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Climate risk and the natural interest rate: An E-DSGE perspective Econ. Lett. (IF 1.469) Pub Date : 2024-04-18 Paul Levine, Victor Pontines
We examine the effect of climate-induced temporary extreme weather events on the natural real interest rate by incorporating environmental aspects into a Keynesian growth model. We find that environmental damage accentuates the reduction in the natural real interest rate caused by climate-induced temporary supply disruptions, and this effect is even more pronounced when the estimate of the current
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Increasing student access through aid: Differences in difference-in-differences estimates Econ. Lett. (IF 1.469) Pub Date : 2024-04-18 Nikolai Cook
Causal identification of a student aid program’s impact can be difficult as the best control group is often a small number of out-of-province students who likely differ from locals in unobservable ways. This paper evaluates the impacts of the 30% Off Ontario Tuition Grant using administrative data from the Ontario–Quebec border, where a number of students are subject to a different province’s unchanged
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Risk sensitive linear approximations Econ. Lett. (IF 1.469) Pub Date : 2024-04-16 Gustavo Solórzano Andrade, Juan Carlos Parra-Alvarez
We propose a linear approximation to the solution of DSGE models that is sensitive to the effects of risk. If variables remain close to the approximation point in expectation, a second-order Taylor expansion to the equilibrium conditions reduces to a fixed-point problem characterized by a system of linear equations that depends on the second-order moments of the variables. The latter can be solved
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Tax progressivity and income inequality in the US Econ. Lett. (IF 1.469) Pub Date : 2024-04-16 João Tovar Jalles, Georgios Karras
Using a novel data set on US tax progressivity constructed by Borella et al. (2023), we estimate its short- to medium-term dynamic effects on US income inequality since 1970. By means of local projections, we find that an increase in tax progressivity reduces the Gini index implying a reduction in income inequality. Our estimates suggest that the effect is gradual but sizeable, statistically significant
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Digital government and regional innovation Econ. Lett. (IF 1.469) Pub Date : 2024-04-16 Tian Gan, Yan Jiang, Xi Wu, Mingxin Zhang
This study examines the effect of digital government policies on regional innovation levels. The findings indicate that implementing a digital government policy significantly boosts the number of patent applications per capita. Digital government policies are particularly effective in regions with advanced marketization, robust intellectual property rights protection, superior network infrastructure
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Dividend Taxation and Financial Business Cycles Econ. Lett. (IF 1.469) Pub Date : 2024-04-15 Matteo F. Ghilardi, Roy Zilberman
We examine the interactions between different dividend tax systems and financial shocks in a dynamic stochastic general equilibrium (DSGE) model with an occasionally-binding investment credit limit. We show that dividend taxes largely determine the collateral value of assets, thereby occasionally distorting investment decisions and altering the propagation of financial shocks. Permanently lower dividend
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Information interruption and hedge fund performance: Evidence from lockdown Econ. Lett. (IF 1.469) Pub Date : 2024-04-15 Han Han, Zhibin Wang, Xueqing Zhao
This paper uses the COVID-19 outbreak as an exogenous shock to study the impact of information interruption on economic activities, particularly on hedge fund performance. Employing a difference-in-differences approach, we find that hedge funds preferring site visits experience a decline in performance and an increase in the failure risk during lockdowns. Additionally, we discover that physical interactions
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Pro-social mission and honesty – an artefactual field experiment with fundraising professionals Econ. Lett. (IF 1.469) Pub Date : 2024-04-13 Maximilian Hiller, Bernd Josef Leisen, Vanessa Mertins
Using priming, we explored how fundraisers’ professional identity influences their reporting behavior in a coin-toss game. While unprimed fundraisers exhibited a payoff-maximizing behavior, primed participants did not show this behavior.
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Tax incentives for key employees and corporate innovation Econ. Lett. (IF 1.469) Pub Date : 2024-04-12 Yongjian Huang, Zhaoyue Ren, Hongwei Zhang, Pengxiang Wen, Zhouyang Li
This study finds that tax incentives for key employees promote corporate innovation, especially in firms with lower employee compensation and firms that are less risk-taking. Furthermore, increased corporate human capital could be a channel through which innovation is advanced.
