This paper studies the heterogeneous effects of the COVID-19 outbreak on stock prices in China and its hidden mechanisms from multi perspectives. First, we confirm the recent conclusion that the spread of the epidemic has a significant negative impact on stock market returns. However, this effect is heterogeneous for different industries. In particular, stocks not only in the pharmaceutical manufacturing industry but also in its upstream industry, the chemical industry, even benefit from the epidemic. Second, we construct a fear sentiment index by using data from searching volume of COVID-19 related words and find that the fear sentiment can directly cause the stock price to fall. Moreover, the panic will exacerbate the negative impact of the epidemic on stock returns. Third, and most importantly, we demonstrate the underlying mechanisms from four firm characteristics. The results show that companies with high asset intensity, low labor intensity, high inventory-to-revenues ratio, and small market value are more negatively affected. We argue that the labor employment in state-owned enterprises is less flexible, so for labor-intensive state-owned firms, their stock performance worsens because of higher idle labor costs. Our evidence also strongly supports this hypothesis. Finally, we create a brand new index based on the WIOD input-output database to measure the relative position of an industry in the supply chain. Our findings show that companies located downstream are more vulnerable to the COVID-19 outbreak.
{"title":"Heterogeneous Stock Market Reactions to COVID-19: More Hidden Mechanisms","authors":"Zhifeng Liu, Tingting Zhang, Guoqing Zhang","doi":"10.2139/ssrn.3697622","DOIUrl":"https://doi.org/10.2139/ssrn.3697622","url":null,"abstract":"This paper studies the heterogeneous effects of the COVID-19 outbreak on stock prices in China and its hidden mechanisms from multi perspectives. First, we confirm the recent conclusion that the spread of the epidemic has a significant negative impact on stock market returns. However, this effect is heterogeneous for different industries. In particular, stocks not only in the pharmaceutical manufacturing industry but also in its upstream industry, the chemical industry, even benefit from the epidemic. Second, we construct a fear sentiment index by using data from searching volume of COVID-19 related words and find that the fear sentiment can directly cause the stock price to fall. Moreover, the panic will exacerbate the negative impact of the epidemic on stock returns. Third, and most importantly, we demonstrate the underlying mechanisms from four firm characteristics. The results show that companies with high asset intensity, low labor intensity, high inventory-to-revenues ratio, and small market value are more negatively affected. We argue that the labor employment in state-owned enterprises is less flexible, so for labor-intensive state-owned firms, their stock performance worsens because of higher idle labor costs. Our evidence also strongly supports this hypothesis. Finally, we create a brand new index based on the WIOD input-output database to measure the relative position of an industry in the supply chain. Our findings show that companies located downstream are more vulnerable to the COVID-19 outbreak.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76612820","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines how labour market outcomes are affected by college graduates’ employment liberalization in China, which refers to the abolition of the job assignment system. Exploiting the cohort-specific exposure to the reform, the estimation from census and household survey data suggest that the reform decreases the employment rate for about 3.6 percentage points and increases wages of employed workers by about 21.4 percent. Building on the evidence, I develop and calibrates an equilibrium search and matching model with two sectors and human capital heterogeneity. Welfare analysis indicates that employment liberation is beneficial to workers with higher human capital by allocating them to more productive vacancies, which leads to an increase in equilibrium wages and total output. The results shed light on the role of labour market liberalization on the economic transition of China.
