Pub Date : 2026-01-28DOI: 10.1016/j.econlet.2026.112839
Don Bredin , Stilianos Fountas , Georgios Karras
We examine the impact of economic upturns and downturns on subsequent economic performance in Europe over six plus centuries. Instead of utilizing the conventional post-World War II framework, we employ a comprehensive panel of GDP data for England, Holland and Italy spanning more than 600 years. We find consistent evidence in favor of asymmetry. Downturns are followed by statistically significant higher growth rates, while upturns are followed by mildly lower growth rates which are often not statistically significant. Our finding of asymmetry suggests that business cycle properties are consistent with mechanisms similar to Friedman’s plucking hypothesis.
{"title":"European booms and busts over six centuries","authors":"Don Bredin , Stilianos Fountas , Georgios Karras","doi":"10.1016/j.econlet.2026.112839","DOIUrl":"10.1016/j.econlet.2026.112839","url":null,"abstract":"<div><div>We examine the impact of economic upturns and downturns on subsequent economic performance in Europe over six plus centuries. Instead of utilizing the conventional post-World War II framework, we employ a comprehensive panel of GDP data for England, Holland and Italy spanning more than 600 years. We find consistent evidence in favor of asymmetry. Downturns are followed by statistically significant higher growth rates, while upturns are followed by mildly lower growth rates which are often not statistically significant. Our finding of asymmetry suggests that business cycle properties are consistent with mechanisms similar to Friedman’s plucking hypothesis.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"261 ","pages":"Article 112839"},"PeriodicalIF":1.8,"publicationDate":"2026-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146077066","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-27DOI: 10.1016/j.econlet.2026.112838
Youquan Pei , Heng Peng , Chi Zhang
We propose a flexible and interpretable tree-based mixture model for heterogeneous mediation analysis, allowing both direct and indirect effects to vary across latent subgroups. Subgroup membership probabilities are modeled as functions of covariates using decision trees. An EM algorithm is developed to estimate subgroup-specific mediation effects and mixing proportions. Simulation studies demonstrate that the method accurately captures complex heterogeneity. Applied to the JOBS II experiment, our model uncovers distinct mediation pathways shaped by baseline depression and economic hardship, which are obscured under conventional homogeneous models.
{"title":"A tree-based mixture model for heterogeneous mediation analysis","authors":"Youquan Pei , Heng Peng , Chi Zhang","doi":"10.1016/j.econlet.2026.112838","DOIUrl":"10.1016/j.econlet.2026.112838","url":null,"abstract":"<div><div>We propose a flexible and interpretable tree-based mixture model for heterogeneous mediation analysis, allowing both direct and indirect effects to vary across latent subgroups. Subgroup membership probabilities are modeled as functions of covariates using decision trees. An EM algorithm is developed to estimate subgroup-specific mediation effects and mixing proportions. Simulation studies demonstrate that the method accurately captures complex heterogeneity. Applied to the JOBS II experiment, our model uncovers distinct mediation pathways shaped by baseline depression and economic hardship, which are obscured under conventional homogeneous models.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"261 ","pages":"Article 112838"},"PeriodicalIF":1.8,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146077061","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-27DOI: 10.1016/j.econlet.2026.112836
Hiroki Kono , Susumu Sato
We consider behavior-based price discrimination by a monopolist that uses customers’ purchase histories and additional customer data to set prices. We find that, as data quality improves, the firm shifts its pricing strategy from screening high-valuation customers to selling to all customers, which benefits consumers. A further improvement in data quality, however, hurts consumers by facilitating price discrimination. This result indicates a novel positive effect of a firm’s data collection, even when it is used for price discrimination.
{"title":"Conditioning prices on purchase history when sellers collect customer data","authors":"Hiroki Kono , Susumu Sato","doi":"10.1016/j.econlet.2026.112836","DOIUrl":"10.1016/j.econlet.2026.112836","url":null,"abstract":"<div><div>We consider behavior-based price discrimination by a monopolist that uses customers’ purchase histories and additional customer data to set prices. We find that, as data quality improves, the firm shifts its pricing strategy from screening high-valuation customers to selling to all customers, which benefits consumers. A further improvement in data quality, however, hurts consumers by facilitating price discrimination. This result indicates a novel positive effect of a firm’s data collection, even when it is used for price discrimination.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"261 ","pages":"Article 112836"},"PeriodicalIF":1.8,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146077062","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-27DOI: 10.1016/j.econlet.2026.112837
Hassan Doosti
We develop a tractable semiparametric framework for estimating affiliated private value (APV) models in first-price sealed-bid auctions by combining copula-based dependence modeling with quantile density function (QDF) methods. Building on the identification results of Li, Perrigne, and Vuong (2002), we propose a two-stage estimator that (i) uses nonparametric QDF methods (Doosti et al., 2025) to estimate marginal distributions, achieving superior boundary performance, and (ii) employs parametric Archimedean copulas to model affiliation, ensuring computational tractability while respecting the equilibrium structure. Our approach decomposes the inverse bid function into an affiliation component (copula multiplier ) and a marginal component (quantile density ), providing both theoretical insights and practical advantages. We extend this framework by developing a fully nonparametric estimator of the copula multiplier, enabling specification tests for parametric copula assumptions. Monte Carlo simulations demonstrate that our estimators substantially outperform existing methods.