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An improper solution to the flood cost sharing problem Econ. Lett. (IF 1.469) Pub Date : 2024-04-12 David Müller, Marcus Franz Konrad Pisch
A model for sharing the costs of flood damage has recently been proposed in this journal (). The suggested model is correct from a mathematical point of view, but unfortunately lacks economic coherence.
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Optimal discounts in green public procurement Econ. Lett. (IF 1.469) Pub Date : 2024-04-12 Olga Chiappinelli, Gyula Seres
We provide an auction-theoretical analysis of Green Public Procurement (GPP) as a preferential program aimed at stimulating investment in green technologies. We find that GPP incentivizes more competitive firms to invest. We also show that GPP can be an optimal mechanism for a procurer who cares about minimizing the purchasing price while triggering green investment.
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Extreme temperatures and school performance of the poor: Evidence from Mexico Econ. Lett. (IF 1.469) Pub Date : 2024-04-11 Eva O. Arceo-Gomez, Alejandro López-Feldman
As the risks associated with climate change intensify, understanding its impacts on human capital development is crucial. In this paper, we analyze the causal effects of temperature on the academic performance of students in Mexico, a middle-income country facing significant climate risks and socioeconomic challenges. Using panel data on over 5.5 million students, our results show that a 1 °C increase
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Stress test precision and bank competition Econ. Lett. (IF 1.469) Pub Date : 2024-04-09 Diego Moreno, Tuomas Takalo
We study a banking sector in which banks choose their asset portfolios and, upon the public disclosure of stress test results, raise funding by promising investors a repayment. Competitive banks must gamble, choosing assets that are riskier the more precise is the stress test. Allocative efficiency, however, improves with precision. When risk taking is not too sensitive to the precision of information
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Financial literacy, uncertainty and costs of education Econ. Lett. (IF 1.469) Pub Date : 2024-04-09 Alessandro Bellocchi, Giuseppe Travaglini
This paper studies how uncertainty and costs of financial education affect spending on financial literacy. To explore the issue a dynamic stochastic model is employed. We show that the marginal value of financial literacy increases with market volatility, but is hampered by the cost of financial education. A solution is derived for the case of reversible investment. Reversibility increases the fundamental
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On the anatomy of cyberattacks Econ. Lett. (IF 1.469) Pub Date : 2024-04-09 Jin-Wook Chang, Kartik Jayachandran, Carlos A. Ramírez, Ali Tintera
Using detailed information on cyberattacks and establishments in the United States, we study whether and how an establishment’s characteristics can alter the likelihood of cyberattacks. We find that larger establishments and establishments of publicly traded companies are more likely targets.
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ESG disclosure and corporate cost stickiness: Evidence from supply-chain relationships Econ. Lett. (IF 1.469) Pub Date : 2024-04-06 Wei Jiang, Wenbin Yang
We investigate the effect of Environmental, social, and governance (ESG) disclosures by customer firms on suppliers’ cost stickiness in a supply-chain setting. Our findings indicate that ESG disclosures can mitigate suppliers' cost stickiness, mainly due to reduced optimistic expectations from suppliers' management. Further analysis reveals that the negative relationship intensifies with increased
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Estimating conditional average treatment effects with heteroscedasticity by model averaging and matching Econ. Lett. (IF 1.469) Pub Date : 2024-04-06 Pengfei Shi, Xinyu Zhang, Wei Zhong
We propose a model averaging approach, combined with a partition and matching method to estimate the conditional average treatment effects under heteroskedastic error settings. The proposed approach has asymptotic optimality and consistency of weights and estimator. Numerical studies show that our method has good finite-sample performances.
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Operational decisions of public firms and feedback mechanism from stock market Econ. Lett. (IF 1.469) Pub Date : 2024-04-05 Xiaohong Huang, Yue Xu, Jian Ni
We investigate the operational strategy of a public firm under feedback effect. We find that the manager who learns useful information from stock market will expand firm production in average. But the average selling price can remain unchanged, leading to the improved firm profitability due to managerial learning.
