Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112130
Yuan Zhong , Xiaobing Lai , Lei Tan
This study examines the impact of regulatory distance on silent donations. The findings indicate a significant positive correlation between regulatory distance and corporate silent donations, confirming the distance decay effect. Besides, political connections strengthen the relationship between regulatory distance and silent donations, while media attention and analyst scrutiny limit this positive relationship. The above impacts are more pronounced in non-state-owned enterprises, highly competitive industries, and heavily polluting sectors.
{"title":"Silent generosity: The impact of regulatory distance on silent donations","authors":"Yuan Zhong , Xiaobing Lai , Lei Tan","doi":"10.1016/j.econlet.2024.112130","DOIUrl":"10.1016/j.econlet.2024.112130","url":null,"abstract":"<div><div>This study examines the impact of regulatory distance on silent donations. The findings indicate a significant positive correlation between regulatory distance and corporate silent donations, confirming the distance decay effect. Besides, political connections strengthen the relationship between regulatory distance and silent donations, while media attention and analyst scrutiny limit this positive relationship. The above impacts are more pronounced in non-state-owned enterprises, highly competitive industries, and heavily polluting sectors.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112130"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143131234","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 : 2025-02-01DOI: 10.1016/j.econlet.2024.112116
Yushi Yoshida , Fabien Rondeau
We suggest obtaining bilateral invoicing ratios by reverse-engineering the unilateral invoicing ratios. We describe the methodology for conducting this extraction algorithm: pre-multiplying the Moore–Penrose pseudoinverse of the bilateral trading partners’ weights matrix to the unilateral invoicing vector.
{"title":"Bilateral invoicing currency ratios: A methodology to calculate them from unilateral invoicing currency ratios","authors":"Yushi Yoshida , Fabien Rondeau","doi":"10.1016/j.econlet.2024.112116","DOIUrl":"10.1016/j.econlet.2024.112116","url":null,"abstract":"<div><div>We suggest obtaining bilateral invoicing ratios by reverse-engineering the unilateral invoicing ratios. We describe the methodology for conducting this extraction algorithm: pre-multiplying the Moore–Penrose pseudoinverse of the bilateral trading partners’ weights matrix to the unilateral invoicing vector.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112116"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2025.112183
Dario Guarascio, Jelena Reljic
This paper contributes to the growing research on AI's labour market impact by presenting novel evidence on the heterogeneous employment effects of AI across EU countries from 2012 to 2022. While concerns persist about AI's disruptive potential, our findings show that occupations more exposed to AI technologies experience stronger employment growth, all else being equal. However, these effects are not uniform across the EU. Positive employment outcomes are concentrated in Innovation Leaders (Belgium, Denmark, Finland, the Netherlands and Sweden) and Strong Innovators (Austria, Cyprus, France, Germany, Ireland and Luxembourg), emphasising the context-dependent nature of AI's impact. These findings reflect the uneven distribution of innovation capabilities, with a country's innovation system and ‘absorptive capacity’ playing a crucial role in fully harnessing AI's potential for employment (and economic) growth. Ultimately, this research challenges the notion of AI as universally beneficial or harmful, highlighting its asymmetric effects across countries and occupations.
{"title":"AI and employment in Europe","authors":"Dario Guarascio, Jelena Reljic","doi":"10.1016/j.econlet.2025.112183","DOIUrl":"10.1016/j.econlet.2025.112183","url":null,"abstract":"<div><div>This paper contributes to the growing research on AI's labour market impact by presenting novel evidence on the heterogeneous employment effects of AI across EU countries from 2012 to 2022. While concerns persist about AI's disruptive potential, our findings show that occupations more exposed to AI technologies experience stronger employment growth, all else being equal. However, these effects are not uniform across the EU. Positive employment outcomes are concentrated in Innovation Leaders (Belgium, Denmark, Finland, the Netherlands and Sweden) and Strong Innovators (Austria, Cyprus, France, Germany, Ireland and Luxembourg), emphasising the context-dependent nature of AI's impact. These findings reflect the uneven distribution of innovation capabilities, with a country's innovation system and ‘absorptive capacity’ playing a crucial role in fully harnessing AI's potential for employment (and economic) growth. Ultimately, this research challenges the notion of AI as universally beneficial or harmful, highlighting its asymmetric effects across countries and occupations.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112183"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143166043","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 : 2025-02-01DOI: 10.1016/j.econlet.2024.112145
Bettina Klaus , Flip Klijn , Jay Sethuraman
We provide the first characterization of the prominent top-trading-cycles (TTC) mechanism in the Shapley–Scarf housing market model (Shapley and Scarf, 1974) that uses respecting-improvement. Specifically, we show that for strict preferences, the TTC mechanism is the unique mechanism satisfying pair-efficiency, respecting-improvement, and strategy-proofness.