{"title":"A copula-quantile density approach to affiliated private value auctions","authors":"Hassan Doosti","doi":"10.1016/j.econlet.2026.112837","DOIUrl":"10.1016/j.econlet.2026.112837","url":null,"abstract":"<div><div>We develop a tractable semiparametric framework for estimating affiliated private value (APV) models in first-price sealed-bid auctions by combining copula-based dependence modeling with quantile density function (QDF) methods. Building on the identification results of Li, Perrigne, and Vuong (2002), we propose a two-stage estimator that (i) uses nonparametric QDF methods (Doosti et al., 2025) to estimate marginal distributions, achieving superior boundary performance, and (ii) employs parametric Archimedean copulas to model affiliation, ensuring computational tractability while respecting the equilibrium structure. Our approach decomposes the inverse bid function into an affiliation component (copula multiplier <span><math><mrow><mi>ψ</mi><mrow><mo>(</mo><mi>u</mi><mo>)</mo></mrow></mrow></math></span>) and a marginal component (quantile density <span><math><mrow><mi>q</mi><mrow><mo>(</mo><mi>u</mi><mo>)</mo></mrow></mrow></math></span>), providing both theoretical insights and practical advantages. We extend this framework by developing a fully nonparametric estimator of the copula multiplier, enabling specification tests for parametric copula assumptions. Monte Carlo simulations demonstrate that our estimators substantially outperform existing methods.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"261 ","pages":"Article 112837"},"PeriodicalIF":1.8,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146049114","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-27DOI: 10.1016/j.econlet.2026.112833
Riccardo (Jack) Lucchetti
The unit-root test by Zivot and Andrews(1992) for series with possible structural breaks has been the industry standard for over 30 years. All available software reports the critical values presented in the original article, which were computed with the technology available at the time.
By a much larger simulation exercise, the relevant distributions are approximated by Gaussian mixtures. This makes the computation of -values straightforward and handles finite-sample issues very naturally.
We show that the discrepancies between the original critical values and ours are relatively minor, but not negligible in some cases.
{"title":"An improved density approximation for the Zivot–Andrews test","authors":"Riccardo (Jack) Lucchetti","doi":"10.1016/j.econlet.2026.112833","DOIUrl":"10.1016/j.econlet.2026.112833","url":null,"abstract":"<div><div>The unit-root test by Zivot and Andrews(1992) for series with possible structural breaks has been the industry standard for over 30 years. All available software reports the critical values presented in the original article, which were computed with the technology available at the time.</div><div>By a much larger simulation exercise, the relevant distributions are approximated by Gaussian mixtures. This makes the computation of <span><math><mi>p</mi></math></span>-values straightforward and handles finite-sample issues very naturally.</div><div>We show that the discrepancies between the original critical values and ours are relatively minor, but not negligible in some cases.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"261 ","pages":"Article 112833"},"PeriodicalIF":1.8,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146077065","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-22DOI: 10.1016/j.econlet.2025.112803
Dilan Aksoy-Yurdagul , Axel Buchner , Abalfazl Zareei
This paper introduces sentiment momentum – the persistence of news sentiment – and examines its role in stock return predictability. Using firm-level RavenPack data for U.S. equities (2000–2023), we show that sentiment persistence leads to nonlinear return patterns: short-term sentiment momentum predicts positive abnormal returns, while long-term persistence signals reversals, reflecting the correction of sentiment-driven mispricing. These findings distinguish sentiment momentum from price momentum and highlight how the pace of market correction depends on the persistence of investor sentiment.
{"title":"The persistence of news sentiment: Implications for return predictability","authors":"Dilan Aksoy-Yurdagul , Axel Buchner , Abalfazl Zareei","doi":"10.1016/j.econlet.2025.112803","DOIUrl":"10.1016/j.econlet.2025.112803","url":null,"abstract":"<div><div>This paper introduces sentiment momentum – the persistence of news sentiment – and examines its role in stock return predictability. Using firm-level RavenPack data for U.S. equities (2000–2023), we show that sentiment persistence leads to nonlinear return patterns: short-term sentiment momentum predicts positive abnormal returns, while long-term persistence signals reversals, reflecting the correction of sentiment-driven mispricing. These findings distinguish sentiment momentum from price momentum and highlight how the pace of market correction depends on the persistence of investor sentiment.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112803"},"PeriodicalIF":1.8,"publicationDate":"2026-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023999","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.econlet.2026.112830
Muhammad Tahir Suleman
This study examines how biodiversity risk, as indicated by biodiversity disclosures in corporate 10-K reports, affects both upside and downside risks. By analysing 36,313 firm-year observations of USA firms, we find that higher exposure to biodiversity risk is associated with increased upside and downside risks. Our results remain consistent using different proxies for biodiversity risk and controlling for endogeneity.