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What I say depends on how you ask: Experimental evidence of the effect of framing on the measurement of attitudes Econ. Lett. (IF 1.469) Pub Date : 2024-04-04 Jeffrey R. Bloem, Khandker Wahedur Rahman
We use a survey experiment to document the presence of framing effects in the measurement of attitudes. Next, using standard techniques for generating aggregate indices, we find that statement framing can meaningfully influence the relationship of the index with relevant covariates—in some cases changing the magnitude, statistical significance, and even the sign of the estimated relationship. We conclude
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New characterizations of the Shapley value using weak differential marginalities Econ. Lett. (IF 1.469) Pub Date : 2024-04-03 Erfang Shan, Zeguang Cui, Bingxin Yu
The principle of differential marginality for cooperative games states that the payoff differential of two players does not change whenever their productivity differential, measured by the differentials of their marginal contributions to coalitions containing neither of them, does not change. The hypothesis of differential marginality is satisfied if and only if the two players are symmetric in the
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Spending response to cash transfers to shield households from inflation: Evidence from bank accounts Econ. Lett. (IF 1.469) Pub Date : 2024-04-01 Oriol Aspachs, Alberto Graziano, Josep Mestres, Jose G. Montalvo, Marta Reynal-Querol
We use daily data from a large Spanish financial institution to analyze the spending responses to a one-off cash transfer to mitigate the impact of the surge in inflation during the 2022–2023 period. Using a staggered difference-in-differences estimator robust to treatment effect heterogeneity, we find that most of the expenditure is concentrated around the date of the transfer and that the average
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Normative conflict and the gender gap in cooperation Econ. Lett. (IF 1.469) Pub Date : 2024-04-01 Nikos Nikiforakis, Ernesto Reuben, Robert Stüber
A normative conflict arises when individuals derive different benefits from cooperation. We analyze experimental data from three published studies to investigate the impact of normative conflict on the cooperative behavior of men and women. We find that women exhibit significantly lower levels of cooperation in the presence of normative conflict. We observe no significant gender differences in cooperation
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Occupational switching during the second industrial revolution Econ. Lett. (IF 1.469) Pub Date : 2024-04-01 Bart Hobijn, Robert S. Kaplan
During the Second Industrial Revolution, in the late nineteenth century, the proliferation of automation technologies coincided with substantial job creation but also a “hollowing out” of middle-skilled job opportunities, which historically offered reliable paths to prosperity. We use recently linked U.S. census data to document three main facts: () declining demand for middle-skilled labor in manufacturing
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From the pandemic to the pitch. Unraveling COVID-19′s effect on workers' performance Econ. Lett. (IF 1.469) Pub Date : 2024-03-30 Arturo J. Galindo, Jorge Tovar
There is a growing body of literature on the impact of COVID-19 on workers' performance upon recovery. This paper explores that question using granular data from professional athletes. Using a difference-in-difference estimation strategy and estimating an n-dimensional performance index, we find that performance drops upon recovery during the first thirty days after infection by 13,6%. Taking advantage
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Club convergence in the eurozone: A look at inequality dynamics Econ. Lett. (IF 1.469) Pub Date : 2024-03-30 Sofia Vale
This paper examines the convergence of eurozone countries’ inequality indicators between 1995 and 2020. The Phillips and Sul (2007, 2009) methodology is used to determine the existence of convergence clubs. Our findings show that eurozone countries follow a similar trajectory in terms of the income of the richest 1% of the population and are divided into two clusters based on other inequality indicators
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Health and retirement: Heterogeneity in the responsiveness to pension incentives Econ. Lett. (IF 1.469) Pub Date : 2024-03-30 De Fen Hsu, Melinda Morrill, Aditi Pathak
Workers often time retirement around pension eligibility, yielding a strong instrument for retirement timing. By estimating the characteristics of the complier population, we find heterogeneity by individual health status in the responsiveness to pension-related financial incentives to retire. Workers in poor health do not uniformly retire earlier or later, but rather are less responsive overall to
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Bertrand-Cournot profit reversal in a vertical structure with cross ownership Econ. Lett. (IF 1.469) Pub Date : 2024-03-29 Arijit Mukherjee, Leonard F.S. Wang, Ji Sun
We provide a new reason for Bertrand-Cournot profit reversal. In a two-tier industry with a profit-maximising input supplier and symmetric final good producers, we show that the profit reversal occurs under passive cross ownership among firms.
