In this paper we analyse developments in the composition of central bank balance sheets for a large set of central banks in a unified framework. Since 2007, central banks in advanced economies have experienced pronounced changes in balance sheet composition as a consequence of unconventional monetary policy measures. In addition, we document a convergence in balance sheet composition from 2007 until 2009, as the initial crisis response was fairly homogeneous across advanced economies, mostly driven by financial stability concerns. However, since 2009 design of balance sheet policies has been more diverse, reflecting diverging policy challenges across regions. By contrast, balance sheets of central banks in emerging market economies have remained broadly unchanged in terms of composition in the period under review.
{"title":"A Comparative Analysis of Developments in Central Bank Balance Sheet Composition","authors":"Christiaan Pattipeilohy","doi":"10.2139/ssrn.2764215","DOIUrl":"https://doi.org/10.2139/ssrn.2764215","url":null,"abstract":"In this paper we analyse developments in the composition of central bank balance sheets for a large set of central banks in a unified framework. Since 2007, central banks in advanced economies have experienced pronounced changes in balance sheet composition as a consequence of unconventional monetary policy measures. In addition, we document a convergence in balance sheet composition from 2007 until 2009, as the initial crisis response was fairly homogeneous across advanced economies, mostly driven by financial stability concerns. However, since 2009 design of balance sheet policies has been more diverse, reflecting diverging policy challenges across regions. By contrast, balance sheets of central banks in emerging market economies have remained broadly unchanged in terms of composition in the period under review.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79155416","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}
A number of U.S. State Departments of Transportation have adopted a price adjustment policy designed to limit cost fluctuations of oil‐based inputs in government procurement. Similar policies are common in defense contracting, and have been used to offset financial losses of health insurance companies in Medicare and the Affordable Care Act. We show that while all bidders submit lower bids after the policy is introduced, the extent of bid reduction diminishes with firm size. Small new firms are able to compete more frequently, promoting auction competition and efficiency.
{"title":"Price Adjustment Policies and Firm Size","authors":"Georgia Kosmopoulou, Carlos Lamarche, Xueqi Zhou","doi":"10.1111/ecin.12286","DOIUrl":"https://doi.org/10.1111/ecin.12286","url":null,"abstract":"A number of U.S. State Departments of Transportation have adopted a price adjustment policy designed to limit cost fluctuations of oil‐based inputs in government procurement. Similar policies are common in defense contracting, and have been used to offset financial losses of health insurance companies in Medicare and the Affordable Care Act. We show that while all bidders submit lower bids after the policy is introduced, the extent of bid reduction diminishes with firm size. Small new firms are able to compete more frequently, promoting auction competition and efficiency.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"55 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90769785","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 extend Akerlof ’s (1970) “Market for Lemons” by assuming that some buyers are overconfident. Buyers in our model receive a noisy signal about the quality of the good that is at display for sale. Overconfident buyers do not update according to Bayes’ rule but take the noisy signal at face value. The main finding is that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection. This stabilization, however, comes at a cost: rational buyers are crowded out of the market.
{"title":"Overconfidence in the Markets for Lemons","authors":"F. Herweg, Daniel Müller","doi":"10.1111/sjoe.12135","DOIUrl":"https://doi.org/10.1111/sjoe.12135","url":null,"abstract":"We extend Akerlof ’s (1970) “Market for Lemons” by assuming that some buyers are overconfident. Buyers in our model receive a noisy signal about the quality of the good that is at display for sale. Overconfident buyers do not update according to Bayes’ rule but take the noisy signal at face value. The main finding is that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection. This stabilization, however, comes at a cost: rational buyers are crowded out of the market.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81577835","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 provides an explanation why garbage as a measure of consumption implies a several times lower coefficient of relative risk aversion in the consumption-based asset pricing model than consumption based on the official National Income and Product Accounts (NIPA): Unlike garbage, NIPA consumption is filtered to mitigate measurement error. I apply a structural model of the filtering process, which allows to revoke the filter inherent in NIPA consumption. Unfiltered NIPA consumption performs as well as garbage in explaining the equity premium and risk-free rate puzzle. Furthermore, I find that two other popular NIPA-based measures, three-year and fourth-quarter NIPA consumption, are related to unfiltered NIPA consumption. Both can be viewed as ad hoc unfilter rules.