{"title":"A characterization of the top-trading-cycles mechanism for housing markets via respecting-improvement","authors":"Bettina Klaus , Flip Klijn , Jay Sethuraman","doi":"10.1016/j.econlet.2024.112145","DOIUrl":"10.1016/j.econlet.2024.112145","url":null,"abstract":"<div><div>We provide the first characterization of the prominent top-trading-cycles (TTC) mechanism in the Shapley–Scarf housing market model (Shapley and Scarf, 1974) that uses <em>respecting-improvement</em>. Specifically, we show that for strict preferences, the TTC mechanism is the unique mechanism satisfying <em>pair-efficiency</em>, <em>respecting-improvement</em>, and <em>strategy-proofness</em>.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112145"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143166164","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112149
Sijmen Duineveld , Christoph Hambel , Kai Lessmann
We study how “green” preferences affect the return on capital in a general equilibrium model with overlapping generations and two types of investors. The “brown” type only cares about financial returns, while the “green” type also cares about climate damages from emissions. Based on the preferences of their owners, firms make an endogenous emission abatement choice. We find that the return on capital of green firms increases in the share of green investors, and that the return differential between green and brown firms decreases in the share of green investors. In general equilibrium, the labor demand of green firms can negatively impact the return on capital of brown firms. We show that a carbon tax curbs the return on capital differential as the behavior of the two types of investors converges.
{"title":"Green investors and the return on capital in general equilibrium","authors":"Sijmen Duineveld , Christoph Hambel , Kai Lessmann","doi":"10.1016/j.econlet.2024.112149","DOIUrl":"10.1016/j.econlet.2024.112149","url":null,"abstract":"<div><div>We study how “green” preferences affect the return on capital in a general equilibrium model with overlapping generations and two types of investors. The “brown” type only cares about financial returns, while the “green” type also cares about climate damages from emissions. Based on the preferences of their owners, firms make an endogenous emission abatement choice. We find that the return on capital of green firms increases in the share of green investors, and that the return differential between green and brown firms decreases in the share of green investors. In general equilibrium, the labor demand of green firms can negatively impact the return on capital of brown firms. We show that a carbon tax curbs the return on capital differential as the behavior of the two types of investors converges.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112149"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143166166","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112157
Francisco Costa , Diana Goldemberg
Analyzing 30,000 Brazilian schools, we find that heat exposure increases dropout rates in public schools, particularly in urban areas. A one-standard-deviation increase in hot days raises dropouts by 5.1%. Private schools show no effects, suggesting infrastructure’s role in educational inequality.
{"title":"Too hot to learn? Evidence from high school dropouts in Brazil","authors":"Francisco Costa , Diana Goldemberg","doi":"10.1016/j.econlet.2024.112157","DOIUrl":"10.1016/j.econlet.2024.112157","url":null,"abstract":"<div><div>Analyzing 30,000 Brazilian schools, we find that heat exposure increases dropout rates in public schools, particularly in urban areas. A one-standard-deviation increase in hot days raises dropouts by 5.1%. Private schools show no effects, suggesting infrastructure’s role in educational inequality.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112157"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143128510","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}
This study examines the impact of trade and monetary policy uncertainty during geopolitical shocks on U.S. consumer confidence. Using monthly data from January 1993 to June 2024, we find that both trade and monetary policy uncertainties have significantly shaped U.S. consumer confidence during major geopolitical events. Moreover, trade policy uncertainty significantly worsens consumer confidence during heightened geopolitical tension, while monetary policy uncertainty tends to stabilize sentiment. Our findings suggest that policymakers should implement clear and consistent trade policies during geopolitical unrest and effectively use monetary policy to reassure consumers. Ultimately, this research underscores the importance of addressing trade and monetary uncertainties to bolster economic resilience and enhance consumer confidence in challenging times.