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Market-based oil spill(overs): Market reactions to the energy windfall tax announcements and disclosures in the United Kingdom Econ. Lett. (IF 1.469) Pub Date : 2024-03-27 Kristian D. Allee, Raffael Speitmann, Arthur Stenzel, Yuchen Wu
We investigate the market reaction to a windfall tax regulation announcement for oil and gas firms in the UK. We find that firms subject to the windfall tax experience a significant abnormal price effect of 6.0 to 7.3 %. The effect is concentrated among large and more profitable firms. The results also show that firms voluntarily disclose more precise information after the regulation to offset the
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Who benefits from covert evidence acquisition in principal–agent interactions? Econ. Lett. (IF 1.469) Pub Date : 2024-03-26 Kym Pram
In a principal–agent interaction, I characterize when the agent can benefit from the ability to covertly acquire hard evidence. The same condition determines whether the principal’s payoff is monotone or U-shaped in the cost of evidence acquisition. I derive implications for aggregate welfare.
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Did CIA interventions increase US arms exports? Evidence from the Cold War (1962–1989) Econ. Lett. (IF 1.469) Pub Date : 2024-03-24 Adelaide Baronchelli, Raul Caruso
This letter explores the impact of CIA interventions on US arms exports during the Cold War. Analyzing data from 1962 to 1989, our findings reveal three key insights: (i) CIA interventions significantly increase US exports of both small arms (SALW) and major conventional weapons (MCW) to intervened countries; (ii) The duration of CIA influence is also positively correlated with arms exports; (iii)
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Data analysis technology and inequality in capital costs Econ. Lett. (IF 1.469) Pub Date : 2024-03-24 Keyun Wang, Fengmin Xu, Shihao Wang, Benchu Li
This paper studies how data analysis technology impacts inequality in capital costs . We build a noisy rational expectations model with data budget, data supply, and the heterogeneous marginal value of firms’ data. We find that the growth in data analysis technology exacerbates by crowding out investors’ attention on the firm with a low marginal value of its data. The widening gap in the marginal value
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Non-tariff measures vs. tariffs: A fresh look at the evidence Econ. Lett. (IF 1.469) Pub Date : 2024-03-23 David J. Kuenzel
This paper examines the relationship between tariffs and the usage of non-tariff measures (NTMs) for a product-level global panel of 97 countries over the period 1996–2020. Using the most comprehensive NTM data set to date, I find that tariff levels or changes therein are of little relevance for implementing NTMs. Instead, smaller tariff overhangs, the difference between WTO members’ bound and applied
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De-dollarization? Not so fast Econ. Lett. (IF 1.469) Pub Date : 2024-03-22 Felix Gerding, Jonathan S. Hartley
De-dollarization refers to the reduction of the reliance of foreign countries on the US dollar. This phenomenon generates concern about the U.S. dollar as a global currency. We construct new data on the currency denomination of central bank currency reserves, foreign exchange transaction volume, denomination of global debt securities, and the invoicing of trade. This paper presents empirical evidence
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Double markups under bilateral vertical contracting Econ. Lett. (IF 1.469) Pub Date : 2024-03-21 Xiao Fu, Guofu Tan
This paper examines price markups at the upstream and downstream levels of a bilateral vertical structure in which firms provide essential inputs to one another and engage in price competition in the downstream market. We show that the ratios of noncooperative equilibrium markups are primarily determined by the price elasticities of demand and the retail pass-through rates and, moreover, that coordination
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Asymmetric conflict games with an extremist Econ. Lett. (IF 1.469) Pub Date : 2024-03-21 Youngseok Park, Colin Campbell
This paper extends the conflict game of Baliga and Sjöström (2012) by allowing for an asymmetry between players. We demonstrate that (i) a player with a greater net gain from playing a hawkish action is more likely to play a hostile action and thereby the risk of war increases with it, and that (ii) an extremist cannot manipulate the conflict via cheap-talk message whenever the properties of actions
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Measuring labor market transitions with time series of cross sections Econ. Lett. (IF 1.469) Pub Date : 2024-03-21 Daniel Borowczyk-Martins, David Pacini
We consider the problem of measuring transition probabilities when panel data is not available and retrospective data is measured with error. We establish point-identification conditions of transition probabilities and propose a method to estimate them using time series of cross sections. We illustrate the application of our results using the European Union Labor Force Survey.