{"title":"Effect of biodiversity risk on upside and downside returns","authors":"Muhammad Tahir Suleman","doi":"10.1016/j.econlet.2026.112830","DOIUrl":"10.1016/j.econlet.2026.112830","url":null,"abstract":"<div><div>This study examines how biodiversity risk, as indicated by biodiversity disclosures in corporate 10-K reports, affects both upside and downside risks. By analysing 36,313 firm-year observations of USA firms, we find that higher exposure to biodiversity risk is associated with increased upside and downside risks. Our results remain consistent using different proxies for biodiversity risk and controlling for endogeneity.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112830"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023997","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.econlet.2026.112829
Tat-kei Lai , Travis Ng , Kwok Ping Tsang
The identity of minority shareholders is assumed to be irrelevant in most applications. Yet, firms in practice do care about the presence of foreign investors, and empirical studies have shown that firms cater to such investors. We fill this gap by proposing a simple theoretical framework to test whether shareholder identity matters. We show that catering to foreign minority shareholders is rational if their presence increases firm value. More broadly, we offer a general framework for using investor-specific shocks in empirical research.
{"title":"Do foreign minority shareholders matter? A theoretical framework","authors":"Tat-kei Lai , Travis Ng , Kwok Ping Tsang","doi":"10.1016/j.econlet.2026.112829","DOIUrl":"10.1016/j.econlet.2026.112829","url":null,"abstract":"<div><div>The identity of minority shareholders is assumed to be irrelevant in most applications. Yet, firms in practice do care about the presence of foreign investors, and empirical studies have shown that firms cater to such investors. We fill this gap by proposing a simple theoretical framework to test whether shareholder identity matters. We show that catering to foreign minority shareholders is rational if their presence increases firm value. More broadly, we offer a general framework for using investor-specific shocks in empirical research.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112829"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146024057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.econlet.2026.112825
Xin Xia , Liu Gan
This paper develops a structural model to investigate the optimal dynamic management of corporate carbon emissions within carbon trading systems when entrepreneurs display present-biased preferences. Entrepreneurs pursue optimal carbon emission management by adjusting production scale, abatement, green innovation, and carbon credit trading. We show that, compared to their fully rational counterparts, present-biased entrepreneurs either expand or reduce the firm’s optimal production scale, depending on the carbon credit balance. Moreover, entrepreneurs with a stronger present-bias preference strategically accelerate carbon credit sales and tend to favor abatement over green innovation for emission reduction. Reputational benefits from green innovation investment and time-decaying innovation subsidies can mitigate the adverse impact of entrepreneurs’ present bias on the firm’s innovation-driven sustainability.
{"title":"Present-biased preferences and corporate carbon emission management","authors":"Xin Xia , Liu Gan","doi":"10.1016/j.econlet.2026.112825","DOIUrl":"10.1016/j.econlet.2026.112825","url":null,"abstract":"<div><div>This paper develops a structural model to investigate the optimal dynamic management of corporate carbon emissions within carbon trading systems when entrepreneurs display present-biased preferences. Entrepreneurs pursue optimal carbon emission management by adjusting production scale, abatement, green innovation, and carbon credit trading. We show that, compared to their fully rational counterparts, present-biased entrepreneurs either expand or reduce the firm’s optimal production scale, depending on the carbon credit balance. Moreover, entrepreneurs with a stronger present-bias preference strategically accelerate carbon credit sales and tend to favor abatement over green innovation for emission reduction. Reputational benefits from green innovation investment and time-decaying innovation subsidies can mitigate the adverse impact of entrepreneurs’ present bias on the firm’s innovation-driven sustainability.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112825"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146024056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.econlet.2026.112831
Michelle Xiaomin Fan , Doudou Gong , Qianqian Kong , Hui Yang
Chameni Nembua (2012) formulated all linear, efficient, and symmetric values for TU-games by assigning different coefficients to players’ marginal contributions corresponding to different coalition sizes. In this paper, we consider these values in voting games, and analyze how their coefficients influence players’ voting power. Our main result is that when all coefficients are between 0 and 1, players in minimal winning coalitions have positive voting power, whereas null players have non-negative voting power. We give the necessary and sufficient conditions for null players to have zero voting power. Moreover, we apply this result to unanimity games.
{"title":"Linear efficient and symmetric power indices","authors":"Michelle Xiaomin Fan , Doudou Gong , Qianqian Kong , Hui Yang","doi":"10.1016/j.econlet.2026.112831","DOIUrl":"10.1016/j.econlet.2026.112831","url":null,"abstract":"<div><div>Chameni Nembua (2012) formulated all linear, efficient, and symmetric values for TU-games by assigning different coefficients to players’ marginal contributions corresponding to different coalition sizes. In this paper, we consider these values in voting games, and analyze how their coefficients influence players’ voting power. Our main result is that when all coefficients are between 0 and 1, players in minimal winning coalitions have positive voting power, whereas null players have non-negative voting power. We give the necessary and sufficient conditions for null players to have zero voting power. Moreover, we apply this result to unanimity games.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112831"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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