{"title":"Asset Pricing without Garbage","authors":"Tim A. Kroencke","doi":"10.2139/ssrn.2327055","DOIUrl":"https://doi.org/10.2139/ssrn.2327055","url":null,"abstract":"This paper provides an explanation why garbage as a measure of consumption implies a several times lower coefficient of relative risk aversion in the consumption-based asset pricing model than consumption based on the official National Income and Product Accounts (NIPA): Unlike garbage, NIPA consumption is filtered to mitigate measurement error. I apply a structural model of the filtering process, which allows to revoke the filter inherent in NIPA consumption. Unfiltered NIPA consumption performs as well as garbage in explaining the equity premium and risk-free rate puzzle. Furthermore, I find that two other popular NIPA-based measures, three-year and fourth-quarter NIPA consumption, are related to unfiltered NIPA consumption. Both can be viewed as ad hoc unfilter rules.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"119 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83428124","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}
type="main" xml:id="ecca12160-abs-0001"> This paper uses an instrumental variables approach to estimate the relationship between trade openness and economic growth in Sub-Saharan Africa. Instrumental variables estimates show that economic growth has a significant negative contemporaneous effect on trade openness, while trade openness has a significant positive effect on economic growth. A 1 percentage point increase in the ratio of trade over GDP is associated with a short-run increase in growth of approximately 0.5% in a given year; the cumulative long-run effect on the level of GDP per capita is larger, reaching about 2%.
{"title":"Trade Openness and Economic Growth: Panel Data Evidence from Sub‐Saharan Africa","authors":"Markus Brüeckner, D. Lederman","doi":"10.1111/ecca.12160","DOIUrl":"https://doi.org/10.1111/ecca.12160","url":null,"abstract":"type=\"main\" xml:id=\"ecca12160-abs-0001\"> This paper uses an instrumental variables approach to estimate the relationship between trade openness and economic growth in Sub-Saharan Africa. Instrumental variables estimates show that economic growth has a significant negative contemporaneous effect on trade openness, while trade openness has a significant positive effect on economic growth. A 1 percentage point increase in the ratio of trade over GDP is associated with a short-run increase in growth of approximately 0.5% in a given year; the cumulative long-run effect on the level of GDP per capita is larger, reaching about 2%.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"81 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85186444","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}
type="main" xml:id="ecca12159-abs-0001"> We develop an augmented Olley–Pakes (OP) decomposition that allows us to examine how entering and exiting firms contribute to the popular OP covariance measure of allocative efficiency. Applying the decomposition to a comprehensive micro-level data, we find that a large part of the OP covariance component can be attributed to entrants and exiting firms. We also build a model of firm dynamics that is consistent with our main empirical results. In the model economy, the standard OP covariance component tends to increase with certain type of distortions because of endogenous changes in firm entry and exit.
{"title":"An Augmented Static Olley–Pakes Productivity Decomposition with Entry and Exit: Measurement and Interpretation","authors":"M. Maliranta, Niku Määttänen","doi":"10.1111/ecca.12159","DOIUrl":"https://doi.org/10.1111/ecca.12159","url":null,"abstract":"type=\"main\" xml:id=\"ecca12159-abs-0001\"> We develop an augmented Olley–Pakes (OP) decomposition that allows us to examine how entering and exiting firms contribute to the popular OP covariance measure of allocative efficiency. Applying the decomposition to a comprehensive micro-level data, we find that a large part of the OP covariance component can be attributed to entrants and exiting firms. We also build a model of firm dynamics that is consistent with our main empirical results. In the model economy, the standard OP covariance component tends to increase with certain type of distortions because of endogenous changes in firm entry and exit.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"11 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81369041","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}
E. Baranov, Igor Kim, D. Piontkovski, E. Staritsyna
Time series of Input-Output (IO) accounts at current and constant prices are widely applied to study the dynamics and structure of economic activity within country and conduct cross-country comparisons and analyses of globalization processes as well as their impacts. For these purposes IO accounts have to adhere to a uniform nomenclature of products and economic activities in accordance with international standards. Unfortunately, Russian statistics currently do not satisfy this condition. The first Russian IO accounts for 2011, built in accordance with international standards, will be published only at the end of 2015 (previously published tables for 1995-2003 were built in the classifications "inherited" from the Soviet period). The IO accounts for 2012 and subsequent years will be built by extrapolating the cost structure of products and services for 2011. However, it leaves the open question of extending the time series of these tables for the retrospective period prior to 2011. As international experience shows, this type of calculation was predominantly conducted by research organizations and universities. Given this, the National Research University Higher School of Economics has been developing a methodology for constructing a retrospective time series of a part of the IO accounts (use tables and valuation matrices) from 2010, in order to experimentally test them, and apply them to the official IO accounts for 2011. The following results were obtained from our study. First, we proposed a two-step procedure to transform IO accounts for 2003 from the Soviet into the OKVED/OKPD classifications. Second, we used a two-stage biproportional method generalizing the RAS procedure to construct a time series of IO accounts for the subsequent period using the 2003 transformed IO accounts as the starting point. Finally, we recalculated a part of the IO accounts (use tables) at the previous year prices.