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Calculating the economic value of non-marginal mortality risk reductions Econ. Lett. (IF 1.469) Pub Date : 2024-03-21 Diego S. Cardoso, Ricardo Dahis
Benefit–cost analyses in public health typically calculate the benefits of mortality reduction interventions by multiplying the Value of a Statistical Life (VSL) and the expected decrease in fatalities. This procedure approximates the benefits of small mortality changes but is inaccurate for large risk changes because it holds constant the VSL—a marginal rate of substitution. Building on the theoretical
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Faster identification of faster Formula 1 drivers via time-rank duality Econ. Lett. (IF 1.469) Pub Date : 2024-03-21 John Fry, Tom Brighton, Silvio Fanzon
Two natural ways of modelling Formula 1 race outcomes are a probabilistic approach, based on the exponential distribution, and econometric modelling of the ranks. Both approaches lead to exactly soluble race-winning probabilities. Equating race-winning probabilities leads to a set of equivalent parametrisations. This time-rank duality is attractive theoretically and leads to quicker ways of dis-entangling
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Inequality reduction and cooperation: Injection of additional resources Econ. Lett. (IF 1.469) Pub Date : 2024-03-19 Abhijit Ramalingam, Brock V. Stoddard
We experimentally examine if reductions in inequality that do not lower the endowments of the rich raise contributions to public goods in formerly unequal groups. Even injections of additional resources directed to the poor fail to raise cooperation to levels observed in groups that were always equal and have fewer resources. Our results suggest that the poor mimic the unchanging selfish behaviour
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The impact of monetary policy shocks — Do not rule out central bank information effects or economic news Econ. Lett. (IF 1.469) Pub Date : 2024-03-19 Sebastian Laumer, Italo Morais Santos
This paper reassesses the impact of monetary policy and central bank information shocks while accounting for the influence of economic news. We regress a set of monetary policy surprises on a measure of economic news and incorporate these new instruments into an SVAR model. Furthermore, we distinguish between the two shocks via sign restrictions on the instruments’ impulse response functions. Our findings
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Phishing attacks: An analysis of the victims’ characteristics based on administrative data Econ. Lett. (IF 1.469) Pub Date : 2024-03-18 Alessandro Fedele, Mirco Tonin, Matteo Valerio
Using administrative data on phishing attacks targeting almost 150,000 Italian- and German-speaking customers of an Italian bank in 2022–23, we investigate how individual characteristics are associated to the likelihood of victimization. We find that younger customers and Italian speakers are more likely to be victims of phishing, while we find no differences in terms of gender or size of the place
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On algorithmic collusion and reward–punishment schemes Econ. Lett. (IF 1.469) Pub Date : 2024-03-18 Andréa Epivent, Xavier Lambin
A booming literature describes how artificial intelligence algorithms may autonomously learn to generate supra-competitive profits. The widespread interpretation of this phenomenon as “collusion” is based largely on the observation that one agent’s unilateral price cuts are followed by several periods of low prices and profits for both agents, which is construed as the signature of a reward–punishment
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Coup d'état in Africa and stock market returns: The case of French companies Econ. Lett. (IF 1.469) Pub Date : 2024-03-15 Whelsy Boungou, Praveen Gupta, Budi Wahyono
This article studies the impact of recent coups d'état in French-speaking Africa on the stock market performance of French companies. Using stock prices of 197 French companies over the period September 2020 to September 2023, our results highlight a negative impact of coups d'état on the stock market performance of French companies. We also observe the heterogeneity of these companies' reactions depending