{"title":"Road to Free labour Market: The Impact of Abolition of Job Assignment Reform in China","authors":"Yucheng Wang","doi":"10.2139/ssrn.3680123","DOIUrl":"https://doi.org/10.2139/ssrn.3680123","url":null,"abstract":"This paper examines how labour market outcomes are affected by college graduates’ employment liberalization in China, which refers to the abolition of the job assignment system. Exploiting the cohort-specific exposure to the reform, the estimation from census and household survey data suggest that the reform decreases the employment rate for about 3.6 percentage points and increases wages of employed workers by about 21.4 percent. Building on the evidence, I develop and calibrates an equilibrium search and matching model with two sectors and human capital heterogeneity. Welfare analysis indicates that employment liberation is beneficial to workers with higher human capital by allocating them to more productive vacancies, which leads to an increase in equilibrium wages and total output. The results shed light on the role of labour market liberalization on the economic transition of China.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86098886","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We provide the first attempt to understand how differences in households’ socio-demographic and economic characteristics account for disparities in wealth inequality between five post-socialist countries of Central and Eastern Europe. We use 2013/2014 data from the second wave of the Household Finance and Consumption Survey (HFCS) and the reweighted Oaxaca-Blinder-like decompositions based on recentered influence function (RIF) regressions. Our results show that the differences in homeownership rates account for up to 42% of the difference in wealth inequality measured with the Gini index and for as much as 63-109% in case of the P50/P25 percentile ratio. Differences in homeownership rates are related to alternative designs of housing tax policies but could be also driven by other factors. We correct for the problem of the ‘missing rich’ in household surveys by calibrating the HFCS survey weights to top wealth shares adjusted using wealth data from national rich lists. Empirically, the correction procedure strengthens the importance of homeownership rates in accounting for cross-country wealth inequality differences, which suggests that our results are not sensitive to the significant underestimation of top wealth observations in the HFCS.
{"title":"Why Wealth Inequality Differs Between Post-Socialist Countries?","authors":"M. Brzeziński, Katarzyna Sałach","doi":"10.2139/ssrn.3631191","DOIUrl":"https://doi.org/10.2139/ssrn.3631191","url":null,"abstract":"We provide the first attempt to understand how differences in households’ socio-demographic and economic characteristics account for disparities in wealth inequality between five post-socialist countries of Central and Eastern Europe. We use 2013/2014 data from the second wave of the Household Finance and Consumption Survey (HFCS) and the reweighted Oaxaca-Blinder-like decompositions based on recentered influence function (RIF) regressions. Our results show that the differences in homeownership rates account for up to 42% of the difference in wealth inequality measured with the Gini index and for as much as 63-109% in case of the P50/P25 percentile ratio. Differences in homeownership rates are related to alternative designs of housing tax policies but could be also driven by other factors. We correct for the problem of the ‘missing rich’ in household surveys by calibrating the HFCS survey weights to top wealth shares adjusted using wealth data from national rich lists. Empirically, the correction procedure strengthens the importance of homeownership rates in accounting for cross-country wealth inequality differences, which suggests that our results are not sensitive to the significant underestimation of top wealth observations in the HFCS.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86380556","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes youth internal migration in the Democratic Republic of the Congo (DRC) and its impact on entrepreneurship startup in a fresh post‐conflict context. Building on a national representative survey conducted in 2005, a recursive bivariate probit specification is used to jointly estimate the decision models of both migration and entrepreneurship. To evaluate the robustness of results, the propensity score matching method is used to test the concordance of the results after eliminating the redundant impact of unobserved factors. The two main conclusions are that youth migration increases the probability of being an entrepreneur, but in the informal sector. In addition, like secondary and post‐secondary education, the duration of stay after migrating is an important factor to being an entrepreneur in the formal sector. These conclusions are expected to enlighten policy‐makers as to the importance of promoting secondary and post‐secondary education as well as inclusive growth investments that may absorb more youth labor in formal sectors. This is the first exercise in the case of the DRC and since it focuses on youth, the paper makes a unique contribution to the literature related to the link between migration and entrepreneurship in a post‐war context.