{"title":"Constructing Retrospective Time Series of Russian Input-Output Accounts Based on the NACE/CPA Classifications","authors":"E. Baranov, Igor Kim, D. Piontkovski, E. Staritsyna","doi":"10.2139/ssrn.2693540","DOIUrl":"https://doi.org/10.2139/ssrn.2693540","url":null,"abstract":"Time series of Input-Output (IO) accounts at current and constant prices are widely applied to study the dynamics and structure of economic activity within country and conduct cross-country comparisons and analyses of globalization processes as well as their impacts. For these purposes IO accounts have to adhere to a uniform nomenclature of products and economic activities in accordance with international standards. Unfortunately, Russian statistics currently do not satisfy this condition. The first Russian IO accounts for 2011, built in accordance with international standards, will be published only at the end of 2015 (previously published tables for 1995-2003 were built in the classifications \"inherited\" from the Soviet period). The IO accounts for 2012 and subsequent years will be built by extrapolating the cost structure of products and services for 2011. However, it leaves the open question of extending the time series of these tables for the retrospective period prior to 2011. As international experience shows, this type of calculation was predominantly conducted by research organizations and universities. Given this, the National Research University Higher School of Economics has been developing a methodology for constructing a retrospective time series of a part of the IO accounts (use tables and valuation matrices) from 2010, in order to experimentally test them, and apply them to the official IO accounts for 2011. The following results were obtained from our study. First, we proposed a two-step procedure to transform IO accounts for 2003 from the Soviet into the OKVED/OKPD classifications. Second, we used a two-stage biproportional method generalizing the RAS procedure to construct a time series of IO accounts for the subsequent period using the 2003 transformed IO accounts as the starting point. Finally, we recalculated a part of the IO accounts (use tables) at the previous year prices.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90652799","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}
“Free” consumer entertainment and information from the Internet, largely supported by advertising revenues, has had a major impact on consumer behavior. Some economists believe that measured gross domestic product (GDP) growth since 2000 is too low because it excludes online entertainment (Brynjolfsson and Oh 2012; Ito 2013). Similar large effects on consumers occurred with the arrival of free radio and television entertainment. We provide an experimental methodology that uses previously established GDP measurement procedures to value advertising-supported entertainment around the world. The experimental method raises global real GDP growth, but the increase is small. It is true that advertising-supported online entertainment has grown dramatically since 2000. Concurrently, advertising-supported print entertainment has been stagnant. The net impact is a real growth rate of 7.6% per year for advertising-supported entertainment. Furthermore, advertising-supported entertainment accounts for less than 0.5% of global GDP. As a result, our experimental methodology only raises overall real GDP growth by 0.019% per year. Across countries, the experimental methodology raises nominal inequality. In 2011, nominal GDP for nations in the Organisation for Economic Co-operation and Development (OECD) increased by 0.18% more than nominal GDP in the rest of the world. Furthermore, nominal GDP in the United States increased 0.22% more than GDP in the rest of the OECD countries. However, prices for advertising-supported entertainment are also higher in wealthier nations. The net impact is a small reduction in real inequality.