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Corrigendum to “A general equilibrium model of investor sentiment” [Economics Letters 218 (2022) 110749] Econ. Lett. (IF 1.469) Pub Date : 2024-03-15 Giulio Bottazzi, Daniele Giachini
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Do climate-exposed firms hold more cash? Global evidence Econ. Lett. (IF 1.469) Pub Date : 2024-03-14 Rufei Ma, Xinxin Fu, Qiang Ji, Pengxiang Zhai
Using a novel global dataset covering firm-level climate change exposure, this paper observes that firms facing greater climate change exposure are significantly holding more cash. This finding is consistent after a series of robustness tests. We further document that more stringent climate policies and greater economic uncertainty amplify the effect of climate change on corporate cash holdings, and
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The interpretation of 2SLS with a continuous instrument: A weighted LATE representation Econ. Lett. (IF 1.469) Pub Date : 2024-03-14 Luis A.F. Alvarez, Rodrigo Toneto
This note introduces a novel weighted local average treatment effect representation for the two-stages least-squares (2SLS) estimand in the continuous instrument with binary treatment case. Under standard conditions, we obtain weights that are nonnegative, integrate to unity, and assign larger values to instrument support points that deviate from their average. Our representation does not require instruments
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Simultaneous bidding in competing auctions Econ. Lett. (IF 1.469) Pub Date : 2024-03-13 Roberto Burguet, József Sákovics
We provide the equilibrium strategies of sellers setting reserve prices in their auctions, when bidders can simultaneously participate in several auctions at a time.
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Condorcet-loser dominance between the plurality rule and other scoring rules Econ. Lett. (IF 1.469) Pub Date : 2024-03-13 Ryoga Doi, Noriaki Okamoto
In a voting model with three alternatives, we show that for any non-Borda scoring rule, there exists at least one preference profile under which the scoring rule selects a Condorcet loser, whereas the plurality rule does not.
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How export performance is mediated by innovation, owner characteristics, and location Econ. Lett. (IF 1.469) Pub Date : 2024-03-12 Luyi Han, Timothy R. Wojan, Zheng Tian, Stephan J. Goetz
We investigate how innovation affects rural nonfarm exports, and thus the U.S. trade deficit. Previous European studies indicate a positive link between R&D expenditures, patented innovation, and exports, but no comparable U.S. firm-level research exists. Using data from the Longitudinal Firm Trade Transactions Database and Annual Business Survey, we examine the relationship between innovation and
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Short-selling constraints and firm-level climate change exposure: Evidence from utility firms Econ. Lett. (IF 1.469) Pub Date : 2024-03-11 Wei Zhang
This study investigates the impact of short selling on firm-level climate change exposure in US utility firms during a period when short selling constraints were exogenously suspended. We find evidence that increasing short selling is associated with greater firm-level climate change exposure.
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Construction and analysis of uncertainty indices based on multilingual text representations Econ. Lett. (IF 1.469) Pub Date : 2024-03-11 Viktoriia Naboka-Krell
The work by Baker et al. (2016), who propose a dictionary based method and estimate the level of (EPU) based on the occurrence of specific terms in ten leading newspapers in the USA, is among the first ones to detect the potential of text data in economic research. Following this line of research, this paper proposes automated approaches to construction of EPU indices for different countries based
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Negative interest rate policy and banks' earnings management Econ. Lett. (IF 1.469) Pub Date : 2024-03-11 Whelsy Boungou, Francis Osei-Tutu, Daniel Taylor
Using bank-level data from 35 OECD countries over the period 2011–2018, we examine the impact of the introduction of negative interest rate policy on banks' earnings management. Overall, our findings underscore the unintended positive consequence of unconventional economic policy and austerity measures aimed at stimulating the economy on the earnings quality of banks.
