-income states are following a different path of structural transformation that deviate from those of high-income states and grow faster than high-income states in the process of structural transformation, and there is great heterogeneity within each state.

  • English
    Authors: 
    Akin, Zafer;
    Country: Germany

    This paper experimentally explores playing the victim behavior, how prevalent it is, its determinants, and potential mechanisms to mitigate it with a subject pool from two regions (UAE and North America). The possibility of playing the victim is introduced by letting some participants receive a negative shock to their initial endowments, after which they can apply for extra compensation even when they do not receive the shock. We find that the majority of participants play the victim. We then test whether defaults and signing an honesty oath influence this behavior. We find, contrary to intuitions, that the omission treatments, where lying is a default, failed to increase misrepresentation, and if anything decreased it, while the oath substantially reduced it as expected. Moreover, the extent of pro-sociality and perceived social norms are found to be strongly related to playing the victim behavior. The findings are very similar across regions. Our findings offer some insights to design better policies to support victims, especially during crises such as the Covid-19 pandemic.

  • English
    Authors: 
    Dumont, Michel;
    Country: Germany

    Belgium met its Europe 2020 target that Research and Development (R&D) expenditures should equal 3% of Gross Domestic Product. This report presents the results of an evaluation of the extent to which public support to business R&D has been instrumental in reaching this target, by stimulat-ing additional R&D expenditures of firms. Regional direct support (subsidies), and the federal par-tial exemption from payment of the withholding tax on the wages of R&D personnel, appear to en-courage firms to increase their investment in R&D activities, in addition to the amount of public support that they receive. By contrast, some incentives provided through corporate income taxation (CIT) seem to have no additionality effect or even result in the crowding out of firms’ own R&D ex-penditures. As the CIT incentives claim the lion’s share of the rapidly rising budgetary cost of public support to business R&D, the efficiency of tax incentives for R&D activities could be increased by introducing a cap on the total amount of public support that companies can receive, as suggested by the findings of a cross-country OECD study.

  • English
    Authors: 
    Kono, Tatsuhito; Tatano, Hirokazu; Ushiki, Kenji; Nakazono, Daisuke; Sugisawa, Fumihito;
    Country: Germany

    The construction of seawalls changes the risk of tsunami inundation and the locations of firms behind the seawalls. In order to estimate the benefits of seawalls and to design land use planning behind seawalls, it is necessary to know the impact of risk reduction on the location of firms. To capture such impacts, we estimate the effects of changes in tsunami inundation risk information on the number of firms behind the seawalls. The data is from Japanese areas with a high possibility of a tsunami. There are regional fixed effects by industry and spatial heterogeneities in risks due to the topographic conditions. We first rigorously derive a fixed-effects model in uncertain situations with expected profits of firms, and theoretically find that, unlike in situations of certainty, we should factor in the interaction between regional fixed effects and the change in risks besides the usual regional fixed effects. Our empirical estimation finds that awareness of a high inundation risk has a negative impact on industries with demand in a wide range of areas, such as manufacturing and wholesale, but no impact on industries with localized demand, such as education and clinics.

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