{"title":"Valuing 'Free' Media Across Countries in GDP","authors":"L. Nakamura, Rachel H. Soloveichik","doi":"10.2139/ssrn.2631621","DOIUrl":"https://doi.org/10.2139/ssrn.2631621","url":null,"abstract":"“Free” consumer entertainment and information from the Internet, largely supported by advertising revenues, has had a major impact on consumer behavior. Some economists believe that measured gross domestic product (GDP) growth since 2000 is too low because it excludes online entertainment (Brynjolfsson and Oh 2012; Ito 2013). Similar large effects on consumers occurred with the arrival of free radio and television entertainment. We provide an experimental methodology that uses previously established GDP measurement procedures to value advertising-supported entertainment around the world. The experimental method raises global real GDP growth, but the increase is small. It is true that advertising-supported online entertainment has grown dramatically since 2000. Concurrently, advertising-supported print entertainment has been stagnant. The net impact is a real growth rate of 7.6% per year for advertising-supported entertainment. Furthermore, advertising-supported entertainment accounts for less than 0.5% of global GDP. As a result, our experimental methodology only raises overall real GDP growth by 0.019% per year. Across countries, the experimental methodology raises nominal inequality. In 2011, nominal GDP for nations in the Organisation for Economic Co-operation and Development (OECD) increased by 0.18% more than nominal GDP in the rest of the world. Furthermore, nominal GDP in the United States increased 0.22% more than GDP in the rest of the OECD countries. However, prices for advertising-supported entertainment are also higher in wealthier nations. The net impact is a small reduction in real inequality.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"16 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87279423","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 Special Data Dissemination Standard (SDDS) initiative was launched by the International Monetary Fund (IMF) in 1996, to enhance the availability of timely and comprehensive macroeconomic and financial statistics based on best dissemination practices, facilitating the pursuit of sound macroeconomic policies. By joining this initiative, governments signal their commitment to disclose policy-relevant data. Has the SDDS initiative served its purpose? We provide first quantitative evidence on the effects of the SDDS data transparency initiative. We use Hollyer, Rosendorff and Vreeland’s (2014) Data Transparency Index which gauges governments’ ability to collect and disseminate aggregate economic data using a Bayesian item response algorithm model, which treats transparency as a latent predictor of the reporting (absence) on 240 variables collected from the World Bank’s World Development Indicators. Using panel data on 120 countries during the 1996-2011 period, we find that countries complying with the SDDS initiative are associated with an increase in data transparency index after controlling for self-section bias. Our results are robust to controlling for endogeneity using instrumental variables, alternative sample, and estimation methods.
{"title":"Do Transparency Initiatives Work? Assessing the Impact of the Special Data Dissemination Standard (SDDS) on Data Transparency","authors":"K. Vadlamannati, A. Cooray","doi":"10.2139/ssrn.2627938","DOIUrl":"https://doi.org/10.2139/ssrn.2627938","url":null,"abstract":"The Special Data Dissemination Standard (SDDS) initiative was launched by the International Monetary Fund (IMF) in 1996, to enhance the availability of timely and comprehensive macroeconomic and financial statistics based on best dissemination practices, facilitating the pursuit of sound macroeconomic policies. By joining this initiative, governments signal their commitment to disclose policy-relevant data. Has the SDDS initiative served its purpose? We provide first quantitative evidence on the effects of the SDDS data transparency initiative. We use Hollyer, Rosendorff and Vreeland’s (2014) Data Transparency Index which gauges governments’ ability to collect and disseminate aggregate economic data using a Bayesian item response algorithm model, which treats transparency as a latent predictor of the reporting (absence) on 240 variables collected from the World Bank’s World Development Indicators. Using panel data on 120 countries during the 1996-2011 period, we find that countries complying with the SDDS initiative are associated with an increase in data transparency index after controlling for self-section bias. Our results are robust to controlling for endogeneity using instrumental variables, alternative sample, and estimation methods.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"66 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90690028","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}
Jens Hainmueller, Barbara Hofmann, Gerhard Krug, Katja Wolf
The caseworker-to-clients ratio is an important, but understudied, policy parameter that affects both the quality and cost of public employment services that help job seekers find employment. We exploit a large-scale pilot by Germany's employment agency that hired 490 additional caseworkers in 14 of its 779 offices. We find that lowering caseloads caused a decrease in the rate and duration of local unemployment as well as a higher re-employment rate. Disentangling the mechanisms that contributed to this improvement, we find that offices with lowered caseloads increased monitoring and imposed more sanctions but also intensified search efforts and registered additional vacancies.
{"title":"Do Lower Caseloads Improve the Performance of Public Employment Services? New Evidence from German Employment Offices","authors":"Jens Hainmueller, Barbara Hofmann, Gerhard Krug, Katja Wolf","doi":"10.1111/sjoe.12166","DOIUrl":"https://doi.org/10.1111/sjoe.12166","url":null,"abstract":"The caseworker-to-clients ratio is an important, but understudied, policy parameter that affects both the quality and cost of public employment services that help job seekers find employment. We exploit a large-scale pilot by Germany's employment agency that hired 490 additional caseworkers in 14 of its 779 offices. We find that lowering caseloads caused a decrease in the rate and duration of local unemployment as well as a higher re-employment rate. Disentangling the mechanisms that contributed to this improvement, we find that offices with lowered caseloads increased monitoring and imposed more sanctions but also intensified search efforts and registered additional vacancies.","PeriodicalId":18164,"journal":{"name":"Macroeconomics: National Income & Product Accounts eJournal","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80178813","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}
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