{"title":"Internal Migration and Youth Entrepreneurship in the Democratic Republic of the Congo","authors":"Alain Kikandi Kiuma, A. Araar, C. Kaghoma","doi":"10.1111/rode.12669","DOIUrl":"https://doi.org/10.1111/rode.12669","url":null,"abstract":"This paper analyzes youth internal migration in the Democratic Republic of the Congo (DRC) and its impact on entrepreneurship startup in a fresh post‐conflict context. Building on a national representative survey conducted in 2005, a recursive bivariate probit specification is used to jointly estimate the decision models of both migration and entrepreneurship. To evaluate the robustness of results, the propensity score matching method is used to test the concordance of the results after eliminating the redundant impact of unobserved factors. The two main conclusions are that youth migration increases the probability of being an entrepreneur, but in the informal sector. In addition, like secondary and post‐secondary education, the duration of stay after migrating is an important factor to being an entrepreneur in the formal sector. These conclusions are expected to enlighten policy‐makers as to the importance of promoting secondary and post‐secondary education as well as inclusive growth investments that may absorb more youth labor in formal sectors. This is the first exercise in the case of the DRC and since it focuses on youth, the paper makes a unique contribution to the literature related to the link between migration and entrepreneurship in a post‐war context.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73985481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates how politicians’ patronage connections affect privatizations in China. The connections to top political leaders (i.e., Central Committee of the Communist Party of China) make local politicians engage more in rent-seeking by selling state-owned enterprises (SOEs) at substantial discounts. These connected local politicians are also more protected in anti-corruption investigations, thus extracting more rents by selling SOE assets at substantial discounts. Consequently, the privatizations conducted by the local politicians with patronage connections achieve significantly lower gains in efficiency and performance. To identify the role of patronage connection in privatization, we use the mandatory retirement age cut-offs of Central Committee members in the regression discontinuity design. We find drops in price discounts of privatization deals and jumps in efficiency for privatized SOEs when local politicians lose connections to Central Committee members around the retirement age cut-offs.
{"title":"How Do Individual Politicians Affect Privatization? Evidence from China","authors":"Hong Ru, Kunru Zou","doi":"10.2139/ssrn.3251361","DOIUrl":"https://doi.org/10.2139/ssrn.3251361","url":null,"abstract":"This paper investigates how politicians’ patronage connections affect privatizations in China. The connections to top political leaders (i.e., Central Committee of the Communist Party of China) make local politicians engage more in rent-seeking by selling state-owned enterprises (SOEs) at substantial discounts. These connected local politicians are also more protected in anti-corruption investigations, thus extracting more rents by selling SOE assets at substantial discounts. Consequently, the privatizations conducted by the local politicians with patronage connections achieve significantly lower gains in efficiency and performance. To identify the role of patronage connection in privatization, we use the mandatory retirement age cut-offs of Central Committee members in the regression discontinuity design. We find drops in price discounts of privatization deals and jumps in efficiency for privatized SOEs when local politicians lose connections to Central Committee members around the retirement age cut-offs.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82153584","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-05-05DOI: 10.1051/e3sconf/202016410027
L. Pushkareva
Innovation activity at an industrial enterprise is a set of conditions affecting the relationship of the interaction of the business structure with other business entities and the state. The environment of innovative activity at the enterprise is variable, heterogeneous, dependent on many positive or negative factors acting on it. The ratio of these factors makes the environment either favorable, i.e. conducive to the implementation of entrepreneurial innovative ideas or adverse (risky) for the normal development of innovation. In the coming years, the structure of sources of financing technological innovation in industry will not change significantly, therefore it is important to create such conditions for organizations so that they can finance innovation in the future. In this significant role belongs to taxes. There are a number of articles in the Tax Code, a slight change of which will create a more favorable climate for innovation. In some cases, it is important for a taxpayer to receive a deferral or installment plan for a tax payment. Investment tax credit also represents a deferred payment; it can be granted to organizations that perform R&D; either technical re-equipment of own production; or carry out innovative or innovative activities, including creating new or improving applied technologies, etc.