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Hedging investment-grade and high-yield bonds with credit VIX Econ. Lett. (IF 1.469) Pub Date : 2024-03-11 Elie Bouri, Naif Alsagr
The existing literature lacks evidence of the ability of newly introduced credit VIXs to hedge investment-grade and high-yield corporate bond indices. A dynamic hedging analysis shows that credit VIX is an effective hedge for its corresponding bond index, but the hedging ability of high-yield credit VIX for high-yield bonds is more stable and effective than that of investment-grade credit VIX for investment-grade
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Pollution, severe health conditions, and extreme right-wing ideology: A tale of three contemporary challenges Econ. Lett. (IF 1.469) Pub Date : 2024-03-08 Morakinyo O. Adetutu, Simona Rasciute
By exploiting the microgeography of local air pollution at the 1km-by-1 km grid-level, we link local air quality to the voting intentions of a nationally-representative sample of 27,000 UK residents. We find a causal link between air pollution and support for far-right parties: a unit increase in pollution leads to a 3% rise in the probability to support these parties. These intentions are stronger
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Consumer sentiment: The influence of social media Econ. Lett. (IF 1.469) Pub Date : 2024-03-08 Zhengfa Zhang, Kevin Keasey, Costas Lambrinoudakis, Danilo V. Mascia
Since the late 1940s consumer sentiment has been used by policy makers, companies and investors as an indicator of economic mood. However, the rapid growth and spread of social media has changed the landscape of the consumer. By using a unique hand-collected dataset of more than 11 million influencers’ posts, we test whether consumer sentiment is related to social media influencer sentiment. We find
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Climate distance and bilateral trade Econ. Lett. (IF 1.469) Pub Date : 2024-03-08 Emilia Lamonaca, Martina Bozzola, Fabio Gaetano Santeramo
Climate conditions are sources of comparative advantages and may foster trading opportunities. Through a gravity-type approach we show that overtime variations in climate differences correlate with bilateral trade values. Intuitively, these differences may be associated with diverse productivity levels, a plausible channel through which climate distance affects trade.
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Top–down and bottom–up information acquisition: Application to financial markets Econ. Lett. (IF 1.469) Pub Date : 2024-03-08 Steve Heinke
Recent studies confirm the main prediction of the rational inattention framework that the perceived value of information (top–down) as a key driver of attention. However, these investigations also report stimulus-driven salience effects (bottom–up) that counteract the framework’s predictions. In this manuscript, I propose an extension to the standard rational inattention model by incorporating bottom–up
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Do supercycles dominate commodity price movements? Econ. Lett. (IF 1.469) Pub Date : 2024-03-06 John Baffes, Alain Kabundi
This study utilizes a frequency domain approach to decompose the prices of 21 primary commodities into transitory, supercycle, and permanent components from 1900 to 2022. The results reveal the presence of four heterogenous supercycles, with an average duration of 24 years. These cycles, however, contribute only modestly to price variability while the permanent component contributes the most. The paper
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Winter weather on exam dates and matriculation for a prestigious university in Japan Econ. Lett. (IF 1.469) Pub Date : 2024-03-06 Mizuhiro Suzuki
Whereas there are growing numbers of studies on how heat affects cognitive performance at high-stakes settings, the effect of cold weather has been less studied. To fill this gap, I analyze the effects of winter weather on exam dates on performance at the centralized exam for university admission in Japan. Since students take the exam in their own prefectures, they are exposed to different weather
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Two-sided asymmetric information and convertible securities in venture financing Econ. Lett. (IF 1.469) Pub Date : 2024-03-05 Shih-Chung Chang, Frank Yong Wang
This paper presents a new explanation for the prevalence of convertible securities in venture capital finance. Modeling two-sided asymmetric information between an entrepreneur and a venture capitalist, we demonstrate that convertible securities can result in the optimal contract. Our theoretical findings also provide some testable predictions. Specifically, the optimal conversion ratio rises when