{"title":"How do geopolitical risks and uncertainty shape US consumer confidence?","authors":"Moustapha Badran , Mohamed Awada , Joanna Darwiche , Whelsy Boungou","doi":"10.1016/j.econlet.2024.112115","DOIUrl":"10.1016/j.econlet.2024.112115","url":null,"abstract":"<div><div>This study examines the impact of trade and monetary policy uncertainty during geopolitical shocks on U.S. consumer confidence. Using monthly data from January 1993 to June 2024, we find that both trade and monetary policy uncertainties have significantly shaped U.S. consumer confidence during major geopolitical events. Moreover, trade policy uncertainty significantly worsens consumer confidence during heightened geopolitical tension, while monetary policy uncertainty tends to stabilize sentiment. Our findings suggest that policymakers should implement clear and consistent trade policies during geopolitical unrest and effectively use monetary policy to reassure consumers. Ultimately, this research underscores the importance of addressing trade and monetary uncertainties to bolster economic resilience and enhance consumer confidence in challenging times.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112115"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165727","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112117
Woongchan Jeon, Kieran James Walsh
We explore how households’ stimulus spending varies by income under different macroeconomic conditions over 2020–2021. We document a shift in the spending distribution from a declining pattern with a high average spending response to a U-shaped one with weaker responses and spending rising with income over much of the distribution. We argue that during crisis times like 2020, binding liquidity constraints render poorer households anxious to consume, while in more normalized economies (2021), they prioritize saving or servicing debts.
{"title":"Heterogeneity and macroeconomic state dependence in the spending response to stimulus","authors":"Woongchan Jeon, Kieran James Walsh","doi":"10.1016/j.econlet.2024.112117","DOIUrl":"10.1016/j.econlet.2024.112117","url":null,"abstract":"<div><div>We explore how households’ stimulus spending varies by income under different macroeconomic conditions over 2020–2021. We document a shift in the spending distribution from a declining pattern with a high average spending response to a U-shaped one with weaker responses and spending rising with income over much of the distribution. We argue that during crisis times like 2020, binding liquidity constraints render poorer households anxious to consume, while in more normalized economies (2021), they prioritize saving or servicing debts.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112117"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165739","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112124
Tong Liu , Yanlin Shi
This paper reexamines the significance of news sentiment in explaining stock return volatility persistence and its role in driving underlying volatility states. Our simulation study demonstrates that more accurately measured news sentiment has a greater impact on volatility dynamics. Using data from firms in the Dow Jones Composite Average index spanning 2019–2023, we compare news sentiment classified by GPT-4 with that classified by RavenPack. Our findings show that both negative and positive firm-specific and macroeconomic news significantly affect intraday stock return volatility. The classification accuracy achieved by employing GPT-4 potentially surpasses that of using RavenPack.
{"title":"News sentiment and investment risk management: Innovative evidence from the large language models","authors":"Tong Liu , Yanlin Shi","doi":"10.1016/j.econlet.2024.112124","DOIUrl":"10.1016/j.econlet.2024.112124","url":null,"abstract":"<div><div>This paper reexamines the significance of news sentiment in explaining stock return volatility persistence and its role in driving underlying volatility states. Our simulation study demonstrates that more accurately measured news sentiment has a greater impact on volatility dynamics. Using data from firms in the Dow Jones Composite Average index spanning 2019–2023, we compare news sentiment classified by GPT-4 with that classified by RavenPack. Our findings show that both negative and positive firm-specific and macroeconomic news significantly affect intraday stock return volatility. The classification accuracy achieved by employing GPT-4 potentially surpasses that of using RavenPack.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112124"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165740","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.econlet.2024.112121
Agha Mureed Ahemed , Umer Iqbal , Mian Muhammad Atif
In this study, we investigate the effect of asymmetric cost behavior (ACB) on financial distress. In ACB, managers’ deliberate decision to retain idle resources creates an inflexible cost structure, which leads to financial distress. Using a sample of 107,021 firm-year observations from 12,850 U.S. listed non-financial firms over the period from 1987 to 2020, our findings reveal a positive relationship between ACB and financial distress. This relationship is driven by managerial optimism and overconfidence, as theorized in behavioral finance and the management optimism hypothesis. These results contribute to the growing understanding of how cognitive biases impact corporate financial decisions, particularly in firms facing financial distress, and underscore the importance of effective cost management in reducing the risks associated with ACB.
{"title":"Asymmetric cost behavior and financial distress","authors":"Agha Mureed Ahemed , Umer Iqbal , Mian Muhammad Atif","doi":"10.1016/j.econlet.2024.112121","DOIUrl":"10.1016/j.econlet.2024.112121","url":null,"abstract":"<div><div>In this study, we investigate the effect of asymmetric cost behavior (ACB) on financial distress. In ACB, managers’ deliberate decision to retain idle resources creates an inflexible cost structure, which leads to financial distress. Using a sample of 107,021 firm-year observations from 12,850 U.S. listed non-financial firms over the period from 1987 to 2020, our findings reveal a positive relationship between ACB and financial distress. This relationship is driven by managerial optimism and overconfidence, as theorized in behavioral finance and the management optimism hypothesis. These results contribute to the growing understanding of how cognitive biases impact corporate financial decisions, particularly in firms facing financial distress, and underscore the importance of effective cost management in reducing the risks associated with ACB.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112121"},"PeriodicalIF":2.1,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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