{"title":"Innovative Activity and Some Features of Taxation","authors":"L. Pushkareva","doi":"10.1051/e3sconf/202016410027","DOIUrl":"https://doi.org/10.1051/e3sconf/202016410027","url":null,"abstract":"Innovation activity at an industrial enterprise is a set of conditions affecting the relationship of the interaction of the business structure with other business entities and the state. The environment of innovative activity at the enterprise is variable, heterogeneous, dependent on many positive or negative factors acting on it. The ratio of these factors makes the environment either favorable, i.e. conducive to the implementation of entrepreneurial innovative ideas or adverse (risky) for the normal development of innovation. In the coming years, the structure of sources of financing technological innovation in industry will not change significantly, therefore it is important to create such conditions for organizations so that they can finance innovation in the future. In this significant role belongs to taxes. There are a number of articles in the Tax Code, a slight change of which will create a more favorable climate for innovation. In some cases, it is important for a taxpayer to receive a deferral or installment plan for a tax payment. Investment tax credit also represents a deferred payment; it can be granted to organizations that perform R&D; either technical re-equipment of own production; or carry out innovative or innovative activities, including creating new or improving applied technologies, etc.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81249621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We propose a statistical mechanics approach to the problem of financial network reconstruction and systemic risk when participants benefit from bilateral netting agreements. We apply physical reasoning to directly estimate individual financial liabilities from data on both total gross and net positions of total liabilities and total assets. We map this constrained network reconstruction problem to an energy-minimization one, to which we apply a Markov Chain Monte Carlo algorithmic to sample from this restricted space. These samples are then used to evaluate the impact of bilateral netting strategies to individual defaults and contagion. As an application, we employ this method to derivative networks and derive individual probabilities of default of banks. The comparison against popular alternative methods underlines the importance of restricting sample solutions to those compatible with the netting strategies of banks. We also provide an R package implementing our methodology.
{"title":"A Statistical Mechanics Sampling of Financial Networks Under Bilateral Netting Constraints","authors":"S. Giansante, Douglas Asthon, T. Rogers","doi":"10.2139/ssrn.3532304","DOIUrl":"https://doi.org/10.2139/ssrn.3532304","url":null,"abstract":"We propose a statistical mechanics approach to the problem of financial network reconstruction and systemic risk when participants benefit from bilateral netting agreements. We apply physical reasoning to directly estimate individual financial liabilities from data on both total gross and net positions of total liabilities and total assets. We map this constrained network reconstruction problem to an energy-minimization one, to which we apply a Markov Chain Monte Carlo algorithmic to sample from this restricted space. These samples are then used to evaluate the impact of bilateral netting strategies to individual defaults and contagion. As an application, we employ this method to derivative networks and derive individual probabilities of default of banks. The comparison against popular alternative methods underlines the importance of restricting sample solutions to those compatible with the netting strategies of banks. We also provide an R package implementing our methodology.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82080675","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The innovation-performance literature has failed to make a distinction between the effects of incremental and disruptive innovation on multinational enterprise (MNE) performance. The understanding of the role of foreignness has overemphasized the negative side. From the institutional anomie theory perspective, this study investigates how foreignness, which consists of national culture, industrial competition, and innovative national capacity, affects the relationship between disruptive innovation and MNE performance. We illustrate the distinctiveness between incremental and disruptive innovation and then build a conceptual model to show the moderating role of foreignness on the innovation-performance link. The model suggests that foreignness provides contextual conditions under which the relationship between disruptive innovation and MNE performance is either strengthened or impeded. Also, firm-level cultural intelligence (CQ) can help MNEs to overcome the negative effects of foreignness, as well as enhance its positive effects. Propositions are discussed for further research.
{"title":"The Role of Foreignness in the Relationship between Disruptive Innovation and MNE Performance","authors":"Chuandi Jiang, Xinglu Zhao","doi":"10.37625/abr.23.1.18-34","DOIUrl":"https://doi.org/10.37625/abr.23.1.18-34","url":null,"abstract":"The innovation-performance literature has failed to make a distinction between the effects of incremental and disruptive innovation on multinational enterprise (MNE) performance. The understanding of the role of foreignness has overemphasized the negative side. From the institutional anomie theory perspective, this study investigates how foreignness, which consists of national culture, industrial competition, and innovative national capacity, affects the relationship between disruptive innovation and MNE performance. We illustrate the distinctiveness between incremental and disruptive innovation and then build a conceptual model to show the moderating role of foreignness on the innovation-performance link. The model suggests that foreignness provides contextual conditions under which the relationship between disruptive innovation and MNE performance is either strengthened or impeded. Also, firm-level cultural intelligence (CQ) can help MNEs to overcome the negative effects of foreignness, as well as enhance its positive effects. Propositions are discussed for further research.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78094498","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The declining labor share in national income and rising inequality over the last four decades raise questions about causes of these trends. In order to explain these trends, we develop a theoretical model that links intra-industry distribution of wages to variation in market power of firms. The model predicts that wages depend crucially on the demand side characteristics – they decline with market power if and only if demand elasticity is increasing with firm’s output. Trade liberalization leads to expansion of more productive firms, which also increases their bargaining power, resulting in lower share of wage bill in total revenue. The model predictions are tested on a sample of Ukrainian manufacturing firms in 2001– 2007. We document that an increase in firm’s size increases its bargaining power relative to workers. We measure firm level markups, and show that they increase with firm’s output and market size. We find that wage rises with firm’s productivity, but fall with its market power. The results are robust to various model specifications estimated at the firm and industry levels.
{"title":"Market Power, Productivity and Distribution of Wages: Theory and Evidence With Micro Data","authors":"Oleksandr Shepotylo, V. Vakhitov","doi":"10.2139/ssrn.3609821","DOIUrl":"https://doi.org/10.2139/ssrn.3609821","url":null,"abstract":"The declining labor share in national income and rising inequality over the last four decades raise questions about causes of these trends. In order to explain these trends, we develop a theoretical model that links intra-industry distribution of wages to variation in market power of firms. The model predicts that wages depend crucially on the demand side characteristics – they decline with market power if and only if demand elasticity is increasing with firm’s output. Trade liberalization leads to expansion of more productive firms, which also increases their bargaining power, resulting in lower share of wage bill in total revenue. The model predictions are tested on a sample of Ukrainian manufacturing firms in 2001– 2007. We document that an increase in firm’s size increases its bargaining power relative to workers. We measure firm level markups, and show that they increase with firm’s output and market size. We find that wage rises with firm’s productivity, but fall with its market power. The results are robust to various model specifications estimated at the firm and industry levels.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85850537","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study develops a new formal theoretical rubric for ranking of proxies for institutional factors that, conceptually, have taxonomy of either of facilitators of, or constraints on economic development. Illustrative implementations of the formal theoretical rubric reveal that spending on each of elementary or secondary education has taxonomy, not of social capital, but of `Productive Capability'. Conditional on optimal spending on primary and secondary education, stock markets are beneficial for welfare of individuals, and are shown to have taxonomy, not of investment capability, but of `Innovation Capability'. An hitherto unexplored factor shown to rank high as facilitator of economic development is `Policy Capability' that incentivizes export orientation within a domestic economy. Alongside spending on education, and stock market size, this policy capability is shown to be more important for realization of economic development than the stock of physical capital within an economy. All rank preferences are shown to satisfy the Strong Axiom of Revealed Preference (SARP). Empirical tests reveal importance of availability and application of formal theoretical rubrics to characterization and interpretation of effects of institutional factors that, conceptually, have taxonomy of facilitators of, or constraints on economic development.
{"title":"A General Equilibrium Approach to Taxonomy of Institutional Proxies for Innovation Outcomes","authors":"Oghenovo A. Obrimah","doi":"10.2139/ssrn.3581880","DOIUrl":"https://doi.org/10.2139/ssrn.3581880","url":null,"abstract":"This study develops a new formal theoretical rubric for ranking of proxies for institutional factors that, conceptually, have taxonomy of either of facilitators of, or constraints on economic development. Illustrative implementations of the formal theoretical rubric reveal that spending on each of elementary or secondary education has taxonomy, not of social capital, but of `Productive Capability'. Conditional on optimal spending on primary and secondary education, stock markets are beneficial for welfare of individuals, and are shown to have taxonomy, not of investment capability, but of `Innovation Capability'. An hitherto unexplored factor shown to rank high as facilitator of economic development is `Policy Capability' that incentivizes export orientation within a domestic economy. Alongside spending on education, and stock market size, this policy capability is shown to be more important for realization of economic development than the stock of physical capital within an economy. All rank preferences are shown to satisfy the Strong Axiom of Revealed Preference (SARP). Empirical tests reveal importance of availability and application of formal theoretical rubrics to characterization and interpretation of effects of institutional factors that, conceptually, have taxonomy of facilitators of, or constraints on economic development.","PeriodicalId":13677,"journal":{"name":"Institutions & Transition Economics: Microeconomic Issues eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90855436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：